<PAGE>
Filed Pursuant to 424B(5)
Registration No. 333-87725
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 3, 2000)
$500,000,000
[LOGO OF COMDISCO APPEARS HERE]
9 1/2% Senior Notes Due August 15, 2003
------------
We will pay interest on the Notes twice a year on February 15 and August 15,
beginning February 15, 2001. 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 supplement or the related 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.................................... 99.777% $498,885,000
Underwriting discount.................................... .400% $ 2,000,000
Proceeds to Comdisco, Inc. (before expenses)............. 99.377% $496,885,000
</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 August 8, 2000.
------------
Salomon Smith Barney
Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
Banc One Capital Markets, Inc.
Mellon Financial Markets, LLC
August 3, 2000
<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 August 3, 2000.
------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<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.......................................... 4
Use of Proceeds............................................................. 4
Forward-Looking Statements.................................................. 4
Description of Our Debt Securities.......................................... 5
Description of Our Capital Stock............................................ 11
Plan of Distribution........................................................ 25
Legal Opinions.............................................................. 26
Experts..................................................................... 26
</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 found in the accompanying prospectus.
Certain terms are defined in the prospectus and the SunTrust Senior Indenture.
General
The Notes will be:
. unsecured general obligations of Comdisco;
. limited to $500 million principal amount; and
. issued in book-entry form only.
The Notes will mature on August 15, 2003 and are not redeemable prior to
maturity.
The Notes will bear interest from August 8, 2000 or from the most recent
Interest Payment Date to which interest has been paid or provided for, at the
rate of 9 1/2% per annum, payable semi-annually on February 15 and August 15,
commencing on February 15, 2001, to the persons in whose names the Notes are
registered at the close of business on the preceding February 1 and August 1,
respectively.
The Notes will constitute Senior Debt Securities as described in the
prospectus, will be issued under the SunTrust Senior Indenture and will
constitute a separate series for purposes of the SunTrust Senior Indenture.
Payment of the principal and interest on the Notes will rank equally with
all our other unsubordinated debt. The SunTrust 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 February 29, 2000, we designated $500 million in Senior Debt Securities
as "Senior Medium-Term Notes, Series I" to be issued under our outstanding $1.5
billion shelf registration statement, $75 million of which have been issued to
date. The SunTrust Senior 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 on page 8 of 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 Comdisco 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
June 30, 2000, we had outstanding approximately $887,390,000 of domestic short-
term indebtedness, with a weighted average maturity of approximately 44 days
and bearing a weighted average interest rate of approximately 7.34% per annum.
If we do not use the net proceeds immediately, we may temporarily invest them
in short-term interest bearing obligations.
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus supplement, each of the underwriters has
severally agreed to purchase, and we have agreed to sell to each underwriter,
the principal amount of Notes set forth opposite the name of each underwriter:
<TABLE>
<CAPTION>
Principal
Amount of
Underwriter Notes
----------- ------------
<S> <C>
Salomon Smith Barney Inc.................................... $300,000,000
Banc of America Securities LLC.............................. 37,500,000
Bear, Stearns & Co. Inc..................................... 37,500,000
Deutsche Bank Securities Inc................................ 37,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................... 37,500,000
Banc One Capital Markets, Inc............................... 25,000,000
Mellon Financial Markets, LLC............................... 25,000,000
------------
Total....................................................... $500,000,000
============
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the Notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the Notes if they purchase any
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
S-4
<PAGE>
providing any notice. We cannot assure you as to the depth or liquidity of any
trading market that may develop for the Notes.
Comdisco has been advised by the underwriters that the underwriters propose
initially to offer some of the Notes directly to the public at the public
offering price set forth on the cover page of this prospectus supplement and
some of the Notes to certain dealers at the public offering price less a
concession not in excess of .25% 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 other dealers. After
the initial offering of the Notes to the public, the public offering price and
such concessions may be changed.
In connection with the offering the underwriters may purchase and sell Notes
in the open market. These transactions may include over-allotment, syndicate
covering transactions and stabilizing transactions. Over-allotment involves
syndicate sales of Notes in excess of the principal amount of Notes to be
purchased by the underwriters in the offering, which creates a syndicate short
position. Syndicate covering transactions involve purchases of the Notes in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of Notes made for the purpose of preventing or retarding a decline in
the market price of the Notes while the offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when they,
in covering syndicate short positions or making stabilizing purchases,
repurchase Notes originally sold by that syndicate member.
Any of these activities may cause the price of the Notes to be higher than
the price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
We estimate that we will spend approximately $225,000 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.
Thomas H. Patrick, a director of Comdisco, is the Executive Vice President
and Chief Financial Officer of Merrill Lynch & Co., Inc.
We have agreed to indemnify the underwriters and certain other persons
against certain liabilities, including liabilities under the Securities Act, or
to contribute payments the underwriters may be required to make in respect of
any of those liabilities.
S-5
<PAGE>
PROSPECTUS
-------------------------------------------------------------------------------
[LOGO OF COMDISCO INC.]
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.
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.
August 3, 2000
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement (SEC File No. 333-
87725) that we filed with the SEC utilizing a "shelf" registration process.
Under this shelf process, we may, from time to time 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.
You should read this prospectus and any prospectus supplement together with
additional information described under the next heading WHERE YOU CAN FIND
MORE INFORMATION.
WHERE YOU CAN FIND MORE INFORMATION
Comdisco files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may 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. Our SEC filings are also accessible
through the Internet at our web site at http://www.comdisco.com and the SEC's
web site at http://www.sec.gov. You can also inspect reports and other
information we file at the offices of the New York Stock Exchange at 20 Broad
Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until our offering has
been completed.
. Annual Report on Form 10-K for the year ended September 30, 1999,
as amended by Form 10-K/A filed with the SEC on February 24, 2000;
. Quarterly Report on Form 10-Q of Comdisco for the quarter ended
March 31, 2000 filed with the SEC on May 15, 2000;
. Quarterly Report on Form 10-Q for the quarter ended December 31,
1999, as amended by Form 10-Q/A filed with the SEC on or about
February 29, 2000;
. Current Report on Form 8-K of Comdisco filed with the SEC on March
9, 2000;
. Current Report on Form 8-K of Comdisco filed with the SEC on June
13, 2000;
. Current Report on Form 8-K of Comdisco filed with the SEC on July
27, 2000; and
. the descriptions of Comdisco's common stock and related preferred
stock purchase rights included in the registration statements filed
under the Exchange Act 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
2
<PAGE>
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. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. 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.
References in this prospectus to "Comdisco", "we", "us" and "our" are to
Comdisco, Inc., and its subsidiaries. References in this prospectus to "Prism"
are to our subsidiary, Prism Communication Services, Inc. References to
"Comdisco Ventures" are to our Comdisco Ventures division.
THE COMPANY
We provide global technology infrastructure solutions to help our customers
maximize technology reliability, efficiency and flexibility. We are aligned
into four primary business lines:
. Technology services,
. Leasing,
. Prism, and
. Comdisco Ventures.
