<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1998
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
FINGERHUT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MINNESOTA 41-1396490
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Code)
</TABLE>
4400 BAKER ROAD
MINNETONKA, MINNESOTA 55343
(612) 932-3100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
MICHAEL P. SHERMAN, ESQ.
FINGERHUT COMPANIES, INC.
4400 BAKER ROAD
MINNETONKA, MINNESOTA 55343
(612) 932-3100
(Name, address and telephone number,
including area code, of agent for service)
------------------------------
WITH A COPY TO:
KRIS SHARPE, ESQ.
FAEGRE & BENSON LLP
2200 NORWEST CENTER
90 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
------------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following
box. /X/
CALCULATION OF REGISTRATION FEE (1)
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT (1) PRICE (1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Senior Debt Securities and Subordinated Debt
Securities (collectively, "Debt
Securities") (3)(4), Preferred Stock (5),
Depositary Shares (5), Common Stock (5)
and Securities Warrants (6) (together with
the Debt Securities, Preferred Stock,
Depositary Shares and Common Stock, the
"Securities")............................. $400,000,000 100% $400,000,000 $111,200
</TABLE>
(1) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3. Securities registered hereby may be
offered for U.S. dollars or the equivalent thereof in foreign currencies,
currency units or composite currencies. Securities registered hereby may be
sold separately or together with other securities registered hereby.
(CONTINUING FOOTNOTES ON FOLLOWING PAGE)
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o).
(3) In the case of Debt Securities issued at an original issue discount, such
greater principal amount as shall result in an aggregate offering price of
the amount set forth above or, in the case of Debt Securities denominated in
a currency other than U.S. dollars or in a composite currency, such U.S.
dollar amount as shall result from converting the aggregate public offering
price of such Debt Securities in U.S. dollars at the spot exchange rate in
effect on the date such Debt Securities are initially offered to the public.
(4) The Debt Securities to be offered hereunder will consist of one or more
series of Senior Debt Securities or Subordinated Debt Securities, or any
thereof, as more fully described herein.
(5) Such indeterminate number of shares of Preferred Stock, Depositary Shares
and Common Stock, as may be issued from time to time at indeterminate
prices.
(6) Securities Warrants will represent rights to purchase Senior Debt
Securities, Subordinated Debt Securities, Preferred Stock, Depositary Shares
or Common Stock registered hereby. Because the Securities Warrants will
provide a right only to purchase the Senior Debt Securities, Subordinated
Debt Securities, Preferred Stock, Depositary Shares and Common Stock offered
hereunder, no additional registration fee is required.
<PAGE>
PROSPECTUS
[LOGO]
FINGERHUT COMPANIES, INC.
4400 BAKER ROAD
MINNETONKA, MINNESOTA 55343
(612) 932-3100
$400,000,000
FINGERHUT COMPANIES, INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
SECURITIES WARRANTS
------------------
We will provide the specific terms of these securities in supplements to this
prospectus.
You should read this prospectus and the applicable supplement carefully before
you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
This prospectus is dated November , 1998.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may sell either separately or in units:
- Debt Securities (as defined under "Description of Debt Securities");
- Preferred Stock (as defined under "Description of Preferred Stock");
- Common Stock (as defined under "Description of Common Stock"); and
- Securities Warrants (as defined under "Description of Securities
Warrants");
in one or more offerings up to a total dollar amount of $400,000,000.
This prospectus provides you with a general description of the securities.
Each time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. Such prospectus
supplement may also add, update or change information contained in this
prospectus. You should read this prospectus and the applicable prospectus
supplement together with the additional information described under the heading
"Where You Can Find More Information."
The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the SEC web site or at the SEC offices mentioned under
the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its Public Reference
Room. Our SEC filings are also available at the office of the New York Stock
Exchange. For more information on obtaining copies of our public filings at the
New York Stock Exchange, you should call (212) 656-5060.
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update this prospectus. We incorporate by
reference the documents listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after
the initial filing of the registration statement that contains this prospectus
and prior to the time that we sell all the securities offered by this
prospectus:
- Annual Report on Form 10-K for the year ended December 26, 1997 (including
information specifically incorporated by reference into our Form 10-K from
our 1997 Annual Report to Shareholders and our definitive Notice and Proxy
Statement for our 1998 Annual Meeting of Shareholders);
- Quarterly Reports on Form 10-Q for the quarters ended March 27, 1998, June
26, 1998 and September 25, 1998 and the Quarterly Report on Form 10-Q/A
for the quarter ended September 25, 1998 filed on November 23, 1998;
2
<PAGE>
- Current Reports on Form 8-K filed on August 19, 1998, September 17, 1998
and October 1, 1998 and Amendments to Current Reports on Form 8-K/A filed
on October 5, 1998, November 9, 1998 and November 23, 1998; and
- the description of our Common Stock contained in the registration
statement on Form 8-A (File No. 1-8668) filed pursuant to Section 12 of
the Exchange Act and declared effective on April 25, 1990 and any
amendment or reports filed to update that description after the date of
this prospectus.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address:
Secretary
Fingerhut Companies, Inc.
4400 Baker Road
Minnetonka, Minnesota 55343
(612) 932-3100
You should rely only on the information incorporated by reference or
presented in this prospectus or the applicable prospectus supplement. We have
not authorized anyone else to provide you with different information. We may
only use this prospectus to sell securities if it is accompanied by a prospectus
supplement. We are only offering these securities in states where the offer is
permitted. You should not assume that the information in this prospectus or the
applicable prospectus supplement is accurate as of any date other than the dates
on the front of those documents.
3
<PAGE>
THE COMPANY
We are a database marketing company that sells a broad range of products and
services directly to consumers using catalogs, telemarketing, television, the
Internet and other media. Our main subsidiary is Fingerhut Corporation
("Fingerhut"). Fingerhut a large national catalog marketer, sells general
merchandise to moderate-income consumers who have limited credit histories.
Fingerhut markets its products using its extensive database (the "Fingerhut
Database"), proprietary data base segmentation software and sophisticated credit
scoring models for determining the creditworthiness of its target customers (the
"Credit Models"). The Fingerhut Database contains information on over 30 million
people, approximately eight million of whom have purchased products from
Fingerhut within the past 24 months, and contains up to 3,500 potential data
items in a customer record. The Fingerhut Database is continually updated as new
information is obtained.
Another principal subsidiary, Fingerhut National Bank ("FNB"), offers
extended payment terms to all customers of Fingerhut in the form of fixed-term,
fixed-payment loans and revolving credit card loans. Fingerhut makes
substantially all of its sales on FNB's proprietary credit. Fingerhut and FNB
together developed the Fingerhut Database and Credit Models.
Our other principal subsidiaries include Arizona Mail Order Company, Inc.
("AMO") and Figi's, Inc. ("Figi's"). AMO markets and sells non-fashion apparel
using catalogs and other direct marketing solicitations. Figi's markets and
sells specialty foods and other gifts, primarily through catalogs.
When we refer to "OUR COMPANY," "WE," "OUR" and "US" in this prospectus
under the headings "The Company," "Use of Proceeds" and "Ratios of Earnings to
Fixed Charges," we mean Fingerhut Companies, Inc. and its subsidiaries. When
these terms are used elsewhere in this prospectus, we mean only Fingerhut
Companies, Inc. unless the context indicates otherwise.
4
<PAGE>
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of the securities offered by us will be added to our
general funds and may be used:
- to meet our working capital requirements;
- to refinance debt; and
- for general corporate purposes, including possible future acquisitions.
Until the net proceeds have been used, they will be invested in short-term
marketable securities.
5
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 29, DECEMBER 27, DECEMBER 26,
1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges..................... 3.3x 2.7x 2.6x 1.6x 2.5x
<CAPTION>
THIRTY-NINE WEEKS ENDED
-----------------------------
SEPTEMBER 26, SEPTEMBER 25,
1997(1) 1998(2)
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<S> <C> <C>
Ratio of Earnings to Fixed
Charges..................... 1.1x -- (3)
</TABLE>
- ------------------------------
(1) Fifty-two weeks ended September 26, 1997 ratio of earnings to fixed charges
is 2.1x.
(2) Fifty-two weeks ended September 25, 1998 ratio of earnings to fixed charges
is 1.7 (2.7 excluding non-recurring charge of $38.1 million).
(3) Earnings were inadequate to cover fixed charges by $32.0 million. Excluding
the non-recurring charge of $38.1 million taken by us in the third quarter,
the pro forma ratio of earnings to fixed charges would have been 1.3.
For purposes of calculating the ratios, fixed charges consist of:
- interest on debt;
- amortization of discount on debt; and
- the interest portion of rental expense on operating leases.
The ratio of earnings to fixed charges is calculated as follows:
(income before extraordinary charges and income taxes) + (fixed charges) -
(capitalized interest)
- --------------------------------------------------------------------------------
(fixed charges)
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the senior debt
securities (the "SENIOR DEBT SECURITIES") and the subordinated debt securities
(the "SUBORDINATED DEBT SECURITIES," and together with the Senior Debt
Securities, the "DEBT SECURITIES"). The prospectus supplement will describe the
specific terms of the Debt Securities offered through that prospectus supplement
and any general terms outlined in this section that will not apply to those Debt
Securities.
The Senior Debt Securities will be issued under an indenture (the "SENIOR
INDENTURE") between us and the trustee named in the applicable prospectus
supplement (the "SENIOR TRUSTEE") and the Subordinated Debt Securities will be
issued under an indenture (the "SUBORDINATED INDENTURE," and together with the
Senior Indenture, the "INDENTURES") between us and the trustee named in the
applicable prospectus supplement (the "SUBORDINATED TRUSTEE," and together with
the Senior Trustee, the "TRUSTEES").
We have summarized certain terms and provisions of the Indentures in this
section. The summary is not complete. We have also filed the form of each of the
Indentures as exhibits to the registration statement. You should read the
applicable Indenture for additional information before you buy any Debt
Securities. The summary that follows includes references to section numbers of
the Indentures so that you can more easily locate these provisions. Capitalized
terms used but not defined in this summary have the meanings specified in the
Indentures.
GENERAL
The Debt Securities will be our direct unsecured obligations. Neither of the
Indentures limits the amount of Debt Securities that we may issue. Both
Indentures permit us to issue Debt Securities from time to time and Debt
Securities issued under an Indenture will be issued as part of a series that has
been established by us pursuant to such Indenture. (Section 301)
The Senior Debt Securities will rank equally with all of our other unsecured
Indebtedness (as defined under "--Subordination" below) other than Indebtedness
that by its terms is subordinated to the Senior Debt Securities. The
Subordinated Debt Securities will rank equally with all of our other
Subordinated Debt Securities and will be subordinated to all of our other
existing and future Indebtedness. See "--Subordination" below.
Unless a prospectus supplement relating to Debt Securities states otherwise,
neither the Indentures nor the terms of the Debt Securities will contain any
covenants designed to afford holders of any Debt Securities protection in a
highly leveraged or other transaction involving us that may adversely affect
holders of the Debt Securities.
A prospectus supplement relating to a series of Debt Securities being
offered will include specific terms relating to the offering. (Section 301)
These terms will include some or all of the following:
- the title and type of the Debt Securities;
- any limit on the total principal amount of the Debt Securities;
- the price at which the Debt Securities will be issued;
- the Person who will receive interest payments if not the registered Holder
(as defined below) on the relevant record date;
- the date or dates on which the principal of and any premium on the Debt
Securities will be payable, and any rights to extend such dates;
- the maturity date of the Debt Securities;
7
<PAGE>
- if the Debt Securities will bear interest:
- the interest rate on the Debt Securities;
- the date from which interest will accrue;
- the record and interest payment dates for the Debt Securities; and
- the first interest payment date;
- any index or formula for calculating principal of or any premium or
interest on the Debt Securities and a description of the applicable
calculation method;
- any optional redemption provisions that would permit us or the Holders of
Debt Securities to elect redemption of the Debt Securities before their
final maturity;
- any sinking fund provisions that would obligate us to redeem the Debt
Securities prior to their final maturity;
- whether the Debt Securities will be convertible into shares of Common
Stock and/or exchangeable for other securities and the terms and
conditions of any such conversion or exchange;
- any additions or changes to the covenants and definitions in the
applicable Indenture;
- the currency or currencies in which the Debt Securities will be
denominated and payable, if other than U.S. dollars;
- any provisions that would permit us or the Holders of the Debt Securities
to elect the currency or currencies in which the Debt Securities are paid;
- if the Debt Securities are denominated in a currency or currencies other
than U.S. dollars, whether and under what terms the provisions described
under the heading "--Defeasance" below apply to such Debt Securities;
- any changes to or additional Events of Default;
- whether all or a part of the Debt Securities will be issued as Global
Securities and, if so, the Depositary for those Global Securities (a
"GLOBAL SECURITY" means a Debt Security that we issue in accordance with
the Indenture to represent all or part of a series of Debt Securities);
- any special tax implications of the Debt Securities; and
- any other terms of the Debt Securities.
