<PAGE> 1
Filed pursuant to Rule 424(b)(1)
Registration No. 333-01507
PROSPECTUS
$200,000,000
LOGO
7% SENIOR NOTES DUE 2006
Interest payable March 15 and September 15
------------------
The 7% Senior Notes due 2006 (the "Notes") are being offered by Olsten
Corporation (the "Company"). Interest on the Notes will be payable semi-annually
on March 15 and September 15, commencing on September 15, 1996, at the rate of
7% per annum. The Notes will mature on March 15, 2006. The Notes will not be
redeemable by the Company prior to maturity and will not be entitled to the
benefit of any mandatory sinking fund.
The Notes will be unsecured obligations of the Company ranking pari passu
with all existing and future unsubordinated and unsecured obligations of the
Company. The Notes will be effectively subordinated to indebtedness and
liabilities of the Company's subsidiaries with respect to the assets of such
subsidiaries, including debt of the Company as to which the Company's
subsidiaries are co-borrowers. In addition, the Notes will be effectively
subordinated to secured indebtedness of the Company and its subsidiaries with
respect to the collateral securing such indebtedness and the claims of the
Company as the holder of general unsecured intercompany indebtedness will be
similarly effectively subordinated to secured indebtedness of its subsidiaries.
As of February 28, 1996, after giving effect to the sale of the Notes and the
use of proceeds of such sale in the manner described in "Use of Proceeds," the
Company would have had approximately $373 million of indebtedness outstanding,
$48 million of which would have ranked with respect to the Company pari passu
with the Notes (but the Notes would be effectively subordinated to the claims of
the holders of such debt with respect to the assets of the Company's
subsidiaries which are co-borrowers thereof) and $125 million of which would
have ranked, by its terms, subordinate to the Notes. See "Description of the
Notes."
The Notes will be issued in fully registered form only in denominations of
$1,000 or integral multiples thereof. The Notes initially will be represented by
one or more Global Notes registered in the name of The Depository Trust Company
(the "Depositary") or its nominee. Beneficial interests in the Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Owners of beneficial
interests in the Notes will be entitled to physical delivery of Notes in
certificated form equal in principal amount to their respective beneficial
interests only under the limited circumstances described herein. Settlement for
the Notes will be made in immediately available funds. The Notes will trade in
the Depositary's Same-Day Funds Settlement System until maturity, and secondary
market trading activity for the Notes therefore will settle in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds. See "Description of the Notes -- Global
Notes; Form, Exchange and Transfer."
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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.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.486% .650% 98.836%
- ---------------------------------------------------------------------------------------------------------
Total $198,972,000 $1,300,000 $197,672,000
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from the date of initial issuance.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before estimated expenses of $350,000 payable by the Company.
------------------
The Notes are being offered by the Underwriters named herein, subject to
prior sale, when, as and if accepted by them and subject to certain conditions.
It is expected that the Notes will be available for delivery on or about March
22, 1996, through the facilities of the Depositary.
------------------
SMITH BARNEY INC.
CHASE SECURITIES, INC.
PRUDENTIAL SECURITIES INCORPORATED
March 19, 1996
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, 7 World Trade Center, New York, New York 10048, and
Chicago Regional Office, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the
prescribed fees. Such reports, proxy statements and other information may also
be inspected and copied at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, on which the Company's Common Stock is listed.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Written or telephone requests should be
directed to: Olsten Corporation, 175 Broad Hollow Road, Melville, New York
11747-8905, Attention: Laurin L. Laderoute, Jr., Vice President and Secretary,
(516) 844-7800.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and the
Notes, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete, and in each instance reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
Copies of the Registration Statement may be inspected, without charge, at the
offices of the Commission or obtained at prescribed rates from the Public
Reference Section of the Commission at the address set forth on the inside front
cover of this Prospectus.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated in this Prospectus by reference and
made a part hereof: (i) the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995; (ii) information contained under the captions
"Security Ownership of Certain Beneficial Owners and Management" and "Executive
Compensation" in the Company's definitive Proxy Statement dated March 31, 1995;
and (iii) the Company's Report on Form 8-K dated March 13, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained in this
Prospectus or another subsequently filed document that is also incorporated by
reference herein modifies or supersedes such statement. Any such statements so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
2
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated by reference herein.
THE COMPANY
Olsten Corporation (the "Company") is one of the world's leading providers
of staffing services and North America's largest provider of home health care
and related services, based on systemwide sales (described below). Primarily
through Olsten Staffing Services, the Company provides assignment employees to
business and industry, professional and service organizations and government
agencies and services for the design, development and maintenance of information
systems. Through Olsten Kimberly QualityCare, the Company serves as a network
manager to provide managed care organizations with a single source for nursing
services, infusion therapy, home medical equipment, physical/occupational/speech
therapies, respiratory therapy, rehabilitation services and pediatric and
perinatal care. The Company is also the nation's leading provider of management
services to hospital-based home health agencies. The Company's services are
provided through a network of approximately 1,300 owned, licensed and franchised
offices in North America, South America, Great Britain and Continental Europe.
The Company, together with its licensees and franchisees, serves a diverse
client base of approximately 500,000 client and patient accounts. For the year
ended December 31, 1995, the Company's total revenues (service sales, franchise
fees, management fees and other income) and systemwide sales (sales generated by
the Company, licensed and franchised offices, and hospital-based home health
agencies under management) were $2.519 billion and $3.006 billion, respectively.
Staffing services and health care services accounted for 56% and 44%,
respectively, of the Company's 1995 systemwide sales.