Our technology services include:
. Business continuity,
. Managed network services,
. Desktop management solutions,
. Web-availability services, and
. Other services.
These services are designed 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 offer equipment leasing in the electronics, communications, medical and
laboratory and scientific industries and the financing of other high technology
equipment, including information technology equipment and industrial automation
equipment, to a broad range of customers, industries and geographic locations.
Through Prism, we are developing an array of services that will include:
. High-speed data connectivity,
. Local and long distance voice,
. Video conferencing,
. Virtual private networks,
. Business continuity, and
. Teleworking solutions.
Prism will provide these services over a facilities-based network consisting
of splitterless, integrated data and voice line card technology from Nortel
Networks(TM) and an optical backbone that will enable us to transport voice and
data traffic from network edge to the Internet, a LAN/WAN or other
destinations.
Comdisco Ventures provides venture leases and venture debt, which are loans
or leases combined with warrants or equity conversion options, and direct
equity financing to venture capital-backed companies. Comdisco Ventures offers
companies a broad range of equity-linked financing products, which complement
equity from venture capital firms and debt from venture-oriented banks and
asset-based lenders.
3
<PAGE>
Our businesses are diversified by customer, customer type, equipment and/or
industry segments and geographic locations. Our customers include "Fortune
1000" corporations as well as smaller organizations and start-up companies. We
do not depend on any single customer or on any single source for the
purchasing, selling or leasing of equipment, in connection with our technology
services or in our financing to venture capital-backed companies.
Our executive offices are located in the Chicago area, at 6111 North River
Road, Rosemont, Illinois 60018, telephone number (847) 698-3000. Our website is
located at http://www.comdisco.com. The information contained on our website is
not a part of this prospectus. At June 30, 2000 we had approximately 4,182
full-time employees.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Fiscal year ended September 30,
Six Months Ended ---------------------------------------------------------------------
March 31, 2000 1999 1998 1997 1996 1995
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.72 1.22 1.71 1.67 1.64 1.55
</TABLE>
These computations include us 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.
USE OF PROCEEDS
Unless we tell you otherwise in a prospectus supplement, we, or our
affiliates, will use the 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 will
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 Annual Report on Form 10-K and Quarterly Report on Form 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
operations 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 these 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 assumptions relating to our operations
4
<PAGE>
and business environment which may cause our actual results to be materially
different from any future results expressed or implied by those forward-looking
statements. Some of these uncertainties and assumptions are discussed in our
most recent Annual Report on Form 10-K.
DESCRIPTION OF OUR 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.
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 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, subordinated debt securities and zero-coupon
convertibles under separate indentures, which we will refer to as senior
indentures, subordinated indentures, and zero-coupon indentures.
We have summarized selected provisions of the Indentures below. You should
read the indentures for the full texts of provisions that may be important to
you.
We will initially issue senior debt securities under a senior indenture
dated as of September 15, 1999, between us and SunTrust Bank, as senior trustee
(the "SunTrust Senior Indenture"). The SunTrust Senior Indenture is included 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.
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:
. title of the series and whether they are senior debt securities,
subordinated debt securities or zero-coupon convertibles;
. any limit on the total principal amount of the series;
. the price or prices at which we will sell the debt securities;
. maturity date or dates;
. the per annum interest rate or rates, if any, on the series and the
date or dates from which any such interest will accrue;
. 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, including one or more
currencies, commodities, equity indices or other indices, and the
manner of determining the amount of these payments;
. 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;
5
<PAGE>
. the place or places where the principal of, and premium, if any,
and interest on the debt securities will be payable;
. any redemption dates, prices, obligations and restrictions;
. any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the series;
. the denominations in which the debt securities will be issued, if
other than $1,000 and integral multiples of $1,000;
. 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;
. provisions, if any, granting special rights to holders of the debt
securities upon the occurrence of specified events;
. 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 those events of default or
covenants are consistent with those contained in the indenture;
. any trustees, authenticating or paying agents, transfer agents or
registrars or other agents with respect to the debt securities;
. any conversion or exchange features;
. any special tax implications of the series; and
. 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 10.
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 those debt securities.
Form, Transfer and Exchange
We will normally denominate debt securities, and pay principal, interest and
any premium, in U.S. dollars. If we denominate debt securities, 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 ("DTC"), New York, New York, or its nominee, will
represent the debt securities.
6
<PAGE>
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. 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 that
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 these 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
these 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 that 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.
If we authorize any other person to make payments on debt securities for us,
we will identify them in a prospectus supplement.
Events of Default
Unless we tell you otherwise in a prospectus supplement, an event of default
under the indenture will occur if:
. we fail to pay the principal or any premium on any debt security
when due;
. we fail to deposit any sinking fund payment when due;
. we fail to pay interest or any additional amounts on any debt
security for 30 days;
. we fail to perform any other covenant in the indenture that
continues for 60 days after we have been given written notice of
that failure;
. any of our debt, other than any debt securities issued under the
indenture or non-recourse indebtedness, with a principal amount of
more than 5% of our consolidated net worth is accelerated and the
acceleration is not rescinded or annulled before a judgment is
obtained; or
. certain events in bankruptcy, insolvency or reorganization occur.
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 that action to be in the best interests of the
holders.
7
<PAGE>
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 an 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:
. pay the principal, interest and any premium on the debt securities
when due;
. maintain a place of payment;
. pay the additional amounts on the debt securities when specified;
. deliver a report to the trustee 120 days after the end of each
fiscal year reviewing our obligations under the indenture; and
. deposit sufficient funds with any paying agent on or before the due
date for any principal, interest or any premium.
No indenture will limit our ability to incur additional debt, unless we
describe this limitation to you in a prospectus supplement.
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 to individual
amounts of $400 million, representing the debt securities issued 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, in turn, keeps 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 book-entry procedures, we will not deliver securities in
certificated 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 beneficial
interests must rely on the procedures of DTC and the participant through which
that person owns its interest in order to exercise any rights of a holder under
that 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. In some cases,
the laws of some jurisdictions require that purchasers of securities take
physical delivery of those securities in certificated form. These limits and
laws may impair the ability to transfer beneficial interests in a global
security.
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
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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 deposit with
DTC. DTC also facilitates the settlement among its participants of securities
transactions, including transfers and pledges, in deposited securities through
computerized records for its participants' accounts. This eliminates the need
to exchange certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
Other organizations, including securities brokers and dealers, banks and
trust companies that work through DTC's participants, 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 DTC's 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 its 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 use an
omnibus proxy to assign any rights to consent or vote to the participant whose
account is credited with securities on a record date. 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.
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:
. 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;
. DTC ceases to be a clearing agency registered under the Securities
Exchange Act of 1934;
. We, at our option, elect to issue notes in definitive form;
. There is, or continues to be, an event of default with respect to
the notes.
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 of its
participants in that issue to be redeemed.
In order to elect to have us repay book-entry securities, a beneficial owner
must notify the trustee, through its participant, and cause the participant to
transfer the participant's interest in the global security or securities
representing those 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 those book-entry securities are
transferred by direct participants on the DTC's records.
