<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 33-55993
THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AND IS SUBJECT TO COMPLETION OR
AMENDMENT. THIS PROSPECTUS SUPPLEMENT 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.
SUBJECT TO COMPLETION, DATED APRIL 17, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 25, 1994
$150,000,000
ASARCO Incorporated
% Debentures Due 2025
Interest payable April and October Due , 2025
------------------
The Debentures are not redeemable at the option of the Company prior to
maturity. See "Description of Debentures".
------------------
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 SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Company(1)(2)
---------------- ---------------- -------------
<S> <C> <C> <C>
Per Debenture................................ % % %
Total........................................ $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1995.
(2) Before deduction of expenses payable by the Company estimated at
$ .
------------------
The Debentures are offered by the Underwriter when, as and if issued by the
Company, delivered to and accepted by the Underwriter and subject to its right
to reject orders in whole or in part. It is expected that delivery of the
Debentures will be made on or about April , 1995.
CS First Boston
The date of this Prospectus Supplement is April , 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, CS FIRST BOSTON CORPORATION MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
DEBENTURES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds from the sale of the % Debentures Due 2025 (the
"Debentures") are estimated to be $ . The net proceeds will be used to
repay, in part, revolving credit bank borrowings, which at April 14, 1995
totaled $505 million at interest rates averaging 6.6% per annum. Borrowings
under the revolving credit agreement were used to fund the purchase of 7,057,215
shares of Southern Peru Copper Corporation ("SPCC").
RECENT DEVELOPMENTS
Southern Peru Copper Corporation
On April 5, 1995, Asarco Incorporated ("Asarco" or the "Company") purchased
7,057,215 shares, representing 10.7% of the outstanding common stock, of
Southern Peru Copper Corporation at a cost of $116.4 million from Newmont Gold
Company. The purchase of these shares (the "Purchase") increased Asarco's
interest in SPCC to 63% from 52.3%.
The shares of SPCC acquired in the Purchase will enable Asarco to elect a
majority of the directors of SPCC. Accordingly, Asarco will consolidate the
financial statements of SPCC in its financial statements commencing with the
first quarter of 1995. Asarco had previously accounted for its investment in
SPCC by the equity method of accounting. The excess of the purchase price over
Asarco's interest in the net book value of SPCC attributable to the shares
acquired in the Purchase is estimated to be assigned to proven and probable
sulfide reserves, proven and probable leachable reserves and mineralized
material.
The tables below summarize unaudited pro forma consolidated results of
operations for the year ended December 31, 1994, assuming the Purchase had
occurred at January 1, 1994, and present the financial position as of December
31, 1994, assuming the Purchase had occurred at December 31, 1994. The tables
detail the financial information used to derive the pro forma consolidation
reflecting Asarco's 63% ownership of SPCC. The components of the tables are: (i)
Asarco -- historical financial statements for the year ended December 31, 1994;
(ii) SPCC -- historical financial statements for the year ended December 31,
1994; (iii) Eliminations -- elimination of intercompany transactions between
Asarco and SPCC; (iv) Pro Forma Adjustments -- adjustments to reflect the effect
of the Purchase; and (v) Pro Forma Consolidated -- consolidation of Asarco and
SPCC.
The unaudited pro forma financial information is based on management's
assumptions and does not purport to represent the results that actually would
have occurred if the Purchase had, in fact, been completed on the dates assumed.
S-2
<PAGE> 3
<TABLE>
<CAPTION>
PRO PRO
RESULTS OF OPERATIONS: FORMA FORMA
(For the year ended December 31, 1994) ASARCO SPCC ELIMINATIONS ADJUSTMENTS CONSOLIDATED
-------------------------------------- ------ ---- ------------ ----------- ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales of products and services............... $2,031.8 $701.7 $ (32.9) $ -- $2,700.6
Operating costs and expenses................. 2,014.4 559.7 (32.9) 0.9(a) 2,542.1
-------- ------ ------- ------ --------
Operating income........................... 17.4 142.0 -- (0.9) 158.5
Interest expense............................. (62.5) (7.8) -- (7.7)(b) (78.0)
Other income................................. 70.8 29.7 -- -- 100.5
-------- ------ ------- ------ --------
Earnings before taxes on income, equity
earnings and minority interest........... 25.7 163.9 -- (8.6) 181.0
Taxes on income (benefit).................... 9.4 54.1 3.3 (2.1)(c) 64.7
Equity in earnings of non-consolidated
associated companies (losses).............. 47.7 -- (44.4) -- 3.3
Minority interest............................ -- (18.6) (43.5) 9.8(d) (52.3)
-------- ------ ------- ------ --------
Net earnings............................. $ 64.0 $ 91.2 $ (91.2) $ 3.3 $ 67.3
======== ====== ======== ====== ========
Net earnings per common share................ $ 1.53 $ 1.61
======== ========
</TABLE>
- ---------------
Explanation of Pro Forma Adjustments:
(a) The excess of the purchase price over Asarco's interest in the net book
value of SPCC attributable to the shares acquired is estimated to be
assigned to proven and probable sulfide reserves, proven and probable
leachable reserves and mineralized material. The amount assigned to
proven and probable sulfide reserves has been amortized based on actual
1994 copper production and reserves as of December 31, 1994.
Amortization of the amount assigned to proven and probable leachable
reserves will begin when production commences in late 1995. Amortization
of the amount assigned to mineralized material will begin upon
completion of the drilling program and reserve analysis which are
expected to be completed by year end 1995;
(b) Interest expense on additional debt incurred in connection with the
Purchase at the Company's average interest rate for revolving credit
borrowings at April 14, 1995 (6.6%). A 1% increase in interest rates
would reduce earnings per share by $0.02;
(c) Income tax benefit from amortization and additional interest expense at
applicable rates net of U.S. deferred income tax on additional
undistributed earnings of SPCC; and
(d) 1994 SPCC earnings attributable to Asarco's additional interest as a
result of the Purchase.
<TABLE>
<CAPTION>
PRO PRO
FINANCIAL POSITION: FORMA FORMA
(As of December 31, 1994) ASARCO SPCC ELIMINATIONS ADJUSTMENTS CONSOLIDATED
------------------------- ------ ---- ------------ ----------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Cash and marketable securities............... $ 18.3 $136.3 $ -- $ -- $ 154.6
Other current assets......................... 729.0 228.7 (3.2) -- 954.5
Investments.................................. 1,143.4 -- (332.1) -- 811.3
Net property................................. 1,305.5 522.9 -- 48.3(a) 1,876.7
Other assets................................. 94.8 80.6 -- -- 175.4
-------- ------ ------- ------ --------
Total assets............................. $3,291.0 $968.5 $(335.3) $ 48.3 $3,972.5
======== ====== ======== ====== ========
Current liabilities.......................... $ 465.5 $118.8 $ (3.2) $ -- $ 581.1
Long-term debt............................... 914.6 114.1 -- 116.4(b) 1,145.1
Deferred income taxes........................ 156.5 6.2 -- -- 162.7
Minority interest............................ 2.4 79.8 302.7 (68.1)(c) 316.8
Other liabilities............................ 234.6 14.8 -- -- 249.4
-------- ------ ------- ------ --------
Total liabilities........................ 1,773.6 333.7 299.5 48.3 2,455.1
Stockholders' equity......................... 1,517.4 634.8 (634.8) -- 1,517.4
-------- ------ ------- ------ --------
Total liabilities and stockholders'
equity................................. $3,291.0 $968.5 $(335.3) $ 48.3 $3,972.5
======== ====== ======== ====== ========
</TABLE>
- ---------------
Explanation of Pro Forma Adjustments:
(a) Excess of the purchase price over Asarco's additional interest in the
net book value of SPCC;
(b) Additional debt incurred in connection with the Purchase; and
(c) Change of minority interest in SPCC due to the Purchase.
S-3
<PAGE> 4
SPCC is an integrated producer of copper that operates mining, smelting and
refining facilities in the southern part of Peru. SPCC is among the world's
leading producers of copper, producing 267,800 tons of copper from its mines in
1994. Smelter production in 1994 was a record 322,100 tons of blister copper.
At December 31, 1994, SPCC's proven and probable ore reserves were
approximately 213.6 million tons with an average copper grade of 0.78% at its
Toquepala mine and 374.1 million tons with an average copper grade of 0.80% at
its Cuajone mine. SPCC also has leachable reserves at Toquepala and Cuajone
which total 570.3 million tons with an average copper grade of 0.22%. In
addition, results of drilling at Toquepala and Cuajone have identified
mineralized material consisting of 640.0 million tons with an average copper
grade of 0.74% at Toquepala and 692.1 million tons with an average copper grade
of 0.71% at Cuajone. This mineralized material will not qualify as proven and
probable reserves until a final and comprehensive economic and technical
feasibility study has been completed demonstrating that such additional material
can be economically mined.
To integrate its operations and further reduce costs, SPCC acquired the Ilo
refinery in May 1994 from a Peruvian government owned entity for $65 million and
a commitment to spend $20 million over three years to increase capacity and
improve efficiency. SPCC's cash cost savings since the acquisition have amounted
to approximately $0.05 per pound of copper. During the seven month period of
SPCC's ownership in 1994, the refinery produced 123,000 tons of refined copper.
Acquisition of the Ilo refinery was part of a $445 million expansion and
modernization plan which began in 1992. The program also includes expenditures
of $120 million for new equipment and technology, $135 million for environmental
projects and $105 million for development and construction of a solvent-
extraction/electrowinning ("SX/EW") facility, which is expected to begin
operation in late 1995 and add approximately 40,000 tons annually of low-cost
copper production. The Company's strategy is to continue to reduce costs and to
expand production through modernization of its operations.
Ray Mine, Arizona
On March 30, 1995, the Company announced that full operations at the Hayden
concentrator at its Ray Complex in Arizona would resume by July 1, 1995, three
months earlier than originally planned. The capacity of the Hayden concentrator
was temporarily curtailed as part of a development program that began in July
1994. The development program was implemented to restore operating flexibility
and production capacity lost as a consequence of water accumulated in 1992 and
early in 1993 from unusually heavy rains.
S-4
<PAGE> 5
COPPER PRICES
Copper is an internationally traded commodity the price of which is
effectively established on terminal markets including the London Metal Exchange
and the New York Commodity Exchange ("COMEX"). The following table sets forth
quarterly average COMEX prices for copper since 1992.
<TABLE>
<CAPTION>
AVERAGE COMEX
COPPER PRICES
--------------------
<S> <C>
($/POUND)
1992
First Quarter...................................... $0.994
Second Quarter..................................... 1.019
Third Quarter...................................... 1.111
Fourth Quarter..................................... 0.985
1993
First Quarter...................................... 0.982
Second Quarter..................................... 0.835
Third Quarter...................................... 0.838
Fourth Quarter..................................... 0.757
1994
First Quarter...................................... 0.868
Second Quarter..................................... 0.989
Third Quarter...................................... 1.139
Fourth Quarter..................................... 1.290
1995
First Quarter...................................... 1.375
</TABLE>
-------------------------------
Source: COMEX First Position, Monthly Average Settlement.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
PRO FORMA 1994 1994 1993 1992 1991 1990
-------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges...... 3.3(a) 1.6 (b) (b) 1.5 3.5
</TABLE>
- ---------------
(a) The pro forma ratio of earnings to fixed charges is based on the pro forma
results of operations contained herein and assumes that the Purchase had
occurred on January 1, 1994.
(b) For the years 1992 and 1993, earnings were insufficient to cover fixed
charges by $73.9 million and $135.3 million, respectively.
The ratio of earnings to fixed charges was calculated based on information
from the Company's books and records. In computing the ratio of earnings to
fixed charges, earnings consist of net earnings of the Company and its
consolidated subsidiaries plus taxes on income, fixed charges and minority
interest, plus dividends received from non-consolidated associated companies
accounted for by the equity method, less interest capitalized net of amount
amortized and less equity earnings of non-consolidated associated companies
accounted for by the equity method. Fixed charges consist of interest costs on
borrowed funds, including capitalized interest, commitment fees and a reasonable
approximation of the imputed interest on non-capitalized lease payments.
S-5
<PAGE> 6
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1994 and as adjusted to give effect to the sale of the Debentures
offered hereby and the application of proceeds therefrom (see "Use of
Proceeds"). The components of the table are: (i) Asarco -- historical financial
information at December 31, 1994; (ii) Pro Forma Consolidation -- consolidation
of Asarco and SPCC giving effect to the purchase of 10.7% of the outstanding
common stock of SPCC; and (iii) As Adjusted Pro Forma Consolidation --
consolidation of Asarco and SPCC giving effect to the sale of the Debentures.
