As filed with the Securities and Exchange Commission on November 12, 1996
Registration No. 333-14977
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Kaufman and Broad Home Corporation
(Exact name of registrant as specified in its charter)
Delaware 95-3666267
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10990 Wilshire Boulevard
Los Angeles, California 90024
(310) 231-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Kimberly N. King, Esq.
Corporate Secretary and
Associate Counsel
Kaufman and Broad Home Corporation
10990 Wilshire Boulevard
Los Angeles, CA 90024
(310) 231-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Jeffrey Small, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
<TABLE>
<S> <C> <C> <C> <C>
TITLE OF EACH AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF REGISTERED(1) OFFERING PRICE PER AGGREGATE REGISTRATION FEE
SECURITIES TO BE UNIT OFFERING
REGISTERED(1) PRICE(2)(3)(4)
Debt Securities(5) -- (6) -- --
Preferred Stock ($1.00 -- (6) -- --
par value)(7)
Common Stock ($1.00 -- (6) -- --
par value)(8)
Warrants -- (6) -- --
Total $200,000,000 (6) $200,000,000 $60,606.06(9)
</TABLE>
(1) Subject to Footnote (3), there are being registered hereunder (i) an
indeterminate amount of Debt Securities, Preferred Stock, Common Stock and
Warrants issuable in primary offerings, (ii) an indeterminate amount of Common
Stock issuable upon conversion of Debt Securities and Preferred Stock
registered hereunder, and (iii) an indeterminate amount of Debt Securities,
Preferred Stock and Common Stock issuable upon exercise of Warrants registered
hereunder.
(2) In U.S. dollars or the equivalent thereof in one or more foreign
currencies or composite currencies. The proposed maximum offering price per
unit will be determined from time to time by the Registrant in connection with
the issuance of the securities registered hereunder.
(3) Estimated solely for the purpose of calculating the registration fee. In
no event will the aggregate maximum offering price of all securities issued
under this Registration Statement exceed $200,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies or, if any
Debt Securities are issued with original issue discount, such greater amount
as shall result in proceeds of $200,000,000 to the Registrant.
(4) With respect to Debt Securities, excluding accrued interest and accrued
amortization of discount, if any, to the date of delivery.
(5) Debt Securities may be issued in primary offerings and/or upon exercise of
Warrants registered hereby.
(6) Omitted pursuant to General Instruction II(D) of Form S-3 under the
Securities Act.
(7) Shares of Preferred Stock may be issued in primary offerings, upon
conversion of Debt Securities registered hereby, and/or upon exercise of
Warrants registered hereby.
(8) Shares of Common Stock may be issued in primary offering, upon conversion
of Debt Securities and/or Preferred Stock registered hereby, and/or upon
exercise of Warrants registered hereby. The aggregate amount of Common Stock
registered hereby is limited to that which is permissible under Rule 415(a)(4)
under the Securities Act of 1933, as amended (the "Securities Act").
(9) Determined pursuant to Rule 457(o) of the Securities Act. An additional
filing fee of $31,250 was previously paid for $100,000,000 aggregate principal
amount of unsold securities registered under Registration Statement No.
33-50732.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus included
herein contains a combined Prospectus that also relates to a total of
$100,000,000 of debt securities of the Registrant previously registered under
Registration Statement on Form S-3 No. 33-50732 (which was declared effective
on August 20, 1992) and not issued. This Registration Statement constitutes
Post-Effective Amendment No. 1 to Registration Statement on Form S-3 No.
33-50732 pursuant to which the total amount of unsold debt securities
previously registered under Registration Statement on Form S-3 No. 33-50732
may be offered and sold as Debt Securities, Preferred Stock, Common Stock or
Warrants, without limitation as to class of securities, together with the
securities registered hereunder, through the use of the combined Prospectus
included herein relating to Debt Securities, Preferred Stock, Common Stock and
Warrants. In the event any of such previously registered Debt Securities are
offered and sold prior to the effective date of this Registration Statement,
the amount of such Debt Securities will not be included in any Prospectus
hereunder.