A "HOLDER," with respect to a Registered Security, means the Person in whose
name such Registered Security is registered in the Security Register. (Section
101)
PAYMENT; TRANSFER
We will designate a Place of Payment where you can receive payment of the
principal of and any premium and interest on the Debt Securities or transfer the
Debt Securities. Even though we will designate a Place of Payment, we may elect
to pay any interest on the Debt Securities by mailing a check to the Person
listed as the owner of the Debt Securities in the Security Register. (Sections
305, 1001, 1002) There will be no service charge for any registration of
transfer or exchange of the Debt Securities, but we may require you to pay any
related tax or other governmental charge. (Section 305)
DENOMINATIONS
Unless the prospectus supplement states otherwise, the Debt Securities will
be issued only in registered form, without coupons, in denominations of $1,000
each or multiples of $1,000.
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ORIGINAL ISSUE DISCOUNT
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities and sold at a substantial discount below their stated
principal amount. If a Debt Security is an "ORIGINAL ISSUE DISCOUNT SECURITY,"
that means that an amount less than the principal amount of the Debt Security
will be due and payable upon a declaration of acceleration of the maturity of
the Debt Security pursuant to the applicable Indenture. (Section 101) The
applicable prospectus supplement will describe the federal income tax
consequences and other special factors you should consider before purchasing any
Original Issue Discount Securities.
RESTRICTIONS ON SECURED DEBT
The Senior Indenture limits the amount of secured Debt that we and our
Restricted Subsidiaries (as defined below) may incur, issue, assume or
guarantee. Neither we nor our Restricted Subsidiaries may incur, issue, assume
or guarantee any Debt secured by a pledge of, or mortgage or other lien on, any
Principal Property owned by us or one of our Restricted Subsidiaries or any
shares of stock or Debt of any of our Restricted Subsidiaries unless immediately
after such incurrence or creation:
- the sum of:
- the aggregate principal amount of all of our outstanding secured Debt
and that of our Restricted Subsidiaries (other than certain categories
of secured Debt discussed below and after giving effect to the
retirement of any Debt which is being retired at the same time as the
incurrence of the additional secured Debt), plus
- the aggregate amount of our Attributable Debt and that of our
Restricted Subsidiaries relating to Sale and Leaseback Transactions
(other than those permitted by the first two bullet points under
"--Restrictions on Sale and Leaseback Transactions" below),
- does not exceed 25% of our Consolidated Net Tangible Assets.
This limitation does not apply if the outstanding Senior Debt Securities are
secured equally and ratably with or prior to the new secured Debt. In addition,
the Senior Indenture provides that a Sale and Leaseback Transaction will not be
deemed to result in the creation of a lien. (Section 1007 of the Senior
Indenture)
A "RESTRICTED SUBSIDIARY" means any of our Subsidiaries which owns or leases
a Principal Property. (Section 101 of the Senior Indenture)
A "SUBSIDIARY" means any Corporation of which we own, directly or through
one or more of our other Subsidiaries, more than 50% of the outstanding
securities of the Corporation entitled to elect at least a majority of the
directors of the Corporation (except for securities entitled to vote for
directors only by reason of the occurrence of a contingency). (Section 101)
"DEBT" means any notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed. (Section 1007 of the Senior Indenture)
"PRINCIPAL PROPERTY" means any plant, office facility, warehouse
distribution center or equipment located in the United States (but not in its
territories or possessions) owned by us or one of our Subsidiaries if it has a
gross book value (without deduction of any depreciation reserves) greater than
1.0% of our Consolidated Net Tangible Assets, but does not include any such
property which is not of material importance to our business and that of our
Subsidiaries (as determined by certain of our officers) (Section 101 of the
Senior Indenture)
"ATTRIBUTABLE DEBT" means, with respect to a Sale and Leaseback Transaction,
the present value (discounted at the rate of interest implicit in the terms of
the lease in question) of the lessee's obligation for net rental payments during
the remaining term of the lease (including any period for
9
<PAGE>
which such lease has been extended or may, at the option of the lessor, be
extended). "NET RENTAL PAYMENTS" means, for any lease period, (1) the rental and
other payments required to be paid in such period by the lessee, minus (2) any
amounts required to be paid by such lessee on account of maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges required
to be paid by such lessee under the lease, and minus (3) any amounts required to
be paid by such lessee under the lease that is contingent upon the amount of
sales, maintenance and repairs, insurance, taxes, assessments, water rates or
similar charges. (Section 101 of the Senior Indenture)
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets (minus
applicable reserves and other properly deductible items), minus
- all current liabilities (excluding any indebtedness for money borrowed
having a maturity of less than 12 months from the date of our most recent
consolidated balance sheet but which by its terms can be renewed or
extended at the option of the borrower beyond 12 months from such date),
and
- goodwill, trade names, patents, unamortized debt discount and expense and
other similar intangibles,
all as presented in our most recent consolidated balance sheet and computed in
accordance with generally accepted accounting principles. (Section 101 of the
Senior Indenture)
"SALE AND LEASEBACK TRANSACTION" means an arrangement with any bank,
insurance company or other lender or investor (but not including us or any of
our Restricted Subsidiaries) that involves the leasing by us or one of our
Restricted Subsidiaries for a period (including renewals) of more than three
years of any Principal Property which has been or will be sold or transferred by
us or such Restricted Subsidiary to such lender or investor or to any person
that has been or will be advanced funds by such lender or investor on the
security of such Principal Property. (Section 1008 of the Senior Indenture)
Debt secured by the following liens will not be considered in determining
whether we are in compliance with the covenant described in the first paragraph
under the heading "--Restrictions on Secured Debt" above:
- liens on any Principal Property acquired, constructed or improved by us or
one of our Restricted Subsidiaries after the date of the Senior Indenture
which are created or assumed at the same time as, or within 120 days
before or after the completion of, such acquisition, construction or
improvement, to secure or provide for the payment of all or any part of
the cost of such acquisition, construction or improvement (including
related expenditures capitalized for federal income tax purposes) incurred
after the date of the Senior Indenture;
- liens of or upon any property, shares of capital stock or Debt that exist
when such property, shares of capital stock or Debt is acquired (whether
by merger, consolidation, purchase, lease or otherwise), including liens
of or upon property, shares of capital stock or indebtedness of a
corporation that exist when such corporation becomes a Restricted
Subsidiary;
- liens in favor of us or any Restricted Subsidiary;
- liens in favor of the U.S. government or any State or any instrumentality
thereof to secure certain payments or obligations or to secure any Debt
incurred for the purpose of financing all or any part of the cost of
acquiring, constructing or improving the property subject to such liens;
- liens imposed by law or governmental liens arising out of contracts for
the sale of products or services by us or one of our Restricted
Subsidiaries, or deposits or pledges to obtain the release of any such
liens;
- (1) pledges or deposits under workmen's compensation laws or similar
legislation and liens of judgments under such laws and legislation which
cannot at such time be discharged, (2) good
10
<PAGE>
faith deposits in connection with bids, tenders, contracts (other than for
the payment of money) or leases to which we or one of our Restricted
Subsidiaries is a party, (3) deposits to secure the public or statutory
obligations of us or one of our Restricted Subsidiaries, (4) deposits in
connection with obtaining or maintaining self-insurance or to obtain the
benefit of any law, regulation or arrangement pertaining to unemployment
insurance, old age pensions, social security or similar matters, (5)
deposits of cash or obligations of the U.S. government to secure surety,
appeal or customs bonds to which we or one of our Restricted Subsidiaries
is party or (6) deposits in litigation or other proceedings;
- liens created by or resulting from any litigation or other proceeding
which is being contested in good faith by appropriate proceedings,
including liens arising out of judgments or awards against us or any
Restricted Subsidiary with respect to which we or such Restricted
Subsidiary is in good faith prosecuting an appeal or proceedings for
review, or liens incurred by us or a Restricted Subsidiary for the purpose
of obtaining a stay or discharge in the course of any litigation or other
proceeding to which we or such Restricted Subsidiary is a party;
- liens for taxes or assessments or governmental charges or levies not yet
due or delinquent, or which can thereafter be paid without penalty or
which are being contested in good faith by appropriate proceedings;
- liens consisting of easements, rights-of-way, zoning restrictions,
restrictions on the use of real property, and defects and irregularities
in the title thereto, landlords' liens and other similar liens and
encumbrances none of which materially interfere with the use of the
property covered by the lien in the ordinary course of business and which
do not, in our opinion, materially detract from the value of such
properties;
- liens existing on the first date on which Senior Debt Securities are
authenticated under the Senior Indenture; and
- any extension, renewal or replacement of any liens referred to above
provided that (1) such extension, renewal or replacement lien is limited
to all or part of the same property, shares of stock or Debt that secured
the lien extended, renewed or replaced (plus improvements on such
property) and (2) the Debt secured by the lien at the time is not
increased. (Section 1007 of the Senior Indenture)
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
The Senior Indenture provides that neither we nor any of our Restricted
Subsidiaries may enter into any Sale and Leaseback Transaction, unless either:
- we or such Restricted Subsidiary could incur Debt secured by a lien on
such Principal Property pursuant to any one of the exclusions to the
secured Debt covenant set forth above without equally and ratably securing
the Senior Debt Securities; or
- we apply an amount (subject to credits for certain voluntary retirements
of Senior Debt Securities and/or certain other Debt as specified in the
Senior Indenture) equal to the greater of (1) the net proceeds of the sale
of the Principal Property sold and leased back pursuant to such Sale and
Leaseback Transaction, or (2) the fair market value of the Principal
Property so sold and leased back at the time of entering into such Sale
and Leaseback Transaction, within 120 days, to the retirement of Debt
which by its terms matures at or is extendible or renewable at the option
of the obligor to a date more than 12 months after the date of the
creation of such Debt.
This restriction will not apply to any Sale and Leaseback Transaction if at
the time of such transaction (and after giving effect to such transaction), the
total amount of all Attributable Debt
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relating to Sale and Leaseback Transactions (other than those permitted by the
provisions set forth in the prior paragraph), together with the total amount of
all outstanding Debt secured by liens (other than Debt which is not considered
in determining whether we are in compliance with the secured Debt covenant),
does not at such time exceed 25% of our Consolidated Net Tangible Assets.