<TABLE>
<CAPTION>
AS
ADJUSTED
PRO PRO
FORMA FORMA
ASARCO CONSOLIDATION CONSOLIDATION
-------- ------------- -------------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
Short-term Debt
Bank loans.......................................... $ 5.1 $ 5.1 $ 5.1
Current portion of long-term debt................... 13.3 17.2 17.2
-------- -------- --------
Total short-term debt....................... $ 18.4 $ 22.3 $ 22.3
======== ======== ========
Long-term Debt
Revolving credits, with interest rates averaging
6.5%............................................. $ 410.0 $ 526.4 $ 376.4
$115 million credit facility, term loans maturing
1996 through 2001 at 8.5% interest............... -- 77.2 77.2
Other term financing due 1996 through 2001 with
interest rates from 9.1% to 11.5%................ -- 36.9 36.9
Pollution control bonds, with interest rates from
6.8% to 8.9% due in varying amounts annually from
1996 through
2006............................................. 169.8 169.8 169.8
Capital lease obligations, with interest rates from
7.3% to 12.0% due from 1996 through 2006......... 84.9 84.9 84.9
7% Notes Due 2001................................... 50.0 50.0 50.0
7 3/8% Notes Due 2003............................... 99.4 99.4 99.4
7 7/8% Debentures Due 2013.......................... 99.7 99.7 99.7
% Debentures Due 2025............................. -- -- 150.0
Foreign and other Debt, with interest rates from
5.5% to 10.4%, due in varying amounts annually
through 2000..................................... 0.8 0.8 0.8
-------- -------- --------
Total long-term debt, less current
portion................................... 914.6 1,145.1 1,145.1
-------- -------- --------
Deferred Income Taxes (non-current)................... 156.5 162.7 162.7
-------- -------- --------
Minority Interest..................................... 2.4 316.8 316.8
-------- -------- --------
Stockholders' Equity
Common stock........................................ 680.0 680.0 680.0
Unrealized gain on securities reported at fair
value............................................ 91.6 91.6 91.6
Retained earnings................................... 853.2 853.2 853.2
Treasury stock, at cost............................. (107.4) (107.4) (107.4)
-------- -------- --------
Total stockholders' equity.................. 1,517.4 1,517.4 1,517.4
-------- -------- --------
Total capitalization (a).................... $2,590.9 $3,142.0 $3,142.0
======== ======== ========
</TABLE>
- ---------------
(a) Total capitalization is the sum of total long-term debt (less current
portion), non-current deferred income taxes, minority interest and total
stockholders' equity.
S-6
<PAGE> 7
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected consolidated financial information presented in the following
table is qualified in its entirety by, and should be read in conjunction with,
the Company's consolidated financial statements and related notes incorporated
by reference in the Prospectus and herein. The selected consolidated financial
information for each of the five years presented below has been derived from
consolidated financial statements which have been audited by Coopers & Lybrand
L.L.P.
<TABLE>
<CAPTION>
AT OR FOR YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales of products and services............. $2,031,846 $1,736,358 $1,908,492 $1,911,806 $2,210,280
Operating costs and expenses:
Cost of products and services............ 1,781,141 1,637,959 1,647,263 1,634,198 1,810,705
Selling, administrative and other........ 79,136 88,249 90,631 107,883 95,531
Depreciation and depletion............... 83,097 80,641 86,642 74,869 75,093
Research and exploration................. 19,775 20,871 21,410 26,431 26,644
Provision for plant closures and
disposals.............................. -- 13,156 31,900 -- --
Provision for environmental matters...... 51,205 6,241 72,400 7,305 75,527
---------- ---------- ---------- ---------- ----------
Total operating costs and expenses..... 2,014,354 1,847,117 1,950,246 1,850,686 2,083,500
---------- ---------- ---------- ---------- ----------
Operating income (loss).................... 17,492 (110,759) (41,754) 61,120 126,780
Interest expense........................... (62,529) (57,321) (51,230) (46,227) (38,038)
Other income............................... 12,281 19,961 23,911 22,870 26,561
Gain from sale by Asarco Australia of
capital stock............................ -- 3,270 -- -- --
Gain on sale of Asarco Australia........... 58,512 10,286 -- -- --
---------- ---------- ---------- ---------- ----------
Earnings (loss) before taxes on income and
equity earnings and cumulative effect of
change in accounting principles.......... 25,756 (134,563) (69,073) 37,763 115,303
Taxes on income (benefit).................. 9,375 (36,503) (37,371) 2,199 15,910
---------- ---------- ---------- ---------- ----------
Earnings (loss) before equity earnings and
cumulative effect of change in accounting
principles............................... 16,381 (98,060) (31,702) 35,564 99,393
Equity in earnings of non-consolidated
associated companies, net of taxes on
income................................... 47,653 27,384 2,575 10,393 36,451
---------- ---------- ---------- ---------- ----------
Earnings (loss) before cumulative effect of
change in accounting principles.......... 64,034 (70,676) (29,127) 45,957 135,844
Cumulative effect of change in accounting
principles, net of taxes................. -- 86,295 (53,964) -- --
---------- ---------- ---------- ---------- ----------
Net earnings (loss)........................ $ 64,034 $ 15,619 $ (83,091) $ 45,957 $ 135,844
========== ========== ========== ========== ==========
PER COMMON SHARE AMOUNTS:
Earnings (loss) before cumulative effect of
change in accounting principles.......... $ 1.53 $ (1.70) $ (0.70) $ 1.12 $ 3.28
Cumulative effect of change in accounting
principles............................... -- 2.08 (1.31) -- --
---------- ---------- ---------- ---------- ----------
Net earnings (loss)........................ $ 1.53 $ 0.38 $ (2.01) $ 1.12 $ 3.28
========== ========== ========== ========== ==========
Cash dividends per common share............ $ 0.40 $ 0.50 $ 0.80 $ 1.60 $ 1.60
BALANCE SHEET DATA:
Cash and marketable securities............. $ 18,321 $ 12,500 $ 33,248 $ 35,210 $ 34,593
Working capital............................ 281,784 201,142 266,541 284,159 342,744
Total assets............................... 3,291,025 3,152,498 2,945,916 2,953,837 2,789,952
Total debt................................. 933,056 900,547 868,769 801,554 543,197
Common stockholders' equity................ 1,517,387 1,471,598 1,357,493 1,474,828 1,489,879
</TABLE>
- ---------------
Note: For notes to Selected Consolidated Financial Information, see the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
S-7
<PAGE> 8
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures offered
hereby (referred to in the Prospectus as the "Offered Securities") supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Debt Securities set forth in the Prospectus,
to which reference is hereby made. The Debentures are part of the Securities
registered by the Company in October 1994 to be issued at an aggregate initial
public offering price not to exceed $300,000,000 and on terms to be determined
at the time of sale.
The Debentures will be issued pursuant to an Indenture dated as of October
1, 1994. The Debentures will be limited to $150,000,000 aggregate principal
amount and will mature on , 2025. The Debentures will bear interest
at % per annum from or from the most recent Interest Payment Date
to which interest has been paid or provided for payable semiannually on
and of each year, commencing on
, to the person in whose name the Debenture is registered at
the close of business on April 1 or October 1, as the case may be, next
preceding such Interest Payment Date. The Debentures will rank equally and
ratably with all other unsecured and unsubordinated indebtedness of the Company.
The Debentures will be issued only in fully registered form without coupons in
denominations of $1,000 and integral multiples thereof.
The Debentures will not be redeemable through the operation of any sinking
fund.
The Debentures are not redeemable at the option of the Company prior to
maturity.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement (the "Underwriting Agreement") incorporated by reference in the Terms
Agreement dated April , 1995, CS First Boston Corporation ("CS First Boston"
or the "Underwriter") has agreed to purchase from the Company all of the
Debentures.
The Underwriting Agreement provides that the obligations of CS First Boston
are subject to certain conditions precedent and that CS First Boston will be
obligated to purchase all the Debentures, if any are purchased.
The Company has been advised by CS First Boston that it proposes to offer
the Debentures to the public initially at the public offering price set forth on
the cover page of this Prospectus Supplement and to certain dealers at such
price less a concession of % of the principal amount per Debenture and CS
First Boston and such dealers may allow a discount of % of such principal
amount per Debenture on sales to certain other dealers. After the initial public
offering, the public offering price and concession and discount to dealers may
be changed by CS First Boston.
The Debentures are a new issue of securities with no established trading
market. CS First Boston has advised the Company that it intends to act as a
market maker for the Debentures. However, CS First Boston is not 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 the
Debentures.
The Company has agreed to indemnify CS First Boston against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
contribute to payments which CS First Boston may be required to make in respect
thereof.
In the ordinary course of its business, CS First Boston has engaged, and
may engage in the future, in investment banking and commercial banking
transactions with the Company for which it has received, and may receive in the
future, customary fees. CS First Boston Limited and Credit Suisse, affiliates of
CS First Boston, are the agent and a lender, respectively, under one of the
Company's revolving bank credit agreements.
S-8
<PAGE> 9
LEGAL MATTERS
The validity of the issuance of the Debentures offered hereby will be
passed upon for the Company by White & Case, New York, New York, and certain
legal matters will be passed upon by Augustus B. Kinsolving, General Counsel of
the Company, and for the Underwriter by Cravath, Swaine & Moore, New York, New
York. Cravath, Swaine & Moore has, from time to time, performed services for the
Company.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Debentures in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Debentures are effected. Accordingly, any resale of the
Debentures in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or pursuant
to a discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Debentures.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Debentures in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Debentures without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Debentures to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Debentures acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #88/5, a copy of which may be obtained from the Company. Only one such
report must be filed in respect of Debentures acquired on the same date and
under the same prospectus exemption.
S-9
<PAGE> 10
PROSPECTUS
ASARCO Incorporated
Debt Securities
Convertible Debt Securities
Common Stock
Preferred Stock
Depositary Shares
Convertible Preferred Stock
Warrants
-----------------------
ASARCO Incorporated ("Asarco" or the "Company") may from time to time offer,
together or separately, (i) its debt securities consisting of debentures, notes
or other unsecured evidences of indebtedness (the "Debt Securities"); (ii)
its convertible debt securities (the "Convertible Debt Securities"),
consisting of debentures, notes or other evidences of indebtedness
representing unsecured obligations of the Company convertible into
common stock, without par value (the "Common Stock") or into Preferred
Stock, without par value (the "Preferred Stock") of the Company; (iii)
shares of its Preferred Stock, which may be represented by Depository
Receipts (the "Depositary Shares") which will represent a fraction
of a share of Preferred Stock; (iv) shares of its Preferred Stock
convertible into Common Stock or another series of Preferred
Stock (the "Convertible Preferred Stock"), which may be
represented by Depositary Shares; and (v) warrants to purchase
securities of the Company as shall be designated by the Company
at the time of the offering (the "Warrants"), in each case, in
amounts, at prices and on terms to be determined at the time
of the offering. Both the Company and M.I.M. Holdings
Limited ("MIM" or the "Selling Stockholder") may also
offer and sell from time to time shares of the Common
Stock. The Common Stock, the Debt Securities, the
Convertible Debt Securities, the Preferred Stock,
the Convertible Preferred Stock, the Depositary
Shares and the Warrants are collectively called the
"Securities."
The aggregate initial offering price of the Securities offered by the Company
hereby will not exceed $300,000,000 or its equivalent in any other currency
or composite currency determined at the applicable exchange rate at
the time of sale, and the number of shares of Common Stock
offered by the Selling Stockholder hereby will not exceed
10,353,363. The Company will not receive any of the
proceeds from the sale of shares by the
Selling Stockholder.
For each offering of Securities for which this Prospectus is being delivered,
there will be an accompanying Prospectus Supplement (the "Prospectus
Supplement"), which sets forth, where applicable, (i) in the case of Debt
Securities and Convertible Debt Securities, the specific designation,
aggregate principal amount, the denomination, maturity, premium, if any,
the rate (which may be fixed or variable), time and method of
calculating payment of interest, if any, on such Debt Securities or
Convertible Debt Securities, any terms of redemption at the option of
the Company or the holder, terms for sinking fund payments, and with
respect to Convertible Debt Securities, terms for conversion into
Common Stock or Preferred Stock; (ii) in the case of Preferred
Stock or Convertible Preferred Stock, the specific title and
stated value, any dividend, liquidation, redemption, voting and
other rights, and any other special terms, including the terms
of any Depositary Shares representing Preferred Stock and
terms for converting Convertible Preferred Stock into other
Securities; (iii) in the case of Common Stock, the number of
shares of Common Stock and the terms of offering thereof;
and (iv) in the case of Warrants, the designation and
number, the exercise price, any listing of the Warrants
or the underlying Securities on a securities exchange
and any other terms in connection with the offering,
sale and exercise of the Warrants. If so specified
in the applicable Prospectus Supplement, Debt
Securities and Convertible Debt Securities of a
series may be issued in whole or in part in the
form of one or more temporary or permanent
global securities. The Prospectus
Supplement will also contain information,
as applicable, about certain United
States Federal income tax considerations
relating to the particular Securities
offered thereby.
The Company and the Selling Stockholder may sell the Securities to or through
underwriters, through dealers or agents or directly to purchasers. See "Plan
of Distribution." The accompanying Prospectus Supplement will set forth
the names of any underwriters, dealers or agents involved in the sale
of the Securities in respect of which this Prospectus is being
delivered, the amounts proposed to be purchased by them, any
applicable fee, commission or discount arrangements with them,
the initial public offering price and the net proceeds to
the Company or the Selling Stockholder.
The Common Stock is listed on the New York Stock Exchange under the symbol "AR."
Any shares of Common Stock sold pursuant to a Prospectus Supplement
will be listed on such exchange, subject
to an official notice of
issuance.
------------------
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 date of this Prospectus is October 25, 1994.
