<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NOS. 33-62145
33-54097
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 17, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 18, 1995)
12,000,000 SHARES
[LOGO] CYPRUS AMAX
MINERALS COMPANY
COMMON STOCK
--------
All of the shares of common stock (the "Common Stock") offered hereby are
being sold by Cyprus Amax Minerals Company ("Cyprus Amax" or the "Company"). Of
the 12,000,000 shares being offered, 9,600,000 shares are being offered hereby
for sale in the United States and Canada by the U.S. Underwriters (the "U.S.
Offering") and 2,400,000 shares are being offered in a concurrent international
offering outside the United States and Canada by the Managers (the
"International Offering" and, together with the U.S. Offering, the
"Offerings"). The public offering price and the aggregate underwriting discount
and commission per share will be identical for both the U.S. Offering and the
International Offering. See "Underwriting."
The Common Stock is traded on the New York Stock Exchange under the symbol
"CYM." The reported last sale price of the Common Stock on the New York Stock
Exchange on May 16, 1996 was $27 1/8 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
--------
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 ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- --------------------------------------------------
<S> <C> <C> <C>
Per Share(3) $ $ $
- --------------------------------------------------
Total(4) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) For information regarding indemnification of the U.S. Underwriters and the
Managers, see "Underwriting."
(2) Before deducting expenses estimated at $ payable by the Company.
(3) Each share of Common Stock will have attached one Preferred Share Purchase
Right issued under the Company's Rights Plan which will initially trade
with the share. Each outstanding share of Common Stock currently also has
one Preferred Share Purchase Right attached thereto.
(4) The Company has granted the U.S. Underwriters a 30-day option to purchase
up to 1,800,000 additional shares of Common Stock on the same terms as set
forth above solely to cover over-allotments, if any. See "Underwriting." If
such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ , $ and
$ , respectively.
--------
The shares of Common Stock are being offered by the several U.S. Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be made available for delivery on or about
June , 1996 at the office of Smith Barney Inc., 333 West 34th Street, New
York, New York 10001.
--------
SMITH BARNEY INC.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
UBS SECURITIES
June , 1996
<PAGE>
IN CONNECTION WITH THE OFFERINGS, THE U.S. UNDERWRITERS AND THE MANAGERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE,
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WITH THE EXCEPTION OF HISTORICAL MATTERS, THE MATTERS DISCUSSED IN THIS
PROSPECTUS SUPPLEMENT, THE PROSPECTUS ACCOMPANYING THIS PROSPECTUS SUPPLEMENT
AND THE DOCUMENTS INCORPORATED BY REFERENCE THEREIN ARE FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM PROJECTED RESULTS. SUCH FORWARD-LOOKING
STATEMENTS INCLUDE STATEMENTS REGARDING EXPECTED COMMENCEMENT DATES OF MINING
OR MINERAL PRODUCTION OPERATIONS, PROJECTED QUANTITIES OF FUTURE MINING OR
MINERAL PRODUCTION, AND ANTICIPATED PRODUCTION RATES, COSTS AND EXPENDITURES,
AS WELL AS PROJECTED DEMAND OR SUPPLY FOR THE PRODUCTS THE COMPANY PRODUCES,
WHICH WILL AFFECT BOTH SALES LEVELS AND PRICES REALIZED BY THE COMPANY.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, AMONG
OTHERS, RISKS AND UNCERTAINTIES RELATING TO: GENERAL DOMESTIC AND
INTERNATIONAL ECONOMIC AND POLITICAL CONDITIONS, THE CYCLICAL AND VOLATILE
PRICES OF COPPER, MOLYBDENUM, GOLD AND OTHER MINERALS, POLITICAL AND ECONOMIC
RISKS ASSOCIATED WITH FOREIGN OPERATIONS, UNANTICIPATED GROUND AND WATER
CONDITIONS, UNANTICIPATED GRADE AND GEOLOGICAL PROBLEMS, METALLURGICAL AND
OTHER PROCESSING PROBLEMS, AVAILABILITY OF MATERIALS AND EQUIPMENT, THE TIMING
OF RECEIPT OF NECESSARY GOVERNMENTAL PERMITS, THE ABILITY TO RETAIN AND OBTAIN
COAL CONTRACTS, THE OCCURRENCE OF UNUSUAL WEATHER OR OPERATING CONDITIONS,
FORCE MAJEURE EVENTS, LOWER THAN EXPECTED ORE GRADES AND HIGHER THAN EXPECTED
STRIPPING RATIOS, THE FAILURE OF EQUIPMENT OR PROCESSES TO OPERATE IN
ACCORDANCE WITH SPECIFICATIONS AND EXPECTATIONS, LABOR RELATIONS, ACCIDENTS,
DELAYS IN ANTICIPATED START-UP DATES, ENVIRONMENTAL COSTS AND RISKS, THE
RESULTS OF FINANCING EFFORTS AND FINANCIAL MARKET CONDITIONS, AND OTHER
FACTORS DESCRIBED HEREIN AND IN THE COMPANY'S SECURITIES AND EXCHANGE
COMMISSION FILINGS. MANY OF SUCH FACTORS ARE BEYOND THE COMPANY'S ABILITY TO
CONTROL OR PREDICT.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED. READERS ARE
CAUTIONED NOT TO PUT UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. FOR A
DISCUSSION OF CERTAIN OF SUCH RISKS AND UNCERTAINTIES, SEE "RISK FACTORS"
CONTAINED HEREIN, AND THE DISCUSSIONS CONTAINED IN THE COMPANY'S ANNUAL
REPORTS ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q AND CURRENT REPORTS ON
FORM 8-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY
DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE PUBLICLY THESE FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The information in this Prospectus Supplement is qualified in its entirety by
the more detailed information and consolidated financial statements and notes
thereto appearing or incorporated by reference in the accompanying Prospectus.
In determining whether to purchase the shares of Common Stock being offered,
prospective investors should consider carefully the information contained in
this Prospectus Supplement and the accompanying Prospectus and the information
incorporated by reference therein. See "Risk Factors." Unless the context
otherwise requires, references to "Cyprus Amax" or the "Company" in this
Prospectus Supplement and the accompanying Prospectus include Cyprus Amax
Minerals Company and its subsidiaries.
THE COMPANY
Cyprus Amax is a leading U.S. copper and coal producer and the world's
largest producer of molybdenum and lithium, and holds significant positions in
gold. The Company is a diversified mining company engaged, directly or through
its subsidiaries and affiliates, in the exploration for and extraction,
processing, and marketing of mineral resources.
The Company's strategy is to increase worldwide revenue and net income by
seeking to expand its core businesses and to lower its costs of production.
Specific components of the Company's growth strategy include seeking (i) to
increase its copper reserves and production and to reduce its copper costs;
(ii) to expand its value-added molybdenum-based chemical applications; (iii) to
increase coal reserves and production and to reduce coal costs; and (iv)
through its approximately 51% owned subsidiary, Amax Gold Inc. ("Amax Gold"),
to increase its gold reserve base and production volume and to reduce its cash
cost of production. The Company reviews, evaluates and engages in discussions
with respect to possible business combinations from time to time and may engage
in significant business acquisitions or dispositions in the future.
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock Offered(1)(2)
U.S. Offering............................. 9,600,000 Shares
International Offering.................... 2,400,000 Shares
Total................................... 12,000,000 Shares
Common Stock to be Outstanding After the
Offerings(2)(3):........................... 105,086,166 Shares
Use of Proceeds............................. The net proceeds of the Offerings
will be used for general
corporate purposes. See "Use of
Proceeds."
NYSE symbol................................. CYM
</TABLE>
- --------
(1) Each share of Common Stock will have attached one Preferred Share Purchase
Right issued under the Company's Rights Plan which initially will trade
with the share. Such Rights may have certain antitakeover effects.
(2) Does not include up to 1,800,000 shares of Common Stock which the U.S.
Underwriters have the option to purchase solely to cover over-allotments.
If the U.S. Underwriters exercise their over-allotment option in full,
106,886,166 shares of Common Stock will be outstanding after the Offerings.
(3) Excludes options to purchase shares of Common Stock, which as of May 16,
1996 consisted of 4,477,103 shares of Common Stock underlying outstanding
stock options.
S-3
<PAGE>
RISK FACTORS
Purchasers of shares of Common Stock carefully should consider and evaluate
all of the information set forth in this Prospectus Supplement and the
Prospectus accompanying this Prospectus Supplement and all the information
incorporated by reference in such Prospectus, including but not limited to the
risk factors listed below.
The Company's business operations are subject to a number of risks and
hazards inherent in the mining industry, including but not limited to those
summarized below, which materially and adversely may affect the Company's
business, financial condition, results of operations and cash flows and the
anticipated development of existing properties and reserves and of future
projects, production quantities and rates, overall costs and expenditures and
expected production commencement dates. The Company is also subject to a
number of risks not specific to the mining industry, including but not limited
to general economic and financial market conditions.
METALS PRICE VOLATILITY
A significant portion of the Company's revenues are derived from the sale of
metals such as copper and molybdenum and, to a lesser extent, gold through the
Company's majority owned subsidiary Amax Gold. Thus, the Company's business,
financial condition, results of operations and cash flows are very sensitive
to changes in the prices of these commodities. Metals prices fluctuate widely
and are affected by numerous factors beyond the Company's control or ability
to predict, including but not limited to domestic and international economic
and political conditions, industry inventory levels and capacity, global and
regional demand and production, the availability and costs of substitute
materials, speculative activities and inflationary expectations. While the
Company historically has used limited financial risk management techniques to
reduce a portion of the Company's exposure to the volatility of market prices,
there can be no assurance that it will continue to do so or that it will be
able to do so effectively in the future. In addition, depending upon the
specific techniques employed, market conditions and other factors, such
activities could reduce the earnings or cash flow which the Company otherwise
would realize or result in losses.
OPERATING AND PROJECT DEVELOPMENT RISKS
The Company's business operations are subject to risks and hazards inherent
in the mining industry, including but not limited to unanticipated grade and
other geological problems, water conditions, surface or underground
conditions, metallurgical and other processing problems and mechanical
equipment performance problems, the unavailability of materials and equipment,
accidents, labor force and force majeure factors, unanticipated transportation
costs and weather conditions, prices and production levels of by-products, and
potential political instabilities of foreign governments, any of which
materially and adversely can affect, among other things, the development of
properties, production quantities and rates, costs and expenditures and
production commencement dates.
In the case of development projects, there generally is no operating history
upon which to base estimates of future operating costs and capital
requirements. The economic feasibility of any individual project is based
upon, among other things: the interpretation of geological data obtained from
drill holes and other sampling techniques; feasibility studies, which derive
estimates of cash operating costs based upon anticipated tonnage and grades of
ore to be mined and processed; the configuration of the ore body; expected
recovery rates of metals from the ore; comparable facility and equipment
costs; anticipated climatic conditions; estimates of labor productivity and
other factors. Such development projects also are subject to the successful
completion of final feasibility studies, issuance of necessary permits and
receipt of adequate financing. Accordingly, uncertainties related to
operations are magnified in the case of development projects.
As a result of the foregoing risks, among other things, expenditures on any
and all projects, actual production quantities and rates, and cash operating
costs materially and adversely may be affected and may differ materially from
anticipated expenditures, production quantities and rates, and costs, just as
estimated production dates may be delayed materially, in each case, especially
to the extent development projects are involved. Any such events materially
and adversely can affect the Company's business, financial condition, results
of operations and cash flows.
S-4
<PAGE>
RELIANCE ON COAL CONTRACTS
A substantial portion of the Company's coal is sold pursuant to long-term
coal supply contracts which are significant to the stability and profitability
of the Company's operations. During 1995, a majority of the Company's revenues
from coal sales resulted from sales under contracts with an initial term of
more than one year. Some of the Company's contracts currently have prices
which exceed the price at which such coal could be sold in the spot market.
The loss of certain of its long-term contracts could have a material adverse
effect on the Company's business, financial condition, results of operations
and cash flow. Most of the Company's coal contracts with an initial term of
more than one year are subject to price adjustment provisions which, subject
to certain limits, permit an increase or decrease periodically in the contract
price. Some of the Company's coal supply contracts also contain price re-
opener provisions which provide for the periodic upward or downward adjustment
of contract prices; such provisions can lead to disputes with customers and
potential modification or early termination of the contract.
COMPETITION
All of the Company's products are sold in highly competitive markets.
Certain foreign and domestic competitors of the Company benefit from higher-
grade ore bodies than some of those owned by the Company. Some foreign
producers maintain maximum production to meet government-imposed employment
and foreign exchange revenue goals, sometimes without regard to the condition
of the world market for a particular mineral or the profitability of their
mining operations. The Company also competes with manufacturers of other
materials, including but not limited to aluminum, stainless steel, plastics
and fiber optic cables, in the case of copper, and other energy sources such
as natural gas, in the case of coal. Should prices for such products decrease
or should prices for the Company's products increase, use of these alternative
materials may increase and use of the Company's products may decrease. Also,
other producers have announced plans to add lithium carbonate production
capacity at low cost. See "Competitive Conditions" in the Company's 1995
Annual Report on Form 10-K.
ENVIRONMENTAL AND OTHER REGULATION OF MINING ACTIVITY
The mining and mineral processing industries are subject to extensive
regulations for the protection of the environment in the United States and
foreign countries, including but not limited to regulations relating to air
and water quality, mine reclamation, remediation, solid and hazardous waste
handling and disposal and the promotion of occupational safety. These laws
often require parties to fund remedial action or to pay damages regardless of
fault. Environmental laws also often impose liability with respect to divested
or terminated operations even if the operations were divested or terminated
many years ago. As a result, the Company generally is required to engage in
substantial remedial and investigatory activities, including but not limited
to assessment and clean up work. Although the Company believes that it has
adequate reserves with respect to environmental matters, there can be no
assurance that the amount of capital expenditures and other costs and expenses
which will be required to complete remedial actions and otherwise to comply
with applicable environmental laws will not exceed the amounts reflected in
the Company's reserves or will not have a material adverse effect on the
Company's business, financial condition, results of operations or cash flows.
From time to time the Company is cited for noncompliance with applicable
environmental laws and regulations. However, the Company expects to be able to
comply in all material respects with existing laws and regulations. See
"Environmental Matters" and "Item 3. Legal Proceedings" in the Company's 1995
Annual Report on Form 10-K.
The mining operations of the Company also are subject to inspection and
regulation by the United States and foreign governments under a variety of
laws and regulations. Current and future regulations or regulatory
interpretations do or may require significant expenditures for compliance
which may increase the Company's mine development and operating costs and may
require the Company to modify or curtail its operations. The Company cannot
predict the likely impact of future or pending legislation on its business,
financial condition, results of operations or cash flows.
RESERVE LEVELS
There are a number of uncertainties inherent in estimating quantities of
reserves, including many factors beyond the control of the Company. The
reserve data set forth in or incorporated by reference in this Prospectus
S-5
<PAGE>
Supplement or the accompanying Prospectus are in large part estimates only. No
assurance can be given that the volume and grade of reserves recovered and
rates of production will not be less than anticipated. Declines in the market
price of a particular metal or in coal also may render reserves containing
relatively lower grades of mineralization, or reduced quality of coal,
uneconomic to exploit. If the price realized by the Company for a particular
commodity were to decline substantially below the price at which ore reserves
were calculated for a sustained period of time, the Company potentially could
experience reductions in reserves and asset write-downs. Under certain such
circumstances, the Company may discontinue the development of a project or
mining at one or more of its properties. Further, changes in operating and
capital costs and other factors, including but not limited to short-term
operating factors such as the need for sequential development of ore bodies
and the processing of new or different ore grades, may materially and
adversely affect reserves.
COMPETITION FOR PROPERTIES; EXPLORATION RISKS
Since mines have limited lives based on proven ore reserves, the Company
continually seeks to replace and expand its reserves. Mineral exploration, at
both newly acquired properties and existing mining operations, is highly
speculative in nature, involves many risks and frequently is nonproductive.
Once mineral deposits are discovered, it may take a number of years from
initial preparatory work until production is possible, during which time the
economic feasibility of production may change. Substantial expenditures are
required to establish ore reserves through drilling to determine metallurgical
processes required for extraction from ore and, in the case of new properties,
to construct mining and processing facilities.
The Company encounters strong competition from other mining companies in
connection with the acquisition of properties producing or capable of
producing metals and coal. As a result of this competition, some of which is
with companies with greater financial resources than the Company, the Company
may be unable to acquire attractive mining properties on terms it considers
acceptable. In addition, there are a number of uncertainties inherent in any
program relating to the location of economic ore reserves, the development of
appropriate metallurgical processes, the receipt of necessary governmental
permits and the construction of mining and processing facilities. Accordingly,
there can be no assurance that the Company's acquisition and exploration
programs will yield new reserves to replace and expand current reserves.