(Section 1008 of the Senior Indenture)
CONSOLIDATION, MERGER OR SALE
Each of the Indentures generally permits a consolidation or merger between
us and another corporation. They also permit the sale or transfer by us of all
or substantially all of our property and assets and the purchase by us of all or
substantially all of the property and assets of another corporation. These
transactions are permitted if:
- the resulting or acquiring corporation assumes all of our responsibilities
and liabilities under the applicable Indenture, including the payment of
all amounts due on the Debt Securities and performance of the covenants in
the applicable Indenture;
- immediately after the transaction, no Event of Default exists; and
- in the case of the Senior Indenture, if, as a result of such transaction,
any of our properties and assets would become subject to a lien or other
encumbrance not permitted by the Senior Indenture, we or our successor
will secure the Senior Debt Securities equally and ratable with or prior
to all indebtedness secured by such lien or encumbrance. (Section 801)
If we consolidate or merge with or into any other corporation or sell all or
substantially all of our assets according to the terms and conditions of the
Indentures, the resulting or acquiring corporation will be substituted for us in
the Indentures with the same effect as if it had been an original party to the
Indentures. As a result, such successor corporation may exercise our rights and
powers under the Indentures, in our name or in its own name and, except in the
case of a lease of all or substantially all of our properties, we will be
released from all our liabilities and obligations under the Indentures and under
the Debt Securities. (Section 802)
MODIFICATION AND WAIVER
Under each of the Indentures, certain of our rights and obligations and
certain of the rights of Holders of the Debt Securities may be modified or
amended with the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of each series of Debt Securities
under the Indenture affected by the modification or amendment. The following
modifications and amendments will not be effective against any Holder without
its consent:
- a change in the stated maturity date of any payment of principal or
interest;
- a reduction in certain payments due on the Debt Securities;
- a change in the Place of Payment or currency in which any payment on the
Debt Securities is payable;
- a limitation of a Holder's right to sue us for the enforcement of certain
payments due on the Debt Securities;
- a reduction in the percentage of Outstanding Debt Securities required to
consent to a modification or amendment of the applicable Indenture, or
consent to a waiver of compliance with certain provisions of the
applicable Indenture or certain defaults under the applicable Indenture;
and
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- a modification of any of the foregoing requirements or a reduction in the
percentage of Outstanding Debt Securities required to waive compliance
with certain provisions of the applicable Indenture or to waive certain
defaults under the applicable Indenture. (Section 902)
Under each of the Indentures, the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of any series of Debt
Securities may, on behalf of all Holders of that series:
- waive compliance by us with certain restrictive covenants of the
applicable Indenture; and
- waive any past default under the applicable Indenture, except:
- a default in the payment of the principal of or any premium or interest
on any Debt Securities of that series; or
- a default under any provision of the applicable Indenture which itself
cannot be modified or amended without the consent of the Holders of
each Outstanding Debt Security of that series. (Sections 1011, 513 of
the Senior Indenture, Sections 1009, 513 of the Subordinated Indenture)
EVENTS OF DEFAULT
"EVENT OF DEFAULT," when used in the Senior Indenture with respect to any
series of Senior Debt Securities, means any of the following:
- failure to pay interest on any Senior Debt Security of that series for 30
days after the payment is due;
- failure to pay the principal of or any premium on any Senior Debt Security
of that series when due;
- failure to deposit any sinking fund payment when due on Senior Debt
Securities of that series;
- failure to perform any other covenant in the Senior Indenture that applies
to Senior Debt Securities of that series for 60 days after we have
received written notice of the failure to perform in the manner specified
in the Senior Indenture;
- default under any indenture or instrument under which we or one of our
Restricted Subsidiaries has outstanding or has guaranteed indebtedness for
borrowed money of at least $10.0 million (other than the Senior Indenture
or any Senior Debt Securities of any other series), and which results in
acceleration of such indebtedness, unless such acceleration is rescinded
within 10 days after we have received written notice of the default in the
manner specified in the Senior Indenture (but if such default is remedied
or waived by the holders of such indebtedness before acceleration of the
Senior Debt Securities of such series, the Event of Default caused by the
events set forth above will also be deemed remedied or waived);
- certain events in bankruptcy, insolvency or reorganization; or
- any other Event of Default that may be specified for the Senior Debt
Securities of that series when that series is created. (Section 501 of the
Senior Indenture)
An Event of Default for a particular series of Senior Debt Securities will not
constitute an Event of Default for any other series of Senior Debt Securities
issued under the Senior Indenture.
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Unless we state otherwise in the applicable prospectus supplement, "Event of
Default" when used with respect to any series of Subordinated Debt Securities,
means any of the following:
- failure to pay interest on any Subordinated Debt Security of that series
for 30 days after the payment is due;
- failure to pay the principal of or any premium on any Subordinated Debt
Security of that series when due;
- failure to convert any Subordinated Debt Security into Common Stock upon
the election of the Holder to convert such Subordinated Debt Security if
the terms of such Debt Security provide for such conversion; or
- certain events in bankruptcy, insolvency or reorganization. (Section 501
of the Subordinated Indenture)
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 Outstanding 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 such a declaration occurs, the Holders of a majority of the
aggregate principal amount of the Outstanding Debt Securities of that series
can, subject to certain conditions, rescind the declaration. (Section 502) The
prospectus supplement relating to each series of Debt Securities which are
Original Issue Discount Securities will describe the particular provisions that
relate to the acceleration of maturity of a portion of the principal amount of
such series when an Event of Default occurs and continues.
Each of the Indentures requires us to file an Officers' Certificate with the
applicable Trustee each year that states that certain defaults do not exist
under the terms of the applicable Indenture. (Section 1009 of the Senior
Indenture, Section 1007 of the Subordinated Indenture) A Trustee may withhold
notice to the Holders of Debt Securities of any default (except defaults in the
payment of principal or any premium or interest or any sinking fund installment)
if it considers such withholding of notice to be in the best interests of the
Holders. (Section 602)
Other than its duties in the case of a default, a Trustee is not obligated
to exercise any of its rights or powers under the applicable Indenture at the
request, order or direction of any Holders, unless the Holders offer such
Trustee reasonable indemnification. (Sections 601, 603) If reasonable
indemnification is provided, then, subject to certain other rights of the
Trustee, the Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may, with respect to the Debt Securities of that
series, direct the time, method and place of:
- conducting any proceeding for any remedy available to the Trustee; or
- exercising any trust or power conferred upon the Trustee. (Sections 512,
603)
The Holder of a Debt Security of any series will have the right to begin any
proceeding with respect to the applicable Indenture or for any remedy only if:
- the Holder has previously given the Trustee written notice of a continuing
Event of Default with respect to that series;
- the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series have made a written request of,
and offered reasonable indemnification to, the Trustee to begin such
proceeding;
- the Trustee has not started such proceeding within 60 days after receiving
the request; and
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- the Trustee has not received directions inconsistent with such request
from the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series during those 60 days. (Section
507)
However, the Holder of any Debt Security will have an absolute right to receive
payment of principal of and any premium and interest on the Debt Security when
due and to institute suit to enforce such payment. (Section 508)
DEFEASANCE
DEFEASANCE AND DISCHARGE. All Debt Securities denominated in U.S. dollars
are subject to the defeasance and discharge provisions of the applicable
Indenture. If we deposit with the Trustee, in trust, sufficient money or direct
obligations of the United States of America (backed by its full faith and
credit) to pay the principal, interest, any premium and any other sums due on
the Debt Securities of that series (such as sinking fund payments) on the dates
such payments are due under the applicable Indenture and the terms of the Debt
Securities, we will, subject to certain conditions set forth in the applicable
Indenture, be discharged from our obligations on such Debt Securities on the
91st day after we make such deposit. (Section 403)
If we deposit funds in trust and discharge our obligations under a series of
Debt Securities as described above, then:
- the applicable Indenture will no longer apply to the Debt Securities of
that series (except for certain obligations to compensate, reimburse and
indemnify the Trustee, to register the transfer and exchange of Debt
Securities, to replace lost, stolen or mutilated Debt Securities and to
maintain paying agencies and the trust funds); and
- Holders of Debt Securities of that series can only look to the trust fund
for payment of principal, any premium and interest on the Debt Securities
of that series. (Section 403)
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. Unless we
otherwise provide in the applicable prospectus supplement, all Debt Securities
denominated in U.S. dollars are also subject to the covenant defeasance
provisions of the applicable Indenture. If we make the deposit described in this
section under the heading "--Defeasance and Discharge" above, subject to certain
other conditions set forth in the applicable Indenture, we will not have to
comply with the following restrictive covenants contained in the applicable
Indenture:
- Consolidation, Merger or Sale (Section 801);
- Maintenance of Properties (Section 1005);
- Payment of Taxes and Other Claims (Section 1006);
- Restrictions on Secured Debt (Section 1007 of the Senior Indenture);
- Restrictions on Sale and Leaseback Transactions (Section 1008 of the
Senior Indenture); and
- any other covenant we designate when we establish the series of Debt
Securities;
and such failure to comply will not cause an Event of Default under the
applicable Indenture. If we defease, our obligations under the applicable
Indenture and such Debt Securities, other than with respect to the covenants and
the Events of Default specifically referred to above, will remain in effect.
(Section 1010 of the Senior Indenture, Section 1008 of the Subordinated
Indenture)
If we exercise our option not to comply with the certain covenants listed
above and the Debt Securities of such series become immediately due and payable
because an Event of Default has occurred (other than as a result of an Event of
Default specifically referred to above), the amount of money and/or U.S.
government obligations on deposit with the applicable Trustee will be sufficient
to
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pay the principal, interest, any premium and any other sums due on the Debt
Securities of such series (such as sinking fund payments) on the date such
payments are due under the applicable Indenture and the terms of such Debt
Securities, but may not be sufficient to pay amounts due at the time of
acceleration. However, we would remain liable for the balance of the payments.
(Section 1010)
DEBT SECURITIES DENOMINATED IN FOREIGN CURRENCIES. If Debt Securities of a
series are denominated in a currency or currencies other than the U.S. dollar,
we will indicate in the applicable prospectus supplement whether, and under what
terms and conditions, the defeasance provisions described above will apply to
such Debt Securities.
SUBORDINATION
The Subordinated Debt Securities will be subordinate to all of our existing
and future Indebtedness (as defined below). If we default in the payment of any
principal, premium or interest on any Senior Indebtedness (as defined below)
when such Subordinated Debt Securities become due and payable (whether at
maturity or at a date fixed for prepayment or by declaration of acceleration or
otherwise), then, until such default is cured, waived or ceases to exist, we
will not make or agree to make any direct or indirect payment (in cash,
property, securities, by set-off or otherwise):
- for principal or any premium or interest on the Subordinated Debt
Securities; or
- in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Subordinated Debt Securities. (Section 1301 of
the Subordinated Indenture)
"SENIOR INDEBTEDNESS" means Indebtedness to which the Subordinated Debt
Securities are subordinated.
"INDEBTEDNESS" means, with respect to us:
- the principal, any premium and interest in respect of:
- our indebtedness for money borrowed; and
- indebtedness evidenced by securities, debentures, bonds or other
similar instruments issued by us;
- all of our capital lease obligations;
- all of our obligations issued or assumed as the deferred purchase price of
property, all of our conditional sale obligations and all of our
obligations under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business);
- all of our obligations for the reimbursement on any letter of credit,
banker's acceptance, security purchase facility or similar credit
transaction;
- all obligations of the type referred to above of other Persons for which
we are responsible or liable for the payment of as obligor, guarantor or
otherwise; and
- all obligations of the type referred to above of other Persons secured by
any lien on any of our property or assets (whether or not such obligation
is assumed by us). (Section 101 of the Subordinated Indenture)
As of September 25, 1998, we had approximately $297.0 million of Senior
Indebtedness outstanding.
If certain events in bankruptcy, insolvency or reorganization occur, we will
first pay all Senior Indebtedness (including any interest accrued after such
events occur) in full before we make any payment or distribution (whether in
cash, securities or other property) on account of the principal of or interest
on the Subordinated Debt Securities. In such an event, we will pay or deliver
directly to the holders of Senior Indebtedness any payment or distribution
otherwise payable or deliverable to holders
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of the Subordinated Debt Securities. We will make such payments to the holders
of Senior Indebtedness according to priorities existing among such holders until
we have paid all Senior Indebtedness (including accrued interest) in full.
Notwithstanding the subordination provisions discussed in this paragraph, we may
make payments or distributions on the Subordinated Debt Securities so long as
(1) the payments or distributions consist of securities issued by us or another
company in connection with a plan of reorganization or readjustment, and (2)
payment on those securities is subordinate to outstanding Senior Indebtedness
and any securities issued with respect to Senior Indebtedness under such plan of
reorganization or readjustment at least to the same extent provided in the
subordination provisions of such Subordinated Debt Securities.
