<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1996
REGISTRATION NO. 333-6333
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------
ARMSTRONG WORLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-0366390
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
313 WEST LIBERTY STREET
LANCASTER, PENNSYLVANIA 17603
(717) 397-0611
(Address of principal executive offices)
L.A. PULKRABEK, ESQUIRE
SENIOR VICE-PRESIDENT, SECRETARY AND GENERAL COUNSEL
313 WEST LIBERTY STREET
LANCASTER, PENNSYLVANIA 17603
(Name and address of agent for service)
717-397-0611
(Telephone number, including area code, of agent for service)
WITH COPIES TO:
Vincent C. Deluzio, Esquire Robert S. Risoleo, Esquire
Buchanan Ingersoll Professional Sullivan & Cromwell
Corporation 125 Broad Street
One Oxford Centre New York, N.Y. 10004
301 Grant Street, 20th Floor (212) 558-4000
Pittsburgh, Pennsylvania 15219-1410
(412) 562-8947
-----------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please 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(c)
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
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2)(3) FEE(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value(4) $250,000,000 100% $250,000,000 $86,208
Preferred Stock Purchase Rights
(5) Class A Preferred Stock, no
par value Depository Shares
Debt Securities(6)
</TABLE>
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- -------------------------------------------------------------------------------
(1) In U.S. Dollars or the equivalent thereof in one or more foreign
currencies or currencies units or composite currencies, including the
European Currency Unit.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(3) The aggregate initial offering price of all securities registered pursuant
to this Registration Statement and offered from time to time will not
exceed $250,000,000. An additional $250,000,000 of Debt Securities has
been previously registered on a Registration Statement on Form S-3 (No.
33-38837) for which a registration fee in the amount of $62,500 has been
previously paid. The previously registered debt securities may also be
sold pursuant to the Prospectus contained herein. Any securities
registered hereunder or under Registration Statement No. 33-38837 may be
sold separately or as units with other securities registered hereunder or
thereunder.
(4) Includes Preferred Stock Purchase Rights (the "Rights").
(5) The Rights attach to the shares of Common Stock to be offered hereby.
Prior to the occurrence of certain events, such Rights will not be
exercisable or evidenced separately from the Common Stock.
(6) Or, if Debt Securities are issued at original issue discount, such greater
amount as shall not exceed an aggregate initial offering price of
$250,000,000.
Pursuant to Rule 429 of the rules and regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended, the combined
prospectus contained herein also relates to the Registration Statement on Form
S-3 (No. 33-38837).
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 that states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT WITH RESPECT TO THESE SECURITIES HAS BEEN FILED WITH +
+THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR +
+MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion) Issued November , 1996
$500,000,000
LOGO
OF ARMSTRONG WORLD INDUSTRIES, INC.]
Armstrong World Industries, Inc.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
----------
Armstrong World Industries, Inc., a Pennsylvania corporation ("Armstrong" or
the "Company"), may offer and sell from time to time, together or separately,
up to an aggregate initial public offering price of $500,000,000 or the
equivalent thereof in other currencies, foreign currency units or composite
currencies such as the European Currency Unit (the "Specified Currency"),
subject to the limitations set forth below, in one or more series (a) debt
securities ("Debt Securities"), which may be either senior debt securities
("Senior Debt Securities") or subordinated debt securities ("Subordinated Debt
Securities"); (b) shares of common stock, $1.00 par value per share ("Common
Stock"), including Preferred Stock Purchase Rights which attach to each share
of Common Stock (the "Rights"); (c) shares of Class A preferred stock, no par
value per share ("Preferred Stock"); and (d) depositary shares ("Depositary
Shares") or any combination of the foregoing, each in amounts, at prices and on
terms to be determined at the time of sale. The Debt Securities, Common Stock
with attached Rights, Preferred Stock, and Depositary Shares are collectively
referred to herein as the "Securities".
All specific terms of the offering and sale of Securities, including the
initial public offering price, aggregate amount, listing on any securities
exchange or quotation system, risk factors, if any, and the agents,
underwriters or dealers, if any, to be utilized in connection with the sale of
the Securities, will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"). With respect to the Debt Securities, the related
Prospectus Supplement will set forth the specific designation, rights and
restrictions, whether they are senior or subordinated, the currencies or
currency units or composite currencies in which they are denominated, the
aggregate principal amount, the maturity, rate and time of payment of interest,
any conversion, exchange, redemption or sinking fund provisions, and any other
terms of the Securities offered thereby. With respect to the Preferred Stock,
the related Prospectus Supplement will set forth the specific designation,
rights, preferences, privileges and restrictions thereof, including dividend
rate or rates (or method of ascertaining the same), dividend payment dates,
voting rights, liquidation preference, any conversion, exchange, redemption or
sinking fund provisions, and any other terms of the Securities offered thereby.
The Prospectus Supplement will also contain information, where applicable,
regarding certain United States federal income tax considerations relating to
the Securities offered thereby.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The Company may sell the Securities directly, or through agents, underwriters
or dealers designated from time to time, or through a combination of such
methods, which underwriters may include Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co. and Merrill Lynch & Co. or may be a group of underwriters
represented by firms including one or more of such firms and such firms may act
as agents. See "Plan of Distribution." If agents of the Company or underwriters
or any dealers are involved in the sale of Securities in respect of which this
Prospectus is being delivered, the name of such agents, underwriters or
dealers, and any applicable commissions or discounts, will be set forth in or
may be calculated from the Prospectus Supplement relating to such Securities.
The Company reserves the sole right to accept and, together with their
respective agents from time to time, to reject in whole or in part any proposed
purchase of Securities to be made directly or through agents.
----------
The Prospectus may not be used to consummate the sale of Securities unless
accompanied by a Prospectus Supplement.
November , 1996
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES DESCRIBED HEREIN OR THEREIN OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THE PROSPECTUS
OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
----------------
TABLE OF CONTENTS
PAGE
Available Information....................................................... 3
Incorporation of Certain Documents by Reference............................. 3
The Company................................................................. 5
Use of Proceeds............................................................. 5
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and
Preferred Stock Dividends................................................... 5
Description of Debt Securities.............................................. 6
Description of Capital Stock................................................ 17
Description of Depositary Shares............................................ 22
Plan of Distribution........................................................ 24
Validity of Securities...................................................... 25
Experts..................................................................... 25
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK, PACIFIC AND/OR PHILADELPHIA
STOCK EXCHANGES. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
2
<PAGE>
AVAILABLE INFORMATION
Armstrong is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC" or the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices of
the SEC located at Citicorp Center, Suite 1400, 500 West Madison Street, Room
1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such information can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. Such reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, the
offices of the Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco,
California 94104-7098, and the offices of the Philadelphia Stock Exchange,
1900 Market Street, Philadelphia, Pennsylvania 19103, on which exchanges
certain of Armstrong's securities are listed. Armstrong's Common Stock is
listed on the New York, Pacific and Philadelphia Stock Exchanges under the
symbol "ACK."
Armstrong has filed with the SEC two Registration Statements on Form S-3
(the "Registration Statements") under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to the Securities. This Prospectus does not
contain all of the information set forth in the Registration Statements,
certain parts of which are omitted in accordance with the rules and
regulations of the SEC. Reference is hereby made to the Registration
Statements and related exhibits for further information with respect to the
Company and the Securities offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the SEC. The Registration
Statements and the exhibits thereto may be inspected without charge at the
office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies thereof may be obtained from the SEC at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding the Company that is electronically
filed through the Commission's Electronic Data Gathering, Analysis and
Retrieval system. Such information is publicly available through the
Commission's Web site (http://www. sec. gov.).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the SEC by Armstrong under the
1934 Act (file number 001-02116) are incorporated herein by reference: (1) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
certain portions of which are superseded by the Company's Current Report on
Form 8-K filed on October 18, 1996; (2) the Company's Current Report on Form
8-K filed on January 16, 1996; (3) the Company's Current Report on Form 8-K
filed on January 16, 1996, as amended by a Form 8-K/A filed on March 13, 1996;
(4) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, certain portions of which are superseded by the Company's Current
Report on Form 8-K filed on October 18, 1996; (5) the Company's Current Report
on Form 8-K filed on May 13, 1996; (6) the Company's Current Report on Form
8-K filed on July 29, 1996, and any amendments or reports filed for the
purpose of updating the Description of the Company's Capital Stock contained
in such report; (7) the description of the Company's Preferred Stock Purchase
Rights, set forth in the Registration Statement on Form 8-A/A dated March 15,
1996; (8) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, certain portions of which are superseded by the Company's
Current Report on Form 8-K filed on October 18, 1996; (9) the Company's
Current Report on Form 8-K filed on October 15, 1996; and (10) the Company's
Current Report on Form 8-K filed on October 18, 1996.
All documents filed by Armstrong with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus
and prior to the termination of the offering or offerings of the Securities
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof
3
<PAGE>
from the date of filing of such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Prospectus. All information
appearing in this Prospectus is qualified in its entirety by the information
and financial statements (including the notes thereto) contained in the
documents incorporated by reference herein.
Armstrong will provide without charge, upon written or oral request, to each
person, including any beneficial owner, to whom a copy of this Prospectus is
delivered, a copy of any or all of the documents incorporated by reference in
this Prospectus (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to L.A. Pulkrabek, Senior Vice-President, Secretary and
General Counsel, Armstrong World Industries, Inc., 313 West Liberty Street,
Lancaster, Pennsylvania 17603-2717 (telephone 717-397-0611).
[Remainder Of This Page Is Intentionally Left Blank]
4
<PAGE>
THE COMPANY
Armstrong World Industries, Inc. is a Pennsylvania corporation incorporated
in 1891. The Company is a manufacturer of interior furnishings, including
floor coverings, and building products which are sold primarily for use in the
furnishing, refurbishing, repair, modernization and construction of
residential, commercial and institutional buildings. It also manufactures
various industrial and other products. In late 1995, Armstrong sold its
furniture business and combined its ceramic tile business with Dal-Tile
International Inc. ("Dal-Tile"), retaining a minority equity interest in the
combined company. Unless the context indicates otherwise, the term "Company"
means Armstrong World Industries, Inc. and its consolidated subsidiaries.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement, Armstrong
intends to use the net proceeds from the sale of the Securities offered hereby
for general corporate purposes, which may include additions to working
capital, refinancing existing indebtedness, capital expenditures and possible
acquisitions. Armstrong has
not allocated a specific portion of the net proceeds for any particular use at
this time. Specific information concerning the use of proceeds from the sale
of any Securities may be included in the Prospectus Supplement relating to
such Securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's consolidated ratios of earnings
to fixed charges for the indicated periods.(1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996
-------------------------------------------------------------------- ----------------
1991 1992 1993 1994 1995
---- ------ ---- ---- ----
<S> <C> <C> <C> <C> <C>
2.56 N/A(2) 2.49 8.70 1.20 7.59
</TABLE>
- --------
(1) Excluding restructuring charges for all periods and the pre-tax loss on
the ceramic tile business combination for 1995, the ratios would have been
2.80, 2.89, 4.50, 8.70 and 7.40 for 1991, 1992, 1993, 1994 and 1995,
respectively.
(2) Earnings were inadequate to cover fixed charges by $66.3 million.
The following table sets forth the Company's consolidated ratio of earnings
to combined fixed charges and preferred dividends for the indicated
periods:(1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996
--------------------------------------------------------------- ----------------
1991 1992 1993 1994 1995
---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C>
1.88 N/A(2) 1.74 5.61 N/A(3) 4.79
</TABLE>
- --------
(1) Excluding restructuring charges for all periods and the pre-tax loss on
the ceramic tile business combination for 1995, the ratios would have been
2.05, 2.08, 3.14, 5.61 and 5.04 for 1991, 1992, 1993, 1994 and 1995,
respectively.
(2) Earnings were inadequate to cover fixed charges and preferred stock
dividends by $85.6 million.
(3) Earnings were inadequate to cover fixed charges plus preferred stock
dividends by $10.6 million.
5
<PAGE>
The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. The ratio of earnings to fixed charges and
preferred stock dividends has been computed by dividing earnings by the sum of
fixed charges and preferred stock dividend requirements. For purposes of
calculating these ratios, earnings consist of consolidated earnings from
continuing business operations before income taxes plus fixed charges. Fixed
charges consist of interest expense, one-third of rent expense which is deemed
to be representative of interest and amortization of finance costs. In June
1989, the Company established an Employee Stock Ownership Plan (the "ESOP").
The Company is the guarantor of a $270 million loan to the ESOP. Contributions
made by the Company to the ESOP and dividends paid by the Company on the
convertible preferred stock purchased by the ESOP are used by the ESOP to pay
installments of principal and interest on the ESOP loan. Such contributions
and dividends are not included in the above ratios of earnings to fixed
charges or ratios to combined fixed charges and preferred stock dividends.
Interest expense on the ESOP loan was approximately $23.2 million, $22.9
million, $22.3 million, $21.7 million and $21.0 million for the years ended
December 31, 1991, 1992, 1993, 1994 and 1995, respectively. Part of the
contributions made by the Company represent payroll deductions made by
participants in the ESOP.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
August 6, 1996 (the "Senior Indenture"), between the Company and Mellon Bank,
N.A. , as Trustee (the "Trustee" or "Mellon"). The Subordinated Debt
Securities are to be issued under a separate Indenture, dated as of August 6,
1996 (the "Subordinated Indenture"), also between the Company and Mellon as
Trustee. The Senior Indenture and Subordinated Indenture are sometimes
referred to collectively as the "Indentures". Copies of the Senior Indenture
and Subordinated Indentures are filed as exhibits to the Registration
Statement of which this Prospectus is a part. The Debt Securities may be
issued from time to time in one or more series. The particular terms of each
series, or of Debt Securities forming a part of a series, which are offered by
a Prospectus Supplement will be described in such Prospectus Supplement.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indentures, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
GENERAL
The Indentures will provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate
principal amount. The Company may specify a maximum aggregate principal amount
for the Debt Securities of any series. (Section 301) The Debt Securities are
to have such terms and provisions which are not inconsistent with the
Indentures, including as to maturity, principal and interest, as the Company
may determine. Unless otherwise specified in the applicable Prospectus
Supplement, the Senior Debt Securities when issued will be unsecured and
unsubordinated obligations of the Company and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities when issued will be subordinated in right of
payment to the prior payment in full of all Senior Debt of the Company, as
described under "Subordination of Subordinated Debt Securities" and in the
applicable Prospectus Supplement.
The applicable Prospectus Supplement will set forth whether the Debt
Securities offered shall be Senior Debt Securities or Subordinated Debt
Securities, the price or prices at which the Debt Securities to be offered
will be issued and will describe the following terms of such offered Debt
Securities: (1) the title of such Debt Securities; (2) any limit on the
aggregate principal amount of such Debt Securities or the series of which they
are a part; (3) the Person to whom any interest on a Debt Security of the
series shall be payable, if other than the
6
<PAGE>
Person in whose name that Debt Security (or one or more predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest; (4) the date or dates on which the principal of any of such
Debt Securities will be payable; (5) the rate or rates at which any of such
Debt Securities will bear interest, if any, the date or dates from which any
such interest will accrue, the Interest Payment Dates on which any such
interest will be payable and the Regular Record Date for any such interest
payable on any Interest Payment Date; (6) the place or places where the
principal of and any premium and interest on any of such Debt Securities will
be payable; (7) the period or periods within which, the price or prices at
which and the terms and conditions on which any of such Debt Securities may be
redeemed, in whole or in part, at the option of the Company; (8) the
obligation, if any, of the Company to redeem or purchase any of such Debt
Securities pursuant to any sinking fund or analogous provision or at the
option of the Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions on which any of such
Debt Securities will be redeemed or purchased, in whole or in part, pursuant
to any such obligation; (9) the denominations in which any of such Debt
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof; (10) if the amount of principal of or any premium
or interest on any of such Debt Securities may be determined with reference to
an index or pursuant to a formula, the manner in which such amounts will be
determined; (11) if other than the currency of the United States of America,
the currency, currencies or currency units in which the principal of or any
premium or interest on any of such Debt Securities will be payable (and the
manner in which the equivalent of the principal amount thereof in the currency
of the United States of America is to be determined for any purpose, including
for the purpose of determining the principal amount deemed to be Outstanding
at any time); (12) if the principal of or any premium or interest on any of
such Debt Securities is to be payable, at the election of the Company or the
Holder thereof, in one or more currencies or currency units other than those
in which such Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of any such amount as to which
such election is made will be payable, the periods within which and the terms
and conditions upon which such election is to be made and the amount so
payable (or the manner in which such amount is to be determined); (13) if
other than the entire principal amount thereof, the portion of the principal
amount of any of such Debt Securities which will be payable upon declaration
of acceleration of the Maturity thereof; (14) if the principal amount payable
at the Stated Maturity of any of such Debt Securities will not be determinable
as of any one or more dates prior to the Stated Maturity, the amount which
will be deemed to be such principal amount as of any such date for any
purpose, including the principal amount thereof which will be due and payable
upon any Maturity other than the Stated Maturity or which will be deemed to be
Outstanding as of any such date (or, in any such case, the manner in which
such deemed principal amount is to be determined); (15) if applicable, that
such Debt Securities, in whole or any specified part, are defeasible pursuant
to the provisions of the Indentures described under "Defeasance and Covenant
Defeasance--Defeasance and Discharge" or "Defeasance and Covenant Defeasance--
Covenant Defeasance", or under both such captions; (16) if applicable, the
terms of any right to convert Debt Securities into shares of Common Stock of
the Company or other securities or property; (17) whether any of such Debt
Securities will be issuable, in whole or in part, in the form of one or more
Global Securities, defined below, and, if so, the respective Depositaries for
such Global Securities, the form of any legend or legends to be borne by any
such Global Security in addition to or in lieu of the legend referred to under
"Form, Exchange and Transfer--Global Securities" and, if different from those
described under such caption, any circumstances under which any such Global
Security may be exchanged, in whole or in part, for Debt Securities
registered, and any transfer of such Global Security, in whole or in part, may
be registered, in the names of Persons other than the Depositary for such
Global Security or its nominee; (18) any addition to or change in the Events
of Default applicable to any of such Debt Securities and any change in the
right of the Trustee or the Holders to declare the principal amount of any of
such Debt Securities due and payable; (19) any addition to or change in the
covenants in the Indentures described under "Certain Restrictive Covenants"
applicable to any of such Debt Securities; and (20) any other terms of such
Debt Securities not inconsistent with the provisions of the applicable
Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount will be described in a
Prospectus Supplement under "United States Taxation". In addition, certain
special United States federal income tax or other considerations (if any)
7
<PAGE>
applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars will be described in a
Prospectus Supplement under "United States Taxation".