FOREIGN OPERATIONS
Certain of the Company's reserves and facilities are located in foreign
countries, including Chile, Peru, Russia, Australia, Canada, the Netherlands
and the United Kingdom. Such foreign reserves and facilities may be materially
and adversely affected by exchange controls, currency fluctuations, ownership
limitations, expropriation, taxation and laws or policies of particular
countries, as well as the laws or policies of the United States affecting
foreign trade, investment and taxation. The Company also may be affected
materially and adversely by the policies and practices of multinational
political or financial institutions.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
are estimated to be $ ($ if the U.S. Underwriters exercise their over-
allotment option in full), after deducting underwriting discounts and
commissions and other expenses of the Company. Such net proceeds will be used
for general corporate purposes, which may include refinancings of
indebtedness, working capital, capital expenditures, acquisitions and
repurchases and redemptions of securities.
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of March 31, 1996, and as adjusted to give effect to the
consummation of the Offerings and the application of the estimated net
proceeds therefrom. See "Use of Proceeds." This table assumes no exercise of
the over-allotment option granted to the U.S. Underwriters in connection with
the Offerings.
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt(1)................................ $ 306 $ 306
========== ==========
Long-term debt.................................... $ 1,857 $ 1,857
Capital lease obligations......................... 141 141
Shareholders' equity
Preferred Stock, $1 par value, 20,000,000 shares
authorized:
$4.00 Series A Convertible Stock, $50 stated
value 4,666,667 authorized, 4,664,783 issued
and outstanding................................ 5 5
Series A Preferred Stock, 1,500,000 shares
authorized, none issued or outstanding
Common Stock, without par value, 150,000,000
shares authorized, 96,030,183 shares issued..... 1 1
Paid-in surplus.................................. 2,950
Accumulated deficit.............................. (426) (426)
Other............................................ 6 6
---------- ----------
2,536
Treasury stock at cost, 2,878,145 shares......... (66) (66)
Loan to savings plan............................. (62) (62)
---------- ----------
Total shareholders' equity.................. 2,408
---------- ----------
Total capitalization(2)..................... $ 4,406 $
========== ==========
</TABLE>
- --------
(1) Includes current portion of long-term debt.
(2) Does not include short-term debt.
S-7
<PAGE>
THE COMPANY
Cyprus Amax is a leading U.S. copper and coal producer and the world's
largest producer of molybdenum and lithium, and holds significant positions in
gold. The Company is a diversified mining company engaged, directly or through
its subsidiaries and affiliates, in the exploration for and extraction,
processing, and marketing of mineral resources.
The Company's strategy is to increase worldwide revenue and net income by
seeking to expand its core businesses and to lower its costs of production.
Specific components of the Company's growth strategy include seeking (i) to
increase its copper reserves and production and to reduce copper costs; (ii)
to expand its value-added molybdenum-based chemical applications; (iii) to
increase coal reserves and production and to reduce coal costs; and (iv)
through its approximately 51% owned subsidiary, Amax Gold, to increase its
gold reserve base and production volume and to reduce its cash cost of
production. The Company reviews, evaluates and engages in discussions with
respect to possible business combinations from time to time and may engage in
significant business acquisitions or dispositions in the future.
Cyprus Amax operates in three principal industry segments:
Copper/Molybdenum, Coal, and Other (which includes Gold, Lithium, Exploration
and Businesses Sold/Non-Operating).
COPPER AND MOLYBDENUM
The Copper/Molybdenum segment explores for, mines, processes and markets
copper and molybdenum and certain other by-product minerals primarily in North
and South America. The Company operates three major copper mines in Arizona,
one in Peru, and one primary molybdenum mine in Colorado. Additionally, the
Company operates two copper rod plants, a copper smelter and a copper refinery
in the United States. The Company also processes molybdenum concentrates at
its conversion plants in the United States and Europe. In 1995, the Company
produced 687 million pounds of copper and 75 million pounds of molybdenum.
Copper and molybdenum accounted for $1,720 million of segment revenues and
$584 million of segment operating income for the year ended December 31, 1995.
The Company's objective is to improve its copper asset base and to expand
its presence in value-added molybdenum chemical applications. The Company's
near-term goals include increasing annual copper production to approximately
one billion pounds primarily of low cost SX-EW copper and geographically
diversifying its production base by the end of 1997. In June 1994, Cyprus Amax
acquired a 51% interest in El Abra, a significant copper deposit in Chile for
approximately $330 million. Construction commenced in February 1995, and
initial production is expected to start in the fourth quarter of 1996 with
full production expected to commence in the first quarter of 1997. Once full
production begins, El Abra is expected to produce at an annualized rate for
1997 of approximately 250 million pounds of copper (Cyprus Amax's share). See
"Risk Factors--Operating and Project Development Risks."
COAL
The Coal segment explores for, mines, cleans, markets and sells coal to
electric utilities and industrial users. The majority of the Company's coal is
produced in the United States and sold to domestic electric utilities under
contracts with an initial term of at least one year. The Company also holds an
approximately 42% interest in Oakbridge Limited and a 50% interest in the
Springvale mine, which was acquired in February 1996, both of which are
Australian coal operations. In 1995, the Company produced 81 million tons of
coal worldwide, including 6 million tons of production representing the
Company's share of Oakbridge Limited. In 1995, the Coal segment's domestic
operations accounted for $1,298 million of segment revenues and $137 million
of segment operating income, excluding write-downs and special items. See
"Risk Factors--Reliance on Coal Contracts."
The Company's objective in the Coal segment is to increase coal reserves and
production and to reduce coal costs. The Company expects to increase coal
output to approximately 92 million tons of annual production by the end of
1997, including its share of Oakbridge and Springvale. The Company possesses
substantial compliance and low-sulfur U.S. coal reserves (approximately 74%
and 11%, respectively, of its developed domestic 1995 proved and probable
reserves of approximately 1.6 billion tons). Total domestic 1995 proved and
probable reserves were approximately 2.4 billion tons. Management believes
Cyprus Amax's Australian and certain Western U.S. operations are well-
positioned to serve the expanding Pacific Rim steam coal market.
S-8
<PAGE>
GOLD
Cyprus Amax owns approximately 51% of Amax Gold, which is engaged in the
mining and processing of gold and silver ore and in the exploration for, and
acquisition and development of, gold-bearing properties, principally in North
and South America and Russia. In 1995, Amax Gold produced a total of 238,000
ounces of gold.
The Company's objective, through Amax Gold, is to seek to increase its
reserve base and production volume and to reduce its cash cost of production.
Amax Gold completed construction of its 50% owned Refugio gold project in
Chile in late 1995. Although such project experienced mechanical problems
involving its ore crushers and is still in the start-up stage, the project's
initial gold pour occurred in April 1996. Other projects under construction
include Amax Gold's Fort Knox project in Alaska and the Company's 50% owned
Kubaka project in far eastern Russia; production from these two projects is
expected to commence in early 1997. In the fourth quarter of 1995, Cyprus Amax
agreed to sell its interest in the Kubaka project to Amax Gold in exchange for
shares of common stock of Amax Gold, subject to certain conditions. The Fort
Knox and Kubaka projects both have experienced material project capital cost
overruns. See "Risk Factors--Operating and Project Development Risks."
Amax Gold is a publicly traded company, the common stock of which is listed
on the New York Stock Exchange under the symbol "AU."
LITHIUM
The Lithium division is a major producer of a variety of lithium products
and has production facilities in the United States and Chile. Management
believes that the Company is the world's largest and lowest-cost producer of
lithium carbonate. The Company has benefited from recent process innovations
and cost containment programs while setting sales, operating and financial
records in 1995. Other producers have announced plans to add lithium carbonate
production capacity at low cost. In response, the Company is expanding its
downstream value-added production facilities.
S-9
<PAGE>
SUMMARY RESERVE AND PRODUCTION DATA
The following table presents reserve information of Cyprus Amax as of
December 31, 1991 through 1995, and selected operating statistics for the
years then ended. Proved reserves represent those reserves that, under
currently anticipated conditions, would be commercially recoverable from known
deposits with a high degree of certainty, except that, as noted below, gold is
stated in contained ounces. Probable reserves represent reserves that are less
well-defined than proved reserves but which have been indicated to exist on
the basis of geological and engineering data. Reserve estimates were prepared
by Cyprus Amax's engineers. Reserves of entities proportionally consolidated
are shown at Cyprus Amax's ownership percentage. See "Risk Factors--Reserve
Levels."
<TABLE>
<CAPTION>
AS OF OR FOR YEAR ENDED DECEMBER 31,
---------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
COPPER
Proved and probable reserves
(billion saleable pounds).. 8.8 14.3 13.7 23.8(1) 22.6(1)
Production (million
pounds).................... 644 662 632 648 687
Average sales realization
($/lb)..................... 1.06 1.04 0.94 1.09 1.33
Net cash cost ($/lb)........ 0.74 0.73 0.72 0.69 0.57
MOLYBDENUM
Proved and probable reserves
(billion saleable pounds).. 0.8 0.8 2.0(2) 2.1 2.1
Production (million
pounds).................... 36 40 28 57 75
Average realization ($/lb).. 2.83 2.65 2.82 3.77 7.53
COAL
Proved and probable reserves
(million tons)(3).......... 745 664 2,681(4) 2,538 2,396
Production (million
tons)(3)................... 17 19 27 75(5) 75
Average realization
($/ton).................... 24.63 23.88 20.80 16.12(5) 16.25
Average cash cost ($/ton)... 20.63 19.26 17.09 12.21(5) 12.19
GOLD(6)
Proved and probable reserves
(million contained
ounces).................... 1.0 0.6 4.0(7) 4.0 4.8
Production (thousand
ounces).................... 169 248 81(8) 98 108
Average realization ($/oz).. 387 362 357 401 406
Average cash cost ($/oz).... 201 219 199 340 326
</TABLE>
- --------
(1) Copper reserves for 1994 and 1995 include Cerro Verde and El Abra reserves
purchased.
(2) In 1993, molybdenum reserves increased by the addition of the Amax
properties, partially offset by the sale of Thompson Creek.
(3) Figures in table do not include the Company's share of Oakbridge's proved
and probable reserves. Such share of such reserves (in millions of tons)
was: 144 for 1993; 171 for 1994; and 159 for 1995. The Company's share of
Oakbridge's production (in millions of tons) was: 2 for 1993; 4 for 1994;
and 6 for 1995.
(4) The addition of over 2 billion tons of coal reserves in 1993 was primarily
due to the merger with Amax and the acquisition of the Cumberland mine in
Pennsylvania. Production in 1993 from Amax operations was 6.4 million tons
for the period November 15 through year end.
(5) Coal production increased, and average realizations and average cash costs
decreased, in 1994 as a result of the inclusion of a full year of
production from former Amax mines.
(6) Figures represent the Company's historical ownership interests for
properties during each period.
(7) In 1993, gold reserves increased due to the addition of the Company's
share of Amax Gold.
(8) The decline in gold production from 1992 to 1993 resulted from the sale of
two of the Company's gold mines: Selwyn in Australia and Golden Cross in
New Zealand.
S-10
<PAGE>
SELECTED FINANCIAL DATA
The selected historical consolidated financial data of the Company set forth
below have been derived from the financial statements for the Company for each
of the five fiscal years for the period ended December 31, 1995 and the
unaudited three-month periods ended March 31, 1996 and March 31, 1995. The
financial statements for each of the five fiscal years for the period ended
December 31, 1995, have been audited by Price Waterhouse LLP, independent
accountants. The selected historical consolidated financial data set forth
below should be read in conjunction with the historical financial statements
and notes thereto contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1996, which are incorporated by
reference in the Prospectus accompanying this Prospectus Supplement. See
"Available Information" in such Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31,(1) MARCH 31,
------------------------------------ --------------
1991 1992 1993 1994 1995 1995(2) 1996
------ ------ ------ ------ ------ ------- ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
OR AS OTHERWISE INDICATED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenue................... $1,657 $1,641 $1,763 $2,788 $3,207 $ 807 $ 684
Segment operating income
(loss)(3)
Copper/Molybdenum........ 127 38 55 206 584 128 86
Coal..................... 4 (267) 142 106 (308) 31 22
Other(4)................. (33) (29) 20 40 (37) (6) 4
------ ------ ------ ------ ------ ----- ------
Total.................. 98 (258) 217 352 239 153 112
Net income (loss)(5)...... 43 (334) 100 175 124 97 62
Income (loss) applicable
to common shares......... 28 (345) 98 157 105 92 57
Primary earnings (loss)
per common share......... 0.72 (8.46) 1.85 1.69 1.13 1.00 0.62
SUPPLEMENTAL DATA
Segment operating income
(loss) (excluding write-
downs and special
items)(3)
Copper/Molybdenum........ $ 127 $ 116 $ 55 $ 219 $ 584 $ 128 $ 86
Coal..................... 14 41 41 116 137 31 22
Other(4)................. 3 12 20 1 (37) (6) 4
------ ------ ------ ------ ------ ----- ------
Total.................. 144 169 116 336 684 153 112
Net income (excluding
write-downs and special
items)................... 75 93 50 162 462 97 62
Income applicable to
common shares (excluding
write-downs and special
items)................... 60 82 48 144 443 92 57
Primary earnings per
common share (excluding
write-downs and special
items)................... 1.53 2.00 0.90 1.55 4.77 1.00 0.62
Cash provided by
operations............... 285 143 74 110 675 191 102
Depreciation, depletion
and amortization......... 119 128 145 253 296 77 72
Capital expenditures...... 178 156 266 359 929 122 255
BALANCE SHEET DATA (PERIOD
END)
Cash and cash
equivalents.............. $ 98 $ 116 $ 96 $ 139 $ 191 $ 182 $ 181
Working capital........... 299 336 41 423 292 408 159
Total assets.............. 1,984 1,709 5,618 5,407 6,196 5,856 6,468
Long-term debt............ 239 232 1,278 1,191 1,734 1,302 1,857
Capital lease
obligations.............. -- -- 69 200 143 197 141
Shareholders' equity...... 1,290 923 2,217 2,329 2,365 2,399 2,408
</TABLE>
- --------
(1) On November 15, 1993, AMAX Inc., a New York corporation ("Amax"), was
merged into Cyprus Minerals Company, which was then renamed Cyprus Amax
Minerals Company. Therefore the 1993 results included Amax operations for
the 47-day period following the merger. The merger contributed revenue of
$140 million for 1993, and the impact on earnings was immaterial,
excluding indirect merger expenses.
(2) Financial information as of March 31, 1995 has been restated to reflect
the retroactive consolidation of Amax Gold to January 1, 1995.
S-11
<PAGE>
(3) Segment operating income reflects earnings before corporate overhead,
interest, equity and other, income taxes and minority interest.
(4) Includes lithium and other operations.
(5) Financial information reflects an after-tax charge of $338 million for the
write-down of certain coal assets and provision for associated liabilities
in 1995; an after-tax gain of $13 million for various special items for
1994; an after-tax charge for 1993 indirect merger costs of $25 million,
an after-tax gain of $75 million in 1993 for the sale of LTV claims; and
after-tax write-downs and other provisions of $315 million in 1992 and $32
million in 1991. In addition, 1992 includes an after-tax charge of $23
million for reorganization expense. The foregoing items on a pre-tax basis
are: a charge of $445 million in 1995; a gain of $16 million in 1994; a
gain of $71 million in 1993; a charge of $444 million in 1992 and a charge
of $42 million in 1991. In 1992, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
and SFAS No. 112, "Employers' Accounting for Postemployment Benefits." The
cumulative effect of adopting these new standards as of January 1, 1992,
was a charge, net of tax of $88 million.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "CYM." The following table sets forth, for the periods shown, the range
of high and low sales prices of the Common Stock on the NYSE and the cash
dividends paid or declared on the Common Stock.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- ---- ---------
<S> <C> <C> <C>
1995
First Quarter........... $29 7/8 $24 3/4 $0.20
Second Quarter.......... 29 25 3/8 0.20
Third Quarter........... 32 1/8 27 0.20
Fourth Quarter.......... 28 1/2 24 1/4 0.20
1996
First Quarter........... $29 1/8 $24 1/2 $0.20
Second Quarter (through
May 16, 1996).......... 29 26 1/4 --
</TABLE>
It is the current intention of the Company's Board of Directors to continue
to declare per share dividends on the Common Stock in the amount of $0.20 per
quarter, or $0.80 per year. Prospective purchasers of Common Stock should
note, however, that no such dividends have been declared and that future
dividends will be determined by the Board of Directors of the Company in light
of earnings, cash flow, results of operations and financial condition of the
Company and its subsidiaries and such other factors and business conditions as
the Board of Directors of the Company deems relevant from time to time. There
can be no assurances with respect to the payment of dividends by the Company
after the Offerings.