If such events in bankruptcy, insolvency or reorganization occur after we
have paid in full all amounts owed on Senior Indebtedness:
- the Holders of Subordinated Debt Securities,
- together with the holders of any of our other obligations ranking equal
with such Subordinated Debt Securities,
will be entitled to receive from our remaining assets any principal, premium or
interest due at that time on such Subordinated Debt Securities and such other
obligations before we make any payment or other distribution on account of any
of our capital stock or obligations ranking junior to such Subordinated Debt
Securities and such other obligations.
If we violate the Subordinated Indenture by making a payment or distribution
to Holders of the Subordinated Debt Securities before we have paid all the
Senior Indebtedness in full, then such Holders will be deemed to have received
the payments or distributions in trust for the benefit of, and will have to pay
or transfer the payments or distributions to, the holders of the Senior
Indebtedness outstanding at the time. The payment or transfer to the holders of
the Senior Indebtedness will be made according to the priorities existing among
such holders. Notwithstanding the subordination provisions discussed in this
paragraph, Holders of Subordinated Debt Securities will not be required to pay,
or transfer payments or distributions to, holders of Senior Indebtedness so long
as (1) the payments or distributions consist of securities issued by us or
another company in connection with a plan of reorganization or readjustment, and
(2) payment on those securities is subordinate to outstanding Senior
Indebtedness and any securities issued with respect to Senior Indebtedness under
such plan of reorganization or readjustment at least to the same extent provided
in the subordination provisions of such Subordinated Debt Securities.
Because of the subordination, if we become insolvent, holders of Senior
Indebtedness may receive more, ratably, and Holders of the Subordinated Debt
Securities having a claim pursuant to such securities may receive less, ratably,
than our other creditors. Such subordination will not prevent an Event of
Default from occurring in connection with the Subordinated Debt Securities.
We may modify or amend the Subordinated Indenture as provided under
"--Modification and Waiver" above. However, such modification or amendment may
not, without the consent of the holders of all Senior Indebtedness outstanding,
modify any of the provisions of such Indenture relating to the subordination of
the Subordinated Debt Securities in a manner that would adversely affect such
holders. (Section 902 of the Subordinated Indenture)
CONVERSION AND EXCHANGE
If any offered Debt Securities are convertible into Preferred Stock,
Depositary Shares or Common Stock at the option of the Holders or exchangeable
for Preferred Stock, Depositary Shares or Common Stock at our option, the
prospectus supplement relating to such Debt Securities will include the terms
and conditions governing such conversions and exchanges.
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DESCRIPTION OF PREFERRED STOCK
This section describes the general terms and provisions of our preferred
stock (the "PREFERRED STOCK") that may be offered by this prospectus. The
prospectus supplement will describe the specific terms of the series of the
Preferred Stock offered through that prospectus supplement and any general terms
outlined in this section that will not apply to that series of Preferred Stock.
We have summarized certain terms and provisions of the Preferred Stock in
this section. The summary is not complete. We have also filed our Amended and
Restated Articles of Incorporation and the form of Certificate of Designation,
Preferences and Rights of Preferred Stock as exhibits to the registration
statement. You should read our Amended and Restated Articles of Incorporation
and the Certificate of Designation, Preferences and Rights ("CERTIFICATE OF
DESIGNATION") relating to the applicable series of the Preferred Stock for
additional information before you buy any Preferred Stock.
GENERAL
Pursuant to our Amended and Restated Articles of Incorporation, our Board of
Directors has the authority, without further shareholder action, to issue a
maximum of 5,000,000 shares of Preferred Stock, including shares issued or
reserved for issuance. As of the date of this prospectus, we had no shares of
Preferred Stock outstanding. The Board of Directors has the authority to
determine or fix the following terms with respect to shares of any series of
Preferred Stock:
- the number of shares and designation or title of the shares;
- dividend rights;
- whether and upon what terms the shares will be redeemable;
- the rights of the holders upon our dissolution or upon the distribution of
our assets;
- whether and upon what terms the shares will have a purchase, retirement or
sinking fund;
- whether and upon what terms the shares will be convertible;
- the voting rights, if any, which will apply; and
- any other preferences, rights, limitations or restrictions of the series.
If we purchase, redeem or convert shares of Preferred Stock, we will retire and
cancel them and restore them to the status of authorized but unissued shares of
Preferred Stock. Such shares will not be part of any particular series of
Preferred Stock and may be reissued by us.
As described under "Description of Depositary Shares" below, we may elect to
offer Depositary Shares represented by Depositary Receipts. If we so elect, each
Depositary Share will represent a fractional interest (to be specified in the
applicable prospectus supplement) in a share of Preferred Stock. If we issue
Depositary Shares representing interests in shares of Preferred Stock, those
shares of Preferred Stock will be deposited with a Depositary.
The Preferred Stock will have the dividend, liquidation, redemption, voting
and conversion rights described in this section unless the applicable prospectus
supplement provides otherwise. You should read the prospectus supplement
relating to the particular series of the Preferred Stock it offers for specific
terms, including:
- the title and liquidation preference of the Preferred Stock and the number
of shares offered;
- the initial public offering price at which we will issue the Preferred
Stock;
- the dividend rate or rates (or method of calculation), the dividend
periods, the dates on which dividends will be payable and whether the
dividends will be cumulative or noncumulative and, if cumulative, the
dates from which the dividends will start to cumulate;
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- any redemption or sinking fund provisions;
- any conversion provisions;
- whether we have elected to offer Depositary Shares as described under
"Description of Depositary Shares" below; and
- any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions.
When we issue shares of Preferred Stock, they will be fully paid and
nonassessable (I.E., you will have paid the full purchase price for your shares
of Preferred Stock and you will not be assessed any additional amounts for such
shares). Unless the applicable prospectus supplement specifies otherwise:
- each series of Preferred Stock will rank equally in all respects with the
outstanding shares of each other series of Preferred Stock; and
- the Preferred Stock will have no preemptive rights to subscribe for any
additional securities which we may issue in the future (I.E., the holders
of shares of Preferred Stock will have no right, as holders of shares of
Preferred Stock, to buy any portion of those issued securities).
The transfer agent and registrar for the Preferred Stock and any Depositary
Shares will be specified in the applicable prospectus supplement.
DIVIDENDS
Subject to the preferential rights as to dividends of holders of any other
of our capital stock ranking prior to any series of the Preferred Stock, the
holders of each series of the Preferred Stock will be entitled to receive cash
dividends, if declared by our Board of Directors or its duly authorized
committee, out of our assets that we can legally use to pay dividends. The
applicable prospectus supplement will describe the dividend rates and dates on
which dividends will be payable. The rates may be fixed or variable or both. If
the dividend rate is variable, the applicable prospectus supplement will
describe the formula used to determine the dividend rate for each dividend
period. We will pay dividends to the holders of record as they appear on our
stock books on the record dates fixed by our Board of Directors or its duly
authorized committee.
The applicable prospectus supplement will also state whether the dividends
on any series of the Preferred Stock are cumulative or noncumulative. If our
Board of Directors does not declare a dividend payable on a dividend payment
date on any noncumulative series of Preferred Stock, then the holders of that
series will not be entitled to receive a dividend for that dividend period and
we will not be obligated to pay the dividend for that dividend period even if
the Board declares a dividend on that series payable in the future.
Our Board will not declare and pay a dividend on any of our stock ranking,
as to dividends, equal with or junior to the Preferred Stock unless full
dividends on the Preferred Stock have been declared and paid (or declared and
sufficient money is set aside for payment). Until full dividends are paid (or
declared and payment is set aside) on any of our capital stock ranking equal
with the Preferred Stock as to dividends, then:
- we will declare any dividends pro rata among the Preferred Stock of each
series offered under this prospectus and any other series of Preferred
Stock ranking equal to the Preferred Stock of each series offered under
this prospectus as to dividends (I.E., the dividends we declare per share
on each series of such Preferred Stock will bear the same relationship to
each other that the full accrued dividends per share on each such series
of the Preferred Stock bear to each other);
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- other than such pro rata dividends, we will not declare or pay any
dividends or declare or make any distributions upon any security ranking
junior to or equal with the Preferred Stock offered under this prospectus
as to dividends or upon liquidation (except dividends or distributions
paid for with securities ranking junior to the Preferred Stock as to
dividends and upon liquidation); and
- we will not redeem, purchase or otherwise acquire (or set aside money for
a sinking fund for) any securities ranking junior to or equal with the
Preferred Stock as to dividends or upon liquidation (except by conversion
into or exchange for stock junior to the Preferred Stock as to dividends
and upon liquidation).
We will not owe any interest, or any money in lieu of interest, on any dividend
payment(s) on any series of Preferred Stock which may be past due.
REDEMPTION
We may redeem all or a part of a series of the Preferred Stock and such
series may be subject to mandatory redemption pursuant to a sinking fund or
otherwise, as described in the applicable prospectus supplement. Redeemed
Preferred Stock will become authorized but unissued shares of Preferred Stock
that we may issue in the future.
If a series of the Preferred Stock is subject to mandatory redemption, the
applicable prospectus supplement will specify the number of shares that we will
redeem each year and the redemption price. If shares of Preferred Stock are
redeemed, we will pay all accrued and unpaid dividends on those shares to, but
excluding, the redemption date. The prospectus supplement will also specify
whether the redemption price will be paid in cash or other property. If (1) we
are only permitted to pay the redemption price for a series of Preferred Stock
from the proceeds of a capital stock issuance and (2) the proceeds from the
issuance are insufficient or no such issuance has occurred, then the terms of
that series may provide that the Preferred Stock will automatically and
mandatorily be converted into such capital stock.
If fewer than all of the outstanding shares of any series of the Preferred
Stock are to be redeemed, our Board of Directors will determine the number of
shares to be redeemed. We will redeem the shares pro rata from the holders of
record in proportion to the number of shares held by them (with adjustments to
avoid redemption of fractional shares).
Even though the terms of a series of Preferred Stock may permit redemption
of all or a part of the Preferred Stock, if any dividends, including accumulated
dividends, on that series are past due:
- we will not redeem any shares of Preferred Stock of that series unless we
simultaneously redeem all outstanding shares of Preferred Stock of that
series; and
- we will not purchase or otherwise acquire any shares of Preferred Stock of
that series.
The prohibition discussed in the prior sentence will not prohibit us from
purchasing or acquiring Preferred Stock of that series pursuant to a purchase or
exchange offer if we make the offer on the same terms to all holders of that
series.
Unless the applicable prospectus supplement specifies otherwise, we will
give notice of a redemption by mailing a notice to each record holder of the
shares to be redeemed, between 30 to 60 days prior to the date fixed for
redemption (unless we issue Depositary Shares representing interests in
Preferred Stock, in which case we will send a notice to the Depositary between
40 to 70 days prior to the date fixed for redemption). We will mail the notices
to the holders' addresses as they appear on our stock records. Each notice will
state:
- the redemption date;
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- the number of shares and the series of the Preferred Stock to be redeemed;
- the redemption price;
- the place or places where holders can surrender the certificates for the
Preferred Stock for payment of the redemption price;
- that dividends on the shares to be redeemed will cease to accrue on the
redemption date; and
- the date when the holders' conversion rights, if any, will terminate.
If we redeem fewer than all shares of any series of the Preferred Stock held by
any holder, we will also specify the number of shares to be redeemed from the
holder in the notice.
If we have given notice of the redemption and have provided the funds for
the payment of the redemption price, then beginning on the redemption date:
- the dividends on the shares of Preferred Stock called for redemption will
no longer accrue;
- such shares will no longer be considered outstanding; and
- the holders will no longer have any rights as shareholders except to
receive the redemption price.
When the holder properly surrenders the redeemed shares, the redemption price
will be paid out of the funds provided by us. If we redeem fewer than all of the
shares represented by any certificate, we will issue a new certificate
representing the unredeemed shares without cost to the holder.
If a redemption described above is deemed to be a "tender offer" within the
meaning of Rule 14e-1 under the Exchange Act, we will comply with all applicable
provisions of the Exchange Act.
CONVERSION
The applicable prospectus supplement relating to a series of convertible
Preferred Stock will describe the terms on which shares of that series are
convertible into shares of Common Stock or a different series of Preferred
Stock.