Staffing Services
The Company provides skilled and semi-skilled assignment employees in the
following broad service areas: general office, office automation, information
technology, professional accounting support, technical/scientific, legal
support, production, assembly and distribution, marketing support and
teleservices. By supplying an auxiliary work force, the Company believes it
affords economies, productivity and flexibility to its clients to meet
fluctuations in their staffing requirements during peak periods and to complete
special assignments. With the availability of such services, a client can
maintain on a cost-effective basis a nucleus of core personnel that can be
supplemented by skilled specialists for long- and short-term assignments.
The Company is also pursuing alternative staffing service relationships
that are becoming increasingly important to the Company. Through its Partnership
Program(R) services with major corporate clients, the Company acts as a master
vendor responsible for the recruitment, training and management of large groups
of employees for departments at a single site or at multiple sites, allowing its
clients to focus better on their core businesses. Other clients have outsourced
entire functions whereby people, processes and technology are all managed by the
Company.
Health Care Services
The Company provides licensed professional health care personnel, such as
registered nurses and licensed practical nurses, and unlicensed health care
personnel, such as home health aides, homemakers, companions and nursing
assistants, to individuals in the home and to hospitals and other health care
facilities. In the furnishing of home health care, the Company's licensed health
care personnel offer a broad range of services, including physician-prescribed
skilled nursing treatments, patient and family education, case management,
pediatric and perinatal care, physical, occupational, neurological and speech
therapies, intravenous administration of drugs, nutrients and other solutions,
and rehabilitation. Through its clinical pharmacy network, the Company is able
to deliver nutrients and medications utilized in certain of its home health care
services. Home health care provided by the Company's unlicensed personnel may
involve assistance with personal hygiene, feeding, dressing, preparation of
meals and light housekeeping. The Company's health care professionals perform
services for hospitals, nursing homes, clinics and other health care facilities
and furnish business and industry with specialized staffing.
The Company is actively pursuing relationships with managed care
organizations as a provider and is expanding its capabilities as a network
manager for managed care organizations in home health care delivery. In this
role, the Company manages and contracts for all home health care services. The
Company believes that its nationwide office network and the quality, range and
cost-effectiveness of its services are important factors as it seeks
opportunities as a network manager. In its managed care relationships, the
Company offers the direct and managed provision of care as a single gatekeeper,
thereby optimizing utilization. The Company also has expanded its health care
service delivery capabilities through hospital management contracts to manage
hospital-based home health operations in exchange for management fees.
Growth Strategy
The Company intends to pursue expansion opportunities by strengthening
relationships with major clients, making strategic acquisitions within and
outside the United States, opening additional offices and developing and
extending specialized services, particularly in health care, information
technology, accounting and legal support.
3
<PAGE> 4
THE OFFERING
Securities Offered.............. $200,000,000 aggregate principal amount of 7%
Senior Notes due 2006 (the "Notes").
Maturity Date................... March 15, 2006.
Interest Rate and Payment Dates... The Notes will bear interest at a rate of 7%
per annum. Interest on the Notes will accrue
from the date of issuance and will be payable
semi-annually on each March 15 and September
15, commencing September 15, 1996.
Ranking......................... The Notes will be unsecured obligations of
the Company ranking pari passu with all
existing and future unsubordinated and
unsecured obligations of the Company. The
Notes will be effectively subordinated to
indebtedness and liabilities of the Company's
subsidiaries with respect to the assets of
such subsidiaries, including debt of the
Company as to which the Company's
subsidiaries are co-borrowers. In addition,
the Notes will be effectively subordinated to
secured indebtedness of the Company and its
subsidiaries with respect to the collateral
securing such indebtedness and the claims of
the Company as the holder of general
unsecured intercompany indebtedness will be
similarly effectively subordinated to secured
indebtedness of its subsidiaries. As of
February 28, 1996, after giving effect to the
sale of the Notes and the use of proceeds of
such sale in the manner described in "Use of
Proceeds," the Company would have had
approximately $373 million of indebtedness
outstanding, $48 million of which would have
ranked with respect to the Company pari passu
with the Notes (but the Notes would be
effectively subordinated to the claims of the
holders of such debt with respect to the
assets of the Company's subsidiaries which
are co-borrowers thereof) and $125 million of
which would have ranked, by its terms,
subordinate to the Notes. See "Description of
the Notes."
Redemption...................... The Notes will not be redeemable by the
Company prior to maturity.
Certain Covenants............... The Indenture will contain certain covenants
which, among other things, will restrict the
ability of the Company and its subsidiaries
to (i) incur additional indebtedness secured
by liens, (ii) enter into sale and leaseback
transactions or (iii) consolidate, merge or
sell all or substantially all of their
assets. These covenants are subject to
important exceptions and qualifications. See
"Description of the Notes -- Certain
Covenants" and "-- Consolidation, Merger and
Disposition of Assets."
Use of Proceeds................. To repay a portion of the Company's
indebtedness under its existing revolving
credit facilities, to expand the Company's
existing office network and the types of
services provided to clients, both internally
and through acquisitions, and for general
working capital purposes. See "Use of
Proceeds."