-------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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PROSPECTUS
Kaufman and Broad Home Corporation
Debt Securities, Preferred Stock,
Common Stock,
and
Warrants to Purchase the Above Securities
Kaufman and Broad Home Corporation, a Delaware corporation (the "Company"),
may offer and issue from time to time (i) its debt securities ("Debt
Securities"), consisting of debentures, notes or other evidences of
indebtedness representing unsecured obligations of the Company, which may be
either senior Debt Securities, senior subordinated Debt Securities or
subordinated Debt Securities, (ii) shares of its Preferred Stock, par value
$1.00 per share ("Preferred Stock"), (iii) shares of its Common Stock, par
value $1.00 per share ("Common Stock"), or (iv) warrants to purchase Debt
Securities, Preferred Stock or Common Stock ("Warrants"). The Debt Securities,
Preferred Stock, Common Stock and Warrants are herein collectively referred to
as the "Securities". The Securities may be offered in one or more separate
classes or series, in amounts, at prices and on terms to be determined by
market conditions at the time of sale and to be set forth in a supplement or
supplements to this Prospectus (a "Prospectus Supplement"). Any Securities
may be offered with other Securities or separately. Debt Securities or
Preferred Stock may be convertible into shares of Common Stock. The aggregate
offering price of the Securities will not exceed $300,000,000.
Certain terms of any Debt Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement
including, without limitation, the specific designation (including whether
such Debt Securities are senior, senior subordinated or subordinated and
whether such Debt Securities are convertible), aggregate principal amount,
purchase price, currency, denomination, maturity, interest rate (which may be
fixed or variable) and time of payment of interest (if any), terms (if any)
for the subordination, redemption or conversion thereof, listing (if any) on a
securities exchange and any other specific terms of the Debt Securities.
Certain terms of any Preferred Stock in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement
including, without limitation, the designation, number of shares, liquidation
preference, purchase price, dividends, voting, redemption and conversion
provisions and any listing on a securities exchange. The purchase price of
any Common Stock in respect of which this Prospectus is being delivered will
be set forth in the accompanying Prospectus Supplement. Certain terms of any
Warrants in respect of which this Prospectus is being delivered will be set
forth in the accompanying Prospectus Supplement, including the specific
designation, number, duration, purchase price and terms thereof, any listing
of the Warrants or the underlying securities on a securities exchange and any
other terms in connection with the offering, sale and exercise of the
Warrants, as well as the terms on which and the securities for which such
Warrants may be exercised. The Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to the Securities covered by the Prospectus
Supplement.
The Company's Common Stock is listed on the New York Stock Exchange
under the symbol KBH.
See "Risk Factors" in the Prospectus Supplement for a description of
certain factors that should be considered by purchasers of the Securities
offered hereby.
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 ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Securities may be sold on a negotiated or competitive bid basis to or
through underwriters or dealers designated from time to time or to other
purchasers directly or through agents designated from time to time. Certain
terms of the offering and sale of the Securities, including, where applicable,
the names of the underwriters, dealers or agents, if any, the principal amount
or number of shares or Warrants to be purchased, the purchase price of the
Securities and the proceeds to the Company from such sale, and any applicable
commissions, discounts and other items constituting compensation of such
underwriters, dealers or agents, will also be set forth in the accompanying
Prospectus Supplement.
The date of this Prospectus is November 12, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY sTATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS FOR SUCH OFFERING MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus or any Prospectus Supplement, and, if given or
made, such information or representation must not be relied upon as having
been authorized by the Company or by any underwriter, agent or dealer. This
Prospectus and any Prospectus Supplement shall not constitute an offer to sell
or a solicitation of an offer to buy any of the Securities offered hereby in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus
and any Prospectus Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that the information therein is correct
as of any time subsequent to the date thereof.
TABLE OF CONTENTS
Page
Available Information............................... 2
Incorporation of Certain Information by Reference... 3
The Company......................................... 4
Use of Proceeds..................................... 4
Consolidated Ratios of Earnings to Fixed Charges
and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends........................... 4
Description of the Debt Securities.................. 5
Limitations on Issuance of Bearer Debt
Securities.......................................... 15
Description of Capital Stock........................ 16
Description of Warrants............................. 20
Plan of Distribution................................ 22
Experts............................................. 23
Legal Matters....................................... 23
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 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 Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661-2511 and at Seven 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, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Such material may also
be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. The Company's Common Stock is listed on
the New York Stock Exchange, Inc. (the "New York Stock Exchange"). In
addition, reports, proxy statements and other information concerning the
Company can 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 Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the
information set forth in such Registration Statement in accordance with the
rules and regulations of the Commission. Reference is hereby made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Securities. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and in each instance reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission for a more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission, are
hereby incorporated by reference:
1. Annual Report on Form 10-K of the Company for the year ended
November 30, 1995; and
2. Quarterly Reports on Form 10-Q of the Company for the quarters
ended February 29, 1996, May 31, 1996 and August 31, 1996, as
amended; and
3. Current Reports on Form 8-K of the Company dated March 12, 1996
(filed March 14, 1996) and May 23, 1996 (filed May 23, 1996).