<PAGE> 11
AVAILABLE INFORMATION
Asarco 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.,
Room 1024, Washington, D.C. 20549 and the following regional offices of the
Commission: New York regional office, Seven World Trade Center, 13th Floor, New
York, New York 10048; and Midwest regional office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained at prescribed rates by writing to the Commission,
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
This Prospectus constitutes part of a Registration Statement filed by
Asarco with the Commission under the Securities Act of 1933, as amended (the
"Act"). This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the Securities offered hereby. Any 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the Company's
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as
amended on June 29, 1994 to include the Company's Report on Form 11-K, (ii)
quarterly Reports on Form 10-Q for the quarters ended March 31, and June 30,
1994, (iii) Proxy Statement for the Annual Meeting of Stockholders on April 27,
1994 (filed with the Commission on March 18, 1994) and (iv) Current Report on
Form 8-K dated September 30, 1994 heretofore filed by the Company (Commission
File Number 1-164) with the Commission pursuant to the Exchange Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date 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 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 such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Asarco will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the request of any such person, a copy of any
or all of the documents referred to above which have been or may be incorporated
in this Prospectus by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such document).
Requests for such copies should be directed to Mr. Augustus B. Kinsolving, Vice
President, General Counsel and Secretary, ASARCO Incorporated, 180 Maiden Lane,
New York, New York 10038, Telephone: (212) 510-2000.
------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR
ANY 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 THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE HEREUNDER
OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF AND THEREOF.
2
<PAGE> 12
THE COMPANY
Asarco is one of the world's leading producers of nonferrous metals. The
principal metals Asarco produces are copper, lead, zinc, silver and gold. Asarco
also produces specialty chemicals and minerals and provides environmental
services. Asarco has substantial equity interests in three mining companies:
15.5% in M.I.M. Holdings Limited ("MIM"), 52.3% in Southern Peru Copper
Corporation ("SPCC") and 23.6% in Grupo Mexico, S.A. de C.V. ("GMEXICO"). Such
companies are referred to herein as "associated companies."
Asarco's strategy since the mid-1980s has been to transform the Company
into an integrated producer of copper and lead. Once principally a custom
smelter and refiner of ores and concentrates produced by others, Asarco has
evolved during the last decade into one of the world's largest integrated
producers of nonferrous metals. In 1985, Asarco supplied less than 25% of its
copper concentrate requirements for its copper smelters and 5% of its lead
concentrate requirements for its Missouri lead smelter; in 1991 Asarco supplied
to these smelters approximately 76% of its copper concentrate and 80% of its
lead concentrate requirements. With the completion of Asarco's expansion
programs in 1993, the Company is now able to supply all of its copper
concentrate and 95% of its lead concentrate requirements. Since 1988 Asarco has
also expanded its specialty chemicals business both by growth of its existing
operations and by acquisition, has expanded its minerals business by acquisition
and has entered the hazardous waste management and waste recycling business.
Asarco or its associated companies operate mines, smelters and refineries
in the United States, Australia, Mexico and Peru. Asarco and its associated
companies together in 1993 accounted for about 13% of the western world mine
production of copper, 22% of lead, 13% of zinc and 13% of silver.
The executive offices of Asarco, a New Jersey corporation organized in
1899, are located at 180 Maiden Lane, New York, New York 10038, telephone number
(212) 510-2000.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, Asarco
intends to use the net proceeds from the sale of the Securities for general
corporate purposes, which may include refinancings of indebtedness, working
capital, capital expenditures and acquisitions. The Company will not receive any
of the proceeds from the sale of shares of Common Stock by the Selling
Stockholder.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND COMBINED
FIXED CHARGES AND PREFERRED SHARE DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ----------------------------------------
JUNE 30, 1994 1993 1992 1991 1990 1989
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
2.1 (a) (a) 1.5 3.5 8.2
</TABLE>
- ---------------
(a) For the years 1992 and 1993, earnings were insufficient to cover fixed
charges by $73.9 million and $135.3 million, respectively.
The ratio of earnings to fixed charges was calculated based on information
from the Company's books and records. In computing the ratio of earnings to
fixed charges, earnings consist of net earnings of the Company and its
consolidated subsidiaries plus taxes on income and fixed charges, plus dividends
received from non-consolidated associated companies accounted for by the equity
method, less interest capitalized net of amount amortized and less equity
earnings of non-consolidated associated companies accounted for by the equity
method. Fixed charges consist of interest costs on borrowed funds, including
capitalized interest, commitment fees, and a reasonable approximation of the
imputed interest on non-capitalized lease payments. There were no preferred
shares outstanding during any of the periods indicated and therefore the ratio
of earnings to combined fixed charges and preferred share dividend requirements
would have been the same as the ratio of earnings to fixed charges for each
period indicated.
3
<PAGE> 13
SELLING STOCKHOLDER
The following table sets forth certain information with respect to MIM's
beneficial ownership of Common Stock, as adjusted to reflect the sale by MIM of
the 10,353,363 shares owned by MIM and registered for possible sale hereby. The
Common Stock is the only class of equity securities of the Company which is
currently outstanding.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED IF ALL
OWNED PRIOR TO REGISTERED
OFFERING NUMBER OF SHARES ARE SOLD
--------------------- SHARES BEING --------------------
SELLING STOCKHOLDER(1) NUMBER PERCENT REGISTERED FOR SALE NUMBER PERCENT
- ------------------------------- --------- ------- ------------------- -------- -------
<S> <C> <C> <C> <C> <C>
M.I.M. Holdings Limited........ 10,353,363 24.6 10,353,363 -0- -0-
</TABLE>
- ---------------
(1) The address of MIM is M.I.M. Plaza, 410 Ann Street, Brisbane, Queensland
4000, Australia.
MIM's decision, subject to market conditions, to sell shares of Asarco is
pursuant to a strategy of concentrating on core businesses over which it has
direct control and which are low cost producers of the core products of those
businesses.
The following is a summary description of a 1981 agreement, as amended in
1985, 1987, 1990 and 1993, between MIM and Asarco (the "Agreement"). This
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the provisions of the Agreement. A copy of the
Agreement, including the amendments thereto, are exhibits to the Company's Form
10-Q for the second quarter 1981, Form 8-K dated September 30, 1985, Form 8-K
filed on September 30, 1987, Form 8-K filed on September 24, 1990 and Form 8-K
filed on July 15, 1993.
Under the Agreement, MIM has the right to require the Company, under
certain conditions, to register under the Act 1,000,000 or more of the shares of
the Company's Common Stock it owns should MIM wish to sell such shares. Under
the Agreement, with respect to 4,938,400 shares of Asarco Common Stock held by
MIM, MIM must provide Asarco with prior written notice of any proposed sale or
transfer of 1,000,000 or more shares in a single transaction, a group of related
transactions or pursuant to a program of transactions, unless such proposed sale
or transfer is pursuant to an underwritten public offering or to a subsidiary of
MIM. Asarco has the right to purchase all of the shares set forth in such notice
at the price set forth in such notice for 90 days after receipt by Asarco of
such notice. Asarco also has agreed to give MIM prior notice of any registered
public offering by Asarco of its Common Stock for cash and to include at MIM's
request (at MIM's pro rata expense) any shares of the Company's Common Stock
owned by MIM in such offering unless including such shares would, in the opinion
of the underwriter, raise a substantial question as to whether the proposed
offering could be successfully consummated on terms reasonably acceptable to
Asarco. The provisions of the Agreement with respect to Asarco's right of first
refusal expire on a date designated by either party by twelve months' prior
notice (the "Expiration Date").
Under the Agreement, MIM has the right to designate two nominees to
Asarco's Board of Directors so long as MIM owns more than 6,500,000 shares of
Asarco's Common Stock, adjusted for stock dividends or stock splits, and so long
as such ownership constitutes more than 10% of Asarco's Common Stock. Pursuant
to the Agreement, Asarco's management has recommended to Asarco's Board of
Directors that two nominees designated by MIM be included in the slate of
nominees recommended by Asarco's Board of Directors to shareholders for election
as directors. Currently Norman C. Fussell and Peter R. Rowland, the Managing
Director and a director of MIM, respectively, are directors of Asarco. Asarco
has the right to nominate two persons for election to MIM's Board of Directors
so long as Asarco's ownership exceeds 241,718,641 MIM common shares, which shall
be adjusted for stock dividends, stock splits and rights offers and so long as
such ownership constitutes more than 10% of MIM's outstanding common shares.
Asarco now owns sufficient MIM shares to have the right to nominate two
directors of MIM but does not currently intend to exercise this right. In the
Agreement, MIM agreed, subject to certain exceptions, to limit its beneficial
ownership of Asarco's Common Stock to 33 1/3% of the outstanding shares of
Common Stock until the Expiration Date and Asarco agreed to limit its ownership
of MIM's common shares to 40% for the same period.
4
<PAGE> 14
Also, under the Agreement, MIM and Asarco have agreed not to authorize or
otherwise amend their organizational documents to provide for the authorization
of, or issue of, voting securities which would adversely affect in a
discriminatory manner the voting rights of the other party so long as the party
in whose benefit such covenant runs owns 10% of the voting securities of the
other party. The Agreement provides that MIM and Asarco will, prior to any sale,
exchange, transfer or other disposition of any shares of the other party owned
by MIM or Asarco, as the case may be, meet to consult and discuss in good faith
for a period of (except in certain circumstances) no less than 30 days the
effects of such proposed disposition.
DESCRIPTION OF COMMON STOCK
The Company has authorized 80 million shares of Common Stock, without par
value, of which 41,946,555 shares were issued and outstanding as of August 31,
1994. The shares of Common Stock currently outstanding are, and the shares of
Common Stock that may be offered hereby will be, fully paid and non-assessable.
Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters voted upon by stockholders, and a majority vote is
required for all action to be taken by stockholders except for certain
transactions with interested shareholders, for which a vote of 80% of
outstanding shares is required for approval. In the event of a liquidation,
dissolution or winding-up of the Company, the holders of Common Stock are
entitled to share equally and ratably in the assets of the Company, if any,
remaining after the payment of all debts and liabilities of the Company and the
liquidation preference of any outstanding Preferred Stock. The holders of the
Common Stock have no preemptive rights or cumulative voting rights and there are
no redemption, sinking fund or conversion provisions applicable to the Common
Stock.
Holders of Common Stock are entitled to receive dividends if, as and when
declared by the Board of Directors out of funds legally available for such
purpose, subject to the dividend and liquidation rights of any Preferred Stock
that may be issued.
In 1989, the Company adopted a Shareholder Rights Plan and declared a
dividend of one right (as defined therein) for each share of its Common Stock.
In certain circumstances, if a person or group becomes the beneficial owner of
15% or more of the outstanding Common Stock (or in the case of MIM, more than
33 1/3%), with certain exceptions, these rights vest and entitle the holder to
certain share purchase rights. In connection with the Rights dividend, 800,000
shares of Junior Participating Preferred Stock were authorized for issuance upon
exercise of the Rights. See "Description of Preferred Share Purchase Rights".
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of
the Company's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of Preferred Stock that may be offered by any
Prospectus Supplement will be described in the Prospectus Supplement relating
thereto. If so indicated in the Prospectus Supplement, the terms of any series
may differ from the terms set forth below. The description of certain provisions
of the Company's Preferred Stock does not purport to be complete and is subject
to and qualified in its entirety by reference to the provisions of the Company's
Restated Certificate of Incorporation, as amended (the "Certificate"), and the
Certificate of Designation (the "Certificate of Designation") relating to each
particular series of Preferred Stock which will be filed or incorporated by
reference, as the case may be, as an exhibit to the Registration Statement of
which this Prospectus is a part at or prior to the time of the issuance of such
Preferred Stock.
GENERAL
Under the Certificate, the Board of Directors of the Company is authorized,
without further stockholder action to provide for the issuance of up to 10
million shares of Preferred Stock. As of September 30, 1994, no shares of
Preferred Stock were issued or outstanding.
The Preferred Stock may be issued in one or more series, with such
designations or titles; dividend rates; any redemption provisions; special or
relative rights in the event of liquidation, dissolution, distribution or
5
<PAGE> 15
winding up of the Company; any sinking fund provisions; any conversion
provisions; any voting rights thereof; and any other preferences, privileges,
powers, rights, qualifications, limitations and restrictions, as shall be set
forth as and when established by the Board of Directors of the Company. The
shares of any series of Preferred Stock will be, when issued, fully paid and
non-assessable and holders thereof will have no preemptive rights in connection
therewith.
The liquidation preference of any series of Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with changes
in market and economic conditions, the financial condition and prospects of the
Company and other factors that generally influence the market price of
securities.
RANK
Any series of Preferred Stock will, with respect to rights on liquidation,
winding up and dissolution, rank (i) senior to all classes of Common Stock and
to all equity securities issued by the Company, the terms of which specifically
provide that such equity securities will rank junior to such series of Preferred
Stock (the "Junior Liquidation Securities"); (ii) on a parity with all equity
securities issued by the Company, the terms of which specifically provide that
such equity securities will rank on a parity with such series of Preferred Stock
("Parity Liquidation Securities"); and (iii) junior to all equity securities
issued by the Company, the terms of which specifically provide that such equity
securities will rank senior to such series of Preferred Stock (the "Senior
Liquidation Securities"). In addition, any series of Preferred Stock will, with
respect to dividend rights, rank (i) senior to all equity securities issued by
the Company, the terms of which specifically provide that such equity securities
will rank junior to such series of Preferred Stock and, to the extent provided
in the applicable Certificate of Designation, to Common Stock; (ii) on a parity
with all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank on a parity with such
series of Preferred Stock and, to the extent provided in the applicable
Certificate of Designation, to Common Stock ("Parity Dividend Securities"); and
(iii) junior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank senior to such series
of Preferred Stock. As used in any Certificate of Designation for these
purposes, the term "equity securities" will not include debt securities
convertible into or exchangeable for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Company out of funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of Preferred
Stock. Dividends will be payable to holders of record of Preferred Stock as they
appear on the books of the Company (or, if applicable, the records of the
Depositary referred to below under "Description of Depositary Shares") on such
record dates as shall be fixed by the Board of Directors. Dividends on any
series of Preferred Stock may be cumulative or non-cumulative.