4
<PAGE> 5
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information of the Company has
been derived from the Consolidated Financial Statements of the Company which
appear in the Company's Annual Report on Form 10-K for the year ended December
31, 1995. Such Form 10-K is incorporated by reference herein. See "Incorporation
of Certain Information by Reference." The following summary is qualified in its
entirety by reference to such Consolidated Financial Statements and to all the
financial information and notes contained therein and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in such Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
DECEMBER JANUARY JANUARY JANUARY DECEMBER
29, 3, 2, 1, 31,
1991(1) 1993(1) 1994(1) 1995 1995
---------- --------- --------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATING DATA:
Service sales, franchise fees, management
fees and other income................... $1,725,166 $1,990,733 $2,196,678 $2,307,667 $2,518,875
Gross profit.............................. $ 554,797 $ 621,144 $ 673,545 $ 685,607 $ 761,556
Income (loss) before extraordinary
charge.................................. $ (10,472 ) $ 27,531 $ (11,243) $ 71,242 $ 90,469
Net income (loss)......................... $ (10,472 ) $ 27,531 $ (25,911) $ 71,242 $ 90,469
Income (loss) per share before
extraordinary charge, fully
diluted(2).............................. $(0.19 ) $0.49 $(0.19) $1.07 $1.33
Net income (loss) per share, fully
diluted(2).............................. $(0.19 ) $0.49 $(0.43) $1.07 $1.33
Average number of shares outstanding,
fully diluted(2)........................ 54,842 55,998 60,467 70,073 70,704
Ratio of earnings to fixed charges(3)..... 1.4x 2.5x 1.1x 6.7x 8.7x
Ratio of EBITDA to interest expense(4).... 2.8x 4.4x 2.4x 17.9x 22.7x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------
AS
ACTUAL ADJUSTED(5)
-------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................................................ $327,928 $ 472,148
Total assets................................................................... $891,918 $ 1,084,138
Long-term debt................................................................. $180,780 $ 373,000
Shareholders' equity........................................................... $472,045 $ 472,045
</TABLE>
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(1) Results for the fiscal year ended January 2, 1994 are net of merger and
integration costs associated with the merger of Lifetime Corporation into
the Company, which reduced net income by $58.7 million, net of tax, and an
extraordinary charge of $14.7 million, net of tax, related to debt
prepayment penalties.
For the fiscal year ended January 3, 1993, Lifetime Corporation recorded a
severance and restructuring charge of $7.1 million, net of tax.
For the fiscal year ended December 29, 1991, Lifetime Corporation recorded a
$43 million pretax charge to write-down goodwill.
(2) Share information has been retroactively restated for the three-for-two
stock split declared on February 16, 1996.
(3) The ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings from continuing operations before income taxes, minority
interests and extraordinary items plus fixed charges. Fixed charges consist
of interest expense, amortization of financing costs and the estimated
interest component of rent expense.
(4) EBITDA represents earnings from continuing operations before interest
expense, income taxes, minority interests, depreciation and amortization and
extraordinary items. EBITDA is included herein because management believes
that certain investors find it to be a useful tool for measuring a company's
ability to service its debt; however, EBITDA does not represent cash flow
from operations, as defined by generally accepted accounting principles,
should not be considered as a substitute for net earnings as an indicator of
the Company's operating performance or cash flow as a measure of liquidity,
and should be examined in conjunction with the Consolidated Financial
Statements of the Company incorporated by reference herein.
(5) Adjusted to reflect the sale of the Notes offered hereby and the repayment
of certain indebtedness as described under "Use of Proceeds" and the January
1996 acquisition of a German staffing services company and related debt.
5
<PAGE> 6
THE COMPANY
The Company was formed in 1967, as a Delaware corporation, as the successor
to a business founded in 1950. The Company's principal executive offices are
located at 175 Broad Hollow Road, Melville, New York 11747 and its telephone
number is (516) 844-7800. As used in this Prospectus, except as otherwise
specified or when the context otherwise requires, the "Company" means Olsten
Corporation and its consolidated subsidiaries.
USE OF PROCEEDS
The net proceeds from the sale of the $200,000,000 principal amount of
Notes offered hereby, after deducting estimated expenses payable by the Company
in connection with this offering, are estimated to be approximately
$197,322,000. The Company intends to use the net proceeds to repay all or
substantially all of its borrowings outstanding at the completion of this
offering under: (i) its existing revolving credit facility with six banks (the
"Revolving Credit Facility"), to the extent such borrowings are denominated in
United States dollars and (ii) its existing revolving credit facility with Fleet
Bank (the "Fleet Revolver"). As of February 28, 1996, borrowings under the
Revolving Credit Facility and the Fleet Revolver were approximately $94.5
million (of which approximately $47 million were dollar denominated) and $10.8
million, respectively. Borrowings under the Revolving Credit Facility and the
Fleet Revolver which are to be repaid with the proceeds of the offering bear
interest at the London Interbank Offered Rate ("LIBOR") plus 5/8 of 1%. All
amounts outstanding under the Revolving Credit Facility and the Fleet Revolver
on December 15, 1996, may, at the Company's option, be converted to term loans
which will mature on December 15, 2000. The remaining portion of the net
proceeds of this offering will be used by the Company to expand its existing
office network and the types of services provided to clients, both internally
and through acquisitions, and for general working capital purposes. Although the
Company is continually seeking and evaluating acquisition opportunities, the
Company currently has no agreements with respect to any material acquisitions.
Pending use for the foregoing purposes, the Company intends to invest the net
proceeds of this offering in short-term, interest-bearing obligations of
investment grade.