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the termination of the offering of the Securities offered hereby, shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein (or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any statements so modified or superseded shall be
deemed to constitute a part of this Prospectus, except as so modified or
superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this
Prospectus (other than certain exhibits to such documents). Requests for such
documents should be directed to Kaufman and Broad Home Corporation, 10990
Wilshire Boulevard, Los Angeles, California 90024, Attention: Investor
Relations (telephone (310) 231-4010).
THE COMPANY
The Company is a builder of single-family homes with domestic operations
in seven western states, and international operations in France and Mexico.
Domestically, the Company is the largest home builder west of the Mississippi
River, delivering more single-family homes than any other builder in the
region. Founded in 1957, the Company builds innovatively designed homes which
cater primarily to first-time home buyers, generally in medium-sized
developments close to major metropolitan areas. Internationally, the Company
is among the largest builders in greater metropolitant Paris, France, based
on the number of homes delivered. In France, the Company also builds
commercial projects and high-density residential properties, such as
condominium and apartment complexes. The Company provides mortgage banking
services to domestic home buyers through its wholly owned subsidiary, Kaufman
and Broad Mortgage Company.
The Company is a Delaware corporation and maintains its principal
executive offices at 10990 Wilshire Boulevard, Los Angeles, California 90024.
Its telephone number is (310) 231-4000. As used herein, the term "Company"
refers to Kaufman and Broad Home Corporation and its subsidiaries, unless the
context indicates otherwise.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement,
proceeds from the sale of the Securities will be used by the Company for
general corporate purposes, which may include, among other things, the
development of new residential properties and commercial projects, the
repayment of existing indebtedness, as well as possible land and corporate
acquisitions.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the consolidated ratios of earnings to
fixed charges and earnings to combined fixed charges and preferred stock
dividends of the Company for each of the periods indicated.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nine Months
Ended August 31, Year Ended November 30,
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ----- ----- ----- -----
Ratio of Earnings to Fixed Charges (1)........................ (1.27)x(2)(3) 1.03x 1.35x 2.09x 2.07x 1.88x 1.51x
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (1)................................. (1.12)x(2)(3) .86x(3) 1.12x 1.64x 1.80x 1.88x 1.51x
</TABLE>
________________
(1) For purposes of calculating the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends,
earnings are computed by adding fixed charges (except capitalized interest and
the effect of preferred stock dividends) and amortization of previously
capitalized interest to pretax earnings (excluding undistributed earnings of
unconsolidated joint ventures). Fixed charges consist of interest expense
plus capitalized interest and the portion of rental expense considered to be
interest and for the ratio of earnings to combined fixed charges and preferred
stock dividends include the effect of preferred stock dividends on the
Company's Series B Mandatory Conversion Premium Dividend Preferred Stock. On
April 1, 1996, all shares of the Company's only outstanding series of
preferred stock, the Series B Mandatory Conversion Premium Dividend Preferred
Stock, were mandatorily converted to shares of Common Stock and no future
preferred stock dividends will be paid or are payable with respect to such
preferred stock.
In computing the ratio of earnings to fixed charges and the ratio of earnings
to combined fixed charges and preferred stock dividends, interest expense
excludes interest incurred by the Company's wholly owned limited purpose
financing subsidiaries with respect to their outstanding collateralized
mortgage obligations. If interest on such collateralized mortgage obligations
were included, the ratio of earnings to fixed charges for the periods
presented would have been (1.05x), 1.03x, 1.31x, 1.88x, 1.77x, 1.55x and
1.31x, respectively, and the ratio of earnings to combined fixed charges and
preferred stock dividends would have been (.94x), .87x, 1.11x, 1.54x, 1.60x,
1.54x, and 1.31x, respectively.
(2) The amount of earnings used in the calculation of the ratio of earnings
to fixed charges and the ratio of earnings to combined fixed charges and
preferred stock dividends for the nine months ended August 31, 1996 includes
the $170.8 million pretax non-cash charge for impairment of long-lived assets
recorded by the Company in the second quarter of 1996. If the non-cash charge
for impairment of long-lived assets were excluded, the ratio of earnings to
fixed charges and the ratio of earnings to combined fixed charges and
preferred stock dividends for the nine months ended August 31, 1996 would have
been 1.65x and 1.46x, respectively.
