Filed Pursuant to Rule 424(b)(5)
File No. 33-60065
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 28, 1995)
1,000,000 WARRANTS
THE BEAR STEARNS COMPANIES INC.
NIKKEI 225 INDEX* STRIKE RESET CALL WARRANTS
EXPIRING OCTOBER 24, 1997
Each Nikkei 225 Index Strike Reset Call Warrant (the "Warrant") will entitle
the holder thereof, upon exercise (including automatic exercise), to receive
from The Bear Stearns Companies Inc. (the "Company") an amount in U.S. dollars
(the "Cash Settlement Value") calculated by reference to increases in the Nikkei
Average (the "Nikkei 225 Index") published by Nihon Keizai Shimbun, Inc.
("NKS"). The Cash Settlement Value will equal the quotient (rounded down to the
nearest cent) of (A) the amount, if any, by which the Spot Nikkei 225 Index (as
defined herein) for the applicable Valuation Date (as defined herein) exceeds
the Strike Level (as defined herein) divided by (B) the product of 6.0 and the
fixed Japanese yen/U.S. dollar Exchange Rate of 101.50 Japanese yen per U.S.
$1.00. If the Strike Level is equal to or exceeds the Spot Nikkei 225 Index on
such Valuation Date, the Cash Settlement Value will be zero, in which case the
holder will be permitted, subject to certain exceptions, to re-exercise the
Warrant prior to the Expiration Date or the Delisting Date (as those terms are
defined herein). The "Strike Level" is equal to 15,954.012, the closing value
(afternoon session) of the Nikkei 225 Index on October 26, 1995, multiplied by
0.90, subject to adjustment as described below on the Reset Date. The "Spot
Nikkei 225 Index" for any date means the closing value (afternoon session) on
such date of the Nikkei 225 Index. On the date of this Prospectus Supplement,
the Cash Settlement Value of the Warrants is $2.91. If the closing value
(afternoon session) (the "Reset Date Closing Value") of the Nikkei 225 Index on
January 26, 1996 (three months after the date of this Prospectus Supplement)
(unless extended as described herein, the "Reset Date") is lower than 17,726.68
(the closing value (afternoon session) on October 26, 1995 (the "Initial Closing
Value"), then the Strike Level shall be reduced by the full amount, if any, by
which the Initial Closing Value is greater than the Reset Date Closing Value. In
the event that a Substitute Index (as defined herein) is substituted for the
Nikkei 225 Index, the Strike Level and the formula used to determine the Cash
Settlement Value will be adjusted so as to preserve any increases or decreases
in the Nikkei 225 Index which have occurred as of the time of such substitution,
and on any date thereafter the closing level of the Substitute Index will be
deemed to be the Spot Nikkei 225 Index.
The Warrants have been approved for listing on the American Stock Exchange
(the "AMEX"). The AMEX symbol for the Warrants will be "NKB.WS."
THE WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE RISK OF EXPIRING
WORTHLESS IF THE LEVEL OF THE NIKKEI 225 INDEX DECLINES. PURCHASERS SHOULD BE
PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE PRICE OF THEIR WARRANTS AND ARE
ADVISED TO CONSIDER CAREFULLY THE INFORMATION UNDER "RISK FACTORS" COMMENCING ON
PAGE S-10 HEREIN, AS WELL AS THE OTHER INFORMATION CONTAINED HEREIN AND IN THE
ACCOMPANYING PROSPECTUS.
(continued on next page)
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* The use of and references to the term "Nikkei 225 Index" herein has been
consented to by NKS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[CAPTION]
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PROCEEDS
PRICE UNDERWRITING TO COMPANY
TO PUBLIC(1) DISCOUNTS(1)(2) (2)(3)
<S> <C> <C> <C>
Per Warrant.............................. $7.00 $.49 $6.51
Total(4)................................. $7,000,000 $490,000 $6,510,000
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(1) For investors purchasing 45,000 or more Warrants or 75,000 or more Warrants
in any single transaction, the Price to Public will be $6.875 per Warrant
and $6.75 per Warrant, respectively, and Underwriting Discounts will be
$.365 per Warrant and $.24 per Warrant, respectively, subject to a minimum
holding period requirement as described herein under "Underwriting". Resales
of Warrants by those investors upon expiration of the holding period may
adversely effect the market price of the Warrants. See "Underwriting".
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated at $150,000.
(4) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to an additional 150,000 Warrants on
the same terms, solely to cover over-allotments, if any. If the option is
exercised in full, the total Price to Public and Underwriting Discounts
(subject to reduction as described above) and Proceeds to Company will be
$8,050,000, $563,500 and $7,486,500, respectively. See "Underwriting"
herein.
------------------------
The Warrants are offered by the Underwriters, subject to prior sale, when, as
and if delivered to and accepted by the Underwriters, and subject to their right
to reject orders in whole or in part. It is expected that delivery of the
Warrants will be made in New York City on or about October 31, 1995.
------------------------
BEAR, STEARNS & CO. INC.
The date of this Prospectus Supplement is October 26, 1995.
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(continued from cover page)
The valuation of and payment for any exercised Warrant (including in the
case of automatic exercise) may be postponed as a result of an Extraordinary
Event or an Exercise Limitation Event (each as defined herein) or as a result of
the exercise of a number of Warrants exceeding the maximum permissible amount as
described herein, in which case the Warrantholder (as defined herein) will
receive a Cash Settlement Value or, under certain circumstances, the Alternative
Settlement Amount (as defined herein) for such Warrant, in either case
determined as of a later date. In addition, following the occurrence of an
Extension Event (as defined herein), exercises of Warrants will be suspended
and, under certain circumstances, any Warrants will be deemed to be worthless.
See "Description of the Warrants--Extension Events, Extraordinary Events and
Exercise Limitation Events" herein. As a result, investors may suffer a total
loss of their investment in the Warrants even though the Cash Settlement Value
of the Warrants if calculated using the fair value of the Underlying Stocks (as
defined herein) at the time the Warrants are deemed to be worthless, would be
greater than zero.
The Warrants will be exercisable at any time from the date of issuance until
3:00 P.M., New York City time, on the earlier of the New York Business Day (as
hereinafter defined) immediately preceding (i) October 24, 1997, the Expiration
Date for the Warrants, or (ii) the Delisting Date. Any Warrant not exercised at
or before 3:00 P.M., New York City time, on such New York Business Day will be
automatically exercised on the Expiration Date, subject to an automatic
extension of the term of the Warrants as described herein. All exercises of
Warrants (other than on the Expiration Date or the Delisting Date or following
the occurrence of an Extension Event) are subject, at the Company's option, to
the limitation that not more than 750,000 Warrants in total may be exercised on
any Exercise Date and not more than 250,000 Warrants may be exercised by or on
behalf of any person or entity, either individually or in concert with any other
person or entity, on any Exercise Date. See "Description of the
Warrants--Exercise of Warrants--Maximum Exercise Amount" herein.
A Warrantholder may exercise no fewer than 500 Warrants at any one time,
except in the case of automatic exercise. See "Description of the
Warrants--Exercise of Warrants--Minimum Exercise Amount" herein. A Warrantholder
tendering Warrants for exercise will have the option of specifying that, unless
an Alternative Settlement Amount is payable in respect of such Warrants, such
Warrants are not to be exercised if the Spot Nikkei 225 Index as of the
applicable Valuation Date is five hundred (500) or more points lower than the
most recent closing level of the Nikkei 225 Index prior to exercise (subject to
adjustment in the case of any substitution of a Substitute Index for the Nikkei
225 Index.) See "Description of the Warrants--Limit Option" herein.
The Warrants are unsecured contractual obligations of the Company and rank
pari passu with all other unsecured and unsubordinated contractual obligations
and indebtedness of the Company. Since the Company is a holding company, the
Warrants will be effectively subordinated to the claims of creditors of its
subsidiaries with respect to the assets of those subsidiaries. At June 30, 1995,
the Company had outstanding approximately $12.3 billion of indebtedness, none of
which was secured, and subsidiaries of the Company had outstanding approximately
$822 million of indebtedness (excluding $29.6 billion relating to securities
sold under repurchase agreements).
REFERENCES
References herein to "U.S. dollar," "U.S. $" or "$" are to the lawful
currency of the United States of America. References to "Japanese yen" or "yen"
are to the lawful currency of Japan. As used herein, "New York Business Day"
means any day other than a Saturday or Sunday or day on which either the AMEX or
the New York Stock Exchange is not open for securities trading or commercial
banks in New York City are required or authorized by law or executive order to
remain closed, and "Tokyo Business Day" means any day other than (i) a Saturday,
Sunday or day on which banks are not open for a full day of business in Tokyo or
(ii) a day on which the Tokyo Stock Exchange (the "TSE"), the Singapore
International Monetary Exchange Ltd. (the "SIMEX") or the Osaka Securities
Exchange (the "OSE") is not open for business. As used herein, "Index
Calculation Day" means any day on which the Nikkei 225 Index, any Successor
Index or any Substitute Index is calculated and published.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE WARRANTS
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE
OVER-THE COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and in the related
Prospectus and in the documents incorporated by reference herein and therein.
Appendix A hereto (the "Index of Terms") contains a listing of defined terms and
pages on which they are defined in this Prospectus Supplement.
THE OFFERING
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SECURITIES OFFERED........................... 1,000,000 Nikkei 225 Index Strike Reset Call
Warrants expiring October 24, 1997.
PRICE PER WARRANT............................ The initial public offering price for the
Warrants will be $7.00 per Warrant, except
that the price will be $6.875 per Warrant and
$6.75 per Warrant for investors purchasing
45,000 or more Warrants or 75,000 or more
Warrants, respectively, in a single
transaction, subject to a 30-day minimum
holding period requirement. See
"Underwriting" herein.
NIKKEI 225 INDEX............................. The Nikkei 225 Index is a modified, price-
weighted stock index calculated, published
and disseminated by NKS. The Nikkei 225 Index
is being used by the Company with the
permission of NKS. The Nikkei 225 Index
measures the composite price performance of
225 Japanese stocks trading on the Tokyo
Stock Exchange (the "TSE") representing a
broad cross section of Japanese industries.
Stocks that constitute the Nikkei 225 Index
may be deleted or added at the discretion of
the NKS which is under no obligation to
continue the calculation and the
dissemination of the Nikkei 225 Index. See
"The Nikkei 225 Index" herein.
A Substitute Index may be substituted for the
Nikkei 225 Index for purposes of determining
the Spot Nikkei 225 Index if the following
conditions are fulfilled (a "Substitution
Event"):
(a) Either of the following has occurred:
(i) The AMEX or another United States
securities exchange publishes (on a
basis not less regularly than each day
on which such exchange and the TSE are
open for trading) an index (the "New
Japan Index") which for a period of 90
days immediately preceding the date of
the Substitution Event (as defined
herein) has a correlation based on
daily, closing value to closing value,
percentage changes, of not less than
90% with the Nikkei 300 Index (as
defined herein); and warrants with
payments determined by reference to
the New Japan Index have been approved
to be listed on the AMEX or such other
exchange by the Commission; or
(ii) Warrants with payments determined by
reference to the Nikkei 300 Index
have
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been approved to be listed on the
AMEX or such other exchange by the
Commission; and
(b) Either of the following has occurred:
(i) The Nikkei 225 Index is no longer
published and/or the Nikkei 225
Futures Contracts (as defined herein)
have been delisted from trading on the
OSE; or
(ii) The Adjusted Trading Volume and the
Adjusted Open Interest (in each case,
as defined herein) for the two Nikkei
300 Futures Contracts (as defined
herein) with expiration dates closest
in time to the Substitution Event
exceed the Adjusted Trading Volume
and the Adjusted Open Interest,
respectively, for the two Nikkei 225
Futures Contracts (as defined herein)
with expiration dates closest in time
to the Substitution Event, each for
any three-month period prior to the
date of any Substitution Event; and
(c) To the extent required, the Company, the
AMEX and/or such other exchange shall
have obtained any licenses necessary to
use the New Japan Index or the Nikkei 300
Index. The Company will agree in the
Warrant Agreement to use its reasonable
efforts to obtain any such license.
Notwithstanding the above, unless the Nikkei
225 Index is no longer published and/or the
Nikkei 225 Futures Contracts shall have been
delisted from trading on the OSE, a
Substitution Event will not be deemed to have
occurred on any of the 60 days immediately
preceding the expiration date of the
Warrants.
As further described herein, any such
substitution will be made for the purpose of
utilizing a capitalization-weighted index,
and will be made in a manner intended to
preserve any increases or decreases in the
Nikkei 225 Index which have occurred as of
the time a Substitute Index is substituted
for the Nikkei 225 Index. See "Nikkei 225
Index--Substitution of the Nikkei 225 Index"
herein.
If the original publisher of the Nikkei 225
Index or any Substitute Index or any Third
Party (as hereinafter defined) discontinues
publication of the Nikkei 225 Index, any
Successor Index (as hereinafter defined) or
any Substitute Index, the Determination Agent
(as hereinafter defined) shall determine the
applicable Cash Settlement Value based on the
formula and method used in calculating the
Nikkei 225 Index, any Successor Index or any
Substitute Index as in effect on the date the
Nikkei 225 Index, such Successor Index or
such Substitute Index was last published. See
"Risk Factors " herein.
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CASH SETTLEMENT VALUE........................ Upon exercise (including automatic exercise),
each Warrant will entitle the holder thereof
to receive from the Company an amount (the
"Cash Settlement Value") in U.S. Dollars
computed by reference to increases in the
Nikkei 225 Index. The Cash Settlement Value
will equal the quotient (rounded down to the
nearest cent) of (A) the amount, if any, by
which the Spot Nikkei 225 Index for the
applicable Valuation Date exceeds the Strike
Level divided by (B) the product of 6.0 and
the fixed Japanese yen/U.S. dollar exchange
rate of 101.50 Japanese yen per U.S. $1.00.
If the Strike Level is equal to or exceeds
the Spot Nikkei 225 Index for the applicable
Valuation Date, the Cash Settlement Value
will be zero, in which case (except in the
case of automatic exercise), the
Warrantholder will be permitted, subject to
certain exceptions, to re-exercise the
Warrant. The Strike Level is equal to
15,954.012 the closing value (afternoon
session) of the Nikkei 225 Index on October
26, 1995, multiplied by 0.90, subject to
adjustment as described below on the Reset
Date. The "Spot Nikkei 225 Index" for any
date means the closing value (afternoon
session) on such date of the Nikkei 225
Index. On the date of this Prospectus
Supplement, the Spot Nikkei 225 Index is
17,726.68 and the Cash Settlement Value of
each Warrant is $2.91 If the closing value
(afternoon session) (the "Reset Date Closing
Value") of the Nikkei 225 Index on January
26, 1996 (three months after the date of this
Prospectus Supplement) (unless extended as
described herein, the "Reset Date") is lower
than 17,726.68 (the closing value (afternoon
session) on October 26, 1995 (the "Initial
Closing Value"), then the Strike Level shall
be reduced by the full amount, if any, by
which the Initial Closing Value is greater
than the Reset Date Closing Value. If a
Substitute Index (as defined herein) is
substituted for the Nikkei 225 Index, the
Strike Level and the formula used to
determine the Cash Settlement Value will be
adjusted so as to preserve any increases or
decreases in the Nikkei 225 Index that have
occurred to the time of such substitution,
and on any date thereafter the closing level
of the Substitute Index will be deemed to be
the Spot Nikkei 225 Index. See "Nikkei 225
Index--Substitution of the Nikkei 225 Index"
herein.
EXERCISE OF WARRANTS......................... The Warrants will be exercisable at any time
from the date of issuance (subject to
postponement as described herein under
"Description of the Warrants--Extension
Events, Extraordinary Events and Exercise
Limitation Events" or as a result of the
exercise of a number of Warrants exceeding
the maximum permissible amount) until 3:00
P.M., New York City time, on the New York
Business Day immediately preceding the
earlier of (i) October 24, 1997 (the
"Expiration Date") and (ii) the effective
date of the delisting of the Warrants from,
or permanent suspension
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S-5
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from trading on (within the meaning of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and
regulations thereunder) the AMEX and failure
to have the Warrants accepted at the same
time for trading pursuant to the rules of
another self-regulatory organization (an
"SRO") that are filed with the Securities and
Exchange Commission (the "Commission") under
the Exchange Act (such last New York Business
Day, the "Delisting Date"). The Warrants will
expire on the Expiration Date, subject to an
automatic extension of the term of the
Warrants as described herein under
"Description of the Warrants-- Extension
Events, Extraordinary Events and Exercise
Limitation Events." Unless the term of the
Warrants is extended, all Warrants not
previously exercised will be automatically
exercised on the earlier of the Expiration
Date or the Delisting Date, as the case may
be. See "Description of the
Warrants--Exercise of Warrants" herein.
EXERCISE AMOUNT.............................. A Warrantholder may exercise no fewer than
500 Warrants at any one time, except in the
case of automatic exercise. See "Description
of the Warrants--Exercise of
Warrants--Minimum Exercise Amount" herein.
All exercises of Warrants (other than on the
Expiration Date or the Delisting Date or upon
the cancellation of Warrants or following the
occurrence of an Extension Event) are
subject, at the Company's option, to the
limitation that not more than 750,000
Warrants in total may be exercised on any
Exercise Date and not more than 250,000
Warrants may be exercised by or on behalf of
any beneficial owner, either individually or
in concert with any other beneficial owner,
on any Exercise Date. See "Description of the
Warrants--Exercise of Warrants--Maximum
Exercise Amount" herein.
LIMIT OPTION................................. Except for Warrants subject to automatic
exercise and except with respect to payments
of any Alternative Settlement Amount and
except following an Extension Event, each
Warrantholder, in connection with any
exercise of Warrants (including postponed
exercise following an Extraordinary Event or
an Exercise Limitation Event), will have the
option (the "Limit Option") to specify that
such Warrants are not to be exercised if the
Spot Nikkei 225 Index that would otherwise be
used to determine the Cash Settlement Value
of such Warrants is five hundred (500) or
more points lower than the closing value
(afternoon session) of the Nikkei 225 Index
(or, in the event that the Cash Settlement
Value is to be determined with respect to any
Substitute Index, a number of points below
the closing level of such index that will be
determined by the Determination Agent in the
manner described under "Description of the
Warrrants-- Substitution of the Nikkei 225
Index") for the day
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S-6
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specified below (such closing level, the
"Limit Option Reference Index"). The Limit
Option Reference Index will be the closing
level of the Nikkei 225 Index (or any
Successor Index or any Substitute Index, as
the case may be) on the relevant Exercise
Date (or if such day is not an Index
Calculation Day, on the immediately preceding
Index Calculation Day). See "Description of
the Warrants--Limit Option."
EXTENSION EVENTS, EXTRAORDINARY EVENTS AND
EXERCISE LIMITATION EVENTS................... See "Description of the Warrants--Extension
Events, Extraordinary Events and Exercise
Limitation Events" herein for a description
of such events and the consequences of the
declaration of such an event by the Company.
RISK FACTORS................................. The Warrants are speculative and involve a
high degree of risk, including (but not
limited to) risks arising from fluctuations
in the prices of the stocks comprising the
Nikkei 225 Index, risks relating to the
Nikkei 225 Index itself, and general risks
applicable to the TSE (the exchange on which
all the stocks underlying the Nikkei 225 are
traded). Investors should recognize that
their Warrants may expire worthless and
should be prepared to sustain a total loss of
the purchase price of their Warrants. The
Warrants are appropriate investments only for
investors with options approved accounts who
are able to understand and bear the risk of a
speculative investment in the Warrants.
Because the Determination Agent is an
affiliate of the Company, potential conflicts
of interest may exist between the
Determination Agent and the Warrantholders.
Although the Warrants have been approved for
listing on the AMEX, it is not possible to
predict how the Warrants will trade in the
secondary market or whether such market will
be liquid or illiquid. To the extent Warrants
are exercised, the number of Warrants
outstanding will decrease, resulting in a
decrease in the liquidity of the Warrants. In
addition, the Company or one or more of its
affiliates may from time to time purchase
Warrants resulting in a decrease in the
liquidity of the Warrants.
In the event that a suspension, material
limitation or absence of trading on the TSE
of 20% or more in number of the Underlying
Stocks (as defined herein) is continuing on
the Expiration Date (an "Extension Event"),
the term of the Warrants will be extended for
a period of one month (the "Extended
Expiration Date"), except that if the Cash
Settlement Value or the Intrinsic Value used
in calculating the Alternative Settlement
Amount, as the case may be, of the Warrants
would have been zero if the Warrants had been
exercised such that the Valuation Date for
such exercise was the Measurement Date (as
defined herein), then the term of the
Warrants will not be extended and the
Warrants will be deemed to be worthless. See
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"Description of the Warrants--Extension
Events, Extraordinary Events and Exercise
Limitation Events" herein. The Warrants will
also be deemed to be worthless if the
Expiration Date of the Warrants is extended
but an Extension Event is continuing on the
Extended Expiration Date or any earlier
Delisting Date. As a result, investors may
suffer a total loss of their investment in
the Warrants even though the Cash Settlement
Value of the Warrants, if calculated using
the fair value of the Underlying Stocks at
the time the Warrants are deemed to be
worthless, would be greater than zero.
Under certain circumstances, a Substitute
Index will replace the Nikkei 225 Index for
purposes of determining the Spot Nikkei 225
Index. On any date following such
substitution, the level of the Substitute
Index (and thus the Spot Nikkei 225 Index)
may be higher than, lower than, or at the
same level as, the Nikkei 225 Index.
Therefore, a Warrantholder who exercises a
Warrant following any such substitution may
realize a Cash Settlement Value that is
greater than, less than, or equal to, the
Cash Settlement Value that might have been
realized had no such substitution occurred.
No assurances can be given as to the
potential level of any Substitute Index
relative to the level of the Nikkei 225 Index
on any date. However, upon any such
substitution, the Strike Level and the
formula used to determine the Cash Settlement
Value will be adjusted so as to preserve any
increases or decreases in the Nikkei 225
Index which have occurred as of the time of
such substitution. See "The Nikkei 225
Index-- Substitution of the Nikkei 225 Index"
herein.
Investors should consider carefully the risks
and other matters discussed under "Risk
Factors," "Description of the Warrants" and
"Certain United States Income Tax
Considerations" herein prior to purchasing
the Warrants.
WHO SHOULD INVEST............................ The AMEX requires that the Warrants be sold
only to investors whose accounts have been
approved for options trading. In addition,
the AMEX requires that its members and member
organizations and registered employees
thereof make certain suitability
determinations before recommending
transactions in Warrants.
Investment decisions relating to
international stock index warrants require an
investor to predict the direction of
movements in the underlying index as well as
the amount and timing of those movements. The
Warrants may change substantially in value,
or lose all of their value, with relatively
small movements in the underlying index.
Moreover, in the absence of countervailing
factors, such as an offsetting movement in
the level of the index, the market value of
an index warrant will tend to decrease over
time and the warrant will have no market
value after the time for exercise has
expired. Accordingly, the
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Warrants involve a high degree of risk and
are not appropriate for every investor.
Investors who are considering purchasing the
Warrants should have an options approved
account, be able to understand and bear the
risk of an investment in the Warrants, be
experienced with respect to options and
option transactions and understand the risks
of stock index transactions. Such investors
should reach an investment decision only
after careful consideration with their
advisers of the suitability of the Warrants
in light of their particular financial
circumstances and the information set forth
in this Prospectus Supplement and the
Prospectus. See "Risk Factors" herein. As
indicated above, investors should be prepared
to sustain a total loss of the purchase price
of the Warrants.
LISTING...................................... The American Stock Exchange.