RIGHTS UPON LIQUIDATION
Unless the applicable prospectus states otherwise, if we voluntarily or
involuntarily liquidate, dissolve or wind up our business, the holders of shares
of each series of the Preferred Stock will be entitled to receive:
- liquidation distributions in the amount stated in the applicable
prospectus supplement; and
- all accrued and unpaid dividends (whether or not earned or declared).
We will pay these amounts to the holders of shares of each series of the
Preferred Stock, and all amounts owing on any Preferred Stock ranking equally
with such series of Preferred Stock as to distributions upon liquidation, out of
our assets available for distribution to shareholders before any distribution is
made to holders of any securities ranking junior to the series of Preferred
Stock upon liquidation.
The sale of all or substantially all of our property and assets, our merger
into or consolidation with any other corporation or the merger of any other
corporation into us will not be considered a dissolution, liquidation or winding
up of our business.
If (1) we voluntarily or involuntarily liquidate, dissolve or wind up our
business and (2) we do not have enough assets available for distribution to the
holders of the Preferred Stock of any series and any other shares of our stock
ranking equal with such series as to any such distribution to pay all amounts
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to which the holders are entitled, then we will only make pro rata distributions
to the holders of all
shares ranking equal as to distributions upon dissolution, liquidation or
winding up of our business (I.E., the distributions we pay to the holders of all
shares ranking equal as to distributions upon dissolution, liquidation or
winding up of our business will bear the same relationship to each other that
the full distributable amounts for which such holders are respectively entitled
upon such dissolution, liquidation or winding up of our business bear to each
other).
After we pay the full amount of the liquidation distribution to which the
holders of a series of the Preferred Stock are entitled, such holders will have
no right or claim to any of our remaining assets.
VOTING RIGHTS
Except as described in this section or in the applicable prospectus
supplement, or except as expressly required by applicable law, the holders of
the Preferred Stock will not be entitled to vote. If the holders of a series of
Preferred Stock are entitled to vote and the applicable prospectus supplement
does not state otherwise, then each share of Preferred Stock will have one vote.
As more fully described under "Description of Depositary Shares" below, if
we issue Depositary Shares representing fractional interests in a share of
Preferred Stock, the holders of each Depositary Share will have a fraction of a
vote.
For any series of Preferred Stock having one vote per share, the voting
power of the series, on matters on which holders of such series and holders of
any other series of Preferred Stock are entitled to vote as a single class, will
solely depend on the total number of shares in such series (not the aggregate
liquidation preference or initial offering price).
Unless we receive the consent of the holders of an outstanding series of
Preferred Stock and the outstanding shares of all other series of Preferred
Stock which (1) rank equal with such series either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up of our
business and (2) have voting rights that are exercisable and that are similar to
those of such series, we will not:
- authorize, create or issue, or increase the authorized or issued amount
of, any class or series of stock ranking prior to such outstanding
Preferred Stock with respect to payment of dividends or the distribution
of assets upon liquidation, dissolution or winding up of our business; or
- amend, alter or repeal, whether by merger, consolidation or otherwise, the
provisions of our Amended and Restated Articles of Incorporation or of the
resolutions contained in a Certificate of Designation creating such series
of the Preferred Stock in a way that materially and adversely affect any
right, preference, privilege or voting power of such outstanding Preferred
Stock.
This consent must be given by the holders of at least two-thirds of all such
outstanding Preferred Stock described in the preceding sentence, voting together
as a single class. However, we will not be required to obtain this consent for
the actions listed in the second bullet point above if we only (1) increase the
amount of the authorized Preferred Stock, (2) create and issue another series of
Preferred Stock, or (3) increase the amount of authorized shares of any series
of Preferred Stock, if such Preferred Stock in each case ranks equal with or
junior to the shares of Preferred Stock offered under this prospectus with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of our business.
DESCRIPTION OF DEPOSITARY SHARES
This section describes the general terms and provisions of the Depositary
Shares (as defined below). The prospectus supplement will describe the specific
terms of the Depositary Shares offered through that prospectus supplement and
any general terms outlined in this section that will not apply to those
Depositary Shares.
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We have summarized certain terms and provisions of the Deposit Agreement,
the Depositary Shares and the Depositary Receipts in this section. The summary
is not complete. We have also filed the form of Deposit Agreement, including the
form of Depositary Receipt, as an exhibit to the registration statement. You
should read the forms of Deposit Agreement and Depositary Receipt relating to a
series of Preferred Stock for additional information before you buy any
Depositary Shares that represent Preferred Stock of such series.
GENERAL
We may offer fractional interests in Preferred Stock, rather than full
shares of Preferred Stock. If we do, we will provide for the issuance by a
Depositary (as defined below) to the public of receipts for depositary shares
("DEPOSITARY SHARES"), each of which will represent a fractional interest in a
share of a particular series of Preferred Stock.
The shares of any series of Preferred Stock underlying the Depositary Shares
will be deposited under a separate deposit agreement (the "DEPOSIT AGREEMENT")
between us and a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50.0 million (the
"DEPOSITARY"). We will name the Depositary in the applicable prospectus
supplement. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will have a fractional interest in all the rights and
preferences of the Preferred Stock underlying such Depositary Share. Those
rights include any dividend, voting, redemption, conversion and liquidation
rights.
The Depositary Shares will be evidenced by depositary receipts issued under
the Deposit Agreement (the "DEPOSITARY RECEIPTS"). If you purchase fractional
interests in shares of the related series of Preferred Stock, you will receive
Depositary Receipts as described in the applicable prospectus supplement. While
the final Depositary Receipts are being prepared, we may order the Depositary to
issue temporary Depositary Receipts substantially identical to the final
Depositary Receipts although not in final form. The holders of the temporary
Depositary Receipts will be entitled to the same rights as if they held the
Depositary Receipts in final form. Holders of the temporary Depositary Receipts
can exchange them for the final Depositary Receipts at our expense.
If you surrender Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption), you are entitled to receive at such office the number of shares of
Preferred Stock and any money or other property represented by such Depositary
Shares. We will not issue partial shares of Preferred Stock. If you deliver
Depositary Receipts evidencing a number of Depositary Shares that represent more
than a whole number of shares of Preferred Stock, the Depositary will issue you
a new Depositary Receipt evidencing such excess number of Depositary Shares at
the same time that the Preferred Stock is withdrawn. Holders of shares of
Preferred Stock received in exchange for Depositary Shares will no longer be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Shares in exchange for such Preferred Stock.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received with respect to the Preferred Stock to the record holders
of Depositary Shares representing the Preferred Stock in proportion to the
numbers of Depositary Shares owned by the holders on the relevant record date.
The Depositary will not distribute amounts less than one cent. The Depositary
will distribute these balances with the next sum received for distribution to
record holders of Depositary Shares.
If there is a distribution other than in cash, the Depositary will
distribute property to the holders of Depositary Shares, unless the Depositary
determines that it is not feasible to make such distribution.
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If this occurs, the Depositary may, with our approval, sell the property and
distribute the net proceeds from the sale to the holders of Depositary Shares.
The Deposit Agreement will also contain provisions relating to how any
subscription or similar rights offered by us to holders of the Preferred Stock
will be made available to the holders of Depositary Shares.
CONVERSION AND EXCHANGE
If any series of Preferred Stock underlying the Depositary Shares is subject
to conversion or exchange, the applicable prospectus supplement will describe
the rights or obligations of each record holder of Depositary Receipts to
convert or exchange the Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If the series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, all or a part of the Depositary Shares will be redeemed
from the redemption proceeds of such series of the Preferred Stock held by the
Depositary. The Depositary will mail notice of redemption between 30 to 60 days
prior to the date fixed for redemption to the record holders of the Depositary
Shares to be redeemed at their addresses appearing in the Depositary's records.
The redemption price per Depositary Share will bear the same relationship to the
redemption price per share of Preferred Stock that the Depositary Share bears to
the underlying Preferred Stock. Whenever we redeem Preferred Stock held by the
Depositary, the Depositary will redeem, as of the same redemption date, the
number of Depositary Shares representing the Preferred Stock redeemed. If less
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as determined by the Depositary.
After the date fixed for redemption, the Depositary Shares called for
redemption will no longer be outstanding. When the Depositary Shares are no
longer outstanding, all rights of the holders will cease, except the right to
receive money or other property that the holders of the Depositary Shares were
entitled to receive upon such redemption. Such payments will be made when
holders surrender their Depositary Receipts to the Depositary.
VOTING THE PREFERRED STOCK
When the Depositary receives notice of any meeting at which the holders of
the Preferred Stock may vote, the Depositary will mail information contained in
the notice (and any accompanying proxy materials) to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the Depositary as to
how the Preferred Stock underlying the holder's Depositary Shares should be
voted.
The Depositary will try, if practical, to vote the number of shares of
Preferred Stock underlying the Depositary Shares according to the instructions
received. We will agree to take all action requested by and deemed necessary by
the Depositary in order to enable the Depositary to vote the Preferred Stock in
that manner. The Depositary will not vote any Preferred Stock for which it does
not receive specific instructions from the holders of the Depositary Shares
relating to such Preferred Stock.
TAXATION
Owners of Depositary Shares will be treated for federal income tax purposes
as if they were owners of the Preferred Stock represented by the Depositary
Shares. Accordingly, for federal income
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tax purposes they will have the income and deductions to which they would be
entitled if they were holders of the Preferred Stock. In addition:
- no gain or loss will be recognized for federal income tax purposes upon
the withdrawal of Preferred Stock in exchange for Depositary Shares as
provided in the Deposit Agreement;
- the tax basis of the Preferred Stock to an exchanging owner of Depositary
Shares will, upon the exchange, be the same as the aggregate tax basis of
the Depositary Shares exchanged for such Preferred Stock; and
- the holding period for the Preferred Stock, in the hands of an exchanging
owner of Depositary Shares who held the Depositary Shares as a capital
asset at the time of the exchange, will include the period that the owner
held such Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may be amended by agreement between us and
the Depositary at any time. However, any amendment that materially and adversely
alters the rights of the existing holders of Depositary Shares will not be
effective unless approved by the record holders of at least a majority of the
Depositary Shares then outstanding. A Deposit Agreement may be terminated by us
or the Depositary only if:
- all outstanding Depositary Shares relating to the Deposit Agreement have
been redeemed; or
- there has been a final distribution on the Preferred Stock of the relevant
series in connection with our liquidation, dissolution or winding up of
our business and the distribution has been distributed to the holders of
the related Depositary Shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay associated
charges of the Depositary for the initial deposit of the Preferred Stock and any
redemption of the Preferred Stock. Holders of Depositary Shares will pay
transfer and other taxes and governmental charges and any other charges that are
stated to be their responsibility in the Deposit Agreement.
MISCELLANEOUS
We will forward to the Depositary, for distribution to the holders of
Depositary Shares, all reports and communications that we must furnish to the
holders of the Preferred Stock.
Neither the Depositary nor we will be liable if the Depositary is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. Our obligations and the Depositary's
obligations under the Deposit Agreement will be limited to performance in good
faith of duties set forth in the Deposit Agreement. Neither the Depositary nor
we will be obligated to prosecute or defend any legal proceeding connected with
any Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished to us and/or the Depositary. We and the Depositary may rely upon
written advice of counsel or accountants, or information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or other
persons believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering notice to us. We may
also remove the Depositary at any time. Resignations or removals will take
effect when a successor depositary is
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appointed and it accepts the appointment. The successor depositary must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50.0 million.
DESCRIPTION OF COMMON STOCK
A description of our common stock (the "COMMON STOCK") is included in the
registration statement on Form 8-A (File No. 1-8668) filed pursuant to Section
12 of the Exchange Act and declared effective on April 25, 1990, which is
incorporated by reference in this prospectus. You may request a copy of this
registration statement in the manner described under "Where You Can Find More
Information."