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as of
December 31, 1995 and (ii) such capitalization as adjusted to give effect to the
issuance and sale of the Notes offered hereby, the repayment of certain
indebtedness as described under "Use of Proceeds" and the incurrence in 1996 of
$48 million in Eurocurrency loans under the Revolving Credit Facility.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt:
7% Senior Notes due 2006................................................... $ -- $ 200,000
4 7/8% Convertible Subordinated Debentures due 2003........................ 125,000 125,000
Revolving credit facilities................................................ 55,780 48,000
-------- -----------
Total long-term debt.................................................... 180,780 373,000
-------- -----------
Shareholders' equity:
Preferred Stock, $.10 par value; 250,000 shares authorized; no shares
issued or outstanding................................................... -- --
Common Stock, $.10 par value; 110,000,000 shares authorized;
50,428,046 shares issued and outstanding(1)(2)(3)....................... 5,043 5,043
Class B Common Stock, $.10 par value; 50,000,000 shares authorized;
13,906,891 shares issued and outstanding(1)(3)(4)....................... 1,391 1,391
Additional paid-in capital(1)................................................ 238,645 238,645
Retained earnings............................................................ 228,721 228,721
Cumulative translation adjustment............................................ (1,755) (1,755)
-------- -----------
Total shareholders' equity................................................. 472,045 472,045
-------- -----------
Total capitalization.................................................... $652,825 $ 845,045
======== =========
</TABLE>
- ---------------
(1) Retroactively restated for the three-for-two stock split declared on
February 16, 1996.
(2) Does not include: (i) 3,591,954 shares of Common Stock (5,387,931 as
restated for the three-for-two stock split declared on February 16, 1996)
reserved for issuance upon conversion of the Company's 4 7/8% Convertible
Subordinated Debentures due 2003, (ii) 10,264,549 shares of Common Stock
(15,396,823 as restated for the three-for-two stock split declared on
February 16, 1996) reserved for issuance upon conversion of Class B Common
Stock (including the shares of Class B Common Stock described in footnote 4)
and (iii) 2,386,747 shares of Common Stock (3,580,120 as restated for the
three-for-two stock split declared on February 16, 1996) reserved for
issuance under the Company's stock plans.
(3) The Common Stock is entitled to one vote per share and the Class B Common
Stock is entitled to ten votes per share.
(4) Does not include 888,000 and 105,288 shares of Class B Common Stock
(1,332,000 and 157,932 as restated for the three-for-two stock split
declared on February 16, 1996) reserved for issuance upon exercise of
outstanding warrants and stock options, respectively.
6
<PAGE> 7
DESCRIPTION OF THE NOTES
The Notes will be issued under an indenture to be dated as of March 15,
1996 (the "Indenture") between the Company and First Union National Bank, as
trustee (the "Trustee"). The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the provisions of the Indenture (the form of which
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part), including the definitions of certain terms contained
therein and those terms made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, as in effect on the date of the Indenture.
GENERAL
The Notes will be unsecured obligations of the Company limited to
$200,000,000 aggregate principal amount and ranking pari passu in right of
payment with all existing and future unsubordinated and unsecured obligations of
the Company. The Notes will be issued only in registered form without coupons,
in denominations of $1,000 and integral multiples thereof. The Notes will be
initially issued in the form of one or more book-entry notes (each, a "Global
Note"). Principal of and interest on the Global Notes will be payable, and the
Global Notes will be transferable and exchangeable, only as provided for below
under the caption "-- Global Notes; Form, Exchange and Transfer." Principal of
and interest on Notes subsequently issued in a form other than as a Global Note
will be payable, and such Notes will be transferable and exchangeable, at the
corporate trust office of the Trustee. In addition, interest payable with
respect to Notes subsequently issued in a form other than as a Global Note may
be paid, at the option of the Company, by check mailed to the Person entitled
thereto as shown on the security register of the Notes. No service charge will
be made for any transfer or exchange of Notes, except in certain circumstances
for any tax or other governmental charge that may be imposed in connection
therewith.
The Notes will mature on March 15, 2006. Interest on the Notes will accrue
at the rate of 7% per annum and will be payable semi-annually on each March 15
and September 15, commencing September 15, 1996, to the Holders of record of
Notes at the close of business on the February 28 and August 31 immediately
preceding such interest payment date. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the original date of issuance of the Notes. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
The Notes are not redeemable at the option of the Company prior to maturity
and will not be entitled to the benefit of any mandatory sinking fund.
The Notes will be unsubordinated and unsecured obligations of the Company
ranking pari passu with all existing and future unsubordinated and unsecured
obligations of the Company. Claims of Holders of Notes will be effectively
subordinated to the claims of holders of the debt of the Company's subsidiaries
with respect to the assets of such subsidiaries, including debt of the Company
as to which the Company's subsidiaries are co-borrowers. In addition, claims of
Holders of Notes will be effectively subordinated to the claims of holders of
secured debt of the Company and its subsidiaries with respect to the collateral
securing such claims and claims of the Company as the holder of general
unsecured intercompany debt will be similarly effectively subordinated to claims
of holders of secured debt of its subsidiaries. As of February 28, 1996, after
giving effect to the sale of the Notes and the use of proceeds of such sale in
the manner described in "Use of Proceeds," the Company would have had
approximately $373 million of indebtedness outstanding, $48 million of which
would have ranked with respect to the Company pari passu with the Notes (but the
Notes would be effectively subordinated to the claims of the holders of such
debt with respect to the assets of the Company's subsidiaries which are
co-borrowers thereof) and $125 million of which would have ranked, by its terms,
subordinate to the Notes.
The Indenture does not contain any restrictions on the incurrence of
unsecured indebtedness or the payment of dividends or any financial covenants.
The Indenture does not contain provisions which would afford the Holders of
Notes protection in the event of a transfer of assets to a subsidiary and
incurrence of unsecured debt by such subsidiary, or in the event of a decline in
the Company's credit quality resulting from highly leveraged or other similar
transactions involving the Company.