WARRANT TRADING SYMBOL....................... NKB.WS
WARRANT AGENT................................ Chemical Bank
DETERMINATION AGENT.......................... Bear, Stearns & Co. Inc. ("Bear Stearns")
INDEX QUOTATION SYMBOL ON REPORTING SERVICES
OPERATED BY BLOOMBERG, L.P................... NKY
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USE OF PROCEEDS AND HEDGING
All or a portion of the net proceeds from the sale of the Warrants will be
used by the Company or one or more of its subsidiaries in connection with
hedging the obligations represented by the Warrants. Any remaining net proceeds
will be used for general corporate purposes. See "Use of Proceeds" in the
Prospectus.
The Company, through its subsidiaries, has hedged its anticipated exposure
in connection with the Warrants by taking positions in futures contracts listed
on the SIMEX linked to the Nikkei 225 Index. Such hedging was carried out in a
manner designed to minimize any impact on the prices of the Underlying Stocks,
but could have affected the prices of the Underlying Stocks and, therefore, the
Nikkei 225 Index. Although the Company has no reason to believe that its hedging
activity had such an impact, there can be no assurance that the Company did not
affect the prices of the Underlying Stocks as a result of its hedging
activities. The Company, through its subsidiaries, expects to modify its hedge
position throughout the life of the Warrants by purchasing and selling futures
or options contracts listed on the SIMEX, the OSE or the Chicago Mercantile
Exchange ("CME") linked to the Nikkei 225 Index, listed or over-the-counter
options linked to the Nikkei 225 Index, the Underlying Stocks, other available
securities and instruments and/or, in the event of a substitution of a
Substitute Index for the Nikkei 225 Index, futures or options contracts listed
on the SIMEX, OSE or CME linked to the Nikkei 300 Index, listed options linked
to the Substitute Index or over-the-counter options linked to the Nikkei 300
Index and the component stocks of the Substitute Index.
RISK FACTORS
TIME LAG AFTER EXERCISE AND POTENTIAL INTERIM CHANGES IN SPOT NIKKEI 225 INDEX
Because the Valuation Date for an exercised Warrant will occur after the
Exercise Date, an owner of a Warrant (a "Warrantholder") will not be able to
determine, at the time of exercise of a Warrant, the Spot Nikkei 225 Index that
will be used in calculating the Cash Settlement Value of such Warrant (and will
thus be unable to determine such Cash Settlement Value).
EXTRAORDINARY EVENTS; EXERCISE LIMITATION EVENTS; MAXIMUM EXERCISE AMOUNT
The Valuation Date for an exercised Warrant may be postponed upon the
occurrence and continuation of an Extraordinary Event or an Exercise Limitation
Event (see "Description of the Warrants--Extension Events, Extraordinary Events
and Exercise Limitation Events" herein) or as a result of the exercise of a
number of Warrants exceeding the limits on exercise described herein under
"Description of the Warrants--Exercise of Warrants--Maximum Exercise Amount."
CERTAIN FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS
The level of the Spot Nikkei 225 Index will determine whether the Warrants
have a Cash Settlement Value greater than zero on any particular day. The
Warrants are "in-the-money" (i.e., their Cash Settlement Value is greater than
zero) as of the date of this Prospectus Supplement and will continue to be
"in-the-money" on any particular day if the level of the Nikkei 225 Index is
above the Strike Level on such day. An increase in the level of the Spot Nikkei
225 Index will result in a greater Cash Settlement Value, and a decrease in the
level of the Spot Nikkei 225 Index will result in a lesser or zero Cash
Settlement Value. Potential profit or loss upon exercise (including automatic
exercise) of a Warrant will be a function of the Cash Settlement Value (or, if
applicable, the Alternative Settlement Amount) of such Warrant, the purchase
price of such Warrant and any related transaction costs.
Each Warrant has a Cash Settlement Value of $2.91 as of the date of this
Prospectus Supplement. The Cash Settlement Value at any time prior to expiration
is expected typically to be less than the Warrants' market value at that time.
The difference between the market value and the Cash Settlement Value will
reflect a number of factors, including the "time value" for the Warrants, and
the supply and
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demand for the Warrants. The "time value" of the Warrants will depend upon the
length of the period remaining to expiration of the Warrants. The Expiration
Date of the Warrants will be accelerated should the Warrants be delisted or
should there be a permanent suspension of trading of the Warrants on the AMEX or
other SRO whose rules are filed with the Commission under the Exchange Act. Any
such acceleration could result in the total loss of any otherwise remaining
"time value" and could occur when the Warrants are "out-of-the-money" (i.e.,
when the Spot Nikkei 225 Index is less than or equal to the Strike Level), thus
resulting in total loss of the purchase price of the Warrants.
Investment decisions relating to the Warrants require the investor to
predict the direction of movements in the underlying index as well as the amount
and timing of those movements. International stock index warrants may change
substantially in value, or lose all of their value, with relatively small
movements in the index. Moreover, an index warrant is a "wasting asset" in that
in the absence of countervailing factors, such as an offsetting movement in the
level of the index, the market value of an index warrant will tend to decrease
over time and the warrant will have no market value after the time for exercise
has expired. Accordingly, the Warrants involve a high degree of risk and are not
appropriate for every investor. As such, investors who are considering
purchasing the Warrants must be able to understand and bear the risk of a
speculative investment in the Warrants and be experienced with respect to
options and option transactions and understand the risks of stock index
transactions. Such investors should reach an investment decision only after
careful consideration, with their advisers, of the suitability of the Warrants
in light of their particular financial circumstances and the information set
forth in this Prospectus Supplement and in the Prospectus.
VOLATILITY OF THE NIKKEI 225 INDEX
Since its inception, the Nikkei 225 Index has experienced significant daily
price fluctuations and it is impossible to predict its future direction. See
"The Nikkei 225 Index--Historical Data on Nikkei 225 Index" herein.
INVESTOR SUITABILITY
The AMEX requires that the Warrants be sold only to investors with options
approved accounts. In addition, the AMEX requires that its members and member
organizations and registered employees thereof make certain suitability
determinations before recommending transactions in Warrants. Before making any
investment in the Warrants, it is important that a prospective investor become
informed about and understand the nature of the Warrants in general, the
specific terms of the Warrants and the nature of the Nikkei 225 Index. An
investor should understand the consequences of liquidating his investment in a
Warrant by exercising it as opposed to selling it. It is especially important
for an investor to be familiar with the procedures governing the exercise of the
Warrants, since the Cash Settlement Value of the Warrants will fluctuate over
the life of the Warrants and a failure to properly exercise a Warrant prior to
its expiration could result in the loss of the opportunity to realize a Cash
Settlement Value that is higher than the Cash Settlement Value that might
otherwise be realized on the Expiration Date. To properly exercise Warrants, an
investor must know when Warrants are exercisable and how to exercise them.
Investors considering the purchase of Warrants should be experienced with
respect to options and options transactions, should understand the risks of
stock index transactions and should reach an investment decision only after
careful consideration, with their advisers, of the suitability of the Warrants
in light of their particular financial circumstances and the information set
forth in this Prospectus Supplement and in the Prospectus.
RISKS DUE TO DELAY OR POSTPONEMENT OF VALUATION OF WARRANTS
Any downward movement in the level of the Spot Nikkei 225 Index between the
time a Warrantholder submits an Exercise Notice and the time the Spot Nikkei 225
Index is determined with respect to such exercise (which period will, at a
minimum, represent an entire Tokyo Business Day and, in the case of a postponed
Valuation Date following an Extraordinary Event or an Exercise Limitation
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<PAGE>
Event or as a result of there being exercised a number of Warrants exceeding the
maximum permissible amount, may be substantially longer) will, subject to the
Limit Option described below and under "Description of the Warrants--Limit
Option" herein, result in such Warrantholder receiving a Cash Settlement Value
or Alternative Settlement Amount (including a zero Alternative Settlement
Amount) that is less than the Cash Settlement Value anticipated by such
Warrantholder based on the level of the Spot Nikkei 225 Index most recently
reported prior to submission of the Exercise Notice. The Nikkei 225 Index is
compiled and published by NKS once per minute during TSE trading hours based
upon prices of each of the Underlying Stocks as reported by the TSE. Due to time
differences, trading on the TSE occurs when the AMEX is closed for business.
Except in the case of automatic exercise, a Warrantholder may be able to
limit to some extent the risk associated with any such downward movement in the
Spot Nikkei 225 Index between an Exercise Date and the applicable Valuation Date
if such Warrantholder, in connection with an exercise of Warrants, elects the
Limit Option. Pursuant to the Limit Option, Warrants tendered for exercise will
not be exercised if the Spot Nikkei 225 Index as of the applicable Valuation
Date is five hundred (500) or more points lower than the Spot Nikkei 225 Index
calculated immediately prior to the applicable Exercise Date (subject to
adjustment in the case of any substitution of a Substitute Index for the Nikkei
225 Index). See "Description of the Warrants--Limit Option" herein. However, in
the event of the occurrence of an Extraordinary Event or Exercise Limitation
Event resulting in the payment to Warrantholders of an Alternative Settlement
Amount in lieu of the Cash Settlement Value or in the case of certain events
following the occurrence of an Extension Event, the Limit Option will not
preclude the exercise of Warrants as described under "Description of the
Warrants--Extension Events, Extraordinary Events and Exercise Limitation Events"
herein.
If the Company determines that an Extraordinary Event or an Exercise
Limitation Event has occurred and is continuing on any day that would otherwise
be a Valuation Date for any exercised Warrant, then the Valuation Date for such
Warrant will be postponed to the next Index Calculation Day following the Tokyo
Business Day on which there is no Extraordinary Event or Exercise Limitation
Event; provided that, subject to an automatic extension of the term of the
Warrants or to a determination that the Warrants are worthless, as described
under "Description of the Warrants--Extension Events, Extraordinary Events and
Exercise Limitation Events," if the postponed Valuation Date has not occurred on
or prior to the Expiration Date or any Delisting Date, the Warrantholders will
receive the Alternative Settlement Amount (as described below) in lieu of the
Cash Settlement Value; provided, further, that, in the case of an Extraordinary
Event, if the Company determines that such Extraordinary Event is expected to
continue and the Company notifies the Warrant Agent that it is cancelling the
Warrants, then the date on which such notice is given (whether or not such date
is a New York Business Day) will become the Valuation Date for such Warrant, in
which case such Warrantholder will receive, in lieu of the Cash Settlement Value
of such Warrant, the Alternative Settlement Amount thereof, which is equal to
the sum of the Cash Settlement Value of the Warrants on such Valuation Date
(determined as provided under "Description of the Warrants--Extension Events,
Extraordinary Events and Exercise Limitation Events" below) and a ratable
portion of 50% of the initial offering price of the Warrants, subject to certain
exceptions and adjustments. The Cash Settlement Value or the Alternative
Settlement Amount of a Warrant determined as of any such postponed Valuation
Date may be substantially lower (including zero) than the otherwise applicable
Cash Settlement Value thereof. See "Description of the Warrants--Extension
Events, Extraordinary Events and Exercise Limitation Events" herein, which
includes a description of events, circumstances or causes constituting
Extraordinary Events or an Exercise Limitation Event.
RISKS DUE TO COMPANY'S INABILITY TO TRADE IN UNDERLYING STOCKS
In the event that a suspension, material limitation or absence of trading on
the TSE of 20% or more in number of the Underlying Stocks is continuing on the
Expiration Date (an "Extension Event"), the term of the Warrants will be
extended for a period of one month (the "Extended Expiration Date"),
S-12
<PAGE>
except that if the Cash Settlement Value or the Intrinsic Value used in
calculating the Alternative Settlement Amount, as the case may be, of the
Warrants would have been zero if the Warrants had been exercised such that the
Valuation Date for such exercise was the Measurement Date, then the term of the
Warrants will not be extended and the Warrants will be deemed to be worthless.
See "Description of the Warrants--Extension Events, Extraordinary Events and
Exercise Limitation Events" herein. The Warrants will also be deemed to be
worthless if the Expiration Date of the Warrants is extended but an Extension
Event is continuing on the Extended Expiration Date or any earlier Delisting
Date. As a result, investors may suffer a total loss of their investment in the
Warrants even though the Cash Settlement Value of the Warrants, if calculated
using the fair value of the Underlying Stocks (as defined below) at the time the
Warrants are deemed to be worthless, would be greater than zero.
RISKS AND COSTS ASSOCIATED WITH CONVERSION AND EXERCISE OF WARRANTS
The Warrants will be issued as certificates in registered form. Accordingly,
a beneficial owner of Warrants holding certificated Warrants indirectly (for
instance, through a broker that holds such Warrants in "street name") may
exercise such Warrants only through his registered holder. In the case of a
beneficial owner holding certificated Warrants through his broker in "street
name," such beneficial owner must direct his broker, who may in turn need to
direct another intermediary, to submit an Exercise Notice and the related
Warrants to the Warrant Agent. To ensure that an Exercise Notice and the related
Warrants will be delivered to the Warrant Agent before 3:00 P.M., New York City
time, on a given New York Business Day, a beneficial holder of Warrants must
give the appropriate direction to his broker or other intermediary before such
broker's cut-off time for accepting exercise instructions from customers for
that day. Different brokerage firms may have different cut-off times for
accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders should consult with their brokers, or other
intermediaries, as to applicable cut-off times and other exercise mechanics. See
"--Exercise of Warrants" and "--Limit Option" under "Description of the
Warrants" herein.
Commencing on the one hundred eightieth calendar day (or if such day is not
a New York Business Day, the next succeeding New York Business Day) after the
closing of the offering, each Warrantholder will have the option, for 45
calendar days thereafter, to convert the form in which such Warrantholder holds
his Warrants from certificated to book-entry form (the "Conversion Option").
Such conversion will occur through the facilities of The Depository Trust
Company, New York, New York ("DTC", which term, as used herein and in the
Prospectus, includes any successor depository selected by the Company). To
exercise Warrants, a Warrantholder who has utilized the Conversion Option must
direct a broker, who may in turn need to direct a Participant (as defined in the
Prospectus under "Description of the Warrants--Certain Items Applicable to all
Warrants--Book-Entry Form"), to transfer Warrants held by DTC on behalf of such
Warrantholder and to submit an Exercise Notice to the Warrant Agent. A
Warrantholder may desire that the New York Business Day on which his Warrants
and an Exercise Notice are delivered on his behalf to the Warrant Agent will
constitute the Exercise Date for the Warrants being exercised (for example, to
utilize the Limit Option most effectively). To achieve such objective, the
Warrantholder must cause such Warrants to be transferred to, and such Exercise
Notice to be received by, the Warrant Agent at or prior to 3:00 P.M., New York
City time, on such New York Business Day. To ensure that such Warrants and
Exercise Notice will be received by the Warrant Agent at or prior to such time,
such Warrantholder must give the appropriate directions to his broker before
such broker's (and, if such broker is not a Participant, the applicable
Participant's) cut-off time for accepting exercise instructions from customers
for that day. Different brokerage firms may have different cut-off times for
accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders holding their Warrants in book-entry form should
consult with their brokers or other intermediaries, if applicable, as to
applicable cut-off times and other exercise mechanics. See "--Exercise of
Warrants," "--Settlement" and "--Limit Option" under "Description of the
Warrants" herein. Forms of Exercise Notice for Warrants held in book-entry form
may be obtained from the Warrant Agent's Office during the Warrant Agent's
normal business hours. See "Description of the Warrants--General" herein.
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<PAGE>
A Warrantholder may exercise no fewer than 500 Warrants at any time, except
in the case of automatic exercise. Accordingly, except in the case of automatic
exercise of the Warrants, a Warrantholder with fewer than 500 Warrants will need
either to sell his Warrants or to purchase additional Warrants, thereby
incurring transaction costs, in order to realize upon his investment.
LIMITATIONS IMPOSED BY THE TOKYO STOCK EXCHANGE ON CHANGES IN STOCK PRICES
Investors should realize that the TSE places daily price floors and ceilings
upon fluctuations of individual stock prices listed on the TSE. In general, any
stocks listed on the TSE cannot be traded at a price outside of these limits,
which are absolute Japanese Yen, and not percentage, limits, from the closing
price of the stock on the previous day. In addition, when there is a major order
imbalance in a listed stock, the TSE posts a "special bid quote" or a "special
asked quote" for that stock at a slightly higher or lower price level than the
stock's last sale price in order to solicit counter orders and balance supply
and demand for the stock. Investors should also be aware that the TSE may
suspend the trading of individual stocks in certain limited and extraordinary
circumstances, including, for example, unusual trading activity in that stock.
As a result, variations in the Nikkei 225 Index may be limited by price
limitations or special quotes, or by suspension of trading, on individual stocks
which comprise the Nikkei 225 Index which may, in turn, adversely affect the
value of the Warrants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Potential investors should also be aware that Bear Stearns, in its capacity
as Determination Agent, is under no obligation to take the interests of the
Warrantholders into consideration in the event it determines the Cash Settlement
Value. Because Bear Stearns is an affiliate of the Company, conflicts of
interest may arise in connection with Bear Stearns performing its role as
Determination Agent. Bear Stearns, as a registered broker-dealer, is required to
maintain policies and procedures regarding the handling and use of confidential
proprietary information, and such policies and procedures will be in effect
throughout the term of the Warrants to restrict the use of information relating
to the calculation of the Cash Settlement Value prior to its dissemination. Bear
Stearns is obligated to carry out its duties and functions as Determination
Agent in good faith and using its reasonable judgment.
Bear Stearns and its affiliates may from time to time engage in transactions
involving the Underlying Stocks for their proprietary accounts and for other
accounts under their management, which may influence the value of such
Underlying Stocks and therefore the value of the Warrants. Bear Stearns and its
affiliates will also be the writers of the hedge of the Company's obligations
under the Warrants and will be obligated to pay to the Company upon exercise of
Warrants an amount equal to the value of the exercised Warrants. See "Use of
Proceeds" in the Prospectus and "Use of Proceeds and Hedging" herein.
Accordingly, under certain circumstances, conflicts of interest may arise
between Bear Stearns's responsibilities as Determination Agent with respect to
the Warrants and its obligations under its hedge.
OFFERING PRICE OF WARRANTS
The initial offering price of the Warrants will be in excess of the price
that a commercial user of options on the Nikkei 225 Index might pay for a
comparable option in a private transaction.
POSSIBLE ILLIQUIDITY OF SECONDARY MARKET
It is not possible to predict how the Warrants will trade in the secondary
market or whether such market will be liquid or illiquid. To the extent Warrants
are exercised, the number of Warrants outstanding will decrease, resulting in a
decrease in the liquidity of the Warrants. In addition, during the life of the
Warrants, the Company or its affiliates may from time to time purchase and
exercise the Warrants, resulting in a decrease in the liquidity of the Warrants.
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<PAGE>
EXCHANGE RATE IMPACT
The Cash Settlement Value or the Alternative Settlement Amount of a Warrant
will be determined using a fixed Japanese yen/U.S. dollar exchange rate. Thus,
changes in the actual Japanese yen/U.S. dollar exchange rate will not affect the
calculation of these amounts. Nevertheless, the Japanese yen/U.S. dollar
exchange rate may reflect economic and political developments in Japan and other
countries which, in turn, may affect the value of the Nikkei 225 Index.
POTENTIAL MODIFICATION OF THE SPOT NIKKEI 225 INDEX
Under certain circumstances, a Substitute Index will replace the Nikkei 225
Index for purposes of determining the Spot Nikkei 225 Index. On any date
following such substitution, the level of the Substitute Index (and thus the
Spot Nikkei 225 Index) may be higher than, lower than, or at the same level as,
the Nikkei 225 Index. Therefore, a Warrantholder who exercises a Warrant
following any such substitution may realize a Cash Settlement Value that is
greater than, less than, or equal to the Cash Settlement Value that might have
been realized had no such substitution occurred. No assurances can be given as
to the potential level of any Substitute Index relative to the level of the
Nikkei 225 Index on any date. However, upon any such substitution, the Strike
Level and the formula used to determine the Cash Settlement Value will be
adjusted so as to preserve any increases or decreases in the Nikkei 225 Index
which have occurred as of the time of such substitution. See "The Nikkei 225
Index-- Substitution of the Nikkei 225 Index" herein.
If the Nikkei 225 Index or any Substitute Index is not published by its
original publisher but is published by another person not affiliated with the
Company and acceptable to the Company (the "Third Party"), then for any date
thereafter the Spot Nikkei 225 Index will be determined based on the closing
level of the Nikkei 225 Index or any Substitute Index as published by such Third
Party. If the original publisher of the Nikkei 225 Index or any Substitute Index
or any Third Party discontinues publication of the Nikkei 225 Index or any
Substitute Index and publishes a successor or substitute index that the Company
determines, in its sole discretion, to be comparable to the Nikkei 225 Index
(any such index being a "Successor Index"), then the Spot Nikkei 225 Index for
any date thereafter will be determined by the Determination Agent on behalf of
the Company based on the closing level of the Successor Index on such date. If
the original publisher of the Nikkei 225 Index or any Substitute Index or any
Third Party makes a material change in the formula for, or the method of
calculating, the Nikkei 225 Index, any Successor Index or any Substitute Index,
the Determination Agent shall make such calculations as may be required to
determine the applicable Cash Settlement Value using the formula and method of
calculating the Nikkei 225 Index, any Successor Index or any Substitute Index as
in effect prior to such change or modification. If the original publisher of the
Nikkei 225 Index, any Successor Index or any Substitute Index and/or any Third
Party discontinues publication of the Nikkei 225 Index, any Successor Index or
any Substitute Index, the Determination Agent will determine the applicable Cash
Settlement Value based on the formula and method used in calculating the Nikkei
225 Index, any Successor Index or any Substitute Index as in effect on the date
the Nikkei 225 Index, any Successor Index or any Substitute Index was last
published.
DELISTING OF THE WARRANTS
The Warrants have been approved for listing on the AMEX. In the event that
the Warrants are delisted from, or permanently suspended from trading on, the
AMEX, and not accepted at the same time for trading pursuant to the rules of
another SRO that are filed with the Commission under the Exchange Act, Warrants
not previously exercised will be deemed automatically exercised on the last New
York Business Day prior to the effective date of such delisting or suspension,
and if such delisting or suspension occurs on or prior to the Expiration Date,
the Cash Settlement Value, if any, will be calculated and settled as provided
below under "Description of the Warrants--Automatic Exercise," subject to a
determination that the Warrants are worthless, as described below under
"Description of the Warrants--Extension Events Extraordinary Events and Exercise
Limitation Events." If such delisting or suspension occurs after the Expiration
Date and prior to any Extended Expiration Date, the
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<PAGE>
Warrants will be deemed to be worthless. See "Description of the
Warrants--Delisting of Warrants" herein. In the event the Company becomes aware
that a delisting or suspension of trading of the Warrants on the AMEX is likely
to occur, the Company will use its best efforts to list the Warrants on another
SRO at or prior to the time such delisting or suspension of trading occurs.
OTHER CONSIDERATIONS
The Underwriters propose initially to offer the Warrants at a price that
reflects a discount from the maximum price to public referred to on the cover of
this Prospectus Supplement for the purchase of 75,000 or more Warrants in any
single transaction, subject to the 30-day holding period requirement referred to
under "Underwriting" herein. Should investors who are subject to the holding
period requirement sell their Warrants once the holding period is no longer
applicable, the market price of the Warrants may be adversely affected. See
"Underwriters" herein.
DESCRIPTION OF THE WARRANTS
GENERAL
The Warrants will be issued pursuant to a Warrant Agreement (the "Warrant
Agreement"), to be dated as of October 31, 1995, among the Company, Chemical
Bank, as Warrant Agent (the "Warrant Agent"), and Bear Stearns, as Determination
Agent. The following summaries of certain provisions of the Warrants and the
Warrant Agreement do not purport to be complete and are subject to, and
qualified in their entirety by reference to, all of the provisions of the
Warrant Agreement (including the form of Warrant Certificate attached as an
exhibit thereto). The Warrant Agreement will be available from the Warrant Agent
by contacting its office (the "Warrant Agent's Office"), which is currently
located at 450 West 33rd Street, New York, New York 10001, during the Warrant
Agent's normal business hours.