DESCRIPTION OF SECURITIES WARRANTS
This section describes the general terms and provisions of the Securities
Warrants (as defined below). The prospectus supplement will describe the
specific terms of the Securities Warrants offered through that prospectus
supplement and any general terms outlined in this section that will not apply to
those Securities Warrants.
We may issue warrants for the purchase of Senior Debt Securities,
Subordinated Debt Securities, Preferred Stock, Depositary Shares or Common Stock
(the "SECURITIES WARRANTS"). Securities Warrants may be issued alone or together
with Senior Debt Securities, Subordinated Debt Securities, Preferred Stock,
Depositary Shares or Common Stock offered by any prospectus supplement and may
be attached to or separate from those securities. Each series of Securities
Warrants will be issued under a separate warrant agreement (a "SECURITIES
WARRANT AGREEMENT") between us and a bank or trust company, as warrant agent
(the "SECURITIES WARRANT AGENT"), which will be described in the applicable
prospectus supplement. The Securities Warrant Agent will act solely as our agent
in connection with the Securities Warrants and will not act as an agent or
trustee for any holders of Securities Warrants.
We have summarized certain terms and provisions of the Securities Warrant
Agreements and Securities Warrants in this section. The summary is not complete.
We have also filed the forms of Securities Warrant Agreements and the
certificates representing the Securities Warrants ("SECURITIES WARRANT
CERTIFICATES") as exhibits to the registration statement. You should read the
applicable forms of Securities Warrant Agreement and Securities Warrant
Certificate for additional information before you buy any Securities Warrants.
GENERAL
If we offer Securities Warrants, the applicable prospectus supplement will
describe their terms. If Securities Warrants for the purchase of Debt Securities
or Subordinated Debt Securities are offered, the applicable prospectus
supplement will describe the terms of such Securities Warrants, including the
following if applicable:
- the offering price;
- the currencies in which such Securities Warrants are being offered;
- the designation, aggregate principal amount, currencies, denominations and
terms of the series of the Senior Debt Securities or Subordinated Debt
Securities that can be purchased if a holder exercises such Securities
Warrants;
- the designation and terms of any series of Senior Debt Securities,
Subordinated Debt Securities, Preferred Stock or Depositary Shares with
which such Securities Warrants are being offered and the number of
Securities Warrants offered with each Senior Debt Security, Subordinated
Debt Security, share of Preferred Stock, Depositary Share or share of
Common Stock;
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- the date on and after which the holder of such Securities Warrants can
transfer them separately from the related Common Stock or series of Senior
Debt Securities, Subordinated Debt Securities, Preferred Stock or
Depositary Shares;
- the principal amount of the series of Senior Debt Securities or
Subordinated Debt Securities that can be purchased if a holder exercises
such Securities Warrant and the price at which and currencies in which
such principal amount may be purchased upon exercise;
- the date on which the right to exercise such Securities Warrants begins
and the date on which such right expires;
- United States federal income tax consequences; and
- any other terms of such Securities Warrants.
Securities Warrants for the purchase of Senior Debt Securities and Subordinated
Debt Securities will be in registered form only.
If Securities Warrants for the purchase of Preferred Stock, Depositary
Shares or Common Stock are offered, the applicable prospectus supplement will
describe the terms of such Securities Warrants, including the following where
applicable:
- the offering price;
- the total number of shares that can be purchased if a holder of such
Securities Warrants exercises them and, in the case of Securities Warrants
for Preferred Stock or Depositary Shares, the designation, total number
and terms of the series of Preferred Stock that can be purchased upon
exercise or that are underlying the Depositary Shares that can be
purchased upon exercise;
- the designation and terms of the series of Debt Securities, Subordinated
Debt Securities, Preferred Stock or Depositary Shares with which such
Securities Warrants are being offered and the number of Securities
Warrants being offered with each Senior Debt Security, Subordinated Debt
Security, share of Preferred Stock, Depositary Share or share of Common
Stock;
- the date on and after which the holder of such Securities Warrants can
transfer them separately from the related Common Stock or series of Senior
Debt Securities, Subordinated Debt Securities, Preferred Stock or
Depositary Shares;
- the number of shares of Preferred Stock, Depositary Shares or shares of
Common Stock that can be purchased if a holder exercises such Securities
Warrant and the price at which such Preferred Stock, Depositary Shares or
Common Stock may be purchased upon each exercise;
- the date on which the right to exercise such Securities Warrants begins
and the date on which such right expires;
- United States federal income tax consequences; and
- any other terms of such Securities Warrants.
Securities Warrants for the purchase of Preferred Stock, Depositary Shares or
Common Stock will be in registered form only.
A holder of Securities Warrant Certificates may (1) exchange them for new
certificates of different denominations, (2) present them for registration of
transfer and (3) exercise them at the corporate trust office of the Securities
Warrant Agent or any other office indicated in the applicable prospectus
supplement. Until any Securities Warrants to purchase Senior Debt Securities or
Subordinated Debt Securities are exercised, the holder of such Securities
Warrants will not have any of the rights of Holders of the Senior Debt
Securities or Subordinated Debt Securities that can be purchased upon exercise,
including any right to receive payments of principal, premium or interest on the
underlying
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Senior Debt Securities or Subordinated Debt Securities or to enforce covenants
in the applicable Indenture. Until any Securities Warrants to purchase Preferred
Stock, Depositary Shares or Common Stock are exercised, holders of such
Securities Warrants will not have any rights of holders of the underlying
Preferred Stock, Depositary Shares or Common Stock, including any right to
receive dividends or to exercise any voting rights.
EXERCISE OF SECURITIES WARRANTS
Each holder of a Securities Warrant is entitled to purchase the principal
amount of Senior Debt Securities or Subordinated Debt Securities or the number
of shares of Preferred Stock, Depositary Shares or shares of Common Stock, as
the case may be, at the exercise price described in the applicable prospectus
supplement. After the close of business on the day when the right to exercise
terminates (or a later date if we extend the time for exercise), unexercised
Securities Warrants will become void.
A holder of Securities Warrants may exercise them by following the general
procedure outlined below:
- delivering to the Securities Warrant Agent the payment required by the
applicable prospectus supplement to purchase the underlying security;
- properly completing and signing the reverse side of the Securities Warrant
Certificate representing the Securities Warrants; and
- delivering the Securities Warrant Certificate representing the Securities
Warrants to the Securities Warrant Agent within five business days of the
Securities Warrant Agent receiving payment of the exercise price.
If you comply with the procedures described above, your Securities Warrants
will be considered to have been exercised when the Securities Warrant Agent
receives payment of the exercise price. After you have completed those
procedures, we will, as soon as practicable, issue and deliver to you the Senior
Debt Securities, Subordinated Debt Securities, Preferred Stock, Depositary
Shares or Common Stock that you purchased upon exercise. If you exercise fewer
than all of the Securities Warrants represented by a Securities Warrant
Certificate, the Securities Warrant Agent will issue to you a new Securities
Warrant Certificate for the unexercised amount of Securities Warrants. Holders
of Securities Warrants will be required to pay any tax or governmental charge
that may be imposed in connection with transferring the underlying securities in
connection with the exercise of the Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
We may amend or supplement a Securities Warrant Agreement without the
consent of the holders of the applicable Securities Warrants if the changes are
not inconsistent with the provisions of the Securities Warrants and do not
materially adversely affect the interests of the holders of the Securities
Warrants. We, along with the Securities Warrant Agent, may also modify or amend
a Securities Warrant Agreement and the terms of the Securities Warrants if a
majority of the then outstanding unexercised Securities Warrants affected by the
modification or amendment consent. However, no modification or amendment that
accelerates the expiration date, increases the exercise price, reduces the
majority consent requirement for any such modification or amendment, or
otherwise materially adversely affects the rights of the holders of the
Securities Warrants may be made without the consent of each holder affected by
the modification or amendment.
COMMON STOCK WARRANT ADJUSTMENTS
Unless the applicable prospectus supplement states otherwise, the exercise
price of, and the number of shares of Common Stock covered by, a warrant for
Common Stock ("COMMON STOCK
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WARRANTS") will be adjusted in the manner set forth in the applicable prospectus
supplement if certain events occur, including:
- if we issue capital stock as a dividend or distribution on the Common
Stock;
- if we subdivide, reclassify or combine the Common Stock;
- if we issue rights or warrants to all holders of Common Stock entitling
them (for a period expiring 45 days after the date fixed for determining
the shareholders entitled to receive such rights or warrants) to purchase
Common Stock at less than the current market price (as defined in the
Warrant Agreement for such series of Common Stock Warrants); or
- if we distribute to all holders of Common Stock evidences of our
indebtedness or our assets (excluding certain cash dividends and
distributions described below) or rights or warrants (excluding those
referred to above).
Except as stated above, the exercise price and number of shares of Common
Stock covered by a Common Stock Warrant will not be adjusted if we issue Common
Stock or any securities convertible into or exchangeable for Common Stock, or
securities carrying the right to purchase Common Stock or securities convertible
into or exchangeable for Common Stock.
Holders of Common Stock Warrants may have additional rights under the
following circumstances:
- a reclassification or change of the Common Stock;
- a consolidation or merger involving our company; or
- a sale or conveyance to another corporation of all or substantially all of
our property and assets.
If one of the above transactions occurs and holders of our Common Stock are
entitled to receive stock, securities, other property or assets (including cash)
with respect to or in exchange for such Common Stock, the holders of the Common
Stock Warrants then outstanding will be entitled to receive upon exercise of
their Common Stock Warrants the kind and amount of shares of stock and other
securities or property that they would have received upon the reclassification,
change, consolidation, merger, sale or conveyance if they had exercised their
Common Stock Warrants immediately before the transaction.
PLAN OF DISTRIBUTION
We may sell the securities offered pursuant to this prospectus through
agents, through underwriters or dealers, directly to one or more purchasers, or
through any combination of these methods of sale.
Underwriters, dealers and agents that participate in the distribution of the
securities offered pursuant to this prospectus may be underwriters as defined in
the Securities Act of 1933 and any discounts or commissions received by them
from us and any profit on the resale of the offered securities by them may be
treated as underwriting discounts and commissions under the Securities Act. Any
underwriters or agents will be identified and their compensation (including
underwriting discount) will be described in the applicable prospectus
supplement. The prospectus supplement will also describe other terms of the
offering, including any discounts or concessions allowed or reallowed or paid to
dealers and any securities exchanges on which the offered securities may be
listed.
The distribution of the securities offered under this prospectus may occur
from time to time in one or more transactions at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
If the applicable prospectus supplement indicates, we will authorize dealers
or our agents to solicit offers by certain institutions to purchase offered
securities from us pursuant to contracts that provide
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for payment and delivery on a future date. We must approve all institutions, but
they may include, among others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
The institutional purchaser's obligations under the contract are only subject to
the condition that the purchase of the offered securities at the time of
delivery is allowed by the laws that govern the purchaser. The dealers and our
agents will not be responsible for the validity or performance of the contracts.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make as a result of those
certain civil liabilities.
When we issue the securities offered by this prospectus (except for shares
of Common Stock), they may be new securities without an established trading
market. If we sell a security offered by this prospectus to an underwriter for
public offering and sale, the underwriter may make a market for that security,
but the underwriter will not be obligated to do so and could discontinue any
market making without notice at any time. Therefore, we cannot give any
assurances to you concerning the liquidity of any security offered by this
prospectus.
Underwriters and agents and their affiliates may be customers of, engage in
transactions with, or perform services for us or our subsidiaries in the
ordinary course of their businesses.
LEGAL OPINIONS
Michael P. Sherman, Esq., who is our General Counsel, or another of our
lawyers, will issue an opinion about the legality of the securities offered by
this prospectus. Mr. Sherman owns, or has the right to acquire, a number of
shares of our Common Stock which represents less than 0.2% of the total
outstanding Common Stock. Any underwriters will be represented by their own
legal counsel.