7
<PAGE> 8
HOLDING COMPANY STRUCTURE
The Notes are obligations exclusively of the Company, which is a holding
company. Since the operations of the Company are currently conducted principally
through its subsidiaries, the cash flow of the Company and the consequent
ability to service its debt, including the Notes, are dependent upon the
earnings of such subsidiaries and the distribution of those earnings to the
Company, or upon loans or other payments of funds by such subsidiaries to the
Company. The subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the
Notes or to make any funds available therefor, whether by dividends, loans or
other payments. In addition, the payment of dividends and certain loans and
advances to the Company by such subsidiaries may be subject to certain statutory
or contractual restrictions, are contingent upon the earnings of such
subsidiaries and are subject to various business considerations.
The Notes will be effectively subordinated to all indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
the Company's subsidiaries. Any right of the Company to receive assets of any
such subsidiary upon the liquidation or reorganization of any such subsidiary
(and the consequent right of the holders of the Notes to participate in those
assets) will be effectively subordinated to the claims of that subsidiary's
creditors, except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company.
GLOBAL NOTES; FORM, EXCHANGE AND TRANSFER
The Notes will be initially issued in the form of fully registered Global
Notes deposited with or on behalf of, and registered in the name of, The
Depository Trust Company (the "Depositary") or a nominee thereof. Unless and
until it is exchanged in whole or in part for Notes in definitive registered
form, a Global Note may not be transferred, except as a whole: (i) by the
Depositary to a nominee of such Depositary, or (ii) by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or (iii) by
such Depositary or any such nominee to a successor of such Depositary or a
nominee of such successor.
Ownership of beneficial interests in a Global Note will be limited to
Persons that have accounts with the Depositary ("participants") or Persons that
may hold interests through participants. Upon the issuance of a Global Note, the
Depositary will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal amounts of the Notes
represented by such Global Note beneficially owned by such participants. The
accounts to be credited will initially be designated by the Underwriters.
Ownership of beneficial interests in such Global Note will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary or its nominee (with respect to interests of
participants) and on the records of participants (with respect to interests of
Persons holding through participants). The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in Global Notes.
So long as the Depositary, or its nominee, is the owner of record of a
Global Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of Notes represented by such Global Note for
all purposes under the Indenture. Except as set forth below, owners of
beneficial interests in a Global Note will not be entitled to have Notes
represented by such Global Note registered in their names, and will not receive
or be entitled to receive physical delivery of such Notes in definitive form and
will not be considered the owners or holders thereof under the Indenture.
Accordingly, each Person owning a beneficial interest in a Global Note must rely
on the procedures of the Depositary and, if such Person is not a participant, on
the procedures of the participant through which such Person owns its interest,
to exercise any rights of a Holder of record under the Indenture. The Company
understands that under existing industry practices, if the Company requests any
action of Holders or if any owner of a beneficial interest in a Global Note
desires to give or take any action which a Holder is entitled to give or take
under the Indenture, the Depositary would authorize the participants holding the
relevant beneficial interests to give or take such action, and such participants
would authorize beneficial owners owning through such participants to give or
take such action or
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<PAGE> 9
would otherwise act upon the instruction of beneficial owners holding through
them. No beneficial owner of an interest in a Global Note will be able to
transfer that interest except in accordance with the Depositary's applicable
procedures, in addition to those provided for in the Indenture.
Payments of principal and interest on Notes represented by a Global Note
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of such
Global Note. None of the Company, the Trustee or any other agent of the Company
or agent of the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in such Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a Global Note, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in such Global Note as shown on the records of
the Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Note held through
such participants will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants.
If the Depositary notifies the Company that it is at any time unwilling or
unable to continue as Depositary or ceases to be eligible under applicable law,
and a successor Depositary eligible under applicable law is not appointed by the
Company within 90 days, the Company will issue Notes in definitive form in
exchange for Global Notes representing such Notes. In addition, the Company may
at any time and in its sole discretion determine not to have any of the Notes
represented by one or more Global Notes and, in such event, will issue Notes in
definitive form in exchange for Global Notes representing such Notes. Any Notes
issued in definitive form in exchange for a Global Note will be registered in
such name or names as the Depositary shall instruct the Trustee. It is expected
that such instructions will be based upon directions received by the Depositary
from participants with respect to ownership of beneficial interests in such
Global Note.
The Depositary has advised the Company as follows: the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
holds securities that its participants deposit with the Depositary. The
Depositary also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. The Depositary is owned
by a number of its participants and by the New York Stock Exchange, Inc., the
American Stock Exchange Inc. and the National Association of Securities Dealers,
Inc. Access to the Depositary's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. The Rules applicable to the Depositary and its participants are on
file with the Commission.
Although the Depositary and its participants are expected to follow the
foregoing procedures in order to facilitate transfers of interests in a Global
Note among participants, they are under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trustee will have any responsibility for the
performance by the Depositary or the participants of their respective
obligations under the rules and procedures governing their operations.
SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL NOTES
So long as any Notes are represented by Global Notes registered in the name
of the Depositary or its nominee, such Notes will trade in the Depositary's
Same-Day Funds Settlement System, and secondary market trading activity in such
Notes will therefore be required by the Depositary to settle in immediately
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<PAGE> 10
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
CERTAIN COVENANTS
Restrictions on Liens
The Indenture will contain a covenant providing that so long as any of the
Notes are outstanding, the Company will not, and will not permit any Subsidiary
to, issue, assume, incur or guarantee any Indebtedness secured by a Lien on or
with respect to any property or assets of the Company or any Subsidiary, or upon
any shares of capital stock, indebtedness or other obligations of any
Subsidiary, whether now owned or leased or hereafter acquired, without in any
such case effectively providing that the Notes shall be secured equally and
ratably with (or prior to) such Indebtedness, except that the foregoing
restrictions shall not apply to (a) Liens existing as of the date of the
Indenture, (b) Liens created solely to secure the payment of Indebtedness
incurred to finance all or any part of the purchase price or cost of
construction of improvements in respect of property or assets acquired by the
Company or a Subsidiary after the date of the Indenture and incurred prior to,
at the time of, or within 90 days after, the acquisition of any such property or
assets or the completion of any such construction of improvements, provided that
any such Lien shall not secure Indebtedness in excess of the amount expended in
the acquisition of, or construction of improvements on, such property or assets
and shall not extend to or cover any property or assets other than the property
or assets so acquired or the improvements thereon, (c) Liens upon any property
or assets owned or leased by any Subsidiary when it becomes a Subsidiary and not
incurred as a result of, or in connection with or in anticipation of, such
Subsidiary becoming a Subsidiary (except to the extent otherwise permitted by
(b) above), (d) Liens existing on any property or assets at the time of its
acquisition by the Company or a Subsidiary (including acquisition through merger
or consolidation) and not incurred as a result of, or in connection with or in
anticipation of, such acquisition (except to the extent otherwise permitted by
(b) above), (e) Liens securing Indebtedness of a Subsidiary to the Company or to
another Subsidiary and (f) the extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien referred
to in the foregoing clauses (a) through (e), or of any Indebtedness secured
thereby, but only if the principal amount of Indebtedness secured by the Lien
immediately prior thereto is not increased and the Lien is not extended to other
property or assets. Notwithstanding the foregoing, the Company or any Subsidiary
may issue, assume, incur or guarantee Indebtedness secured by Liens which
otherwise would be subject to the foregoing restrictions in an aggregate amount
which, together with all other such Indebtedness of the Company and its
Subsidiaries outstanding which would otherwise be subject to the foregoing
restrictions (not including Indebtedness permitted to be secured under clauses
(a) through (f) above) and all Attributable Debt in respect of Sale and
Leaseback Transactions which would not be permitted by either (a), (b) or (c)
under "Restrictions on Sale and Leaseback Transactions" below, does not exceed
15% of Consolidated Shareholders' Equity of the Company.
Restrictions on Sale and Leaseback Transactions
The Indenture contains a covenant providing that so long as any of the
Notes are outstanding, the Company will not, nor will it permit any Subsidiary
to, enter into any arrangement with any Person (other than the Company or a
Subsidiary) providing for the leasing by the Company or any Subsidiary of any
property or assets, whether now owned or hereafter acquired, which has been or
is to be sold or transferred by the Company or such Subsidiary to such Person
with the intention of taking back a lease on such property or assets (a "Sale
and Leaseback Transaction") unless (a) such transaction involves a lease or
right to possession or use for a temporary period not to exceed three years
following such sale, by the end of which it is intended that the use of such
property or assets by the lessee will be discontinued, (b) the Company or such
Subsidiary would, on the effective date of such transaction, be entitled to
issue, assume or guarantee Indebtedness secured by a Lien on such property or
assets at least equal in an amount to the Attributable Debt in respect thereof,
without equally and ratably securing the Notes as set forth in the Indenture, or
(c) if the proceeds of such sale (i) are equal to or greater than the fair
market value (as determined by the Board of Directors of the Company) of such
property or assets and (ii) are applied within 90 days after the receipt of
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<PAGE> 11
the proceeds of sale or transfer to the repayment of Senior Funded Debt of the
Company or any Subsidiary. Notwithstanding the foregoing, the Company or any
Subsidiary may enter into Sale and Leaseback Transactions in addition to any
permitted by the immediately preceding sentence and without any obligation to
retire any Indebtedness, provided that, at the time of entering into such Sale
and Leaseback Transaction, and after giving effect thereto, the amount of
Attributable Debt in respect of such Sale and Leaseback Transaction, together
with all such other Attributable Debt outstanding and all Indebtedness
outstanding secured by Liens (not including Indebtedness permitted to be secured
under clauses (a) through (f) under "Restrictions on Liens" above), does not
exceed 15% of Consolidated Shareholders' Equity of the Company.
Certain Definitions
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
at the time of determination, the then present value (discounted at the actual
rate of interest of such transaction) of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such Sale and
Leaseback Transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"Consolidated Shareholders' Equity" of the Company means the shareholders'
equity of the Company and its Subsidiaries on a consolidated basis calculated in
accordance with GAAP as of the last day of the Company's then most recently
completed fiscal quarter.
"Funded Debt" means Indebtedness of the Company and its Subsidiaries,
whether incurred, assumed or guaranteed, which by its terms matures more than
one year from the date of creation thereof, or which is extendable or renewable
at the sole option of the obligor so that it may become payable more than one
year from such date.
"GAAP" means, unless otherwise specified in the Indenture, such accounting
principles as are generally accepted in the United States as of the date of the
relevant calculation.