The aggregate number of Warrants to be issued will be 1,000,000, subject to
the over-allotment option granted by the Company to the Underwriters (see
"Underwriting" herein) and to the right of the Company to issue additional
Warrants with substantially identical terms at a later time.
A Warrant will not require or entitle a Warrantholder to purchase or take
delivery from the Company of any shares of any of the Underlying Stocks or any
other securities. Upon exercise of a Warrant, the Company will make only a U.S.
Dollar cash payment in the amount of the Cash Settlement Value or Alternative
Settlement Amount, if any and as applicable, of such Warrant. The Company is
under no obligation to, nor will it, sell or deliver to any Warrantholder any
shares of any of the Underlying Stocks or any other securities in connection
with the exercise of any Warrants. Warrantholders will not receive any interest
on any Cash Settlement Value or Alternative Settlement Amount, and the Warrants
will not entitle the Warrantholders to any of the rights of holders of any of
the Underlying Stocks or any other securities.
CASH SETTLEMENT VALUE
Each Warrant will entitle the Warrantholder to receive, upon exercise
(including automatic exercise), the Cash Settlement Value of such Warrant,
except that, under the circumstances described under "--Extension Events,
Extraordinary Events and Exercise Limitation Events" herein, such Warrantholder
may instead receive the Alternative Settlement Amount for such Warrant or, in
certain circumstances following an Extension Event, the Warrants will be deemed
to be worthless. The Cash Settlement Value of a Warrant will be in an amount in
U.S. Dollars equal to the quotient (rounded down to the nearest cent) of (A) the
amount, if any, by which the Spot Nikkei 225 Index for the applicable Valuation
Date for such Warrant exceeds the Strike Level divided by (B) the product of 6.0
and the fixed Japanese yen/U.S. Dollar exchange rate of 101.50 Japanese yen per
U.S. $1.00. The Cash Settlement Value is described by the following formula:
Cash Settlement Value = the greater of (i) $0 and
(ii) $1 x (Spot Nikkei 225 Index -
Strike Level)
-------------------------
6 x (yen 101.50/U.S.
$1.00)
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The "Strike Level" is equal to the closing value (afternoon session) of the
Nikkei 225 Index on October 26, 1995, multiplied by 0.90, subject to adjustment
as described below on the Reset Date. The "Spot Nikkei 225 Index" for any date
means the closing value (afternoon session) on such date of the Nikkei 225
Index. If the Reset Date Closing Value of the Nikkei 225 Index on the Reset Date
(unless extended as described herein, January 26, 1996) is lower than 17,726.68
(the Initial Closing Value), then the Strike Level shall be reduced by the full
amount, if any, by which the Initial Closing Value is greater than the Reset
Date Closing Value. The Warrant Agreement will provide that if the Company
determines that an Extraordinary Event or Exercise Limitation Event has occurred
and is continuing on the Reset Date, then the Reset Date Closing Value shall be
calculated on the basis that the Reset Date shall be the next Index Calculation
Day following an Applicable Tokyo Business Day on which there is no
Extraordinary Event or Exercise Limitation Event. Promptly following the Reset
Date, the Company will notify the Warrant Agent in writing if there has been an
adjustment to the Strike Level and will either make a public announcement
regarding the amount of such adjustment and the new Strike Level or publish such
information in a United States newspaper with a national circulation (such as
The Wall Street Journal). If a Substitute Index is substituted for the Nikkei
225 Index, the Strike Level and the formula used to determine the Cash
Settlement Value will be adjusted so as to preserve any increases or decreases
in the Nikkei 225 Index that have occurred as of the time of such substitution,
and on any date thereafter the closing level of the Substitute Index will be
deemed to be the Spot 225 Nikkei Index. See "Nikkei 225 Index--Substitution of
the Nikkei 225 Index" herein.
HYPOTHETICAL WARRANT VALUES ON EXERCISE
Set forth below is an illustrative example demonstrating the Cash Settlement
Values of a hypothetical Warrant at the Strike Level of and at various
hypothetical levels of the Spot Nikkei 225 Index. The illustrative hypothetical
Cash Settlement Values in the table do not reflect any reduction of the Strike
Level as described above or any "time value" for a Warrant, which may be
reflected in the trading value, and are not necessarily indicative of potential
profit or loss, which are also affected by purchase price and transaction costs.
The hypothetical Cash Settlement Values in the table have been rounded to two
decimal places.
<TABLE>
<CAPTION>
HYPOTHETICAL CASH
HYPOTHETICAL SETTLEMENT VALUE
SPOT NIKKEI 225 INDEX OF WARRANT
- ---------------------- -----------------
<S> <C>
15,954.012 or below.................................................... 0
16,000................................................................. .07
16,500................................................................. .89
17,000................................................................. 1.71
17,500................................................................. 2.53
18,000................................................................. 3.35
18,500................................................................. 4.18
19,000................................................................. 5.00
19,500................................................................. 5.82
20,000................................................................. 6.64
20,500................................................................. 7.46
21,000................................................................. 8.28
21,500................................................................. 9.10
22,000................................................................. 9.92
22,500................................................................. 10.74
23,000................................................................. 11.56
23,500................................................................. 12.39
24,000................................................................. 13.21
24,500................................................................. 14.03
</TABLE>
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EXERCISE OF WARRANTS
Exercise of Warrants. The Warrants will be exercisable at any time from the
date of issuance, subject to postponement as described herein under "--Extension
Events, Extraordinary Events and Exercise Limitation Events" or as a result of
the exercise of a number of Warrants exceeding the maximum permissible amount,
and will expire on October 24, 1997 (the "Expiration Date"), subject to an
automatic extension of the term of the Warrants as described under "--Extension
Events, Extraordinary Events and Exercise Limitation Events" below. Unless the
term of the Warrants is extended, all Warrants not exercised (including by
reason of any such postponed exercise) at or before 3:00 P.M., New York City
time, on the New York Business Day immediately preceding the earlier of (i) the
Expiration Date and (ii) the Delisting Date, will be automatically exercised as
described under "Automatic Exercise" below.
A Warrantholder may exercise definitive Warrants on any New York Business
Day during the period from the date of issuance until 3:00 P.M., New York City
time, on the New York Business Day immediately preceding the earlier of (i) the
Expiration Date or (ii) the Delisting Date, by delivering or causing to be
delivered to the Warrant Agent at the location designated for such purpose (the
"Warrant Agent's Window"), the Warrant Certificate representing such Warrants
with the irrevocable notice of exercise on the reverse thereof (or a notice of
exercise in substantially identical form delivered therewith) (such notice, an
"Exercise Notice") duly completed and executed. The current address of the
Warrant Agent's Window is: Chemical Bank/Geoserve, Corporate Trust Securities
Window, 55 Water Street, Room 234, North Building, New York, New York 10041,
Attention: Tender Department.
In the case of book-entry Warrants held through the facilities of DTC, a
Warrantholder may exercise such Warrants on any New York Business Day during the
period from the beginning of the Conversion Option Period (which will be one
hundred eighty calendar days from the closing of the offering) until 3:00 P.M.,
New York City time, on the earlier of (i) the New York Business Day immediately
preceding the Expiration Date and (ii) any Delisting Date, by causing (x) such
Warrants to be transferred free to the Warrant Agent on the records of DTC and
(y) a duly completed and executed Exercise Notice to be received by the Warrant
Agent from a Participant acting on behalf of the Warrantholder. Forms of
Exercise Notice for Warrants held through the facilities of DTC may be obtained
from the Warrant Agent at the Warrant Agent's office. The Warrant Agent's
facsimile transmission number for this purpose is (212) 946-7682.
In the case of book-entry Warrants held through the facilities of CEDEL or
Euroclear, a Warrantholder may exercise such Warrants on any New York Business
Day during the period from the date on which his certificated Warrants have been
effectively converted into book-entry form during the Conversion Option Period
(which will begin 180 calendar days following the closing of this offering)
until 3:00 P.M., New York City time, on the earlier of (i) the New York Business
Day immediately preceding the Expiration Date and (ii) the Delisting Date, by
causing (a) such Warrants to be transferred free to the Warrant Agent on the
records of DTC, by giving appropriate instructions to the participant holding
such Warrants in either the CEDEL or Euroclear system, as the case may be, and
(b) a duly completed and executed Exercise Notice to be delivered on behalf of
the Warrantholder by CEDEL or Euroclear, as the case may be, to the Warrant
Agent. Forms of Exercise Notice for Warrants held through the facilities of
either CEDEL or Euroclear may be obtained from the Warrant Agent at the Warrant
Agent's office or from CEDEL or Euroclear.
Except for Warrants subject to automatic exercise or subject to the Limit
Option and except following an Extension Event, the "Exercise Date" for a
Warrant will be (i) the New York Business Day on which the Warrant Agent
receives at the Warrant Agent's Window the Warrant (or transfer of such Warrant
through DTC in the case of book-entry Warrants) and Exercise Notice (by
facsimile transmission in the case of Exercise Notices for book-entry Warrants)
in proper form with respect to such Warrant, if received at or prior to 3:00
P.M., New York City time, on such day, or (ii) if the
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Warrant Agent receives such Warrant (or transfer of such Warrant through DTC in
the case of book-entry Warrants) and Exercise Notice after 3:00 P.M., New York
City time, on a New York Business Day, then the next succeeding New York
Business Day.
In the case of Warrants held in book-entry form through the facilities of
CEDEL or Euroclear, except for Warrants subject to automatic exercise, and
subject to the Limit Option, the "Exercise Date" for a Warrant will be (i) the
New York Business Day on which the Warrant Agent receives the Exercise Notice in
proper form with respect to such Warrant if such Exercise Notice is received at
or prior to 3:00 P.M., New York City time, on such day, provided that the
Warrant is received by the Warrant Agent by 3:00 P.M., New York City time, on
the Valuation Date, or (ii) if the Warrant Agent receives such Exercise Notice
after 3:00 P.M., New York City time, on a New York Business Day, then the New
York Business Day next succeeding such New York Business Day, provided that the
Warrant is received by 3:00 P.M., New York City time, on the Valuation Date
relating to exercises of Warrants on such succeeding New York Business Day. In
the event that the Warrant is received after 3:00 P.M., New York City time, on
the Valuation Date, then the Exercise Date for such Warrant will be the day on
which such Warrant is received or, if such day is not a New York Business Day,
the next succeeding New York Business Day. In the case of Warrants held in
book-entry form through the facilities of CEDEL or Euroclear, in order to ensure
proper exercise on a given New York Business Day, participants in CEDEL or
Euroclear must submit exercise instructions to CEDEL or Euroclear, as the case
may be, by 10:00 A.M., Luxembourg time, in the case of CEDEL and by 10:00 A.M.,
Brussels time (by telex), or 11:00 A.M., Brussels time (by EUCLID), in the case
of Euroclear. In addition, in the case of book-entry exercises through
Euroclear, (a) participants must also transmit, by facsimile (facsimile number
(212) 946-7682), to the Warrant Agent a copy of the Exercise Notice submitted to
Euroclear by 3:00 P.M., New York City time, on the desired Exercise Date and (b)
Euroclear must confirm by telex to the Warrant Agent by 9:00 A.M., New York City
time, on the Valuation Date that the Warrants will be received by the Warrant
Agent on such date; provided, that if such telex communication is received after
9:00 A.M., New York City time, on the Valuation Date, the Company will be
entitled to direct the Warrant Agent to reject the related Exercise Notice or
waive the requirement for timely delivery of such telex communication.
To ensure that an Exercise Notice and the related Warrants will be delivered
to the Warrant Agent before 3:00 P.M., New York City time, on a given New York
Business Day, a Warrantholder may need to give exercise instructions to his
broker or other intermediary substantially earlier than 3:00 P.M., New York City
time, on such day. Different brokerage firms may have different cut-off times
for accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders should consult with their brokers and other
intermediaries, if applicable, as to applicable cut-off times and other exercise
mechanics.
Except in the case of Warrants subject to automatic exercise and for
Warrants that upon exercise will entitle the holder thereof to receive an
Alternative Settlement Amount in lieu of the Cash Settlement Amount and except
following an Extension Event, if on any Valuation Date the Cash Settlement
Amount for any Warrants would be zero, then the attempted exercise of any such
Warrants will be void and of no effect and, in the case of definitive Warrants,
the Warrant Certificate evidencing such Warrants will be returned to the
registered holder by first class mail at the Company's expense or, in the case
of book-entry Warrants held through the facilities of DTC, such Warrants will be
transferred back to the Participant that submitted them free on the records of
DTC, and, in any such case, such Warrantholder will be permitted to re-exercise
such Warrants prior to the Expiration Date or any Delisting Date, as the case
may be.
Minimum Exercise Amount. No fewer than 500 Warrants may be exercised by a
Warrantholder at any one time (other than on automatic exercise). Accordingly,
Warrantholders with fewer than 500 Warrants will need either to sell their
Warrants or to purchase additional Warrants, thereby incurring transaction
costs, in order to realize upon their investment. Warrantholders must satisfy
the minimum
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exercise amount requirement described above separately with respect to both
certificated and book-entry Warrants even if both kinds of Warrants are to be
exercised at the same time. Thus, a Warrantholder seeking to exercise both
certificated and book-entry Warrants at the same time must still exercise a
minimum of 500 of each kind of Warrant in order to satisfy such requirement. In
addition, book-entry Warrants held through one Participant may not be combined
with book-entry Warrants held through another Participant in order to satisfy
the minimum exercise requirement.
Maximum Exercise Amount. All exercises of Warrants (other than on automatic
exercise or following an Extension Event) are subject, at the Company's option,
to the limitation that not more than 750,000 Warrants in total may be exercised
on any Exercise Date and not more than 250,000 Warrants may be exercised by or
on behalf of any beneficial owner, either individually or in concert with any
other beneficial owner, on any Exercise Date. If any New York Business Day would
otherwise, under the terms of the Warrant Agreement, be the Exercise Date in
respect of more than 750,000 Warrants, then at the Company's election, 750,000
of such Warrants shall be deemed exercised on such Exercise Date (selected by
the Warrant Agent on a pro rata basis, but if, as a result of such pro rata
selection, any registered holders of Warrants would be deemed to have exercised
less than 500 Warrants, then the Warrant Agent shall first select an additional
amount of such holders' Warrants so that no holder shall be deemed to have
exercised less than 500 Warrants), and the remainder of such Warrants (the
"Remaining Warrants") shall be deemed exercised on the following New York
Business Day (notwithstanding the minimum exercise requirement and subject to
successive applications of this provision); provided that any Remaining Warrants
for which an Exercise Notice was delivered on a given Exercise Date shall be
deemed exercised before any other Warrants for which an Exercise Notice was
delivered on a later Exercise Date. If any beneficial owner of Warrants attempts
to exercise more than 250,000 Warrants on any New York Business Day individually
or in concert, then at the Company's election, 250,000 of such Warrants shall be
deemed exercised on such New York Business Day and the remainder shall be deemed
exercised on the following New York Business Day (notwithstanding the minimum
exercise requirement and subject to successive applications of this provision).
As a result of any postponed exercise as described above, Warrantholders will
receive a Cash Settlement Value determined as of a date later than the otherwise
applicable Valuation Date. In any such case, as a result of any such
postponement, the Cash Settlement Value actually received by Warrantholders may
be lower than the otherwise applicable Cash Settlement Value if the Valuation
Date of the Warrants had not been postponed.
VALUATION OF WARRANTS
The "Valuation Date" for a Warrant will be the first Index Calculation Day
following the applicable Exercise Date, subject to postponement upon the
occurrence of an Extraordinary Event or Exercise Limitation Event as described
under "--Extension Events, Extraordinary Events and Exercise Limitation Events"
herein or as a result of the exercise of a number of Warrants exceeding the
limits on exercise described herein under "Exercise of Warrants--Maximum
Exercise Amount." The Nikkei 225 Index is compiled and published by NKS once
each minute during each Index Calculation Day based on the most recent official
prices of each of the Underlying Stocks as reported by the TSE. Due to time
differences, trading on the TSE occurs when the AMEX is closed for business.
The following is an illustration of the timing of an Exercise Date, the
ensuing Valuation Date and the Limit Option Reference Index (as described herein
under "--Limit Option"), assuming (i) that all relevant dates are New York
Business Days and Index Calculation Days, (ii) the absence of any intervening
Extraordinary Event or Exercise Limitation Event and (iii) the number of
exercised Warrants does not exceed the maximum permissible amount. If the
Warrant Agent receives a Warrantholder's Warrants and the related Exercise
Notice in proper form at or prior to 3:00 P.M., New York City time, on
Wednesday, November 15, 1995, the Exercise Date for such Warrants will be
November 15 and the Valuation Date for such Warrants will be Thursday, November
16. The Spot Nikkei 225 Index used to determine the Cash Settlement Value of
such Warrants will be the closing
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level of the Nikkei 225 Index (or any Successor Index or Substitute Index, as
the case may be) on November 16 (i.e., the level at the close of trading on the
TSE on November 16 which, because of the time zone difference, occurs prior to
the opening of business in New York on November 16). If the Warrantholder
elected the Limit Option in connection with the exercise of such Warrants, the
Limit Option Reference Index would be the Spot Nikkei 225 Index on November 15
(which again, because of the time zone difference, will generally be available
in the United States prior to the opening of business in New York on November
15).
If the Warrant Agent were to receive such Warrantholder's Warrants and the
related Exercise Notice after 3:00 P.M., New York City time, on November 15 then
the Exercise Date for such Warrants would instead be November 16, the Valuation
Date would be November 17 and the applicable Limit Option Reference Index would
be the closing level of the Nikkei 225 Index on November 16 (which will not have
occurred at the time such Warrantholder tendered his Warrants and Exercise
Notice on November 15).
SETTLEMENT
Following receipt of Warrants and the related Exercise Notice in proper
form, the Warrant Agent will: (i) not later than 10:00 A.M., New York City time,
on the New York Business Day next succeeding the applicable Valuation Date
determine the Cash Settlement Value of such Warrants based on the Spot Nikkei
225 Index on such Valuation Date provided by the Determination Agent and (ii)
not later than 12:00 Noon, New York City time, on the New York Business Day next
succeeding the applicable Valuation Date, advise the Company of the aggregate
Cash Settlement Value of the exercised Warrants. The Determination Agent will
not be responsible for good faith errors or omissions in determining or
disseminating information regarding the Spot Nikkei 225 Index. Except for
Warrants subject to automatic exercise or that upon exercise entitle the
Warrantholder to an Alternative Settlement Amount, the Company will be required
to make available to the Warrant Agent, no later than 3:00 P.M., New York City
time, on the second New York Business Day following the Valuation Date for such
Warrants (or, if the Valuation Date is not a New York Business Day, on the
second New York Business Day following the New York Business Day following the
Valuation Date) (the "Funding Date"), New York Clearing House or next day funds
in an amount sufficient to pay such aggregate Cash Settlement Value. If the
Company has made such funds available by such time, the Warrant Agent will
thereafter be responsible for making payment available (i) in respect of
definitive Warrants to each registered holder of an exercised definitive Warrant
prior to the close of business on the New York Business Day following the
Funding Date (the "Settlement Date") in the form of a cashier's check or
official bank check or (in the case of payments of at least U.S. $100,000) by
wire transfer to a U.S. Dollar bank account maintained by such holder in the
United States (at such holder's election as specified in the applicable Exercise
Notice), in an amount equal to the aggregate Cash Settlement Value of such
holder's exercised Warrants or (ii) in respect of book-entry Warrants held
through the facilities of DTC, prior to the close of business on the Settlement
Date to each appropriate Participant in the form of a cashier's check or an
official bank check or (in the case of payments of at least U.S. $100,000) by
wire transfer to a U.S. Dollar account maintained by such Participant in the
United States (at the Participant's election as specified in the Exercise
Notice) in an amount equal to the aggregate Cash Settlement Value of the
exercised Warrants held through such Participant. Each Participant will be
responsible for disbursing payments to the Warrantholders it represents, and
such Participant will be responsible for disbursing such payments to the
Warrantholders it represents and to each brokerage firm for which it acts as
agent. Each such brokerage firm will be responsible for disbursing funds to the
Warrantholders it represents.
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LIMIT OPTION
Except for Warrants subject to automatic exercise and as described below
with respect to payments of any Alternative Settlement Amount and except
following an Extension Event, each Warrantholder, in connection with any
exercise of Warrants (including a postponed exercise following an Extraordinary
Event or an Exercise Limitation Event), will have the option (the "Limit
Option") to specify that such Warrants are not to be exercised if the Spot
Nikkei 225 Index that would otherwise be used to determine the Cash Settlement
Value of such Warrants is five hundred (500) or more points lower than the
closing value (afternoon session) of the Nikkei 225 Index (or, in the event that
the Cash Settlement Value is to be determined with respect to any Substitute
Index, a number of points below the closing level of such index that will be
determined by the Determination Agent in the manner described under
"Substitution of the Nikkei 225 Index" herein) for the day specified below (such
closing level, the "Limit Option Reference Index"). A Warrantholder's election
of the Limit Option must be specified in the applicable Exercise Notice
delivered to the Warrant Agent. The Limit Option Reference Index will be the
closing level of the Nikkei 225 Index (or any Successor Index or any Substitute
Index, as the case may be) on the relevant Exercise Date (or if such day is not
an Index Calculation Day, on the immediately preceding Index Calculation Day).
If an Exercise Notice and the related Warrants are received after 3:00 P.M., New
York City time, on a given day, the applicable Limit Option Reference Index will
be determined as of the next day that is also a New York Business Day (or, if
such day is not an Index Calculation Day, as of the immediately preceding Index
Calculation Day).
To ensure that the Limit Option will have its intended effect of limiting
the risk of any downward movement in the level of the Nikkei 225 Index between
the date on which a Warrantholder submits an Exercise Notice and the related
Valuation Date, such Exercise Notice and the related Warrants generally must be
received by the Warrant Agent not later than 3:00 P.M., New York City time, on
the New York Business Day on which it is submitted (except as permitted in the
case of Warrants held through the facilities of CEDEL or Euroclear) and the
Exercise Date must also be an Index Calculation Day. See the illustration under
"Exercise of Warrants" and "Risk Factors" herein.
Following receipt of an Exercise Notice and the related Warrants subject to
the Limit Option, the Warrant Agent will obtain the applicable Limit Option
Reference Index from the Determination Agent and will determine whether such
Warrants will not be exercised because of the Limit Option. Warrants that are
not exercised will be treated as not having been tendered for exercise and
either the Warrant Certificate evidencing such Warrants will be returned to the
registered holder by first class mail at the Company's expense or, in the case
of Warrants held through the facilities of DTC, such Warrants will be
transferred to the account at DTC from which they were transferred to the
Warrant Agent. To exercise such Warrants, a Warrantholder will be required to
cause an Exercise Notice and the related Warrants to be submitted again to the
Warrant Agent.