EXPERTS
The consolidated financial statements of Fingerhut Companies, Inc. as of
December 26, 1997 and December 27, 1996, and for each of the years in the
three-year period ended December 26, 1997, have been incorporated by reference
herein in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, which report is also incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. To the extent that KPMG Peat Marwick LLP audits and reports on
financial statements of Fingerhut Companies, Inc. issued at future dates, and
consents to the use of their report thereon, such financial statements also will
be incorporated by reference in the registration statement in reliance upon
their report and said authority.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate, subject to future contingencies, of the
expenses to be incurred by the Registrants in connection with the issuance and
distribution of the securities being registered:
<TABLE>
<S> <C>
Registration Fee.................................................. $ 111,200
Legal Fees and Expenses*.......................................... 100,000
Trustee Fees and Expenses*........................................ 25,000
Accounting Fees and Expenses*..................................... 55,000
Blue Sky and Legal Investment Fees and Expenses*.................. 25,000
Printing and Engraving Fees*...................................... 80,000
Rating Agency Fees*............................................... 200,000
Listing Fees*..................................................... 50,000
Miscellaneous*.................................................... 28,800
---------
Total*............................................................ $ 675,000
---------
---------
</TABLE>
- ------------------------
* Estimated pursuant to instruction to Item 511 of Regulation S-K.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant is subject to Minnesota Statutes Chapter 302A, the Minnesota
Business Corporation Act (the "Corporation Act"). Section 302A.521 of the
Corporation Act provides in substance that, unless prohibited by its articles of
incorporation or bylaws, a corporation must indemnify an officer or director who
is made or threatened to be made a party to a proceeding by reason of the former
or present official capacity of the person against judgments, penalties, fines,
including, without limitation, excise taxes assessed against the person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorneys' fees and disbursements, incurred by such person in
connection with the proceeding, if certain criteria are met. These criteria, all
of which must be met by the person seeking indemnification, are: (a) that such
person has not been indemnified by another organization or employee benefit plan
for the same judgments, penalties, fines, including, without limitation, excise
taxes assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding with
respect to the same act or omissions; (b) that such person must have acted in
good faith; (c) that no improper personal benefit was obtained by such person
and such person satisfied certain statutory conflicts of interest provisions, if
applicable; (d) that in the case of a criminal proceeding, such person had no
reasonable cause to believe that the conduct was unlawful; and (e) that such
person must have acted in a manner he reasonably believed was in the best
interests of the corporation or, in certain limited circumstances, not opposed
to the best interests of the corporation. The determination as to eligibility
for indemnification is made by the members of the corporation's board of
directors or a committee of the board who are at the time not parties to the
proceedings under consideration, by special legal counsel, by the shareholders
who are not parties to the proceedings or by a court.
The Corporation Act also permits a corporation to purchase and maintain
insurance on behalf of a person in that person's official capacity against any
liability asserted against and incurred by the person in or arising from that
capacity whether or not the corporation would have been required to indemnify
the person against the liability.
II-1
<PAGE>
The Bylaws of the Registrant provide for indemnification of its officers and
directors to the fullest extent permitted under the Corporation Act.
The Registrant currently maintains a policy insuring, subject to certain
exceptions, its directors and officers and the directors and officers of its
subsidiaries against liabilities which may be incurred by such persons acting in
such capacities.
Pursuant to the terms of the form of underwriting agreement and the form of
distribution agreement filed as Exhibits 1.1 and 1.2 to this Registration
Statement, the directors and officers of the Registrant will be indemnified
against certain civil liabilities that they may incur under the Securities Act
of 1933 (the "Securities Act") in connection with this Registration Statement
and the related Prospectus and applicable Prospectus Supplement.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<C> <S>
*1.1 Form of Underwriting Agreement for Debt
Securities, Preferred Stock, Common
Stock, Depositary Shares and
Securities Warrants.
*1.2 Form of Distribution Agreement.
3.1 Amended and Restated Articles of
Incorporation of the Registrant.(1)
3.2 Bylaws of the Registrant.(2)
*4.1 Form of Senior Indenture.
*4.2 Form of Subordinated Indenture.
*4.3 Form of Senior Debt Security.
*4.4 Form of Subordinated Debt Security.
*4.5 Form of Certificate of Designation,
Preferences and Rights of Preferred
Stock.
*4.6 Form of Preferred Stock Certificate.
*4.7 Form of Convertible Preferred Stock
Certificate.
*4.8 Form of Deposit Agreement, including
form of Depositary Receipt.
*4.9 Form of Debt Warrant Agreement,
including form of Debt Warrant
Certificate.
*4.10 Form of Preferred Stock Warrant
Agreement, including form of Preferred
Stock Warrant Certificate.
*4.11 Form of Common Stock Warrant Agreement,
including form of Common Stock Warrant
Certificate.
*4.12 Forms of Registered Medium-Term Notes.
4.13 Form of Common Stock Certificate.(3)
5.1 Opinion of General Counsel of the
Registrant
12.1 Computations of ratio of earnings to
fixed charges.
23.1 Consent of General Counsel of the
Registrant (included as part of
Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Powers of Attorney.
</TABLE>
- ------------------------
* To be filed by Amendment.
(1) Incorporated by reference to Exhibit 3.a to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 (File No. 1-8668).
II-2
<PAGE>
(2) Incorporated by reference to Exhibit 3.b to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 (File No. 1-8668).
(3) Incorporated by reference to Exhibit 4 to the Registrant's Registration
Statement on Form 8-A (File No. 1-8668) filed on April 13, 1990.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the
II-3
<PAGE>
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(e) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(f) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Securities Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minnetonka, State of Minnesota, on the 23rd day of
November, 1998.
FINGERHUT COMPANIES, INC.
By /s/ THEODORE DEIKEL
---------------------------
Theodore Deikel
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
By /s/ THEODORE DEIKEL Dated: November 23, 1998
-------------------------------------------
Theodore Deikel
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By /s/ GERALD T. KNIGHT Dated: November 23, 1998
-------------------------------------------
Gerald T. Knight
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By /s/ THOMAS C. VOGT Dated: November 23, 1998
-------------------------------------------
Thomas C. Vogt
Corporate Controller
(Principal Accounting Officer)
By *
-------------------------------------------
Wendell R. Anderson
Director
By
-------------------------------------------
Edwin C. Gage
Director
II-5
<PAGE>
By *
-------------------------------------------
Stanley S. Hubbard
Director
By
-------------------------------------------
Robert H. Lessin
Director
By *
-------------------------------------------
Kenneth A. Macke
Director
By *
-------------------------------------------
John M. Morrison
Director
By *
-------------------------------------------
Christina L. Shea
Director
*By /s/ MICHAEL P. SHERMAN Dated: November 23, 1998
--------------------------------------
Michael P. Sherman
AS ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT FORM OF FILING
- ---------- ---------------------------------------- ------------------------------
<C> <S> <C>
*1.1 Form of Underwriting Agreement for Debt
Securities, Preferred Stock, Common
Stock, Depositary Shares and
Securities Warrants...................
*1.2 Form of Distribution Agreement..........
3.1 Amended and Restated Articles of
Incorporation of the Registrant....... Incorporated by Reference
3.2 Bylaws of the Registrant................ Incorporated by Reference
*4.1 Form of Senior Indenture................
*4.2 Form of Subordinated Indenture..........
*4.3 Form of Senior Debt Security............
*4.4 Form of Subordinated Debt Security......
*4.5 Form of Certificate of Designation,
Preferences and Rights of Preferred
Stock.................................
*4.6 Form of Preferred Stock Certificate.....
*4.7 Form of Convertible Preferred Stock
Certificate...........................
*4.8 Form of Deposit Agreement, including
form of Depositary Receipt............
*4.9 Form of Debt Warrant Agreement,
including form of Debt Warrant
Certificate...........................
*4.10 Form of Preferred Stock Warrant
Agreement, including form of Preferred
Stock Warrant Certificate.............
*4.11 Form of Common Stock Warrant Agreement,
including form of Common Stock Warrant
Certificate...........................
*4.12 Forms of Registered Medium-Term Notes...
4.13 Form of Common Stock Certificate........ Incorporated by Reference
5.1 Opinion of General Counsel of the
Registrant............................ Electronic Transmission
12.1 Computations of ratio of earnings to
fixed charges......................... Electronic Transmission
23.1 Consent of General Counsel of the
Registrant (included as part of
Exhibit 5.1)..........................
23.2 Consent of KPMG Peat Marwick LLP........ Electronic Transmission
24.1 Powers of Attorney...................... Electronic Transmission
</TABLE>
- ------------------------
* To be filed by Amendment.
<PAGE>
Exhibit 5.1
November 23, 1998
Fingerhut Companies, Inc.
4400 Baker Road
Minnetonka, Minnesota 55343
RE: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
I am General Counsel of Fingerhut Companies, Inc. (the "Corporation")
and, as such, I and the attorneys that I supervise have acted as counsel for the
Corporation in the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
in connection with the proposed offer and sale of the following securities (the
"Securities") of the Corporation having an aggregate initial offering price of
up to $400,000,000:
(i) unsecured debt securities of the Corporation consisting of
debentures, notes and/or other evidences of indebtedness, which may be
senior ("Senior Debt Securities") or subordinated ("Subordinated Debt
Securities" and, together with the Senior Debt Securities, "Debt
Securities");
(ii) preferred stock, $0.01 par value per share (the "Preferred
Stock"), of the Corporation, interests in which may be evidenced by
appropriately prepared depositary shares (the "Depositary Shares") or upon
conversion or exchange of Debt Securities;
(iii) common stock, $0.01 par value per share (the "Common Stock") of
the Corporation, upon conversion of Debt Securities or Preferred Stock, or
Depositary Shares, or upon exercise of Warrants (as defined below);
(iv) warrants to purchase Debt Securities, Preferred Stock,
Depositary Shares or Common Stock (collectively, the "Warrants"); and
(v) units comprised of one or more of the above-referenced
securities offered together in different combinations (the "Units").
The Securities may be offered in separate series, in amounts, at
prices, and on terms to be set forth in the prospectus and one or more
supplements to the prospectus (collectively, the "Prospectus") constituting a
part of the Registration Statement, and in the Registration Statement.
<PAGE>
The Senior Debt Securities are to be in the forms filed as
Exhibits 4.3 and 4.12 to the Registration Statement, whichever is appropriate
and with appropriate changes and insertions, and are to be issued under one or
more indentures in the form filed as Exhibit 4.1 to the Registration Statement,
with appropriate changes and insertions (the "Senior Indenture"), to be entered
into by the Corporation and a trustee or trustees to be named by the
Corporation. The Subordinated Debt Securities are to be in the form filed as
Exhibit 4.4 to the Registration Statement, with appropriate changes and
insertions, and are to be issued under one or more indentures in the form filed
as Exhibit 4.2 to the Registration Statement, with appropriate changes and
insertions (the "Subordinated Indenture", and, together with the Senior
Indenture, the "Indentures"), to be entered into by the Corporation and a
trustee or trustees to be named by the Corporation. The shares of Preferred
Stock are to be evidenced by the forms of preferred stock certificate filed as
Exhibits 4.6 and 4.7 to the Registration Statement, whichever is appropriate and
with appropriate changes and insertions. Each series of Preferred Stock is to
be issued under the Corporation's Amended and Restated Articles of
Incorporation, as amended (the "Articles of Incorporation"), and a certificate
of designations (a "Certificate of Designations") to be approved by the Board of
Directors of the Corporation or a committee thereof and filed with the Secretary
of State of the State of Minnesota (the "Minnesota Secretary of State") in
accordance with Section 302A.401 of the Minnesota Business Corporation Act. The
Depositary Shares are to be issued under a deposit agreement in the form filed
as Exhibit 4.8 to the Registration Statement, with appropriate changes and
insertions (the "Deposit Agreement"), to be entered into by the Corporation, a
depositary to be named by the Corporation, and the holders from time to time of
depositary receipts evidencing Depositary Shares. The Common Stock is to be
evidenced by the form of common stock certificate filed as Exhibit 4.13 to the
Registration Statement, with appropriate insertions, and issued under the
Articles of Incorporation. The Warrants are to be issued under warrant
agreements in the forms filed as Exhibits 4.9, 4.10 and 4.11 to the Registration
Statement, whichever is appropriate and with appropriate changes and insertions
(the "Warrant Agreements"), to be entered into by the Corporation and warrant
agents to be named by the Corporation.