No full dividends may be declared or paid out of funds set apart for the
payment of dividends on any series of Preferred Stock unless dividends shall
have been paid or set apart for such payment on the Parity Dividend Securities.
If full dividends are not so paid, such series of Preferred Stock shall share
dividends pro rata with the Parity Dividend Securities.
CONVERSION AND EXCHANGE
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
another series of Preferred Stock or Common Stock or exchangeable for another
series of Preferred Stock, Common Stock or Debt Securities of the Company. The
Common Stock of the Company is described above under "Description of Common
Stock."
6
<PAGE> 16
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Company, or by any other method determined to be equitable by the Board of
Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock that ranks senior to the
Junior Liquidation Securities will be entitled to receive out of assets of the
Company available for distribution to shareholders, before any distribution is
made on any Junior Liquidation Securities, including Common Stock, distributions
upon liquidation in the amount set forth in the Prospectus Supplement relating
to such series of Preferred Stock. If the holders of the Preferred Stock of any
series and any other Parity Liquidation Securities are not paid in full, the
holders of the Preferred Stock of such series and the Parity Liquidation
Securities will share ratably in any such distribution of assets of the Company
in proportion to the full liquidation preferences to which each is entitled.
After payment of the full amount of the liquidation preference to which they are
entitled, the holders of such series of Preferred Stock will not be entitled to
any further participation in any distribution of assets of the Company.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a particular
series of Preferred Stock or except as expressly required by applicable law or
the Company's Certificate, the holders of shares of Preferred Stock will have no
voting rights.
DESCRIPTION OF PREFERRED SHARE PURCHASE RIGHTS
In 1989, the Company adopted a Shareholder Rights Plan (the "Rights Plan")
and declared a dividend of one Preferred Share Purchase Right (a "Right") for
each outstanding share of Common Stock held of record at the close of business
on August 7, 1989. Each Right entitles the registered holder, upon the
occurrence of certain events, to purchase from the Company a unit consisting of
one one-hundredth of a share (a "Unit") of Junior Participating Preferred Stock,
without par value, at a purchase price of $90 per Unit.
As distributed, the Rights will be attached to and will trade together with
the Common Stock. They may be exercised or traded separately only after the
earlier to occur of: (i) 10 days following a public announcement that a person
or group of persons has obtained the right to acquire beneficial ownership of
15% or more of the outstanding Common Stock, or (ii) 10 business days (or such
later date as the Board of Directors may determine) following the commencement
of a tender offer or exchange offer that would result in a person or group of
persons beneficially owning 15% or more of the outstanding Common Stock. In the
event that a person or group of persons acquires 15% or more of the outstanding
Common Stock (with certain exceptions), each right will thereafter vest and
entitle the holder to receive, upon exercise of the Right, Common Stock having a
value equal to two times the exercise price of that Right. Additionally, if the
Company is acquired in a merger or other business combination, or 50% or more of
the Company's assets or earning power is sold or transferred, each Right shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of that
Right.
7
<PAGE> 17
In connection with the Rights Plan, 800,000 shares of Junior Participating
Preferred Stock were authorized for issuance upon exercise of the Rights.
The Company may redeem the Rights at a price of $.01 per Right at any time
until ten days following the date a person or group of persons acquires 15% of
the Company's outstanding Common Stock. The Company may amend the Rights (other
than the basic economic terms of the Rights) at any time without shareholder
approval. The Rights will expire by their terms on August 7, 1999.
Under the Rights Plan, MIM will not be deemed an acquiring person unless
and until it becomes the beneficial owner of more than 33 1/3% of the shares of
outstanding Common Stock.
The existence of the Rights Plan and the Rights may, under certain
circumstances discourage, delay or prevent a change in control of the Company.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) does not purport to be complete and is subject to
and qualified in its entirety by reference to the forms of Deposit Agreement and
Deposit Receipt, included as exhibits to the Registration Statement of which
this Prospectus is a part.
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 the
Company so elects, the Depositary will issue 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 as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a depositary that is a bank or trust company having its
principal offices in the United States and having a combined capital surplus of
at least $50,000,000 (the "Depositary"). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption, conversion and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). The Depositary
Receipts will be distributed to those persons purchasing the fractional shares
of Preferred Stock in accordance with the terms of the offering.
Pending the preparation of definitive Depositary Receipts, the Depositary
shall, upon the written order of the Company or any holder of deposited
Preferred Stock, execute and deliver temporary Depositary Receipts which are
substantially identical to, and entitle the holders thereof to all the rights
pertaining to, the definitive Depositary Receipts. 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.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the deposited Preferred Stock to the record
holders of the Depositary Shares relating to such Preferred Stock in proportion
to the numbers of such Depositary Shares owned by such holders.
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. If the Depositary determines that it is not feasible to make
such distribution, it may, with the approval of the Company, sell such property
and distribute the net proceeds from such sale to such holders.
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REDEMPTION OF STOCK
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The Depositary Shares will be
redeemed by the Depositary at a price per Depositary Share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of Preferred Stock so redeemed. If fewer than all the Depositary Shares
will be redeemed, the Depositary Shares to be redeemed will be selected by the
Depositary by lot or pro rata or by any other equitable method as may be
determined by the Depositary.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited 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 series of 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 relevant series of Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of the Preferred Stock represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the amount
of such series of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable actions that may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting shares
of the Preferred Stock to the extent it does not receive specific instructions
from the holder of Depositary Shares representing such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of the 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
prejudices any substantially existing right of the holders of the Depositary
Shares representing Preferred Stock of any series will not be effective unless
such amendment has been approved by the record holders of a majority of the
Depositary Shares then outstanding. Every holder of an outstanding Depositary
Receipt at the time any such amendment becomes effective shall be deemed, by
continuing to hold such Depositary Receipt to consent and agree to such
amendment and to be bound by the Deposit Agreement as amended thereby. The
Deposit Agreement may be terminated by the Company or by the Depositary only
after (i) all outstanding Depositary Shares have been redeemed; or (ii) each
share of Preferred Stock has been converted into other Preferred Stock or Common
Stock or has been exchanged for Debt Securities; or (iii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of 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 pay all charges of the Depositary in connection with the initial deposit of
the relevant series of Preferred Stock and any redemption of such Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges or expenses as are expressly
provided in the Deposit Agreement to be for their accounts.
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 its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or
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trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward all reports and communications from the Company
that are delivered to the Depositary and that the Company is required to furnish
to the holders of the deposited Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of 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, Depositary Receipts or
shares of Preferred Stock unless satisfactory indemnity is furnished. They may
rely upon written advice of counsel or accountants, or upon information provided
by holders of Depositary Receipts or other persons believed to be competent and
on documents believed to be genuine.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities and the Convertible Debt Securities are to be issued
under an Indenture dated as of October 1, 1994 (the "Indenture"), between the
Company and Chemical Bank, as Trustee (the "Trustee"). The following summary
statements with respect to the Debt Securities and the Convertible Debt
Securities do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, the detailed provisions of the Indenture, the
form of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. Capitalized terms are defined in the Indenture unless
otherwise defined herein. Whenever any particular section of the Indenture or
any term defined therein is referred to, such section or definition is
incorporated herein by reference.
GENERAL
The Debt Securities and the Convertible Debt Securities offered hereby will
be limited to an aggregate initial offering price not to exceed U.S.
$300,000,000 or its equivalent in any other currency or composite currency,
determined at the applicable exchange rate at the time of sale. The Indenture
does not limit the amount of Debt Securities or Convertible Debt Securities
which can be issued thereunder and provides that additional Debt Securities or
Convertible Debt Securities may be issued in one or more series thereunder up to
the aggregate principal amount which may be authorized from time to time by the
Company's Board of Directors. The Debt Securities will be unsecured senior
obligations of the Company and will rank equally and ratably with all other
unsecured unsubordinated indebtedness of the Company. The Convertible Debt
Securities may be subordinated to the Senior Indebtedness.
Reference is made to the Prospectus Supplement relating to the particular
Debt Securities or Convertible Debt Securities offered thereby for the following
terms, where applicable, of the Debt Securities or Convertible Debt Securities:
(i) the specific designation of the Debt Securities or Convertible Debt
Securities; (ii) the denominations in which such Debt Securities or Convertible
Debt Securities are authorized to be issued; (iii) the aggregate principal
amount of such Debt Securities or Convertible Debt Securities; (iv) the date or
dates on which the principal of such Debt Securities or Convertible Debt
Securities will mature or the method of determining such date or dates; (v) the
price or prices (expressed as a percentage of the aggregate principal amount
thereof) at which the Debt Securities or Convertible Debt Securities will be
issued; (vi) the rate or rates (which may be fixed or variable) at which such
Debt Securities or Convertible Debt Securities will bear interest, if any, or
the method of calculating such rate or rates; (vii) the times and places where
principal of, premium, if any, and interest, if any, on such Debt Securities or
Convertible Debt Securities will be payable; (viii) the date, if any, after
which such Debt Securities or Convertible Debt Securities may be redeemed and
the redemption prices; (ix) the date or dates on which interest, if any, will be
payable and the record date or dates therefor or the method by which such date
or dates will be determined; (x) the period or periods within which, the price
or prices at which, the currency or currencies (including currency units) in
which, and the terms and conditions upon which, such Debt Securities or
Convertible Debt Securities may be
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redeemed, in whole or in part, at the option of the Company; (xi) the
obligation, if any of the Company to redeem or purchase such Debt Securities or
Convertible Debt Securities pursuant to any sinking fund or analogous
provisions, upon the happening of a specified event or at the option of a holder
thereof and the period or periods within which, the price or prices at which and
the terms and conditions upon which, such Debt Securities or Convertible Debt
Securities shall be redeemed or purchased, in whole or in part, pursuant to such
obligations; (xii) the terms and conditions upon which conversion of such
Convertible Debt Securities will be effected, including the conversion price,
the conversion period and other conversion provisions in addition to or in lieu
of those described below; (xiii) the currency or currency units for which such
Debt Securities or Convertible Debt Securities may be purchased or in which such
Debt Securities or Convertible Debt Securities may be denominated and/or the
currency or currency units in which principal of, premium, if any, and/or
interest, if any, on such Debt Securities or Convertible Debt Securities will be
payable and whether the Company or the holders of any such Debt Securities or
Convertible Debt Securities may elect to receive payments in respect of such
Debt Securities or Convertible Debt Securities in a currency or currency units
other than that in which such Debt Securities or Convertible Debt Securities are
stated to be payable; (xiv) if other than the principal amount thereof, the
portion of the principal amount of such Debt Securities or Convertible Debt
Securities which will be payable upon declaration of the acceleration of the
maturity thereof or the method by which such portion shall be determined; (xv)
the person to whom any interest on any such Debt Security or Convertible Debt
Security shall be payable if other than the person in whose name such Debt
Security or Convertible Debt Security is registered on the applicable record
date; (xvi) any addition to, or modification or deletion of, any Event of
Default or any covenant of the Company specified in the Indenture with respect
to such Debt Securities or Convertible Debt Securities; (xvii) the application,
if any, of such means of defeasance or covenant defeasance as may be specified
for such Debt Securities or Convertible Debt Securities; (xviii) whether such
Debt Securities or Convertible Debt Securities are to be issued in whole or in
part in the form of one or more temporary or permanent global securities and, if
so, the identity of the depositary for such global security or securities; (xix)
whether such Convertible Debt Securities shall be subordinated and subject to
the right to prior payment in full of all Senior Indebtedness; and (xx) any
other special terms pertaining to such Debt Securities or Convertible Debt
Securities. Unless otherwise specified in the applicable Prospectus Supplement,
the Debt Securities or Convertible Debt Securities will not be listed on any
securities exchange. Unless otherwise provided in the applicable Prospectus
Supplement, principal and premium, if any, or interest, if any, will be payable
and the Debt Securities or Convertible Debt Securities may be surrendered for
payment or transferred at the offices of the Trustee as paying and
authenticating agent, provided that payment of interest on Registered Securities
may be made at the option of the Company by check mailed to the address of the
person entitled thereto as it appears in the Security Register. Payment of Debt
Securities or Convertible Debt Securities in bearer form will be made at such
paying agencies outside of the United States as the Company may appoint.
(Sections 301 and 1002)
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities and Convertible Debt Securities will be issued in fully
registered form without coupons in denominations set forth in the Prospectus
Supplement. No service charge will be made for any transfer or exchange of such
Debt Securities or Convertible Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Section 305) Where Debt Securities and
Convertible Debt Securities of any series are issued in bearer form, the special
restrictions and considerations, including special offering restrictions and
special Federal income tax considerations, applicable to any such Debt
Securities or Convertible Debt Securities and to payment on and transfer and
exchange of such Debt Securities or Convertible Debt Securities will be
described in the Prospectus Supplement. Bearer Debt Securities and Convertible
Debt Securities will be transferrable by delivery. (Section 305)
Some of the Debt Securities and Convertible Debt Securities may be issued
at a discount (bearing no interest or interest at below market rates) ("Discount
Securities") to be sold at a substantial discount below their stated principal
amount. Federal income tax consequences and other special considerations
applicable to any such Debt Securities and Convertible Debt Securities or any
Debt Securities and Convertible Debt Securities which are denominated in a
currency or composite currency other than United States dollars will be
described in the applicable Prospectus Supplement.