Unless otherwise set forth in the applicable Prospectus Supplement, neither
the Indentures nor the Debt Securities will contain provisions which would
afford holders of the Debt Securities protection in the event of a takeover,
recapitalization, or similar restructuring involving the Company that could
adversely affect such holders.
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into Common
Stock or other securities or property will be set forth in the Prospectus
Supplement relating thereto. Such terms shall include provisions as to whether
conversion is mandatory or at the option of the holder and may include
provisions pursuant to which the number of shares of Common Stock or other
securities or property to be received by the Holders of Debt Securities would
be calculated according to the market price of Common Stock or other
securities or property as of a time stated in the applicable Prospectus
Supplement. (Article Fourteen)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior
payment in full of all Senior Debt, including the Senior Debt Securities. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the Holders of the Subordinated
Debt Securities will be entitled to receive or retain any payment in respect
of the principal of (and premium, if any) or interest, if any, on the
Subordinated Debt Securities. (Section 1502)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are not holders of Senior Debt or Holders of
Subordinated Debt Securities may recover less, ratably, than holders of Senior
Debt and may recover more, ratably, than the Holders of the Subordinated Debt
Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Section 1503)
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to
Senior Debt, or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. (Section 1504) For purposes
of the subordination provisions, the payment, issuance and delivery of cash,
property or securities (other than stock and certain subordinated securities
of the Company) upon conversion of a Subordinated Debt Security will be deemed
to constitute payment on account of the principal of such Subordinated Debt
Security.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any, (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company to the extent that
such claim for post-petition interest is allowed in such proceeding) on Debt
(as defined under "Restrictive Covenants--Limitation on Liens"), whether
incurred on or prior to the date of the Subordinated Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debt
Securities or to other Debt which is pari passu with, or subordinated to, the
Subordinated Debt Securities; provided, however, that Senior Debt shall not be
deemed to include the Subordinated Debt Securities.
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The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indentures and the
limitations applicable to Global Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indentures and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305) The Company may at any time designate additional transfer agents
or rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Debt Security of that series (or of
that series and specified terms, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing or (ii) register
the transfer of or exchange any Debt Security so selected for redemption, in
whole or in part, except the unredeemed portion of any such Debt Security
being redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more global securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby (a "Global Security"). Each Global Security will be registered in the
name of a Depositary or a nominee thereof identified in the applicable
Prospectus Supplement, will be deposited with such Depositary or nominee or a
custodian therefor and will bear a legend regarding the restrictions on
exchanges and registration of transfer thereof referred to below and any such
other matters as may be provided for pursuant to the Indentures.
Notwithstanding any provision of the Indentures or any Debt Security
described herein, no Global Security may be exchanged, in whole or in part,
for Debt Securities registered, and no transfer of a Global Security, in whole
or in part, may be registered, in the name of any Person other than the
Depositary for such Global Security or any nominee of such Depositary unless
(i) the Depositary has notified the Company that it is unwilling or unable to
continue as Depositary for such Global Security or has ceased to be qualified
to act as such as required by the Indentures, (ii) there shall have occurred
and be continuing an Event of Default with respect to the Debt Securities
represented by such Global Security or (iii) there shall exist such
circumstances, if any, in addition to
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or in lieu of those described above as may be described in the applicable
Prospectus Supplement. All securities issued in exchange for a Global Security
or any portion thereof will be registered in such names as the Depositary may
direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indentures. Except in the limited circumstances referred to above, owners
of beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered
to be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the
Indentures. All payments of principal of and any premium and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to
the Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears
in the Security Register. Unless otherwise indicated in the applicable
Prospectus Supplement, the corporate trust office of the Trustee in The City
of New York will be designated as the Company's sole Paying Agent for payments
with respect to Debt Securities of each series. Any other Paying Agents
initially designated by the Company for the Debt Securities of a particular
series will be named in the applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the designation of
any Paying Agent or approve a change in the office through which any Paying
Agent acts, except that the Company will be required to maintain a Paying
Agent in each Place of Payment for the Debt Securities of a particular series.
(Section 1002)
All monies paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
has become due and payable will be repaid to the Company, and the Holder of
such Debt Security thereafter may look only to the Company for payment
thereof. (Section 1003)
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RESTRICTIVE COVENANTS
Limitation on Liens. The Senior Indenture will provide that, except as
otherwise provided in the next succeeding paragraph, the Company shall not,
and shall not permit any Restricted Subsidiary to, issue, assume or guarantee
any indebtedness for borrowed money ("Debt") secured by any mortgage, pledge,
security interest, lien or other encumbrance (a "Lien") upon any Principal
Property of the Company or of any Restricted Subsidiary or upon any shares of
stock or Debt of any Restricted Subsidiary (whether such Principal Property,
shares of stock or Debt are now owned or hereafter acquired) without in any
such case effectively providing concurrently with the issuance, assumption or
guaranty of any such Debt that the Senior Debt Securities (together with, if
the Company shall so determine, any other indebtedness of or guaranty by the
Company or such Restricted Subsidiary then existing or thereafter created
which is not subordinate to the Senior Debt Securities) shall be secured
equally and ratably with (or, at the option of the Company, prior to) such
Debt, so long as such Debt shall be so secured; provided, however, that the
foregoing restrictions shall not prevent, restrict or apply to (and there
shall be excluded from secured Debt in any computation made for purposes of
the "Limitation on Liens" covenant) Debt secured by (A) Liens on property,
shares of stock or indebtedness of any corporation existing at the time such
corporation becomes a Restricted Subsidiary or arising thereafter (i)
otherwise than in connection with the borrowing of money arranged thereafter
and (ii) pursuant to contractual commitments entered into prior to and not in
contemplation of such corporation's becoming a Restricted Subsidiary; (B)
Liens on any property (including shares of stock or Debt) existing at the time
of acquisition thereof (including acquisition through merger or consolidation)
or securing the payment of all or any part of the purchase price or
construction cost thereof or securing any Debt incurred prior to, at the time
of or within 180 days after, the acquisition of such property, shares of stock
or Debt or the completion of any such construction, whichever is later, for
the purpose of financing all or any part of the purchase price or construction
costs thereof (provided such Liens are limited to such property, improvements
thereon and the land upon which such property and improvements are located and
any other property not then constituting a Principal Property); (C) Liens on
any property to secure all or any part of the cost of development, operations,
construction, alteration, repair or improvement of all or any part of such
property, or to secure Debt incurred prior to, at the time of or within 180
days after, the completion of such development, operation, construction,
alteration, repair or improvement, whichever is later, for the purpose of
financing all or any part of such cost (provided such Liens are limited to
such property, improvements thereon and the land upon which such property and
improvements are located and any other property not then constituting a
Principal Property); (D) Liens which secure Debt owing by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary or by the
Company to a Restricted Subsidiary; (E) Liens securing indebtedness of a
corporation which becomes a successor of the Company in accordance with the
provisions described under "Consolidation, Merger and Sale of Assets"; (F)
Liens on property of the Company or a Restricted Subsidiary in favor of the
United States of America or any State thereof, or any department agency or
instrumentality or political subdivision of the United States of America or
any State thereof, or in favor of any other country or any political
subdivision thereof, to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the cost of
construction of the property subject to such Liens, or in favor of any trustee
or mortgagee for the benefit of holders of indebtedness of any such entity
incurred for any such purpose; (G) Liens existing at August 6, 1996; and (H)
any extension, renewal or replacement (or successive extension, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses (A) to (G), inclusive, or of any Debt secured thereby; provided that
such extension, renewal or replacement Lien shall be limited to all or any
part of the same property that secured the Lien extended, renewed or replaced
(plus any improvements on such property) and shall secure no larger amount of
Debt than that existing at the time of such extension, renewal or replacement.
Notwithstanding the foregoing restrictions, the Company and any one or more
Restricted Subsidiaries may issue, assume or guarantee Debt secured by a Lien
which would otherwise be subject to the foregoing restrictions if at the time
it does so (the "Incurrence Time") the aggregate amount of such Debt plus all
other Debt of the Company and its Restricted Subsidiaries secured by a Lien
which would otherwise be subject to the foregoing
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restrictions (not including Debt permitted to be secured under clauses (A)
through (H) of the next preceding paragraph), plus the aggregate Attributable
Debt (determined as of the Incurrence Time) of Sale and Leaseback Transactions
(other than Sale and Leaseback Transactions permitted by clause (1) under "--
Limitations on Sale and Leaseback Transactions") entered into after August 6,
1996 and in existence at the Incurrence Time (less the aggregate amount of
proceeds of such Sale and Leaseback Transactions which shall have been applied
in accordance with clause (3) under "Limitations on Sale and Leaseback
Transactions"), does not exceed 15% of Consolidated Net Tangible Assets.
Limitations on Sale and Leaseback Transactions. The Senior Indenture will
provide that the Company shall not itself, and shall not permit any Restricted
Subsidiary to, enter into any arrangements after August 6, 1996 with any bank,
insurance company or other lender or investor (other than the Company or
another Restricted Subsidiary) providing for the leasing as lessee by the
Company or by any such Restricted Subsidiary of any Principal Property (except
a lease for a temporary period not to exceed three years by the end of which
it is intended the use of such Principal Property by the lessee will be
discontinued), which was or is owned by the Company or a Restricted Subsidiary
and which has been or is to be sold or transferred by the Company or a
Restricted Subsidiary more than 180 days after the completion of construction
and commencement of full operation thereof by the Company or such Restricted
Subsidiary, to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
Principal Property (herein called a "Sale and Leaseback Transaction") unless
(1) the Company or such Restricted Subsidiary would (at the time of entering
into such arrangement) be entitled pursuant to clauses (A) through (H) above
under "--Limitation on Liens", without equally and ratably securing the Senior
Debt Securities, to issue, assume or guarantee indebtedness secured by a Lien
on such Principal Property; or (2) the Attributable Debt of the Company and
its Restricted Subsidiaries in respect of such Sale and Leaseback Transaction
and all other Sale and Leaseback Transactions entered into after August 6,
1996 (other than such Sale and Leaseback Transactions as are permitted by
clause (1) or clause (3) of this paragraph), plus the aggregate principal
amount of Debt secured by Liens on Principal Properties then outstanding
(excluding any such Debt secured by Liens covered in subdivisions (A) through
(H) under "--Limitation on Liens") which do not equally and ratably secure the
Senior Debt Securities, would not exceed 15% of Consolidated Net Tangible
Assets; or (3) the Company, within 180 days after the sale or transfer,
applies or causes a Restricted Subsidiary to apply an amount equal to the
greater of the net proceeds of such sale or transfer or fair market value of
the Principal Property so sold and leased back at the time of entering into
such Sale and Leaseback Transaction (in either case as determined by the Board
of Directors) to the retirement of Senior Debt Securities or other
indebtedness of the Company (other than indebtedness subordinated to the
Senior Debt Securities) or indebtedness of a Restricted Subsidiary, for money
borrowed, having a stated maturity more than 12 months from the date of such
application or which is extendible at the option of the obligor thereon to a
date more than 12 months from the date of such application, provided that the
amount to be so applied shall be reduced by (i) the principal amount of Senior
Debt Securities delivered within 180 days after such sale or transfer to the
Trustee for retirement and cancellation, and (ii) the principal amount of any
such indebtedness of the Company or a Restricted Subsidiary other than Senior
Debt Securities voluntarily retired by the Company or a Restricted Subsidiary
within 180 days after such sale or transfer; provided, further, that
notwithstanding the foregoing, no retirement referred to in this clause (3)
may be affected by payment at Maturity.
Notwithstanding the foregoing, where the Company or any Restricted
Subsidiary is the lessee in any Sale and Leaseback Transaction, Attributable
Debt shall not include any Debt resulting from the guarantee by the Company or
any other Restricted Subsidiary of the lessee's obligation thereunder.
CERTAIN DEFINITIONS
The term "Attributable Debt" means, in respect of a Sale and Leaseback
Transaction and as of any particular time, the present value (discounted at
the rate of interest implicit in the terms of the lease involved in such Sale
and Leaseback Transaction, as determined in good faith by the Company) of the
obligation of the lessee thereunder for net rental payments (excluding,
however, any amounts required to be paid by such lessee,
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whether or not designated as rent or additional rent, on account of
maintenance and repairs, services, insurance, taxes, assessments, water rates
or similar charges or any amounts required to be paid by such lessee
thereunder contingent upon monetary inflation or the amount of sales,
maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges) during the remaining term of such lease (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended).
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, and (b) all
current liabilities, all as reflected in the Company's latest audited
consolidated balance sheet contained in the Company's most recent annual
report to its stockholders under Rule 14a-3 of the Exchange Act prior to the
time as of which "Consolidated Net Tangible Assets" shall be determined.
The term "Maturity", when used with respect to any security, means the date
on which the principal of such security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
The term "Principal Property" means any single manufacturing plant, research
laboratory or other similar facility located within the United States of
America (other than its territories and possessions) and owned by, or leased
to, the Company or any Restricted Subsidiary, the book value of the property,
plant and equipment of which (as shown, net of depreciation, on the books of
the owner or owners) is not less than 2% of the Consolidated Net Tangible
Assets at the end of the most recent fiscal year of the Company, reflected in
the latest audited consolidated statement of financial position contained in
the Company's most recent annual report to its stockholders under Rule 14a-3
of the Exchange Act, except (a) any such plant or facility (i) owned or leased
jointly or in common with one or more Persons other than the Company and its
Subsidiaries, in which the interest of the Company and its Restricted
Subsidiaries does not exceed 50%, or (ii) which the Board of Directors
determines by Board Resolution in good faith is not of material importance to
the total business conducted, or assets owned, by the Company and its
Subsidiaries as an entirety, or (b) any portion of any such plant or facility
which the Board of Directors determines by Board Resolution in good faith not
to be of material importance to the use or operation thereof.
The term "Restricted Subsidiary" means any Subsidiary substantially all the
property of which is located, or substantially all of the business of which is
carried on, within the United States of America (other than its territories
and possessions) which shall at the time, directly or indirectly through one
or more Subsidiaries or in combination with one or more other Subsidiaries,
own or be a lessee of a Principal Property.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that the Company may not consolidate with or
merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person (a "successor Person"), and may
not permit any Person to merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to, the Company, unless (i)
the successor Person (if any) is a corporation, partnership, trust or other
entity organized and validly existing under the laws of any domestic
jurisdiction and assumes the Company's obligations on the Debt Securities and
under the Indentures, (ii) immediately after giving effect to the transaction,
no Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be continuing,
(iii) if, as a result of the transaction, property of the Company or a
Restricted Subsidiary would become subject to a Lien that would not be
permitted under "Restrictive Covenants--Limitations on Liens", the Company
takes such steps as shall be necessary to secure the Senior Debt Securities,
if any, equally and ratably with (or prior to) the indebtedness secured by
such Lien, and (iv) certain other conditions are met. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indentures with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due (with
respect to Subordinated Debt Securities, whether or not such payment is
prohibited by the
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subordination provisions of the Subordinated Indenture); (b) failure to pay
any interest on any Debt Securities of that series when due, continued for 30
days (with respect to Subordinated Debt Securities whether or not such payment
is prohibited by the subordination provision of the Subordinated Indenture);
(c) failure to deposit any sinking fund payment, when due, in respect of any
Debt Security of that series (with respect to Subordinated Debt Securities,
whether or not such deposit is prohibited by the subordination provisions of
the Subordinated Indenture); (d) failure to perform any other covenant of the
Company in the Indentures (other than a covenant included in the Indentures
solely for the benefit of a series other than that series), continued for 60
days after written notice has been given by the Trustee, or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that
series, as provided in the Indentures; (e) certain events in bankruptcy,
insolvency or reorganization; and (f) any other Event of Default specified in
the applicable Prospectus Supplement. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities of
that series by notice as provided in the Indentures may declare the principal
amount of the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Security or the principal amount
of which is not then determinable, such portion of the principal amount of
such Debt Security, or such other amount in lieu of such principal amount, as
may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (e) above with respect
to the Debt Securities of any series at the time Outstanding shall occur, the
principal amount of all the Debt Securities of that series (or, in the case of
any such Original Issue Discount Security or other Debt Security, such
specified amount) will automatically, and without any action by the Trustee or
any Holder, become immediately due and payable. After any such acceleration,
but before a judgment or decree based on acceleration, the Holders of a
majority in aggregate principal amount of the Outstanding Securities of that
series may, under certain circumstances, rescind and annul such acceleration
if all Events of Default, other than the non-payment of accelerated principal
(or other specified amount), have been cured or waived as provided in the
Indentures. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver".