S-12
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of the
Common Stock applicable to Non-United States Holders of such Common Stock. For
the purpose of this discussion, a "Non-United States Holder" is any holder
that is, for United States federal income tax purposes, a foreign corporation,
a non-resident alien individual, a foreign partnership or a foreign estate or
trust as such terms are defined in the Internal Revenue Code of 1986, as
amended (the "Code"), in each case not subject to United States federal income
tax on a net income basis in respect of income or gain from Common Stock. This
discussion does not deal with all aspects of United States federal income and
estate taxation and does not deal with foreign, state and local tax
consequences that may be relevant to Non-United States Holders in light of
their personal circumstances. Furthermore, the following discussion is based
on current provisions of the Code and administrative and judicial
interpretations as of the date hereof, all of which are subject to change.
PROSPECTIVE FOREIGN INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES INCOME
AND OTHER TAX CONSEQUENCES OF OWNING AND DISPOSING OF COMMON STOCK.
DIVIDENDS
Generally, any dividend paid to a Non-United States Holder of Common Stock
will be subject to United States withholding tax either at a rate of 30% of
the gross amount of the dividend or such lower rate as may be specified by an
applicable tax treaty. Under current United States Treasury Regulations (the
"U.S. Regulations"), dividends paid to an address outside the United States
are presumed to be paid to a resident of such country (absent knowledge that
such presumption is not warranted) for purposes of the withholding discussed
above and, under the current interpretation of the U.S. Regulations, for
purposes of determining applicability of a tax treaty rate. However, under
United States Treasury Regulations that are proposed to be effective after
1997 (the "Proposed Regulations"), a Non-United States Holder of Common Stock
who wishes to claim the benefit of an applicable treaty rate would be required
to satisfy applicable certification and other requirements. In addition, under
the Proposed Regulations, in the case of Common Stock held by a foreign
partnership, (x) the certification requirement would generally be applied to
the partners of the partnership and (y) the partnership would be required to
provide certain information, including a United States taxpayer identification
number. The Proposed Regulations also provide look-through rules for tiered
partnerships. It is not certain whether, or in what form, the Proposed
Regulations will be adopted as final regulations. Dividends received by a Non-
United States Holder that are effectively connected with a United States trade
or business conducted by such Non-United States Holder (and are attributable
to a United States permanent establishment of such holder, if an applicable
income tax treaty so requires as a condition for the non-United States Holder
to be subject to United States income tax on a net income basis in respect of
such dividends) are exempt from such withholding tax. However, such
effectively connected dividends, net of certain deductions and credits, are
taxed at the same graduated rates applicable to United States persons. A Non-
United States Holder may claim exemption from withholding under the
effectively connected income exception by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected With the Conduct of
Business in the United States) each year with the Company or its paying agent
prior to the payment of the dividends for such year.
In addition to the graduated tax described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a
United States trade or business of the corporate Non-United States Holder may
also be subject to a branch profits tax at a rate of 30% or such lower rate as
may be specified by an applicable tax treaty.
A Non-United States Holder of Common Stock eligible for a reduced rate of
United States withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for
refund with the Internal Revenue Service (the "IRS"). In the event that
dividends from the Company are not out of current or accumulated earnings and
profits, a Non-United States Holder of Common Stock may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
IRS.
S-13
<PAGE>
GAINS OR DISPOSITION OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax on any gain realized upon the sale or other disposition of
his Common Stock unless: (i) such gain is effectively connected with a United
States trade or business of the Non-United States Holder; (ii) the Non-United
States Holder is an individual who holds such Common Stock as a capital asset
and who is present in the United States for a period or periods aggregating
183 days or more during the calendar year in which such sale or disposition
occurs and certain other conditions are met; or (iii) the Company is or has
been a "United States real property holding corporation" for federal income
tax purposes and the Non-United States Holder held, directly or indirectly, at
any time during the five-year period ending on the date of sale or
disposition, more than 5% of the Common Stock (and is not eligible for any
treaty exemption).
The Company likely is or has been a "United States real property holding
corporation" for federal income tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax
withheld. A similar report is sent to the holder. Pursuant to tax treaties or
other agreements, the IRS may make its reports available to tax authorities in
the recipient's country of residence.
Dividends paid to a Non-United States Holder at an address within the United
States may be subject to backup withholding at a rate of 31% if the Non-United
States Holder fails to establish that it is entitled to an exemption or to
provide a correct taxpayer identification number and other information to the
payor. Backup withholding will generally not apply to dividends paid to a Non-
United States Holder at an address outside the United States (unless the payor
has definite knowledge that the payee is a U.S. person). Under the Proposed
Regulations, however, dividend payments generally will be subject to
information reporting and backup withholding unless applicable certification
requirements are satisfied. See the discussion above with respect to the rules
applicable to foreign partnerships under the Proposed Regulations.
The payment of the proceeds of the disposition of Common Stock to or through
the United States office of a broker is subject to information reporting and
backup withholding at a rate of 31% unless the holder certified its non-United
States status under penalties of perjury or otherwise establishes an
exemption. Generally, the payment of the proceeds of the disposition by a Non-
United States Holder of Common Stock outside the United States through a
foreign office of a broker will not be subject to backup withholding. However,
information reporting requirements (but not backup withholding) will apply to
a payment of disposition proceeds outside the United States through an office
outside the United States of a broker that is (a) a United States person, (b)
a United States "controlled foreign corporation" for U.S. tax purposes or (c)
a foreign person 50% or more of whose gross income for certain periods is from
the conduct of a United States trade or business unless such broker has
documentary evidence in its files of the owner's foreign status and has no
actual knowledge to the contrary or the holder otherwise establishes an
exemption.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
ESTATE TAX
An individual Non-United States Holder who owns Common Stock at the time of
his death or has made certain lifetime transfers of an interest in Common
Stock will be required to include the value of such Common Stock in such
holder's gross estate for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.
S-14
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in the U.S.
Underwriting Agreement and related U.S. Pricing Agreement dated the date
hereof, each of the underwriters of the U.S. Offering named below (the "U.S.
Underwriters"), for whom Smith Barney Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, PaineWebber Incorporated and UBS Securities LLC are acting
as the Representatives (the "Representatives"), has severally agreed to
purchase, and the Company has agreed to sell to each U.S. Underwriter, the
number of shares of Common Stock set forth opposite the name of such U.S.
Underwriter below:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER SHARES
---------------- ---------
<S> <C>
Smith Barney Inc...................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................................
PaineWebber Incorporated...........................................
UBS Securities LLC.................................................
---------
Total.......................................................... 9,600,000
</TABLE>
Under the terms and subject to the conditions contained in the International
Underwriting Agreement and related International Pricing Agreement dated the
date hereof, each of the managers of the concurrent International Offering
named below (the "Managers"), for whom Smith Barney Inc., Merrill Lynch
International, PaineWebber International (U.K.) Ltd. and UBS Limited are
acting as lead managers (the "Lead Managers"), has severally agreed to
purchase, and the Company has agreed to sell to each Manager, the number of
shares of Common Stock set forth opposite the name of such Manager below:
<TABLE>
<CAPTION>
NUMBER OF
MANAGER SHARES
------- ---------
<S> <C>
Smith Barney Inc...................................................
Merrill Lynch International........................................
PaineWebber International (U.K.) Ltd...............................
UBS Limited........................................................
---------
Total.......................................................... 2,400,000
</TABLE>
The U.S. Underwriters and the Managers (collectively, the "Underwriters")
initially propose to offer part of the shares of Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and part to certain dealers at a price that represents a
concession not in excess of $ per share below the public offering price.
The U.S. Underwriters and the Managers may allow, and such dealers may re-
allow, a concession not in excess of $ per share to the other U.S.
Underwriters or Managers, respectively, or to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed by the U.S. Underwriters and the Managers.
The Company has granted to the U.S. Underwriters an option, exercisable for
30 days from the date of this Prospectus Supplement, to purchase up to an
aggregate of 1,800,000 additional shares of Common Stock at the public
offering price set forth on the cover page of this Prospectus Supplement less
underwriting discounts and commissions. The U.S. Underwriters may exercise
such option to purchase additional shares solely for the
S-15
<PAGE>
purpose of covering over-allotments, if any, incurred in connection with the
sale of the shares offered hereby. To the extent such option is exercised,
each U.S. Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares as the
number of shares set forth opposite such U.S. Underwriter's name in the
preceding table bears to the total number of shares in such table.
The Company and the U.S. Underwriters and Managers have agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
The Company and each of its officers and directors have agreed that, for a
period of 90 days after the date of this Prospectus Supplement, they will not,
without the prior written consent of Smith Barney Inc., offer, sell, contract
to sell or otherwise dispose of any Common Stock (or any securities
convertible into or exercisable or exchangeable for Common Stock) or grant any
options or warrants to purchase Common Stock, subject to limited exceptions
including in connection with the acquisition by the Company of the assets or
shares of any other corporation, business or other entity (as long as any
recipient of any securities so issued agrees for the benefit of the U.S.
Underwriters and Managers to abide by the restrictions described above).
The U.S. Underwriters and the Managers have entered into an Agreement
Between U.S. Underwriters and Managers pursuant to which each U.S. Underwriter
has agreed that, as part of the distribution of the 9,600,000 shares offered
in the U.S. Offering (i) it is not purchasing any such shares for the account
of anyone other than a U.S. or Canadian Person and (ii) it has not offered or
sold, and will not, offer, sell, resell or deliver, directly or indirectly,
any of such shares or distribute any prospectus supplement relating to the
U.S. Offering outside the United States or Canada or to anyone other than a
U.S. or Canadian Person. In addition, each Manager has agreed that as part of
the distribution of the 2,400,000 shares offered in the International
Offering: (i) it is not purchasing any such shares for the account of any U.S.
or Canadian Person and (ii) it has not offered or sold, and will not offer,
sell, resell or deliver, directly or indirectly, any of such shares or
distribute any prospectus supplement relating to the International Offering in
the United States or Canada or to any U.S. or Canadian Person. Each Manager
has also agreed that it will offer to sell shares only in compliance with all
relevant requirements of any applicable laws.
The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the U.S. Underwriting Agreement and
related U.S. Pricing Agreement, the International Underwriting Agreement and
related International Pricing Agreement and the Agreement Between U.S.
Underwriters and Managers, including: (i) certain purchases and sales between
the U.S. Underwriters and the Managers, (ii) certain offers, sales, resales,
deliveries or distributions to or through investment advisors or other persons
exercising investment discretion, (iii) purchases, offers or sales by a U.S.
Underwriter who is also acting as a Manager or by a Manager who is also acting
as a U.S. Underwriter and (iv) other transactions specifically approved by the
Representatives and the Lead Managers. As used herein, "U.S. or Canadian
Person" means any resident or national of the United States or Canada, any
corporation, partnership or other entity created or organized in or under the
laws of the United States or Canada or any estate or trust the income of which
is subject to United States or Canadian income taxation regardless of the
source of its income (other than the foreign branch of any U.S. or Canadian
Person) and includes any United States or Canadian branch of a person other
than a U.S. or Canadian Person.
Any offer of shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the relevant province of Canada
in which such offer is made.
Each Manager has agreed that (i) it will not offer or sell any shares to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which will not involve an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) it will comply with all applicable provisions of the
Financial Services Act 1986 and the Regulations with respect to anything done
by it in relation to the shares in, from or otherwise involving the United
Kingdom; and (iii) it will only issue or pass on to any person in the United
Kingdom any document
S-16
<PAGE>
received by it in connection with the offer of the shares if that person is of
a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom
such document may otherwise lawfully be issued or passed on.
No action has been or will be taken in any jurisdiction by the Company or
the Managers that would permit an offering to the general public of the shares
of Common Stock offered hereby in any jurisdiction other than the United
States.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
Pursuant to the Agreement Between U.S. Underwriters and Managers, sales may
be made between the U.S. Underwriters and the Managers of such number of
shares as may be mutually agreed. The price of any shares so sold shall be the
public offering price as then in effect for shares being sold by the U.S.
Underwriters and Managers, less all or any part of the selling concession,
unless otherwise determined by mutual agreement. To the extent that there are
sales between the U.S. Underwriters and the Managers pursuant to the Agreement
Between U.S. Underwriters and Managers, the number of shares initially
available for sale by the U.S. Underwriters and by the Managers may be more or
less than the number of shares appearing on the front cover of this Prospectus
Supplement.
Certain of the U.S. Underwriters and Managers, and their respective
affiliates, have performed various investment banking and commercial banking
services for the Company and its affiliates, for which they have received
customary compensation.
VALIDITY OF SHARES
The validity of the Common Stock to be issued pursuant to the Offerings will
be passed upon for Cyprus Amax by Wachtell, Lipton, Rosen & Katz, New York,
New York, and for the Underwriters by Sullivan & Cromwell, Los Angeles,
California.
EXPERTS
The consolidated financial statements incorporated in the Prospectus
accompanying this Prospectus Supplement by reference to the Annual Report on
Form 10-K for the year ended December 31, 1995, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
With respect to the unaudited consolidated financial information for the
three-month periods ended March 31, 1996 and March 31, 1995, incorporated in
the Prospectus accompanying this Prospectus Supplement by reference to the
Quarterly Report on Form 10-Q for the three months ended March 31, 1996, Price
Waterhouse LLP reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report dated May 15, 1996, so incorporated by
reference, states that they did not audit and they do not express an opinion
on that unaudited consolidated financial information. Price Waterhouse LLP has
not carried out any significant or additional audit tests beyond those which
would have been necessary if their report had not been included. Accordingly,
the degree of reliance on their report on such information should be
restricted in light of the limited nature of the review procedures applied.
Price Waterhouse LLP is not subject to the liability provisions of section 11
of the Securities Act of 1993 for their report on the unaudited consolidated
financial information because those reports are not a "report" or a "part" of
the registration statement prepared or certified by Price Waterhouse LLP
within the meaning of sections 7 and 11 of the Securities Act of 1933, as
amended.
S-17
<PAGE>
PROSPECTUS
$600,000,000
[LOGO] CYPRUS AMAX
MINERALS COMPANY
DEBT SECURITIES
GUARANTEES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
----------------
CYPRUS AMAX FINANCE CORPORATION
GUARANTEED DEBT SECURITIES
GUARANTEED PREFERRED STOCK
----------------
Cyprus Amax Minerals Company (the "Company") may offer from time to time (i)
Debt Securities ("Debt Securities"), which may be either senior debt
securities ("Senior Securities"), senior subordinated debt securities ("Senior
Subordinated Securities") or subordinated debt securities ("Subordinated
Securities"), consisting of debentures, notes, bonds and/or other unsecured
evidences of indebtedness in one or more series, (ii) full, unconditional and
irrevocable guarantees ("Guarantees") of Debt Securities and shares of
Preferred Stock issued by Cyprus Amax Finance Corporation ("Finance"), a
wholly-owned subsidiary of the Company, (iii) shares of Preferred Stock (as
issued by the Company or Finance, "Preferred Stock") in one or more series,
(iv) shares of Common Stock, without par value ("Common Stock"), or (v)
Warrants ("Warrants") to purchase Debt Securities, Preferred Stock or Common
Stock. Finance may offer from time to time guaranteed Debt Securities,
consisting of debentures, notes, bonds and/or other unsecured evidences of
indebtedness in one or more series, and guaranteed Preferred Stock, in one or
more series, each guaranteed by the Company. The foregoing securities are
collectively referred to as the "Securities." The Securities will be offered
at an aggregate initial offering price not to exceed U.S.$600,000,000, at
prices and on terms to be determined at the time of sale.