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 these circumstances, in the event that a successor
securities depository is not obtained, securities in certificated form are
required to be printed and delivered.
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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 has been obtained from
sources that we believe to be reliable, but we take no responsibility for the
accuracy thereof.
Subordination
Payment of the principal, interest and any premium on subordinated debt
securities will, when stated in a subordinated indenture and 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 of 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:
. of any insolvency, bankruptcy or similar proceeding involving us or
our property; or
. we fail to pay the principal, interest, any premium or any other
amounts on any Senior Indebtedness when due.
Under these circumstances, any payment or distribution under the
subordinated debt securities, whether in cash, securities or other property,
which would otherwise, with the exception of 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 those 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, that 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 those
holders for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all that Senior Indebtedness in full.
As of June 30, 2000, we had approximately $3.4 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.
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:
. we are the continuing corporation; or
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. 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.
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 applicable
indenture. However, no change can affect your principal or interest payment
terms, or the percentage required to change other terms of the applicable
indenture, without your consent, as well as the consent of others similarly
affected. In addition, no supplemental indenture may directly or indirectly
modify the applicable 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
SunTrust Bank serves as trustee under the SunTrust Senior Indenture. Its
principal office is located at 25 Park Place, Atlanta, Georgia. We lease
equipment to SunTrust Bank and provide it with business continuity services. We
also have commercial banking relationships with SunTrust Bank and certain of
its affiliates.
DESCRIPTION OF OUR CAPITAL STOCK
The following is a summary and should be read with our restated charter
which we have filed as an exhibit to our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000 that is incorporated by reference into this
prospectus.
Our Restated Charter and Tracking Stock Structure
On April 20, 2000 our stockholders approved our tracking stock proposal. In
order to implement the proposal, we filed our restated charter with the
Secretary of State of Delaware on May 4, 2000. Our restated charter, among
other things:
. increased the total authorized shares of our common stock from
750,000,000 to 1,800,000,000;
. authorized our board of directors to issue common stock in
multiple series;
. designated the initial two series of common stock as Comdisco
Stock and Comdisco Ventures Stock;
. re-classified each outstanding share of our then existing common
stock as one share of Comdisco Stock; and
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. initially authorized 750,000,000 shares of Comdisco Stock and
750,000,000 shares of Comdisco Ventures Stock.
We intend Comdisco Ventures Stock to reflect the performance of Comdisco
Ventures, our venture financing business division.
We intend Comdisco Stock to reflect the performance of Comdisco Group, which
consists of our other businesses and a retained interest in Comdisco Ventures.
To implement our tracking stock structure, we have allocated, for financial
reporting purposes, all of Comdisco's consolidated assets, liabilities,
revenue, expenses and cash flow between Comdisco Group and Comdisco Ventures.
In the future, so long as Comdisco Ventures Stock is outstanding, we will
provide separate financial information about Comdisco Ventures and Comdisco
Group that is intended to allow Comdisco stockholders the ability to track the
performance of those assets, liabilities, revenues, expenses and cash flows
allocated to each group.
This description refers in many places to "Comdisco Group's retained
interest in Comdisco Ventures." This represents the ownership of Comdisco Group
in that portion of Comdisco Ventures that is not represented by outstanding
Comdisco Ventures Stock. As of the date of this prospectus, Comdisco Group's
retained interest in Comdisco Ventures is 100%, as no Comdisco Ventures Stock
is outstanding. We will adjust Comdisco Group's retained interest in Comdisco
Ventures to reflect any issuances or repurchases of Comdisco Ventures Stock
that relates to Comdisco Ventures (including the grant of any restricted stock
awards or exercises of any options granted to, Comdisco employees), capital
contributions to, or returns of capital from, Comdisco Ventures and certain
other events, including any distribution of that stock representing all of our
retained interest in Comdisco Ventures to holders of Comdisco Stock.
Under our restated charter and to the extent permitted by Delaware law, our
board of directors could, without the need to obtain stockholder approval:
. designate common stock not previously designated by the board of
directors, or re-designate previously designated but unissued
common stock, into one or more additional new series of common
stock; or
. increase or decrease from time to time the total number of
authorized shares of each designated series of common stock.
However, the board of directors could not increase the number of shares of
authorized stock of a designated series above a number which, when added to the
number of authorized shares of all designated common stock, would exceed the
total number of authorized shares of common stock. In addition, the board of
directors could not decrease the number of shares authorized of any series of
common stock below the number of shares outstanding of such series and shares
reserved for options, warrants, the rights plan and, as applicable, any
retained interest of one group by another.
At the time it creates any new series of common stock, our board of
directors would be authorized to determine and designate the number of shares
of each new series and all rights and privileges of each new series, including
dividend rights, exchange or redemption provisions, rights upon liquidation or
merger, and voting rights.
Authorized but unissued shares of Comdisco Ventures Stock and Comdisco Stock
and previously undesignated common stock would be available for issuance by
Comdisco from time to time, as determined by the board of directors, for any
proper corporate purpose. These purposes could include raising capital, paying
stock dividends, effecting a stock split, providing compensation or benefits to
employees or acquiring other companies or businesses, or designating a new
series of common stock. Comdisco would not be required to solicit your approval
for any issuance described above, unless required by the Delaware law or NYSE
or Nasdaq Stock Market rules.
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As of March 31, 2000, there were 152,278,647 shares of Comdisco Stock and no
shares of Comdisco Ventures Stock issued and outstanding.
Preferred Stock. Under our restated charter, our board of directors has the
authority to issue up to 100,000,000 shares of preferred stock in one or more
series, without stockholder approval and is authorized to fix the dividend
rights and terms, conversion rights, voting rights, redemption rights,
liquidation preferences, sinking funds and any other rights, preferences,
privileges and restrictions applicable to each series of preferred stock. Our
restated charter designates two series of preferred stock:
.200,000 shares of Series C Junior Participating Preferred Stock; and
. 200,000 shares of Series D Junior Participating Preferred Stock.
These shares are reserved for issuance in connection with Comdisco's
preferred stock purchase rights described below. None of these shares are
currently issued or outstanding.
Description of Comdisco Common Stock
Dividends. We will be permitted to pay dividends on Comdisco Stock and
Comdisco Ventures Stock out of assets of Comdisco legally available for the
payment of dividends under Delaware law. Our restated charter, however,
provides that the total amounts paid as dividends on any of Comdisco Stock or
Comdisco Ventures Stock cannot exceed the available dividend amount for each
group.
The "available dividend amount" for Comdisco Group at any time is the amount
that would then be legally available for the payment of dividends on Comdisco
Stock under Delaware law if:
.Comdisco Group and Comdisco Ventures were each independent Delaware
corporations,
. Comdisco Group had outstanding (1) a number of shares of common
stock, par value $0.10 per share, equal to the number of shares of
Comdisco Stock that are then outstanding and (2) number of shares
of preferred stock, par value $0.10 per share, equal to the number
of shares that have been attributed to Comdisco Group and are then
outstanding,
. the assumptions about Comdisco Ventures set forth in the following
paragraph were true, and
. Comdisco Group owned a number of shares of Comdisco Ventures Stock
equal to the number of shares that would be issuable with respect
to Comdisco Group's retained interest interest in Comdisco
Ventures.