Subject to the provisions of the Indentures relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indentures at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indentures, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of that series, (ii) the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series have made written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee and (iii) the Trustee has failed to institute such
proceeding, and has not received from the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507) However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of
the principal of or any premium or interest on such Debt Security on or after
the applicable due date specified in such Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the Indentures and, if so, specifying all such
known defaults. (Section 1004)
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MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security, (b) reduce the
principal amount of, or any premium or interest on, any Debt Security, (c)
reduce the amount of principal of an Original Issue Discount Security or any
other Debt Security payable upon acceleration of the Maturity thereof, (d)
change the place or currency of payment of principal of, or any premium or
interest on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, (f), in
the case of Subordinated Debt Securities, modify the subordination provisions
in a manner adverse to the Holders of the Subordinated Debt Securities, (g)
reduce the percentage in principal amount of Outstanding Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indentures, (h) reduce the percentage in principal amount of
Outstanding Securities of any series necessary for waiver of compliance with
certain provisions of the Indentures or for waiver of certain defaults, or (i)
modify such provisions with respect to modification and waiver. (Section 902)
The Holders of a majority in principal amount of the Outstanding Securities
of any series may waive compliance by the Company with certain restrictive
provisions of the Indentures. (Sections 1010 and 1008 of the Senior Indenture
and the Subordinated Indenture, respectively.) The Holders of a majority in
principal amount of the Outstanding Securities of any series may waive any
past default under the Indentures, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
Indentures which cannot be amended without the consent of the Holder of each
Outstanding Security of such series affected. (Section 513)
The Indentures will provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken
any direction, notice, consent, waiver or other action under the Indentures as
of any date, (i) the principal amount of an Original Issue Discount Security
that will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of such date upon acceleration of the
Maturity thereof to such date, (ii) if, as of such date, the principal amount
payable at the Stated Maturity of a Debt Security is not determinable (for
example, because it is based on an index), the principal amount of such Debt
Security deemed to be Outstanding as of such date will be an amount determined
in the manner prescribed for such Debt Security, and (iii) the principal
amount of a Debt Security denominated in one or more foreign currencies or
currency units that will be deemed to be Outstanding will be the U.S. dollar
equivalent, determined as of such date in the manner prescribed for such Debt
Security, of the principal amount of such Debt Security (or, in the case of a
Debt Security described in clause (i) or (ii) above, of the amount described
in such clause). Certain Debt Securities, including those for whose payment or
redemption money has been deposited or set aside in trust for the Holders and
those that have been fully defeased pursuant to Section 1302, will not be
deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indentures, in the manner
and subject to the limitations provided in the Indentures. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such shorter period as
may be specified by the Company (or the Trustee, if it set the record date),
and may be shortened or lengthened (but not beyond 180 days) from time to
time. (Section 104)
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DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of
Section 1302, relating to defeasance and discharge of indebtedness, or Section
1303, relating to defeasance of certain restrictive covenants in the
Indentures, applied to the Debt Securities of any series, or to any specified
part of a series. (Section 1301)
Defeasance and Discharge. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1302 applied to any
Debt Securities, with respect to any Subordinated Debt Securities, the
provisions of Article Fifteen of the Subordinated Indenture relating to
subordination will cease to be effective and, with respect to any Debt
Securities, the Company will be discharged from all its obligations with
respect thereto (except for certain obligations to exchange or register the
transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the Indentures and such Debt
Securities. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling, or there has been a change in
tax law, in either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304)
Defeasance of Certain Covenants. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Restrictive Covenants" and in the
last sentence under "Consolidation, Merger and Sale of Assets" and any that
may be described in the applicable Prospectus Supplement, and the occurrence
of certain Events of Default, which are described above in clause (d) (with
respect to such restrictive covenants) under "Events of Default" and any that
may be described in the applicable Prospectus Supplement, will be deemed not
to be or result in an Event of Default, in each case with respect to such Debt
Securities, and, in the case of the Subordinated Indenture, the provisions of
Article Fifteen relating to subordination will cease to be effective with
respect to any Subordinated Debt Securities. The Company, in order to exercise
such option, will be required to deposit, in trust for the benefit of the
Holders of such Debt Securities, money or U.S. Government Obligations, or
both, which, through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount sufficient to
pay the principal of and any premium and interest on such Debt Securities on
the respective Stated Maturities in accordance with the terms of the
Indentures and such Debt Securities. The Company will also be required, among
other things, to deliver to the Trustee an Opinion of Counsel to the effect
that Holders of such Debt Securities will not recognize gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case
if such deposit and defeasance were not to occur. In the event the Company
exercised this option with respect to any Debt Securities and such Debt
Securities were declared due and payable because of the occurrence of any
Event of Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such Debt
Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any acceleration
resulting from such Event of Default. In such case, the Company would remain
liable for such payments. (Sections 1303 and 1304)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
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TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the
purpose of making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The Trustee is the trustee for the Debt Securities to be issued. The Trustee
is also trustee under the Company's ESOP, as defined below, as discussed more
fully herein. In addition, Chemical Mellon Shareholder Services, L.L.C., an
affiliate of the Trustee, is the Rights Agent under the Company's Rights Plan,
as defined below, as discussed more fully herein. The Trustee also provides
cash management and other banking and advisory services to the Company in the
normal course of business.
Upon the occurrence of an Event of Default or an event which, after notice
or lapse of time or both, would become an Event of Default, or upon the
occurrence of a default under such other indenture, the Trustee may be deemed
to have a conflicting interest with respect to the Debt Securities for
purposes of the Trust Indenture Act of 1939 and, unless the Trustee is able to
eliminate any such conflicting interest, the Trustee may be required to resign
as Trustee under either the Subordinated Indenture or the Senior Indenture. In
that event, the Company would be required to appoint a successor trustee for
such Indenture.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 200,000,000 shares
of Common Stock, par value $1.00 per share, and 20,000,000 shares of Class A
Preferred Stock, without par value. The following description of the capital
stock of the Company is a summary, and as such, it does not purport to be
complete and is subject, and qualified in its entirety by reference to, the
more complete descriptions contained in (i) the Articles of Incorporation of
the Company, as amended (the "Articles"), the Bylaws of the Company, as
amended (the "Bylaws"), and the Rights Agreement, effective March 21, 1996,
between the Company and Chemical Mellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agreement"), copies of each of which are
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part, and (ii) the certificate of designation relating to
each series of Preferred Stock.
COMMON STOCK
Dividends. Subject to the rights and preferences that may be applicable to
any outstanding Preferred Stock, the holders of Common Stock are entitled to
receive dividends, when, if and as declared by the Board of Directors of the
Company, out of funds legally available therefor.
Voting Rights. The holders of Common Stock are entitled to one vote per
share on all matters to be voted upon by shareholders, except that
shareholders are entitled to cumulate their votes in the election of
directors. Under cumulative voting, a shareholder has the right to multiply
the total number of shares which the shareholder is entitled to vote by the
number of directors to be elected and to cast the whole number of votes so
determined for one nominee or to distribute them among different nominees. The
Bylaws require shareholders desiring to nominate persons for election as a
director to give advance notice of such nominations to the Company.
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Other than in the election of directors, whenever any corporate action is to
be taken by vote of the shareholders of the Company, or by a class of such
shareholders of the Company, generally, it shall be authorized upon receiving
the affirmative vote of a majority of the votes cast by such shareholders, or
by such class of shareholders, entitled to vote thereon. The Articles and
Bylaws require, however, the approval by the holders of at least 80% of the
votes which all shareholders of the Company would be entitled to cast at an
annual election of directors, voting together as a single class, for the
removal of any director, class of directors or the entire Board of Directors
(subject to nonremoval if sufficient votes are cast against removal) or for
any change to any provision of the Articles or Bylaws providing for the number
of directors, the classification of directors or the filling of vacancies on
the Board of Directors, unless any such change is unanimously approved by the
Board of Directors of the Company. In addition, the Bylaws of the Company may
be amended only by a vote of two-thirds of the Board of Directors then in
office, subject to the power of the shareholders to change such action.
The Bylaws provide for the Board of Directors to be divided into three
classes of directors, each class as nearly equal in number as possible, with
one class being elected each year for a three-year term. The classification of
the Board helps to ensure continuity and stability of corporate leadership and
policy; however, it also has the effect of making it more difficult for a
person to acquire control of the Company because at least two annual meetings
are necessary to effect a change in a majority of the Company's directors.
Further, while cumulative voting enables minority shareholders to gain
representation on the Board, the existence of a classified Board increases the
number of shares required to elect at least one director.
Liquidation. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after the payment of the liabilities and the liquidation
preferences of any outstanding preferred stock.
Other Information. The Common Stock does not carry preemptive rights, is not
redeemable, does not have any conversion rights, is not subject to further
calls and is not subject to any sinking fund provisions. The shares of Common
Stock currently outstanding are freely alienable, fully paid and
nonassessable. Except in certain circumstances as discussed below under
"Description of Capital Stock--Certain Provisions Affecting Control of the
Company," the Common Stock is not subject to discriminatory provisions based
on ownership thresholds.
Conversion of Series A ESOP Preferred Stock. On July 31, 1996, the Trustee
appointed by the Company's Employee Stock Ownership Plan, Mellon Bank, N.A.,
converted the shares of Series A ESOP Preferred Stock formerly held by the
trustee for the account of participants in the Employee Stock Ownership Plan
into Company Common Stock.
CLASS A PREFERRED STOCK
The Class A Preferred Stock, other than Series One Preferred Stock as
discussed below, is issuable in one or more series and will have the dividend,
conversion, redemption, voting and liquidation rights set forth below unless
otherwise provided in the Prospectus Supplement relating to a particular
series of the Preferred Stock. Reference is made to the Prospectus Supplement
relating to the particular series of the Preferred Stock offered thereby for
specific terms, including: (i) the title of the series and the number of
shares in the series offered; (ii) the price at which such series will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to accumulate for such series; (iv) any redemption or sinking fund provisions
of such series; (v) any conversion provisions of such series; (vi) the voting
rights, if any, of such series; (vii) the liquidation preference of such
series; and (viii) any additional dividend, liquidation, redemption, sinking
fund and other special or relative rights, preferences, qualifications,
privileges, limitations, options and restrictions of such series. The Class A
Preferred Stock is available for possible future financing and acquisition
transactions, to pay stock dividends or make distributions, to fund employee
benefit plans and for other general corporate purposes. Under certain
circumstances, the Class A Preferred Stock could be used to create voting
impediments for persons seeking to gain control of the Company.
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Dividends. The Preferred Stock will be preferred over the Common Stock (but
may be subordinated as to the other series of Preferred Stock) as to the
payment of dividends. Before any dividends or distributions on the Common
Stock shall be declared and set apart for payment or paid, the holders of
shares of each series of Preferred Stock shall be entitled to receive
dividends (either in cash, shares of Common Stock or Preferred Stock, or
otherwise), when, as and if declared by the Board of Directors, at the rate
and on the date or dates as set forth in the Prospectus Supplement. With
respect to each series of Preferred Stock, the dividends on each share of such
series shall be cumulative from the date of issuance of such shares unless
some other date is set forth in the Prospectus Supplement relating to any such
series. Accruals of dividends shall not bear interest.
Conversion. Shares of any series of Preferred Stock will be convertible into
shares of Common Stock or into shares of any other series of Preferred Stock
to the extent set forth in the Prospectus Supplement relating to any such
series.
Redemption. Shares of any series of Preferred Stock will be redeemable to
the extent set forth in the Prospectus Supplement relating to any such series,
which may or may not include any restrictions on the repurchase or redemption
thereof while there is any arrearage in the payment of dividends.
Voting Rights. Unless otherwise provided in the Prospectus Supplement, the
holders of shares of Preferred Stock will be entitled to one vote for each
share of Preferred Stock held by them on all matters presented to
shareholders.
Liquidation. The Preferred Stock will be preferred over the Common Stock
(but may be subordinated as to other series of Preferred Stock, as described
herein) as to assets so that the holders of each series of Preferred Stock
will be entitled to be paid, upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company and before any distribution is made
to the holders of Common Stock, the amount set forth in the Prospectus
Supplement relating to any such series, but in such case the holders of such
series of Preferred Stock will not be entitled to any other or further
payment.
Other Information. Unless otherwise provided in the Prospectus Supplement,
the Preferred Stock will not carry any preemptive rights, will not be, upon
issuance, subject to further calls and will not be, upon issuance, subject to
any sinking fund provisions. The Preferred Stock will be, when issued, fully
paid and nonassessable. Unless otherwise provided in the Prospectus
Supplement, and except in certain circumstances as discussed below under
"Description of Capital Stock--Certain Provisions Affecting Control of the
Company," the Preferred Stock will not be, upon issuance, subject to
discriminatory provisions based on ownership thresholds.
SERIES ONE PREFERRED STOCK AND PREFERRED STOCK PURCHASE RIGHTS
Preferred Stock Purchase Rights. The Series One Preferred Stock, which is a
series of Class A Preferred Stock, is issuable pursuant to the exercise of
rights to purchase Series One Preferred Stock ("Rights"). The Series One
Preferred Stock is not being offered hereby, although the Rights will attach
to any Common Stock which may be sold pursuant to this Prospectus and any
Prospectus Supplement. On March 21, 1996, the Board of Directors of the
Company paid a distribution of one Right for each outstanding share of Common
Stock of the Company to shareholders of record on January 19, 1996, and with
respect to each share of Common Stock that may be issued by the Company prior
to the date on which the Rights first become exercisable (or the earlier
redemption or expiration of the Rights), subject to adjustment in certain
events. In general, the Rights become exercisable ten days after a person or
group either acquires beneficial ownership of shares representing 20% or more
of the voting power of the Company or announces a tender or exchange offer
that would result in such person or group beneficially owning shares
representing 28% or more of the voting power of the Company. When the Rights
become exercisable, each Right entitles its holder (other than such 20%
shareholder or tender or exchange offeror) to buy one one-hundredth of a newly
issued share of Series One Preferred Stock at a purchase price of $300,
subject to adjustment. If, after the Rights become exercisable, any person or
group becomes the beneficial owner of 28% or more of the voting power of the
Company or if the Company is the surviving corporation in a merger with a
person or group that owns 20% or more of the voting power of the Company, then
each owner of a Right (other than such 20% or 28% shareholder) will be
entitled to purchase
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shares of Armstrong's Common Stock having a value equal to twice the exercise
price of the Right. In addition, if, after the Rights become exercisable, the
Company is a party to a merger and is not the surviving company or 50% or more
of the Company's assets or earnings power are sold in a single or series of
related transactions, then each owner of a Right will be entitled to purchase
shares of the acquiring person having a value equal to twice the exercise
price of the Right. Until the Rights first become exercisable, the Rights
attach to and trade with shares of the Company's Common Stock. Generally, the
Rights are redeemable at the option of the Company for $.05 per Right at any
time prior to the tenth day following a public announcement that a person or
group has acquired beneficial ownership of 20% or more of the voting power of
the Company. The Rights expire by their terms on March 21, 2006, unless
earlier redeemed.
The terms of the Rights are set forth in the Rights Agreement which has been
filed with the SEC as an Exhibit to a Registration Statement on Form 8-A/A
filed on March 15, 1996, file number 001-02116, and is incorporated herein by
reference.
Dividends. Subject to the rights and preferences of the holders of any other
series of Class A Preferred Stock, the holders of Series One Preferred Stock
are entitled to receive cumulative, quarterly dividends, without interest,
when and as declared by the Board of Directors of the Company, out of funds
legally available therefor, in preference to the holders of Common Stock and
in an amount per share equal to the greater of $36.00 or 100 times, as
adjusted, the aggregate per share amount of all cash and non-cash dividends or
other distributions, other than a dividend or distribution payable in shares
of Common Stock, paid on the Common Stock in the immediately preceding
quarter.
Conversion Rights. In the event the Company enters into any consolidation,
merger, combination or other transaction in which the Common Stock is
exchanged for or changed into other stock or securities, cash and/or any other
property, then the Series One Preferred Stock will be at the same time,
similarly exchanged for or converted into an amount per share equal to 100
times, as adjusted, the aggregate amount for or into which the Common Stock is
exchanged or converted.
Voting Rights. Holders of Series One Preferred Stock have no voting rights
except as may be provided by law.
Redemption. The Series One Preferred Stock may be redeemed at the option of
the Board of Directors of the Company, as a whole, but not in part, at any
time, at a cash price per share equal to 100 times, as adjusted, the average
market value, as defined, of the Common Stock, plus all accrued but unpaid
dividends. The Company is not entitled, however, to purchase or otherwise
acquire shares of the Series One Preferred Stock if the quarterly dividend in
respect thereof is accrued and has not been paid or declared and a sum
sufficient for the payment thereof set apart unless all shares of such stock
at the time outstanding are purchased or otherwise acquired.
Liquidation. Subject to the rights and preferences of the holders of any
other series of Class A Preferred Stock, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Series
One Preferred Stock are entitled to $100 per share, plus all accrued and
unpaid dividends, plus an amount equal to the holder's pro rata share of
assets that would be available for distribution after payment of all
liabilities, liquidation preferences and distributions on the Common Stock, if
any, as determined according to a formula and subject to adjustment in certain
events. The amount payable to the holders of Series One Preferred Stock as so
determined is prior to any payment or distribution to the holders of Common
Stock.
Other Information. The Series One Preferred Stock does not carry any
preemptive rights, will not be subject, upon issuance, to any sinking fund
provisions and will not be subject, upon issuance, to any further calls. Upon
issuance, the shares of the Series One Preferred Stock will be freely
alienable, fully paid and nonassessable. Except in certain circumstances as
discussed below under "Description of Capital Stock--Certain Provisions
Affecting Control of the Company," the Series One Preferred Stock will be,
upon issuance, freely alienable and not subject to discriminatory provisions
based on ownership thresholds.
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CERTAIN PROVISIONS AFFECTING CONTROL OF THE COMPANY
General. Certain provisions of the Company's Articles, Bylaws and the
Pennsylvania Business Corporation Law (the "PBCL") operate only with respect
to extraordinary corporate transactions, such as mergers, reorganizations,
tender offers, sales or transfers of substantially all of the Company's assets
or the liquidation of the Company, and could have the effect of delaying or
making more difficult a change in control of the Company in certain
circumstances.
Certain Provisions of the Articles. The Articles provide that a Business
Combination (as defined below) with an Interested Shareholder (as defined
below) requires the affirmative vote of shareholders entitled to cast at least
a majority of the votes which all shareholders, other than the Interested
Shareholder, would be entitled to cast at an annual election of directors,
voting together as a single class, unless the transaction is approved by a
majority of the Disinterested Directors (as defined below) or the transaction
meets certain fair price and procedural requirements. An "Interested
Shareholder" is, with certain exceptions, any person, or his assignee or
successor (not including Armstrong or an affiliate of Armstrong), who is (or
was within the previous two years) the beneficial owner of more than ten
percent of the voting power of the outstanding voting stock, together with
such person's affiliates and associates. A "Business Combination" includes,
among other transactions, the following: (i) the merger or consolidation of
the Company with the Interested Shareholder; (ii) the sale of all or
substantially all of the assets of the Company to the Interested Shareholder
or its affiliates or associates; (iii) the issuance of securities of the
Company to an Interested Shareholder having a value equal to greater than ten
percent of the assets of the Company; (iv) the adoption of any plan for the
liquidation or dissolution of the Company proposed by or on behalf of the
Interested Shareholder; or (v) any reclassification or recapitalization of
securities which effectively increases the proportional equity share of the
Interested Shareholder. The term "Disinterested Director" means a director who
is neither affiliated with nor a representative of an Interested Shareholder
and (i) was a director prior to the time an Interested Shareholder became
such, (ii) was recommended or elected to fill a vacancy created by an increase
in the size of the Board of Directors by a majority of the Disinterested
Directors then in office, or (iii) was a successor of a Disinterested Director
and was recommended or elected to succeed a Disinterested Director by a
majority of the Disinterested Directors then in office. Certain other
provisions of the Articles and Bylaws which could have the effect of delaying
or preventing a Change in Control of the Company are described above under the
captions "Description of Capital Stock--Common Stock" and "Description of
Capital Stock--Class A Preferred Stock."