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The Prospectus Supplement for a particular series may indicate terms for
redemption at the option of a Holder. Unless otherwise indicated in the
applicable Prospectus Supplement, the covenants contained in the Indenture and
the Debt Securities or Convertible Debt Securities (as the case may be) would
not provide for redemption at the option of a Holder nor necessarily afford
Holders thereof protection in the event of a highly leveraged or other
transaction that may adversely affect such Holders.
RESTRICTIVE COVENANTS
Definitions.
"Subsidiary" is defined to mean a corporation whose accounts are
consolidated with those of the Company in accordance with generally accepted
accounting principles. (Section 101)
"Significant Subsidiary" is defined to mean any Subsidiary of the Company
which owns a Principal Property and any Subsidiary which owns directly or
indirectly stock of a Significant Subsidiary. (Section 101)
"Consolidated Net Tangible Assets" is defined to mean the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting (a) all current liabilities (excluding any thereof constituting Funded
Debt by reason of being renewable or extendable) and (b) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense, and other
like intangibles, all as set forth on the most recent balance sheet of the
Company and its consolidated Subsidiaries and computed in accordance with
generally accepted accounting principles. (Section 101)
"Funded Debt" is defined to mean all indebtedness for money borrowed having
a maturity of more than 12 months from the date as of which the amount thereof
is to be determined or having a maturity of less than 12 months but by its terms
being renewable or extendable beyond 12 months from such date at the option of
the borrower. (Section 101)
"Principal Property" is defined to mean any smelters, refineries, mines,
concentrators or other facilities, located within the present 50 states of the
United States of America (other than its territories or possessions), owned by
the Company or any Subsidiary and the gross book value of which (without
deduction of any depreciation reserves) on the date as of which the
determination is being made exceeds 3% of Consolidated Net Tangible Assets,
other than any such facility or portion thereof which is pollution control or
other equipment or facility financed by obligations issued by a State or local
government unit and other than any smelters, refineries, mines, concentrators or
facilities or any portions thereof which the Board of Directors of the Company
declares by resolution are not of material importance to the total business
conducted by the Company and its Subsidiaries as an entirety. (Section 101)
"Nonrecourse Obligations" is defined to mean indebtedness or lease payment
obligations substantially related to (i) the acquisition of assets not currently
owned by the Company or any of its Significant Subsidiaries or (ii) the
financing of the construction or improvement of equipment, mines or facilities
involving the development of properties of the Company or any of its Significant
Subsidiaries, as to which the obligee with respect to such indebtedness or
obligation has no recourse to the general corporate funds or the assets, in
general, of the Company or any of its Significant Subsidiaries. (Section 1004)
"Debt" is defined to mean notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed. (Section 1004)
"Attributable Debt" is defined to mean as to any particular Capitalized
Lease under which any Person is at the time liable, at any date as of which the
amount thereof is to be determined, the total net amount of rent required to be
paid by such Person under such Capitalized Lease during the remaining primary
term thereof, discounted from the respective due dates thereof to such date at
the rate of interest per annum implicit in the terms of such Capitalized Lease,
as determined in good faith by the Company, compounded semi-annually. The net
amount of rent required to be paid under any such Capitalized Lease for any such
period shall be the amount of the rent payable by the lessee with respect to
such period, after excluding amounts required to be paid on account of
maintenance, repairs, insurance, taxes, assessments, water rates and similar
charges. In the case of any Capitalized Lease which is terminable by the lessee
upon the payment of a penalty, such net
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amount shall also include the amount of such penalty, but shall not include any
rent required to be paid under such Capitalized Lease subsequent to the first
date upon which it may be so terminated. (Section 101)
"Senior Indebtedness" is defined to mean all Debt of the Company, including
principal and interest (and premium, if any) (including, without limitation, any
interest that would accrue but for the occurrence of any event specified in
paragraphs (6) and (7) of "-- Events of Default") on such Debt except (i)
existing subordinated Debt Securities or subordinated Convertible Debt
Securities, (ii) such indebtedness as is by its terms expressly stated to be
junior in right of payment to the subordinated Debt Securities or subordinated
Convertible Debt Securities, and (iii) such indebtedness as is by its terms
expressly stated to rank pari passu with the subordinated Debt Securities or
subordinated Convertible Debt Securities. (Section 101)
RESTRICTIONS ON SECURED DEBT (SECTION 1004)
The Company has covenanted that it will not itself, and will not permit any
Subsidiary to, incur, issue, assume or guarantee any Debt secured after the date
of the Indenture by pledge of, or mortgage or other lien on ("Mortgage"), any
Principal Property of the Company or any Significant Subsidiary, or any shares
of stock or Debt of any Significant Subsidiary without effectively providing
that the Debt Securities or Convertible Debt Securities of all series issued
pursuant to the Indenture (together with, if the Company shall so determine, any
other Debt of the Company or such Significant Subsidiary then existing or
thereafter created which is not subordinate to the Debt Securities or
Convertible Debt Securities) shall be secured equally and ratably with (or, at
the option of the Company, prior to) such secured Debt, so long as such secured
Debt shall be so secured, unless after giving effect thereto, the aggregate
principal amount of all such secured Debt then outstanding which would otherwise
be prohibited, plus all Attributable Debt of the Company and its Significant
Subsidiaries in respect of sale and leaseback transactions (as defined in
"-- Restrictions on Sales and Leasebacks") occurring after the date of the
Indenture which would otherwise be prohibited by the covenant described in
"-- Restrictions on Sales and Leasebacks", would not exceed 10% of Consolidated
Net Tangible Assets. This restriction does not apply to, and there shall be
excluded in computing secured Debt for the purpose of such restriction, Debt
secured by:
(1) Mortgages on property of, or on any shares of stock or Debt of,
any corporation existing at the time such corporation becomes a Significant
Subsidiary;
(2) Mortgages in favor of the Company or any Significant Subsidiary;
(3) Mortgages 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 Mortgages for taxes, assessments or governmental charges or
levies in each case (i) not then due and delinquent or (ii) the validity of
which is being contested in good faith by appropriate proceedings, and
materialmen's, mechanics', carriers', workmen's, repairmen's, landlord's or
other like Mortgages, or deposits to obtain the release of such Mortgages;
(4) Mortgages on property, shares of stock or Debt existing at the
time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the purchase
price or construction cost thereof or to secure any Debt incurred prior to,
at the time of, or within 180 days after, the acquisition of such property
or shares or Debt or the completion of any such construction for the
purpose of financing all or any part of the purchase price or construction
cost thereof, provided that any such Mortgage shall only extend to the
property acquired or constructed or property on which the acquired or
constructed property is situated;
(5) Mortgages securing obligations issued by a State, territory or
possession of the United States of America, or any political subdivision of
any of the foregoing, to finance the acquisition or construction of
property, and on which the interest is not, in the opinion of tax counsel
of recognized standing or in accordance with a ruling issued by the
Internal Revenue Service, includible in gross income of the holder by
reason of Section 103(a) of the Internal Revenue Code (or any successor to
such provision) as in
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effect at the time of the issuance of such obligations, including, without
limitation, Debt related to the financing of pollution control or other
equipment or facilities financed by State or local government units;
(6) Mortgages created in connection with a project financed, or assets
acquired, with, and created to secure any Nonrecourse Obligations;
(7) Production payments or other related rights of others to the
output of mines, refineries, smelters, concentrators or production
facilities, including project financings, with respect to any property or
assets acquired, constructed or improved by the Company or a Subsidiary
with the proceeds of such project financings or Mortgages to secure payment
of workmen's compensation or to secure performance in connection with
tenders, leases of real property, bids or contracts or to secure (or in
lieu of) surety or appeal bonds and Mortgages made in the ordinary course
of business for similar purposes; and
(8) Any extension, renewal, refunding or replacement (or successive
extensions, renewals, refundings or replacements), as a whole or in part,
of any Mortgage referred to in the foregoing clauses (1) to (7), inclusive;
provided, however, that (i) such extension, renewal, refunding or
replacement Mortgage shall be limited to all or a part of the same
property, shares of stock or Debt that secured the Mortgage extended,
renewed, refunded or replaced (plus improvements on such property) and (ii)
the Debt secured by such Mortgage at such time is not increased.
RESTRICTIONS ON SALES AND LEASEBACKS (SECTION 1005)
The Company has covenanted that it will not itself, and will not permit any
Significant Subsidiary to, enter into any arrangement with any bank, insurance
company or other lender or investor (not including the Company or any
Significant Subsidiary) or to which any such lender or investor is a party,
providing for the leasing by the Company or any such Significant Subsidiary of
any Principal Property which has been or is to be sold or transferred by the
Company or such Significant 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
(each, a "sale and leaseback transaction") unless, after giving effect thereto,
the aggregate amount of all Attributable Debt with respect to all such
transactions occurring after the date of the Indenture and existing at such time
plus all secured Debt then outstanding of the Company and its Significant
Subsidiaries incurred after the date of the Indenture which would otherwise be
prohibited by the covenant described in "-- Restrictions on Secured Debt" above,
would not exceed 10% of Consolidated Net Tangible Assets. This restriction does
not apply to, and there shall be excluded from Attributable Debt in any
computation under such restriction, Attributable Debt with respect to any sale
and leaseback transaction if:
(1) the lease in such sale and leaseback transaction is for a period,
including renewals, of not in excess of three years, or
(2) such sale and leaseback transaction is entered into prior to, at
the time of, or within 180 days after the later of the acquisition of the
Principal Property to which such sale and leaseback transaction relates or
the completion of construction thereon, or
(3) the lease in such sale and leaseback transaction secures or
relates to obligations issued by a State, territory or possession of the
United States of America, or any political subdivision of any of the
foregoing, to finance the acquisition or construction of property, and on
which the interest is not, in the opinion of tax counsel of recognized
standing or in accordance with a ruling issued by the Internal Revenue
Service, includible in gross income of the holder by reason of Section
103(a) of the Internal Revenue Code (or any successor to such provision) as
in effect at the time of the issuance of such obligations, including,
without limitation, Debt related to the financing of pollution control or
other equipment or facilities financed by State or local government units,
or
(4) such sale and leaseback transaction is entered into between the
Company and a Significant Subsidiary or between Significant Subsidiaries,
or
(5) such sale and leaseback transaction is created in connection with
a project financed, or assets acquired, with, and such obligation
constitutes, a Nonrecourse Obligation, or
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(6) the Company or a Significant Subsidiary, within 180 days after the
sale or transfer shall have been made by the Company or by any such
Significant Subsidiary, applies an amount not less than the greater of (i)
the net proceeds of the sale of the Principal Property sold and leased back
pursuant to such arrangement or (ii) the fair market value of the Principal
Property so sold and leased back at the time of entering into such
arrangement (as determined by any two of the following officers of the
Company: the Chairman of the Board of Directors, the President, any Vice
President, the Treasurer and the Controller) to (x) the purchase of
property, facilities or equipment (other than the property, facilities or
equipment involved in such sale) which will constitute Principal Property
or (y) the retirement of Funded Debt of the Company or any Significant
Subsidiary; provided, however, that the amount to be applied to the
retirement of Funded Debt of the Company or any Significant Subsidiary
shall be reduced by (i) the principal amount of any Funded Debt (including
the Debt Securities or Convertible Debt Securities of any series) of the
Company or any Significant Subsidiary (or, if the Debt Securities or
Convertible Debt Securities of any series are Original Issue Discount
Securities, such portion of the principal amount as may be due and payable
with respect to such series pursuant to a declaration in accordance with
Section 502 of the Indenture), delivered within 180 days after such sale to
the Trustee or other applicable trustee for retirement and cancellation,
and (ii) the principal amount of Funded Debt, other than any Funded Debt
referred to in the immediately preceding clause (i) of this proviso,
voluntarily retired by the Company or a Significant Subsidiary within 180
days after such sale; and provided, further, that, notwithstanding the
foregoing, no retirement referred to in this clause (y) may be effected by
payment at Maturity or pursuant to any mandatory sinking fund payment or
any mandatory redemption provision.
SUBORDINATION
The Convertible Debt Securities may be subordinated and junior in right of
payment, to the extent set forth in the applicable Prospectus Supplement, to all
"Senior Indebtedness" of the Company as defined in the applicable Prospectus
Supplement.
EVENTS OF DEFAULT (SECTION 501)
The following are Events of Default with respect to Debt Securities or
Convertible Debt Securities of each series:
(1) default in the payment of the principal of, or any premium on, any
of the Debt Securities or Convertible Debt Securities of such series as and
when the same shall become due and payable either at Stated Maturity, upon
redemption, by declaration or otherwise; or
(2) default in the payment of any installment of interest, if any,
upon any of the Debt Securities or Convertible Debt Securities of such
series as and when it shall become due and payable, and continuance of such
default for a period of 30 days; or
(3) default in the payment of any sinking fund payment, when and as
due and payable by the terms of the Debt Securities or Convertible Debt
Securities of such series; or
(4) default in the performance, or breach, of any covenant or
agreement of the Company in the Indenture or the Debt Securities or
Convertible Debt Securities of such series (other than a covenant or
agreement a default in the performance or a breach of which is otherwise
specified as an Event of Default or which has expressly been included in
the Indenture and designated as being solely for the benefit of such series
of Debt Securities or Convertible Debt Securities other than such series),
and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, 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 Debt Securities or Convertible Debt
Securities of such series then outstanding, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Indenture; or
(5) a default under any Debt in excess of $25,000,000 of the Company
or any Significant Subsidiary (including a default with respect to Debt
Securities or Convertible Debt Securities of any series other
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than such series) or under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
such indebtedness for money borrowed by the Company or any Significant
Subsidiary (including the Indenture), whether such indebtedness is existing
or shall thereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without such
involuntary acceleration having been rescinded or annulled within a period
of 30 days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Debt
Securities or Convertible Debt Securities of such series then Outstanding a
written notice specifying such default and requiring the Company to cause
such acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" under the Indenture; provided, however, that, if
such default shall be remedied or cured by the Company or waived by the
holders of such indebtedness, then the Event of Default under the Indenture
by reason thereof shall be deemed likewise to have been thereupon remedied,
cured or waived without any action on the part of the Trustee or any of the
holders; or
(6) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law then or thereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or for all or
substantially all of its property or ordering the winding up or liquidation
of its affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
(7) the Company shall commence a voluntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law then or thereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of the
Company or for all or substantially all of its property, or make any
general assignment for the benefit of creditors; or
(8) any other Event of Default provided with respect to Debt
Securities or Convertible Debt Securities of such series.
ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
If an Event of Default with respect to Debt Securities or Convertible Debt
Securities of any series at the time Outstanding occurs and is continuing, then,
and in each and every such case, unless the principal of all of the Debt
Securities or Convertible Debt Securities of such series shall have already
become due and payable, either the Trustee or the holders of not less than 25%
in aggregate principal amount of the Debt Securities or Convertible Debt
Securities of such series then outstanding, by notice in writing to the Company
(and to the Trustee if given by Holders), may declare the entire principal
amount (or, if the Debt Securities or Convertible Debt Securities of such series
are Original Issue Discount Securities (as defined in the Indenture), such
portion of the principal as may be specified in the terms of such series) of all
of the Debt Securities or Convertible Debt Securities of such series and any
premium and interest accrued thereon to be due and payable immediately, and upon
any such declaration such principal amount (or specified amount) and any premium
and interest accrued thereon shall become immediately due and payable.
However, at any time after a declaration of acceleration with respect to
Debt Securities or Convertible Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration has been obtained, the
Holders of a majority in principal amount of Outstanding Securities of that
series may, under certain circumstances, rescind and annul such acceleration.
(Section 502) For information as to waiver of defaults, see "Modification and
Waiver."
Reference is made to the Prospectus Supplement relating to each series of
Debt Securities or Convertible Debt Securities which are Discount Securities for
the particular provisions relating to acceleration of the Maturity of a portion
of the principal amount of such Discount Securities upon the occurrence of an
Event of Default and the continuation thereof.
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The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture 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 indemnification of the Trustee, the Holders of a majority in
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 or Convertible Debt Securities of
that series. (Section 512)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1006)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of 66 2/3% in principal amount
of the Outstanding Securities of each series affected thereby (each such series
voting as a single class); 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, or any
installment of principal of or interest on, any Debt Security or Convertible
Debt Security, (b) reduce the principal amount thereof, or reduce any premium
thereof or change the time of payment of any premium thereon, (c) reduce the
rate or change the time of payment of interest thereon, if any, (d) reduce any
amount payable on redemption of any such Security (if any), (e) reduce the
Overdue Rate thereof, (f) change the place or currency of payment of principal
of, or any premium or interest thereon, (g) reduce the amount of principal of
any Original Issue Discount Security payable upon acceleration of the Maturity
thereof or the amount thereof provable in bankruptcy, (h) impair, if applicable,
any right of repayment at the option of the Holder, (i) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security or Convertible Debt Security, or (j) reduce the percentage in principal
amount of Outstanding Securities of any series, the consent of the Holders of
which is required for modification or amendment of the Indenture or for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults, or (k) alter or impair the right of any Holder to convert Securities
of any series, if applicable, at the rate and upon the terms established
pursuant to the Indenture. (Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all Debt Securities or
Convertible Debt Securities of that series waive, insofar as that series is
concerned, compliance by the Company with certain restrictive provisions of the
Indenture. (Section 1007) The Holders of a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all Debt
Securities or Convertible Debt Securities of that series waive any past default
under the Indenture with respect to Debt Securities or Convertible Debt
Securities of that series, except a default not theretofore cured in the payment
of the principal of (or premium, if any) or interest on any Debt Securities or
Convertible Debt Securities of that series or in respect of any provision which
under the Indenture cannot be modified or amended without the consent of the
Holder of each Outstanding Security of that series affected. (Section 513)
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more supplemental indentures without the consent of the
Holders of any of the Debt Securities or Convertible Debt Securities in order
(i) to evidence the succession of another corporation to the Company and the
assumption of the covenants of the Company by a successor to the Company; (ii)
to add to the covenants of the Company or surrender any right or power of the
Company; (iii) to add additional Events of Default with respect to any series of
Debt Securities or Convertible Debt Securities; (iv) to add to, change or
eliminate any provision affecting Debt Securities or Convertible Debt Securities
not yet issued; (v) to secure the Debt Securities or Convertible Debt
Securities; (vi) to establish the form or terms of Debt Securities or
Convertible Debt Securities; (vii) to evidence and provide for a successor
Trustee; and (viii) to cure any ambiguity or correct any mistake or to correct
any defect or supplement any inconsistent provisions or to make any other
provisions
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with respect to matters or questions arising under the Indenture, provided that
such action does not adversely affect the interests of any Holder of Debt
Securities or Convertible Debt Securities of any series. (Section 901)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate or merge with or into, or transfer or lease
all or substantially all its assets to, any Person, and any other Person may not
consolidate or merge with or into, the Company, unless (i) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or which acquires or leases all or substantially all the assets of the
Company is organized and existing under the laws of the United States, any state
thereof or the District of Columbia and expressly assumes all of the Company's
obligations under the Debt Securities or Convertible Debt Securities and under
the Indenture, (ii) immediately after giving effect to such 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 happened and be continuing (provided that
a transaction will only be deemed to be in violation of this condition (ii) as
to any series of Debt Securities or Convertible Debt Securities as to which such
Event of Default or such event shall have occurred and be continuing), and (iii)
certain other conditions are met.
SATISFACTION, DISCHARGE, AND DEFEASANCE PRIOR TO MATURITY OR REDEMPTION
Covenant Defeasance of any Series
If the Company shall deposit with the Trustee, in trust, at or before
maturity or redemption of the Debt Securities or Convertible Debt Securities of
any series, money and/or Government Obligations in such amounts and maturing at
such times such that the proceeds of such obligations to be received upon the
respective maturities and interest payment dates of such obligations will
provide funds sufficient, without reinvestment, in the opinion of a nationally
recognized firm of independent public accountants, to pay when due the principal
of (and premium, if any) and each installment of principal of (and premium, if
any) and interest on such series of Debt Securities or Convertible Debt
Securities at the Stated Maturity of such principal or installment of principal
or interest, as the case may be, then the Company may omit to comply with
certain of the terms of the Indenture with respect to that series of Debt
Securities or Convertible Debt Securities, including the restrictive covenants
described above, and the Events of Default described in clauses (4) and (5)
under "Events of Default" above shall not apply. Defeasance of Debt Securities
or Convertible Debt Securities of any series is subject to the satisfaction of
certain conditions, including among others: (1) the absence of an Event of
Default or event which, with notice or lapse of time, would become an Event of
Default at the date of the deposit, (2) the delivery to the Trustee by the
Company of an Opinion of Counsel to the effect that Holders of the Debt
Securities or Convertible Debt Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and covenant defeasance and will be subject to Federal income tax in the same
amounts and in the same manner and at the same times as would have been the case
if such deposit and covenant defeasance had not occurred, (3) such covenant
defeasance will not cause any Debt Securities or Convertible Debt Securities of
such series then listed on any nationally recognized securities exchange to be
delisted, (4) that such covenant defeasance will not result in a breach of, or
constitute a default under, any instrument by which the Company is bound and (5)
such covenant defeasance shall not cause the Trustee for the Securities of such
series to have conflicting interest for purposes of the Trust Indenture Act with
respect to any securities of the Company. If indicated in the Prospectus
Supplement relating to a series of Debt Securities or Convertible Debt
Securities, in addition to the obligations of the United States of America or
obligations guaranteed by the United States of America, Government Obligations
may include obligations of the government, and obligations guaranteed by such
government, issuing the currency or currency unit in which Debt Securities or
Convertible Debt Securities of such series are payable. (Section 1304)
Defeasance of any Series
Upon the deposit of money or securities as contemplated in the preceding
paragraph and the satisfaction of certain other conditions, the Company may also
omit to comply with its obligation duly and punctually to
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pay the principal of (and premium, if any) and interest on a particular series
of Debt Securities or Convertible Debt Securities, and any Events of Default
with respect thereto shall not apply, and thereafter, the Holders of Debt
Securities or Convertible Debt Securities of such series shall be entitled only
to payment out of the money or securities deposited with the Trustee. (Section
1304) Such conditions include among others: (1) the absence of an Event of
Default or event which, with notice or lapse of time, would become an Event of
Default at the date of the deposit, (2) the delivery to the Trustee by the
Company of an Opinion of Counsel, which refers to or is based on a ruling of the
Internal Revenue Service or a change in the applicable Federal income tax law
occurring after the date of the Indenture, to the effect that Holders of the
Debt Securities or Convertible Debt Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and the satisfaction, discharge and defeasance, and will be subject to Federal
income tax in the same amounts and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not occurred, (3)
such defeasance will not cause any Debt Securities or Convertible Debt
Securities of such series then listed on any nationally recognized securities
exchange to be delisted, (4) that such defeasance will not result in a breach
of, or constitute a default under, any instrument by which the Company is bound
and (5) such defeasance shall not cause the Trustee for the Securities of such
series to have a conflicting interest for the purpose of the Trust Indenture Act
with respect to any securities of the Company. (Section 1304)
Federal Income Tax Consequences
Under current Federal income tax law, the deposit and defeasance described
above under "Covenant Defeasance of any Series" will not result in a taxable
event to any Holder of Debt Securities or Convertible Debt Securities or
otherwise affect the Federal income tax consequences of an investment in Debt
Securities or Convertible Debt Securities of any series.
The Federal income tax treatment of the deposit and defeasance described
above under "Defeasance of any Series" is not clear. A deposit and defeasance
may be treated as a taxable exchange of such Debt Securities or Convertible Debt
Securities for beneficial interests in the trust consisting of the deposited
money or securities. In that event, a Holder of Debt Securities or Convertible
Debt Securities would be required to recognize gain or loss equal to the
difference between the Holder's adjusted basis for the Debt Securities or
Convertible Debt Securities and the fair market value of the Holder's beneficial
interest in such trust. Thereafter, such Holder would be required to include in
income a share of the income, gain, and loss of the trust. As described above,
it is a condition to such a deposit and defeasance that the Company obtain an
opinion of tax counsel to the effect that such deposit and defeasance will not
alter the Holder's tax consequences that would have been applicable in the
absence of the deposit and defeasance. Purchasers of the Debt Securities or
Convertible Debt Securities should consult their own advisers with respect to
the tax consequences to them of such deposit and defeasance, including the
applicability and effect of tax laws other than Federal income tax law.
CONVERTIBLE DEBT SECURITIES
The following provisions will apply to Convertible Debt Securities, unless
otherwise provided in the applicable Prospectus Supplement for such Convertible
Debt Securities. The holder of any Convertible Debt Securities will have the
right exercisable at any time prior to maturity, or prior to such other date as
may be specified in the applicable Prospectus Supplement, unless previously
redeemed by the Company, to convert such Convertible Debt Securities into shares
of Common Stock or Preferred Stock of the Company at the conversion price set
forth in the applicable Prospectus Supplement, subject to adjustment. The holder
of Convertible Debt Securities may convert any portion thereof which is $1,000
or any integral multiple of $1,000. In the case of Convertible Debt Securities
called for redemption, conversion rights will expire at the close of business on
the date fixed for the redemption unless the Company shall default in payment of
the redemption price, except that in the case of redemption at the option of the
Holder thereof, if applicable, the conversion right will terminate upon receipt
of written notice of the exercise of such option. (Section 1402) In certain
events, the conversion price will be subject to adjustment as set forth in the
applicable Prospectus Supplement. Fractional shares of Common Stock or Preferred
Stock will not be issued upon conversion, but,
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in lieu thereof, the Company will pay a cash adjustment based on the then
current market price for the Common Stock or Preferred Stock. (Section 1406)
Subordination of Convertible Debt Securities
The obligation of the Company to make payment on account of the principal
of, and premium, if any, and interest on the Convertible Debt Securities may be
subordinated and junior in right of payment, to the extent and in the manner set
forth in the Prospectus Supplement relating to any Convertible Debt Securities,
to the prior payment in full of all Senior Indebtedness of the Company.