In the case of a postponed Valuation Date, the Limit Option will continue to
apply once elected by a Warrantholder in connection with an exercise of Warrants
on the basis of the Limit Option Reference Index as initially determined for
such Warrants, except when such Valuation Date is postponed until the Expiration
Date, any Delisting Date or the Cancellation Date (each as defined herein) or
following an Extension Event, all as described under "--Extension Events,
Extraordinary Events and Exercise Limitation Events" herein. Such Warrants will
either (i) be exercised on a delayed basis if the applicable Spot Nikkei 225
Index on the postponed Valuation Date is not five hundred (500) or more points
lower than the Limit Option Reference Index or (ii) be excluded from being
exercised if, on any applicable postponed Valuation Date, the applicable Spot
Nikkei 225 Index is five hundred (500) or more points lower than the Limit
Option Reference Index, in each case such number of points being subject to
adjustment in the event of any substitution of a Substitute Index for the Nikkei
225 Index. See "Substitution of the Nikkei 225 Index" herein.
In connection with any exercise of 1,000 or more Warrants, a Warrantholder
may elect to subject the exercise of only a portion of such Warrants to the
Limit Option, provided that the number of
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Warrants subject to the Limit Option and the number of Warrants not subject to
the Limit Option shall in each case not be less than 500. A Warrantholder may
not combine definitive Warrants and book-entry Warrants in order to meet the
500-Warrant minimum requirements. See "Exercise of Warrants-- Minimum Exercise
Amount" herein.
AUTOMATIC EXERCISE
All Warrants for which the Warrant Agent has not received a valid Exercise
Notice at or prior to 3:00 P.M., New York City time, on (i) the New York
Business Day immediately preceding the Expiration Date or (ii) any Delisting
Date, as the case may be, or for which the Warrant Agent has received a valid
Exercise Notice but with respect to which timely delivery of the relevant
Warrants has not been made, together with any Warrants the Valuation Date for
which has at such time been postponed as described under "--Extension Events,
Extraordinary Events and Exercise Limitation Events" herein, will be
automatically exercised on such date, subject to an automatic extension of the
term of the Warrants or to a determination that the Warrants are worthless, as
described below. The Exercise Date for such Warrants will be the Expiration Date
or any Delisting Date, as the case may be, or, if such date is not a New York
Business Day, the next succeeding New York Business Day. The Warrant Agent will
obtain the Spot Nikkei 225 Index (determined as of the first Index Calculation
Day following such date, which will be the Valuation Date for such Warrants
except in the case of an exercise following the occurrence of an Extraordinary
Event or an Exercise Limitation Event as described under "--Extension Events,
Extraordinary Events and Exercise Limitation Events" herein) and will determine
the Cash Settlement Value, if any, of such Warrants.
In the case of Definitive Warrants subject to automatic exercise, except in
the case of an exercise following the occurrence of an Extraordinary Event or an
Exercise Limitation Event as described under "--Extension Events, Extraordinary
Events and Exercise Limitation Events" herein, the Company will be required to
make New York Clearing House or next day funds available to the Warrant Agent,
no later than 3:00 P.M., New York City time, on the second New York Business Day
following the Valuation Date for such Warrants (or, if such Valuation Date is
not a New York Business Day, on the second New York Business Day following the
New York Business Day next succeeding such Valuation Date) (the "Automatic
Funding Date"). If the Company has made such funds available by such time, the
Warrant Agent will thereafter be responsible for making a payment available to
each registered holder of a Definitive Warrant in the form of a cashier's check
or official bank check, or (in the case of payments of at least U.S.$100,000) by
wire transfer to a U.S. Dollar account maintained by such holder in the United
States (at such holder's election) prior to the close of business on the
Automatic Funding Date (or, in the case of payments made by wire transfer, prior
to the close of business on the New York Business Day next succeeding the
Automatic Funding Date) against receipt by the Warrant Agent at the Warrant
Agent's Window of such holder's Warrant Certificates. Such payment will be in an
amount equal to the aggregate Cash Settlement Value of the Warrants evidenced by
such Warrant Certificates.
In the case of book-entry Warrants held through DTC subject to automatic
exercise, except in the case of an exercise following the occurrence of an
Extraordinary Event or an Exercise Limitation Event as described under
"--Extension Events, Extraordinary Events and Exercise Limitation Events"
herein, the Company will be required to make available to the Warrant Agent, no
later than 3:00 P.M., New York City time, on the Automatic Funding Date, New
York Clearing House or next day funds in an amount sufficient to pay such
aggregate Cash Settlement Value. If the Company has made such funds available by
such time, the Warrant Agent will thereafter be responsible for making funds
available to DTC prior to the close of business on the Automatic Funding Date in
an amount sufficient to pay the aggregate Cash Settlement Value of the Warrants.
DTC will be responsible for disbursing such funds to each appropriate
Participant and such Participant will be responsible for disbursing such
payments to the Warrantholders it represents and to each brokerage firm for
which it acts as agent. Each such brokerage firm will be responsible for
disbursing funds to the Warrantholders it represents.
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EXTENSION EVENTS, EXTRAORDINARY EVENTS AND EXERCISE LIMITATION EVENTS
Extension Events. If an event described in clause (i) of the definition of
Exercise Limitation Event below is continuing on the Expiration Date (an
"Extension Event") the term of any outstanding Warrants will be extended for a
period of 30 days (the thirtieth day following the Expiration Date being the
"Extended Expiration Date"), except that if the Cash Settlement Value or the
Intrinsic Value used in calculating the Alternative Settlement Amount, as the
case may be, of the Warrants would have been zero if the Warrants had been
exercised such that the Valuation Date for such exercise was the Measurement
Date (as defined below), then the term of the Warrants will not be extended and
the Warrants will be deemed to be worthless. Any such automatic extension shall
be deemed to have been revoked and the Warrants shall expire on the earlier of
(i) the next Index Calculation Day following a Tokyo Trading Day (as defined
below) on which there is no Extension Event (such Index Calculation Day, the
"Early Extended Expiration Date") and (ii) any Delisting Date occurring on or
after the Expiration Date. The Company will give the Warrant Agent prompt notice
by telephone or facsimile transmission and will give prompt notice to the
Warrantholders by publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal) of the occurrence
of an Extension Event, any Extended Expiration Date, any Index Calculation Day
referred to in clause (i) above and any Delisting Date referred to in clause
(ii) above.
Any Warrants that expire as described in clause (i) of the preceding
paragraph will be deemed to be exercised on the Early Extended Expiration Date
(even if such Warrants would not otherwise be exercisable on such date because
of the Limit Option) on the basis that the Valuation Date for such exercise
shall be such Early Extended Expiration Date, and the holder of each such
Warrant will receive the Alternative Settlement Amount, calculated using the
value of the Underlying Stocks on such Early Extended Expiration Date, whether
or not an Extraordinary Event or an Exercise Limitation Event is then
continuing.
If the term of the Warrants has been extended but an Extension Event is
continuing (A) when the Warrants expire on the Extended Expiration Date or (B)
on any Delisting Date occurring on or after the Expiration Date, the Warrants
will be deemed to be worthless and the Company shall not be required to make any
payments in respect thereof. The Company will give prompt notice of any such
determination to the Warrant Agent by telephone or facsimile transmission and to
the Warrantholders by publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal). In such a case,
the holders of such Warrants will lose their entire investment, even though the
Cash Settlement Value of the Warrants, if calculated using the fair value of the
Underlying Stocks at the time the Warrants are deemed to be worthless, would be
greater than zero.
"Measurement Date" means the Tokyo Trading Day (as defined below) occurring
most recently prior to the Expiration Date on which none of the events described
in clause (i) of the definition of Exercise Limitation Event below had occurred
or was continuing. "Tokyo Trading Day" means a day on which the TSE is open for
business.
Extraordinary Events. The Warrant Agreement will provide that if the Company
determines that an Extraordinary Event has occurred and is continuing on the
Tokyo Business Day with respect to which the Spot Nikkei 225 Index on a
Valuation Date is to be determined (the "Applicable Tokyo Business Day"), then
the Cash Settlement Value with respect to an exercise of Warrants shall be
calculated on the basis that the Valuation Date shall be the next Index
Calculation Day following an Applicable Tokyo Business Day on which there is no
Extraordinary Event or Exercise Limitation Event; provided that, subject to an
automatic extension of the term of the Warrants or to a determination that the
Warrants are worthless, as described under "--Extension Events" above, if the
Valuation Date has not occurred on or prior to the Expiration Date or any
Delisting Date, the Warrantholders will receive the Alternative Settlement
Amount in lieu of the Cash Settlement Value which shall be calculated as if the
Warrants had been cancelled on the Expiration Date or any Delisting Date, as the
case may be. The
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Company shall promptly give notice to Warrantholders, by publication in a United
States newspaper with a national circulation (currently expected to be The Wall
Street Journal), if an Extraordinary Event shall have occurred.
"Extraordinary Event" means any of the following events:
(i) a suspension, material limitation or absence of trading on the TSE
of all the Underlying Stocks which then comprise the Nikkei 225 Index, any
Substitute Index or a Successor Index (the "Underlying Stocks");
(ii) the enactment, publication, decree or other promulgation of any
statute, regulation, rule or order of any court of any jurisdiction, any
administrative agency or any other U.S. or non-U.S. governmental authority
that would make it unlawful for the Company to perform any of its
obligations under the Warrant Agreement or the Warrants or that has had or
is reasonably expected to have a material adverse effect on the ability of
(A) the Company to perform its obligations under the Warrants or to hedge or
modify the hedge of its position with respect to the Nikkei 225 Index, any
Substitute Index or a Successor Index or (B) any affiliate of the Company to
hedge or modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with the Company's
obligations under the Warrants; or
(iii) any outbreak or escalation of hostilities or other national or
international calamity or crisis (including, without limitation, natural
calamities that in the opinion of the Company may materially and adversely
affect the economy of Japan or the trading of securities generally on the
TSE) that has had or is reasonably expected to have a material adverse
effect on the ability of (A) the Company to perform its obligations under
the Warrants or to modify the hedge of its position with respect to the
Nikkei 225 Index, any Substitute Index or a Successor Index or (B) any
affiliate of the Company to hedge or modify the hedge of its position with
respect to any hedging transaction entered into with the Company in
connection with the Company's obligations under the Warrants.
For the purpose of determining whether an Extraordinary Event has occurred:
(1) a limitation on the hours or number of days of trading will not constitute
an Extraordinary Event if it results from an announced change in the regular
business hours of the TSE and (2) an "absence of trading" on the TSE will not
include any time when the TSE is closed for trading under ordinary
circumstances.
Based on information provided by the TSE, the Company is not aware of any
circumstances that have arisen since 1980 that could have constituted an
Extraordinary Event, except that on January 7, 1989 trading was suspended due to
the death of the Emperor of Japan (the "1989 Suspension"). The existence of such
circumstances, however, is not necessarily indicative of the likelihood of such
circumstances arising or not arising in the future. See "The Nikkei 225
Index--The Tokyo Stock Exchange" herein.
If the Company determines that an Extraordinary Event has occurred and is
continuing, and if the Extraordinary Event is expected by the Company to
continue, the Company, prior to the Expiration Date, may immediately cancel the
Warrants by notifying the Warrant Agent of such cancellation (the date such
notice is given being the "Cancellation Date"), and each Warrantholder's rights
under the Warrants and the Warrant Agreement shall thereupon cease; provided
that each Warrant shall be exercised (even if such Warrant would not otherwise
be exercisable on such date because of the Limit Option) on the basis that the
Valuation Date for such Warrant shall be the Cancellation Date and the holder of
each such Warrant will receive, in lieu of the Cash Settlement Value of such
Warrant, the Alternative Settlement Amount, determined by the Determination
Agent.
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The "Alternative Settlement Amount" is equal to the amount calculated using
the formula set forth below:
T A
Alternative Settlement Amount = Intrinsic Value + [ -- x -- ]
2 B
where
Intrinsic Value = the Cash Settlement Value of the Warrants determined as
described under "--Cash Settlement Value" herein (or, in the event of a
substitution of a Substitute Index for the Nikkei 225 Index, as described under
"The Nikkei 225 Index--Substitution of the Nikkei 225 Index" herein), but
calculated with a Spot Nikkei 225 Index determined by the Determination Agent
which, subject to approval by the Company (such approval not to be unreasonably
withheld), in the reasonable opinion of the Determination Agent, fairly reflects
the value of the Underlying Stocks on the Cancellation Date, Expiration Date,
Delisting Date or Early Extended Expiration Date, whichever has given rise to
the payment of the Alternative Settlement Amount;
T = U.S.$7.00, the maximum initial offering price per Warrant, less
U.S.$2.91, the Cash Settlement Value per Warrant on the date of this Prospectus
Supplement.
A = the total number of days from but excluding the Cancellation Date,
Expiration Date or Delisting Date, whichever has given rise to the payment of
the Alternative Settlement Amount for such Warrants, to and including the
Expiration Date; and
B = the total number of days from, but excluding the date on which sales of
the Warrants were initially confirmed, to and including the Expiration Date.
For the purposes of determining "Intrinsic Value" in the above formula, in
the event that the Determination Agent and the Company are required, but have
not, after good faith consultation with each other and within five days
following the first day upon which such Alternative Settlement Amount may be
calculated in accordance with the above formula, agreed upon a Spot Nikkei 225
Index which fairly reflects the value of the Underlying Stocks on the
Cancellation Date, Expiration Date, Delisting Date or Early Extended Expiration
Date, whichever gives rise to the payment of the Alternative Settlement Amount,
then the Determination Agent shall promptly nominate a third party, subject to
approval by the Company (such approval not to be unreasonably withheld), to
determine such figure and calculate the Alternative Settlement Amount in
accordance with the above formula. Such party shall act as an independent expert
and not as an agent of the Company or the Determination Agent, and its
calculation and determination of the Alternative Settlement Amount shall, absent
manifest error, be final and binding on the Company, the Warrant Agent, the
Determination Agent and the Warrantholders. Any such calculations will be made
available to a Warrantholder for inspection at the Warrant Agent's Office.
Neither the Company nor such third party shall have any responsibility for good
faith errors or omissions in calculating the Alternative Settlement Amount.
Exercise Limitation Events. The Warrant Agreement will provide that if the
Company determines that on an Applicable Tokyo Business Day an Exercise
Limitation Event has occurred and is continuing, then the Cash Settlement Value
in respect of an exercise shall be calculated on the basis that the Valuation
Date shall be the next Index Calculation Day following an Applicable Tokyo
Business Day on which there is no Exercise Limitation Event or Extraordinary
Event; provided that, subject to an automatic extension of the term of the
Warrants or to a determination that the Warrants are worthless, as described
under "--Extension Events" above, if the Valuation Date has not occurred on or
prior to the Expiration Date or any Delisting Date, the Warrantholders will
receive the Alternative Settlement Amount in lieu of the Cash Settlement Value,
which shall be calculated as if the Warrants had been cancelled on the
Expiration Date or any Delisting Date, as the case may be. The Company shall
promptly give notice to Warrantholders, by publication in a United States
newspaper with a national circulation (currently expected to be The Wall Street
Journal), if an Exercise Limitation Event shall have occurred.
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"Exercise Limitation Event" means any of the following events:
(i) a suspension, material limitation or absence of trading on the TSE
of 20% or more in number of the Underlying Stocks; or
(ii) the suspension or material limitation on the SIMEX, OSE or AMEX or
any other major futures, options or securities market (which as of the date
of this Prospectus Supplement includes only the SIMEX, OSE or AMEX, but
which in the Company's judgment may change in the future) of trading in
futures or options contracts related to the Nikkei 225 Index (or, in the
event of a substitution of a Substitute Index for the Nikkei 225 Index, the
Nikkei 300 Index) or a Successor Index.
For purposes of determining whether an Exercise Limitation Event has
occurred: (l) a limitation on the hours or number of days of trading will not
constitute an Exercise Limitation Event if it results from an announced change
in the regular business hours of the relevant exchange, (2) a decision to
permanently discontinue trading in the relevant futures or options contract will
not constitute an Exercise Limitation Event, (3) a suspension of trading in an
Underlying Stock or in a futures or options contract referred to in clauses (i)
and (ii) above, by reason of (x) a price change violating limits set by the TSE,
SIMEX, OSE or AMEX or other futures or securities market on which futures or
options contracts related to the Nikkei 225 Index (or, in the event of a
substitution of a Substitute Index for the Nikkei 225 Index, the Nikkei 300
Index), the Japan Index, any New Japan Index or a Successor Index are traded or
such other futures or securities market or (y) an imbalance of orders relating
to an Underlying Stock or such contracts will constitute a suspension or
material limitation of trading, (4) an "absence of trading" on the TSE will not
include any time when the TSE is closed for trading under ordinary circumstances
and (5) the occurrence of an Extraordinary Event described in clause (i) of the
definition of Extraordinary Event will not constitute, and will supersede the
occurrence of, an Exercise Limitation Event.
Based on information provided to the Company by the TSE, the Company is not
aware of any suspensions of trading during the past ten years on such exchange
under circumstances that could have constituted an Exercise Limitation Event,
except for the 1989 Suspension and a suspension of trading on the OSE of futures
and options on January 17, 1995 as a result of the Kobe earthquake. The Company
has not, however, verified with the TSE, SIMEX, OSE or AMEX, and makes no
representations concerning, whether any suspensions of trading by reason of a
price change violating limits set by the TSE, SIMEX, OSE or AMEX or any absences
of trading during such period could have constituted an Exercise Limitation
Event. The lack or occurrence of such suspensions over the period indicated is
not necessarily indicative of the number or frequency of any future suspensions.
See "The Nikkei 225 Index--The Tokyo Stock Exchange" herein.
In the case of Warrants as to which there has been a postponed Valuation
Date resulting from an Extraordinary Event or an Exercise Limitation Event
(including an Extension Event) or as a result of a number of Warrants exceeding
the maximum permissible amounts (as described herein), the Company will be
required to make available to the Warrant Agent no later than 3:00 P.M., New
York City time, on the second New York Business Day following the date on which
the Cash Settlement Value or Alternative Settlement Amount, as the case may be,
has been calculated (the "Alternative Funding Date") New York Clearing House or
next day funds in an amount equal to, and for the payment of, the aggregate Cash
Settlement Value or Alternative Settlement Amount, as applicable, of such
Warrants. The Warrant Agent will thereafter be responsible for making payment
available to each registered holder who holds Warrants in certificated form in
the form of a cashier's check or official bank check, or (in the case of
payments of at least U.S.$100,000) by wire transfer to a U.S. Dollar bank
account maintained by such holder in the United States (at such holder's
election), in an amount equal to the aggregate Cash Settlement Value or
Alternative Settlement Amount, as applicable, of such holder's exercised
Warrants prior to the close of business on the Alternative Funding Date (or, in
the case of
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payments made by wire transfer, prior to the close of business on the New York
Business Day next succeeding the Alternative Funding Date). In the case of
Warrants held through the facilities of DTC, if the Company has made such funds
available by such time as noted above, the Warrant Agent will thereafter be
responsible for making funds available to DTC in an amount sufficient to pay the
Cash Settlement Value or Alternative Settlement Amount of the Warrants, if
applicable, prior to the close of business on the Alternative Funding Date. DTC
will be responsible for disbursing such funds to each appropriate Participant
and such Participant will be responsible for disbursing such payments to the
Warrantholders it represents and to each brokerage firm for which it acts as
agent. Each such brokerage firm will be responsible for disbursing funds to the
Warrantholders it represents.
Certain of the Extraordinary Events and Exercise Limitation Events may be
events that would tend to decrease the level of the Nikkei 225 Index, any
Substitute Index and any Successor Index and accordingly decrease the Cash
Settlement Value for the Warrants following the occurrence of any such
Extraordinary Event or Exercise Limitation Event. However, as a result of any
postponed exercise as described above, Warrantholders would not receive such
Cash Settlement Value, but would receive instead a Cash Settlement Value (or, if
applicable, an Alternative Settlement Amount) determined as of a later date. In
any such case, any immediate impact of the related Extraordinary Event or
Exercise Limitation Event on the Nikkei 225 Index may have been negated by
interim market and other developments and, as a result of any such postponement,
the Cash Settlement Value (or Alternative Settlement Amount) actually received
by Warrantholders may be substantially different than the otherwise applicable
Cash Settlement Value if the valuation of the Warrants had not been postponed.
WARRANT CERTIFICATES
The Warrants will originally be issued as certificates in registered form
(each, a "Warrant Certificate"). The Warrant Agent will from time to time
register the transfer of any outstanding Warrant Certificate upon surrender
thereof at the Warrant Agent's Window duly endorsed by, or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent and the Company duly executed by, the registered holder thereof, a
duly appointed legal representative or a duly authorized attorney. Such
signature must be guaranteed by a bank or trust company having a correspondent
office in New York City or by a broker or dealer which is a member of the
National Association of Securities Dealers, Inc. (the "NASD") or by a member of
a national securities exchange. A new Warrant Certificate will be issued to the
transferee upon any such registration of transfer.
At the option of a Warrantholder, unexercised Warrant Certificates may be
exchanged for other Warrant Certificates representing a like number of Warrants,
upon surrender to the Warrant Agent at the Warrant Agent's Window, of the
Warrant Certificates to be exchanged. The Company will thereupon execute, and
the Warrant Agent will countersign and deliver, one or more new Warrant
Certificates representing such like number of unexercised Warrants.
In the event that upon any exercise of Warrants evidenced by a Warrant
Certificate, the number of Warrants exercised is fewer than the total number of
Warrants evidenced by such Certificate, a new Warrant Certificate evidencing the
number of Warrants not exercised will be issued to the registered holder or his
assignee. See "--Exercise of Warrants--Minimum Exercise Amount" herein.
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the
Company may in its discretion execute, and the Warrant Agent may countersign and
deliver, in exchange and substitution for such mutilated Warrant Certificate or
in replacement for such lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate representing a like number of Warrants, but only (in the
case of loss, theft or destruction) upon receipt of evidence satisfactory to the
Company and the Warrant Agent of loss, theft or destruction of such Warrant
Certificate and security or indemnity, if requested, satisfactory to them.
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Warrantholders requesting replacement Warrant Certificates must also comply with
such other reasonable regulations and pay such reasonable charges as the Company
or the Warrant Agent may prescribe. In case all of the Warrants represented by
any such mutilated, lost, stolen or destroyed Warrant Certificate have been or
are about to be exercised (including upon automatic exercise), the Company in
its discretion may, instead of issuing a new Warrant Certificate, direct the
Warrant Agent to treat such Warrant Certificate the same as if the Warrant Agent
had received an Exercise Notice in proper form in respect thereof or as being
subject to automatic exercise, as the case may be.
No service charge will be made for any registration of transfer or exchange
of Warrant Certificates, but the Company may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection thereto, other than exchanges not involving any transfer. In the case
of the replacement of mutilated, lost, stolen or destroyed Warrant Certificates,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Warrant Agent) connected
therewith.
BOOK-ENTRY CONVERSION
One hundred eighty calendar days after the consummation of the sale of the
Warrants pursuant to this Prospectus Supplement, each Warrantholder will have
the option to convert the form in which such Warrantholder holds his Warrants
from certificated to book-entry form by utilizing the Conversion Option. The
Conversion Option will be available for 45 calendar days (the "Conversion Option
Period") and is expected to run from April 29, 1996 through June 13, 1996.
In order to be exchanged for a Warrant in book-entry form, a Warrant
Certificate must be delivered to DTC, in proper form for deposit, by a
Participant. Accordingly, a Warrantholder who is not a Participant (other than a
Warrantholder holding Warrants through CEDEL or Euroclear) must deliver this
Warrant Certificate, in proper form for deposit, to a Participant, either
directly or through an indirect participant (such as a bank, brokerage firm,
dealer or trust company that clears through, or maintains a custodial
relationship with, a Participant) or brokerage firm which maintains an account
with a Participant, in order to have its Warrant Certificate exchanged for a
Warrant in book-entry form. Warrantholders who desire to exchange their Warrant
Certificates for Warrants in book-entry form should contact their brokers or
other Participants or indirect participants to obtain information on procedures
for submitting their Warrant Certificate to DTC, including the proper form for
submission and (during the Conversion Option Period) the cut-off times for same
day and next dy exchange. A Warrant Certificate held by the Warrantholder in
nominee or "street" name may be automatically exchanged into book-entry form by
the broker or other entity in whose name such Warrant Certificate is registered,
without action of, or consent by, the beneficial owner of the related Warrant.