As part of the corporate action taken and to be taken in connection
with the issuance of the Securities (the "Corporate Proceedings"), the Board of
Directors will, before they are issued, authorize the issuance of any Securities
other than the Debt Securities, and certain terms of the Securities to be issued
by the Corporation from time to time will be approved by the Board of Directors
of the Corporation or a committee thereof or certain authorized officers of the
Corporation.
I, or attorneys that I supervise, have examined or are otherwise
familiar with the Articles of Incorporation, the By-Laws of the Corporation, as
amended, the Registration Statement, such of the Corporate Proceedings as have
occurred as of the date hereof, and such other documents, records and
instruments as I have deemed necessary or appropriate for the purposes of this
opinion.
Based on the foregoing and the assumptions that follow, I am of the
opinion that:
(i) upon the execution and delivery by the Corporation of the
Senior Indenture or the Subordinated Indenture, as the case may be, such
Indenture will become a valid and binding obligation of the Corporation;
<PAGE>
(ii) upon (a) the execution and delivery by the Corporation of the
Senior Indenture or the Subordinated Indenture, as the case may be, (b) the
completion of all required Corporate Proceedings relating to the issuance
of Senior Debt Securities or Subordinated Debt Securities, as the case may
be, (c) the due execution and delivery of the Senior Debt Securities or
Subordinated Debt Securities, as the case may be, and (d) the due
authentication of the Senior Debt Securities or Subordinated Debt
Securities, as the case may be, by a duly appointed trustee, such Debt
Securities will be valid and binding obligations of the Corporation;
(iii) upon (a) the due authorization, execution, acknowledgment,
delivery and filing by the Corporation with, and recording by, the
Minnesota Secretary of State of the applicable Certificate of Designations,
(b) the completion of all required Corporate Proceedings relating to the
issuance of Preferred Stock, and (c) the due execution, issuance and
delivery of certificates representing the Preferred Stock pursuant to such
Certificate of Designations, the Preferred Stock will be validly authorized
and issued, fully paid and non-assessable;
(iv) upon (a) the completion of all required Corporate Proceedings
relating to the issuance of Common Stock, and (b) the execution, issuance
and delivery of the certificates representing Common Stock, the Common
Stock will be validly authorized and issued, fully paid and non-assessable;
(v) upon (a) the completion of all required Corporate Proceedings
relating to the issuance of Warrants, (b) the due execution and delivery of
Warrant Agreements, (c) the due execution and delivery of the related
Warrants, and (d) the due authentication of the related Warrants by the
Warrant Agent, such Warrants will be legally issued, valid and binding
obligations of the Corporation;
(vi) upon (a) the completion of all required Corporate Proceedings
relating to the issuance of Depositary Shares, (b) the due execution and
delivery of a Deposit Agreement, and (c) the due execution and delivery by
the Corporation of receipts evidencing interests in the Depositary Shares,
the Deposit Agreement will be a valid and binding agreement of the
Corporation and the Depositary Shares will be validly authorized and
issued, fully paid and non-assessable; and
(vii) if Debt Securities, Preferred Stock or Depositary Shares are
exchangeable for or convertible into shares of Preferred Stock, Depositary
Shares or shares of Common Stock, when such shares of Preferred Stock,
Depositary Shares or shares of Common Stock have been duly issued in
exchange for or upon conversion of such Debt Securities, Preferred Stock or
Depositary Shares, as the case may be, in accordance with the terms of the
applicable Indenture, Certificate of Designations, Deposit Agreement or
other instrument fixing the terms of such exchange or conversion duly
authorized by the Board of Directors, or a duly authorized committee
thereof, or a duly authorized officer of the Company, such shares of
Preferred Stock or Common Stock, as the case may be, will be legally
issued, fully paid and nonassessable, and such Depositary Shares will be
legally issued and valid and binding obligations of the Company entitled to
the benefits of the Deposit Agreement or such other instrument.
<PAGE>
The foregoing opinions assume that (a) the consideration designated in
the applicable Corporate Proceedings for any Security shall have been received
by the Corporation in accordance with applicable law; (b) the Senior Indenture,
Subordinated Indenture and any Deposit Agreement or Warrant Agreement shall have
been duly authorized, executed and delivered by all parties thereto other than
the Corporation; (c) the Registration Statement shall have become effective
under the Securities Act; and (d) the Senior Indenture or the Subordinated
Indenture, as the case may be, shall have become qualified under the Trust
Indenture Act of 1939, as amended. To the extent they relate to enforceability,
each of the foregoing opinions is subject to the limitation that the provisions
of the referenced instruments and agreements may be limited by bankruptcy or
other laws of general application affecting the enforcement of creditors' rights
and by general equity principles (regardless of whether enforcement is
considered in a proceeding in equity or at law).
I have also assumed (a) the accuracy and truthfulness of all public
records of the Corporation and of all certifications, documents and other
proceedings examined by me that have been produced by officials of the
Corporation acting within the scope of their official capacities, without
verifying the accuracy or truthfulness of such representations, and (b) the
genuineness of such signatures appearing upon such public records,
certifications, documents and proceedings. I express no opinion as to the laws
of any jurisdiction other than the laws of the State of New York and the federal
laws of the United States of America.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to being named in the Prospectus included therein
under the caption "Legal Opinions" with respect to the matters stated therein
without implying or admitting that I am an "expert" within the meaning of the
Securities Act, or other rules and regulations of the Securities and Exchange
Commission issued thereunder with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Michael P. Sherman
------------------------------
Michael P. Sherman
General Counsel
M1:438678.02
<PAGE>
Exhibit 12.1
Fingerhut Companies, Inc.
Computation of Ratio of Earnings to Fixed Charges
(in thousands, except ratios)
<TABLE>
<CAPTION>
Thirty-nine weeks ended Fiscal Year Ended
------------------------ ------------------------------------------------------------------
Sept. 25, Sept. 26, Dec. 26, Dec. 27, Dec. 29, Dec. 30, Dec. 31,
1998(a) 1997(b) 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) from continuing
operations before income
taxes and extraordinary items(c). $ (31,970) $ 3,640 $ 58,989 $ 32,445 $ 68,857 $ 67,423 $ 109,880
Add:
Fixed charges:
Interest on indebtedness and
amortization of debt
expense . . . . . . . . . . . 15,863 21,643 28,630 32,739 29,353 25,711 34,852
Interest factor on rental
expense . . . . . . . . . . . 8,223 8,304 11,162 11,588 12,815 13,253 13,027
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges . . . . . . 24,086 29,947 39,792 44,327 42,168 38,964 47,879
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less: Capitalized interest . . . . -- -- -- (3,869) (2,233) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total available earnings (loss) . . $ (7,884) $ 33,587 $ 98,781 $ 72,903 $ 108,792 $ 106,387 $ 157,759
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed
charges . . . . . . . . . . . . --(d) 1.1x 2.5x 1.6x 2.6x 2.7x 3.3x
</TABLE>
- ---------------
(a) Fifty-two weeks ended September 25, 1998 ratio of earnings to fixed charges
is 1.7 (2.7 excluding non-recurring charge of $38.1 million).
(b) Fifty-two weeks ended September 26, 1997 ratio of earnings to fixed charges
is 2.1.
(c) Reflects the restatement of all prior years and periods presented to
account for Metris Companies Inc. ("Metris"), an 83% owned subsidiary,
as discontinued operations as a result of the tax-free spin-off of Metris
effective September 25, 1998.
(d) Earnings were inadequate to cover fixed charges by $32.0 million.
Excluding the non-recurring charge of $38.1 million taken by us in
the third quarter, the pro forma ratio of earnings to fixed charges
would have been 1.3.
M1:439951.01
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Fingerhut Companies, Inc.
We consent to the use of our report dated January 21, 1998 incorporated herein
by reference and to the reference to our firm under the heading "EXPERTS" in the
prospectus.
KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
November 23, 1998
M1:439929.01
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of FINGERHUT
COMPANIES, INC., a Minnesota corporation (the "Corporation") does hereby make,
constitute and appoint Theodore Deikel and Michael P. Sherman and each of them,
his or her true and lawful attorneys-in-fact and agents with full power and
substitution and resubstitution, for such person and in his or her name, place
and stead, in any and all capacities, to sign and affix the undersigned's name
as director and/or officer of the Corporation to this Registration Statement on
Form S-3, or other applicable forms, and all amendments including, without
limitation, post-effective amendments thereto, to be filed by the Corporation
with the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of securities of the Corporation,
and to file the same, with all exhibits thereto and other supporting documents,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted as fully to all intents and
purposes and he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney shall remain in effect until revoked in
writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 16th day of
November, 1998.
/s/ Stanley S Hubbard
----------------------------------------
Stanley S. Hubbard
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of FINGERHUT
COMPANIES, INC., a Minnesota corporation (the "Corporation") does hereby make,
constitute and appoint Theodore Deikel and Michael P. Sherman and each of them,
his or her true and lawful attorneys-in-fact and agents with full power and
substitution and resubstitution, for such person and in his or her name, place
and stead, in any and all capacities, to sign and affix the undersigned's name
as director and/or officer of the Corporation to this Registration Statement on
Form S-3, or other applicable forms, and all amendments including, without
limitation, post-effective amendments thereto, to be filed by the Corporation
with the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of securities of the Corporation,
and to file the same, with all exhibits thereto and other supporting documents,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted as fully to all intents and
purposes and he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney shall remain in effect until revoked in
writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 16th day of
November, 1998.
/s/ Wendell R Anderson
----------------------------------------
Wendell R. Anderson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of FINGERHUT
COMPANIES, INC., a Minnesota corporation (the "Corporation") does hereby make,
constitute and appoint Theodore Deikel and Michael P. Sherman and each of them,
his or her true and lawful attorneys-in-fact and agents with full power and
substitution and resubstitution, for such person and in his or her name, place
and stead, in any and all capacities, to sign and affix the undersigned's name
as director and/or officer of the Corporation to this Registration Statement on
Form S-3, or other applicable forms, and all amendments including, without
limitation, post-effective amendments thereto, to be filed by the Corporation
with the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of securities of the Corporation,
and to file the same, with all exhibits thereto and other supporting documents,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted as fully to all intents and
purposes and he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney shall remain in effect until revoked in
writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 16th day of
November, 1998.
/s/ Kenneth Macke
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Kenneth A. Macke
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of FINGERHUT
COMPANIES, INC., a Minnesota corporation (the "Corporation") does hereby make,
constitute and appoint Theodore Deikel and Michael P. Sherman and each of them,
his or her true and lawful attorneys-in-fact and agents with full power and
substitution and resubstitution, for such person and in his or her name, place
and stead, in any and all capacities, to sign and affix the undersigned's name
as director and/or officer of the Corporation to this Registration Statement on
Form S-3, or other applicable forms, and all amendments including, without
limitation, post-effective amendments thereto, to be filed by the Corporation
with the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of securities of the Corporation,
and to file the same, with all exhibits thereto and other supporting documents,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted as fully to all intents and
purposes and he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney shall remain in effect until revoked in
writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 16th day of
November, 1998.
/s/ John M. Morrison
----------------------------------------
John M. Morrison
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of FINGERHUT
COMPANIES, INC., a Minnesota corporation (the "Corporation") does hereby make,
constitute and appoint Theodore Deikel and Michael P. Sherman and each of them,
his or her true and lawful attorneys-in-fact and agents with full power and
substitution and resubstitution, for such person and in his or her name, place
and stead, in any and all capacities, to sign and affix the undersigned's name
as director and/or officer of the Corporation to this Registration Statement on
Form S-3, or other applicable forms, and all amendments including, without
limitation, post-effective amendments thereto, to be filed by the Corporation
with the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of securities of the Corporation,
and to file the same, with all exhibits thereto and other supporting documents,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted as fully to all intents and
purposes and he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney shall remain in effect until revoked in
writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 17th day of
November, 1998.
/s/ Christina L Shea
----------------------------------------
Christina L. Shea