The "available dividend amount" for Comdisco Ventures at any time is the
amount that would then be legally available for the payment of dividends on
Comdisco Ventures Stock under Delaware law if:
. Comdisco Ventures was an independent Delaware corporation; and
. Comdisco Ventures had outstanding a number of shares of common
stock, par value $0.10 per share, equal to the number of shares of
Comdisco Ventures Stock that are then outstanding plus the number
of shares of Comdisco Ventures Stock that would be issuable with
respect to Comdisco Group's retained interest in Comdisco
Ventures.
The amount legally available for the payment of dividends on common stock of
a corporation under Delaware law is generally limited to:
. the total assets of the corporation,
. less its total liabilities,
. less the aggregate par value of the outstanding shares of its
common and preferred stock.
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However, if that amount is not greater than zero, the corporation may also
pay dividends out of the net profits for the corporation for the fiscal year in
which the dividend is declared and/or the preceding fiscal year. As mentioned
above, these restrictions will form the basis for calculating the available
dividend amounts for Comdisco Group or Comdisco Ventures. These restrictions
will also form the basis for calculating the aggregate amount of dividends that
Comdisco as a whole can pay on its common stock (regardless of series). Thus,
net losses of any business group, and any dividends and distributions on, or
repurchases of, any series of common stock, will reduce the assets legally
available for dividends on other series of common stock.
Subject to the above limitations, we have the right to pay dividends on
none, any or all of the series of common stock, in equal or unequal amounts,
notwithstanding the performance of any business group, the amount of assets
available for dividends on any series, the amount of prior dividends declared
on any series or any other factor. Dividend payments may also be subject to any
other limitations set forth in any future series of preferred stock or in any
agreements binding on Comdisco from time to time.
At the time we pay any dividend on the outstanding shares of Comdisco
Ventures Stock, we will credit to Comdisco Group, and charge against Comdisco
Ventures a corresponding amount in respect of Comdisco Group's retained
interest in that group for purposes of calculating available dividend amounts
for future dividends. Specifically, the corresponding amount will equal (1) the
aggregate amount of that dividend times (2) a fraction, the numerator of which
is the number of shares that would be issuable with respect to Comdisco Group's
retained interest in Comdisco Ventures and the denominator of which is the
number of shares of Comdisco Ventures Stock then outstanding.
Mandatory Dividend, Redemption or Conversion of Comdisco Ventures Stock. If
we sell or dispose of all or substantially all of the properties and assets of
Comdisco Ventures in a transaction other than one described below under "--
Exceptions to the Dividend, Redemption or Conversion Requirement for Comdisco
Ventures Stock if a Disposition Occurs" our board of directors will decide if
we will:
. pay a dividend to the holders of Comdisco Ventures Stock in cash
and/or securities or other property having a value equal to their
proportionate interest in the net proceeds of the disposition; or
. if the disposition involves all of the properties and assets,
redeem all outstanding shares of Comdisco Ventures Stock in
exchange for cash and/or securities or other property having a
value equal to the proportionate interest of the holders of
Comdisco Ventures Stock in the net proceeds of the disposition; or
. if the disposition involves substantially all, but not all, of the
properties and assets, redeem a number of whole shares of Comdisco
Ventures Stock having an aggregate average market value, during
the twenty-day trading period beginning on the sixteenth trading
day following consummation of that transaction, equal to the
proportionate interest of the holders of Comdisco Ventures Stock
in the value of the net proceeds of the disposition; or
. convert each outstanding share of Comdisco Ventures Stock into a
number of shares of Comdisco Stock equal to 115% of the ratio of
the average market value of one share of Comdisco Ventures Stock
to the average market value of one share of Comdisco Stock during
the twenty-day trading period ending on the fifth trading day
prior to the first public announcement of that disposition
transaction.
We will determine the proportionate interest of the holders of Comdisco
Ventures Stock in the net proceeds of a disposition by assuming that Comdisco
Group's retained interest in Comdisco Ventures is represented by issued and
outstanding shares of Comdisco Ventures Stock. Under these circumstances, our
board of directors in its sole discretion, will determine the fair market value
of all assets, except for cash and unrestricted publicly traded securities.
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We may only pay a dividend or redeem shares of a series of common stock if
we have legally available funds under Delaware law. We will pay the dividend or
complete the redemption or conversion on or prior to the ninetieth trading day
following the disposition date.
For purposes of determining whether a disposition has occurred,
"substantially all of the properties and assets" attributed to Comdisco
Ventures means a portion of the properties and assets that represents at least
80% of the value of the properties and assets attributed to Comdisco Ventures.
The "net proceeds" of a disposition means an amount equal to what remains of
the gross proceeds of the disposition after any payment of, or reasonable
provision is made as determined by our board of directors for:
. any taxes payable by us, or which would have been payable but for
the utilization of tax benefits attributable to Comdisco Group, in
respect of the disposition or in respect of any resulting dividend
or redemption;
. any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses; and
. any liabilities of or attributed to Comdisco Ventures, including,
without limitation, any liabilities for deferred taxes, any
indemnity or guarantee obligations incurred in connection with the
disposition or otherwise, any liabilities for future purchase
price adjustments and any preferential amounts plus any
accumulated and unpaid dividends in respect of the preferred stock
attributed to Comdisco Ventures.
We may elect to pay the dividend or redemption price either in the same form
as the proceeds of the disposition or in any other combination of cash,
securities or other property that our board of directors or, in the case of
securities that have not been publicly traded for a period of at least fifteen
months, an independent investment banking firm, determines will have an
aggregate market value of not less than the value of the net proceeds.
Exceptions to the Dividend, Redemption or Conversion Requirement for
Comdisco Ventures Stock if a Disposition Occurs. We are not required to take
any of the above actions for any disposition of all or substantially all of the
properties and assets attributed to Comdisco Ventures in a transaction or
series of related transactions that results in our receiving for those
properties and assets primarily equity securities of any entity which:
. acquires those properties or assets or succeeds to the business
conducted with those properties or assets or controls that
acquirer or successor; and
. is primarily engaged or proposes to engage primarily in one or
more businesses similar or complementary to the businesses
conducted by Comdisco Ventures prior to the disposition, as
determined by our board of directors.
The purpose of this exception is to enable us technically to dispose of
properties or assets of Comdisco Ventures to other entities engaged or
proposing to engage in businesses similar or complementary to those of that
group without requiring a dividend on, or a conversion or redemption of,
Comdisco Ventures Stock, so long as we hold an equity interest in that entity.
A joint venture in which we own a direct or indirect equity interest is an
example of such an acquirer. We are not required to control that entity,
whether by ownership or contract provisions. As a result of these exceptions,
holders of Comdisco Ventures Stock could find themselves holding a tracking
stock that tracks the performance of a set of assets owned by an entity or
entities supervised by management other than Comdisco Ventures.