In addition, a Warrant Certificate held through the facilities of CEDEL or
Euroclear will automatically be exchanged into book-entry form by CEDEL or
Euroclear, as the case may be, pursuant to the Conversion Option on the last day
of the Conversion Option Period without action of, or consent by, the beneficial
owner of the related Warrants. Accordingly, Warrantholders holding their
Warrants through CEDEL or Euroclear who do not wish to convert the form in which
they hold such Warrants to book-entry form must arrange to transfer their
Warrants out of the CEDEL or Euroclear systems, as the case may be, prior to the
last day of the Conversion Option Period. Thereafter, Warrantholders may no
longer hold certificated Warrants through the facilities of CEDEL or Euroclear.
Warrant Certificates received by DTC for exchange during the Conversion
Option Period will be exchanged for Warrants in book-entry form by the close of
business on the New York Business Day that those Warrant Certificates are
received by DTC (if received by DTC at its then applicable cut-off time for same
day credit) or on the following New York Business Day (if received by DTC at its
then applicable cut off-time for next day credit). After the last day of the
Conversion Option Period, DTC will not be required to accept delivery of Warrant
Certificates in exchange for book-entry Warrants, but
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may permit Warrant Certificates to be so exchanged on a case-by-case basis.
However, there can be no assurance that such Warrant Certificates will be
accepted for exchange. Warrant Certificates surrendered at any time for exchange
for book-entry Warrants may not be exercised or delivered for settlement or
transfer until such exchange has been effected. Accordingly, if a change in the
level of the Nikkei 225 Index were to occur after a Warrant Certificate had been
surrendered for exchange into book-entry form, a Warrantholder would not be able
to take advantage of the changes by exercising the related Warrant until such
exchange had been effected. Since Warrant Certificates are not required to be
exchanged for Warrants in book-entry form, it is likely that not all Warrant
Certificates will be so exchanged. Accordingly, Warrantholders purchasing
Warrants in secondary market trading after commencement of the Conversion Option
Period may wish specific arrangements with brokers or other Participants or
indirect participants if they wish to purchase only Warrants in book-entry form
and not Warrant Certificates. The Company has been informed by CEDEL and
Euroclear that they will only clear Warrants in book-entry form after the
Conversion Option Period.
Once a Warrantholder has elected the Conversion Option, such Warrantholder
may hold his Warrants only in book-entry form and will not be able to change his
election or withdraw from the book-entry system. Accordingly, ownership of the
Warrants in certificated form will no longer be available to investors who have
elected the Conversion Option.
CEDEL AND EUROCLEAR
Initially, Warrantholders may hold their Warrants in either book-entry or
certificated form through Centrale de Livraison de Valeurs Mobiliees S.A.
("CEDEL") or Euroclear if they are participants in those systems, or indirectly
through organizations which are participants in such systems. However, as
described above under "--Book Entry Conversion", it is anticipated that Warrant
Certificates held through those systems will be converted into book-entry form
on the last day of the Conversion Option Period and, accordingly, certificated
ownership of Warrants will no longer be available through those systems after
such day.
CEDEL and Euroclear will hold omnibus certificated positions and omnibus
book-entry positions on behalf of their participants through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries which in turn will, in the case of certificated
positions only, hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A., New York Office
("Citibank") will act as depositary for CEDEL and Morgan Guaranty Trust Company
of New York, New York Office ("Morgan") will act as depositary for Euroclear (in
such capacities, the "Depositaries"). All securities in CEDEL or Euroclear are
held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts.
Exercises of certificated Warrants by persons holding through CEDEL or
Euroclear participants will be effected through Citibank or Morgan, as the case
may be; however, such transactions will require delivery of exercise
instructions to the relevant European international clearing system by the
participants in that system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the exercise meets its requirements,
deliver instructions to the depositary to take action to effect the exercise of
the Warrants on its behalf by delivering Warrants to the Warrant Agent and
receiving payment in accordance with its normal procedures for next-day funds
settlement. Payments with respect to the certificated Warrants held through
CEDEL or Euroclear will be credited to the cash accounts of CEDEL participants
or Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. See "--Exercise and
Settlement of the Warrants" herein.
Exercises of book-entry Warrants by persons holding through CEDEL or
Euroclear participants will be effected through DTC, in accordance with DTC
rules, on behalf of the relevant European international clearing system by its
Depositary; however, such transactions will require delivery of
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exercise instructions to the relevant European international clearing system by
the participant in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the exercise meets its requirements,
deliver instructions to its Depositary to take action to effect its exercise of
the Warrants on its behalf by delivering Warrants through DTC and receiving
payment in accordance with its normal procedures for next-day funds settlement.
Payments with respect to the Warrants held through CEDEL or Euroclear will be
credited to the cash accounts of CEDEL participants or Euroclear participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. See "--Exercise and Settlement of the Warrants"
herein.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
CEDEL participants through electronic book-entry changes in accounts of CEDEL
participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in CEDEL in any of 28 currencies,
including U.S. dollars. CEDEL provides to its participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. CEDEL
interfaces with domestic markets in several countries. As a professional
depository, CEDEL is subject to regulation by the Luxembourg Monetary Institute.
CEDEL participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
Underwriters. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for its
participants and to clear and settle transactions between its participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 27 currencies, including U.S. dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan's Brussels, Belgium office (the "Euroclear
Operator" or "Euroclear"), under contract with Euroclear Clearance System S.C.,
a Belgian cooperative corporation (the "Cooperative"). Morgan is a member bank
of the United States Federal Reserve System. All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of Euroclear participants. Euroclear participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include the Underwriters. Indirect access to
the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipt of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear participants, and has no record
of or relationship with persons holding through Euroclear participants.
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All information herein on CEDEL and Euroclear is derived from CEDEL or
Euroclear, as the case may be, and reflects the policies of those organizations,
which are subject to change without notice.
LISTING
The Warrants have been approved for listing on the AMEX. The AMEX symbol for
the Warrants is NKB.WS. The AMEX expects to cease trading the Warrants on such
Exchange as of the close of business on the later of the Expiration Date or any
Early Extended Expiration Date or Extended Expiration Date. See "Risk
Factors--Delisting of the Warrants" herein.
DELISTING OF WARRANTS
In the event that the Warrants are delisted from, or permanently suspended
from trading (within the meaning of the Securities Exchange Act of 1934 and the
rules and regulations thereunder) on the AMEX, and not accepted at the same time
for listing on another SRO, Warrants not previously exercised will be deemed
automatically exercised on the last New York Business Day prior to the effective
date of such delisting or trading suspension (such New York Business Day, the
"Delisting Date"), and if such Delisting Date occurs prior to the Expiration
Date, the Cash Settlement Value, if any, shall be calculated and settled as
provided herein under "--Automatic Exercise," subject to a determination that
the Warrants are worthless, as described above. If such Delisting Date occurs on
or after the Expiration Date and prior to any Extended Expiration Date, the
Warrants will be deemed to be worthless. See "Description of the
Warrants--Extension Events, Extraordinary Events and Exercise Limitation Events"
above. The Company will notify Warrantholders as soon as practicable of such
delisting or trading suspension. However, if the Company first receives notice
of the delisting or suspension on the same day on which the Warrants are
delisted or suspended, such day will be deemed the Delisting Date. The Company
will covenant in the Warrant Agreement that it will not seek delisting of the
Warrants from, or suspension of their trading on, the AMEX unless the Company
has, at the same time, arranged for the Warrants to be traded pursuant to the
rules of another SRO that are filed with the Commission under the Exchange Act.
THE NIKKEI 225 INDEX
Unless otherwise stated, all information herein relating to the Nikkei 225
Index has been derived from the Stock Market Indices Data Bank published by NKS
and other publicly-available sources. Such information reflects the policies of
NKS and are subject to change at the discretion of NKS.
The Nikkei 225 Index is a stock index calculated, published and disseminated
by NKS that measures the composite price performance of selected Japanese
stocks. The Nikkei 225 Index currently is based on 225 highly capitalized
Underlying Stocks trading on the TSE representing a broad cross-section of
Japanese industries. (See Appendix B hereto for a list of the 225 Underlying
Stocks as of October 26, 1995). All 225 Underlying Stocks are stocks listed in
the First Section of the TSE. Stocks listed in the First Section are among the
most actively traded stocks on the TSE.
The Nikkei 225 Index is a modified, price-weighted index (i.e., an
Underlying Stock's weight in the index is based on its price per share rather
than the total market capitalization of the issuer) which is calculated by (i)
multiplying the per share price of each Underlying Stock by the corresponding
weighting factor for such Underlying Stock (a "Weight Factor"), (ii) calculating
the sum of all these products and (iii) dividing such sum by a divisor (the
"Divisor"). The Divisor, initially set in 1949 at 225, was 10.036 as of October
26, 1995 and is subject to periodic adjustments as set forth below. Each Weight
Factor is computed by dividing Yen50 by the par value of the relevant Underlying
Stock, so that the share price of each Underlying Stock when multiplied by its
Weight Factor corresponds to a share price based on a uniform par value of
Yen50. The stock prices used in the calculation of the Nikkei 225
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Index are those reported by a primary market for the Underlying Stocks
(currently the TSE). The level of the Nikkei 225 Index is calculated once per
minute during TSE trading hours.
In order to maintain continuity in the level of the Nikkei 225 Index in the
event of certain changes due to non-market factors affecting the Underlying
Stocks, such as the addition or deletion of stocks, substitution of stocks,
stock dividends, stock splits or distributions of assets to stockholders, the
Divisor used in calculating the Nikkei 225 Index is adjusted in a manner
designed to prevent any instantaneous change or discontinuity in the level of
the Nikkei 225 Index. Thereafter, the Divisor remains at the new value until a
further adjustment is necessary as the result of another change. As a result of
such change affecting any Underlying Stock, the Divisor is adjusted in such a
way that the sum of all share prices immediately after such change multiplied by
the applicable Weight Factor and divided by the new Divisor (i.e., the level of
the Nikkei 225 Index immediately after such change) will equal the level of the
Nikkei 225 Index immediately prior to the change.
Underlying Stocks may be deleted or added by NKS. Any stock becoming
ineligible for listing in the First Section of the TSE due to any of the
following reasons will be deleted from the Underlying Stocks: (i) bankruptcy of
the issuer, (ii) merger of the issuer with, or acquisition of the issuer by,
another company, (iii) delisting of such stock, (iv) transfer of such stock to
the "Seiri-Post" because of excess debt of the issuer or because of any other
reason or (v) transfer of such stock to the Second Section. Upon deletion of a
stock from the Underlying Stocks, NKS will select a suitable replacement for
such deleted Underlying Stock in accordance with certain criteria. In an
exceptional case, a newly listed stock in the First Section of the TSE that is
recognized by NKS to be representative of a market may be added to the
Underlying Stocks. In such a case, an existing Underlying Stock with low trading
volume and not representative of a market will be deleted by NKS.
NKS is under no obligation to continue the calculation and dissemination of
the Nikkei 225 Index. The Warrants are not sponsored, endorsed, sold or promoted
by NKS. No inference should be drawn from the information contained in this
Prospectus Supplement that NKS makes any representation or warranty, implied or
express, to the Company, the Warrantholders or any member of the public
regarding the advisability of investing in securities generally or in the
Warrants in particular or the ability of the Nikkei 225 Index to track general
stock market performance. NKS has no obligation to take the needs of the Company
or the Warrantholders into consideration in determining, composing or
calculating the Nikkei 225 Index. NKS is not responsible for, and has not
participated in the determination of, the timing of, prices for, or quantities
of, the Warrants to be issued or in the determination or calculation of the
equation by which the Warrants are to be settled in cash. NKS has no obligation
or liability in connection with the administration, marketing or trading of the
Warrants.
The use of and references to the Nikkei 225 Index in connection with the
Warrants has been consented to by NKS, the publisher of the Nikkei 225 Index.
None of the Company, the Warrant Agent, the Determination Agent and the
Underwriters accepts any responsibility for the calculation, maintenance or
publication of the Nikkei 225 Index or any Successor Index or Substitute Index.
NKS disclaims all responsibility for any errors or omissions in the calculation
and dissemination of the Nikkei 225 Index or the manner in which such index is
applied in determining any Cash Settlement Value or Alternative Settlement
Amount upon exercise of the Warrants.
S-33
<PAGE>
HISTORICAL DATA ON NIKKEI 225 INDEX
NKS first calculated and published the Nikkei 225 Index in 1970. The
following table sets forth the highest and lowest daily closing level of the
Nikkei 225 Index for each quarter or partial quarter, as the case may be, in the
period from 1990, through October 26, 1995, as well as the closing level of the
Nikkei 225 Index as of the end of each such quarter or partial quarter, as the
case may be. These historical data on the Nikkei 225 Index are not any
indication of the future performance of the Nikkei 225 Index.
<TABLE>
<CAPTION>
DAILY CLOSING LEVELS
-----------------------------------
HIGHEST LOWEST CLOSING
LEVEL LEVEL LEVEL
--------- --------- ---------
<S> <C> <C> <C>
1990:
1st Quarter............................................. 38,712.88 29,843.34 29,980.45
2nd Quarter............................................. 33,192.50 28,002.07 31,940.24
3rd Quarter............................................. 33,172.28 20,983.50 20,983.50
4th Quarter............................................. 25,352.63 20,221.86 23,848.71
1991:
1st Quarter............................................. 27,146.91 22,442.70 26,292.04
2nd Quarter............................................. 26,980.37 23,290.96 23,290.96
3rd Quarter............................................. 24,120.75 21,456.76 23,916.44
4th Quarter............................................. 25,222.28 21,502.90 22,983.77
1992:
1st Quarter............................................. 23,801.18 19,345.95 19,345.95
2nd Quarter............................................. 18,804.60 15,741.27 15,951.73
3rd Quarter............................................. 18,908.47 14,309.41 17,399.08
4th Quarter............................................. 17,690.67 15,993.48 16,924.95
1993:
1st Quarter............................................. 19,048.38 16,287.45 18,591.45
2nd Quarter............................................. 21,076.00 19,099.09 19,590.00
3rd Quarter............................................. 21,148.11 19,621.46 20,105.71
4th Quarter............................................. 20,500.25 16,078.71 17,417.24
1994:
1st Quarter............................................. 20,677.77 17,369.74 19,111.92
2nd Quarter............................................. 21,552.81 19,122.22 20,643.93
3rd Quarter............................................. 20,862.77 19,468.89 19,563.81
4th Quarter............................................. 20,148.83 18,666.93 19,723.06
1995:
1st Quarter............................................. 19,684.04 15,749.77 16,139.95
2nd Quarter............................................. 17,103.69 14,507.17 14,517.40
3rd Quarter............................................. 18,758.55 14,485.41 17,913.06
4th Quarter (through October 26, 1995).................. 18,506.28 17,726.68 17,726.68
</TABLE>
Since its inception, the Nikkei 225 Index has experienced significant daily
price fluctuations. Any historical upward or downward trend in the closing level
of the Nikkei 225 Index during any period set forth above is not any indication
that the Nikkei 225 Index is more or less likely to increase or decline at any
time during the term of the Warrants.
S-34
<PAGE>
The following graph, which has been prepared by the Company based on data
obtained from NKS, illustrates the historical performance of the Nikkei 225
Index at the end of each quarter from December 31, 1989 through September 30,
1995 and weekly Nikkei 225 Index levels through October 26, 1995. Past
performance of the Nikkei 225 Index is not necessarily indicative of future
Nikkei 225 Index performance.
NIKKEI 225 INDEX - HISTORICAL PERFORMANCE
Quarterly Values Through October 26, 1995
[Graphic Material (1) Omitted]
THE TOKYO STOCK EXCHANGE
The Tokyo Stock Exchange is one of the world's largest securities exchanges
in terms of market capitalization. The TSE is a two-way, continuous pure auction
market. Trading hours are currently from 9:00 A.M. to 11:00 A.M. and from 12:30
P.M. to 3:00 P.M., Tokyo time, Monday through Friday.
Due to the time zone difference, on any normal trading day the TSE will
close prior to the opening of business in New York City on the same calendar
day. Therefore, the closing level of the Nikkei 225 Index on such trading day
will generally be available in the United States by the opening of business on
the same calendar day.
The TSE has adopted certain measures intended to prevent any extreme
short-term price fluctuations resulting from order imbalances. These include
daily price floors and ceilings intended to prevent extreme fluctuations in
individual stock prices. In general, any stocks listed on the TSE cannot be
traded at a price outside of these limits which are stated in absolute Japanese
Yen, and not percentage, limits from the closing price of the stock on the
previous day. In addition, when there is a major order imbalance in a listed
stock, the TSE posts a "special bid quote" or a "special asked quote" for that
stock at a specified higher or lower price level than the stock's last sale
price in order to solicit counter orders and balance supply and demand for the
stock. Investors should also be aware that the TSE may suspend
S-35
<PAGE>
the trading of individual stocks in certain limited and extraordinary
circumstances including, for example, unusual trading activity in that stock. As
a result, variations in the Nikkei 225 Index may be limited by price
limitations, or by suspension of trading, on individual stocks which comprise
the Nikkei 225 Index which may, in turn, adversely affect the value of the
Warrants or result in an Exercise Limitation Event or Extraordinary Event. See
"Description of the Warrants--Extension Events, Extraordinary Events and
Exercise Limitation Events" herein.
SUBSTITUTION OF THE NIKKEI 225 INDEX
The Nikkei 225 Index, published by NKS, is currently the most widely
utilized index relating to Japanese equity securities, as measured by the market
value of: (i) the average daily trading volume of futures contracts on such
index and (ii) the average daily open interest in such contracts, in each case
market value being calculated by reference to the daily closing prices of such
contracts. In October of 1993, NKS commenced the calculation and publication of
a new broad-based, capitalization-weighted index referred to as the Nikkei 300
Index (the "Nikkei 300 Index"). Unlike the Nikkei 225 Index, which is a
price-weighted index of 225 Japanese stocks listed in the First Section of the
TSE, the Nikkei 300 Index is a capitalization-weighted index of 300 Japanese
stocks listed in the First Section of the TSE. See "--Nikkei 300 Index" for a
description of the Nikkei 300 Index. In addition, on February 14, 1994, trading
on the OSE of new futures contracts on the Nikkei 300 Index (the "Nikkei 300
Futures Contracts") was inaugurated. If the Nikkei 300 Futures Contracts develop
Adjusted Trading Volume and Adjusted Open Interest (in each case, as defined
below) with a market value exceeding that of the futures contracts on the Nikkei
225 Index (the "Nikkei 225 Futures Contracts"), the Company believes this would
indicate that the Nikkei 300 Futures Contracts will have become more widely
utilized than the Nikkei 225 Futures Contracts.
On any Substitution Date (as defined herein), a Substitute Index will be
substituted for the Nikkei 225 Index, and, thereafter, the index used to
determine the Spot Nikkei 225 Index will be such Substitute Index. The
"Substitution Date" shall be the thirtieth calendar day (or, if such day is not
a New York Business Day, the next succeeding New York Business Day) following
the giving of notice (as described below) of a Substitution Event (as defined
herein). Upon the occurrence of a Substitution Event, the Company shall promptly
give notice to the Warrantholders, by publication in a United States newspaper
with a national circulation (currently expected to be the Wall Street Journal),
of the Substitution Event, the Substitute Index, the Substitution Date and the
Strike Level and the divisor used to determine the Cash Settlement Value, both
as adjusted in the manner described below.
Upon the substitution of a Substitute Index for the Nikkei 225 Index, the
Strike Level will be adjusted as follows:
Strike Level Current Value of
-------------------------- x Substitute Index
Current Value of Nikkei 225
Index
and the Cash Settlement Value of a Warrant will be calculated as the amount in
U.S. Dollars equal to the quotient (rounded down to the nearest cent) of the
amount, if any, by which the Spot Nikkei 225 Index (i.e., the closing level of
the Substitute Index) for the applicable Valuation Date for such Warrant exceeds
the Strike Level (adjusted in the manner described above), divided by the
Adjusted Divisor. The "Adjusted Divisor" shall be an amount equal to 6
multiplied by the fixed Japanese yen/U.S. dollar exchange rate of 101.50
yen/U.S. $1.00 multiplied by a fraction, the numerator of which will be the
Current Value of the Substitute Index and the denominator of which will be the
Current Value of the Nikkei 225 Index. In addition, upon the substitution of a
Substitute Index for the Nikkei 225 Index, the
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<PAGE>
Limit Option will be adjusted so that the Limit Option Reference Index will be
the number of points lower than the closing level of such Substitute Index
determined as follows:
500 Current Value of
--------------------------- x Substitute Index
Current Value of Nikkei 225
Index
For purposes of the above calculations, the "Current Value" of the Nikkei
225 Index and of the Substitute Index will equal their respective levels
reported by the relevant exchange at the close of business on the day that the
Determination Agent substitutes the Substitute Index for the Nikkei 225 Index
or, if such day is not a Tokyo Business Day, the Tokyo Business Day immediately
preceding such day.
A "Substitution Event" will occur if, as determined by the Determination
Agent (whose opinion shall be conclusive and binding on the Company and on the
Warrantholders), the following conditions are fulfilled:
(a) Either of the following has occurred:
(i) The AMEX or another United States securities exchange publishes (on
a basis not less regularly than each day on which such exchange and
the TSE are open for trading) an index (the "New Japan Index") which
for a period of 90 days immediately preceding the date of the
Substitution Event has a correlation based on daily, closing value
to closing value, percentage changes, of not less than 90% with the
Nikkei 300 Index; and warrants with payments determined by reference
to the New Japan Index have been approved to be listed on the AMEX
or such other exchange by the Commission; or
(ii) Warrants with payments determined by reference to the Nikkei 300
Index have been approved to be listed on the AMEX or such other
exchange by the Commission; and
(b) Either of the following has occurred:
(i) The Nikkei 225 Index is no longer published and/or the Nikkei 225
Futures Contracts have been delisted from trading on the OSE; or
(ii) The Adjusted Trading Volume and the Adjusted Open Interest (in each
case, as defined herein) for the two Nikkei 300 Futures Contracts
with expiration dates closest in time to the Substitution Event
exceed the Adjusted Trading Volume and the Adjusted Open Interest,
respectively, for the two Nikkei 225 Futures Contracts with
expiration dates closest in time to the Substitution Event, each for
any three-month period prior to the date of any Substitution Event;
and
(c) To the extent required, the Company, the AMEX and/or such other exchange
shall have obtained any licenses necessary to use the New Japan Index or
the Nikkei 300 Index. The Company will agree in the Warrant Agreement to
use its reasonable efforts to obtain any such license.
Notwithstanding the above, unless the Nikkei 225 Index is no longer
published and/or the Nikkei 225 Futures Contracts shall have been delisted from
trading on the OSE, a Substitution Event will not be deemed to have occurred on
any of the 60 days immediately preceding the expiration date of the Warrants.
A "Substitute Index" means, in the event that the circumstances described in
(a)(i) above have occurred, the New Japan Index or, in the event that the
circumstances described in (a)(ii) above have occurred, the Nikkei 300 Index.
S-37
<PAGE>
"Adjusted Trading Volume" for the Nikkei 300 Futures Contracts or the Nikkei
225 Futures Contracts means the arithmetic mean, for any period, of the amounts
on each trading day equal to the product of: (x) the number of such futures
contracts traded on such day and (y) the closing level on such day of the index
to which such futures contracts relate, multiplied by Yen 10,000, in the case of
the Nikkei 300 Futures Contracts, or Yen 1,000, in the case of the Nikkei 225
Futures Contracts (the "Contract Multiplier"). "Adjusted Open Interest" for the
Nikkei 300 Futures Contracts or the Nikkei 225 Futures Contracts means the
arithmetic mean, for any period, of the amounts on each trading day equal to the
product of: (x) the open interest in such futures contracts on such day and (y)
the closing level on such day of the index to which such futures contracts
relate, multiplied by the Contract Multiplier.