The accompanying Prospectus Supplement sets forth with regard to the
particular Securities in respect of which this Prospectus is being delivered
(i) in the case of Debt Securities, the title, aggregate principal amount,
denominations (which may be in United States dollars, in any other currency,
currencies or currency unit, including the European Currency Unit), maturity,
rate, if any (which may be fixed or variable) or method of calculation
thereof, and time of payment of any interest, any terms for redemption at the
option of the Company (or, in the case of Debt Securities issued by Finance,
Finance) or the holder, any terms for sinking fund payments, any conversion or
exchange rights, any listing on a securities exchange and the initial public
offering price and any other terms in connection with the offering and sale of
such Debt Securities, (ii) in the case of Preferred Stock, the designation,
aggregate principal amount, and stated value and liquidation preference per
share, initial public offering price, dividend rate (or method of
calculation), dates on which dividends shall be payable and dates from which
dividends shall accrue, any redemption or sinking fund provisions, any
conversion or exchange rights, whether offered in the form of depositary
shares, any listing of the Preferred Stock on a securities exchange, and any
other terms in connection with the offering and sale of such Preferred Stock;
(iii) in the case of Common Stock, the number of shares of Common Stock and
the terms of the offering thereof; and (iv) in the case of Warrants, the
number and terms thereof, the designation and the number of Securities
issuable upon their exercise, 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. The
Prospectus Supplement will also contain information, as applicable, about
certain United States Federal income tax considerations relating to the
Securities in respect of which this Prospectus is being delivered.
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Senior Subordinated Securities will
be subordinated to all existing and future Senior Indebtedness (as defined) of
the Company, and senior to all existing and future Subordinated Indebtedness
(as defined) of the Company. The Subordinated Securities will be subordinated
to all existing and future Senior Indebtedness (as defined) of the Company.
All or a portion of any Debt Securities may be issued in permanent global
form.
The Company's Common Stock is listed on the New York Stock Exchange (Symbol:
"CYM"). Any Common Stock offered will be listed, subject to notice of
issuance, on such exchange. See "Price Range of Common Stock and Dividends."
The Company and Finance may sell Securities to or through one or more
underwriters, and also may sell Securities directly to other purchasers or
through agents. The accompanying Prospectus Supplement sets forth the names of
any underwriters or agents involved in the sale of the Securities in respect
of which this Prospectus is being delivered, the principal amounts, if any, to
be purchased by underwriters and the compensation, if any, of such
underwriters or agents. See "Plan of Distribution" herein.
----------------
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.
----------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is September 18, 1995
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR IN THE PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, FINANCE OR ANY UNDERWRITER, AGENT OR DEALER.
THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH THEY RELATE OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE ACCOMPANYING PROSPECTUS SUPPLEMENT, NOR ANY SALE MADE
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE THE IMPLICATION THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission ("Commission"). Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its Regional Offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511, and 7 World Trade Center, 13th Floor, New York, New York 10007. Copies
of such material can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such reports and proxy statements can be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Finance is a wholly-owned subsidiary of the Company. It currently is not
independently subject to the information requirements of the Exchange Act.
Finance intends to seek a conditional exemption pursuant to Section 12(h) of
the Exchange Act from the informational requirements of such Act. If such an
exemption is granted, no independent reports concerning Finance will be sent
to holders of Securities issued by Finance.
The Company and Finance have filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act
of 1933 (the "Securities Act") with respect to the Securities offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement in
accordance with the rules and regulations of the Commission, and reference is
hereby made to the Registration Statement and the exhibits thereto for further
information with respect to the Company, Finance and the Securities.
The Registration Statement and the exhibits thereto can be obtained from or
inspected and copied at the public reference facilities maintained by the
Commission as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994.
2. Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
1995 and June 30, 1995.
3. Registration Statement on Form 8-A, dated March 3, 1989, as amended, for
the Company's Preferred Share Purchase Rights.
4. Registration Statement on Form 10, dated July 11, 1985 for the Company's
Common Stock.
5. All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of
the Securities shall be deemed to be incorporated herein by reference.
2
<PAGE>
Any statement contained herein or in a document all or a portion of which is
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 or in the
Prospectus Supplement 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.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the request of
such person, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to 9100 East Mineral Circle, Englewood, Colorado 80112 (telephone
(303) 643-5000), Attention: Investor Relations.
3
<PAGE>
THE COMPANY
Cyprus Amax Minerals Company ("Cyprus Amax" or the "Company") is a
diversified mining company engaged, directly or through its subsidiaries, in
the exploration for and extraction, processing and marketing of mineral
resources. Cyprus Amax is a leading U.S. copper and coal producer and the
world's largest producer of molybdenum and lithium, and holds significant
positions in gold. The Company reviews possible business transactions from
time to time and may engage in business acquisitions or dispositions in the
future. Cyprus Amax is incorporated in Delaware and operates primarily in the
United States. As of December 31, 1994, Cyprus Amax employed approximately
9,500 employees.
The Company's principal executive office is located at 9100 East Mineral
Circle, Englewood, Colorado 80112, and its telephone number is (303) 643-5000.
Because the Company is primarily a holding company, conducting business
generally through its subsidiaries, the ability of the Company to meet its
obligations under the Debt Securities and its other indebtedness and to pay
dividends on its Preferred Stock and Common Stock will be dependent on the
earnings and cash flow of its subsidiaries and the ability of its subsidiaries
to pay dividends and to advance funds to the Company. In addition, the
Company's rights and the rights of its creditors and securities holders,
including the holders of the Securities, to participate in the assets of any
subsidiary upon such subsidiary's liquidation or recapitalization will be
subject to the prior claims of such subsidiary's creditors, except to the
extent that the Company may itself be a creditor with recognized claims
against any such subsidiary. A substantial amount of the Company's
consolidated debt represents claims of the creditors of the Company's
subsidiaries.
Finance is a wholly-owned subsidiary of the Company which was incorporated
under the laws of the state of Delaware on May 26, 1994. The primary purpose
of Finance is to issue guaranteed Debt Securities and Preferred Stock and to
loan to or invest the proceeds in the Company or subsidiaries. Finance is
prohibited from issuing any common stock to any person other than the Company
and its subsidiaries. Finance does not now, and in the near future does not
expect to, lease or own any material facilities or operating property.
Finance's principal executive office is located at 9100 East Mineral Circle,
Englewood, Colorado 80112, telephone (303) 643-5000.
USE OF PROCEEDS
Except as otherwise described in the accompanying Prospectus Supplement or
any Pricing Supplement, the net proceeds from the sale of Securities will be
used for general corporate purposes, which may include refinancings of
indebtedness, working capital, capital expenditures, acquisitions and
repurchases and redemptions of securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to fixed
charges............................... 4.5 2.7 3.3 (a) 2.5 5.5
Consolidated ratio of earnings to fixed
charges and preferred stock
dividends............................. 3.9 2.3 3.1 (b) 1.6 3.4
</TABLE>
- --------
(a) Earnings for the year ended December 31, 1992 were inadequate to cover
fixed charges by $332 million.
(b) Earnings for the year ended December 31, 1992 were inadequate to cover
combined fixed charges and preferred stock dividend requirements by $347
million.
4
<PAGE>
For purposes of the ratio of earnings to fixed charges, "earnings" includes
income before income taxes, the cumulative effect of a change in accounting
principle and fixed charges. "Fixed charges" consist of interest on all
indebtedness and that portion of rental expense that management believes to be
representative of interest. For purposes of calculating the ratio of earnings
to combined fixed charges and preferred stock dividends, the preferred stock
dividend requirements were assumed to be equal to the pretax earnings which
would be required to cover such dividend requirements. The amount of such
pretax earnings required to cover preferred stock dividends was computed using
tax rates for the applicable year.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol ("CYM"). The following table sets forth, for the periods shown, the
range of high and low sales prices of the Common Stock on the New York Stock
Exchange and the cash dividends declared on the Common Stock:
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1992
First quarter......................................... 23 3/4 18 1/2 .20
Second quarter........................................ 28 1/2 19 .20
Third quarter......................................... 32 26 5/8 .20
Fourth quarter........................................ 32 25 3/4 .25(1)
1993
First quarter......................................... 36 3/8 30 3/4 .20
Second quarter........................................ 33 1/8 22 7/8 .20
Third quarter......................................... 28 1/4 23 3/8 .20
Fourth quarter........................................ 26 5/8 21 1/4 .20
1994
First quarter......................................... 33 3/8 25 5/8 .20
Second quarter........................................ 31 7/8 25 3/4 .20
Third quarter......................................... 32 1/2 28 3/8 .20
Fourth quarter........................................ 31 5/8 23 7/8 .30(2)
1995
First quarter......................................... 29 7/8 24 3/4 .20
Second quarter........................................ 29 25 3/8 .20
Third quarter (through September 13).................. 32 1/8 27 5/8 .20
</TABLE>
- --------
(1) Includes a special dividend of $.05 per share.
(2) Includes a special dividend of $.10 per share.
If shares of Common Stock or Securities convertible or exercisable for
Common Stock are being offered, a recent last sale price of the Common Stock
will be set forth on the cover page of the Prospectus Supplement.
Determinations by the Board of Directors of the Company of the amount and
timing of future dividends will be based upon the Company's earnings, cash
needs, capital requirements and other relevant factors. The Board of Directors
will continue to evaluate the Company's performance and the appropriateness of
dividends. It is currently anticipated that dividends will continue to be paid
during 1995.
There is no established trading market for the Company's Series A
Convertible Preferred Stock, which was issued in the Company's merger with
AMAX, Inc. in 1993 (the "Cyprus/Amax Merger").
5
<PAGE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
Debt Securities may be issued time to time in one or more series by the
Company or by Finance. In the event that any series of Debt Securities is
issued by Finance, such Debt Securities will be offered together with full,
unconditional and irrevocable guarantees issued by the Company. In the
following description, references to the Issuer refer to the Company, in the
case of a series of Debt Securities issued by the Company, and to the Company
and Finance, in the case of a series of Debt Securities issued by Finance.
The Debt Securities will constitute either indebtedness designated as Senior
Indebtedness ("Senior Securities"), indebtedness designated as Senior
Subordinated Indebtedness ("Senior Subordinated Securities") or indebtedness
designated as Subordinated Indebtedness ("Subordinated Securities"). The
particular terms of each series of Securities offered by a particular
Prospectus Supplement and, if such Debt Securities are offered by Finance, the
particular terms of the Guarantees offered in connection therewith, will be
described therein. Senior Securities, Senior Subordinated Securities and
Subordinated Securities will each be issued under a separate indenture
(individually an "Indenture" and collectively the "Indentures") to be entered
into prior to the issuance of such Debt Securities. The Indentures will be
substantially identical, except for provisions relating to subordination and
Guarantees. See "Subordination of Senior Subordinated Securities, Subordinated
Securities and Guarantees". There will be a separate Trustee (individually a
"Trustee" and collectively the "Trustees') under each Indenture. Information
regarding the Trustee under an Indenture will be included in any Prospectus
Supplement relating to the Debt Securities issued thereunder. The following
discussion includes a summary description of all material terms of the
Indentures, other than terms which are specific to a particular series of Debt
Securities and which will be described in the Prospectus Supplement relating
to such series. The following summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Indentures, including the definitions therein of certain
terms capitalized in this Prospectus. Wherever particular Sections or Articles
or defined terms of the Indentures are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein
by reference.
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any
Prospectus Supplement or Prospectus Supplements will be described in such
Prospectus Supplement or Prospectus Supplements relating to such series.
Other than as set forth under "Certain Covenants of the Company," and only
to the extent applicable to the Debt Securities of a particular series, as
indicated in the applicable Prospectus Supplement, there are no provisions of
the Indentures which afford holders of the Debt Securities protection in the
event of a highly leveraged transaction involving the Company.
GENERAL
The Indentures do not limit the aggregate amount of Debt Securities which
may be issued thereunder, and Debt Securities may be issued thereunder from
time to time in separate series up to the aggregate amount from time to time
authorized by the Issuer for each series. Debt Securities of a series may be
issuable in registered form without coupons ("Registered Debt Securities"), in
bearer form with or without coupons attached ("Bearer Debt Securities") or in
the form of one or more Global Securities in registered or bearer form (each,
a "Global Security"). Bearer Debt Securities, if any, will be offered only to
non-United States persons and to offices located outside the United States of
certain United States financial institutions. The Senior Securities will be
unsecured and unsubordinated obligations of the Issuer and will rank equally
and ratably with other unsecured and unsubordinated indebtedness of the
Issuer. The Senior Subordinated Securities and the Subordinated Securities
will be subordinated in right of payment to the prior payment in full of the
Senior Indebtedness (as defined) of the Issuer, as described below under
"Subordination of Subordinated Securities" and in a Prospectus Supplement
applicable to an offering of Senior Subordinated Securities or Subordinated
Securities.
Any Debt Security issued by Finance will be fully, unconditionally and
irrevocably guaranteed by the Company as to payment of principal, premium, if
any, and interest.
6
<PAGE>
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the series of Debt Securities in respect of which this
Prospectus is being delivered: (1) the issuer (which may be the Company or
Finance) and title of such Debt Securities; (2) any limit on the aggregate
principal amount of such Debt Securities; (3) whether such Debt Securities
will be issued as Registered Debt Securities, Bearer Debt Securities or any
combination thereof, and any limitation on issuance of such Bearer Debt
Securities and any provisions regarding the transfer or exchange of such
Bearer Debt Securities, including exchange for Registered Debt Securities of
the same series; (4) whether any of such Debt Securities are to be issuable as
a Global Security, whether such Global Securities are to be issued in
temporary global form or permanent global form, and, if so, the terms and
conditions, if any, upon which interests in such Securities in global form may
be exchanged, in whole or in part, for the individual Debt Securities
represented thereby; (5) the person to whom any interest on any Debt Security
of the series shall be payable if other than the person in whose name the Debt
Security is registered on the Regular Record Date; (6) the date or dates on
which such Debt Securities will mature; (7) the rate or rates of interest, if
any, or the method of calculation thereof, which such Debt Securities will
bear; (8) the date or dates from which any such interest will accrue, the
Interest Payment Dates on which any such interest on such Debt Securities will
be payable and the Regular Record Date for any interest payable on any
Interest Payment Date; (9) the place or places where the principal of, premium
(if any) and interest on such Debt Securities will be payable; (10) the period
or periods within which, the events upon the occurrence of which, and the
price or prices at which, such Debt Securities may, pursuant to any optional
or mandatory provisions, be redeemed or purchased, in whole or in part, by the
Issuer and any terms and conditions relevant thereto; (11) the obligation of
the Issuer, if any, to redeem or repurchase such Debt Securities at the option
of the Holders; (12) the denominations in which any such Debt Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof; (13) the currency, currencies or currency unit or units of payment of
principal of and any premium and interest on such Debt Securities if other
than U.S. dollars; (14) any index or formula used to determine the amount of
payments of principal of and any premium and interest on such Debt Securities;
(15) if the principal of or any premium or interest on such Debt Securities is
to be payable, at the election of the Issuer or a Holder thereof, in one or
more currencies or currency units other than that or those in which such Debt
Securities are stated to be payable, the currency, currencies or currency
units in which payment of the principal of and any premium and interest on
Debt Securities of such series as to which such election is made shall be
payable, and the periods within which and the terms and conditions upon which
such election is to be made; (16) if other than the principal amount thereof,
the portion of the principal amount of such Debt Securities of the series
which will be payable upon declaration of the acceleration of the Maturity
thereof; (17) the applicability of any provisions described under "Certain
Covenants of the Company"; (18) the applicability of any provisions described
under "Defeasance"; (19) the terms and conditions, if any, pursuant to which
such Debt Securities are convertible or exchangeable into Common Stock or
other securities; and (20) any other terms of such Debt Securities not
inconsistent with the provisions of the respective Indentures.
Debt Securities may be issued at a discount from their principal amount.
United States Federal income tax considerations and other special
considerations applicable to any such Original Issue Discount Securities will
be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or
units, the restrictions, elections, general tax considerations, specific terms
and other information with respect to such issue of Debt Securities and such
foreign currency or currencies or foreign currency unit or units will be set
forth in the applicable Prospectus Supplement.
GUARANTEES
The Company will fully, unconditionally and irrevocably guarantee, on a
senior, senior subordinated or subordinated basis, the due and punctual
payment of principal of, premium, if any, and interest on any Debt Securities
that are issued by Finance, and the due and punctual payment of any sinking
fund payments thereon,
7
<PAGE>
when and as the same shall become due and payable, whether at the maturity
date, by declaration of acceleration, call for redemption or otherwise. See
"Subordination of Senior Subordinated Securities, Subordinated Securities and
Guarantees."
SENIOR SECURITIES
The Senior Securities will rank pari passu with all other unsecured and
unsubordinated debt of the Issuer and senior to the Senior Subordinated
Securities and Subordinated Securities.
SUBORDINATION OF SENIOR SUBORDINATED SECURITIES, SUBORDINATED SECURITIES AND
GUARANTEES
The indebtedness evidenced by the Senior Subordinated Securities and the
Subordinated Securities will be subordinated and junior in right of payment to
the extent set forth in the respective Indenture to the prior payment in full
of amounts then due on all Senior Indebtedness (as defined below) and the
indebtedness evidenced by the Subordinated Securities will be subordinated and
junior in right of payment to the extent set forth in the respective Indenture
to the prior payment in full of amounts then due on all indebtedness other
than Subordinated Indebtedness, including any Senior Subordinated Securities.