We are also not required to effect a dividend, redemption or conversion if:
. the disposition is of all or substantially all of our properties
and assets in one transaction or a series of related transactions
in connection with our dissolution, liquidation or winding up and
the distribution of our assets to stockholders;
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. the disposition is on a pro rata basis, such as in a spin-off, to
the holders of all outstanding shares of Comdisco Ventures Stock;
. the disposition is made to any person or entity controlled by us,
as determined by the board of directors;
. the disposition is made at a time when only one series of common
stock is outstanding; or
. before the thirtieth trading day following the disposition, we
have mailed a notice stating that we are exercising our right to
convert all of the outstanding shares of Comdisco Ventures Stock,
as applicable, into newly issued shares of Comdisco Stock as
contemplated under "Conversion of Comdisco Ventures Stock at
Option of Comdisco" below.
Sale of less than substantially all the assets of Comdisco Ventures. We
currently intend to allocate to Comdisco Ventures for its benefit the proceeds
from any disposition of less than all or substantially all of the Comdisco
Ventures properties and assets. However, our board of directors has the right,
to determine whether to allocate those proceeds differently, subject to the
fiduciary duties owed by the board of directors to all Comdisco stockholders.
Conversion of Comdisco Ventures Stock at Option of Comdisco. We will have
the right, at any time, to convert shares of Comdisco Ventures Stock into a
number of shares of Comdisco Stock initially equal to 125% of the ratio of the
average market value of one share of Comdisco Ventures Stock to the average
market value of one share of Comdisco Stock over a twenty-day trading period
ending on the fifth trading day prior to the mailing of the conversion notice
for conversions occurring in the first quarter after the original issuance of
Comdisco Ventures Stock. The percentage applied to the ratio of market values
will decline ratably each quarter over a period of ten quarters to 115%.
If, however, we convert Comdisco Ventures Stock into Comdisco Stock as a
result of tax law changes that subject Comdisco or our stockholders to adverse
tax consequences as a result of our tracking stock structure, we will have the
right to convert shares of Comdisco Ventures Stock into a number of shares of
Comdisco Stock equal to 110% of the ratio of the average market values of the
Comdisco Ventures Stock and the Comdisco Stock described above, regardless of
when that adverse tax law change takes place.
These provisions allow us the flexibility to recapitalize our outstanding
series of common stocks into one class of common stock that would, after the
recapitalization, represent an equity interest in all of our businesses. The
optional conversion could be exercised at any future time if our board of
directors determines that, under the facts and circumstances then existing, an
equity structure consisting of multiple series of common stock was no longer in
the best interests of all of our stockholders.
The conversion ratio that will result in the specified premium will be
calculated based on the average market value of one share of Comdisco Ventures
Stock as compared to the average market value of one share of Comdisco Stock
during the twenty consecutive trading day period ending on, and including, the
fifth trading day immediately preceding the date on which we mail the notice of
conversion to holders of Comdisco Ventures Stock.
Conversion would be based upon the relative market values of Comdisco Stock,
on the one hand, and Comdisco Ventures Stock, on the other. Many factors could
affect the market values of Comdisco Stock and Comdisco Ventures Stock,
including our results of operations and those of each group, trading volume and
general economic and market conditions. Market values could also be affected by
decisions by our board of directors or our management that investors perceive
to affect adversely one series of common stock compared to the other. These
decisions could include changes to our management and allocation policies,
transfers of assets between groups, allocations of corporate opportunities and
financing resources between the groups and changes in dividend policies.
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Redemption of Comdisco Ventures Stock in Exchange for Stock of Subsidiary.
Although it currently has no intention to do so, our board of directors may
redeem on a pro rata basis all of the outstanding shares of Comdisco Ventures
Stock for shares of the common stock of one or more of our wholly owned
subsidiaries which will then own all of the assets and liabilities attributed
to Comdisco Ventures, and no other assets or liabilities. We may redeem shares
of Comdisco Ventures Stock for subsidiary stock only if we have legally
available funds under Delaware law. In connection with any exchange, in the
event that we have a retained interest in Comdisco Ventures, we could retain
any remaining shares of common stock of the subsidiary holding Comdisco
Ventures' assets or distribute those shares as a dividend on Comdisco Stock.
As a result of a redemption in exchange for stock of a subsidiary, holders
of the series of common stock redeemed would hold securities of a separate
legal entity. This redemption could be authorized by the board of directors at
any time in the future if it determines that, under the facts and circumstances
then existing, an equity structure comprised of multiple series of common stock
designated as tracking stocks is no longer in the best interests of all of our
stockholders as a whole.
Because Comdisco Ventures would most likely be subject to the registration
requirements of the Investment Company Act of 1940 if the exchange described
above were to occur, it is unlikely that our board of directors would redeem
Comdisco Ventures Stock in the manner described in this section.
Voting Rights
Holders of Comdisco Stock and Comdisco Ventures Stock will generally vote
together as a single class on all matters requiring a stockholder vote.
On all matters as to which all series of Comdisco's common stock will vote
together as a single class:
. each share of Comdisco Stock will have one vote; and
. each share of Comdisco Ventures Stock will have a number of votes
(or a fraction of a vote) based on the ratio of the average market
value of one share of Comdisco Ventures Stock to the average
market value of one share of Comdisco Stock during the 20
consecutive trading days ending on (and including) the record date
of the vote; provided that until the thirty first trading day for
Comdisco Ventures Stock, each share of Comdisco Ventures Stock
will have one vote.
For example, if the average market value of one share of Comdisco Stock for
the period specified above was $40.00, and the average market value of one
share of the Comdisco Ventures Stock for the period specified above was $20.00,
each share of Comdisco Stock would have one vote and each share of Comdisco
Ventures Stock would have 0.5 votes based on the following calculation:
$20.00
---- = .5 votes per share
$40.00
However, in the event that the foregoing calculation results in the holders
of Comdisco Ventures Stock holding more than 35% of the total voting power of
all outstanding shares of common stock, the vote of each share of Comdisco
Ventures Stock that exceeds that amount will be reduced so that all of the
outstanding shares of Comdisco Ventures Stock in the aggregate represent 35% of
the total voting power of all outstanding shares of Comdisco's common stock.
Subject to the 35% limitation, the voting formula above is intended to
equate the relative voting rights of the series of common stock to their
relative market capitalization at the time of each adjustment. The periodic
adjustments could influence an investor interested in acquiring and maintaining
a fixed percentage of the voting power of Comdisco's outstanding stock to
acquire that percentage of all series of common stock, and would limit the
ability of investors in one class to acquire for the same consideration
relatively more or less votes per share than investors in the other series.
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Because, of the limitations on the voting power of Comdisco Ventures Stock,
when the holders of Comdisco Ventures Stock and Comdisco Stock vote together as
a single class, the holders of Comdisco Stock will be in a position to control
the outcome of a majority vote even if the matter involves a conflict of
interest between the holders of Comdisco Ventures Stock and Comdisco Stock.