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, dissolution, winding-up, total or partial liquidation,
reorganization or other similar proceedings in respect of the Company or a
substantial part of its property, whether voluntary or involuntary, or (b) that
(i) a default shall have occurred with respect to the payment of principal of
(and premium, if any) or any interest on or other monetary amounts due and
payable on any Senior Indebtedness in an amount in excess of $25,000,000 or (ii)
there shall have occurred an event of default (other than a default in the
payment of principal, premium, if any, or interest, or other monetary amounts
due and payable) in respect of any Senior Indebtedness, as defined therein or in
the instrument under which the same is outstanding, permitting the holder or
holders thereof to accelerate the maturity thereof and such default or event of
default shall not have been cured or waived or shall not have ceased to exist,
or (iii) separately with respect to each series of Securities, if immediately
after giving effect to any payment of principal, premium, if any, or interest on
such series of Securities there would occur an event of default (other than a
default in the payment of principal or interest or other monetary amounts due
and payable) in respect of any Senior Indebtedness, as defined therein or in the
instrument under which the same is outstanding, permitting the holder or holders
thereof to accelerate the maturity thereof and such default or event of default
shall not have been cured or waived or shall not have ceased to exist, or (c)
that the principal of and accrued interest on any subordinated Convertible Debt
Securities shall have been declared due and payable upon an Event of Default
pursuant to the Indenture and such declaration shall not have been rescinded and
annulled as provided therein, then the holders of all Senior Indebtedness shall
first be entitled to receive payment of the full amount unpaid thereon, or
provision shall be made, in accordance with the relevant Senior Indebtedness,
for such payment in money or money's worth, before the Holders of any of the
subordinated Convertible Debt Securities are entitled to receive any payment on
account of the principal of (and premium, if any) or any interest on the
indebtedness evidenced by such subordinated Convertible Debt Securities or any
cash payments to repurchase such subordinated Convertible Debt Securities at the
option of the holders thereof or otherwise. By reason of such subordination, in
the event of insolvency, creditors of the Company (including holders of
subordinated Convertible Debt Securities) who are not holders of Senior
Indebtedness may recover less, ratably, than holders of Senior Indebtedness.
REGARDING THE TRUSTEE
The Indenture, by reference to Section 315 of the Trust Indenture Act,
provides that, except during the continuance of an Event of Default, the Trustee
shall perform only such duties as are specifically set forth in the Indenture.
During the continuance of any Event of Default, the Trustee shall exercise such
of the rights and powers vested in it under the Indenture and use the same
degree of care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
The Trustee may acquire and hold Debt Securities or Convertible Debt
Securities and, subject to certain conditions, otherwise deal with the Company
as if it were not the Trustee under the Indenture. (Section 605)
The Company maintains deposit accounts and conducts other banking
transactions with the Trustee in the ordinary course of the Company's business.
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DESCRIPTION OF WARRANTS
DEBT WARRANTS
The Company may issue, together with other Securities or separately, Debt
Warrants for the purchase of Debt Securities or Convertible Debt Securities. The
Debt Warrants are to be issued under Debt Warrant Agreements (each a "Debt
Warrant Agreement") to be entered into between the Company and a bank or trust
company, as Debt Warrant Agent (the "Debt Warrant Agent"), all as to be set
forth in a Prospectus Supplement relating to Debt Warrants. A copy of the form
of Debt Warrant Agreement, including the form of Warrant Certificates
representing the Debt Warrants (the "Debt Warrant Certificates"), reflecting the
alternative provisions to be included in the Debt Warrant Agreements that will
be entered into with respect to particular offerings of Debt Warrants, is filed
as an exhibit to the Registration Statement of which this Prospectus forms part.
The following summaries of certain provisions of the Debt Warrant Agreement and
the Debt Warrant Certificates do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Debt Warrant Agreement and the Debt Warrant Certificates, respectively,
including the definitions therein of certain capitalized terms not defined
herein.
General. Reference is made to the applicable Prospectus Supplement for the
terms of Debt Warrants in respect of which this Prospectus is being delivered,
the Debt Warrant Agreement relating to such Debt Warrants and the Debt Warrant
Certificates representing such Debt Warrants, including the following: (1) the
designation, aggregate principal amount and terms of the Debt Securities or
Convertible Debt Securities purchasable upon exercise of such Debt Warrants and
the procedures and conditions relating to the exercise of such Debt Warrants;
(2) the designation and terms of any related Debt Securities or Convertible Debt
Securities with which such Debt Warrants are issued and the number of such Debt
Warrants issued with each such Debt Security or Convertible Debt Security; (3)
the date, if any, on and after which such Debt Warrants and the related Debt
Securities or Convertible Debt Securities will be separately transferable; (4)
the principal amount of Debt Securities or Convertible Debt Securities
purchasable upon exercise of each Debt Warrant and the price at which such
principal amount of Debt Securities or Convertible Debt Securities may be
purchased upon such exercise; (5) the date on which the right to exercise such
Debt Warrants shall commence and the date on which such right shall expire; (6)
if the Debt Securities or Convertible Debt Securities purchasable upon exercise
of such Debt Warrants are original issue discount Debt Securities, a discussion
of Federal income tax considerations applicable thereto; and (7) whether the
Debt Warrants represented by the Debt Warrant Certificates will be issued in
registered or bearer form, and, if registered, where they may be transferred and
registered.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of
their Debt Warrants, holders of Debt Warrants will not have any of the rights of
holders of the Debt Securities or Convertible Debt Securities purchasable upon
such exercise and will not be entitled to payments of principal of (and premium,
if any) or interest, if any, on the Debt Securities or Convertible Debt
Securities purchasable upon such exercise.
Exercise of Debt Warrants. Each Debt Warrant will entitle the holder to
purchase for cash such principal amount of Debt Securities or Convertible Debt
Securities at such exercise price as shall in each case be set forth in, or be
determinable as set forth in, the applicable Prospectus Supplement relating to
the Debt Warrants offered thereby. Debt Warrants may be exercised at any time up
to 5:00 p.m. New York City time on the expiration date set forth in the
applicable Prospectus Supplement. After 5:00 p.m. New York City time on the
expiration date, unexercised Debt Warrants will become void.
Debt Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Debt Warrants. Upon receipt of payment and the Debt
Warrant Certificate properly completed and duly executed at the corporate trust
office of the Debt Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, forward the
Debt Securities or Convertible Debt Securities purchasable upon such exercise.
If less than all of the Debt Warrants represented by such
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Debt Warrant Certificate are exercised, a new Debt Warrant Certificate will be
issued for the remaining amount of Debt Warrants.
COMMON STOCK WARRANTS
The Company may issue, together with other securities or separately, Common
Stock Warrants for the purchase of Common Stock. The Common Stock Warrants are
to be issued under Common Stock Warrant Agreements (each a "Common Stock Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as Common Stock Warrant Agent (the "Common Stock Warrant Agent"), all as to be
set forth in the applicable Prospectus Supplement relating to Common Stock
Warrants in respect of which this Prospectus is being delivered. A copy of the
form of Common Stock Warrant Agreement, including the form of Warrant
Certificates representing the Common Stock Warrants (the "Common Stock Warrant
Certificates") reflecting the provisions to be included in the Common Stock
Warrant Agreements that will be entered into with respect to particular
offerings of Common Stock Warrants, is filed as an exhibit to the Registration
Statement of which this Prospectus forms part. The following summaries of
certain provisions of the Common Stock Warrant Agreement and the Common Stock
Warrant Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Common
Stock Warrant Agreement and the Common Stock Warrant Certificates, respectively,
including the definitions therein of certain capitalized terms not defined
herein.
General. Reference is made to the applicable Prospectus Supplement for the
terms of Common Stock Warrants in respect of which this Prospectus is being
delivered, the Common Stock Warrant Agreement relating to such Common Stock
Warrants and the Common Stock Warrant Certificates representing such Common
Stock Warrants, including the following: (1) the offering price of such Common
Stock Warrants, if any; (2) the procedures and conditions relating to the
exercise of such Common Stock Warrants; (3) the number of shares of Common Stock
purchasable upon exercise of each Common Stock Warrant and the initial price at
which such shares may be purchased upon exercise; (4) the date on which the
right to exercise such Common Stock Warrants shall commence and the date on
which such right shall expire; (5) a discussion of U.S. Federal income tax
considerations applicable to the exercise of Common Stock Warrants; (6) call
provisions of such Common Stock Warrants, if any; and (7) any other terms of the
Common Stock Warrants.
Prior to the exercise of their Common Stock Warrants, holders of the Common
Stock Warrants will not have any of the rights of holders of the Common Stock
purchasable upon such exercise, and will not be entitled to any dividend
payments on the Common Stock purchasable upon such exercise.
Exercise of Stock Warrants. Each Common Stock Warrant will entitle the
holder to purchase for cash such number of shares of Common Stock at such
exercise price as shall in each case be set forth in, or be determinable as set
forth in, the applicable Prospectus Supplement relating to the Common Stock
Warrants offered thereby. Unless otherwise specified in the applicable
Prospectus Supplement, Common Stock Warrants may be exercised at any time up to
5:00 p.m. New York City time on the expiration date set forth in the applicable
Prospectus Supplement. After 5:00 p.m. New York City time on the expiration
date, unexercised Common Stock Warrants will become void.
Common Stock Warrants may be exercised as to be set forth in the applicable
Prospectus Supplement relating to the Common Stock Warrants in respect of which
this Prospectus is being delivered. Upon receipt of payment and the Common Stock
Warrant Certificates properly completed and duly executed at the corporate trust
office of the Common Stock Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Company will, as soon as practicable,
forward a certificate representing the number of shares of Common Stock
purchasable upon such exercise. If less than all of the Common Stock Warrants
represented by such Common Stock Warrant Certificate are exercised, a new Common
Stock Warrant Certificate will be issued for the remaining amount of Common
Stock Warrants.
Antidilution Provisions. Unless otherwise specified in the applicable
Prospectus Supplement, the exercise price payable and the number of shares
purchasable upon the exercise of each Common Stock Warrant will be subject to
adjustment in certain events, including (1) the issuance of a stock dividend to
holders of Common Stock or a combination, subdivision or reclassification of
Common Stock; (2) the
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issuance of rights, warrants or options to all holders of Common Stock entitling
the holders thereof to purchase Common Stock for an aggregate consideration per
share less than the current market price per share of the Common Stock; or (3)
any distribution by the Company to the holders of its Common Stock of evidences
of indebtedness of the Company or of assets (excluding cash dividends or
distributions payable out of capital surplus and dividends and distributions
referred to in (1) above). No fractional shares will be issued upon exercise of
Common Stock Warrants, but the Company will pay the cash value of any fractional
shares otherwise issuable.
PREFERRED STOCK WARRANTS
The Company may issue, together with other securities or separately,
Preferred Stock Warrants for the purchase of Preferred Stock or Convertible
Preferred Stock. The Preferred Stock Warrants are to be issued under Preferred
Stock Warrant Agreements (each a "Preferred Stock Warrant Agreement") to be
entered into between the Company and a bank or trust company, as Preferred Stock
Warrant Agent (the "Preferred Stock Warrant Agent"), all as to be set forth in
the applicable Prospectus Supplement relating to the Preferred Stock Warrants in
respect of which this Prospectus is being delivered. A copy of the form of
Preferred Stock Warrant Agreement, including the form of Warrant Certificates
representing the Preferred Stock Warrants (the "Preferred Stock Warrant
Certificates") reflecting the provisions to be included in the Preferred Stock
Warrant Agreements that will be entered into with respect to particular
offerings of Preferred Stock Warrants, is filed as an exhibit to the
Registration Statement of which this Prospectus forms part. The following
summaries of certain provisions of the Preferred Stock Warrant Agreement and the
Preferred Stock Warrant Certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Preferred Stock Warrant Agreement and the Preferred Stock
Warrant Certificates, respectively, including the definitions therein of certain
capitalized terms not defined herein.
General. Reference is made to the applicable Prospectus Supplement for the
terms of Preferred Stock Warrants in respect of which this Prospectus is being
delivered, the Preferred Stock Warrant Agreement relating to such Preferred
Stock Warrants and the Preferred Stock Warrant Certificates representing such
Preferred Stock Warrants, including the following: (1) the offering price of
such Preferred Stock Warrants, if any; (2) the procedures and conditions
relating to the exercise of such Preferred Stock Warrants; (3) the number of
shares of Preferred Stock or Convertible Preferred Stock purchasable upon
exercise of such Preferred Stock Warrant and the initial price at which such
shares may be purchased upon exercise; (4) the date on which the right to
exercise such Preferred Stock Warrants shall commence and the date on which such
right shall expire; (5) a discussion of the U.S. Federal income tax
considerations applicable to the exercise of Preferred Stock Warrants; (6) call
provisions of such Preferred Stock Warrants, if any; and (7) any other terms of
the Preferred Stock Warrants.
Prior to the exercise of their Preferred Stock Warrants, holders of
Preferred Stock Warrants will not have any of the rights of holders of the
Preferred Stock or Convertible Preferred Stock purchasable upon such exercise,
and will not be entitled to any dividend payments on the Preferred Stock or
Convertible Preferred Stock purchasable upon such exercise.
Exercise of Stock Warrants. Each Preferred Stock Warrant will entitle the
holder to purchase for cash such number of shares of Preferred Stock or
Convertible Preferred Stock at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the applicable Prospectus
Supplement relating to the Preferred Stock Warrants offered thereby. Unless
otherwise specified in the applicable Prospectus Supplement, Preferred Stock
Warrants may be exercised at any time up to 5:00 p.m. New York City time on the
expiration date set forth in the applicable Prospectus Supplement. After 5:00
p.m. New York City time on the expiration date, unexercised Preferred Stock
Warrants will become void.
Preferred Stock Warrants may be exercised as to be set forth in the
applicable Prospectus Supplement relating to the Preferred Stock Warrants in
respect of which this Prospectus is being delivered. Upon receipt of payment and
the Preferred Stock Warrant Certificates properly completed and duly executed at
the corporate trust office of the Preferred Stock Warrant Agent or any other
office indicated in the applicable Prospectus Supplement, the Company will, as
soon as practicable, forward a certificate representing the number of shares
23
<PAGE> 33
of Preferred Stock purchasable upon such exercise. If less than all of the
Preferred Stock Warrants represented by such Preferred Stock Warrant Certificate
are exercised, a new Preferred Stock Warrant Certificate will be issued for the
remaining amount of Preferred Stock Warrants.