Certain Provisions of the PBCL. The Company is governed by certain "anti-
takeover" provisions in the PBCL which include the following: (i) provisions
which prohibit certain business combinations (as defined in the PBCL)
involving a corporation that has voting shares registered under the Exchange
Act and an "interested shareholder" (generally defined to include a person who
beneficially owns shares representing at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors of the
corporation) unless certain conditions are satisfied or an exemption is
applicable; (ii) provisions concerning a "control-share acquisition" in which
the voting rights of certain shareholders of the corporation (specifically, a
shareholder who acquires 20%, 33 1/3% or 50% or more of the voting power of
the corporation ) are conditioned upon the consent of a majority vote at a
meeting of the independent shareholders of the corporation after disclosure by
such shareholder of certain information, and with respect to which such
shareholder is effectively deprived of voting rights if consent is not
obtained; (iii) provisions pursuant to which any profit realized by a
"controlling person or group," generally defined as a 20% beneficial owner,
from the disposition of any equity securities within twenty-four months prior
to, and eighteen months succeeding, the acquisition of such control is
recoverable by the corporation; (iv) provisions pursuant to which severance
payments are to be made by the corporation to any eligible employee of a
covered corporation whose employment is terminated, other than for willful
misconduct, with ninety days before, or twenty-four months after, a control-
share acquisition; (v) provisions pursuant to which any holder of voting
shares of a registered corporation who objects to a "control transaction"
(generally defined as the acquisition by a person or group (the "controlling
person or group") that would entitle the holders thereof to cast at least 20%
of the votes that all shareholders would be entitled to cast in an election of
the directors of the corporation) is entitled to make a written demand on the
controlling person or group for payment of the fair value of the voting shares
of the corporation held by the shareholder; (vi) a set of interrelated
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provisions which are designed to support the validity of actions taken by the
Board of Directors in response to takeover bids, including specifically the
Board's authority to "accept, reject or take no action" with respect to a
takeover bid, and permitting the unfavorable disparate treatment of a takeover
bidder; and (viii) provisions which allow the directors broad discretion in
considering the best interests of the corporation, including a provision which
permits the Board to consider various corporate interests including the short
and long-term interests of the corporation and the resources, intent and
conduct of any person seeking to acquire the corporation.
DESCRIPTION OF DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue to purchasers receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock)
of a share of a particular series of Preferred Stock.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the name
and address of the Depositary. Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share will be entitled, in proportion to the
applicable fractional interest in a share of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights). The Depositary Shares will be evidenced by
Depositary Receipts issued pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts
but not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will
be exchangeable for definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to
the terms thereof, a holder of Depositary Shares is entitled to have the
Depositary deliver to such holder the whole shares of Preferred Stock
underlying the Depositary Shares evidenced by the surrendered Depositary
Receipts.
Dividends. The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction
of one cent, and any balance not so distributed shall be added to and treated
as part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
Conversion and Exchange. If any Preferred Stock underlying the Depositary
Shares is subject to provisions relating to its conversion or exchange as set
forth in a Prospectus Supplement relating thereto, each record holder of
Depositary Shares will have the right or obligation to convert or exchange
such Depositary Shares into other securities of the Company or rights or
payments pursuant to the terms thereof.
Redemption. After the date fixed for redemption as may be set forth in any
Prospectus Supplement relating to the Depositary Shares, the Depositary Shares
so called for redemption will no longer be deemed to be outstanding, and all
rights of the holders of the Depositary Shares will cease, except the right to
receive the
22
<PAGE>
moneys payable upon such redemption and any money or other property to which
the holders of such redeemed Depositary Shares were entitled upon surrender to
the Depositary of the Depositary Receipts in respect thereof. Unless otherwise
provided in the Prospectus Supplement or in the Deposit Agreement, the
Depositary Shares will not be subject to any restriction on the repurchase or
redemption thereof while there is any arrearage in the payment of dividends.
Voting Rights. Upon receipt of notice of any meeting at which the holders of
the Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting 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 the exercise of the voting rights pertaining to the number of
shares of Preferred Stock underlying such holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the number of shares
of Preferred Stock underlying such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action which may be
deemed necessary by the Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting shares of Preferred Stock to the
extent it does not receive specific instructions from the holders of
Depositary Shares relating to such Preferred Stock.
Other Information. Unless otherwise provided in the Prospectus Supplement or
the Deposit Agreement, the Depositary Shares will not carry any conversion
rights, will not be subject, upon issuance, to any sinking fund provisions,
will not carry any liquidation or preemption rights and will not be, upon
issuance, subject to any further calls. The Depositary Shares will be, when
issued, freely alienable, fully paid and nonassessable. Unless otherwise
provided in the Prospectus Supplement or the Deposit Agreement, and except in
certain circumstances as described above under "Description of Capital Stock--
Anti-Takeover Provisions," the Preferred Stock will not be, upon issuance,
subject to discriminatory provisions based on ownership thresholds.
Amendment and Termination of the Deposit Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Depositary. However, any amendment which materially and adversely alters the
rights of the existing holders of Depositary Shares will not be effective
unless such amendment has been approved by the record holders of at least a
majority of the Depositary Shares then outstanding. A Deposit Agreement may be
terminated by the Company Depositary only if (i) all outstanding Depositary
Shares relating thereto have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock of the relevant series in
connection with any liquidation, dissolution or winding up of the Company and
such distribution has been distributed to the holders of the related
Depositary Shares.
Charges of Depositary. The Company will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. The Company will also pay charges of the Depositary in
connection with 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 such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary will forward to the holders of Depositary
Shares all reports and communications which are delivered to the Depositary
and which are required to be furnished to the holders of the Preferred Stock.
Neither the Depositary nor the Company will be liable if either is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares
or Preferred Stock unless satisfactory indemnity is furnished. Either may rely
upon written advice of its 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.
23
<PAGE>
Resignation and Removal of Depositary. The Depositary may resign at any time
by delivering to the Company notice of its election to do so, and the Company
may at any time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and the Company's
acceptance of such appointment. Such successor Depositary must be appointed
within 90 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 $50,000,000.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in any of four
ways: (i) directly to purchasers, (ii) through agents, (iii) through
underwriters, and (iv) through dealers. Offers to purchase Securities may be
made by potential investors or their agents on an unsolicited basis or may be
solicited directly by the Company or agents designated by the Company from
time to time. The applicable Prospectus Supplement or Prospectus Supplements
will set forth the terms of the offering of the Securities, including the name
or names of any agents, underwriters or dealers, the purchase price of the
Securities and the proceeds to be received by the Company from such sale, any
underwriting discounts and other items constituting underwriters' compensation
and any discounts and commissions allowed or reallowed or paid to dealers or
agents. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers or agents may be changed from time to
time.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company in the form of underwriting discounts or
commissions. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters. Underwriters, dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act of 1933, as
amended. Such underwriters, dealers and agents may be entitled under
agreements which may be entered into by the Company to indemnification by the
Company against and contribution toward certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Securities may be distributed in one or more transactions from time to
time at a fixed price or prices, which may be changed, or from time to time at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so indicated in the applicable Prospectus Supplement or Prospectus
Supplements, the Company will authorize dealers or other persons acting as the
Company's agents to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
applicable Prospectus Supplement or Prospectus Supplements pursuant to delayed
delivery contracts ("Contracts") providing for payment and delivery on the
future date or dates stated in the applicable Prospectus Supplement or
Prospectus Supplements. Each Contract will be for an amount not less than, and
the aggregate amount of Securities sold pursuant to Contracts shall be not
less nor more than, the respective amounts stated in the applicable Prospectus
Supplement or Prospectus Supplements. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will in all cases be subject to the
approval of the Company. The obligations of any purchaser under any Contract
will not be subject to any conditions except (1) the purchase by an
institution of the Securities covered by its Contract shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject and (2) if Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of such Securities less the principal amount thereof covered
by Contracts. Underwriter and such other persons will not have any
responsibility in respect of the validity or performance of Contracts.
The Securities (other than Common Stock) will be a new issue of securities
with no established trading market. If so indicated in the applicable
Prospectus Supplement, any underwriters or agents to or through whom
Securities are sold by the Company for public offering and sale may make a
market in such Securities, but such
24
<PAGE>
underwriters and agents will not be obligated to do so and may discontinue any
market-making at any time without notice. No assurance can be given as to the
liquidity of the trading market for any Securities, other than Common Stock.
Certain of the underwriters, dealers and/or agents and their associates may
be customers of, engage in transactions with and perform services for the
Company, including its subsidiaries, in the ordinary course of business.
VALIDITY OF SECURITIES
Unless indicated otherwise in a Prospectus Supplement relating thereto, the
validity of the Securities will be passed upon for Armstrong by Buchanan
Ingersoll Professional Corporation, Pittsburgh, Pennsylvania. With the
exception of the Preferred Stock Purchase Rights, the validity of the
Securities will be passed upon for the underwriters or agents, as the case may
be, by Sullivan & Cromwell, New York, New York. Sullivan & Cromwell will rely
upon the opinion of Buchanan Ingersoll Professional Corporation as to all
matters of Pennsylvania law.
EXPERTS
The consolidated financial statements and schedule of the Company and its
subsidiaries as of December 31, 1995 and 1994 and for each of the fiscal years
in the three-year period ended December 31, 1995, have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick L.L.P., independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended June 30, 1996 and 1995, and, March 31, 1996 and 1995, incorporated by
reference herein, the independent certified public accountants have reported
that they applied limited procedures in accordance with professional standards
for a review of such information. However, their separate reports included in
the Company's quarterly report on Form 10-Q for the quarters ended June 30,
1996 and March 31, 1996, certain portions of which are superseded by the
Company's Current Report on Form 8-K filed on October 18, 1996, and
incorporated by reference herein, state that they did not audit and they do
not express an opinion on the interim financial information. Accordingly, the
degree of reliance on such reports should be restricted in light of the
limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of section 11 of the 1933 Act for their
reports on the unaudited interim financial information because those reports
are not "reports" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of sections 7 and 11 of the
1933 Act.
The consolidated financial statements of Dal-Tile International Inc.
incorporated by reference in the Company's Current Report on Form 8-K, as
amended, for the fiscal year ended December 31, 1994, have been audited by
Ernst & Young L.L.P., independent auditors, as set forth in their report
thereon (which contains an explanatory paragraph with respect to a change in
the method of accounting for income taxes as discussed in Note 8 to the
consolidated financial statements) incorporated therein and herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
25
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee**.............. $86,208
Legal fees and expenses............................................ 75,000
Rating agencies' fees.............................................. 150,000
Printing fees and expenses......................................... 80,000
Trustee's fees and expenses........................................ 15,000
Accounting fees and expenses....................................... 35,000
Blue Sky fees and expenses......................................... 20,000
Transfer Agent's and registrar's fees and expenses................. 25,000
Miscellaneous...................................................... 13,792
-------
Total**.......................................................... 500,000
</TABLE>
- --------
* All amounts are estimated except for the registration fee.
** A Securities and Exchange Commission filing fee of $62,500 was previously
paid when Registration Statement 33-38837 was initially filed. In addition,
approximately $290,000 of expenses not reflected in Item 14 was previously
paid in connection with Registration Statement 33-38837.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subchapter D of Chapter 17 of the PBCL provides in general that a
corporation may indemnify any person, including its directors, officers and
employees, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative (including actions by or in the
right of the corporation) by reason of the fact that he or she is or was a
representative of or serving at the request of the corporation, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
the action or proceeding if he or she is determined by the board of directors,
or in certain circumstances by independent legal counsel to the shareholders,
to have acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal proceeding, had no reason to believe his conduct was
unlawful. In the case of actions by or in the right of the corporation,
indemnification is not permitted in respect of any claim, issue or matter as
to which the person has been adjudged to be liable to the corporation except
to the extent a court determines that the person is fairly and reasonably
entitled to indemnification. In any case, to the extent that the person has
been successful on the merits or otherwise in defense of any claim, issue or
matter, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
Subchapter D of Chapter 17 also provides that the indemnification permitted or
required thereby is not exclusive of any other rights to which a person
seeking indemnification may be entitled.
Article IX of the Company's By-laws, as amended, provides that the Company
shall indemnify any person who was or is made a party to, or threatened to be
made a party to, or is involved in, any action, suit, or proceeding (including
actions by or in the right of the Company) by reason of the fact that he or
she is or was a director or officer of the Company (or is or was serving at
the request of the Company as a director, officer, trustee, employee, or agent
of a related enterprise including service with respect to an employee benefit
plan or is or was serving at the specific written request of the Company as a
director, officer, trustee, employee, or agent of an unrelated enterprise)
against all expenses and liability he or she actually incurs, including,
without limitation, judgments and amounts paid or to be paid in settlement of
or in actions brought by or in the right of the Company, to the fullest extent
permitted by law. Article IX also provides that directors and officers shall
be entitled to payment in advance of expenses incurred in defending any such
action, suit, or proceeding, upon receipt of an undertaking to repay all
amounts so advanced if it is ultimately determined that they are not entitled
II-1
<PAGE>
to be indemnified or, in the case of criminal action, a majority of the Board
of Directors so determines. In addition, the Company has entered into
indemnification agreements with each of its directors which entitle the
director to indemnification for certain expenses to the fullest extent
permitted by law.
The By-laws of Armstrong also provide pursuant to Section 1713 of the PBCL
that a director of Armstrong shall not be personally liable for monetary
damages as such for any action taken, or any failure to take any action,
unless: (1) the director has breached or failed to perform the duties of
his/her office under Section 1712 of the 1988 BCL (relating to standard of
conduct and justifiable reliance); and (2) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. This limitation
on the personal liability of directors of Armstrong does not apply to: (1) the
responsibility or liability of a director pursuant to any criminal statute; or
(2) the liability of a director for the payment of taxes pursuant to local,
state or Federal law.
Armstrong and its subsidiaries also carry insurance insuring their officers
and directors against certain liabilities which they might incur as directors
or officers of the Company or of any other organization which they serve at its
request, including certain liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS
This Registration Statement includes the following Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S>
Form of Underwriting Agreement for Debt Securities and Preferred
1.1 -- Stock
1.2 -- Form of Underwriting Agreement for Common Stock
3.1 -- Articles of Incorporation, as amended
3.2 -- By-laws, as amended
4.1 -- Indenture for Senior Debt Securities dated August 6, 1996
4.2 -- Indenture for Subordinated Debt Securities dated August 6, 1996
4.3 -- Form of Deposit Agreement
4.4 -- Rights Agreement between the Company and Chemical Mellon
Shareholder Services, L.L.C. effective as of March 21, 1996
5.1 -- Opinion of Buchanan Ingersoll Professional Corporation
12.1 -- Calculation of Ratios of Earnings to Fixed Charges
Calculation of Ratios of Earnings to Fixed Charges and Preferred
12.2 -- Stock Dividends
Letter re: unaudited interim financial information for the period
15.1 -- ended March 31, 1996
Letter re: unaudited interim financial information for the period
15.2 -- ended June 30, 1996
23.1 -- Consent of Buchanan Ingersoll Professional Corporation (contained
in its opinion filed as Exhibit 5.1 to this Registration
Statement)
23.2 -- Consent of KPMG Peat Marwick L.L.P.
23.3 -- Consent of Ernst & Young L.L.P.
24.1 -- Powers of Attorney
Statement of Eligibility on Form T-1 with respect to the Senior
25.1 -- Debt Securities
25.2 -- Statement of Eligibility on Form T-1 with respect to the
Subordinated Debt Securities
</TABLE>
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
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 of 1933;
(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 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; and
(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 (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Armstrong pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 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.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulations S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to
provide such interim financial information.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, 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.
(7) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
II-3
<PAGE>
(8) 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 ("Act") in accordance with the rules
and regulations prescribed by the Commission under section
305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "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 Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the 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.
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 Amendment No. 2 to
the Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Lancaster,
Commonwealth of Pennsylvania, on this 30th day of October, 1996.