If shares of only one series of common stock are outstanding, each share of
that series will have one vote. If any series of common stock is entitled to
vote as a separate class with respect to any matter, each share of that series
will, for purposes of that vote, have one vote on that matter.
We will set forth the number of outstanding shares of Comdisco Ventures
Stock and Comdisco Stock in our annual and quarterly reports filed pursuant to
the Exchange Act, and disclose in any proxy statement for a stockholder meeting
the number of outstanding shares and per share voting rights of each share of
Comdisco Ventures Stock and Comdisco Stock.
The holders of Comdisco Ventures Stock will not have any rights to vote
separately as a class on any matter coming before our stockholders, except for
the limited class voting rights provided under Delaware law or by Nasdaq Stock
Market rules. Matters that provide for separate class voting include amendments
to our restated charter that would change the par value of Comdisco Ventures
Stock or alter or change the powers, preferences or special rights of shares of
Comdisco Ventures Stock so as to adversely affect the holders of Comdisco
Ventures Stock.
The shares of Comdisco Ventures Stock designated by the board to reflect the
retained interest in Comdisco Ventures held by Comdisco Group do not constitute
outstanding shares of our common stock. Accordingly, these shares would not be
voted on any matter by Comdisco Group, including any matter requiring the vote
of the holders of Comdisco Ventures Stock as a separate class.
Liquidation
In the event of our voluntary or involuntary liquidation, dissolution or
winding-up, the holders of Comdisco Stock and Comdisco Ventures Stock will be
entitled to receive our assets, if any, remaining for distribution to
stockholders on a per share basis in proportion to the liquidation units per
share of each series. Our assets remaining for distribution will be determined
after payment of, or provision for, all liabilities, including contingent
liabilities, and payment of the liquidation preference payable to any holders
of our preferred stock. Each share of Comdisco Stock shall have one liquidation
unit. Each share of Comdisco Ventures Stock will have a number of liquidation
units, including a fraction of one liquidation unit, equal to the ratio of
(1)the average market value of a share of Comdisco Ventures Stock
during the twenty consecutive trading days prior to February 28, 2001,
to
(2) the average of the market value of one share of Comdisco Stock
over the same period, expressed as a decimal fraction rounded to the
nearest five decimal places.
If the voluntary or involuntary dissolution, liquidation or winding up of
Comdisco occurs prior to February 28, 2001, the average market value of one
share of Comdisco Ventures Stock will be determined based on:
(1)the twenty consecutive trading day period immediately prior to
the dissolution, liquidation or winding-up event, or
(2)the actual number of consecutive trading days in the event that
the dissolution, liquidation or winding-up event, if that event occurs
prior to the 21st trading day after the effective date of our restated
charter.
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After the number of liquidation units with respect to Comdisco Ventures
Stock has been determined in the manner above, the number will not be changed
except as described below. Thus, the liquidation rights of the holders of the
Comdisco Ventures Stock or Comdisco Stock may not bear any relationship to the
relative market values or the relative voting rights of that series.
The liquidation units of the Comdisco Ventures Stock and Comdisco Stock were
determined by Comdisco in consultation with our financial advisors and are
based upon, among other factors, each group's initial level of debt and equity
capitalization, each group's recent historical financial performance, the
market prices of shares of comparable companies that are publicly traded and
the current state of the markets for public offerings and other stock
transactions.
If Comdisco subdivides, by stock split, reclassification or otherwise, or
combines, by reverse stock split, reclassification or otherwise, the
outstanding shares of Comdisco Ventures Stock or Comdisco Stock, the number of
liquidation units of the Comdisco Ventures Stock or Comdisco Stock, as
applicable, shall be adjusted as determined by the board of directors so as to
avoid any dilution in the aggregate liquidation rights of either series of
common stock.
In the absence of a public trading market for the shares of Comdisco
Ventures Stock, our board of directors will exercise its good faith judgment to
determine the market value of a share of that stock for purposes of this
formula.
In the case of our dissolution, liquidation or winding up:
. no holder of Comdisco Stock will have any special right to receive
specific assets of Comdisco Group; and
. no holder of Comdisco Ventures Stock will have any special right
to receive specific assets of Comdisco Ventures.
Neither a merger nor consolidation of Comdisco into or with any other
corporation, nor any sale, transfer or lease of all or any part of our assets,
will, alone, be deemed a liquidation or winding up of Comdisco, or cause the
dissolution of Comdisco, for purposes of these liquidation provisions.
Comdisco considers that its complete liquidation is a remote contingency,
and its financial advisors believe that, in general, these liquidation
provisions are immaterial to the value of Comdisco Ventures Stock.
Determinations by the Board
Any determinations made by our board of directors in good faith under our
restated charter or in any certificate of designation filed pursuant to our
restated charter would be final and binding on all stockholders of Comdisco,
subject to rights under applicable Delaware law and under the federal
securities laws.
Preemptive Rights
Holders of Comdisco Ventures Stock will not have any preemptive rights to
subscribe for any additional shares of capital stock or securities that we may
issue in the future.
Amended and Restated Rights Agreement
We have issued and will issue preferred stock purchase rights to all holders
of our common stock under a rights agreement amended and restated as of May 4,
2000, between Comdisco and ChaseMellon Shareholder Services L.L.C., as rights
agent.
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The restated rights agreement provides that:
. each right in effect at the date of restatement be redesignated as
a Comdisco Stock right, which will continue to allow holders of
outstanding Comdisco Stock to purchase shares of Series C Junior
Participating Preferred Stock of Comdisco if a distribution date
occurs;
. for each share of Comdisco Stock issued between the date of the
restated rights agreement and the expiration date of the rights,
we will issue one Comdisco Stock right which will allow holders to
purchase shares of Series C Junior Participating Preferred Stock
of Comdisco if a distribution date occurs; and
. for each share of Comdisco Ventures Stock issued between the date
of the restated rights agreement and the expiration date of the
rights, we will issue one Comdisco Ventures Stock right which will
allow holders to purchase shares of Series D Junior Participating
Preferred Stock of Comdisco if a distribution date occurs.
We refer to the Comdisco Stock rights and the Comdisco Ventures Stock rights
collectively as the "rights."
A "distribution date" will occur upon the earliest of:
. the tenth day, or a later day determined by our board of
directors, after a public announcement that a person or group of
affiliated or associated persons other than us, any subsidiary of
Comdisco, or any of our or our subsidiaries' employee benefit
plans (an "acquiring person") has acquired beneficial ownership of
15% or more of the voting power of all the shares of our common
stock; or
. the tenth business day, or a later day determined by our board of
directors, following the commencement of or announcement of the
intention to commence a tender or exchange offer that would result
in that person or group beneficially owning 15% or more of the
voting power of all the shares of our common stock; or
. the tenth business day after our board of directors declares a
person to be an "adverse person."
Any person or group that beneficially owns 20% or more of our outstanding
common stock on the effective date of the amendment and statement of the rights
plan, which we refer to as an "existing holder," will not be deemed an
"acquiring person" until that existing holder acquires beneficial ownership of
30% or more of the voting power of our outstanding common stock. An adverse
person is a person or group (1) which beneficially owns 10% or more of the
voting power of our outstanding common stock and (2) which our board of
directors has determined has interests adverse to ours based on requirements
set out in the amended and restated rights agreement.