For the period from June 9, 1995 to October 9, 1995 (when both Nikkei 300
Futures Contracts and Nikkei 225 Futures Contracts with September 1995 and
December 1995 expirations were traded), the Adjusted Trading Volume for the
Nikkei 300 Futures Contracts and the Nikkei 225 Futures Contracts expiring
September 1995 and December 1995 were yen 21,506 million and yen 442,724
million, respectively, and the Adjusted Open Interest for the Nikkei 300 Futures
Contracts and for the Nikkei 225 Futures Contracts expiring September 1995 and
December 1995 were yen 307,411 million and yen 2,050,531 million, respectively.
NIKKEI 300 INDEX
The Nikkei 300 Index is an index calculated, published and disseminated by
NKS, that measures the composite price performance of stocks of 300 Japanese
companies. All 300 stocks are listed in the First Section of the TSE. Stocks
listed in the First Section are among the most actively traded stocks on the
TSE. Publication of the Nikkei 300 Index began on October 8, 1993.
The Nikkei 300 Index is a market capitalization-weighted index which is
calculated by (i) multiplying the per share price of each stock included in the
Nikkei 300 Index by the number of outstanding shares (excluding shares held by
the Japanese Government), (ii) calculating the sum of all these products (such
sum being hereinafter referred to as the "Aggregate Market Price"), (iii)
dividing the Aggregate Market Price by the Base Aggregate Market Price (i.e.,
the Aggregate Market Price as of October 1, 1982) and (iv) multiplying the
result by 100. Because of such capitalization-weighting, movements in share
prices of companies with relatively larger market capitalization will have a
greater effect on the level of the entire index than will movements in share
prices of companies with relatively smaller market capitalization.
The stocks included in the Nikkei 300 Index (such stocks being referred to
herein as the "Nikkei 300 Stocks") were selected from a reference group of
stocks which were selected by excluding stocks listed in the First Section of
the TSE that met certain stated criteria, including: conspicuously low trading
volume or low share prices as compared to other stocks in the First Section of
the TSE, a failure of the issuer to pay a dividend for a considerable period of
time, or the posting of excessive losses by the issuer for a considerable period
of time. The Nikkei 300 Stocks were selected from this reference group by (i)
selecting from the remaining stocks in this reference group the stocks with the
largest aggregate market value in each of 36 industrial sectors and (ii)
selecting additional stocks (with priority within each industrial sector given
to the stock with the largest aggregate market value) so that the selection
ratios (i.e., the ratio of the aggregate market value of the included stocks to
that of the stocks in the reference group) with respect to all 36 industry
sectors will be as nearly equal as possible and the total number of companies
with stocks included in the Nikkei 300 Index will be 300.
In order to maintain continuity in the level of the Nikkei 300 Index, the
Nikkei 300 Index will be reviewed annually by NKS and the Nikkei 300 Stocks may
be replaced, if necessary, in accordance with a deletion/addition rule. The
deletion/addition rule, as announced and applied by NKS, provides generally for
the deletion of a stock from the Nikkei 300 Index if such stock is no longer
included in the
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<PAGE>
reference group or if the aggregate market value of such stock is low relative
to other stocks in the relevant industry sector. Stocks deleted pursuant to the
deletion/ addition rule will be replaced by stocks included in the reference
group which have relatively high aggregate market values. In addition, stocks
may be added or deleted from time to time for extraordinary reasons.
During the period from its initial publication on October 8, 1993 at a level
of 298.89 to October 26, 1995, the highest and lowest daily closing levels of
the Nikkei 300 Index were 311.71 and 222.26, respectively. On October 26, 1995,
the daily closing level was 265.17. However, historical performance of the
Nikkei 300 Index is not indicative of potential future levels of such index.
All disclosure contained in this Prospectus Supplement regarding the Nikkei
225 Index, Nikkei 225 Futures Contracts, Nikkei 300 Index, Nikkei 300 Futures
Contracts, or their publisher, NKS, is derived from publicly available
information. NKS has no relationship with the Company or the Warrants; it does
not sponsor, endorse, authorize, sell or promote the Warrants, and has no
obligation or liability in connection with the administration, marketing or
trading of the Warrants.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material United States Federal income
tax consequences of the ownership and disposition of a Warrant as of the date
hereof and is based on the opinion of Weil, Gotshal & Manges, special tax
counsel to the Company. Such summary generally considers only Warrants held as
capital assets by United States Holders (as defined below) and does not consider
holders in special situations, such as dealers in options, securities or
currencies, tax-exempt entities, S corporations or persons who hold a Warrant in
the ordinary course of business, financial institutions or life insurance
companies. Furthermore, the discussion below is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings
and judicial decisions thereunder as of the date hereof, and such authorities
may be repealed, revoked or modified, possibly on a retroactive basis, so as to
result in Federal income tax consequences different from those discussed below.
This summary does not address every U.S. Federal income tax issue raised by
the ownership of Warrants. In particular, this summary does not consider (i) the
U.S. Federal income tax consequences of holding Warrants as a hedge against
currency or security price risks or the hedging of the Warrants themselves, or
(ii) the possible application of the "straddle" rules of the Code to a
Warrantholder as a result of holding other "positions" (within the meaning of
Section 1092 of the Code) or (iii) whether a Warrantholder is holding Warrants
as part of a "conversion transaction" within the meaning of Section 1258 of the
Code. Any of these factors might substantially alter the tax consequences
described below and may require specific identification of positions in the
Warrants before the close of the date on which they are acquired. This
discussion also does not address the tax consequences to shareholders, partners
or beneficiaries of a Warrantholder or any U.S. alternative minimum tax, gift
tax or estate tax consequences. Accordingly, prospective purchasers of Warrants
are urged to consult their own tax advisers concerning the U.S. Federal, state
and local tax consequences, in light of their own particular circumstances
(including whether they would be treated as a dealer for federal tax purposes),
of owning Warrants.
As used herein, a "United States Holder" of a Warrant means a holder that is
a citizen or resident of the United States, a domestic corporation or an estate
or trust the income of which is subject to United States Federal income taxation
regardless of its source.
TAXATION OF WARRANTS HELD AT THE CLOSE OF TAXABLE YEAR
Each Warrant will be treated as a "section 1256 contract" which must be
"marked-to-market" (i.e., treated as sold at fair market value) on the last
business day of each taxable year. Under these
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<PAGE>
mark-to-market rules, a United States Holder of a Warrant will recognize gain or
loss equal to the difference between the fair market value of the Warrant on the
last business day of each taxable year (as determined by the Warrant's trading
price) and the United States Holder's tax basis for the Warrant. A United States
Holder's tax basis in a Warrant will equal the amount paid for the Warrant, plus
or minus the net gain or loss recognized under the mark-to-market rules by the
United States Holder in respect of the Warrant in prior taxable years. As a
result of these mark-to-market rules, a United States Holder might incur Federal
income tax liability on an annual basis in respect of an increase in the value
of the Warrant without the receipt of cash attributable thereto.
SALE, EXCHANGE AND EXERCISE OF WARRANTS
Upon sale, exchange or exercise (including automatic exercise) of a Warrant,
a United States Holder will recognize gain or loss equal to the difference
between the amount realized, if any, and the United States Holder's tax basis in
the Warrant.
CHARACTER OF GAIN OR LOSS
Any gain or loss with respect to a Warrant--either under the mark-to-market
rules or on a sale, exchange or exercise--will be capital gain or loss and will
be 60% long-term capital gain or loss and 40% short-term capital gain or loss.
With respect to a corporate United States Holder, capital losses for a
taxable year are allowed only to the extent of the holder's capital gains for
such year, but may be carried back for three taxable years and carried forward
for five taxable years. With respect to individual United States Holders, in
general, capital losses for the taxable year are allowed only to the extent of
the holder's capital gains for the taxable year plus a maximum of $3,000, but
may be carried forward indefinitely. An individual may elect, however, to carry
net section 1256 contract losses for the taxable year back against net section
1256 contract gains for the three preceding taxable years, provided such
carryback does not increase or produce a net operating loss for such years. For
individuals with significant ordinary income, long-term capital gains are
generally taxed at lower rates than items of ordinary income.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNERSHIP OF A WARRANT BY A NON-U.S.
HOLDER
Subject to the discussion below of backup withholding, in general, a holder
of a Warrant who or which is (i) a non-resident alien individual or (ii) a
foreign corporation, partnership, estate or trust which is not subject to U.S.
Federal income tax on a net income basis in respect of a Warrant (each such
person or entity, a "Non-U.S. Holder") will not be subject to U.S. Federal
withholding tax with respect to amounts received, if any, with respect to a
Warrant.
BACKUP WITHHOLDING
In general, the proceeds received from a sale, exchange, cancellation or
exercise of a Warrant by a United States Holder will be subject to information
reporting, and may be subject to a U.S. "backup" withholding at a rate of 31% if
the United States Holder thereof fails to supply an accurate taxpayer
identification number or otherwise comply with applicable U.S. information
reporting or certification requirements or otherwise establishes an exemption.
Such payment made to a Non-U.S. Holder will not be subject to information
reporting or backup withholding if the Non-U.S. Holder certifies its status as a
Non-U.S. Holder under penalty of perjury, provided that the payor does not have
actual knowledge that the holder is a United States Holder. Any amounts so
withheld would be refundable or allowed as a credit against such Holder's U.S.
Federal income tax liability.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement,
dated the date hereof (the "Underwriting Agreement"), the Company has agreed to
sell to each of the Underwriters named below, and each of the Underwriters has
severally agreed to purchase, the number of Warrants set forth opposite its
name:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF WARRANTS
------------ ------------------
<S> <C>
Bear, Stearns & Co. Inc. ......................................... 390,000
Alex. Brown & Sons Incorporated................................... 30,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc. ...................... 30,000
Everen Securities, Inc. .......................................... 30,000
The Chicago Corporation........................................... 20,000
Cowen & Company................................................... 20,000
Dain Bosworth Incorporated........................................ 20,000
First Albany Corporation.......................................... 20,000
Furman Selz Incorporated.......................................... 20,000
Gruntal & Co., Incorporated....................................... 20,000
Hanifen, Inhoff Inc. ............................................. 20,000
Interstate/Johnson Lane Corporation............................... 20,000
Ladenburg, Thalmann & Co. Inc. ................................... 20,000
Legg Mason Wood Walker, Incorporated.............................. 20,000
Needham & Company, Inc. .......................................... 20,000
The Ohio Company.................................................. 20,000
Piper Jaffrey Inc. ............................................... 20,000
Principal Financial Securities, Inc. ............................. 20,000
Ragen MacKenzie Incorporated...................................... 20,000
Rauscher Pierce Refsnes, Inc. .................................... 20,000
Raymond James & Associates, Inc. ................................. 20,000
The Robinson-Humphrey Company, Inc. .............................. 20,000
Stifel, Nicolaus & Company, Incorporated ......................... 20,000
Wheat First Butcher Singer........................................ 20,000
George K. Baum & Company.......................................... 10,000
Brean Murray, Foster Securities, Inc. ............................ 10,000
Commonwealth Associates........................................... 10,000
Crowell, Weedon & Co. ............................................ 10,000
Donald & Co. Securities, Inc. .................................... 10,000
C.L. King & Associates, Inc. ..................................... 10,000
Rodman & Renshaw, Inc. ........................................... 10,000
Scott & Stringfellow, Inc. ....................................... 10,000
Sutro & Co. Incorporated.......................................... 10,000
Tucker Anthony Incorporated....................................... 10,000
Van Kasper & Company.............................................. 10,000
Wedbush Morgan Securities Inc. ................................... 10,000
----------
Total..................................................... 1,000,000
----------
----------
</TABLE>
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<PAGE>
The Underwriters have advised the Company that they propose to offer the
Warrants to the public initially at the offering price set forth on the cover
page of this Prospectus Supplement, except that the price will be $6.875 per
Warrant and $6.75 per Warrant for the purchase of 45,000 or more Warrants or
75,000 or more Warrants, respectively, in any single transaction in this
offering, subject to the holding period requirements described below. In
addition, the Underwriters propose to offer the Warrants to certain dealers at a
price that represents a concession not in excess of $.30 per Warrant. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $.05 per Warrant to certain other dealers. After the initial public offering,
the public offering price and such concessions may be changed.
Any investor who purchases at least 45,000 Warrants or at least 75,000
Warrants in a single transaction in this offering and agrees with the
Underwriters not to sell such Warrants for a period of 30 days following the
date of this Prospectus Supplement without the consent of Bear Stearns, as
representative of the Underwriters, will be entitled to purchase the Warrants at
the reduced price as discussed above. If Bear Stearns determines that an
investor failed to comply with this 30-day holding period, such investor will be
obligated to pay to the Underwriters the difference between the offering price
and the reduced price paid for the Warrants purchased by such investor. Should
investors who are subject to the holding period requirement sell their Warrants
immediately following the expiration of the holding period, the market price of
the Warrants may be adversely affected.
The Company has granted the Underwriters an option, exercisable within
thirty days of the date of this Prospectus Supplement, to purchase up to 150,000
additional Warrants from the Company at the same price per Warrant as described
above. This option may be exercised only for the purpose of covering
over-allotments, if any, made in the sale of the Warrants offered hereby.
The Underwriting Agreement provides that the obligation of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the Warrants if any are purchased.
The Company has agreed to indemnify the Underwriters and the "qualified
independent underwriter" against, and to contribute to losses arising out of,
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
Bear Stearns is a wholly owned subsidiary of the Company. The participation
of Bear Stearns in the offer and sale of the Warrants complies with the
requirements of Schedule E ("Schedule E") of the By-Laws of the National
Association of Securities Dealers, Inc. (the "NASD") regarding underwriting
securities of an affiliate. Under the provisions of Schedule E, when a NASD
member such as Bear Stearns distributes warrants of an affiliate, the price of
the warrants can be no higher than that recommended by a "qualified independent
underwriter," as such term is defined in Schedule E, meeting certain standards.
In accordance with such requirements, Cowen & Company has agreed to serve as a
"qualified independent underwriter" and has conducted due diligence and will
recommend a price for the Warrants in compliance with the requirements of
Schedule E.
VALIDITY OF THE WARRANTS
The validity of the Warrants will be passed upon for the Company by Weil,
Gotshal & Manges, New York, New York, a partnership including professional
corporations, and for the Underwriters by Kramer, Levin, Naftalis, Nessen, Kamin
& Frankel, New York, New York.
S-42
<PAGE>
APPENDIX A
INDEX OF KEY TERMS
<TABLE>
<CAPTION>
PAGE ON WHICH
TERM IS DEFINED
---------------
<S> <C>
Adjusted Divisor.............................................................. S-36
Adjusted Open Interest........................................................ S-38
Adjusted Trading Volume....................................................... S-38
Alternative Funding Date...................................................... S-27
Alternative Settlement Amount................................................. S-26
AMEX.......................................................................... cover
Applicable Tokyo Business Day................................................. S-24
Automatic Funding Date........................................................ S-23
Bear Stearns.................................................................. S-9
Cancellation Date............................................................. S-25
Cash Settlement Value......................................................... S-5
CEDEL......................................................................... S-30
Citibank...................................................................... S-30
CME........................................................................... S-10
Code.......................................................................... S-39
Commission.................................................................... S-6
Company....................................................................... cover
Contract Multiplier........................................................... S-38
Conversion Option............................................................. S-13
Conversion Option Period...................................................... S-29
Cooperative................................................................... S-31
Current Value................................................................. S-37
Delisting Date................................................................ S-32
Depositories.................................................................. S-30
Determination Agent........................................................... S-9
Divisor....................................................................... S-32
DTC........................................................................... S-13
Early Extended Expiration Date................................................ S-24
Euroclear..................................................................... S-31
Euroclear Operator............................................................ S-31
Exchange Act.................................................................. S-6
Exercise Date................................................................. S-19
Exercise Limitation Event..................................................... S-27
Exercise Notice............................................................... S-18
Expiration Date............................................................... S-18
Extended Expiration Date...................................................... S-24
Extension Event............................................................... S-24
Extraordinary Event........................................................... S-25
Funding Date.................................................................. S-21
Index Calculation Day......................................................... S-2
Initial Closing Value......................................................... Cover
Intrinsic Value............................................................... S-26
Limit Option.................................................................. S-22
Limit Option Reference Index.................................................. S-22
Measurement Date.............................................................. S-24
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
PAGE ON WHICH
TERM IS DEFINED
---------------
<S> <C>
Morgan........................................................................ S-30
NASD.......................................................................... S-28
New Japan Index............................................................... S-37
New York Business Day......................................................... S-2
NKS........................................................................... cover
Nikkei 225 Futures Contracts.................................................. S-36
Nikkei 225 Index.............................................................. cover
Nikkei 300 Futures Contracts.................................................. S-36
Nikkei 300 Index.............................................................. S-36
Nikkei 300 Stocks............................................................. S-38
Non-U.S. Holder............................................................... S-40
OSE........................................................................... S-2
Remaining Warrants............................................................ S-20
Reset Date.................................................................... cover
Reset Date Closing Value...................................................... cover
Schedule E.................................................................... S-42
Settlement Date............................................................... S-21
SIMEX......................................................................... S-2
Spot Nikkei 225 Index......................................................... cover
SRO........................................................................... S-6
Strike Level.................................................................. S-17
Substitute Index.............................................................. S-37
Substitution Date............................................................. S-36
Substitution Event............................................................ S-37
Successor Index............................................................... S-15
Terms and Conditions.......................................................... S-31
Third Party................................................................... S-15
TSE........................................................................... S-2
Tokyo Business Day............................................................ S-2
Tokyo Trading Day............................................................. S-24
United States Holder.......................................................... S-39
Underlying Stocks............................................................. S-25
Valuation Date................................................................ S-20
Warrant Agent................................................................. S-16
Warrant Agent's Office........................................................ S-16
Warrant Agent's Window........................................................ S-18
Warrant Agreement............................................................. S-16
Warrant Certificate........................................................... S-28
Warrantholder................................................................. S-10
Weight Factor................................................................. S-32
1989 Suspension............................................................... S-25
</TABLE>
A-2
<PAGE>
APPENDIX B
LIST OF UNDERLYING STOCKS
The following is a list of the 225 companies whose stocks comprised the
Nikkei 225 Index as of October 26, 1995.