No payment shall be made by the Issuer on account of principal of (or premium,
if any) or interest on the Senior Subordinated Securities or the Subordinated
Securities or on account of the purchase or other acquisition of Senior
Subordinated Securities or the Subordinated Securities, if the maturity of any
of the Senior Subordinated Securities or the Subordinated Securities shall
have been accelerated, until all amounts due have been paid on all outstanding
Senior Indebtedness, or if there shall have occurred and be continuing (i) a
default in the payment of principal (or premium, if any) or interest on any
Senior Indebtedness beyond any applicable grace period with respect thereto,
or any event of default with respect to any Senior Indebtedness resulting in
the acceleration of the maturity of such Senior Indebtedness, unless and until
such default or event of default shall have been cured or waived or shall have
ceased to exist and such acceleration shall have been rescinded or annulled or
(ii) any such default in payment or event of default shall be the subject of a
judicial proceeding. By reason of these provisions, in the event of default of
any Senior Indebtedness, whether now outstanding or hereafter issued, payments
of principal of (and premium, if any) and interest on the Senior Subordinated
Securities or the Subordinated Securities may not be permitted to be made
until such default is cured or such Senior Indebtedness is paid in full.
Upon any distribution of assets of the Issuer upon any receivership,
dissolution, winding-up, liquidation, reorganization or similar proceedings of
the Issuer, whether voluntary or involuntary, or in bankruptcy or insolvency,
all principal of (and premium, if any) and interest due upon all Senior
Indebtedness must be paid in full before the Holders of the Senior
Subordinated Securities and the Subordinated Securities or the Trustee is
entitled to receive or retain any assets so distributed in respect of the
Senior Subordinated Securities or the Subordinated Securities. By reason of
this provision, in the event of insolvency Holders of the Senior Subordinated
Securities and the Subordinated Securities may recover less, ratably, than
other creditors of the Issuer, including holders of Senior Indebtedness.
"Senior Indebtedness" means, when used with respect to any series of Senior
Subordinated Securities or Subordinated Securities, the principal of (and
premium, if any) and interest on (a) all indebtedness of the Issuer (including
indebtedness of others guaranteed by the Issuer) other than the Subordinated
Securities which is (i) for money borrowed or (ii) evidenced by a note or
similar instrument given in connection with the acquisition of any businesses,
properties or assets of any kind, (b) obligations of the Issuer as lessee
under leases required to be capitalized on the balance sheet of the lessee
under generally accepted accounting principles, and (c) amendments, renewals,
extensions, modifications and refunding of any such indebtedness or
obligation, in any such case whether outstanding on the date of the Senior
Subordinated Indenture or the Subordinated Indenture or thereafter created,
incurred or assumed, except that, with respect to the Senior Subordinated
Securities, any particular indebtedness, obligation, liability, guaranty,
assumption, deferral, renewal, extension or refunding shall not constitute
"Senior Indebtedness" if it is expressly stated in the governing terms, or in
the assumption or guarantee, thereof that the indebtedness involved is not
senior in right of payment to the Senior Subordinated Securities or that such
indebtedness is pari passu with or junior to the Senior Subordinated
Securities and, with
8
<PAGE>
respect to Subordinated Securities, any particular indebtedness, obligation,
liability, guaranty, assumption, deferral, renewal, extension or refunding
shall not constitute "Senior Indebtedness" if it is expressly stated in the
governing terms, or in the assumption or guarantee, thereof that the
indebtedness involved is not senior in right of payment to the Subordinated
Securities or that such indebtedness is pari passu with or junior to the
Subordinated Securities. As of June 30, 1995, the amount of Senior
Indebtedness of the Company was approximately $1.66 billion. Finance has no
indebtedness at the date of this Prospectus. The Senior Subordinated Indenture
and Subordinated Indenture do not prohibit or limit the incurrence of
additional Senior Indebtedness.
If this Prospectus is being delivered in connection with a series of Senior
Subordinated Securities or Subordinated Securities, the accompanying
Prospectus Supplement or the information incorporated herein by reference will
set forth the approximate amount of Senior Indebtedness outstanding as of the
most recent practicable date.
In the event that Senior Subordinated Securities or Subordinated Securities
are issued by Finance, the related Guarantees issued by the Company will be
subordinate and junior in right of payment to Senior Indebtedness of the
Company on substantially the same terms and conditions as the obligations of
Finance under the Senior Subordinated Securities or the Subordinated
Securities, as the case may be, will be subordinate and junior in right of
payment to Senior Indebtedness of Finance.
FORM, EXCHANGE, REGISTRATION, CONVERSION AND TRANSFER
Debt Securities are issuable in definitive form as Registered Debt
Securities, as Bearer Debt Securities or both. Unless otherwise indicated in
an applicable Prospectus Supplement, Bearer Debt Securities will have interest
coupons attached. Debt Securities are also issuable in temporary or permanent
global form.
Registered Debt Securities of any series will be exchangeable for other
Registered Debt Securities of the same series and of a like aggregate
principal amount and tenor of different authorized denominations. In addition,
with respect to any series of Bearer Debt Securities, at the option of the
holder, subject to the terms of the Indenture, such Bearer Debt Securities
(with all unmatured coupons, except as provided below, and all matured coupons
in default) will be exchangeable into Registered Debt Securities of the same
series of any authorized denominations and of a like aggregate principal
amount and tenor. Bearer Debt Securities surrendered in exchange for
Registered Debt Securities between a Regular Record Date or a Special Record
Date and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest, and interest
accrued as of such date will not be payable in respect of the Registered Debt
Security issued in exchange for such Bearer Debt Security, but will be payable
only to the holder of such coupon when due in accordance with the terms of the
Indenture.
In connection with its sale during the restricted period (as defined below),
no Bearer Debt Security (including a Debt Security in permanent global form
that is either a Bearer Debt Security or exchangeable for Bearer Debt
Securities) shall be mailed or otherwise delivered to any location in the
United States (as defined under "--Limitations on Issuance of Bearer Debt
Securities") and a Bearer Debt Security may be delivered outside the United
States in definitive form in connection with its original issuance only if
prior to delivery the person entitled to receive such Bearer Debt Security
furnishes written certification, in the form required by the Indenture, to the
effect that such Bearer Debt Security is owned by: (a) a person (purchasing
for its own account) who is not a United States person (as defined under "--
Limitations on Issuance of Bearer Debt Securities"); (b) a United States
person who (i) is a foreign branch of a United States financial institution
purchasing for its own account or for resale or (ii) acquired such Bearer Debt
Security through the foreign branch of a United States financial institution
and who for purposes of the certification holds such Bearer Debt Security
through such financial institution on the date of certification and, in either
case, such United States financial institution certifies to the Issuer or the
distributor selling the Bearer Debt Security within a reasonable time stating
that it agrees to comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder, or (c) a United States or foreign
financial institution for purposes of resale within the "restricted period" as
defined in United States Treasury Regulations
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Section 1.163-5(c)(2)(i)(D)(7). A financial institution described in clause
(c) of the preceding sentence (whether or not also described in clauses (a)
and (b)) must certify that it has not acquired the Bearer Debt Security for
purpose of resale, directly or indirectly, to a United States person or to a
person within the United States or its possessions. In the case of a Bearer
Debt Security in permanent global form, such certification must be given in
connection with notation of a beneficial owner's interest therein in
connection with the original issuance of such Debt Security or upon exchange
of a portion of a temporary global Debt Security.
Debt Securities may be presented for exchange as provided above, and
Registered Debt Securities may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed), at the office or agency
of the Issuer maintained for such purposes and at any other office or agency
maintained for such purpose with respect to any series of Debt Securities and
referred to in the applicable Prospectus Supplement, without a service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. Such transfer or exchange will be effected upon the Issuer or
its agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request.
In the event of any redemption in part, the Issuer shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of Debt Securities of that series for redemption and ending on the
close of business on (A) if Debt Securities of the series are issued only as
Registered Debt Securities, the day of mailing of the relevant notice of
redemption and (B) if Debt Securities of the series are issued as Bearer Debt
Securities, the day of the first publication of the relevant notice of
redemption except that, if Securities of the series are also issued as
Registered Debt Securities and there is no publication, the day of mailing of
the relevant notice of redemption; (ii) register the transfer of or exchange
any Registered Debt Security, or portion thereof, called for redemption,
except the unredeemed portion of any Registered Debt Security being redeemed
in part; or (iii) exchange any Bearer Debt Security called for redemption,
except to exchange such Bearer Debt Security for a Registered Debt Security of
that series and like tenor which is simultaneously surrendered for redemption.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and any premium) and interest on Bearer Debt Securities will
be payable, subject to any applicable laws and regulations, in the designated
currency or currency unit, at the offices of such Paying Agents ("Paying
Agents") outside the United States as the Issuer may designate from time to
time, at the option of the holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States;
provided, however, that the written certification described above under "--
Form, Exchange, Registration and Transfer" has been delivered prior to the
first actual payment of interest. Unless otherwise indicated in the applicable
Prospectus Supplement, payment of interest on Bearer Debt Securities on any
Interest Payment Date will be made only against surrender to the Paying Agent
of the coupon relating to such Interest Payment Date. No payment with respect
to any Bearer Debt Security will be made at any office or agency of the Issuer
in the United States or by check mailed to any address in the United States or
by transfer to any account maintained with a bank located in the United
States, nor shall any payments be made in respect of Bearer Debt Securities
upon presentation to the Issuer or its designated Paying Agents within the
United States. Notwithstanding the foregoing, payments of principal of (and
premium, if any) and interest on Bearer Debt Securities denominated and
payable in U.S. dollars will be made at the office of the Issuer's Paying
Agent in the United States, if (but only if) payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States
is illegal or effectively precluded by exchange controls or other similar
restrictions.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and interest on Registered Debt
Securities will be made in the designated currency or currency unit at the
office of such Paying Agent or Paying Agents as the Issuer may designate from
time to time, except that at the option of the Issuer payment of any interest
may be made by check mailed to the address of the person entitled thereto as
such address shall appear in the Security Register. Unless otherwise indicated
in an applicable Prospectus Supplement, payment of any installment of interest
on Registered Debt Securities will be made to the
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person in whose name such Registered Debt Security is registered at the close
of business on the Regular Record Date for such interest.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee will be designated as a Paying Agent for
the Trustee for payments with respect to Debt Securities which are issuable
solely as Registered Debt Securities, and the Issuer will maintain a Paying
Agent outside the United States for payments with respect to Debt Securities
(subject to limitations described above in the case of Bearer Debt Securities)
which are issued solely as Bearer Debt Securities, or as both Registered Debt
Securities and Bearer Debt Securities. Any Paying Agents outside the United
States and any other Paying Agents in the United States initially designated
by the Issuer for the Debt Securities will be named in an applicable
Prospectus Supplement. The Issuer may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in
the office through which any Paying Agent acts, except that, if Debt
Securities of a series are issued solely as Registered Debt Securities, the
Issuer will be required to maintain a Paying Agent in each Place of Payment
for such series and, if Debt Securities of a series are issued as Bearer
Securities, the Issuer will be required to maintain (i) a Paying Agent in the
United States for principal payments with respect to any Registered Debt
Securities of the series (and for payments with respect to Bearer Debt
Securities of the series in the circumstances described above, but not
otherwise), and (ii) a Paying Agent in a Place of Payment located outside the
United States where Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment.
All monies paid by the Issuer to a Paying Agent for the payment of principal
of and any premium or interest on any Debt Security which remain unclaimed at
the end of two years after such principal, premium or interest shall have
become due and payable will (subject to applicable escheat laws) be repaid to
the Issuer and the holder of such Debt Security or any coupon will thereafter
look only to the Issuer for payment thereof.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series which are issuable as Bearer Debt
Securities will initially be represented by one or more temporary global Debt
Securities, without interest coupons, to be deposited with a common depository
in London for the Euroclear System ("Euroclear") and CEDEL S.A. ("CEDEL") for
credit to the designated accounts. On and after the date determined as
provided in any such temporary global Debt Security and described in the
applicable Prospectus Supplement, each such temporary global Debt Security
will be exchangeable for definitive Bearer Debt Securities, definitive
Registered Debt Securities or all or a portion of a permanent global security,
or any combination thereof, as specified in the applicable Prospectus
Supplement, but, unless otherwise specified in the applicable Prospectus
Supplement, only upon written certification in the form and to the effect
described under "--Form, Exchange, Registration and Transfer." No Bearer Debt
Security delivered in exchange for a portion of a temporary global Debt
Security will be mailed or otherwise delivered to any location in the United
States in connection with such exchange.
Unless otherwise specified in the applicable Prospectus Supplement, interest
in respect of any portion of a temporary global Debt Security payable in
respect of an Interest Payment Date occurring prior to the issuance of
definitive Debt Securities or a permanent global Debt Security will be paid to
each of Euroclear and CEDEL with respect to the portion of the temporary
global Debt Security held for its account. Each of Euroclear and CEDEL will
undertake in such circumstances to credit such interest received by it in
respect of a temporary global Debt Security to the respective accounts for
which it holds such temporary global Debt Security only upon receipt in each
case of written certification in the form and to the effect described above
under "-Form, Exchange, Registration and Transfer" as of the relevant Interest
Payment Date regarding the portion of such temporary global Debt Security on
which interest is to be so credited.
PERMANENT GLOBAL SECURITIES
If any Debt Securities of a series are issuable in permanent global form,
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such
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permanent global Debt Securities may exchange such interests for Debt
Securities of such series and of like tenor and principal amount in any
authorized form and denomination. No Bearer Debt Security delivered in
exchange for a portion of a permanent global Debt Security shall be mailed or
otherwise delivered to any location in the United States in connection with
such exchange.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on
behalf of, a Depositary ("Depositary") or its nominee identified in the
applicable Prospectus Supplement. In such a case, one or more Global
Securities will be issued in a denomination or aggregate denominations equal
to the portion of the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global Security may not be registered for
transfer or exchange except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any nominee to a successor Depositary or a nominee of such successor
Depositary and except in the circumstances described in the applicable
Prospectus Supplement. (Sections 2.5 and 3.5)
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Issuer expects that the
following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global Security, and the deposit of such Global Security with or on
behalf of the Depositary for such Global Security, the Depositary will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Global Security to the
accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited will be designated by
the underwriters or agents of such Debt Securities or by the Issuer, if such
Debt Securities are offered and sold directly by the Issuer. Ownership of
beneficial interest in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by Persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Securities
represented by such Global Security for all purposes under the applicable
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not
be considered the Holders thereof for any purposes under the applicable
Indenture. (Sections 2.4 and 3.5) Accordingly, each Person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such Person is not a participant, on the procedures of the participant
through which such Person owns its interest, to exercise any rights of a
Holder under the applicable Indenture. The Issuer understands that under
existing industry practices, if the Issuer requests any action of Holders or
an owner of a beneficial interest in such Global Security desires to give any
notice or take any action a Holder is entitled to give or take under an
Indenture, the Depositary would authorize the participants to give such notice
or
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take such action, and participants would authorize beneficial owners owning
through such participants to give such notice or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States Federal tax laws and regulations, Bearer
Debt Securities (including securities in permanent global form that are either
Bearer Debt Securities or exchangeable for Bearer Debt Securities) will not be
offered or sold during the restricted period (as defined in United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)) (generally, the first 40
days after the closing date, and, with respect to unsold allotments, until
sold) within the United States or to United States persons (each as defined
below) other than to an office located outside the United States of a United
States financial institution (as defined in Section 1.165-12(c)(1)(v) of the
United States Treasury Regulations), purchasing for its own account or for
resale or for the account of certain customers, that provides a certificate
stating that it agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code and the United States Treasury
Regulations thereunder, or to certain other persons described in Section
1.163-5(c)(2)(i)(D)(1)(iii)(B) of the United States Treasury Regulations.
Moreover, such Bearer Debt Securities will not be delivered in connection with
their sale during the restricted period within the United States. Any
underwriters and dealers participating in the offering of Bearer Debt
Securities must covenant that they will not offer or sell during the
restricted period any Bearer Debt Securities within the United States or to
United States persons (other than the persons described above) or deliver in
connection with the sale of Bearer Debt Securities during the restricted
period any Bearer Debt Securities within the United States and that they have
in effect procedures reasonably designed to ensure that their employees and
agents who are directly engaged in selling the Bearer Debt Securities are
aware of the restrictions described above. No Bearer Debt Security (other than
a temporary global Bearer Debt Security) will be delivered in connection with
its original issuance nor will interest be paid on any Bearer Debt Security
until receipt by the Issuer of the written certification described above under
"-Form, Exchange, Registration and Transfer." Each Bearer Debt Security, other
than a temporary global Bearer Debt Security, will bear a legend to the
following effect: "Any United States person who holds this obligation will be
subject to limitations under the United States Federal income tax laws,
including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code."