"Indebtedness" of any Person means, without duplication, notes, bonds,
debentures or other evidences of indebtedness for borrowed money and all
indebtedness under purchase money mortgages or other purchase money liens or
conditional sales or similar title retention agreements, in each case where such
indebtedness has been created, incurred, assumed or guaranteed by such Person or
where such Person is otherwise liable therefor, and indebtedness for borrowed
money secured by any mortgage, pledge or other lien or encumbrance upon property
owned by such Person even though such Person has not assumed or become liable
for the payment of such indebtedness.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority, or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Senior Funded Debt" means all Funded Debt, except Funded Debt the payment
of which is subordinated to the payment of the Notes.
"Subsidiary" means any corporation, partnership, association or other
business entity of which more than 50% of the outstanding voting stock is owned,
directly or indirectly, by the Company or by one or more other Subsidiaries, or
by the Company and one or more other Subsidiaries. For the purposes of this
definition, "voting stock" means stock (or a similar interest) which ordinarily
has voting power for the election of directors, managers or trustees, whether at
all times or only so long as no senior class of stock (or similar interest) has
such voting power by reason of any contingency.
CONSOLIDATION, MERGER AND DISPOSITION OF ASSETS
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, and
may not permit any Person to consolidate with or merge
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<PAGE> 12
into, or convey, transfer or lease its properties and assets substantially as an
entirety to, the Company, unless (a) the successor, if other than the Company,
is a Person organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and such successor, if other than the
Company, expressly assumes the Company's obligations under the Indenture and the
Notes, (b) immediately after giving effect to such transaction, no Event of
Default under the Indenture or event which, after notice or lapse of time or
both, would become an Event of Default thereunder would exist and be continuing,
(c) if as a result of any such consolidation or merger or such conveyance,
transfer or lease, properties or assets of the Company would become subject to a
mortgage, pledge, lien, security interest or other encumbrance which would not
be permitted as described under "Certain Covenants -- Restrictions on Liens,"
the Company or such successor Person, as the case may be, shall take such steps
as shall be necessary to effectively secure the Notes equally and ratably with
(or prior to) all indebtedness secured thereby, and (d) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such transaction complies with the Indenture. Upon compliance
with these provisions, the successor Person will succeed to, and be substituted
for, the Company under the Indenture, and the Company will be relieved (except
in the case of a lease) of its obligations under the Indenture and the Notes.
EVENTS OF DEFAULT
Each of the following will constitute an "Event of Default" under the
Indenture with respect to the Notes: (a) default in the payment of principal of
any Note, (b) default in the payment of any interest upon any Note when due,
which default continues for 30 days, (c) default in the performance, or breach,
of any other covenant or warranty contained in the Indenture, which default
continues for 60 days after written notice to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Notes, (d) default in the payment of principal at maturity
(subject to any applicable grace period) of any indebtedness for money borrowed
by the Company or any Subsidiary in an aggregate principal amount of $25 million
or more or the acceleration of such indebtedness, if such acceleration is not
rescinded or annulled within 30 days after written notice as specified in clause
(c) and requiring the Company to cause such indebtedness to be discharged or
cause such acceleration to be rescinded or annulled, and (e) certain events of
bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Outstanding Notes shall occur and be continuing,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Notes may, by notice in writing to the Company (and to
the Trustee if given by Holders), declare the principal amount of all Notes to
be due and payable immediately. If an Event of Default described in clause (e)
above with respect to the Notes shall occur, the principal amount of all the
Notes 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 for payment of the money due has been obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture.
The Indenture will provide that the Trustee shall, within 90 days after the
occurrence of a default with respect to the Notes, give to the Holders of the
Notes notice of such default known to it, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of or interest on any of the Notes, the Trustee shall
be protected in withholding such notice if in good faith it determines that the
withholding of such notice is in the interest of such Holders. The Indenture
provides that, subject to the duty of the Trustee during a default to act with
the required standard of care, the Trustee will not be under an obligation to
exercise any right or power under the Indenture at the request or direction of
any of the Holders, unless the Holders shall have offered to the Trustee
reasonable security or indemnity. The Indenture provides that the Holders of a
majority in aggregate principal amount of the Outstanding Notes may direct the
time, method and place of conducting proceedings for remedies available to the
Trustee or exercising any trust or power conferred on the Trustee with respect
to the Notes.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless (a) such Holder
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<PAGE> 13
shall have previously given to the Trustee written notice of a continuing Event
of Default with respect to the Notes, (b) the Holders of not less than 25% in
aggregate principal amount of the Outstanding Notes shall have made written
request to the Trustee to institute proceedings as Trustee, (c) such Holder or
Holders shall have offered to the Trustee reasonable security or indemnity, (d)
the Trustee shall have failed to institute such proceeding within 60 days
thereafter and (e) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Outstanding Notes a direction
inconsistent with such request. However, such limitations do not apply to a suit
instituted by a Holder of a Note for the enforcement of payment of the principal
of or interest on such Note on or after the applicable due date specified in
such Note.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its obligations under the Indenture and
as to any default in such performance.
MODIFICATION AND WAIVERS
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of the Holders to: (a) evidence the
succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company herein and in the Notes; (b) add to
the covenants of the Company for the benefit of the Holders or an additional
Event of Default or surrender any right or power conferred upon the Company; (c)
secure the Notes; (d) cause the Notes to comply with applicable law; (e)
evidence and provide for the acceptance of appointment by a successor Trustee
with respect to the Notes; and (f) cure any defect or ambiguity or correct or
supplement any provision which may be defective or inconsistent with any other
provision, or make any other provisions with respect to matters or questions
arising under the Indenture which shall not be inconsistent with the provisions
of the Indenture, provided, however, that no such modification or amendment may
adversely affect the interest of the Holders in any material respect.