1. KYOKUYO CO. LTD.
2. NICHIRO CORPORATION
3. NIPPON SUISAN KAISHA LTD.
4. MITSUI MINING CO. LTD.
5. SUMITOMO COAL MINING CO. LTD.
6. TEIKOKU OIL
7. TAISEI CORPORATION
8. OBAYASHI CORPORATION
9. SHIMIZU CORPORATION
10. SATO KOGYO CO. LTD.
11. TOBISHIMA CORPORATION
12. FUJITA CORPORATION
13. KAJIMA CORPORATION
14. TEKKEN CONSTRUCTION
15. HAZAMA CORPORATION
16. KUMAGAI GUMI CO. LTD.
17. TOA CORPORATION
18. AOKI CORPORATION
19. DAIWA HOUSE INDUSTRY CO. LTD.
20. NIPPON FLOUR MILLS CO. LTD.
21. NISSHIN FLOUR MILLING CO. LTD.
22. NIPPON BEET SUGAR MANUFACTURING CO.
23. MORINAGA AND CO. LTD.
24. MEIJI SEIKA KAISHA LTD.
25. MEIJI MILK PRODUCTS CO. LTD.
26. SAPPORO BREWERIES LTD.
27. ASAHI BREWERIES LTD.
28. KIRIN BREWERY CO. LTD.
29. TAKARA SHUZO
30. NISSHIN OIL MILLS LTD.
31. KIKKOMAN CORPORATION
32. AJINOMOTO CO. INC.
33. NICHIREI CORPORATION
34. TOYOBO CO. LTD.
35. KANEBO LTD.
36. FUJI SPINNING CO. LTD.
37. NISSHINBO INDUSTRIES INC.
38. NITTO BOSEKI CO. LTD.
39. MARUI CO. LTD.
40. TORAY INDUSTRIES
41. TOHO RAYON
42. KURARAY CO. LTD.
43. ASAHI CHEMICAL INDUSTRY CO. LTD.
44. NEW OJI PAPER CO.
B-1
<PAGE>
45. HONSHU PAPER CO. LTD.
46. MITSUBISHI PAPER MILLS LTD.
47. HOKUETSU PAPER MILLS LTD.
48. MITSUI TOATSU CHEMICALS INC.
49. SHOWA DENKO K.K.
50. SUMITOMO CHEMICAL CO. LTD.
51. MITSUBISHI CHEMICAL CORPORATION
52. NISSAN CHEMICAL INDUSTRIES LTD.
53. RASA INDUSTRIES LTD.
54. NIPPON SODA CO. LTD.
55. TOSOH CORPORATION
56. TOAGOSEI CHEMICAL INDUSTRY
57. DENKI KAGAKU KOGYO K.K.
58. SHIN ETSU CHEMICAL CO. LTD.
59. NIPPON CARBIDE INDUSTRIES CO. INC.
60. NIPPON CHEMICAL INDUSTRIAL CO. LTD.
61. MERCIAN CORPORATION
62. KYOWA HAKKO KOGYO CO. LTD.
63. NIPPON SYNTHETIC CHEMICAL INDUSTRY
64. NIPPON KAYAKU CO. LTD.
65. ASAHI DENKA KOGYO K.K.
66. NOF CORPORATION
67. SANKYO CO. LTD.
68. TAKEDA CHEMICAL INDUSTRIES
69. YAMANOUCHI PHARMACEUTICAL
70. DAINIPPON PHARMACEUTICAL CO. LTD.
71. SHIONOGI AND CO. LTD.
72. FUJI PHOTO FILM CO. LTD.
73. KONICA CORPORATION
74. NIPPON OIL CO. LTD.
75. SHOWA SHELL SEKIYU K.K.
76. MITSUBISHI OIL CO. LTD.
77. TONEN CORPORATION
78. JAPAN ENERGY CORPORATION
79. YOKOHAMA RUBBER
80. BRIDGESTONE CORPORATION
81. ASAHI GLASS CO. LTD.
82. NIPPON SHEET GLASS CO. LTD.
83. NIHON CEMENT CO. LTD.
84. SUMITOMO CEMENT CO. LTD.
85. CHICHIBU CEMENT ONODA CORP.
86. TOKAI CARBON CO. LTD.
87. NIPPON CARBON CO. LTD.
88. NORITAKE CO. LTD.
89. TOTO LTD.
90. NGK INSULATORS LTD.
91. SHINAGAWA REFRACTORIES CO. LTD.
92. SUMITOMO METAL INDUSTRIES LTD.
93. NIPPON METAL INDUSTRY CO. LTD.
94. NIPPON YAKIN KOGYO
95. NIPPON DENKO CO. LTD.
96. JAPAN STEEL WORKS LTD.
B-2
<PAGE>
97. MITSUBISHI STEEL MANUFACTURING CO.
98. NIPPON LIGHT METAL CO. LTD.
99. MITSUI MINING AND SMELTING LTD.
100. TOHO ZINC CO. LTD.
101. MITSUBISHI MATERIALS CORPORATION
102. SUMITOMO METAL MINING CO. LTD.
103. DOWA MINING CO. LTD.
104. FURUKAWA CO. LTD.
105. FURUKAWA ELECTRIC CO. LTD.
106. SUMITOMO ELECTRIC IND. LTD.
107. FUJIKURA LTD.
108. SHOWA ELECTRIC WIRE AND CABLE CO. LTD.
109. NIPPON STEEL CORPORATION
110. TOYO SEIKAN KAISHA
111. TOKYO ROPE MFG.
112. NIIGATA ENGINEERING CO. LTD.
113. OKUMA CORPORATION
114. KOMATSU LTD.
115. SUMITOMO HEAVY INDUSTRIES, LTD.
116. KUBOTA CORPORATION
117. EBARA CORPORATION
118. CHIYODA CORPORATION
119. NSK LTD.
120. NTN CORPORATION
121. NACHI FUJIKOSHI CORPORATION
122. MINEBEA CO. LTD.
123. HITACHI LTD.
124. TOSHIBA CORPORATION
125. MITSUBISHI ELECTRIC CORPORATION
126. FUJI ELECTRIC CO. LTD.
127. MEIDENSHA CORPORATION
128. NEC CORPORATION
129. FUJITSU LTD.
130. OKI ELECTRIC INDUSTRY CO. LTD.
131. MATSUSHITA ELECTRIC INDUSTRIAL
132. SHARP CORPORATION
133. SONY CORPORATION
134. SANYO ELECTRIC CO. LTD.
135. PIONEER ELECTRONIC CORPORATION
136. YOKOGAWA ELECTRIC
137. NIPPONDENSO CO. LTD.
138. YUASA CORPORATION
139. MITSUI ENG. AND SHIPBUILDING
140. HITACHI ZOSEN CORPORATION
141. MITSUBISHI HEAVY INDUSTRIES
142. ISHIKAWAJIMA HARIMA HEAVY IND.
143. NIPPON SHARYO LTD.
144. NISSAN MOTOR CO. LTD.
145. ISUZU MOTORS LTD.
146. TOYOTA MOTOR CORPORATION
147. HINO MOTORS LTD.
148. MAZDA MOTOR CORPORATION
B-3
<PAGE>
149. HONDA MOTOR CO. LTD.
150. SUZUKI MOTOR CORPORATION
151. HONEN CORPORATION
152. NIKON CORPORATION
153. CANON INC.
154. RICOH COMPANY LTD.
155. CITIZEN WATCH CO. LTD.
156. TOPPAN PRINTING CO. LTD.
157. DAI NIPPON PRINTING CO. LTD.
158. YAMAHA CORPORATION
159. ITOCHU CORPORATION
160. MARUBENI CORPORATION
161. MITSUI AND CO. LTD.
162. SUMITOMO CORPORATION
163. MITSUBISHI CORPORATION
164. SEIKA CORPORATION
165. IWATANI INTERNATIONAL CORPORATION
166. MITSUKOSHI LTD.
167. TOKYU DEPARTMENT STORE
168. UNITIKA LTD.
169. MARUZEN CO. LTD.
170. DAI ICHI KANGYO BANK LTD.
171. BANK OF TOKYO LTD.
172. SAKURA BANK LTD.
173. MITSUBISHI BANK LTD.
174. FUJI BANK LTD.
175. SUMITOMO BANK LTD.
176. MITSUI TRUST AND BANKING CO. LTD.
177. MITSUBISHI TRUST AND BANKING CORP.
178. JAPAN SECURITIES FINANCE CO. LTD.
179. NIPPON SHINPAN CO. LTD.
180. TEIJIN LTD.
181. NIKKO SECURITIES CO. LTD.
182. NOMURA SECURITIES CO. LTD.
183. TOKIO MARINE AND FIRE INSUR. CO.
184. MITSUI MARINE AND FIRE INSUR. CO.
185. YASUDA FIRE AND MARINE INSURANCE CO.
186. MITSUI FUDOSAN CO. LTD.
187. MITSUBISHI ESTATE CO. LTD.
188. HEIWA REAL ESTATE CO. LTD.
189. TOBU RAILWAY
190. TOKYU CORPORATION
191. KEIHIN ELECTRIC EXPRESS RAILWAY CO.
192. ODAKYU ELECTRIC RAILWAY
193. KEIO TEITO ELECTRIC RAILWAY CO. LTD
194. KEISEI ELECTRIC RAILWAY CO. LTD.
195. MITSUBISHI RAYON CO. LTD.
196. NIPPON EXPRESS CO. LTD.
197. SANKYU INC.
198. NIPPON YUSEN K.K.
199. MITSUI O.S.K. LINES LTD.
200. KAWASAKI KISEN KAISHA LTD.
B-4
<PAGE>
201. SHOWA LINE LTD.
202. ALL NIPPON AIRWAYS CO. LTD.
203. MITSUBISHI WAREHOUSE AND TRANSPORT
204. MITSUI SOKO CO. LTD.
205. NIPPON TELEGRAPH AND TELEPHONE NTT
206. TOKYO ELECTRIC POWER CO. INC.
207. KANSAI ELECTRIC POWER CO. INC.
208. TOKYO GAS CO. LTD.
209. TOEI CO.
210. TOKYO DOME CORPORATION
211. NIPPON PAPER IND. CO. LTD.
212. UBE INDUSTRIES
213. KAWASAKI STEEL CORPORATION
214. NKK CORPORATION
215. KOBE STEEL LTD.
216. SHIMURA KAKO CO. LTD.
217. ISEKI AND CO. LTD.
218. NIPPON PISTON RING CO. LTD.
219. KOYO SEIKO CO. LTD.
220. KAWASAKI HEAVY IND. LTD.
221. TOPY INDUSTRIES
222. TOMEN CORPORATION
223. NISSHO IWAI CORPORATION
224. NAVIX LINE LTD.
225. OSAKA GAS CO. LTD.
B-5
<PAGE>
PROSPECTUS
$2,399,571,350
THE BEAR STEARNS COMPANIES INC.
DEBT SECURITIES AND WARRANTS
The Company may issue and sell from time to time, in one or more series with
an aggregate initial public offering price of up to $2,399,571,350 (or the
equivalent in foreign denominated currency or units based on or relating to such
currencies), debt securities ("Debt Securities"), consisting of debentures,
notes and/or other unsecured evidences of indebtedness, and warrants
("Warrants") to purchase Debt Securities or to buy and sell government debt
securities, currencies, currency units, currency indices or currency baskets,
stock indices, stock baskets, commodities, commodity indices or other indices or
references. The Debt Securities and Warrants are herein collectively referred to
as the "Securities." The Debt Securities and Warrants may be offered
independently or together for sale directly to purchasers or through dealers,
underwriters or agents. The Company will offer the Securities to the public on
terms determined by market conditions. The Securities may be sold for, and
principal of and interest on Debt Securities and the cash settlement value of
the Warrants may be payable in, United States dollars, foreign denominated
currency or currency units, in each case, as the Company specifically
designates.
The accompanying Prospectus Supplement sets forth the specific designation,
aggregate principal amount, purchase price, maturity, interest rate (or manner
of calculation thereof), time of payment of interest (if any), currency or
currency units in which payments will be made (if other than United States
dollars), listing (if any) on a securities exchange and any other specific terms
of the Debt Securities, the purchase price, exercise price, exercise period,
detachability and any other specific terms of any Warrants and the name of and
compensation to each dealer, underwriter or agent (if any) involved in the sale
of the Securities. The managing underwriters with respect to each series sold to
or through underwriters will be named in the accompanying Prospectus Supplement.
Such underwriters (and any representative thereof), dealers or agents may
include Bear, Stearns & Co. Inc., a wholly-owned subsidiary of the Company.
There are no restrictions in the Indenture (as defined in the Prospectus) on
the ability of the Company or its subsidiaries to incur additional unsecured
indebtedness or on the ability of the Company to incur additional secured
indebtedness except that the Indenture restricts the Company from incurring any
indebtedness for borrowed money that is secured by a pledge of the Voting Stock
of any Restricted Subsidiary (each as defined in the Prospectus) without
effectively providing that the Notes and other indebtedness of the Company under
the Indenture will be secured equally and ratably with such secured
indebtedness.
-------------------
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 OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------
The Securities may be offered through dealers, through underwriters or
through agents designated from time to time, as set forth in the accompanying
Prospectus Supplement. The net proceeds to the Company will be, in the case of a
dealer, the sales price to such dealer, in the case of an underwriter, the
public offering price less the applicable underwriting discount or commission,
and, in the case of an agent, the public offering price less the applicable
agency commission, in each case, less other expenses attributable to issuance
and distribution. See "Plan of Distribution" for possible indemnification
arrangements for dealers, underwriters and agents.
This Prospectus and the accompanying Prospectus Supplement may be used by
Bear, Stearns & Co. Inc. in connection with offers and sales of Debt Securities
and Warrants in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale or otherwise. Bear, Stearns & Co.
Inc. may act as a principal or agent in such transactions.
-------------------
BEAR, STEARNS & CO. INC.
JULY 28, 1995
<PAGE>
IN CONNECTION WITH THE OFFERING OF CERTAIN SECURITIES HEREUNDER, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICES OF THOSE SECURITIES, OR OTHER SECURITIES OF THE COMPANY, AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 or at its Regional
Offices located at the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor,
New York, New York 10048, and copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained in
the Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the Securities.
Statements contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
Section 13 of the Exchange Act (File No. 1-8989), are incorporated herein by
reference: (i) the Annual Report on Form 10-K (including the portions of the
Company's Annual Report to Stockholders incorporated by reference therein) for
the fiscal year ended June 30, 1994 (the "1994 Form 10-K") and (ii) the
Quarterly Reports on Form 10-Q for the quarterly periods ended September 30,
1994, December 31, 1994 and March 31, 1995. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all documents incorporated by reference into this Prospectus
except the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to Corporate Communications Department, The Bear Stearns Companies
Inc., 245 Park Avenue, New York, New York 10167; telephone number
(212) 272-2000.
-------------------
3
<PAGE>
THE COMPANY
The Company is a holding company that, through its subsidiaries, principally
Bear, Stearns & Co. Inc. ("Bear Stearns") and Bear, Stearns Securities Corp.
("BSSC") is a leading United States investment banking, securities trading and
brokerage firm serving United States and foreign corporations, governments and
institutional and individual investors. The business of the Company and its
subsidiaries includes market-making and trading in corporate, United States
government and agency, mortgage-related, asset-backed and municipal securities
and trading in options, futures, foreign currencies, interest rate swaps and
other derivative products; securities and commodities arbitrage; securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities, arranging
for the private placement of securities, assisting in mergers and acquisitions
and restructurings and providing other financial advisory services, including
advising on, and participating in principal investments in, leveraged
acquisitions; providing securities clearance services; specialist activities in
securities on the floors of the New York Stock Exchange (the "NYSE"); customer
financing activities; securities lending activities; fiduciary services; and
providing other services, including real estate brokerage, investment management
and advisory activities, and securities research.
The Company's operations are conducted from its principal offices in New
York City, from domestic regional offices in Atlanta, Boston, Chicago, Dallas,
Los Angeles and San Francisco, from representative offices in Geneva, Hong Kong
and Shanghai, through international subsidiaries in Frankfurt, Hong Kong, London
and Paris, through a branch office in Tokyo and through joint ventures with
other firms in Karachi, Madrid and Paris. The Company's foreign offices provide
services and engage in investment activities involving foreign clients and
international transactions. The Company's trust company subsidiary, Custodial
Trust Company, operates from offices in Princeton, New Jersey.
Bear Stearns and BSSC are broker-dealers registered with the Commission,
futures commission merchants registered with the Commodity Futures Trading
Commission, members of the NYSE and all other principal United States securities
and commodities exchanges and members of the National Association of Securities
Dealers, Inc. (the "NASD") and the National Futures Association. Bear Stearns is
also recognized as a "primary dealer" in United States government securities
designated by the Federal Reserve Bank of New York.
The Company is incorporated in Delaware. The principal executive office of
the Company is located at 245 Park Avenue, New York, New York 10167; its
telephone number is (212) 272-2000.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, which may include additions to working capital, the
repayment of short-term indebtedness and investments in, or extensions of credit
to, subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was 1.2 for the nine months ended
March 31, 1995 and 1.6, 1.8, 1.6, 1.2 and 1.2 for the fiscal years ended June
30, 1994, 1993, 1992, 1991 and 1990, respectively. These ratios were calculated
by dividing the sum of fixed charges into the sum of earnings before taxes and
fixed charges. Fixed charges for these purposes consist of all interest expense
and certain other immaterial expenses.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general terms and provisions will not apply to
the Debt Securities so offered will be described in the Prospectus Supplement
relating to those Debt Securities.
The Debt Securities will be issued under an Indenture, dated as of May 31,
1991 (the "Indenture"), between the Company and Chemical Bank (formerly
Manufacturers Hanover Trust Company), as trustee (the "Trustee"). A copy of the
Indenture is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part (the "Registration Statement"). The following summaries
of certain provisions of the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the Indenture, including the definitions therein of certain terms.
The Indenture does not limit the principal amount of Debt Securities that
may be issued thereunder, and provides that Debt Securities may be issued
thereunder in one or more series up to the aggregate principal amount that may
be authorized from time to time by the Company. The Company from time to time
may, without the consent of the Holders of outstanding Debt Securities, provide
for the issuance of other debt securities under the Indenture in addition to the
Debt Securities authorized on the date of this Prospectus. The Indenture
provides the Company with the ability, in addition to the ability to issue Debt
Securities with terms different than those of Debt Securities previously issued,
to "reopen" a previous issue of a series of Debt Securities and issue additional
Debt Securities of such series. Debt Securities in an aggregate principal amount
of up to $2,399,571,350 may be offered pursuant to this Prospectus. As of the
date of this Prospectus, $7,512,003,425 aggregate principal amount of Debt
Securities have been issued under the Indenture and are outstanding.
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby for the terms of those Debt
Securities, including, where applicable (1) the title of the Debt Securities and
the series of which those Debt Securities are a part; (2) the aggregate
principal amount of, or any limit on the aggregate principal amount of, those
Debt Securities; (3) the date or dates on which those Debt Securities will
mature; (4) the rate or rates per annum (which may be fixed or variable) at
which those Debt Securities will bear interest, if any; (5) the date or dates on
which such interest, if any, will be payable and the record date or dates
relating thereto; (6) the provisions, if any, for redemption of those Debt
Securities and the redemption price thereof; (7) the sinking fund requirements,
if any, with respect to those Debt Securities; (8) whether those Debt Securities
provide for payment in United States dollars, a foreign currency or a composite
currency; (9) any index, formula or other method used to determine the amount of
payments of principal (and premium, if any) or interest, if any, on those Debt
Securities; (10) the form (registered or bearer or both) in which those Debt
Securities may be issued and any restrictions applicable to the exchange of one
form for another and to the offer, sale and delivery of the Debt Securities in
either form; (11) whether those Debt Securities will be issued in book-entry
form (a "Global Security") or in certificated form; (12) whether and under what
circumstances the Company will pay additional amounts ("Additional Amounts")
relating to specified taxes, assessments or other governmental charges in
respect of those Debt Securities and whether the Company has the option to
redeem those Debt Securities rather than pay such Additional Amounts, and the
terms of any such redemption; (13) if the amount of payments of principal of
(and premium, if any) or interest, if any, on, and Additional Amounts in respect
of those Debt Securities may be determined with reference to an index, formula
or other method based on a coin or currency other than that in which the Debt
Securities are stated to be payable, the manner in which those amounts will be
determined; (14) the provisions, if any, for the defeasance of those Debt
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Securities; and (15) any other terms of those Debt Securities not inconsistent
with the provisions of the Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities will be issued only in registered form without coupons ("Registered
Securities") in denominations of $1,000 and integral multiples thereof, and in
bearer form with or without coupons ("Bearer Securities") in the denomination of
$5,000. If Bearer Securities of a series are issued, the federal income tax
consequences and other special considerations applicable to those Bearer
Securities will be described in the Prospectus Supplement relating to that
series.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities may be transferred or exchanged at the corporate trust
office or agency of the Trustee in the City and State of New York, subject to
the limitations provided in the Indenture, without the payment of any service
charge, other than any tax or other governmental charge that may be imposed in
connection therewith. Bearer Securities will be transferable by delivery.
Provisions with respect to the exchange of Bearer Securities of any series will
be described in the Prospectus Supplement relating thereto.
If the amount of payments of principal of (and premium, if any) or any
interest on Debt Securities of any series is to be determined with reference to
any type of index, formula or other method, the federal income tax consequences
(if material), specific terms of and other information with respect to those
Debt Securities and that index, formula or other method will be described in the
Prospectus Supplement relating to that series.
If the principal of (and premium, if any) or any interest on Debt Securities
of any series are payable in a foreign or composite currency, the restrictions,
elections, federal income tax consequences, specific terms and other information
with respect to those Debt Securities and such currency will be described in the
Prospectus Supplement relating to that series.
One or more series of Debt Securities may be sold at a substantial discount
below its or their stated principal amount, bearing no interest or interest at a
rate that at the time of issuance is below market rate. One or more series of
Debt Securities may be variable rate debt securities that may be exchangeable
for fixed rate debt securities. Federal income tax consequences and other
special considerations applicable to any such series will be described in the
Prospectus Supplement relating thereto.
The Debt Securities will be unsecured and will rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company. The Company
extends credit to its subsidiaries from time to time. Extensions of credit to
subsidiaries may be subordinated to the claims of unaffiliated creditors of
those subsidiaries. In addition, since the Company is a holding company, the
right of the Company and hence the right of creditors of the Company (including
the Holders of the Debt Securities) to participate in any distribution of the
assets of any subsidiary upon its liquidation or reorganization, or otherwise,
is necessarily subject to the prior claims of creditors of the subsidiary,
except to the extent that claims of the Company itself as a creditor of the
subsidiary may be recognized. Furthermore, dividends, loans and advances to the
Company from certain of its subsidiaries, including Bear Stearns and BSSC, are
restricted by net capital requirements under the Exchange Act and under rules of
certain exchanges and other regulatory bodies and by covenants governing certain
indebtedness of those subsidiaries.
Unless otherwise provided in the applicable Prospectus Supplement, the
principal of (and premium, if any) and any interest on Debt Securities will be
payable (in the case of Registered Securities) at the corporate trust office or
agency of the Trustee in the City and State of New York or (in the case of
Bearer Securities) at the office of the Trustee located outside the United
States maintained for such purpose; provided, however, that payment of interest
other than interest payable at maturity (or on the date of redemption, if any,
if the Debt Securities are redeemable by the Company prior to maturity, or on
the date of repayment, if the Debt Securities are repayable at the option of the
Holder thereof prior
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to maturity) on Registered Securities may be made at the option of the Company
by check mailed to the address of the person entitled thereto or, at the option
of a Holder of at least $10,000,000 in principal amount of Registered
Securities, by wire transfer to an account designated by such Holder in writing
at least 16 days prior to the date on which such payment is due. Unless
otherwise provided in the applicable Prospectus Supplement, no payment on a
Bearer Security will be made by mail to an address in the United States or by
wire transfer to an account maintained by the Holder thereof in the United
States or will otherwise be made inside the United States.
NOTICES
Unless otherwise provided in the applicable Prospectus Supplement, any
notice required to be given to a Holder of a Debt Security of any series that is
a Registered Security will be mailed to the last address of such Holder set
forth in the applicable Security Register. Any notice required to be given to a
Holder of a Debt Security that is a Bearer Security will be published in a daily
newspaper of general circulation in the city or cities specified in the
Prospectus Supplement relating to such Bearer Security.
GLOBAL 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 (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued in either registered or
bearer form and in either temporary or definitive form. Unless and until it is
exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any nominee to a successor of the Depositary or a
nominee of the successor.
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary will credit on its
book-entry system the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of institutions
that have accounts with the Depositary ("participants"). The accounts to be
credited shall be designated by the underwriters of the Debt Securities, or if
the Debt Securities are offered and sold directly by the Company or through
agents, by the Company or those agents. Ownership of beneficial interest in a
Global Security will be limited to participants or persons that may hold
beneficial interests through participants. Ownership of beneficial interest in a
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary's participants or
persons that hold through participants. The laws of some states require that
certain purchasers of securities take physical delivery of securities. Such
limits and such laws may limit the market for beneficial interests in a Global
Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of a Global Security, the Depositary or nominee, as the case
may be, will be considered the sole owner or Holder of the Debt Securities
represented by the Global Security for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in a Global Security will not
be entitled to have Debt Securities represented by Global Securities registered
in their names, will not receive or be entitled to receive physical delivery of
Debt Securities in definitive form and will not be considered the owners or
Holders thereof under the Indenture.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities and Bearer Warrants" below, payments of principal of (and
premium, if any) and any interest on the individual Debt Securities registered
in the name of the Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the Holder of such Global Security. Neither
the
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Company nor the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of a Global Security, or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests and each of them may act or
refrain from acting without liability on any information provided by the
Depositary. The Company expects that the Depositary, upon receipt of any payment
of principal, premium or interest in respect of a Global Security, will credit
immediately the accounts of the participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in a Global Security as shown on the records of the Depositary. The
Company also expects that payments by participants to owners of beneficial
interests in a Global Security will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants. Receipt by owners of beneficial
interests in a temporary Global Security of payments of principal, premium or
interest in respect thereof will be subject to the restrictions discussed under
"Limitations on Issuance of Bearer Securities and Bearer Warrants" below.
If interest is paid on a bearer Global Security, or if no interest has been
paid but the bearer Global Security remains outstanding beyond a reasonable
period of time after the restricted period (as defined in applicable U.S.
Treasury regulations) has ended, the Depositary must provide the Company with a
certificate to the effect that the owners of the beneficial interests in the
Global Security are non-U.S. persons or U.S. persons that are permitted to hold
bearer securities under applicable U.S. Treasury regulations. In general, U.S.
persons that are permitted to hold bearer securities are U.S. persons who
acquire the securities through the foreign branch of certain U.S. financial
institutions and certain U.S. financial institutions that hold the securities
for resale to non-U.S. persons or who hold the securities on their own account
through a foreign branch. The certificate must be provided within a reasonable
period of time after the end of the restricted period, but in no event later
than the date when interest is paid. The certificate must be based on statements
provided to the Depositary by the owners of the beneficial interests.
If the Depositary is at any time unwilling or unable or ineligible to
continue as depositary and a successor depositary is not appointed by the
Company within 90 calendar days, then the Company will issue Debt Securities in
certificated form in exchange for all outstanding Global Securities. In
addition, the Company (but not a Holder) may at any time determine not to have
Debt Securities represented by a Global Security and, in that event, will issue
Debt Securities in definitive form in exchange for all Global Securities. In any
such instance, an owner of a beneficial interest in the Global Securities to be
exchanged will be entitled to delivery in definitive form of Debt Securities
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name. Individual Debt Securities of the series so
issued will be issued (a) as Registered Securities in denominations, unless
otherwise specified by the Company, of $1,000 and integral multiples thereof if
the Debt Securities of that series are issuable as Registered Securities, (b) as
Bearer Securities in the denomination or denominations specified by the Company
if the Debt Securities of that series are issuable as Bearer Securities or (c)
as either Registered or Bearer Securities, if the Debt Securities of that series
are issuable in either form. See, however, "Limitations on Issuance of Bearer
Securities and Bearer Warrants" below for a description of certain restrictions
on the issuance of individual Bearer Securities in exchange for beneficial
interests in a Global Security.
LIMITATION ON LIENS
The Indenture provides that the Company may not, and may not permit any
Restricted Subsidiary to, issue, incur, assume, guarantee or suffer to exist any
indebtedness for borrowed money secured by a pledge of, lien on or security
interest in any shares of Voting Stock of any Restricted Subsidiary without
effectively providing that the securities issued under the Indenture, including
the Debt Securities, will be secured equally and ratably with such secured
indebtedness. The term "Restricted Subsidiary" as defined in the Indenture means
Bear Stearns, Custodial Trust Company, BSSC and any other
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subsidiary of the Company owning, directly or indirectly, any of the common
stock of, or succeeding to a significant portion of the business, property or
assets of a Restricted Subsidiary, or with which a Restricted Subsidiary is
merged or consolidated.