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ L. A. Pulkrabek
----------------------------------
L. A. Pulkrabek
Senior Vice President, Secretary
and General Counsel
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
date above indicated:
<TABLE>
<S> <C> <C>
George A. Lorch Chairman of the
Board and President
(Principal Executive Officer)
Frank A. Riddick, III Senior Vice-President,
Finance, and Chief Financial
Officer (Principal Financial Officer)
Bruce A. Leech, Jr. Controller (Principal
Accounting Officer)
H. Jesse Arnelle Director
Van C. Campbell Director
/s/ L. A. Pulkrabek
Donald C. Clark Director Attorney-in-Fact
E. Allen Deaver Director
Ursula F. Fairbairn Director
James E. Marley Director
J. Phillip Samper Director
Jerre L. Stead Director
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Unless otherwise noted, the following exhibits are filed herewith:
<TABLE>
<CAPTION>
PAGE
NUMBER IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION SYSTEM
----------- ----------- ----------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement for Debt
Securities and Preferred Stock*
1.2 -- Form of Underwriting Agreement for Common Stock*
3.1 -- Articles of Incorporation, as amended, previously
filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994, file no. 1-2116, filed with
the Commission on March 28, 1995
3.2 -- By-laws, as amended, previously filed as an
exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994,
file no. 1-2116, filed with the Commission on
March 28, 1995
4.1 -- Indenture for Senior Debt Securities dated August
6, 1996*
4.2 -- Indenture for Subordinated Debt Securities dated
August 6, 1996*
4.3 -- Form of Deposit Agreement**
4.4 -- Rights Agreement between the Company and Chemical
Mellon Shareholder Services, effective as of
March 21, 1996, previously filed as an exhibit to
Form 8A/A, filed with the Commission on March 15,
1996, file no. 1-2116
5.1 -- Opinion of Buchanan Ingersoll Professional
Corporation**
12.1 -- Calculation of Ratios of Earnings to Fixed
Charges**
12.2 -- Calculation of Ratios of Earnings to Fixed
Charges and Preferred Stock Dividends**
15.1 -- Letter re: unaudited interim financial
information for the period ended March 31, 1996**
15.2 -- Letter re: unaudited interim financial
information for the period ended June 30, 1996**
23.1 -- Consent of Buchanan Ingersoll Professional
Corporation (contained in its opinion filed as
Exhibit 5.1 to this Registration Statement)**
23.2 -- Consent of KPMG Peat Marwick L.L.P.**
23.3 -- Consent of Ernst & Young L.L.P.**
24.1 -- Powers of Attorney*
25.1 -- Statement of Eligibility on Form T-1 with respect
to the Senior Debt Securities*
25.2 -- Statement of Eligibility on Form T-1 with respect
to the Subordinated Debt Securities*
</TABLE>
- --------
*Previously filed
**Filed herewith
II-6
<PAGE>
Exhibit 4.3
DEPOSIT AGREEMENT
dated as of _______________, 1996
among
ARMSTRONG WORLD INDUSTRIES, INC.
a Pennsylvania corporation,
_____________________________________________
[a national banking association],
AND THE HOLDERS FROM TIME TO TIME
OF THE RECEIPTS DESCRIBED HEREIN.
WHEREAS, it is desired to provide, as hereinafter
set forth in this Deposit Agreement, for the deposit of shares
of [title of preferred stock] [, par value $____ per share,] of
ARMSTRONG WORLD INDUSTRIES, INC. with the Depositary (as
hereinafter defined) for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of Receipts
(as hereinafter defined) by the Depositary evidencing
Depositary Shares (as hereinafter defined) in respect of the
Stock (as hereinafter defined) so deposited; and
WHEREAS, the Receipts are to be substantially in the
form of Exhibit A annexed hereto, with appropriate insertions,
---------
modifications and omissions as hereinafter provided in this
Deposit Agreement;
NOW, THEREFORE, in consideration of the premises
contained herein and such other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Terms Generally. For all purposes of
---------------
this Deposit Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article I when
used in this Deposit Agreement have the meanings assigned
to them in this Article I and include the plural as well
as the singular (with the singular and plural forms
having correlative meanings except as expressly otherwise
provided);
(b) unless the context otherwise requires, any
reference to an "Article", a "Section", or an "Exhibit"
refers to an Article, a Section, or an Exhibit, as the
case may be, of or to this Deposit Agreement;
(c) the words "include", "includes" and
"including" shall be deemed to be followed by the phrase
"without limitation";
(d) whenever the context may require, any
pronoun shall be deemed to include the corresponding
masculine, feminine and neuter forms;
(e) references to "dollars" or "$" shall be
deemed to be references to the lawful money of the Unit-
ed States; and
(f) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to
this Deposit Agreement as a whole and not to any
particular Article, Section or other subdivision.
SECTION 1.02. Definitions. The following
-----------
definitions shall for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit
Agreement and the Receipts (as hereinafter defined):
"Certificate" shall mean the Statement of
Designation filed with the Department of State of the Commonwealth
of Pennsylvania establishing the Stock as a series of preferred
stock of the Company, as it may be amended from time to time
in accordance with its terms.
"Company" shall mean Armstrong World Industries,
Inc., a Pennsylvania corporation, and its successors.
-2-
<PAGE>
"Deposit Agreement" shall mean this Deposit
Agreement, as amended or supplemented from time to time in
accordance with the terms hereof.
"Depositary" shall mean _______________, a [national
banking association], and any successor Depositary hereunder.
"Depositary Shares" shall mean the depositary shares
representing ________ of a share of Stock and evidenced by a
Receipt.
"Depositary's Agent" shall mean an agent appointed
by the Depositary pursuant to Section 7.05 and shall include
the Registrar appointed pursuant to Section 5.01 if such
Registrar is not the Depositary.
"Depositary's Office" shall mean the principal
office of the Depositary at which at any particular time its
depositary business shall be administered.
"holder" or "record holder" with respect to a
Receipt shall mean the individual, entity or person in whose
name a Receipt is registered on the books or any register of
the Registrar maintained for such purpose at a given time.
"NASD" shall mean the National Association of
Securities Dealers, Inc. and its successors.
"Receipt" shall mean one of the depositary receipts,
whether in definitive or temporary form, issued hereunder by
the Depositary, each representing any number of whole
Depositary Shares.
"Registrar" shall mean the Depositary or any other
bank or trust company appointed by the Depositary to register
ownership and transfers of Receipts as herein provided.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Stock" shall mean shares of the Company's [title of
preferred stock][, par value $____ per share].
"Stockholders" shall mean holders of the Stock.
-3-
<PAGE>
ARTICLE II
FORM OF RECEIPTS; DEPOSIT OF STOCK;
EXECUTION AND DELIVERY, TRANSFER
AND SURRENDER OF RECEIPTS
SECTION 2.01. Form and Transfer of Receipts,
------------------------------
Surrender and Redemption of Receipts. The Receipts may be
------------------------------------
typewritten or shall, upon notice by the Company to the
Depositary, be definitive Receipts which shall be engraved,
printed, lithographed on steel-engraved borders or typewritten
and shall be substantially in the form set forth in Exhibit A
---------
annexed to this Deposit Agreement, with appropriate
insertions, modifications and omissions, as hereinafter
provided, if required by any securities exchange on which the
Receipts are listed. Pending the preparation of definitive
Receipts (or if definitive Receipts are not required by any
securities exchange on which the Receipts are listed), the
Depositary, upon the written order of the Company (or any
holder of Receipts, as the case may be) delivered in
compliance with Section 2.02, shall execute and deliver
temporary Receipts, which shall be printed, lithographed,
typewritten, mimeographed or otherwise substantially of the
tenor of the definitive Receipts in lieu of which they are
issued and with such appropriate insertions, omissions,
substitutions and other variations as the persons executing
such Receipts may determine, as evidenced by their execution
of such Receipts. If temporary Receipts are issued, the
Company and the Depositary will cause definitive Receipts to
be prepared without unreasonable delay. After the preparation
of definitive Receipts, the temporary Receipts shall be
exchangeable for definitive Receipts upon surrender of the
temporary Receipts at the Depositary's Office or at such other
place as places as the Depositary shall determine, without
charge to the holder thereof. Upon surrender for cancellation
of any one or more temporary Receipts, the Depositary shall
execute and deliver in exchange therefor definitive Receipts
representing the same number of Depositary Shares as
represented by the surrendered temporary Receipt or Receipts
registered in the name (and only the name) of the holder of
the temporary Receipt. Such exchange shall be made at the
Company's expense and without any charge therefor to such
holder. Until so exchanged, the temporary Receipts shall in
all respects be entitled to the same benefits under this
Deposit Agreement, and with respect to the Stock, as
definitive Receipts.
Receipts shall be executed by the Depositary by the
manual signature of a duly authorized officer of the
Depositary; provided, however, that such signature may be a
--------- -------
facsimile if a Registrar for the Receipts (other than the
-4-
<PAGE>
Depositary) shall have been appointed and such Receipts are
countersigned by manual signature of a duly authorized officer
of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed
manually by a duly authorized officer of the Depositary or, if
a Registrar for the Receipts (other than the Depositary) shall
have been appointed, by manual or facsimile signature of a
duly authorized officer of the Depositary and countersigned
manually by a duly authorized officer of such Registrar. The
Depositary shall cause the Registrar to record on its books
each Receipt so signed and delivered as hereinafter provided.
The manual or facsimile signatures of individuals who were at
any time proper officers of the Depositary or the Registrar,
as the case may be, shall constitute adequate signatures
hereunder, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the delivery of
Receipts bearing such signatures or did not hold such offices
on the date of delivery of such Receipts.
Receipts shall be in denominations of any number of
whole Depositary Shares. The Company shall deliver to the
Depositary from time to time such quantities of blank Receipts
as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.
Receipts may be endorsed with or have incorporated
in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Deposit Agreement as
may be required by the Depositary and approved by the Company
or required to comply with any applicable law or regulation or
with the rules and regulations of any securities exchange upon
which the Stock, the Depositary Shares or the Receipts may be
listed or to conform with any usage with respect thereto, or
to indicate any special limitations or restrictions to which
any particular Receipts are subject.
Title to any Receipt (and to the Depositary Shares
evidenced by such Receipt) that is properly endorsed, or
accompanied by a properly executed instrument of transfer,
shall be transferable by delivery of such Receipt with the
same effect as if such Receipt were a negotiable instrument;
provided, however, that until transfer of a Receipt shall be
- -------- -------
registered on the books of the Registrar, on behalf of the
Depositary, as provided in Section 2.03, the Depositary may,
notwithstanding any notice to the contrary, treat the record
holder thereof as the absolute owner thereof for the purpose
of determining the person entitled to distributions of
dividends or other distributions with respect to the Stock or
to any notice provided for in this Deposit Agreement and for
all other purposes.
-5-
<PAGE>
The Depositary shall not lend any Stock deposited
hereunder.
SECTION 2.02. Deposit of Stock; Execution and
-------------------------------
Delivery of Receipts in Respect Thereof. Subject to the terms
- ---------------------------------------
and conditions of this Deposit Agreement, the Company may from
time to time deposit shares of Stock with the Depositary under
this Deposit Agreement by delivery to the Depositary of a
certificate or certificates representing the Stock to be
deposited properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or
endorsement, in form satisfactory to the Depositary, together
with all such certificates as may be required by the
Depositary in accordance with the provisions of this Deposit
Agreement, and together with a written order of the Company
directing the Depositary to execute and deliver to, or upon
the written order of, the person or persons named in such
order a Receipt or Receipts evidencing in the aggregate the
number of Depositary Shares representing such deposited Stock.
All Stock deposited by the Company with the
Depositary shall be held by the Depositary at the Depositary's
Office or at such other place or places as the Depositary
shall determine.
If required by the Depositary, Stock presented for
deposit at any time (except for the initial deposit of Stock
by the Company), whether or not the register of stockholders
of the Company is closed, shall also be accompanied by an
agreement or assignment, or other instrument satisfactory to
the Depositary, that will provide for the prompt transfer to
the Depositary or its nominee of any dividend or right to
subscribe for additional Stock or to receive other property
that any person in whose name the Stock is or has been
registered may thereafter receive upon or in respect of such
deposited Stock, or in lieu thereof such agreement of
indemnity or other agreement as shall be satisfactory to the
Depositary.
Upon receipt by the Depositary of a certificate or
certificates representing Stock deposited with the Depositary
by the Company in accordance with the provisions of this
Section 2.02, together with the other documents required as
above specified, and upon recordation of the Stock so
deposited on the books of the Company in the name of the
Depositary or its nominee, the Depositary, subject to the
terms of this Deposit Agreement, shall execute and deliver, to
or upon the order of the person or persons named in the
written order delivered to the Depositary referred to in the
first paragraph of this Section 2.02, a Receipt or Receipts
evidencing in the aggregate the number of Depositary Shares
-6-
<PAGE>
representing the Stock so deposited. Such Receipt or Receipts
shall be registered by the Depositary or the Registrar in such
name or names as may be requested by the person or persons
named in the written order of the Company delivered to the
Depositary referred to in the next preceding sentence. The
Depositary shall execute and deliver such Receipt or Receipts
at the Depositary's Office or such other offices, if any, as
such person may designate. Delivery at other offices shall be
at the risk and expense of the person requesting such
delivery. In each case, delivery will be made only upon
payment by the Company to the Depositary of all taxes and
other governmental charges and any fees payable in connection
with such deposit and the transfer of the deposited Stock.
SECTION 2.03. Registration of Transfer of Receipts.
------------------------------------
Subject to the terms and conditions of this Deposit Agreement,
the Registrar, on behalf of the Depositary, shall register on
its books transfers of Receipts from time to time upon notice
to the Registrar by the Depositary of the surrender of a
Receipt for transfer by the holder thereof in person or by
duly authorized attorney, which Receipt in each case must be
properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement together with evidence
of the payment of any transfer taxes as may be required by
law. Upon surrender of a properly endorsed Receipt or a
Receipt accompanied by an instrument of transfer or
endorsement, the Depositary shall execute a new Receipt or
Receipts evidencing the same aggregate number of Depositary
Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or
upon the order of the transferee(s) named in the
endorsement(s) or instrument(s) of transfer.
SECTION 2.04. Split-ups and Combinations of
-----------------------------
Receipts; Surrender of Receipts and Withdrawal of Stock. Upon
- -------------------------------------------------------
surrender of a Receipt or Receipts at the Depositary's Office
or at such other office as it may designate for the purpose of
effecting a split-up or combination of such Receipt or
Receipts, and subject to the terms and conditions of this
Deposit Agreement, the Depositary shall execute and deliver a
new Receipt or Receipts to the holder thereof or to such
holder's order in the authorized denominations requested,
evidencing the aggregate number of Depositary Shares evidenced
by the Receipt or Receipts surrendered; provided, however,
-------- -------
that the Depositary shall not issue any Receipt evidencing a
fractional Depositary Share. The Depositary shall give prompt
notice of such action and the certificate numbers to the
Registrar for the purpose of recording such split-up or
consolidation.
-7-
<PAGE>
Any holder of a Receipt or Receipts representing any
number of whole shares of Stock may (unless the related
Depositary Shares have previously been called for redemption)
withdraw the Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts
at the Depositary's Office or at such other offices as the
Depositary may designate for such withdrawals. Thereafter,
without unreasonable delay, the Depositary shall deliver to
such holder, or to the person or persons designated by such
holder as hereinafter provided, the number of whole shares of
Stock and all money and other property, if any, represented by
the Receipt or Receipts so surrendered for withdrawal, but
Stockholders of such whole shares of Stock will not thereafter
be entitled to deposit such Stock hereunder or to receive
Depositary Shares therefor. If the Receipt or Receipts
delivered by the holder thereof to the Depositary in
connection with such withdrawal shall evidence in the
aggregate a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole
shares of Stock to be so withdrawn, the Depositary shall at
the same time, in addition to such number of whole shares of
Stock and such money and other property, if any, to be so
withdrawn, deliver to such holder, or upon its order, a new
Receipt evidencing such excess number of Depositary Shares;
provided, however, that the Depositary shall not issue any
- -------- -------
Receipt evidencing a fractional Depositary Share. Delivery of
the Stock and the money and other property being withdrawn may
be made by the delivery of such certificates, documents of
title and other instruments as the Depositary may deem
appropriate.
Stock delivered pursuant to the preceding paragraph
may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the
provisions of this Deposit Agreement as may be required by the
Depositary or required to comply with any applicable law or
any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Stock may be listed or
to conform with any usage with respect thereto, or to indicate
any special limitations or restrictions to which any
particular shares of Stock are subject.
If the Stock and the money and other property being
withdrawn are to be delivered to a person or persons other
than the record holder of the Receipt or Receipts being
surrendered for withdrawal of Stock, such holder shall execute
and deliver to the Depositary a written order so directing the
Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of such
shares of Stock be properly endorsed in blank or accompanied
by a properly executed instrument of transfer in blank.
-8-
<PAGE>
Delivery of the Stock and the money and other
property, if any, represented by Receipts surrendered for
withdrawal shall be made by the Depositary at the Depositary's
Office, except that, at the request, risk and expense of the
holder surrendering such Receipt or Receipts and for the
account of the holder thereof, such delivery may be made at
such other place as may be designated by such holder.
SECTION 2.05. Limitations on Execution and
----------------------------
Delivery, Transfer, Surrender and Exchange of Receipts. As a
- ------------------------------------------------------
condition precedent to the execution and delivery,
registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the
Depositary's Agents or the Company may require payment to it
of a sum sufficient for the payment (or, in the event that the
Depositary or the Company shall have made such payment, the
reimbursement to it) of any taxes, charges or expenses payable
by the holder of a Receipt pursuant to Section 3.02 and
Section 5.07, may require the production of evidence satisfac-
tory to it as to the identity and genuineness of any signature
and may also require compliance with the rules and regulations
of any governmental body, any stock exchange or any applicable
self-regulatory body, including the Securities Transfer
Association, Inc., the NASD or such procedures or regulations,
if any, as the Depositary or the Company may establish
consistent with the provisions of this Deposit Agreement.
The delivery of Receipts against Stock deposited
with the Depositary may be suspended, the registration of
transfer of Receipts may be refused and the registration of
transfer, surrender, exchange, split-up or combination of
outstanding Receipts may be suspended and the deposit of Stock
may be refused (i) during any period when the register of
stockholders of the Company is closed or (ii) if any such
action is deemed necessary by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to
time because of any applicable requirement of law or of any
government, governmental body or commission, stock exchange or
the NASD.
SECTION 2.06. Lost Receipts, Etc. If any mutilated
------------------
Receipt is surrendered to the Depositary, the Depositary shall
execute and deliver in exchange therefor a new Receipt of like
form and tenor in exchange and substitution for such mutilated
Receipt. In case any Receipt shall be destroyed, lost or
stolen, the Depositary shall execute and deliver a Receipt to
the holder thereof of like form and tenor in exchange and
substitution for such destroyed, lost or stolen Receipt, upon
(i) the filing by the holder thereof with the Depositary of
evidence satisfactory to the Depositary of such destruction or
loss or theft of such Receipt, of the authenticity thereof and
-9-
<PAGE>
of such holder's ownership thereof, (ii) the holder's
furnishing the Depositary with reasonable indemnification
satisfactory to such Depositary and (iii) payment of any
expenses, including fees, charges and expenses of the
Depositary, in connection with such execution and delivery
(which may include the customary premium payable to its
insurance carrier in connection therewith).
SECTION 2.07. Cancellation and Destruction of
-------------------------------
Surrendered Receipts. All Receipts surrendered to the
- --------------------
Depositary or any Depositary's Agent shall be canceled by the
Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all
Receipts so cancelled.