Until the distribution date, the rights will not be represented by a
separate certificate and may be transferred only with their respective series
of common stock.
Following the distribution date, holders of rights other than any acquiring
person or adverse person (whose rights will thereupon become null and void)
will be entitled to purchase from us:
. in the case of a Comdisco right, one one-thousandth of a share of
Series C Junior Participating Preferred Stock at a purchase price
of $75, subject to adjustment; and
. in the case of a Comdisco Ventures Stock right, one one-thousandth
of a share of Series D Junior Participating Preferred Stock at a
purchase price of $180, subject to adjustment.
The purchase prices discussed above are referred to as the "Series C
purchase price" and the "Series D purchase price."
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Unless the rights are earlier redeemed, if any person or group becomes an
acquiring person or our board of directors declares a person to be an "adverse
person":
. a Comdisco Stock right will entitle its holder other than any
acquiring person or adverse person to purchase, at the Series C
purchase price, a number of shares of Comdisco Stock with a market
value equal to twice that purchase price;
. any Comdisco Ventures Stock right will entitle its holder other
than any acquiring person or adverse person to purchase, at the
Series D purchase price, a number of shares of Comdisco Ventures
Stock with a market value equal to twice that purchase price; and
. all rights of any acquiring person or adverse person will become
null and void.
After the rights have been triggered, the board of directors may exchange
the rights, other than rights owned by an acquiring person or adverse person,
at an exchange ratio of:
. one share of Comdisco Stock per Comdisco Stock right, subject to
adjustment, and
. one share of Comdisco Ventures Stock per Comdisco Ventures Stock
right, subject to adjustment.
Unless the rights are earlier redeemed, if, following the time a person
becomes an acquiring person or adverse person:
. Comdisco is acquired in a merger or other business combination
transaction and Comdisco is not the surviving corporation;
. any person consolidates or merges with Comdisco and all or part of
the common stock is converted or exchanged for securities, cash or
property of any other person or of Comdisco; or
. 50% or more of Comdisco's assets or earning power is sold or
transferred,
then, each right will entitle its holder other than any acquiring person to
purchase, for the applicable purchase price, a number of shares of common stock
of the surviving entity in that merger, consolidation or other business
combination of, or the purchaser in, that sale or transfer with a market value
equal to twice the applicable purchase price.
The rights will expire on November 17, 2007, unless we extend or terminate
them as described below.
At any time until the close of business on the fifteenth day following a
public announcement that there is an acquiring person or our board of directors
declares a person to be an "adverse person", our board of directors may redeem
all of the rights at a price of $0.01 per right. On the redemption date, the
right to exercise the rights will terminate and the only right of the holders
of rights will be to receive that redemption price.
Prior to a distribution date, the board of directors may, without the
approval of any holders of rights, supplement or amend any provision of the
amended and restated rights agreement in any manner, whether or not that
supplement or amendment is adverse to any holders of the rights. From and after
a distribution date, the board of directors may, without the approval of any
holders of rights, supplement or amend the amended and restated rights
agreement only:
. to cure any ambiguity,
. to correct or supplement any provision that may be defective or
inconsistent with any other provision, or
. in any manner that it may deem necessary or desirable and which
does not materially adversely affect the interests of the holders
of rights other than an acquiring person, adverse person and their
associates and affiliates.
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A holder of a right will not have any rights as a stockholder of Comdisco,
including the right to vote or to receive dividends, until a right is
exercised.
The amended and restated rights agreement contains provisions designed to
prevent the inadvertent triggering of the rights. A person will not be deemed
an acquiring person if the board of directors of Comdisco approved the
acquisition by that person of shares of common stock prior to that person
otherwise becoming an acquiring person. In addition, the amended and restated
rights agreement gives a person who has inadvertently acquired 15% or more of
the voting power of all series of our common stock and does not have any
intention of changing or influencing the control of Comdisco the opportunity to
sell a sufficient number of shares so that the acquisition would not trigger
the rights. In addition, the rights will not be triggered and a divestiture of
shares will not be required if a person becomes the holder of 15% or more, or
30% or more in the case of an existing holder, of the voting power of all of
our series of common stock, solely as a result of either (1) the reduction of
our outstanding common stock as the result of our repurchase of any of our
common stock or (2) any adjustment of the voting rights of Comdisco Ventures
Stock in accordance with the provisions of our restated charter. However, any
person who exceeds that threshold as a result of our stock repurchases or a
voting rights adjustment will trigger the rights if the person subsequently
acquires additional shares of our common stock. Our board may also further
amend the amended and restated rights agreement in the future, including in
connection with any distribution of Comdisco Group's retained interest in
Comdisco Ventures, to compensate for any unintended effects of the variable
voting rights associated with Comdisco Ventures Stock.
The restated rights agreement will permit disinterested stockholders to
acquire additional shares of our common stock or of an acquiring company at a
substantial discount in the event of those changes in control described in the
restated rights agreement. The restated rights agreement is intended to
discourage anyone from buying shares of common stock having more than 15% of
the voting power of all series of our common stock without prior approval by
the board of directors.
We have filed the form of amended and restated rights agreement with the SEC
as an exhibit to the registration statement of which this prospectus is a part.
Other Provisions of Our Restated Charter, Bylaws and Delaware Law
Authorized Shares. Our restated charter provides that we may from time to
time designate and issue shares of common stock or preferred stock in one or
more series, the terms of which will be determined by our board of directors,
and authorize and issue additional common stock of any previously designated
series. Our board of directors, is authorized to fix the dividend rights and
terms, conversion rights, voting rights, redemption rights, liquidation
preferences, and any other rights, preferences, privileges and restrictions
applicable to each series of common stock or preferred stock. We will not
solicit further approval of our stockholders to designate, authorize or issue
those shares unless our board of directors believes that approval is advisable
or is required by NYSE or Nasdaq Stock Market rules or Delaware law. The
purpose of authorizing the board of directors to determine these rights and
preferences is to eliminate delays associated with a stockholder vote on
specific issuances. This authority however could enable our board of directors
to issue shares to persons friendly to current management which could render
more difficult or discourage an attempt to obtain control of Comdisco by means
of a merger, tender offer, proxy contest or otherwise, and thereby protect the
continuity of our management. These additional shares also could be used to
dilute the stock ownership of persons seeking to obtain control of Comdisco.
Classified Board of Directors; Removal of Directors; Limitation on Ability
to Call Special Meetings. Our restated charter provides that our board of
directors shall be divided into three classes and shall consist of such number
of directors as is set in our bylaws. Our bylaws provide that the board of
directors will be divided into three classes of an approximately equal number
of directors with each class of directors having a three-year term of office.
Our restated charter also provides that a director may be removed for cause
only upon the vote of two-thirds of the voting stock of Comdisco. These
provisions in our restated charter and bylaws may only be amended by a vote of
two-thirds of the voting power of all series of common stock of Comdisco voting
together as a class.