As used herein, "United States person" means any citizen or resident of the
United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States and any estate or trust
the income of which is subject to United States Federal income taxation
regardless of its source, and "United States" means the United States of
America (including the states and the District of Columbia) and its
possessions.
CERTAIN COVENANTS OF THE COMPANY
If so indicated in the applicable Prospectus Supplement with respect to a
particular series of Debt Securities, the Company will be subject to either or
both of the following covenants or such other covenants as are indicated
therein, if any.
Restrictions on Secured Debt.
If the Company or any Restricted Subsidiary shall incur, issue, assume, or
guarantee any loans, whether or not evidenced by any evidence of indebtedness,
for money borrowed ("Debt") secured by a mortgage, pledge, or lien
("Mortgage") on any Principal Property of the Company or any Restricted
Subsidiary, or on any share of stock or Debt of any Restricted Subsidiary, the
Company will secure or cause such Restricted Subsidiary to secure any Debt
Securities to which this covenant is applicable equally and ratably with (or,
at the Company's
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option, prior to) such secured Debt, unless the aggregate amount of all such
secured Debt, together with all Attributable Debt of the Company and its
Restricted Subsidiaries with respect to sale and leaseback transactions
involving Principal Properties (with the exception of such transactions which
are excluded as described in "Restrictions on Sales and Leasebacks" below),
would not exceed 10 percent of Consolidated Net Tangible Assets.
The above restriction does not apply to, and there will be excluded from
secured Debt in any computation under such restriction, Debt secured by (i)
Mortgages on property of, or on any shares of stock of or Debt of, any
corporation existing at the dates of the respective Indentures or at the time
such corporation becomes a Restricted Subsidiary; (ii) Mortgages in favor of
the Company or a Restricted Subsidiary; (iii) Mortgages in favor of
governmental bodies to secure progress, advance or certain other payments;
(iv) Mortgages on property, assets, shares of stock or Debt existing at the
time of acquisition thereof (including acquisition through merger or
consolidation), and purchase money and construction Mortgages which are
entered into within 180 days after the acquisition or completion of
construction; (v) Mortgages securing industrial revenue or pollution control
bonds; (vi) Mortgages created in connection with a project financed with, and
created to secure, a Nonrecourse Obligation; and (vii) any extension, renewal,
or refunding of any Mortgage referred to in the foregoing clauses (i) through
(vi) inclusive. (Section 10.8). In addition, the above restriction does not
apply to, and there will be excluded from secured Debt in any corporation
under such restriction, the sale or other transfer of the following: (i)
minerals in place for a period of time until, or in an amount such that, the
purchaser will realize therefrom a specified amount of money (however
determined) or a specified amount of such minerals, or (ii) any other interest
in property of the character commonly referred to as a "production payment."
Restrictions on Sales and Leasebacks.
Neither the Company nor any Restricted Subsidiary may enter into any sale
and leaseback transaction involving any Principal Property, unless the
aggregate amount of all Attributable Debt of the Company and its Restricted
Subsidiaries with respect to all such transactions plus all secured Debt (with
the exception of secured Debt which is excluded as described in "Restrictions
on Secured Debt" above) would not exceed 10 percent of Consolidated Net
Tangible Assets.
This restriction does not apply to, and there will be excluded from
Attributable Debt in any computation under such restriction, any sale and
leaseback transaction if (i) the lease is for a period, including renewal
rights, not in excess of three years; (ii) the sale or transfer of the
Principal Property is made within 180 days after its acquisition or
construction; (iii) the lease secures or relates to industrial revenue or
pollution control bonds; (iv) the transaction is between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries; (v) the lease
payment obligation is created in connection with a project financed with, and
such obligation constitutes, a Nonrecourse Obligation; or (vi) the Company or
such Restricted Subsidiary, within 180 days after the sale is completed,
applies to the retirement of Funded Debt of the Company or a Restricted
Subsidiary, or to the purchase of other property which will constitute
Principal Property of a value at least equal to the value of the Principal
Property leased, an amount not less than the greater of (a) the net proceeds
of the sale of the Principal Property leased or (b) the fair market value of
the Principal Property leased. The amount to be applied to the retirement of
Funded Debt shall be reduced by (x) the principal amount of any debentures or
notes (including the Debt Securities) of the Company or a Restricted
Subsidiary surrendered within 180 days after such sale to the applicable
trustee for retirement and cancellation and (y) the principal amount of Funded
Debt, other than items referred to in the preceding clause (x), voluntarily
retired by the Company or a Restricted Subsidiary within 180 days after such
sale. (Section 10.9)
Certain Definitions Applicable to Covenants.
"Attributable Debt" is defined to mean the total net amount of rent required
to be paid during the remaining primary term of any particular lease under
which any person is at the time liable, discounted at the rate of 10 1/8% per
annum. (Section 1.1)
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"Consolidated Net Tangible Assets" is defined to mean the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting (1) all liabilities, other than deferred income taxes, liabilities
resulting from any charge in connection with the adoption of SFAS 106, and
Funded Debt, and (2) all goodwill, trade names, trademarks, patents,
organization expenses, and other like intangibles of the Company and its
consolidated subsidiaries. (Section 1.1)
"Funded Debt" is defined as (i) all indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the determination is
made or having a maturity of 12 months or less but by its terms being
renewable or extendable beyond 12 months from such date at the option of the
borrower and (ii) rental obligations payable more than 12 months from such
date under leases which are capitalized in accordance with generally accepted
accounting principles. (Section 1.1)
"Nonrecourse Obligation" is defined to mean indebtedness or lease payment
obligations substantially related to (i) the acquisition of assets not owned
as of December 31, 1992 by the Company or any of its Restricted Subsidiaries
or (ii) the financing of a project involving the development of properties of
the Company or any of its Restricted 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
Restricted Subsidiaries. (Section 10.8)
"Principal Property" is defined to mean any mine, mill, converting plant,
manufacturing plant, or other facility owned by the Company or any Restricted
Subsidiary of the Company which is located within the present 50 states of the
United States 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 2.5 percent of Consolidated Net Tangible Assets, other than properties
or any portion of a particular property which in the opinion of the Board of
Directors is not of material importance to the Company's business. (Section
1.1)
"Restricted Subsidiary" is defined to mean a Subsidiary of the Company
substantially all the property of which is located, or substantially all of
the business of which is carried on, within the present 50 states of the
United States and which owns a Principal Property, excluding however a
Subsidiary of the Company which is primarily engaged in the development and
sale or financing of real property. (Section 1.1)
"Subsidiary" of the Company is defined to mean a corporation more than 50
percent of the voting stock of which is, directly or indirectly, owned by the
Company, one or more Subsidiaries of the Company, or the Company and one or
more Subsidiaries. (Section 1.1)
EVENTS OF DEFAULT
The following are Events of Default under the Indentures with respect to
Debt Securities of any series: (a) failure to pay principal of or premium, if
any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to make any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the applicable Indenture (other than a covenant included in such
Indenture solely for the benefit of a series of Debt Securities other than
that series), continued for 60 days after written notice as provided in the
respective Indentures; (e) failure to pay at the final maturity thereof the
principal of, or acceleration of, any indebtedness for money borrowed by the
Issuer in excess of $20 million, if such indebtedness is not discharged, or
such acceleration is not annulled, as provided in the respective Indentures;
(f) certain events of bankruptcy, insolvency or reorganization of the Issuer;
and (g) any other Event of Default provided with respect to Debt Securities of
that series. (Section 5.1)
If an Event of Default with respect to Outstanding Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that
series by notice as provided in the respective Indenture may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities, such portion of the principal amount
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as may be specified in the terms of that series) of all Debt Securities of
that series to be due and payable immediately. However, at any time after a
declaration of acceleration with respect to 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 the Outstanding
Debt Securities of that series may, under certain circumstances, rescind and
annul such acceleration. (Section 5.2) For information as to waiver or
defaults, see "Modification and Waiver" below.
The Indentures provide that, subject to the duty of the respective Trustees
thereunder during an Event of Default to act with the required standard of
care, such Trustee will be under no obligation to exercise any of its rights
or powers under the respective Indentures at the request or direction of any
of the Holders, unless such Holders shall have offered to such Trustee
reasonable security or indemnity. (Sections 6.1 and 6.3) Subject to certain
provisions, including those requiring security or indemnification of the
Trustees, the Holders of a majority in principal amount of the Outstanding
Debt 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
applicable Trustee, or exercising any trust or power conferred on such
Trustee, with respect to the Debt Securities of that series. (Section 5.12)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the applicable
Trustee written notice of a continuing Event of Default (as defined) and
unless also the Holders of at least 25 percent in aggregate principal amount
of the Outstanding Debt Securities of the same series shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of the same series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (Section 5.7)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for enforcement of payment of the principal of and interest on
such Debt Security on or after the respective due dates expressed in such Debt
Security. (Section 5.8)
The Issuer will be required to furnish to the Trustees annually a statement
as to the performance by the Issuer of its obligations under the respective
Indentures and as to any default in such performance. (Section 10.4)
MODIFICATION AND WAIVER
Modifications and amendments of the respective Indentures may be made by the
Issuer and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected thereby; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby: (a) change the Stated Maturity of the principal of,
or any installment of principal of, or interest on, any Debt Security; (b)
reduce the principal amount of, the rate of interest on, or the premium, if
any, payable upon the redemption of, any Debt Security; (c) reduce the amount
of principal of an Original Issue Discount Security payable upon acceleration
of the Maturity thereof; (d) change the place or currency of payment of
principal of, or premium, if any, or interest on any Debt Security; (e) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security on or after the Stated Maturity or Redemption
Date thereof; or (f) reduce the percentage in principal amount of Outstanding
Debt Securities of any series, the consent of the Holders of which is required
for modification or amendment of the applicable Indenture or for waiver of
compliance with certain provisions of the applicable Indenture or for waiver
of certain defaults. (Section 9.2)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Issuer with certain covenants of the applicable Indenture.
(Section 10.10) The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may, on behalf of the Holders of
all Debt Securities of that series, waive any past default under the
applicable Indenture with respect to that series, except a default in the
payment of the principal of, or premium, if any, or interest on, any Debt
Security of that series or in respect of a provision which under the
applicable Indenture cannot be modified
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or amended without the consent of the Holder of each Outstanding Debt Security
of that series affected. (Section 5.13)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Issuer, without the consent of any Holders of Outstanding Debt
Securities, may consolidate with or merge into, or transfer or lease its
assets substantially as an entirety to, any Person, and any other Person may
consolidate with or merge into, or transfer or lease its assets substantially
as an entirety to, the Issuer, provided (a) that the Person (if other than the
Issuer) formed by such consolidation or into which the Issuer is merged or
which acquires or leases the assets of the Issuer substantially as an entirety
is a Person organized and existing under the laws of any United States
jurisdiction and assumes the Issuer's obligations on the Debt Securities and
under the respective Indentures, (b) that 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, and (c) that certain other conditions are met. (Article Eight)
DEFEASANCE
If so indicated in the applicable Prospectus Supplement with respect to the
Debt Securities of a series, the Issuer, at its option, (i) will be discharged
from any and all obligations in respect of the Debt Securities of such series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace destroyed, stolen, lost or mutilated
Debt Securities of such series, and to maintain an office or agency in respect
of the Debt Securities and hold moneys for payment in trust) or (ii) will be
released from its obligations to comply with the covenants that are specified
under "Certain Covenants of the Company" above with respect to the Debt
Securities of such series and the occurrence of an event described in clause
(d) under "Events of Default" above with respect to any defeased covenant and
clauses (e) and (g) of the "Events of Default" above shall no longer be an
Event of Default if, in either case, the Issuer irrevocably deposits with the
Trustee, in trust, money or U.S. Government Obligations that through the
payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay all the principal of
(and premium, if any) and any interest on the Debt Securities of such series
on the dates such payments are due (which may include one or more redemption
dates designated by the Issuer) in accordance with the terms of such Debt
Securities. Such a trust may only be established if, among other things, (a)
no Event of Default or event which with the giving of notice or lapse of time,
or both, would become an Event of Default under the applicable Indenture shall
have occurred and be continuing on the date of such deposit, (b) no Event of
Default described under clause (f) under "Events of Default" above or event
which with the giving of notice or lapse of time, or both, would become an
Event of Default described under such clause (f) shall have occurred and be
continuing at any time during the period ending on the 91st day following such
date of deposit, and (c) the Issuer shall have delivered an Opinion of Counsel
to the effect that the Holders of the Debt Securities will not recognize gain
or loss for United States Federal income tax purposes as a result of such
deposit or defeasance and will be subject to United States Federal income tax
in the same manner as if such defeasance had not occurred. In the event the
Issuer omits to comply with its remaining obligations under the applicable
Indenture after a defeasance of such Indenture with respect to the Debt
Securities of any series as described under clause (ii) above and the Debt
Securities of such series are declared due and payable because of the
occurrence of any undefeased Event of Default, the amount of money and U.S.
Government Obligations on deposit with the Trustee may be insufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Company will
remain liable in respect of such payments. (Article Thirteen)
Notwithstanding the description set forth under "Subordination of Senior
Subordinated Securities, Subordinated Securities and Guarantees" above, in the
event that the Company deposits money or U.S. Government Obligations in
compliance with such Indenture in order to defease all or certain of its
obligations with respect to any Senior Subordinated Securities or Subordinated
Securities, the monies or U.S. Government Obligations so deposited will not be
subject to the subordination provisions of such Indenture and the indebtedness
evidenced by such Securities will not be subordinated in right of payment to
the holders of Senior Indebtedness to the extent of the monies or U.S.
Government Obligations so deposited.
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NOTICES
Except as otherwise provided in the Indenture, notices to holders of Bearer
Debt Securities will be given by publication at least twice in a daily
newspaper in the City of New York and London or other capital city in Western
Europe and in such other city or cities as may be specified in such
Securities. Notices to holders of Registered Debt Securities will be given by
mail to the addresses of such holders as they appear in the Security Register.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 1.12)
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee,
should it become a creditor of the Issuer, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received
in respect of any such claim as security or otherwise. (Section 6.13) The
Trustee will be permitted to engage in certain other transactions; however, if
it acquires any conflicting interest and there is a default under the Debt
Securities, it must eliminate such conflict or resign. (Section 6.8)
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<PAGE>
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock
will be described in the applicable Prospectus Supplement. If so indicated in
a Prospectus Supplement, the terms of any such series may differ from the
terms set forth below. Certain provisions applicable to the Company's
Preferred Stock are set forth below in "Description of Common Stock." In the
following description, references to the Issuer refer to the Company, in the
case of a series of Preferred Stock issued by the Company, and to Finance, in
the case of Preferred Stock issued by Finance.
The summary of terms of the Issuer's preferred stock (including the
Preferred Stock) contained in this Prospectus does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of the
Issuer's Certificate of Incorporation and the certificate of designations
relating to each series of the Preferred Stock (the "Certificate of
Designations"), which will be filed as an exhibit to or incorporated by
reference in the Registration Statement of which this Prospectus is a part at
or prior to the time of issuance of such series of the Preferred Stock.
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of preferred stock, par value of $1.00 per share. 4,664,863
shares of the Company's Series A Convertible Preferred Stock (the "Series A
Convertible Preferred Stock") are currently outstanding, and the Company has
reserved for issuance 500,000 shares of its Series A Junior Participating
Preferred Stock (the "Series A Junior Participating Preferred Stock") issuable
pursuant to the Rights Plan. A description of the Series A Convertible
Preferred Stock and the Series A Junior Participating Preferred Stock is set
forth below. The Company's preferred stock may be issued from time to time in
one or more series, without stockholder approval. Finance intends to amend its
Certificate of Incorporation to permit its preferred stock to be issued on a
similar basis. Subject to limitations prescribed by law, the Board of
Directors of the Issuer is authorized to determine the voting powers (if any),
designation, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, for
each series of preferred stock that may be issued, and to fix the number of
shares of each such series. As such, the Company's Board of Directors, without
stockholder approval, could authorize the issuance of preferred stock with
voting, conversion and other rights that could adversely affect the voting
power and other rights of holders of Common Stock or other series of preferred
stock or that could have the effect of delaying, deferring or preventing a
change in control of the Company. See "Description of Common Stock" herein.