SECTION 2.08. Redemption of Stock. Whenever the
-------------------
Company shall elect to redeem shares of Stock in accordance
with the provisions of the Certificate, it shall (unless
otherwise agreed in writing with the Depositary) mail notice
to the Depositary of such redemption, by first class mail,
postage prepaid, on the same date on which the Company first
publicly announces such redemption, which date shall not be
less than 35 days prior to the date of such redemption, which
notice shall state the date of such redemption, the number of
shares of Stock deposited with the Depositary to be so
redeemed and the applicable redemption price and shall be
accompanied by a certificate from the Company stating that
such redemption is in accordance with the provisions of the
Certificate. On the date of such redemption, provided that
the Company shall then have deposited with the Depositary an
amount in cash required pursuant to the Certificate in order
to effect a redemption of the number of shares of Stock
specified in the notice of redemption and any other amounts
per share payable with respect to the Stock, the Depositary
shall redeem the Depositary Shares relating to such Stock.
The Depositary shall provide notice of such redemption and the
simultaneous redemption of the number of Depositary Shares
relating to the Stock to be redeemed to the record holders of
the Receipts evidencing the Depositary Shares to be so
redeemed on the record date fixed pursuant to Section 4.04 by
first-class mail, postage prepaid, at the addresses of such
holders as they appear on the records of the Depositary, not
less than 30 and not more than 60 days prior to the date fixed
for redemption of such Stock and Depositary Shares (the
"Redemption Date"). Neither failure to mail any such notice
to one or more such holders nor any defect in any notice or in
the mailing thereof to one or more such holders shall affect
the validity of the proceedings for redemption of any
Depositary Shares as to other holders of Receipts. Each such
notice of redemption provided by the Depositary to the holders
shall state, as appropriate: (i) the Redemption Date; (ii)
-10-
<PAGE>
the number of Depositary Shares to be redeemed and, if less
than all the Depositary Shares held by any such holder are to
be redeemed, the number of such Depositary Shares held by such
holder to be so redeemed and the method by which the
Depositary Shares will be chosen for redemption; (iii) the
redemption price per Depositary Share (expressed as an amount
of cash) and any other amounts per share payable with respect
to the Depositary Shares; (iv) the place or places where
Receipts evidencing Depositary Shares are to be surrendered
for redemption; and (v) that dividends in respect of the Stock
to be redeemed, which are represented by the Depositary Shares
to be redeemed, will cease to accrue at the close of business
on the day prior to such Redemption Date, except as otherwise
provided in the Certificate. If less than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to
be so redeemed shall be selected by lot or pro rata as may be
determined by the Depositary.
Notice having been mailed by the Depositary as
aforesaid, from and after the Redemption Date (unless the
Company shall have failed to deliver to the Depositary cash
sufficient to redeem the shares of Stock to be redeemed by it
or any other amounts per share payable with respect to the
Stock as set forth in the Company's notice provided for in the
preceding paragraph), all dividends in respect of the shares
of Stock so called for redemption shall cease to accrue
(except as otherwise provided in the Certificate), the
Depositary Shares being redeemed shall be deemed no longer to
be outstanding, all rights of the holders of Receipts
evidencing such Depositary Shares (except the right to receive
the cash redemption price required to redeem such Depositary
Shares and any other amounts per Share payable with respect to
the Stock) shall, to the extent of such Depositary Shares,
cease and terminate and, upon surrender in accordance with
such redemption notice of the Receipts evidencing any such
Depositary Shares called for redemption (properly endorsed or
assigned for transfer, if the Depositary or applicable law
shall so require), such Depositary Shares shall be redeemed by
the Depositary for an amount of cash per Depositary Share
equal to one ___-________ (1/_____) of the cash amount
required by the Certificate to be delivered in respect of one
share of Stock plus all money and other property, if any,
underlying such Depositary Shares, including all amounts paid
by the Company in respect of dividends that, on the Redemption
Date, have accrued on the shares of Stock to be so redeemed
and relate to dividend periods ending on or prior to the
Redemption Date or to the extent provided in the Certificate,
to the dividend period ending after the Redemption Date, and
have not theretofore been paid.
-11-
<PAGE>
If less than all the Depositary Shares evidenced by
a Receipt are called for redemption, the Depositary will
deliver to the holder of such Receipt upon its surrender to
the Depositary, together with the delivery of a cash amount
sufficient to redeem the shares of Stock to be redeemed and
any other amounts per share payable with respect to the Stock,
a new Receipt evidencing such number of Depositary Shares as
were evidenced by such prior Receipt and not called for
redemption.
Upon any redemption, the Company shall deliver to
the Depositary an amount in cash required by the Certificate
in order to effect the redemption of the number of shares of
Stock specified in the notice of redemption mailed by the
Company to the Depositary pursuant to this Section 2.08 and a
sufficient amount of funds to pay any other amounts per share
payable with respect to the Stock. The Depositary shall
deliver to each holder of a Receipt surrendered for redemption
an amount in cash equal to the number or amount required by
the Certificate to effect a redemption of the number of
Depositary Shares evidenced by such Receipt to be redeemed.
ARTICLE III
CERTAIN OBLIGATIONS OF THE HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.01. Filing Proofs, Certificates and Other
-------------------------------------
Information. Any person presenting Stock for deposit or any
- -----------
holder of a Receipt may be required from time to time to file
such proof of residence, or other matters or other
information, to obtain such guaranties of signature, to
execute such certificates and to make such customary
representations and warranties as the Depositary or the
Company may reasonably deem necessary or proper. The
Depositary or the Company may withhold the delivery, or delay
the registration of transfer, redemption or exchange, of any
Receipt or the withdrawal or conversion of the Stock
represented by the Depositary Shares evidenced by any Receipt
or the distribution of any dividend or other distribution or
the sale of any rights or of the proceeds thereof until such
proof or other information is filed or such certificates are
executed or such representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other
-------------------------
Governmental Charges. Holders of Receipts shall be obligated
- --------------------
to make payments to the Depositary of certain charges and
expenses as provided in Section 5.07. Registration of
transfer of any Receipt or any withdrawal of Stock and
delivery of all money or other property, if any, represented
-12-
<PAGE>
by the Depositary Shares evidenced by such Receipt may be
refused until any such payment due is made, and any dividends,
interest payments or other distributions may be withheld or
all or any part of the Stock or other property represented by
the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder
thereof (after attempting by reasonable means to notify such
holder prior to such sale), and such dividends, interest
payments or other distributions or the proceeds of any such
sale may be applied to any payment of such charges or
expenses, the holder of such Receipt remaining liable for any
deficiency.
SECTION 3.03. Warranty as to Stock. The Company
--------------------
hereby represents and warrants to the Depositary that the
Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable. Such representation and
warranty shall survive the deposit of the Stock and the
issuance of Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.01. Cash Distributions. Whenever the
------------------
Depositary shall receive any cash dividend or other cash
distribution with respect to the Stock, the Depositary shall,
subject to Section 3.01 and Section 3.02, distribute to record
holders of Receipts on the record date fixed pursuant to
Section 4.04 such amounts of such dividend or distribution as
are, as nearly as practicable, applicable to the number of
Depositary Shares evidenced by the Receipts held by such
holders; provided, however, that if the Company or the
-------- -------
Depositary shall be required to withhold and shall withhold
any monies from any cash dividend or other cash distribution
in respect of the Stock on account of taxes or as otherwise
required by law, regulation or court order, the distribution
in respect of Depositary Shares shall be reduced accordingly.
The Depositary shall distribute or make available for
distribution, as the case may be, the amount received by it
after making any necessary adjustments to round (up or down)
to the nearest cent any fraction of one cent attributed to any
holder of Receipts representing Depositary Shares after
aggregating all amounts to be distributed to such holder.
SECTION 4.02. Distributions Other than Cash,
-----------------------------
Rights, Preferences or Privileges. Whenever the Depositary
- ---------------------------------
shall receive any property (including securities) for
distribution in a form other than cash, rights, preferences or
privileges with respect to the Stock, the Depositary shall,
-13-
<PAGE>
subject to Section 3.01 and Section 3.02, distribute to record
holders of Receipts on the record date fixed pursuant to
Section 4.04 such amounts of such property (including
securities) received by it as are, as nearly as practicable,
applicable to the number of Depositary Shares evidenced by the
Receipts held by such holders, in any manner that the
Depositary may deem equitable and practicable for
accomplishing such distribution. If, in the opinion of the
Depositary, such distribution cannot be made proportionately
among such record holders, or if for any other reason
(including any requirement that the Company or the Depositary
withhold an amount on account of taxes or as otherwise
required by law, regulation or court order) the Depositary
deems, after consultation with the Company, such distribution
not to be feasible, the Depositary may adopt such method as it
deems equitable and practicable for the purpose of effecting
such distribution, including the sale (at public or private
sale) of the property (including securities) thus received, or
any part thereof, in a commercially reasonable manner and upon
commercially reasonable terms. The net proceeds of any such
sale shall, subject to Section 3.01 and Section 3.02, be
distributed or made available for distribution, as the case
may be, by the Depositary to record holders of Receipts in
accordance with the provisions of Section 4.01 for a
distribution received in cash.
SECTION 4.03. Subscription Rights, Preferences or
-----------------------------------
Privileges. If the Company shall at any time offer or cause
- ----------
to be offered to the persons in whose names Stock is recorded
on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or
any rights, preferences or privileges of any other nature,
such rights, preferences or privileges shall in each such
instance be made available by the Depositary to the record
holders of Receipts in such manner as the Depositary may
determine, either by the issue to such record holders of
warrants representing such rights, preferences or privileges
or by such other method as may be approved by the Depositary
in its discretion with the approval of the Company; provided,
--------
however, that (i) if at the time of issue or offer of any such
- -------
- -------
rights, preferences or privileges the Depositary determines
that it is not lawful or (after consultation with the Company)
not feasible to make such rights, preferences or privileges
available to holders of Receipts by the issue of warrants or
otherwise, or (ii) if and to the extent so instructed by
holders of Receipts who do not desire to exercise such rights,
preferences or privileges, then the Depositary, in its
discretion (with the approval of the Company, in any case
where the Depositary has determined that it is not feasible to
make such rights, preferences or privileges available), may,
if applicable laws or the terms of such rights, preferences or
-14-
<PAGE>
privileges permit such transfer, sell such rights, preferences
or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net
proceeds of any such sales shall, subject to Section 3.01 and
Section 3.02, be distributed by the Depositary to the record
holders of Receipts entitled thereto as provided by
Section 4.01 in the case of a distribution received in cash.
If registration under the Securities Act of the
securities to which any rights, preferences or privileges
relate is required in order for holders of Receipts to be
offered or sold the securities to which such rights,
preferences or privileges relate, the Company will file
promptly a registration statement pursuant to such act with
respect to such rights, preferences or privileges and
securities and use its best efforts and take all steps
available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such
rights, preferences or privileges to enable such holders to
exercise such rights, preferences or privileges. In no event
shall the Depositary make available to the holders of Receipts
any right, preference or privilege to subscribe for or to
purchase any securities unless and until it has received
written notice from the Company that such registration
statement shall have become effective, or that the offering
and sale of such securities to such holders are exempt from
registration under the provisions of the Securities Act and
the Company shall have provided to the Depositary an opinion
of counsel to such effect.
If any other action under the laws of any
jurisdiction or any governmental or administrative
authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to
holders of Receipts, the Company agrees with the Depositary
that the Company will use its best efforts to take such action
or obtain such authorization, consent or permit sufficiently
in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights,
preferences or privileges.
SECTION 4.04. Notice of Dividends, Etc.; Fixing
---------------------------------
Record Date for Holders of Receipts. Whenever any cash
- -----------------------------------
dividend or other cash distribution shall become payable or
any distribution of property (including securities) other than
cash shall be made, or if rights, preferences or privileges
shall at any time be offered, with respect to Stock, or
whenever the Depositary shall receive notice of (i) any
meeting at which Stockholders are entitled to vote or of which
Stockholders are entitled to notice, (ii) any election on the
part of the Company to redeem any shares of Stock, or (iii)
-15-
<PAGE>
whenever the Depositary and the Company shall agree that it is
appropriate, the Depositary, in each such instance, shall fix
a record date (which shall be the same date as the record date
fixed by the Company with respect to or otherwise in
accordance with the terms of the Stock) for the determination
of the holders of Receipts who shall be entitled under this
Deposit Agreement to receive a distribution in respect of such
dividend, distribution, rights, preferences or privileges or
the net proceeds of the sale thereof, or to give instructions
for the exercise of voting rights at any such meeting, or to
receive notice of such meeting or to have any other rights in
respect of the Stock.
SECTION 4.05. Voting Rights. Upon receipt of
-------------
notice of any meeting at which Stockholders are entitled to
vote, the Depositary shall, as soon as practicable thereafter,
mail to the record holders of Receipts a notice which shall be
provided by the Company and which shall contain (i) such
information as is contained in such notice of meeting and (ii)
a statement that the record holders of Receipts at the close
of business on the specified record date fixed pursuant to
Section 4.04 will, subject to any applicable restrictions, be
entitled to instruct the Depositary as to the exercise of the
voting rights pertaining to the amount of Stock (or portion
thereof) represented by their respective Depositary Shares
(including an express indication that instructions may be
given to the Depositary to grant a discretionary proxy to a
person designated by the Company) and (iii) a brief statement
as to the manner in which such instructions may be given.
Upon the written request of the holders of Receipts on the
applicable record date, the Depositary shall endeavor, insofar
as practicable, to vote or cause to be voted, in accordance
with the instructions set forth in such requests, the votes
relating to the shares of Stock (or portion thereof)
represented by the Depositary Shares evidenced by all Receipts
as to which any particular voting instructions are received.
The Company hereby agrees to take all reasonable action which
may be deemed necessary by the Depositary in order to enable
the Depositary to vote such Stock (or portion thereof) or
cause such Stock (or portion thereof) to be voted. Absent
specific instructions from the holder of a Receipt, the
Depositary will abstain from voting (but, at its discretion,
not from appearing at any meeting with respect to such Stock
unless directed to the contrary by the holders of all the
Receipts) to the extent of the Stock (or portion thereof)
represented by the Depositary Shares evidenced by such
Receipt.
SECTION 4.06. Changes Affecting Deposited
---------------------------
Securities and Reclassifications, Recapitalization, etc. Upon
- -------------------------------------------------------
any change in par or stated value or liquidation preference,
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<PAGE>
split-up, combination or any other reclassification of the
Stock, or upon any recapitalization, reorganization, merger,
amalgamation or consolidation to which the Company is a party
or sale of all or substantially all of the Company's assets
(each of the foregoing being referred to herein as a
"Transaction"), the Depositary may with the approval of, and
shall upon the instructions of, the Company, and (in either
case) in such manner as to retain as nearly as possible the
percentage ownership interest in Stock of holders of Receipts
immediately prior to such event, (i) make such adjustments in
(a) the fraction of an interest in one share of Stock
represented by one Depositary Share and (b) the ratio of the
redemption price per Depositary Share to the redemption price
of a share of Stock, in each case as may be necessary fully to
reflect the effects of such Transaction, and (ii) treat any
securities received by the Depositary in exchange for, or upon
conversion or in respect of, the Stock as new deposited
securities so received in exchange for, or upon conversion or
in respect of, the Stock. In any such case the Depositary
may, with the approval of the Company, execute and deliver
additional Receipts, or may call for surrender of all
outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited securities.
Anything to the contrary herein or in any Receipt
notwithstanding, holders of Receipts shall have the right from
and after the effective date of any such Transaction, to the
extent that Stockholders had the right, prior to or on the
applicable effective date, to convert, exchange or surrender
shares of Stock into or for other stock, securities, property
or cash, to surrender such Receipts to the Depositary with
instructions to convert, exchange or surrender the Stock
represented thereby only into or for, as the case may be, the
kind and amount of shares of stock and other securities and
property and cash for which such Stock might have been
exchanged or surrendered immediately prior to the effective
date of such Transaction.
SECTION 4.07. Inspection of Reports. The
---------------------
Depositary shall make available for inspection by holders of
Receipts during normal business hours at the Depositary's
Office, and at such other places as it may from time to time
deem advisable, any reports and communications received from
the Company that are received by the Depositary as a
Stockholder.
SECTION 4.08. List of Holders of Receipts.
---------------------------
Promptly upon request by, and at the expense of, the Company,
the Depositary shall furnish to the Company a list, as of a
specified date, of the names and addresses of all record
-17-
<PAGE>
holders of Receipts and the amount of Stock represented
thereby.
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY
SECTION 5.01. Maintenance of Offices, Agencies and
------------------------------------
Transfer Books by the Depositary; Registrar. Upon execution
- -------------------------------------------
of this Deposit Agreement, the Depositary shall maintain, at
the Depositary's Office, facilities for the execution and
delivery, registration and registration of transfer, surrender
and exchange of Receipts, and at the offices of the
Depositary's Agents, if any, facilities for the delivery,
registration of transfer, surrender and exchange of Receipts,
all in accordance with the provisions of this Deposit
Agreement.
The Depositary may, with the approval of the
Company, appoint a Registrar for registration of the Receipts
or the Depositary Shares evidenced thereby. If the Receipts
or the Depositary Shares evidenced thereby or the Stock
represented by such Depositary Shares shall be listed on one
or more national stock exchanges, the Depositary will appoint
a Registrar (acceptable to the Company) for registration of
such Receipts or Depositary Shares in accordance with any
requirements of such exchange. Such Registrar (which may be
the Depositary if so permitted by the requirements of any such
exchange) may be removed and a substitute Registrar appointed
by the Depositary upon the request or with the approval of the
Company. If the Receipts, such Depositary Shares or such
Stock are listed on one or more other stock exchanges, the
Depositary will, at the request and at the expense of the
Company, arrange such facilities for the delivery,
registration, registration of transfer, surrender and exchange
of such Receipts, such Depositary Shares or such Stock as may
be required by any applicable law or regulation of any govern-
ment, governmental body or commission, stock exchange or the
NASD.