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Our bylaws further provide that stockholders of Comdisco may not call
special meetings of the stockholders.
The provisions regarding classification of our board of directors, removal
of directors and the limitations on the stockholders' ability to call special
meetings may have the effect of discouraging anyone from attempting to acquire
control of Comdisco and thereby discouraging open market purchases of any
series of common stock.
Business Combinations with Substantial Stockholders. Our restated charter
provides that business combinations with substantial stockholders will require
the vote of two-thirds of the voting stock of Comdisco to approve that
transaction.
A "substantial stockholder" is defined as a person, other than a member of
our board of directors as of September 30, 1985 or any of our employee benefit
plans, who or which beneficially owns 10% or more of our outstanding shares of
common stock.
A "business combination" is defined to mean:
. a merger or consolidation of Comdisco with a substantial
stockholder;
. a sale, lease, exchange, transfer or other disposition of all or
any substantial part of the assets of Comdisco or any subsidiary
to a substantial stockholder (defined as 10% of the total book
value of the assets);
. a merger or consolidation of a substantial stockholder with
Comdisco or any subsidiary;
. a sale, lease, exchange, transfer or other disposition of all or
any substantial part of the assets of a substantial stockholder to
Comdisco or a subsidiary;
. any re-classification of our common stock or any recapitalization
of Comdisco consummated within five years after a substantial
stockholder became a substantial stockholder;
. issuance of any securities of Comdisco or any subsidiary to a
substantial stockholder, except proportionately as a stockholder;
. acquisition by Comdisco or any subsidiary of securities of a
substantial stockholder; or
. any agreement providing for any of these types of transactions.
The business combination will not need to receive the two-thirds vote
outlined above if the consideration to be paid by the interested stockholder in
the business combination meets various tests set forth in our restated charter,
designed to ensure that the form and amount of consideration to be paid by the
interested stockholder is fair to the other holders of our common stock.
The business combination provisions outlined above may have the effect of
discouraging attempts to acquire control of Comdisco and thereby of
discouraging open market purchases of our common stock.
Stockholder Nominations and Proposals. Our bylaws provide that 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.
Similarly, to submit proposals at an annual meeting, a stockholder must
provide our corporate secretary of notice of the proposal 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:
. a description of the proposal;
. the reasons for presenting the proposal at the annual meeting;
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. the text of any resolutions to be presented;
. the stockholder's name and address and number of shares held;
. any material interest of the stockholder in the proposal; and
. a representation that the stockholder intends to appear at the
meeting, in person or by proxy, to submit the proposal.
In addition, the bylaws provide that only the board of directors, chairman
of the board, chief executive officer or president of Comdisco can call special
meetings of stockholders and that the only business that may be brought before
a special meeting is that business specified in the notice of that meeting.
These procedural requirements could have the effect of delaying or preventing
the submission of matters proposed by any stockholder to a vote of the
stockholders.
Delaware Law. Section 203 of the General Corporation Law of the State of
Delaware applies to Comdisco. Generally, Section 203 limits the ability of an
"interested stockholder" to effect various business combinations with Comdisco
for a three-year period following the time that that stockholder became an
interested stockholder. An "interested stockholder" is defined as a holder of
15% or more of our outstanding voting stock.
An interested stockholder may engage in a business combination transaction
with Comdisco within the three-year period only if:
. our board of directors approved the transaction before the
stockholder became an interested stockholder or approved the
transaction in which the stockholder became an interested
stockholder;
. the interested stockholder acquired at least 85% of our voting
stock in the transaction in which it became an interested
stockholder; or
. our board of directors and the holders of shares entitled to cast
two-thirds of the votes entitled to be cast by all of our
outstanding voting shares held by all disinterested stockholders
approve the transaction.
Listing
We list our Comdisco Stock on The New York Stock Exchange and The Chicago
Stock Exchange under the symbol "CDO". We have applied to list our Comdisco
Ventures Stock on the NASDAQ Stock Market.
Stock Transfer Agent and Registrar
ChaseMellon Shareholder Services L.L.C. will act as the registrar and
transfer agent for Comdisco Stock and Comdisco Ventures Stock.
Anti-takeover Considerations
The existence of multiple series of common stock could present complexities
and could pose obstacles, financial and otherwise, to an acquiring person. The
existence of multiple series of common stock could prevent stockholders from
profiting from an increase in the market value of their shares as a result of a
change in control of Comdisco by delaying or preventing that change in control.
Additional shares of common stock are available for future issuance without
further stockholder approval. One of the effects of the existence of authorized
and unissued common stock and preferred stock could be to enable the board to
issue shares to persons friendly to current management which could render more
difficult or discourage an attempt to obtain control of Comdisco by means of a
merger, tender offer, proxy contest or otherwise, and thereby protect the
continuity of our management. These additional shares also could be used to
dilute the stock ownership of persons seeking to obtain control of Comdisco.
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For additional anti-takeover considerations, see "--Other Provisions of Our
Restated Charter, Bylaws and Delaware Law", beginning on page 22.
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 restated 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:
. violated their duty of loyalty to us or our stockholders;
. acted in bad faith;
. knowingly or intentionally violated the law;
. authorized illegal dividends or redemptions; or
. 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, including any capacity 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, including an injunction or rescission for breach of the
director's duty of care.
PLAN OF DISTRIBUTION
We may sell any series of debt securities:
. through underwriters or dealers;
. through agents; or
. directly to one or more purchasers.
The prospectus supplement will include:
. the initial public offering price;
. the names of any underwriters, dealers or agents;
. the purchase price of the debt securities;
. our proceeds from the sale of the debt securities;
. any underwriting discounts or agency fees and other underwriters'
or agents' compensation; and
. 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.
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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 to you no underwriters or agents would be involved.
Underwriters, dealers and agents that participate in the distribution of the
debt securities may be underwriters as defined in the Securities Act. 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 the Securities Act. We may enter into agreements with
underwriters, dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act, or to contribute
with respect to payments that they may be required to make, and to reimburse
those persons for expenses.
To facilitate a debt securities offering, any underwriter may engage in
over-allotment, stabilizing transactions, short covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
. 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.
We are not making an offer of debt securities in any state that does not
permit this kind of offer.
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.
LEGAL OPINIONS
Jeremiah M. Fitzgerald, Esq., our Vice President and Chief Legal Officer, or
another of our lawyers, will issue an opinion about the legality of the
securities for us. Mr. Fitzgerald owns 66,292 shares of our common stock and
holds options granted under our stock option plans to purchase an additional
164,415 shares of common stock. We expect Brown & Wood llp, New York, New York
to advise any underwriters, agents and dealers.
EXPERTS
KPMG 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 LLP as
experts in accounting and auditing in giving the report.
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$500,000,000
9 1/2% Senior Notes Due August 15, 2003
------------
PROSPECTUS SUPPLEMENT
August 3, 2000
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Salomon Smith Barney
Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
Banc One Capital Markets, Inc.
Mellon Financial Markets, LLC
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