CURRENCY WARRANTS
The Company may issue, together with Debt Securities or Debt Warrants or
separately, Currency Warrants either in the form of Currency Put Warrants
entitling the holders thereof to receive from the Company the Cash Settlement
Value in U.S. dollars of the right to sell a specified amount of a specified
foreign currency or currency units for a specified amount of U.S. dollars, or in
the form of Currency Call Warrants entitling the holders thereof to receive from
the Company the Cash Settlement Value in U.S. dollars of the right to purchase a
specified amount of a specified foreign currency or currency units for a
specified amount of U.S. dollars. The spot exchange rate of the applicable Base
Currency, upon exercise, as compared to the U.S. dollar, will determine whether
the Currency Warrants have a Cash Settlement Value on any given day prior to
their expiration.
The Currency Warrants are to be issued under a Currency Warrant Agreement
to be entered into between the Company and a bank or trust company, as Currency
Warrant Agent (the "Currency Warrant Agent"), all as to be set forth in the
applicable Prospectus Supplement. A copy of the form of Currency Warrant
Agreement, including the forms of Global Warrant Certificates representing the
Currency Put Warrants and Currency Call Warrants (the "Currency Warrant
Certificates"), reflecting the provisions to be included in the Currency Warrant
Agreement that will be entered into with respect to particular offerings of
Currency Warrants, is filed as an exhibit to the Registration Statement of which
this Prospectus forms part. The description of the Currency Warrants contained
herein and the following summaries of certain provisions of the Currency Warrant
Agreement and the Currency Warrant Certificates do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Currency Warrant Agreement and the Currency Warrant
Certificates, respectively, including the definitions therein of certain
capitalized terms not defined herein.
General. Reference is made to the applicable Prospectus Supplement for the
terms of Currency Warrants in respect of which this Prospectus is being
delivered, the Currency Warrant Agreement relating to such Currency Warrants and
the Currency Warrant Certificates representing such Currency Warrants, including
the following: (1) whether such Currency Warrants will be Currency Put Warrants,
Currency Call Warrants, or both; (2) the formula for determining the Cash
Settlement Value, if any, of each Currency Warrant; (3) the procedures and
conditions relating to the exercise of such Currency Warrants; (4) the
circumstances which will cause the Currency Warrants to be deemed to be
automatically exercised; (5) any minimum number of Currency Warrants which must
be exercised at any one time, other than upon automatic exercise; and (6) the
date on which the right to exercise such Currency Warrants will commence and the
date on which such right will expire.
Book-Entry Procedures and Settlement. Except as may otherwise be provided
in the applicable Prospectus Supplement, the Currency Warrants will be issued in
the form of Global Currency Warrant Certificates, registered in the name of a
depositary or its nominee. Holders will not be entitled to receive definitive
certificates representing Currency Warrants. A holder's ownership of a Currency
Warrant will be recorded on or through the records of the brokerage firm or
other entity that maintains such holder's account. In turn, the total number of
Currency Warrants held by an individual brokerage firm for its clients will be
maintained on the records of the depositary in the name of such brokerage firm
or its agent. Transfer of ownership of any Currency Warrant will be effected
only through the selling holder's brokerage firm.
Exercise of Currency Warrants. Each Currency Warrant will entitle the
holder to receive the Cash Settlement Value of such Currency Warrant on the
applicable Exercise Date, in each case as such terms will be defined in the
applicable Prospectus Supplement. If not exercised prior to 3:00 p.m., New York
City time, on the fifth New York Business Day preceding the expiration date,
Currency Warrants will be deemed automatically exercised on the expiration date.
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<PAGE> 34
CORPORATE PROVISIONS
CERTIFICATE OF INCORPORATION AND BY-LAWS
The Company's Restated Certificate of Incorporation (the "Certificate") and
By-laws ("By-laws") provide for the classification of the Company's Board of
Directors into three classes to be elected to staggered three-year terms;
limitations on the shareholders' ability to nominate individuals for election as
directors; and the inclusion of provisions which require that special meetings
of shareholders may only be called by the Chairman of the Board, the President
or the Board pursuant to a resolution approved by a majority of the entire
Board.
The Certificate also provides that the affirmative vote of the holders of
at least 80% of the outstanding shares of all classes of capital stock entitled
to vote, considered as one class, is required to authorize the Company to enter
into certain transactions with any individual, corporation or other person that
is the beneficial owner of more than 10% of the outstanding shares of any class
of capital stock of the Company. Beneficial ownership of shares by a person
includes shares which such person has the right to acquire by agreement or by
exercise of warrants, options or other rights, shares so owned by others with
which such person has an agreement with respect to the acquisition, holding,
voting or disposition of Asarco capital stock or assets, or shares owned by
"affiliates" or "associates" of such person (as such terms are defined in the
rules and regulations of the Commission). The transactions with a 10% beneficial
owner that are subject to such special shareholder approval requirements
include: (a) any merger or consolidation of the Company or of any subsidiary of
the Company with or into such beneficial owner, (b) any sale, lease, exchange or
other disposition of all or any material part of the assets of the Company or of
any subsidiary of the Company to or with such beneficial owner, and (c) any
issuance or transfer of securities of the Company to such beneficial owner. The
special shareholder approval described in this paragraph does not apply to any
agreement for the merger of any subsidiary of the Company with the Company if
the Company is the surviving corporation. No amendment to the provisions of the
Company's Certificate outlined in this paragraph may be made without the
affirmative vote of the holders of at least 80% of the outstanding shares of all
classes of voting stock entitled to vote, considered as one class.
In addition to any vote required by law or by provisions outlined in the
preceding paragraph, the Certificate provides that a majority of the Continuing
Directors (as defined) of the Company must approve certain transactions,
including transactions between the Company and any person (or any affiliate or
associate of such person) who at the time of the transaction or during the
preceding two years was the beneficial owner of 10% or more of the voting stock
of the Company or who has announced the intention of becoming the beneficial
owner of such stock (such person is referred to herein as an "interested
shareholder"). A "Continuing Director" is defined to include the current members
of the Board of Directors and any future members who are not affiliates or
associates of an interested shareholder at the time of the transaction and who
either became a member of the Board before the interested shareholder became or
threatened to become a beneficial owner of 10% of the voting stock or who was
nominated or elected by a majority of the other Continuing Directors. The
transactions with an interested shareholder that are subject to the approval of
the Continuing Directors include: (a) the sale or other disposal of assets or
securities to an interested shareholder or any other arrangement for the benefit
of an interested shareholder where the assets or securities sold or disposed of
have a fair market value of more than $10,000,000 or 1% of the book value of the
Company's consolidated total assets; (b) any arrangement pursuant to which the
interested shareholder or parties related to such interested shareholder would
have any management responsibility over the Company's affairs, other than as a
director; (c) the adoption of any plan or proposal for the liquidation or
dissolution of the Company or any amendment to the Company's By-laws; and (d)
any reclassification of securities, recapitalization or other transaction which
has the effect, directly or indirectly, of increasing an interested
shareholder's proportionate share of the outstanding capital stock of the
Company or a subsidiary. No amendment to the provision of the Company's
Certificate outlined in this paragraph may be made without the affirmative vote
of the holders of at least 80% of the outstanding voting stock of the Company
and the holders of at least a majority of the voting stock who are not
affiliated or associated with the interested shareholder. By act of the
Continuing Directors, the Board is empowered to waive the requirement that such
80% approval and majority approval be obtained.
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<PAGE> 35
The Company's Board of Directors believes that the provisions described
above will help assure that all of the Company's shareholders will be treated
similarly if certain kinds of business combinations are effected. However, these
provisions also may have the effect of deterring hostile takeovers or delaying
or preventing changes in control or management of the Company, and may make it
more difficult to accomplish certain transactions that are opposed by the
incumbent Board of Directors.
NEW JERSEY LAW AND OTHER LIMITATIONS UPON TRANSACTIONS WITH "INTERESTED
SHAREHOLDERS"
The New Jersey Business Corporation Act provides that in determining
whether a proposal or offer to acquire a corporation is in the best interest of
the corporation, the Board of Directors may, in addition to considering the
effects of any action on shareholders, consider any of the following: (a) the
effects of the proposed action on the corporation's employees, suppliers,
creditors and customers, (b) the effects on the community in which the
corporation operates and (c) the long-term as well as short-term interests of
the corporation and its shareholders, including the possibility that these
interests may best be served by the continued independence of the corporation.
The statute further provides that if, based on these factors, the Board of
Directors determines that any such offer is not in the best interest of the
corporation, it may reject the offer. These provisions may make it more
difficult for a shareholder to challenge the Board of Directors' rejection of,
and may facilitate the Board of Directors' rejection of, an offer to acquire the
Company.
The Company is also subject to the New Jersey Shareholders Protection Act
(the "Protection Act"), which prohibits certain New Jersey corporations from
engaging in business combinations (including mergers, consolidations,
significant asset dispositions and certain stock issuances) with any Interested
Shareholder (defined to include, among others, any person that becomes a
beneficial owner of 10% or more of the affected corporation's voting power) for
five years after such person becomes an Interested Shareholder, unless the
business combination is approved by the Board of Directors prior to the date the
shareholder became an Interested Shareholder. In addition, the Protection Act
prohibits any business combination at any time with an Interested Shareholder
other than a transaction that (i) is approved by the Board of Directors prior to
the date the Interested Shareholder became an Interested Shareholder, or (ii) is
approved by the affirmative vote of the holders of two-thirds of the voting
stock not beneficially owned by the Interested Shareholder, or (iii) satisfies
certain "fair price" and related criteria.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company has a shareholder-approved By-law provision requiring it to
indemnify its directors and officers to the fullest extent permitted in certain
circumstances, to advance expenses, to maintain insurance and to follow certain
other procedures. Provisions of the Certificate eliminate the personal monetary
liability of directors and officers for breaches of duty, except for (i)
breaches of such person's duty of loyalty, (ii) those instances where such
person is found not to have acted in good faith or in knowing violation of law
and (iii) those instances where such person received an improper personal
benefit as the result of such breach.
TRANSFER AGENT
The transfer agent for the Common Stock is The Bank of New York.
PLAN OF DISTRIBUTION
GENERAL
The Company and the Selling Stockholder may sell Securities to or through
underwriters, and also may sell Securities directly to other purchasers or
through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
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<PAGE> 36
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions under the Act.
Any such underwriter or agent will be identified, and any such compensation
received from the Company will be described, in the applicable Prospectus
Supplement.
The Preferred Stock, the Convertible Debt Securities, the Debt Securities,
the Depositary Shares and the Warrants will each be a new issue of Securities
("New Issues") with no established trading market. Underwriters and agents to
whom New Issues are sold by the Company for public offering and sale may make a
market in such New Issues, but such 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
the New Issues.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act, or to contribution with respect to payments
required to be made in respect thereof.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other persons will not have any responsibility in respect of the validity or
performance of such contracts.
EXPERTS
The financial statements and financial statement schedules included in the
latest Annual Report of the Company on Form 10-K incorporated herein by
reference, have been audited by Coopers & Lybrand, independent accountants, as
stated in their report included in such Form 10-K, and have been incorporated by
reference herein in reliance upon such report given upon the authority of that
firm as experts in accounting and auditing.
With respect to any unaudited interim financial information included in the
Company's Quarterly Reports on Form 10-Q, that are or will be incorporated
herein by reference, Coopers & Lybrand applies limited procedures in accordance
with professional standards for reviews of such information. As stated in any of
its reports that are included in the Company's Quarterly Reports on Form 10-Q
that are or will be incorporated herein by reference, Coopers & Lybrand did not
audit and did not express an opinion on such interim financial information.
Accordingly, the degree of reliance on any of its reports on such information
should be restricted in light of the limited nature of the review procedures
applied. Coopers & Lybrand has advised the Company that it is not subject to the
liability provisions of Section 11 of the Act for any of its reports on such
unaudited interim financial information because those reports are not "reports"
or a "part" of the Registration Statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.
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<PAGE> 37
LEGAL MATTERS
The validity of the issuance of the Securities offered hereby will be
passed upon for the Company by White & Case, New York, New York, and certain
legal matters will be passed upon by Augustus B. Kinsolving, General Counsel of
the Company, and for the underwriters, if any, by Cravath, Swaine & Moore, New
York, New York.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds...................... S-2
Recent Developments.................. S-2
Copper Prices........................ S-5
Ratio of Earnings to Fixed Charges... S-5
Capitalization....................... S-6
Selected Consolidated Financial
Information........................ S-7
Description of Debentures............ S-8
Underwriting......................... S-8
Legal Matters........................ S-9
Notice to Canadian Residents......... S-9
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents
by Reference....................... 2
The Company.......................... 3
Use of Proceeds...................... 3
Ratio of Earnings to Fixed Charges... 3
Selling Stockholder.................. 4
Description of Common Stock.......... 5
Description of Preferred Stock....... 5
Description of Preferred Share
Purchase Rights.................... 7
Description of Depositary Shares..... 8
Description of Debt Securities....... 10
Description of Warrants.............. 21
Corporate Provisions................. 25
Plan of Distribution................. 26
Experts.............................. 27
Legal Matters........................ 28
</TABLE>
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ASARCO
Incorporated
$150,000,000
% Debentures Due 2025
P R O S P E C T U S S U P P L E M E N T
(CS FIRST BOSTON LOGO)
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