The Registrar shall maintain books at the
Depositary's Office for the registration and registration of
transfer of Receipts or at such other place as shall be
approved by the Company and of which the holders of Receipts
shall have reasonable notice, which books at all reasonable
times during normal business hours shall be open for
inspection by the record holders of Receipts; provided, that
--------
any such holder requesting to exercise such right shall
certify in writing to the Registrar that such inspection shall
-18-
<PAGE>
be for a proper purpose reasonably related to such person's
interest as an owner of Depositary Shares evidenced by the
Receipts.
The Depositary may cause the Registrar to close the
books with respect to the Receipts, at any time or from time
to time, when the register of stockholders of the Company is
closed with respect to the Stock or when such action is deemed
necessary or advisable by the Depositary, any Depositary's
Agent or the Company because of any requirement of this
Deposit Agreement, of law or of any government, governmental
body or commission, stock exchange or any applicable self-
regulatory body, including the NASD.
SECTION 5.02. Prevention of or Delay in Performance
-------------------------------------
by the Depositary, the Depositary's Agents, the Registrar or
- ------------------------------------------------------------
the Company. None of the Depositary, the Depositary's Agents,
- -----------
the Registrars and the Company shall incur any liability to
any holder of any Receipt if by reason of any provision of any
present or future law, rule or regulation, or by reason of any
provision, present or future, of the Company's Certificate of
Incorporation (including the Certificate) or by reason of any
act of God, war or civil disorder, failure of power, fire or
other casualty damage or governmental requirements or
restrictions, the Depositary, the Depositary's Agent, the
Registrar or the Company shall be prevented, delayed or
forbidden from, or subjected to any penalty on account of,
doing or performing any act or thing that the terms of this
Deposit Agreement provide shall be done or performed; nor
shall any such person incur any liability or be subject to any
obligation (i) by reason of any nonperformance or delay,
caused as aforesaid, in the performance of any act or thing
that the terms of this Deposit Agreement provide shall or may
be done or performed, or (ii) by reason of any exercise of, or
failure to exercise, any discretion provided for in this
Deposit Agreement, except in the event of the gross
negligence, willful misconduct or bad faith of the party
charged with such exercise or failure to exercise.
SECTION 5.03. Obligations of the Depositary, the
----------------------------------
Depositary's Agents, the Registrar and the Company. None of
- --------------------------------------------------
the Depositary, the Depositary's Agents and the Registrars
shall be under any obligation to appear in, prosecute or
defend any action, suit or other proceeding in respect of the
Stock, the Depositary Shares or the Receipts that in its
opinion may involve it in expense or liability unless
indemnity satisfactory to such party against all such expense
and liability be furnished as often as may be required.
None of the Depositary, the Depositary's Agents, the
Registrars and the Company assumes any obligation or shall be
-19-
<PAGE>
subject to any liability under this Deposit Agreement to
holders of Receipts other than to use its best judgment and
good faith in the performance of such duties as are
specifically set forth in this Deposit Agreement, nor shall
any such person be liable to any party hereto for any action
or any failure to act by it with respect to this Deposit
Agreement in reliance upon the written advice of legal counsel
or accountants, or information from any person presenting
Stock for deposit or any holder of a Receipt. The Depositary,
any Depositary's Agent, any Registrar and the Company may each
rely and shall each be protected in acting upon any written
notice, request, direction or other document believed by it to
be genuine and to have been signed or presented by the proper
party or parties.
The Depositary undertakes, and shall cause any
Registrar to undertake, to perform such duties and only such
duties as are specifically set forth in this Deposit Agreement
using its best efforts and in good faith. The parties hereto
acknowledge that no implied covenants or obligations shall be
read into this Deposit Agreement against the Depositary or any
Registrar or against the Company with respect to the
Depositary and any Registrar.
The Depositary, its affiliates or subsidiaries, the
Depositary's Agents, the Registrars and the Company (to the
extent permitted by law) may own, buy, sell or deal in any
class of securities of the Company and its affiliates and in
Receipts or Depositary Shares. The Depositary, its affiliates
or subsidiaries, the Depositary's Agents and the Registrars
may become pecuniarily interested in any transaction in which
the Company or its affiliates may be interested or contract
with or lend money to the Company or its affiliates or
otherwise act as fully or as freely as if it were not the
Depositary, the Depositary's Agent or the Registrar hereunder.
The Depositary may also act as trustee, transfer agent or
registrar of any of the securities of the Company and its
affiliates or act in any other capacity for the Company or its
affiliates.
The parties hereto intend that none of the
Depositary, the Depositary's Agents and the Registrars, acting
as the Depositary Agent or Registrar, as the case may be,
shall be deemed to be an "issuer" of the securities under the
federal securities laws or applicable state securities laws,
it being expressly understood and agreed that the Depositary,
the Depositary's Agents and the Registrars are acting only in
a ministerial capacity as Depositary or Registrar for the
Stock. None of the Depositary (and its officers, directors,
employees and agents), the Depositary's Agents and the
Registrars makes any representation or has any responsibility
-20-
<PAGE>
as to the validity of the registration statement pursuant to
which the Depositary Shares are registered under the
Securities Act, the Stock, the Depositary Shares, the Receipts
(except its counter signature thereon) or any instruments
referred to therein or herein, or as to the correctness of any
statement made therein, except as to the number of Depositary
Shares represented by such Receipts.
The Depositary assumes no responsibility for the
correctness of the description that appears in the Receipts,
which can be taken as a statement of the Company summarizing
certain provisions of this Deposit Agreement. Notwithstanding
any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity,
genuineness or sufficiency of any Stock at any time deposited
with the Depositary hereunder or of the Depositary Shares or
as to the value of the Depositary Shares. The Depositary
shall not be accountable for the use or application by the
Company of the Depositary Shares or the Receipts or the
proceeds thereof.
SECTION 5.04. Resignation and Removal of the
------------------------------
Depositary; Appointment of Successor Depositary. The
- -----------------------------------------------
Depositary may at any time resign as Depositary hereunder by
written notice of its election so to resign delivered to the
Company, such resignation to take effect upon the appointment
of a successor Depositary and its acceptance of such
appointment as hereinafter provided.
The Depositary may at any time be removed by the
Company by notice of such removal delivered to the Depositary,
such removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment as
hereinafter provided.
If the Depositary acting hereunder shall at any time
resign or be removed, the Company shall, within 60 days after
the delivery of the notice of resignation or removal, as the
case may be, use its reasonable best efforts to appoint a
successor Depositary, which shall be a bank or trust company
having its principal office in the United States of America
and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so
appointed which has accepted its appointment within 60 days
after delivery of such notice, the resigning or removed
Depositary may petition any court of competent jurisdiction
for the appointment of a successor Depositary. Every
successor Depositary shall execute and deliver to its
predecessor and to the Company an instrument in writing
accepting its appointment hereunder and agreeing to become a
party to this Deposit Agreement, and thereupon such successor
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<PAGE>
Depositary, without any further act or deed, shall become
fully vested with all the rights, powers, duties and
obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such
predecessor, upon payment of all sums due it and on the
written request of the Company, shall execute and deliver an
instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign,
transfer and deliver all right, title and interest in the
Stock and any moneys or property held hereunder to such
successor and shall deliver to such successor a list of the
record holders of all outstanding Receipts and such records,
books and other information in its possession as relate
thereto. Any successor Depositary shall promptly mail notice
of its appointment to the record holders of Receipts.
Any corporation or other entity into or with which
the Depositary may be merged, consolidated or converted, or to
which the Depositary may sell all or substantially all its
assets, shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such
successor Depositary may authenticate the Receipts in the name
of the predecessor Depositary or in the name of the successor
Depositary.
SECTION 5.05. Corporate Notices and Reports. The
-----------------------------
Company agrees that it will deliver to the Depositary and the
Depositary will, promptly after receipt thereof, transmit to
the record holders of Receipts, in each case at the addresses
recorded in the Registrar's books, all notices and reports
(including financial statements) required by law, the rules of
any national securities exchange upon which the Stock, the
Depositary Shares or the Receipts are listed or by the
Company's Articles of Incorporation (including the
Certificate) or By-laws to be furnished by the Company to
Stockholders. Such transmission will be at the Company's
expense and the Company will provide the Depositary with such
number of copies of such documents as the Depositary may
reasonably request. In addition, the Depositary will transmit
to record holders of Receipts at the Company's expense such
other documents as may be requested by the Company.
SECTION 5.06. Indemnification by the Company. The
------------------------------
Company shall indemnify the Depositary, each Depositary's
Agent and each Registrar against, and hold each of them
harmless from, any loss, liability or expense (including the
reasonable costs and expenses of defending itself) that may
arise out of (i) acts performed or omitted in connection with
this Deposit Agreement and the Receipts (a) by the Depositary,
any Registrar or any of their respective agents (including any
Depositary's Agent) except for any liability arising out of
-22-
<PAGE>
negligence or willful misconduct or breach of this Deposit
Agreement on the respective parts of any such person or
persons, or (b) by the Company or any of its agents, or (ii)
the offer, sale or registration of the Depositary Shares,
Receipts or the Stock pursuant to the provisions hereof. This
indemnification does not extend in favor of holders of
Receipts or owners of Depositary Shares or Stock. The
obligations of the Company set forth in this Section 5.06
shall survive the termination of this Deposit Agreement and
the succession of any Depositary, Depositary's Agent or
Registrar.
SECTION 5.07. Charges and Expenses. The Company
--------------------
shall pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary
arrangements. The Company shall pay all charges of the
Depositary in connection with the initial deposit of the
Stock, the initial issuance of the Depositary Shares, all
withdrawals of shares of Stock by holders of Receipts, and any
redemption or exchange of the Stock at the option of the
Company. All other transfer and other taxes and governmental
charges shall be at the expense of holders of Receipts. If,
at the request of a holder of Receipts, the Depositary incurs
charges or expenses for which it is not otherwise liable
hereunder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary
and any Depositary's Agent hereunder and of any Registrar
(including, in each case, reasonable fees and expenses of
counsel) incident to the performance of their respective
obligations hereunder will be payable by the Company only
after prior consultation and agreement between the Depositary
and the Company and consent by the Company to the incurrence
of such expenses, which consent shall not be unreasonably
withheld. The Depositary shall present any statement for
charges and expenses to the Company promptly, unless the
Company shall agree otherwise.
SECTION 5.08. Tax Compliance. The Depositary, on
--------------
its own behalf and on behalf of the Company, will comply with
all applicable certification, information reporting and
withholding (including "backup" withholding) requirements
imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to
the Depositary Shares or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Receipts
or the Depositary Shares. Such compliance shall include the
preparation and timely filing of required returns and the
timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.
-23-
<PAGE>
The Depositary shall comply with any direction
received from the Company with respect to the application of
such requirements to particular payments or holders or in
other particular circumstances, and may for purposes of this
Deposit Agreement rely on any such direction in accordance
with the provisions of Section 5.03.
The Depositary shall maintain all appropriate
records documenting compliance with such requirements, and
shall make such records available on request to the Company or
to its authorized representatives.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment. The form of the Receipts
---------
and any provisions of this Deposit Agreement may at any time
and from time to time be amended by agreement between the
Company and the Depositary in any respect which they may deem
necessary or desirable; provided, however, that no such
-------- -------
amendment that shall materially and adversely alter the rights
of the holders of Receipts shall be effective unless such
amendment shall have been approved by the holders of Receipts
representing not less than a majority of the Depositary Shares
then outstanding. Every holder of an outstanding Receipt at
the time any amendment becomes effective shall be deemed, by
continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by the Deposit Agreement as amended
thereby. In no event shall any amendment impair the right,
subject to the provisions of this Deposit Agreement, of any
owner of any Depositary Shares to surrender any Receipt
evidencing such Depositary Shares to the Depositary with
instructions to deliver to the holder of such Receipt the
Stock and all money, and other property, if any, represented
thereby, except in order to comply with mandatory provisions
of applicable law or the rules and regulations of any
governmental body, agency or commission, the NASD or any
applicable stock exchange.
SECTION 6.02. Termination. This Deposit Agreement
-----------
may be terminated by the Company or the Depositary only after
(i) all outstanding Depositary Shares have been redeemed
pursuant to Section 2.08 or (ii) there shall have been made a
final distribution in respect of the Stock in connection with
any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders
of Depositary Receipts pursuant to Section 4.01 or
Section 4.02, as applicable.
-24-
<PAGE>
If any Receipts shall remain outstanding after the
date of termination of this Deposit Agreement, the Depositary
shall discontinue the transfer of Receipts, shall suspend the
distribution of dividends to the holders thereof, and shall
not give any further notices (other than notice of such
termination) or perform any further acts under this Deposit
Agreement except that the Depositary shall continue to collect
dividends and other distributions pertaining to the Stock,
shall sell rights, preferences or privileges as provided in
this Deposit Agreement and shall continue to deliver Stock
certificates together with such dividends and distributions
and the net proceeds of any sales of rights, performances,
privileges, or other property in exchange for Receipts
surrendered. At any time after the expiration of two years
from the date of termination, the Depositary may sell the
Stock and hold the proceeds of such sale, without interest,
for the benefit of the holders of Receipts who have not then
surrendered their Receipts. After making such sale, the
Depositary shall be discharged from all obligations under this
Deposit Agreement except to account for such proceeds and
except as provided in the following paragraph. In the event
this Deposit Agreement is terminated, the Company will use its
best efforts to list the underlying shares of Preferred Stock
on any stock exchange on which the Depositary Shares were
listed.
Upon the termination of this Deposit Agreement, the
parties hereto shall be discharged from all obligations under
this Deposit Agreement except for their respective obligations
under Section 5.03, Section 5.06 and Section 5.07.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Counterparts. This Deposit Agreement
------------
may be executed in any number of counterparts, and by each of
the parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed
an original, but all of which counterparts taken together
shall constitute one and the same instrument.
SECTION 7.02. Exclusive Benefit of Parties. This
----------------------------
Deposit Agreement is for the exclusive benefit of the parties
hereto, and their respective successors hereunder, and shall
not be deemed to give any legal or equitable right, remedy or
claim to any other person whatsoever.
SECTION 7.03. Invalidity of Provisions. If any one
------------------------
or more of the provisions contained in this Deposit Agreement
-25-
<PAGE>
or in the Receipts should be or become invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or modified
thereby.
SECTION 7.04. Notices. Any and all notices to be
-------
given to the Company hereunder or under the Receipts shall be
in writing and shall be deemed to have been duly given if
personally delivered or sent by mail or telegram, telecopy or
telex confirmed by letter, addressed to the Company at
Armstrong World Industries, Inc., 313 West Liberty Street,
Lancaster, Pennsylvania 17603, attention: ______________,
telephone (717) 397-0611, facsimile (717) ___________, [with
a copy to _________________], or at any other address and to
the attention of any other person of which the Company shall
have notified the Depositary in writing.
Any and all notices to be given to the Depositary
hereunder or under the Receipts shall be in writing and shall
be deemed to have been duly given if personally delivered or
sent by mail or by telegram, telecopy or telex confirmed by
letter, addressed to the Depositary at the Depositary's
Office, ________________________, ________________, ____
_______, attention ___________, telephone: (____) ________,
facsimile: (____) ________, or at any other address and to
the attention of any other person of which the Depositary
shall have notified the Company in writing.
Any and all notices to be given to any record holder
of a Receipt hereunder or under the Receipts shall be in
writing and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram, telecopy
or telex confirmed by letter, addressed to such record holder
at the address of such record holder as it appears on the
books of the Registrar, or if such holder shall have timely
filed with the Depositary a written request that notices
intended for such holder be mailed to some other address, at
the address designated in such request.
Delivery of a notice sent by mail or by telegram,
telecopy or telex shall be deemed to be effected at the time
when a duly addressed letter containing the same (or a
confirmation thereof in the case of a telegram or telex
message) is deposited, postage prepaid, in a post office
letter box or sent by overnight courier service. The
Depositary or the Company may, however, act upon any telegram
or telecopy message received by it from the other or from any
holder of a Receipt, notwithstanding that such telegram or
-26-
<PAGE>
telecopy message shall not subsequently be confirmed by letter
or as aforesaid.
SECTION 7.05. Depositary's Agents. The Depositary
-------------------
may from time to time appoint any Depositary's Agent to act in
any respect for the Depositary for the purposes of this
Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of
such Depositary's Agents. The Depositary will promptly notify
the Company of any such action.
SECTION 7.06. Holders of Receipts Are Parties;
-------------------------------
Supremacy of Certificate. (a) By acceptance of delivery of
- ------------------------
the Receipts, any holder of such Receipt from time to time
shall be deemed to have agreed to become a party to this
Deposit Agreement and to be bound by all of the terms and
conditions hereof and of the Receipts to the same extent and
with the same effect as though such person had executed this
Deposit Agreement.
(b) Insofar as the rights of holders of Receipts
and owners of Depositary Shares derive from the rights of the
Stock as specified in the Certificate, in the case of any
inconsistency between the provisions of this Deposit Agreement
and the Certificate, the Certificate shall control; provided,
--------
however, that, this Section 7.06(b) shall not abridge any
- -------
rights of the Depositary, any Depositary's Agent or the
Registrar under Article V.
SECTION 7.07. Governing Law. THIS DEPOSIT
-------------
AGREEMENT AND THE RECEIPTS AND ALL RIGHTS HEREUNDER AND
THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REFERENCE TO APPLICABLE CONFLICTS OF LAW
PROVISIONS).
SECTION 7.08. Inspection of Deposit Agreement.
-------------------------------
Copies of this Deposit Agreement shall be filed with the
Depositary and the Depositary's Agents and shall be open to
inspection during business hours at the Depositary's Office
and the respective offices of the Depositary's Agents, if any,
by any holder of a Receipt.
SECTION 7.09. Headings. The headings of articles
--------
and sections in this Deposit Agreement and in the form of the
Receipt set forth in Exhibit A hereto have been inserted for
---------
convenience only and are not to be regarded as a part of this
Deposit Agreement or the Receipts or to have any bearing upon
the meaning or interpretation of any provision contained
herein or in the Receipts.
-27-
<PAGE>
IN WITNESS WHEREOF, the Company and the Depositary
have caused their duly authorized officers to execute and
deliver this Deposit Agreement as of the day and year first
above set forth, and all holders of Receipts shall become
parties hereto by and upon acceptance by them of delivery of
Receipts issued in accordance with the terms hereof.