MERGER AND CONSOLIDATION
The Indenture provides that the Company may consolidate or merge with or
into any other corporation, and the Company may sell, lease or convey all or
substantially all of its assets to any corporation, organized and existing under
the laws of the United States of America or any state thereof, provided that (a)
the corporation (if other than the Company) formed by or resulting from any such
consolidation or merger or that shall have received such assets shall expressly
assume payment of the principal of, and premium, if any, and interest on, (and
any Additional Amounts payable in respect of) the Debt Securities and the
performance and observance of all of the covenants and conditions of the
Indenture to be performed or observed by the Company, and (b) the Company or
such successor corporation shall not immediately thereafter be in default under
the Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, the
Indenture does not restrict (i) a consolidation, merger, sale of assets or other
similar transaction that may adversely affect the creditworthiness of the
Company or a successor or combined entity, (ii) a change in control of the
Company or (iii) a highly leveraged transaction involving the Company, whether
or not involving a change in control, and the Indenture therefore will not
protect holders of the Debt Securities from the substantial impact that any of
the foregoing transactions may have on the value of the Debt Securities.
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be effected by the Company
and the Trustee with the consent of the Holders of 66 2/3% in principal amount
of the outstanding Debt Securities of each series affected thereby, provided
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
or the date of any installment of principal of, or interest on, any Debt
Security or change the Redemption Price or the Optional Redemption Price
thereof; (b) reduce the principal amount of, or the rate of interest on, or the
amount of any Additional Amount payable in respect of, any Debt Security or
reduce the amount of principal that could be declared due and payable prior to
the Stated Maturity of that Debt Security, or change the obligation of the
Company to pay any Additional Amounts (except as contemplated or permitted under
the Indenture), or reduce the amount of the principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the maturity
of that Debt Security pursuant to the Indenture; (c) change the place or
currency of any payment of principal, premium, if any, or interest on any Debt
Security; (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security; (e) reduce the percentage in
principal amount of the outstanding Debt Securities of any series, the consent
of whose Holders is required to modify or amend the Indenture; or (f) modify the
foregoing requirements or reduce the percentage of outstanding Debt Securities
necessary to waive any past default to less than a majority. Except with respect
to certain fundamental provisions, the Holders of at least a majority in
principal amount of outstanding Debt Securities of any series may, with respect
to that series, waive past defaults under the Indenture and waive compliance by
the Company with certain provisions of the Indenture.
EVENTS OF DEFAULT
Under the Indenture, the following will be Events of Default with respect to
any series of Debt Securities: (a) default in the payment of interest on, or any
Additional Amounts payable in respect of, any Debt Securities of that series
when due, which default has continued for 30 days; (b) default in the payment of
the principal of, and premium, if any, on, any Debt Security of that series when
due; (c) default in the deposit of any sinking fund payment, when due, in
respect of any Debt Security of that series; (d) default in the performance of
any other covenant of the Company contained in the Indenture
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or in the Debt Securities of that series, which default has continued for 60
days after written notice as provided in the Indenture; (e) default for 10 days
after notice as provided in the Indenture, in respect of any other indebtedness
for borrowed money of the Company or any Restricted Subsidiary in excess of
$10,000,000 that has been declared due and payable prior to maturity; (f)
certain events of bankruptcy, insolvency or reorganization; and (g) any other
Event of Default with respect to Debt Securities of that series. The Trustee or
the Holders of 25% in principal amount (or any lesser amount that may be
provided for in the Debt Securities of that series) of the outstanding Debt
Securities of that series may declare the principal amount of all outstanding
Debt Securities of that series due and payable immediately if an Event of
Default with respect to the Debt Securities of that series shall occur and be
continuing at the time of declaration. At any time after a declaration of
acceleration has been made with respect to the Debt Securities of any series,
but before a judgment or decree for payment of money due has been obtained by
the Trustee, the Holders of a majority in principal amount of the outstanding
Debt Securities of that series may rescind any declaration of acceleration and
its consequences, if all payments due (other than those due solely as a result
of acceleration) have been made and all Events of Default have been remedied or
waived. Any Event of Default with respect to Debt Securities of any series may
be waived by the Holders of a majority in principal amount of all outstanding
Debt Securities of that series, except in a case of failure to pay the principal
of, and premium, if any, or interest on, or any Additional Amounts payable in
respect of, any Debt Security of that series for which payment had not been
subsequently made or in respect of a covenant or provision that cannot be
modified or amended without the consent of the Holder of each outstanding Debt
Security of that series.
The Holders of a majority in principal amount of the outstanding Debt
Securities of a series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to Debt Securities of that series,
provided that this direction shall not be in conflict with any rule of law or
the Indenture. Before proceeding to exercise any right or power under the
Indenture at the direction of those Holders, the Trustee shall be entitled to
receive from those Holders reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in complying with any
such direction.
The Company will be required to furnish to the Trustee annually a statement
as to the fulfillment by the Company of all of its obligations under the
Indenture.
DEFEASANCE
If so established by the Company under the terms of the Indenture with
respect to Debt Securities of any series that are Registered Securities
denominated and payable only in United States dollars (except as otherwise
provided under the Indenture), the Company, at its option, (a) will be
discharged from any and all obligations in respect of the Debt Securities of
that series (except for certain obligations to register the transfer or exchange
of Debt Securities of that series, replace stolen, lost or mutilated Debt
Securities of that series, maintain paying agents and hold moneys for payment in
trust) on the 91st day after the applicable conditions described in this
paragraph have been satisfied or (b) will not be subject to provisions of the
Indenture described above under "Limitation on Liens" and "Merger and
Consolidation" with respect to the Debt Securities of that series, in each case
if the Company 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 (including any mandatory sinking fund payments) of, and
premium, if any, and any interest on, the Debt Securities of that series on the
dates such payments are due in accordance with the terms of those Debt
Securities. To exercise either option, the Company is required to deliver to the
Trustee an opinion of counsel to the effect that (i) the deposit and related
defeasance would not cause the Holders of the Debt Securities of the series
being defeased to recognize income, gain or loss for United States Federal
income tax purposes and (ii) if the Debt Securities of that series are then
listed on the NYSE, the exercise of the option would not result in delisting.
Defeasance provisions, if any, with respect to any series of Debt Securities may
be specified by the Company under the terms of the Indenture.
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DESCRIPTION OF WARRANTS
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular terms
of the Warrants offered by any Prospectus Supplement and the extent, if any, to
which such general terms and provisions will not apply to the Warrants so
offered will be described in the Prospectus Supplement relating to those
Warrants.
The Company may issue Warrants for the purchase of Debt Securities, Warrants
to buy or sell debt securities of or guaranteed by the United States or other
sovereign states ("Government Debt Securities"), Warrants to buy or sell
currencies, currency units or units of a currency index or currency basket,
Warrants to buy or sell units of a stock index or stock basket and Warrants to
buy and sell a commodity or a commodity index. Warrants may be offered
independently of or together with any series of Debt Securities and may be
attached to or separate from those Debt Securities. The Warrants will be settled
either through physical delivery or through payment of a cash settlement value
as set forth herein and in any applicable Prospectus Supplement. Each series of
Warrants will be issued under a separate warrant agreement (a "Warrant
Agreement") to be entered into between the Company and a bank or a trust
company, as warrant agent (the "Warrant Agent"), all as described in the
Prospectus Supplement relating to that series of Warrants. The Warrant Agent
will act solely as the agent of the Company under the applicable Warrant
Agreement and in connection with the certificates for the Warrants (the "Warrant
Certificates"), if any, of that series, and will not assume any obligation or
relationship of agency or trust for or with any holders of those Warrant
Certificates or beneficial owners of those Warrants. The following summaries of
certain provisions of the forms of Warrant Agreements and Warrant Certificates
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Warrant Agreements and the
Warrant Certificates, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.
GENERAL
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Warrants, if any, offered thereby for the terms of those
Warrants, including, where applicable: (1) whether the Warrant is for Debt
Securities, Government Debt Securities, currencies, currency units, currency
indices or currency baskets, stock indices, stock baskets, commodities,
commodity indices or any other index or reference as therein described; (2) the
offering price; (3) the currency, currency unit, currency index or currency
basket based on or relating to currencies for which those Warrants may be
purchased; (4) the date on which the right to exercise those Warrants will
commence and the date (the "Expiration Date") on which that right will expire;
(5) whether those Warrants are to be issuable in registered form ("Registered
Warrants") or bearer form ("Bearer Warrants"); (6) whether those Warrants are
extendable and the period or periods of such extendibility; (7) the terms upon
which Bearer Warrants, if any, of any series may be exchanged for Registered
Warrants of that series; (8) whether those Warrants will be issued in book-entry
form (a "Global Warrant Certificate") or in certificated Form; (9) United States
federal income tax consequences applicable to those Warrants; and (10) any other
terms of those Warrants not inconsistent with the applicable Warrant Agreement.
If the offered Warrants are to purchase Debt Securities, the Prospectus
Supplement will also describe (1) the designation, aggregate principal amount,
currency, currency unit or currency basket and other terms of the Debt
Securities purchasable upon exercise of those Warrants; (2) the designation and
terms of the Debt Securities with which those Warrants are issued and the number
of those Warrants issued with each such Debt Security; (3) the date or dates on
and after which those Warrants and the related Debt Securities will be
separately transferable; and (4) the principal amount of Debt Securities
purchasable upon exercise of one offered Warrant and the price at which and
currency, currency unit or currency basket in which such principal amount of
Debt Securities may be purchased
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upon such exercise. Prior to exercising their Warrants, holders of those
Warrants will not have any of the rights of Holders of the Debt Securities of
the series purchasable upon such exercise, including the right to receive
payments of principal of, or premium, if any, or interest, if any, on, those
Debt Securities, or to enforce any of the covenants in the Indenture.
If the offered Warrants are to buy or sell Government Debt Securities or a
currency, currency unit, currency index or currency basket, the Prospectus
Supplement will describe the amount and designation of the Government Debt
Securities or currency, currency unit, currency index or currency basket, as the
case may be, subject to each Warrant, whether those Warrants provide for cash
settlement or delivery of the Government Debt Securities or currency, currency
unit, currency index or currency basket upon exercise.
If the offered Warrants are Warrants on a stock index or a stock basket,
those Warrants will provide for payment of an amount in cash determined by
reference to increases or decreases in such stock index or stock basket, and the
Prospectus Supplement will describe the terms of those Warrants, the stock index
or stock basket covered by those Warrants and the market to which the stock
index or stock basket relates.
If the offered Warrants are Warrants on a commodity or commodity index,
those Warrants will provide for cash settlement or delivery of the particular
commodity or commodity index. The Prospectus Supplement will describe the terms
of those Warrants, the commodity or commodity index covered by those Warrants
and the market, if any, to which the commodity or commodity index relates.
Registered Warrants of any series will be exchangeable for Registered
Warrants of the same series representing in the aggregate the number of Warrants
surrendered for exchange. Warrant Certificates, to the extent exchangeable, may
be presented for exchange, and Registered Warrants may be presented for
transfer, at the corporate trust office of the Warrant Agent for that series of
Warrants (or any other office indicated in the Prospectus Supplement relating to
that series of Warrants). Warrants to buy or sell Government Debt Securities or
a currency, currency unit, currency index or currency basket, and Warrants on
stock indices or stock baskets or on commodities or commodity indices, may be
issued in the form of a single Global Warrant Certificate, registered in the
name of the nominee of the depository of the Warrants, or may initially be
issued in the form of definitive certificates that may be exchanged, on a fixed
date, or on a date or dates selected by the Company, for interests in a Global
Warrant Certificate, as set forth in the applicable Prospectus Supplement.
Bearer Warrants will be transferable by delivery. The Prospectus Supplement will
describe the terms of exchange applicable to any Bearer Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the Holder to purchase such principal amount of
the Debt Securities or buy or sell such amount of Government Debt Securities or
of a currency, currency unit, currency index or currency basket, commodity or
commodities at the exercise price, or receive a settlement value in respect of
such amount of Government Debt Securities or of a currency, currency unit,
currency index or currency basket, stock index or stock basket, commodity or
commodity index, as shall in each case be set forth in or calculable from, the
Prospectus Supplement relating to that series of Warrants or as otherwise set
forth in the Prospectus Supplement. Warrants may be exercised at the corporate
trust office of the Warrant Agent (or any other office indicated in the
Prospectus Supplement relating to those Warrants) at any time up to 5:00 p.m.
New York time on the date set forth in the Prospectus Supplement relating to
those Warrants or as may be otherwise set forth in the Prospectus Supplement.
After such time on that date (or such later date to which such date may be
extended by the Company), unexercised Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the
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Warrant Certificate evidencing such Warrants properly completed and duly
executed and of payment as provided in the Prospectus Supplement of the amount
required to purchase the Debt Securities, or (except in the case of Warrants
providing for cash settlement) payment for or delivery of the Government Debt
Securities or currency, currency unit, currency basket, stock index, stock
basket, commodity or commodity index, as the case may be, purchased or sold upon
such exercise. Only Registered Securities will be issued and delivered upon
exercise of Registered Warrants. Warrants will be deemed to have been exercised
upon receipt of such Warrant Certificate and any payment, if applicable, at the
corporate trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement and the Company will, as soon as practicable thereafter,
issue and deliver the Debt Securities purchasable upon such exercise, or buy or
sell such Government Debt Securities or currency, currency unit, currency
basket, commodity or commodities or pay the settlement value in respect of the
Warrants. If fewer than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of the Warrants. Special provisions relating to the exercise of
any Bearer Warrants or automatic exercise of Warrants will be described in the
related Prospectus Supplement.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with United States federal income tax laws and regulations,
the Company and any underwriter, agent or dealer participating in the offering
of any Bearer Security will agree that, in connection with the original issuance
of such Bearer Security or during the restricted period (as defined in
applicable U.S. Treasury regulations) of such Bearer Security, they will not
offer, sell or deliver such Bearer Security, directly or indirectly, to a U.S.
Person or to any person within the United States, except to the extent permitted
under U.S. Treasury regulations.
Each Bearer Security, including Bearer Global Securities that will not be
exchanged for definitive individual Securities prior to the stated maturity,
will bear on the face of the Security and on any interest coupons that may be
detachable therefrom a legend to the following effect: "Any United States Person
who holds this obligation will be subject to limitations under the United States
income tax laws, including the limitations provided in Sections 165(j) and
1287(a) of the Internal Revenue Code." The sections referred to in the legend
provide that, with certain exceptions, a United States taxpayer who holds Bearer
Securities will not be allowed to deduct any loss, and will not be eligible for
capital gain treatment with respect to any gain, realized on a sale, exchange,
redemption or other disposition of those Bearer Securities. The legend described
above will also be evidenced on any book-entry system maintained with respect to
the Bearer Securities.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in or under the
laws of the United States, or an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
Pending the availability of a definitive Global Security or individual
Bearer Securities, as the case may be, Debt Securities that are issuable as
Bearer Securities may initially be represented by a single temporary Global
Security. Following the availability of a definitive Global Security in bearer
form, or individual Bearer Securities, and subject to any further limitations
described in the applicable Prospectus Supplement, the temporary Global Security
will be exchangeable for interests in such definitive Global Security or for
such individual Bearer Securities, respectively, only upon receipt of a
"Certificate of Non-U.S. Beneficial Ownership" unless such a certificate has
already been provided by the Depositary because interest has been paid on the
Global Security or because a reasonable period of time after the end of the
restricted period has passed.
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Limitations on the offer, sale, delivery and exercise of Bearer Warrants
(including a requirement that a Certificate of Non-U.S. Beneficial Ownership be
delivered upon exercise of a Bearer Warrant) will be described in the Prospectus
Supplement relating to those Bearer Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) to
underwriters (including Bear Stearns) or dealers, who may act directly or
through a syndicate represented by one or more managing underwriters (including
Bear Stearns); (ii) through broker-dealers (including Bear Stearns) designated
by the Company to act on its behalf as agents; or (iii) directly to one or more
purchasers. Each Prospectus Supplement will set forth the manner and terms of
the offering of the Securities covered thereby, including (i) whether that
offering is being made to underwriters or through agents; (ii) any underwriting
discounts, dealer concessions, agency commissions and any other items that may
be deemed to constitute underwriters', dealers' or agents' compensation, and
(iii) the purchase price or initial public offering price of the Securities and
the anticipated proceeds to the Company from the sale of the Securities.
When Securities are to be sold to underwriters, unless otherwise set forth
in the applicable Prospectus Supplement, the obligations of the underwriters to
purchase those Securities will be subject to certain conditions precedent but
the underwriters will be obligated to purchase all of the Securities if any are
purchased. The Securities will be acquired by the underwriters for their own
account and may be resold by the underwriters, either directly to the public or
to securities dealers, from time to time in one or more transactions, including
negotiated transactions, either at fixed public offering price or at varying
prices determined at the time of sale. The initial public offering price, if
any, and any concessions allowed or reallowed to dealers, may be changed from
time to time.
To the extent that any Securities underwritten by Bear Stearns are not
resold by Bear Stearns for an amount at least equal to the public offering price
thereof, the proceeds from the offering of those Securities will be reduced.
Bear Stearns intends to resell any of those Securities from time to time
following termination of the offering at varying prices related to prevailing
market prices at the time of sale, subject to applicable prospectus delivery
requirements.
Unless otherwise indicated in the applicable Prospectus Supplement, when
Securities are sold through an agent, the designated agent will agree, for the
period of its appointment as agent, to use its best efforts to sell the
Securities for the Company's account and will receive commissions from the
Company as set forth in the applicable Prospectus Supplement.
Securities purchased in accordance with a redemption or repayment pursuant
to their terms may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for the Company. Any remarketing firm will be identified and the terms of its
agreement, if any, with the Company and its compensation will be described in
the Prospectus Supplement. Remarketing firms may be deemed to be underwriters in
connection with the Securities remarketed by them.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a future date specified in the Prospectus Supplement.
These contracts will be subject only to those conditions set forth in the
applicable Prospectus Supplement and the Prospectus Supplement will set forth
the commissions payable for solicitation of these contracts.
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Underwriters and agents participating in any distribution of Securities may
be deemed "underwriters" within the meaning of the Securities Act and any
discounts or commissions they receive in connection therewith may be deemed to
be underwriting compensation for the purposes of the Securities Act. Those
underwriters and agents may be entitled, under their agreements with the
Company, to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution by the
Company to payments that they may be required to make in respect of those civil
liabilities. Various of those underwriters or agents may be customers of, engage
in transactions with or perform services for the Company or its affiliates in
the ordinary course of business.
Following the initial distribution of any series of Securities, Bear Stearns
may offer and sell previously issued Securities of that series from time to time
in the course of its business as a broker-dealer. Bear Stearns may act as
principal or agent in those transactions. This Prospectus and the Prospectus
Supplement applicable to those Securities will be used by Bear Stearns in
connection with those transactions. Sales will be made at prices related to
prevailing prices at the time of sale.
Each distribution of Securities will conform to the requirements set forth
in the applicable sections of Schedule E to the By-laws of the NASD.
ERISA CONSIDERATIONS
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
prohibits the borrowing of money, the sale of property and certain other
transactions involving the assets of plans that are qualified under the Code
("Qualified Plans") or individual retirement accounts ("IRAs") and persons who
have certain specified relationships to them. Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), prohibits similar
transactions involving employee benefit plans that are subject to ERISA ("ERISA
Plans"). Qualified Plans, IRAs and ERISA Plans are hereinafter collectively
referred to as "Plans."
Persons who have such specified relationships are referred to as "parties in
interest" under ERISA and as "disqualified persons" under the Code. "Parties in
interest" and "disqualified persons" encompass a wide range of persons,
including any fiduciary (e.g., investment manager, trustee or custodian), any
person providing services (e.g., a broker), the Plan sponsor, an employee
organization any of whose members are covered by the Plan, and certain persons
related to or affiliated with any of the foregoing.
The Company, Bear Stearns and/or BSSC each is considered a "party in
interest" or "disqualified person" with respect to many Plans, including IRAs
established with any of them. The purchase and/or holding of Securities by a
Plan with respect to which the Company, Bear Stearns and/or BSSC is a fiduciary
and/or a service provider (or otherwise is a "party in interest" or
"disqualified person") would constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code, unless such Securities
are acquired or held pursuant to and in accordance with an applicable statutory
or administrative exemption. An IRA that engages in a non-exempt prohibited
transaction could forfeit its tax-exempt status under Section 408 of the Code.
Applicable exemptions may include the exemption for services under Section
408(b)(2) of ERISA and certain prohibited transaction class exemptions (e.g.,
Prohibited Transaction Class Exemption 84-14 relating to qualified professional
asset managers and Prohibited Transaction Class Exemptions 75-1 and 86-128
relating to securities transactions involving employee benefit plans and
broker-dealers).
In accordance with ERISA's general fiduciary requirement, a fiduciary with
respect to any ERISA Plan who is considering the purchase of Securities on
behalf of such plan should determine whether such purchase is permitted under
the governing plan document and is prudent and appropriate for the ERISA Plan in
view of its overall investment policy and the composition and diversification of
its portfolio. No IRA established with, or for which services are provided by,
the Company, Bear Stearns,
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and/or BSSC should acquire any Securities and other Plans established with, or
for which services are provided by, the Company, Bear Stearns and/or BSSC should
consult with counsel prior to making any such acquisition.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this prospectus by reference from the Company's 1994
Annual Report on Form 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
VALIDITY OF THE SECURITIES
The validity of the Debt Securities and the Warrants will be passed upon for
the Company by Weil, Gotshal & Manges (a partnership including professional
corporations), New York, New York.
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============================================= ==============================
NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH 1,000,000 WARRANTS
INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR ANY UNDERWRITER. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, THE BEAR STEARNS
CREATE ANY IMPLICATION THAT THERE HAS BEEN COMPANIES INC.
NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATES AS OF WHICH INFORMATION IS
GIVEN IN THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH AN OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL NIKKEI 225 INDEX STRIKE RESET
TO MAKE SUCH OFFER OR SOLICITATION. CALL WARRANTS
EXPIRING OCTOBER 24, 1997
--------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLENENT
Summary.............................. S-3
Use of Proceeds and Hedging.......... S-10
Risk Factors......................... S-10
Description of the Warrants.......... S-16 ---------------------
The Nikkei 225 Index................. S-32 PROSPECTUS SUPPLEMENT
Certain United States Federal Income ---------------------
Tax Considerations................... S-39
Underwriting......................... S-41
Validity of the Warrants............. S-42
Appendix A: Index of Key Terms....... A-1
Appendix B: List of Underlying
Stocks............................... B-1
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents
by Reference....................... 3 BEAR, STEARNS & CO. INC.
The Company.......................... 4
Use of Proceeds...................... 4
Ratio of Earnings to Fixed Charges... 4
Description of Debt Securities....... 5
Description of Warrants.............. 11
Limitations on Issuance of Bearer
Securities and Bearer Warrants....... 13
Plan of Distribution................. 14
ERISA Considerations................. 15
Experts.............................. 16
Validity of the Securities........... 16 OCTOBER 26, 1995
============================================= ==============================
<PAGE>
GRAPHIC APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(Pursuant to Rule 304(a) of Regulation S-T)
GRAPHIC MATERIAL (1) - PAGE S-35:
In the paper-format version of this Prospectus Supplement to The Bear Stearns
Companies Inc. Prospectus, dated July 28, 1995, (Registration No. 33-60065), a
line-graph titled "NIKKEI 225 INDEX-HISTORICAL PERFORMANCE" appears in the
section "HISTORICAL DATA ON NIKKEI 225 INDEX". The table on Page S-34 describes
this graph and the same data presented in the graph is presented in the
aforementioned table.