The Preferred Stock issued by the Company shall have the dividend,
liquidation, redemption and voting rights set forth below unless otherwise
provided in a Prospectus Supplement relating to a particular series of the
Preferred Stock. The Preferred Stock issued by Finance shall have the
dividend, liquidation, redemption and voting rights set forth in the
applicable Prospectus Supplement, except as specifically provided below. The
applicable Prospectus Supplement will describe the following terms of the
series of Preferred Stock in respect of which this Prospectus is being
delivered: (1) the designation and stated value per share of such Preferred
Stock and the number of shares offered; (2) the amount of liquidation
preference per share; (3) the initial public offering price at which such
Preferred Stock will be issued; (4) the dividend rate (or method of
calculation), the dates on which dividends shall be payable and the dates from
which dividends shall commence to cumulate, if any; (5) any redemption or
sinking fund provisions; (6) any conversion or exchange rights; (7) in the
case of Preferred Stock offered by the Company, whether the Company has
elected to offer Depositary Shares as described below under "Description of
Depositary Shares"; and (8) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges,
limitations and restrictions.
GENERAL
The Preferred Stock offered hereby will be issued in one or more series. The
holders of Preferred Stock will have no preemptive rights. Preferred Stock,
upon issuance against full payment of the purchase price therefor, will be
fully paid and nonassessable. Neither the par value nor the liquidation
preference is indicative of the price at which the Preferred Stock will
actually trade on or after the date of issuance. The applicable
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<PAGE>
Prospectus Supplement will contain a description of certain United States
Federal income tax consequences relating to the purchase and ownership of the
series of Preferred Stock offered by such Prospectus Supplement.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer depositary shares ("Depositary Shares") evidenced
by depositary receipts ("Depositary Receipts"), each representing a fractional
interest (to be specified in the Prospectus Supplement relating to the
particular series of the Company's Preferred Stock) in a share of the
particular series of the Company's Preferred Stock issued and deposited with a
Depositary (as defined below).
RANK
The Preferred Stock shall, with respect to dividend rights and rights on
liquidation, winding up and dissolution of the Issuer, rank prior to the
Issuer's Common Stock and to all other classes and series of equity securities
of the Issuer now or hereafter authorized, issued or outstanding (the Common
Stock and such other classes and series of equity securities collectively may
be referred to herein as the "Junior Stock"), other than any classes or series
of equity securities of the Issuer ranking on a parity with (the "Parity
Stock") or senior to (the "Senior Stock") the Preferred Stock as to dividend
rights and rights upon liquidation, winding up or dissolution of the Issuer.
The Preferred Stock shall be junior to all outstanding debt of the Issuer. The
Preferred Stock shall be subject to creation of Senior Stock, Parity Stock and
Junior Stock to the extent not expressly prohibited by the Issuer's
Certificate of Incorporation.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds of the Issuer legally
available for payment, cash dividends, payable at such dates and at such rates
per share per annum as set forth in the applicable Prospectus Supplement. Such
rate may be fixed or variable or both. Each declared dividend shall be payable
to holders of record as they appear at the close of business on the stock
books of the Issuer (or, if applicable, on the records of the Depositary (as
hereinafter defined) referred to below under "Description of Depositary
Shares") on such record dates, not more than 60 calendar days preceding the
payment dates therefor, as are determined by the Board of Directors (each of
such dates, a "Record Date").
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement. If dividends on a series of Preferred Stock are
noncumulative and if the Board of Directors fails to declare a dividend in
respect of a dividend period with respect to such series, then holders of such
Preferred Stock will have no right to receive a dividend in respect of such
dividend period, and the Issuer will have no obligation to pay the dividend
for such period, whether or not dividends are declared payable on any future
Dividend Payment Dates. Dividends on the shares of each series of Preferred
Stock for which dividends are cumulative will accrue from the date on which
the Issuer initially issues shares of such series.
No full dividends shall be declared or paid or set apart for payment on
preferred stock of the Issuer of any series ranking, as to dividends, on a
parity with or junior to the series of Preferred Stock offered by the
Prospectus Supplement attached hereto for any period unless full dividends for
the immediately preceding dividend period on such Preferred Stock (including
any accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such Preferred Stock are cumulative) have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for such payment. When dividends are not so
paid in full (or a sum sufficient for such full payment is not so set apart)
upon such Preferred Stock and any other preferred stock of the Issuer ranking
on a parity as to dividends with the Preferred Stock, dividends upon shares of
such Preferred Stock and dividends on such other preferred stock shall be
declared pro rata so that the amount of dividends declared per share on such
Preferred Stock and such other preferred stock shall in all cases bear to each
other the same ratio that accrued dividends for the then-current dividend
period per share on the shares of such Preferred Stock (including any
accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such Preferred Stock are cumulative) and accrued dividends,
including
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<PAGE>
required or permitted accumulations, if any, on shares of such other preferred
stock, bear to each other. Unless full dividends on the series of Preferred
Stock offered by the Prospectus Supplement attached hereto have been declared
and paid or set apart for payment for the immediately preceding dividend
period (including any accumulation in respect of unpaid dividends for prior
dividend periods, if dividends on such Preferred Stock are cumulative) (a) no
cash dividend or distribution (other than in shares of Junior Stock) may be
declared, set aside or paid on the Junior Stock, (b) the Issuer may not
repurchase, redeem or otherwise acquire any shares of its Junior Stock (except
by conversion into or exchange for Junior Stock) and (c) the Issuer may not,
directly or indirectly, repurchase, redeem or otherwise acquire any shares of
Preferred Stock or Parity Stock otherwise than pursuant to certain pro rata
offers to purchase or a concurrent redemption of all, or a pro rata portion,
of the outstanding shares of such Preferred Stock and Parity Stock (except by
conversion into or exchange for Junior Stock). Neither the Company nor Finance
currently has outstanding any Parity Stock.
CONVERTIBILITY
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock of the Company or another corporation or another series of Preferred
Stock or other securities of the Company, Finance or another corporation will
be set forth in the Prospectus Supplement relating thereto. See "Description
of Common Stock."
REDEMPTION
The terms, if any, on which shares of Preferred Stock of any series may be
redeemed will be set forth in the related Prospectus Supplement.
LIQUIDATION
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Issuer, the holders of a series of Preferred Stock will be
entitled, subject to the rights of creditors, but before any distribution or
payment to the holders of Common Stock or any other security ranking junior to
the Preferred Stock on liquidation, dissolution or winding up of the Issuer,
to receive an amount per share as set forth in the related Prospectus
Supplement plus accrued and unpaid dividends for the then-current dividend
period (including any accumulation in respect of unpaid dividends for prior
dividend periods, if dividends on such series of Preferred Stock are
cumulative). If the amounts available for distribution with respect to the
Preferred Stock and all other outstanding stock of the Issuer ranking on a
parity with the Preferred Stock upon liquidation are not sufficient to satisfy
the full liquidation rights of all the outstanding Preferred Stock and stock
ranking on a parity therewith, then the holders of each series of such stock
will share ratably in any such distribution of assets in proportion to the
full respective preferential amount (which in the case of preferred stock may
include accumulated dividends) to which they are entitled. After payment of
the full amount of the liquidation preference, unless otherwise specified in
the applicable Prospectus Supplement, the holders of shares of Preferred Stock
will not be entitled to any further participation in any distribution of
assets by the Issuer.
VOTING
The Preferred Stock of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement and as required by
applicable law. With respect to Preferred Stock issued by the Company, unless
otherwise specified in the related Prospectus Supplement, at any time
dividends in an amount equal to six quarterly dividend payments on the
Preferred Stock shall have accrued and be unpaid, holders of the Preferred
Stock issued by the Company shall have the right to a separate class vote
(together with the holders of shares of any Parity Stock upon which like
voting rights have been conferred and are exercisable, "Voting Parity Stock")
to elect two members of the Board of Directors of the Company at the next
annual meeting of stockholders and thereafter until dividends on the Preferred
Stock have been paid in full for four consecutive dividend periods, including
the last preceding dividend period. Additionally, without the affirmative vote
of the
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<PAGE>
holders of two-thirds of the shares of Preferred Stock issued by the Company
then outstanding (voting separately as a class together with any Voting Parity
Stock), the Company may not, either directly or indirectly or through merger
or consolidation with any other corporation, (i) approve the authorization,
creation or issuance, or an increase in the authorized or issued amount, of
any class or series of stock ranking prior to the shares of Preferred Stock in
rights and preferences or (ii) amend, alter or repeal its Certificate of
Incorporation or the Certificate of Designations so as to materially and
adversely change the specific terms of the Preferred Stock. An amendment which
increases the number of authorized shares of or authorizes the creation or
issuance of other classes or series of preferred stock ranking junior to or on
a parity with the Preferred Stock with respect to the payment of dividends or
distribution of assets upon liquidation, dissolution or winding up, or
substitutes the surviving entity in a merger, consolidation, reorganization or
other business combination for the Company, shall not be considered to be such
an adverse change. The applicable Prospectus Supplement will describe the
voting rights, if any, with respect to shares of Preferred Stock issued by
Finance.
As more fully described under "Description of Depositary Shares" below, if
the Company elects to issue Depositary Shares, each representing a fraction of
a share of a series of the Preferred Stock, each such Depositary Share will,
in effect, be entitled to such fraction of a vote per Depositary Share.
GUARANTEES
The Company will fully, unconditionally and irrevocably guarantee the
payment of accumulated and unpaid dividends, and payments due on liquidation
or redemption, as and when due, regardless of any defense, right of set-off or
counterclaim that Finance may have or assert. This obligation will rank junior
to all other obligations of the Company, and effectively rank senior to the
Company's common stock.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the related Prospectus Supplement, the
Certificate of Incorporation and in the certificate of designations or as
otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent for each series of Preferred Stock will be designated in
the related Prospectus Supplement.
SERIES A CONVERTIBLE PREFERRED STOCK OF THE COMPANY
As of September 8, 1995, a total of 4,664,863 shares of Series A Preferred
Stock were issued and outstanding.
Dividends
Holders of shares of Series A Convertible Preferred Stock will be entitled
to receive, when, as and if declared by the Company's Board of Directors out
of funds legally available therefor, cumulative cash dividends at an annual
rate of $4.00 per share, payable quarterly in arrears on March 1, June 1,
September 1 and December 1 of each year, to holders of record as they appear
on the stock transfer books on such record dates as are fixed by the Board of
Directors. So long as any shares of the Series A Convertible Preferred Stock
are outstanding, dividends on the Series A Convertible Preferred Stock will
accrue and be cumulative from and after dates determined, as follows: (i) if
issued during the period commencing immediately after the record date for a
dividend on such series and ending on the payment date for such dividend, then
from and after such dividend payment date; and (ii) otherwise from and after
the first day of March, June, September or December next preceding the date of
issue of such shares.
So long as any shares of Series A Convertible Preferred Stock are
outstanding, no dividend may be paid, or any other distribution made, on any
Common Stock or any other class or series of stock of the Company over
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<PAGE>
which the Series A Convertible Preferred Stock has preference or priority in
the payment of dividends or in the distribution of assets on any dissolution,
liquidation or winding up of the Company (collectively, the "Cyprus Junior
Stock"), other than a dividend payable in Cyprus Junior Stock, and no shares
of Cyprus Junior Stock may be acquired for consideration by the Company or any
subsidiary of the Company, unless all dividends on the Series A Convertible
Preferred Stock accrued for all past dividend periods have been paid or
declared and set aside for payment, and the full dividends thereon for the
then current quarter-yearly dividend period have been paid or declared.
Subject to the foregoing, and not otherwise, such dividends (payable in cash,
stock or otherwise) as may be determined by the Board of Directors may be
declared and paid on any Cyprus Junior Stock from time to time and the Series
A Convertible Preferred Stock will not be entitled to participate in any stock
in any such dividends whether payable in cash, stock or otherwise.
The amount of dividends payable per share of Series A Convertible Preferred
Stock for each quarterly dividend period will be computed by dividing the
annual dividend amount by four. The amount of dividends payable for the
initial dividend period and for any period shorter than a full quarterly
dividend period will be computed on the basis of a 360-day year of twelve 30-
day months. No interest will be payable in respect of any dividend payment on
the Series A Convertible Preferred Stock which may be in arrears.
Liquidation Rights
In the event of any voluntary liquidation, dissolution or winding up of the
Company, holders of the Series A Convertible Preferred Stock then outstanding
are entitled to receive the amount per share which such holders would have
been entitled to receive had such shares been redeemed on the date fixed for
payment, or if redemption on such date is not provided for, an amount equal to
the maximum price at which such shares are thereafter redeemable, plus in
respect of each share a sum computed at the rate of $4.00 per annum from and
after the date on which dividends on such share became cumulative to and
including the date fixed for such payment, less the aggregate of dividends
theretofore paid thereon, but computed without interest. In the event of any
involuntary liquidation, dissolution or winding up of the Company, holders of
the Series A Convertible Preferred Stock then outstanding are entitled to
receive out of the assets of the Company, before any distribution or payment
may be made to the holders of Cyprus Junior Stock, an amount equal to $50 per
share, plus in respect of each such share a sum computed at the rate of $4.00
per annum from and after the date on which dividends on such share became
cumulative to and including the date fixed for such payment, less the
aggregate of dividends theretofore paid thereon, but computed without
interest. After payment to the holders of the Series A Convertible Preferred
Stock of the full preferential amounts, the holders of the Series A
Convertible Preferred Stock will be entitled to no further participation in
any distribution of assets by the Company. A consolidation or merger of the
Company with another corporation, or a sale of all or substantially all of the
assets of the Company, will not be considered a liquidation, dissolution or
winding up of the Company.
Relation to Other Cyprus Preferred Stock
The holders of the Series A Convertible Preferred Stock will not be entitled
to receive any amount upon the dissolution, liquidation or winding up of the
Company until the liquidation preference of any other class of stock of the
Company ranking senior to the Series A Convertible Preferred Stock as to
rights upon liquidation, dissolution or winding up shall have been paid in
full. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the assets available for distribution are
insufficient to pay in full the amounts payable with respect to Series A
Convertible Preferred Stock and any other shares of stock of the Company
ranking as to any such distribution on a parity with the Series A Convertible
Preferred Stock, the holders of the Series A Convertible Preferred Stock and
of such other shares will share ratably in any distribution of assets of the
Company in proportion to the full respective preferential amounts to which
they are entitled.
Voting Rights
The holders of Series A Convertible Preferred Stock will have no voting
rights except as described below or as required by law. In exercising any such
vote, each outstanding share of Series A Convertible Preferred
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Stock will be entitled to one vote, excluding shares held by the Company or
any subsidiary of the Company, which shares under applicable law will have no
voting rights.
In the event that four quarterly dividends (whether or not consecutive)
payable on the Series A Convertible Preferred Stock or any class or series of
stock which ranks on a parity with the Series A Convertible Preferred Stock in
the payment of dividends (collectively, including the Series A Convertible
Preferred Stock, the "Cyprus Parity Preferred Stock") are in default, in whole
or in part, the holders of the outstanding Cyprus Parity Preferred Stock
(including the Series A Convertible Preferred Stock), in addition to any right
of holders of any series of Cyprus Parity Preferred stock to vote with the
Common Stock at the election of other directors or otherwise, will be entitled
at the next annual meeting of stockholders, voting separately as a class
regardless of series, each share of Cyprus Parity Preferred Stock having one
vote, to elect one director of the class of directors then being elected for a
three-year term and, in the event such default continues to exist at
succeeding annual meetings, the holders of the outstanding Cyprus Parity
Preferred Stock will be entitled in a like manner to elect one director of the
class of directors being elected at such meeting; thus, the holders of
outstanding Cyprus Parity Preferred Stock will be entitled as a class to elect
a maximum of three directors. If, after any default in the payment of
dividends on any series of Cyprus Parity Preferred Stock, all such dividends
in default are paid in full, the Cyprus Parity Preferred Stock will then be
divested of its then current right as a class to elect directors and any
directors elected by the holders of Cyprus Parity Preferred Stock shall
resign.
Redemption at Option of the Company
The Series A Convertible Preferred Stock may not be redeemed prior to
December 18, 1996. On and after such date, the Series A Convertible Preferred
Stock may be redeemed by the Company, at its option, in whole or in part at
any time, subject to the limitations, if any, imposed by applicable law, at a
redemption price of $52.40 per share if redeemed prior to December 18, 1997,
and at the following redemption prices per share, if redeemed during the 12-
month period ending December 17:
<TABLE>
<CAPTION>
PRICE
YEAR PER SHARE
---- ---------
<S> <C>
1998............................................................. $52.00
1999............................................................. $51.60
2000............................................................. $51.20
2001............................................................. $50.80
2002............................................................. $50.40
</TABLE>
and thereafter at $50 per share plus, in each case, accrued and unpaid
dividends to and including the redemption date, but computed without interest.