ARMSTRONG WORLD INDUSTRIES, INC.
By:_________________________
Authorized Officer
[DEPOSITARY]
By:_________________________
_________________________
Title:
-28-
<PAGE>
EXHIBIT A
DEPOSIT AGREEMENT
FORM OF RECEIPT
TEMPORARY RECEIPT EXCHANGEABLE FOR DEFINITIVE CERTIFICATE FOR
ENGRAVED RECEIPT WHEN READY FOR DELIVERY _________________
DEPOSITARY SHARES
TRANSFERABLE CUSIP _______________
DEPOSITARY RECEIPT
This Certificate is SEE REVERSE FOR
transferable in CERTAIN DEFINITIONS
__________, __________
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES, EACH
DEPOSITARY SHARE REPRESENTING A _________ INTEREST
IN ONE SHARE OF [TITLE OF PREFERRED STOCK]
ARMSTRONG WORLD INDUSTRIES, INC.,
A PENNSYLVANIA CORPORATION
_________________________, as Depositary (the "Depositary"), hereby certifies
that
is the registered owner of _________________________ _____DEPOSITARY SHARES
("Depositary Shares"), each Depositary Share representing a ______ interest in
one share of [title of preferred stock][, par value $_____ per share], $_______
stated value per preferred share (the "Stock"), of Armstrong World Industries,
Inc., a Pennsylvania corporation (the "Corporation"), on deposit with the
Depositary, subject to the terms and entitled to the benefits of the Deposit
Agreement dated as of ___________________, 199__ (the "Deposit Agreement"),
between the Corporation and the Depositary. By accepting this Depositary
Receipt, the holder hereof becomes a party to and agrees to be bound by all
the terms and conditions of the Deposit Agreement. This Depositary Receipt
shall not be valid or obligatory for any purpose or be entitled to any
benefits under the Deposit Agreement unless it shall have been executed by the
Depositary by the manual signature of a duly authorized officer or, if
executed in facsimile by the Depositary, countersigned by a Registrar in
respect of the Depositary Receipts by a duly authorized officer thereof.
Dated:_______ __, 199_
Countersigned
Depositary and Registrar
By
Authorized officer
<PAGE>
ARMSTRONG WORLD INDUSTRIES, INC.
ARMSTRONG WORLD INDUSTRIES, INC. WILL FURNISH WITHOUT CHARGE TO EACH HOLDER OF
A RECEIPT WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A STATEMENT OR
SUMMARY OF THE STATEMENT OF DESIGNATION ESTABLISHING THE POWERS, DESIGNA-
TIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIFIED
RIGHTS OF THE [TITLE OF PREFERRED STOCK] AND EACH OTHER CLASS OF PREFERRED
STOCK OR SERIES THEREOF WHICH THE CORPORATION IS AUTHORIZED TO ISSUE AND OF
THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCE AND/OR
RIGHTS. ANY SUCH REQUEST SHOULD BE ADDRESSED TO ARMSTRONG WORLD INDUSTRIES,
INC., 313 WEST LIBERTY STREET, LANCASTER, PENNSYLVANIA 17603, ATTENTION:
__________________________.
________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this Depositary Receipt, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ______ Custodian _______
(Cust) (Minor)
under Uniform Gifts to
Minors Act _____________
(State)
UNIF GIFT MIN ACT - ______ Custodian (until age ____)
(Cust)
______ under Uniform Transfers
(Minor)
to Minors Act ___________________
(State)
Additional abbreviations may also be
used though not in the above list.
-2-
<PAGE>
Exhibit 5.1
October 29, 1996
Armstrong World Industries, Inc.
313 Liberty Street
Lancaster, Pennsylvania 17603
Re: Armstrong World Industries, Inc.
Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as counsel to Armstrong World Industries, Inc. (the
"Company") in connection with the preparation of the Registration Statement on
Form S-3 (together with all exhibits thereto and documents incorporated by
reference therein, the "Registration Statement") (SEC File No. 333-6333)
filed by the Company with the Securities and Exchange Commission (the
"Commission"). The Registration Statement relates to the issuance and sale from
time to time, pursuant to Rule 415 of the General Rules and Regulations of the
Commission promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), of the following securities of the Company with an aggregate
initial public offering price of up to $500,000,000: (i) unsecured debt
securities which may be either senior or subordinated debt securities, in one or
more series (the "Debt Securities"), which in each case are to be issued under
an indenture (the "Indenture" and, collectively, the "Indentures") entered into
between the Company and Mellon Bank, N.A. as trustee thereunder (the "Trustee");
(ii) shares of the Company's common stock, $1.00 par value (the "Common Stock"),
with Preferred Stock Purchase Rights attached to each share of Common Stock (the
"Rights"); and (iii) shares of the Company's Class A Preferred Stock, no par
value (the "Preferred Stock"), in one or more series, which may also be issued
in the form of depositary shares (the "Depositary Shares") evidenced by
depositary receipts (the "Receipts"). The Debt Securities, the Common Stock, the
Preferred Stock and the Depositary Shares are collectively referred to herein as
the "Offered Securities."
This opinion is being delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K promulgated under the Securities Act.
<PAGE>
Armstrong World Industries, Inc.
October 29, 1996
Page -2-
For the purpose of rendering this opinion, we have examined (i) the
registration statements relating to the Offered Securities (SEC File Nos. 333-
6333 and 33-38837); (ii) the form of Indenture for Senior Debt Securities filed
as Exhibit 4.1 and the form of Indenture for Subordinated Debt Securities filed
as Exhibit 4.2 to the Registration Statement; (iii) the Articles of
Incorporation of the Company, as amended to date (the "Articles of
Incorporation"); (iv) the Bylaws of the Company, as amended to date (the
"Bylaws"); and (v) certain resolutions adopted by the Board of Directors of the
Company (the "Board of Directors") relating to the issuance of the Offered
Securities. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others and such other documents, certificates
and records as we have deemed necessary or appropriate as a basis for the
opinions set forth herein.
In our examination, we have assumed without independent verification (i)
the legal capacity of all natural persons; (ii) the genuineness of all
signatures; (iii) the authenticity of all documents submitted to us as
originals; (iv) the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such latter documents; and (v) the power and authority of all
persons other than the Company signing such documents to execute, deliver and
perform such documents, and the valid authorization, execution and delivery of
such documents by such other persons. As to any facts material to the opinions
expressed herein which were not independently established or verified, we have
relied upon oral or written statements and representations of officers or other
representatives of the Company and others.
In rendering this opinion, we are not expressing an opinion as the laws of
any jurisdiction other than the Commonwealth of Pennsylvania and the federal
laws of the United States of America to the extent referred to specifically
herein, and we assume no responsibility as to the applicability of any other
jurisdictions to the subject matter hereof or to effects of such laws thereon.
The Offered Securities may be issued from time to time on a delayed or
continuous basis, and this opinion is limited to the laws, including applicable
rules and regulations, in effect on the date hereof. We assume no obligation to
update such opinion.
Based upon and subject to the foregoing, such examinations of law and such
other matters as we have deemed relevant under the circumstances, we are of the
opinion that, as of the date hereof:
<PAGE>
Armstrong World Industries, Inc.
October 29, 1996
Page -3-
1. With respect to any series of Debt Securities (the "Offered Debt
Securities"), when (i) if the Offered Debt Securities are to be sold pursuant to
a firm commitment underwritten offering, the underwriting agreement with respect
to the Offered Debt Securities (the "Debt Underwriting Agreement") has been duly
authorized, executed and delivered by the Company and the other parties thereto;
(ii) if the Offered Debt Securities are to be sold on an agency basis, the
distribution agreement with respect to the Offered Debt Securities (the "Debt
Distribution Agreement") has been duly authorized, executed and delivered by the
Company and the other parties thereto; (iii) the Board of Directors, including
any appropriate committee appointed thereby, and appropriate officers of the
Company have taken all necessary corporate action to approve the issuance and
terms of the Offered Debt Securities and related matters; (iv) the terms of the
Offered Debt Securities and of their issuance and sale have been duly
established in conformity with the Indenture relating thereto so as not to
violate any applicable law, the Articles of Incorporation or Bylaws or result in
a default under or breach of any agreement or instrument binding upon the
Company and so as to comply with any requirement or restriction imposed by any
court or governmental body having jurisdiction over the Company; (v) the
applicable Indenture has been duly executed and delivered by the Company and the
Trustee thereunder; and (vi) the Offered Debt Securities have been duly executed
and authenticated in accordance with the provisions of the applicable Indenture
and duly delivered to the purchasers thereof upon payment of the agreed-upon
consideration therefor, the Offered Debt Securities, when issued and sold in
accordance with the applicable Indenture and the related Debt Underwriting
Agreement or Debt Distribution Agreement, if any, or any other duly authorized,
executed and delivered applicable purchase agreement, will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except to the extent that enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
2. With respect to any shares of Common Stock with attached Rights (the
"Offered Common Stock"), when, (i) the underwriting agreement with respect to
the Offered Common Stock (the "Common Stock Underwriting Agreement") has been
duly authorized, executed and delivered by the
<PAGE>
Armstrong World Industries, Inc.
October 29, 1996
Page -4-
Company and the other parties thereto; (ii) the Board of Directors, including
any appropriate committee appointed thereby, and appropriate officers of the
Company have taken all necessary corporate action to approve the issuance and
terms of issuance of the shares of Offered Common Stock in conformity with the
Articles of Incorporation and the Bylaws, so as not to violate any applicable
law, the Articles of Incorporation or the Bylaws or result in a default under or
breach of any agreement or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Company; and (iii) certificates representing
the Offered Common Stock are duly executed, countersigned, registered and
delivered upon payment of the agreed-upon consideration therefor, the Offered
Common Stock, when issued and sold in accordance with the related Common Stock
Underwriting Agreement or Common Stock distribution agreement, if any, or any
other duly authorized, executed and delivered applicable purchase agreement,
will be duly authorized and validly issued, and, the shares of Common Stock
will be fully paid and nonassessable, provided that the consideration therefor
is not less than the par value thereof.
3. With respect to the shares of any series of Preferred Stock (the
"Offered Preferred Stock"), when, (i) the underwriting agreement with respect to
the shares of the Offered Preferred Stock (the "Preferred Stock Underwriting
Agreement") has been duly authorized, executed and delivered by the Company and
the other parties thereto; (ii) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the Company
have taken all necessary corporate action to approve the issuance and terms of
the shares of the Offered Preferred Stock and related matters, including the
adoption of a statement of designation for the Offered Preferred Stock in the
form required by applicable law (the "Statement of Designation"); (iii) the
filing of the Statement of Designation with the Department of State of the
Commonwealth of Pennsylvania has duly occurred; (iv) the terms of the Offered
Preferred Stock and of their issuance and sale have been duly established in
conformity with the Articles of Incorporation, the Statement of Designation and
the Bylaws, so as not to violate any applicable law, the Articles of
Incorporation, the Statement of Designation or the Bylaws or result in a default
under or breach of any agreement or instrument binding upon the Company and so
as to comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (v) certificates
representing the shares of the Offered Preferred Stock are duly executed,
countersigned, registered and delivered upon payment of the agreed-upon
<PAGE>
Armstrong World Industries, Inc.
October 29, 1996
Page -5-
consideration therefor, the shares of the Offered Preferred Stock, when issued
and sold in accordance with the related Preferred Stock Underwriting Agreement
or Preferred Stock Distribution agreement, if any, or any other duly authorized,
executed and delivered applicable purchase agreement, will be duly authorized,
validly issued, fully paid and nonassessable, provided that the consideration
therefor is not less than the par value thereof.
4. With respect to Depositary Shares representing fractional interests in
any series of Preferred Stock (the "Offered Depositary Shares"), when, (i) the
Preferred Stock Underwriting Agreement with respect to the Offered Depositary
Shares has been duly authorized, executed and delivered by the Company and the
other parties thereto; (ii) the Board of Directors, including any appropriate
committee appointed thereby, and appropriate officers of the Company have taken
all necessary corporate action to approve the issuance and terms of the Offered
Depositary Shares and related matters, including the adoption of the Statement
of Designation for the related series of Preferred Stock in the form required by
applicable law (the "Underlying Preferred Stock Statement of Designation");
(iii) the filing of the Underlying Preferred Stock Statement of Designation with
the Department of State of the Commonwealth of Pennsylvania has duly occurred;
(iv) a deposit agreement between the Company and an institution appointed by the
Company to act as depositary thereunder (the "Deposit Agreement") has been duly
authorized by the Board of Directors and executed and delivered by the Company;
(v) the institution appointed by the Company to act as depositary under the
Deposit Agreement (the "Depositary") has duly authorized, executed and delivered
the Deposit Agreement; (vi) the terms of the Offered Depositary Shares and of
their issuance and sale have been duly established in conformity with the
Deposit Agreement so as not to violate any applicable law, the Articles of
Incorporation or the Bylaws or result in a default under or breach of any
agreement or instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company; (vii) the related series of Preferred Stock has
been duly authorized, validly issued and delivered to the Depositary for deposit
in accordance with the laws of the Commonwealth of Pennsylvania; and (viii) the
Receipts evidencing the Depositary Shares are duly issued against the deposit of
the Preferred Stock in accordance with the Deposit Agreement, such Offered
Depositary Shares will be validly issued and the Receipts will entitle the
holders thereof to the rights specified therein and in the Deposit Agreement,
provided that the consideration therefor is not less than the par value of the
Preferred Stock represented by such Offered Depositary Shares.
<PAGE>
Armstrong World Industries, Inc.
October 29, 1996
Page -6-
This opinion is rendered to you and for your benefit solely in connection
with the registration of the Offered Securities. This opinion may not be relied
on by you for any other purpose and may not be relied upon by, nor may copies
thereof be provided to, any other person, firm, corporation or entity for any
purposes whatsoever without our prior written consent. We hereby consent to be
named in the Registration Statement and in each of the Prospectuses as attorneys
who passed upon the legality of the Offered Securities and to the filing of a
copy of this opinion as Exhibit 5 to the Registration Statement. Unless the
prior written consent of our firm is obtained, this opinion is not to be quoted
or otherwise referred to in any written report, proxy statement or other
registration statement, nor is it to be filed with or furnished to any other
governmental agency or other person, except as otherwise required by law.
Very truly yours,
BUCHANAN INGERSOLL PROFESSIONAL
CORPORATION
By: /s/ Stephen W. Johnson
-------------------------
Stephen W. Johnson
<PAGE>
Exhibit 12.1
Exhibit 12.2
CALCULATION OF THE RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION> Six Months Ended Year Ended
June 30 December 31
(Amounts in Millions) (Amounts in Millions)
1995 1996 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (Loss) from continuing businesses $112.6 $100.2 $82.8 ($66.3) $66.6 $265.8 $8.2
before income taxes ----------------- -----------------------------------------------------
Fixed Charges:
Amortized finance costs $0.1 $0.5 $0.3 $0.3 $0.3 $0.2 $0.2
Interest expense $16.9 $12.5 $45.8 $41.6 $38.0 $28.3 $34.0
Operating leases (1/3 of rent expense) $3.1 $2.2 $6.9 $8.2 $6.3 $6.0 $6.0
----------------- -----------------------------------------------------
Total Fixed Charges (excluding Preferred $20.1 $15.2 $53.0 $50.1 $44.6 $34.5 $40.2
Stock Dividends) ================= =====================================================
Adjusted Earnings (Loss) from continuing $132.7 $115.4 $135.8 ($16.2) $111.2 $300.3 $48.4
businesses before income taxes ================= =====================================================
(excluding Preferred Stock Dividends)
================= =====================================================
Ratio of Earnings from continuing 6.60 7.59 2.56 N/A(1) 2.49 8.70 1.20
businesses to fixed charges ================= =====================================================
Preferred Dividends (3) $9.4 $8.9 $19.4 $19.3 $19.2 $19.0 $18.8
Ratio of Earnings from continuing ================= =====================================================
businesses to fixed charges and 4.50 4.79 1.88 N/A(1) 1.74 5.61 N/A(2)
Preferred Stock Dividends ================= =====================================================
</TABLE>
(1) Adjusted Earnings were inadequate to cover Fixed Charges by $66.3 million
and Fixed Charges plus Preferred Stock Dividends by $85.6 million.
(2) Adjusted Earnings were inadequate to cover Fixed Charges plus Preferred
Stock Dividends by $10.6 million.
(3) In 1995, the Preferred Dividend for the six months are an allocation of
the total year dividends.
<PAGE>
Exhibit 15.1
Exhibit 15.2
Armstrong World Industries, Inc.
Lancaster, Pennsylvania
Gentlemen:
With respect to Amendment No. 2 to the Registration Statement filed on Form S-3,
we acknowledge our awareness of the incorporation by reference therein of our
reports dated May 6, 1996, except as to note 3, which is as of October 8, 1996,
and August 12, 1996, except as to note 4, which is as of October 8, 1996,
related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act, such reports are not
considered a part of a Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
October 29, 1996
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
The Board of Directors
Armstrong World Industries, Inc.:
We consent to the use of our audit report dated February 16, 1996, except as to
the note entitled "Restated Consolidated Financial Statements", which is as of
October 8, 1996, on the consolidated balance sheets of Armstrong World
Industries, Inc. and subsidiaries as of December 31, 1995 and 1994 and the
related consolidated statements of earnings, cash flows and shareholders' equity
and related supplementary information on depreciation rates and schedule for
each of the years in the three-year period ended December 31, 1995, incorporated
herein by reference and to the reference to our firm under the heading "Experts"
in the prospectus.
KPMG Peat Marwick LLP
Philadelphia Pennsylvania
October 29, 1996
<PAGE>
Exhibit 23.3
Consent of Independent Auditors
-------------------------------
Armstrong World Industries, Inc.:
We consent to the reference to our firm under the caption "Experts" in the
Amendment No. 1 of the Registration Statement on Form S-3 pertaining to the
registration of securities of Armstrong World Industries, Inc. and to the
incorporation by reference therein of our report dated February 21, 1995, with
respect to the consolidated financial statements and schedule of Dal-Tile
International Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1994, and included in the Current Report on Form 8-K/A of Armstrong
World Industries, Inc.
/s/ Ernst & Young LLP
------------------------------
Ernst & Young LLP
Dallas, Texas
October 28, 1996