Modifications and amendments of the Indenture may be made by the Company
and the Trustee, with the consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes, by executing supplemental
indentures for the purpose of adding any provisions to, or changing in any
manner or eliminating any of the provisions of, the Indenture or modifying in
any manner the rights of the Holders of the Outstanding Notes; provided, that no
such modification or amendment may, without the consent of the Holders of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of or interest on, any Note, (c) change the place or currency
of payment of principal of, or any interest on, any Note, (d) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Note when due, (e) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary to modify or amend the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, or (f) modify certain provisions of the Indenture with respect to
modification and waiver.
The Holders of at least a majority in aggregate principal amount of the
Outstanding Notes may waive compliance by the Company with certain restrictive
provisions of the Indenture. The Holders of at least a majority in aggregate
principal amount of the Outstanding Notes may waive any past default under the
Indenture, except a default in the payment of the principal of or interest on
any Note and certain covenants and provisions of the Indenture which cannot be
modified or amended without the consent of the Holder of each Outstanding Note.
SATISFACTION AND DISCHARGE; DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that the Company may discharge its obligations
under the Indenture while Notes remain Outstanding if all Outstanding Notes will
become due and payable at their scheduled maturity within one year and the
Company has deposited with the Trustee an amount sufficient to pay and discharge
all Outstanding Notes on the date of their scheduled maturity. The Indenture
will further provide that the Company, at its option, (a) will be discharged
from any and all obligations with respect to the Notes (except for certain
obligations which include exchanging or registering the transfer of the Notes,
replacing stolen, lost or mutilated Notes, maintaining paying agencies and
holding monies for payment in trust) ("defeasance"), or
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<PAGE> 14
(b) need not comply with certain restrictive covenants of the Indenture
("covenant defeasance"), and the occurrence of certain events which would
otherwise be or result in an Event of Default will be deemed not to be or result
in an Event of Default with respect to the Notes, upon the deposit with the
Trustee, in trust for the benefit of the Holders of the Notes, of money or U.S.
Government Obligations, or both, which through the payment of principal of and
interest in respect thereof in accordance with their terms will provide money in
an amount sufficient to pay principal of and interest on the Notes on the dates
such payments are due in accordance with the terms of the Indenture. To
establish such defeasance or covenant defeasance, the Company will be required
to meet certain conditions, including delivery to the Trustee of an Opinion of
Counsel to the effect that the Holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred. In the case of
defeasance pursuant to clause (a), such Opinion of Counsel must refer to and be
based upon either (i) a ruling received by the Company from, or published by,
the Internal Revenue Service or (ii) a change in applicable federal income tax
law after the date of the Indenture.
INFORMATION CONCERNING THE TRUSTEE
The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred and
is continuing, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent Person would exercise under the circumstances in the conduct of such
Person's own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein, contain limitations on the rights of
the Trustee thereunder, should it become a creditor of the Company, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions with the Company; provided, however,
that if it acquires any conflicting interest (as defined in such Act) it must
eliminate such conflict or resign.
The Company and its Subsidiaries may maintain deposit accounts and conduct
other banking transactions with the Trustee in the ordinary course of business.
GOVERNING LAW
The Indenture and the Notes will be governed by the laws of the State of
New York, without regard to principles of conflicts of law.
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<PAGE> 15
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement dated March 19, 1996, each Underwriter named below has severally
agreed to purchase, and the Company has agreed to sell to such Underwriter, the
principal amount of Notes set forth opposite the name of such Underwriter.
<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT
--------------------------------------------------------- -----------
<S> <C>
Smith Barney Inc......................................... $66,668,000
Chase Securities, Inc.................................... $66,666,000
Prudential Securities Incorporated....................... $66,666,000
-----------
Total.................................................. $200,000,000
===========
</TABLE>
The Underwriters are obligated to take and pay for the total principal
amount of Notes offered hereby if any such Notes are taken.
The Underwriters have advised the Company that they propose to offer part
of the Notes directly to the public at the public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of .400% of the public offering price of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of .250% of the public offering price of the Notes to certain other dealers.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes, and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
Certain of the Underwriters and their affiliates have engaged in
transactions with and perform services for the Company or one or more of its
affiliates in the ordinary course of business, and may do so in the future. In
addition, an affiliate of Chase Securities, Inc. is a party to the Revolving
Credit Facility and, accordingly, will receive its pro rata portion of the
proceeds from the offering used to repay outstanding borrowings thereunder. See
"Use of Proceeds."
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Gordon
Altman Butowsky Weitzen Shalov & Wein, New York, New York ("Gordon Altman") and
for the Underwriters by Dewey Ballantine, New York, New York. Andrew N. Heine, a
Director of the Company, is of counsel to Gordon Altman.
EXPERTS
The consolidated balance sheets as of December 31, 1995 and January 1, 1995
and the consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1995 incorporated
by reference in this Prospectus, have been incorporated herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
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<PAGE> 16
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Available Information.................. 2
Incorporation of Certain Information by
Reference............................ 2
Prospectus Summary..................... 3
The Company............................ 6
Use of Proceeds........................ 6
Capitalization......................... 6
Description of the Notes............... 7
Underwriting........................... 15
Legal Matters.......................... 15
Experts................................ 15
</TABLE>
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$200,000,000
LOGO
7% SENIOR
NOTES DUE 2006
------------
PROSPECTUS
MARCH 19, 1996
------------
SMITH BARNEY INC.
CHASE SECURITIES, INC.
PRUDENTIAL SECURITIES INCORPORATED
- ------------------------------------------------------
- ------------------------------------------------------