If fewer than all the outstanding shares of Series A Convertible Preferred
Stock are to be redeemed, the Company will select those shares to be redeemed
pro rata or by lot in such other manner as its Board of Directors may
determine.
There is no mandatory redemption or sinking fund obligation with respect to
the Series A Convertible Preferred Stock. So long as any shares of the Series
A Convertible Preferred Stock remain outstanding, if at any time dividends on
the Series A Convertible Preferred Stock are in arrears for any past quarter-
yearly dividend period, the Company may not redeem and neither the Company nor
any subsidiary may purchase (unless pursuant to a call for tenders meeting
certain conditions) less than all of the then-outstanding shares of the Series
A Convertible Preferred Stock until all accrued dividends for all past
quarter-yearly dividend periods have been paid or declared and funds set aside
for their payment.
Conversion Rights
The holder of any shares of Series A Convertible Preferred Stock will have
the right, at the holder's option, to convert any or all such shares into
Common Stock at any time at a conversion price applicable per share of Common
Stock calculated pursuant to the formula set forth in the Certificate of
Designation for the Series A
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<PAGE>
Convertible Preferred Stock and subject to adjustment as set forth therein
except that if the Series A Convertible Preferred Stock is called for
redemption, the conversion right will terminate at the close of business on
the tenth business day prior to the date fixed for such redemption.
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On February 23, 1989, the Company's Board of Directors declared a dividend
of one preferred share purchase right (a "Right") for each outstanding share
of Common Stock. The dividend was paid on March 6, 1989 (the "Rights Record
Date") to the stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company two-thirds of one one-hundredth
of a share of Series A Junior Participating Preferred Stock, par value $1.00
per share (the "Junior Preferred Shares"), of the Company at a price of $93.33
(the "Purchase Price"), subject to adjustment. The terms of the Rights are set
forth in a Rights Agreement dated as of February 23, 1989, as amended (the
"Rights Agreement"), between the Company and Society National Bank, as Rights
Agent (the "Rights Agent"). Each share of Common Stock is accompanied by one
duly authorized and validly issued Right having the terms summarized herein.
The Rights may have certain antitakeover effects.
Junior Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Junior Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be
entitled to an aggregate dividend of 150 times the dividend declared per share
of Common Stock. In the event of liquidation, the holders of the Junior
Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100 per share but will be entitled to an aggregate payment of 150
times the payment made per share of Common Stock. Each Junior Preferred Share
will have 150 votes, voting together with the Common Stock. Finally, in the
event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each Junior Preferred Share will be entitled to
receive 150 times the amount received per Common Stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the Junior Preferred Shares' dividend, liquidation
and voting rights, the value of the two-thirds of one one-hundredth interest
in a Junior Preferred Share purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
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<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject
to and qualified in its entirety by reference to the forms of Deposit
Agreement and Depositary Receipts relating to each series of the Preferred
Stock which have been or will be filed with the Commission at or prior to the
time of the offering of such series of the Preferred Stock.
GENERAL
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than shares of Preferred Stock. In the event
such option is exercised, the Company will provide for the issuance by a
Depositary to the public of receipts for Depositary Shares, each of which will
represent a fractional interest (to be set forth in the Prospectus Supplement
relating to a particular series of the Preferred Stock which will be filed
with the Commission at or prior to the time of the offering of such series of
the Preferred Stock as described below).
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the name
and address of the Depositary. Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share will be entitled, in proportion to the
applicable fractional interest in a share of Preferred Stock underlying such
Depositary Shares, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts
but not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will
be exchangeable for definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to
the terms thereof, a holder of Depositary Shares is entitled to have the
Depositary deliver to such holder the whole shares of Preferred Stock
underlying the Depositary Shares evidenced by the surrendered Depositary
Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction
of one cent, and any balance not so distributed shall be added to and treated
as part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
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<PAGE>
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, 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 the Preferred Stock held by the Depositary. The
Depositary shall mail notice of redemption not less than 30 and not more than
60 days prior to the date fixed for redemption to the record holders of the
Depositary Shares to be so redeemed at their respective addresses appearing in
the Depositary's books. The redemption price per Depositary Share will be
equal to the applicable fraction of the redemption price per share payable
with respect to such series of the Preferred Stock. Whenever the Company
redeems shares of Preferred Stock held by the Depositary, the Depositary will
redeem as of the same redemption date the number of Depositary Shares relating
to shares of Preferred Stock so redeemed. If less than all of the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be
selected by lot or pro rata as may be determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of Preferred
Stock underlying such holder's Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the number of shares of Preferred
Stock underlying such Depositary Shares in accordance with such instructions,
and the Company will agree to take all action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares relating
to such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which
materially and adversely alters the rights of the existing holders of
Depositary Shares will not be effective unless such amendment has been
approved by the record holders of at least a majority of the Depositary Shares
then outstanding. A Deposit Agreement may be terminated by the Company or the
Depositary only if (i) all outstanding Depositary Shares relating thereto have
been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock of the relevant series in connection with any liquidation,
dissolution or winding up of the Company and such distribution has been
distributed to the holders of the related Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with
27
<PAGE>
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Shares will pay other transfer and other taxes
and governmental charges and such other charges as are expressly provided in
the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from the Company which are delivered to the Depositary and
which the Company is required to furnish to the holders of the Preferred
Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares
or Preferred Stock unless satisfactory indemnity is furnished. They may rely
upon written advice of counsel or accountants, or information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Shares
or other persons believed to be competent and on documents believed to be
genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering 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 trust company having its
principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
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<PAGE>
DESCRIPTION OF COMMON STOCK
The Company's Certificate of Incorporation authorizes the issuance of
150,000,000 shares of common stock, without par value ("Common Stock"). A
description of the Company's Preferred Share Purchase Rights, which are
attached to and trade with the Common Stock, is incorporated by reference
herein.
The holders of Common Stock are entitled to receive dividends when and as
declared by the Board of Directors of the Company out of funds legally
available therefor, provided that if any shares of preferred stock are at the
time outstanding, the payment of dividends or other distributions on Common
Stock (including purchases of Common Stock) may be subject to the declaration
and payment of full cumulative dividends, and the absence of arrearages in any
mandatory sinking fund, on outstanding shares of preferred stock.
The holders of Common Stock are entitled to one vote for each share on all
matters voted on by stockholders, including elections of directors. The
holders of Common Stock do not have any conversion, redemption or preemptive
rights. In the event of the dissolution, liquidation or winding up of the
Company, holders of Common Stock are entitled to share ratably in any assets
remaining after the satisfaction in full of the prior rights of creditors,
including holders of the Company's indebtedness, and the aggregate liquidation
preference of any preferred stock then outstanding.
All outstanding shares of Common Stock are, and the shares offered hereby,
upon issuance, will be, fully paid and non-assessable.
Under the Certificate of Incorporation and By-Laws of the Company, the Board
of Directors is classified into three classes of members with staggered terms.
Action can be taken by stockholders only at an annual or special meeting,
action by written consent by stockholders being prohibited. No business may be
proposed by a stockholder at the annual meeting of stockholders without giving
written notice to the Company at least 90 days prior to the anniversary date
of the previous annual meeting. No nominations for director positions may be
proposed by a stockholder at any annual or special meeting of stockholders
without giving written notice to the Company at least 90 days before the
anniversary date of the previous annual meeting or within 10 days after notice
of a special meeting is mailed to the Company. A special meeting can be called
by the Board of Directors, the Chairman of the Board, the President or holders
of at least 50 percent of the shares entitled to vote at such meeting.
Directors can be removed only with cause by the vote of holders of at least 75
percent of outstanding shares of Common Stock.
Certain "business combinations" (as defined) involving "interested
stockholders" (defined generally to be holders of 10 percent or more of Common
Stock) require approval by vote of holders of at least 75 percent of shares
eligible to vote if not previously approved by a majority of the disinterested
members of the Board of Directors unless certain minimum price criteria and
procedural requirements are satisfied. In a business combination involving
cash or other consideration being paid to the Company's stockholders, the
consideration would be required to be either cash or the same type of
consideration used by the interested stockholder in acquiring the largest
portion of its shares prior to the first public announcement of the terms of
the proposed business combination. In the case of payments to holders of
Common Stock, the per share fair market value of such payments would generally
have to be at least equal in value to the higher of (i) the highest per share
price paid by the interested stockholder in acquiring any share of Common
Stock during the two years prior to such announcement date (although not an
interested stockholder at the time of any such acquisition) or in the
transaction in which it became an interested stockholder (whichever is higher)
or (ii) the fair market value per share of Common Stock on such announcement
date or on the date on which the interested stockholder became an interested
stockholder, whichever is higher, in either case appropriately adjusted for
any stock dividend, stock split or combination of shares. Unless a business
combination is approved by a majority of disinterested directors, it would be
subject to the 75 percent stockholder vote requirement, even if it satisfied
the minimum price criteria, if the interested stockholder acquired any
additional shares of Common Stock, directly from the Company or otherwise, in
any transaction subsequent to the transaction pursuant to which it became an
interested stockholder. The Certificate of Incorporation also contains an
"anti-greenmail" provision prohibiting certain purchases of
29
<PAGE>
shares by the Company from "interested stockholders" without a majority vote
of disinterested stockholders. These provisions could limit stockholders'
participation in certain types of business combinations or other transactions
that might be proposed in the future whether or not such transactions were
favored by a majority of stockholders and could enhance the ability of
officers and directors to retain their positions. Since no more than one-third
of the directors are to be elected at each annual meeting, action would be
required at two annual meetings to change a majority of the Board members,
even by holders of a majority of shares who believe a change may be
beneficial.
The transfer agent for the Common Stock is KeyCorp Shareholder Services,
Inc., 1515 Arapahoe Street, Suite 1505, Denver, Colorado 80202.
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<PAGE>
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), as well as other types of Warrants. Warrants may
be issued independently or together with any Debt Securities and may be
attached to or separate from such Debt Securities. Each series of Warrants
will be issued under a separate warrant agreement (each a "Warrant Agreement")
to be entered into between the Company and a warrant agent ("Warrant Agent").
The Warrant Agent will act solely as an agent of the Company in connection
with the Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners
of Warrants. The following sets forth certain general terms and provisions of
the Warrants offered hereby. Further terms of the Warrants and the applicable
Warrant Agreement will be set forth in the applicable Prospectus Supplement.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the following terms of
the Debt Warrants in respect of which this Prospectus is being delivered: (1)
the title of such Debt Warrants; (2) the aggregate number of such Debt
Warrants; (3) the price or prices at which such Debt Warrants will be issued;
(4) the currency or currencies, including composite currencies, in which the
price of such Debt Warrants may be payable; (5) the designation, aggregate
principal amount and terms of the Debt Securities purchasable upon exercise of
such Debt Warrants; (6) if applicable, the designation and terms of the Debt
Securities with which such Debt Warrants are issued and the number of such
Debt Warrants issued with each such Debt Security; (7) the currency or
currencies, including composite currencies, in which the principal of or any
premium or interest on the Debt Securities purchasable upon exercise of such
Debt Warrant will be payable; (8) if applicable, the date on and after which
such Debt Warrants and the related Debt Securities will be separately
transferable; (9) the price at which and currency or currencies, including
composite currencies, in which the Debt Securities purchasable upon exercise
of such Debt Warrants may be purchased; (10) the date on which the right to
exercise such Debt Warrants shall commence and the date on which such right
shall expire; (11) if applicable, the minimum or maximum amount of such Debt
Warrants which may be exercised at any one time; (12) information with respect
to book-entry procedures, if any; (13) if applicable, a discussion of certain
United States Federal income tax considerations; and (14) any other terms of
such Debt Warrants, including terms, procedures and limitations relating to
the exchange and exercise of such Debt Warrants.
OTHER WARRANTS
The Company may issue other Warrants. The applicable Prospectus Supplement
will describe the following terms of any such other Warrants in respect of
which this Prospectus is being delivered: (1) the title of such Warrants; (2)
the securities (which may include Preferred Stock or Common Stock) for which
such Warrants are exercisable; (3) the price or prices at which such Warrants
will be issued; (4) the currency or currencies, including composite
currencies, in which the price of such Warrants may be payable; (5) if
applicable, the designation and terms of the Debt Securities or Preferred
Stock with which such Warrants are issued and the number of such Warrants
issued with each such Debt Security or share of Preferred Stock or Common
Stock; (6) if applicable, the date on and after which such Warrants and the
related Debt Securities, Preferred Stock or Common Stock will be separately
transferable; (7) if applicable, a discussion of certain United States Federal
income tax considerations; and (8) any other terms of such Warrants, including
terms, procedures and limitations relating to the exchange and exercise of
such Warrants.
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<PAGE>
PLAN OF DISTRIBUTION
The Company may offer Securities to or through underwriters, through agents
or dealers or directly to other purchasers.
The distribution of 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 market prices
or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers in the form of
discounts, concessions or commissions. Underwriters, agents and dealers
participating in the distribution of the Securities may be deemed to be
underwriters within the meaning of the Securities Act.
Pursuant to agreements which may be entered into between the Company and any
underwriters or agents named in the Prospectus Supplement, such underwriters
or agents may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company may issue
Securities to or through underwriters, agents or dealers in connection with
the conversion or redemption of its or Finance's outstanding securities.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as agents for the Company to solicit
offers by certain institutional investors to purchase Debt Securities or
Preferred Stock 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
shall in all cases be subject to the approval of the Company. The obligations
of the purchaser under any such contract will not be subject to any conditions
except (i) the investment in the Debt Securities or Preferred Stock by the
institution shall not at the time of delivery be prohibited by the laws of any
jurisdiction in the United States to which such institution is subject, and
(ii) if a portion of the Debt Securities or Preferred Stock is being sold to
underwriters, the Company shall have sold to such underwriters the Debt
Securities or Preferred Stock not sold for delayed delivery. Underwriters and
such other persons will not have any responsibility in respect of the validity
or performance of such contracts.
All Debt Securities, Preferred Stock and Warrants offered will be a new
issue of securities with no established trading market. Any underwriters to
whom such Debt Securities, Preferred Stock and Warrants are sold by the
Company for public offering and sale may make a market in such Debt
Securities, Preferred Stock and Warrants, but such underwriters 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 or the trading
markets for any Debt Securities, Preferred Stock or Warrants.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
The specific terms and manner of sale of the Securities in respect of which
this Prospectus is being delivered are set forth or summarized in the
Prospectus Supplement.
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<PAGE>
VALIDITY OF SECURITIES
The validity of the Securities offered will be passed upon for the Company
and Finance by Davis, Graham & Stubbs, L.L.C., Denver, Colorado.
EXPERTS
The consolidated financial statements as of December 31, 1994 and 1993 and
for each of the three years in the period ended December 31, 1994,
incorporated by reference in this Prospectus from the Company's Annual Report
on Form 10-K for the year ended December 31, 1994, have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in accounting and auditing.
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<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS
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 DEALER.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL CREATE, UNDER ANY CIRCUMSTANCES, AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT
AND PROSPECTUS, OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DO THEY CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL OR NOT AUTHORIZED
OR IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............................................ S-3
Risk Factors............................................................. S-4
Use of Proceeds.......................................................... S-6
Capitalization........................................................... S-7
The Company.............................................................. S-8
Selected Financial Data.................................................. S-11
Price Range of Common Stock and Dividends................................ S-12
Certain United States Tax Consequences to Non-United States Holders...... S-13
Underwriting............................................................. S-15
Validity of Shares....................................................... S-17
Experts.................................................................. S-17
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
The Company.............................................................. 4
Use of Proceeds.......................................................... 4
Ratios of Earnings to Fixed Charges and Earnings to Fixed Charges and
Preferred Stock Dividends............................................... 4
Price Range of Common Stock and Dividends................................ 5
Description of Debt Securities and
Guarantees.............................................................. 6
Description of Preferred Stock........................................... 19
Description of Depositary Shares......................................... 26
Description of Common Stock.............................................. 29
Description of Warrants.................................................. 31
Plan of Distribution..................................................... 32
Validity of Securities................................................... 33
Experts.................................................................. 33
</TABLE>
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12,000,000 SHARES
[LOGO] CYPRUS AMAX
MINERALS COMPANY
COMMON STOCK
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PROSPECTUS SUPPLEMENT
JUNE , 1996
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SMITH BARNEY INC.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
UBS SECURITIES
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