(3) Earnings for the nine months ended August 31, 1996 are inadequate to
cover fixed charges by $132.8 million. Earnings for the nine months ended
August 31, 1996 and 1995 are inadequate to cover combined fixed charges and
preferred stock dividends by $140.5 million and $9.8 million, respectively.
DESCRIPTION OF THE DEBT SECURITIES
The following sets forth certain general terms and provisions of the
indentures under which the Debt Securities are to be issued. If so issued,
the particular terms of the Debt Securities will be set forth in a Prospectus
Supplement relating to such Debt Securities which will accompany this
Prospectus.
The Debt Securities will constitute either senior, senior subordinated
or subordinated debt of the Company and will be issued, in the case of Debt
Securities that will be senior debt, under a Senior Indenture (the "Senior
Debt Indenture"), in the case of Debt Securities that will be senior
subordinated debt, under a Senior Subordinated Indenture (the "Senior
Subordinated Debt Indenture"), and, in the case of Debt Securities that will
be subordinated debt, under a Subordinated Indenture (the "Subordinated Debt
Indenture"), each such indenture to be executed by the Company and one or more
trustees (each a "Trustee"). The Senior Debt Indenture, the Senior
Subordinated Debt Indenture and the Subordinated Debt Indenture are sometimes
hereinafter referred to individually as an "Indenture" and collectively as the
"Indentures." The Indentures will be in the form that has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part,
subject to such amendments or supplements as are adopted from time to time.
The following summaries of certain provisions of the Indentures and the Debt
Securities do not purport to be complete and such summaries are subject to the
detailed provisions of the applicable Indenture to which reference is hereby
made for a full description of such provisions, including the definition of
certain terms used herein, and for other information regarding the Debt
Securities. Numerical references in parentheses below are to sections in the
applicable Indenture. Wherever particular sections or defined terms of the
applicable Indenture are referred to, such sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. The Indentures are
substantially identical, except for the provisions relating to subordination.
See "Senior Subordinated Debt" and "Subordinated Debt." The Debt Securities
offered by this Prospectus and the accompanying Prospectus Supplement are
referred to herein as the "Offered Debt Securities."
General
None of the Indentures limits the amounts of additional indebtedness the
Company or any of its subsidiaries may incur, except as may be provided in the
Prospectus Supplement. The Debt Securities will be unsecured senior, senior
subordinated or subordinated obligations of the Company. The Company is a
holding company, which currently conducts its operations through consolidated
and unconsolidated subsidiaries. All of the operating assets of the Company
are owned by its subsidiaries, effectively subordinating the Debt Securities
to all indebtedness (including trade payables) of the Company's subsidiaries.
Therefore, the Company's rights and the rights of its creditors, including
holders of Debt Securities, to participate in the assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent that the Company may
itself be a creditor with recognized claims against the subsidiary, in which
case the claims of the Company would still be effectively subordinate to any
third party security interests in the assets of such subsidiary and would be
subordinate to any indebtedness of such subsidiary senior to that held by the
Company. In addition, dividends, loans and advances from certain subsidiaries
to the Company may be subject to certain contractual, statutory or regulatory
restrictions, are contingent upon the earnings of such subsidiaries and are
subject to various business considerations.
The Indentures provide that Debt Securities may be issued from time to
time in one or more series and may be denominated and payable in U.S. dollars
or foreign currencies or units based on or relating to foreign currencies,
including European Currency Units ("ECUs"). Special United States federal
income tax considerations applicable to any Debt Securities so denominated are
described in the relevant Prospectus Supplement.
Reference is made to the Prospectus Supplement for the following terms
of and information relating to the Offered Debt Securities (to the extent such
terms are applicable to such Offered Debt Securities): (i) classification as
senior, senior subordinated or subordinated Debt Securities, the specific
designation, aggregate principal amount, purchase price and denomination; (ii)
currency or units based on or relating to currencies in which such Offered
Debt Securities are denominated and/or in which principal (and premium, if
any) and/or any interest will or may be payable; (iii) any date of maturity;
(iv) interest rate or rates (or the method by which such rate will be
determined), if any; (v) the date from which interest will accrue and dates on
which any such interest will be payable; (vi) the place or places where the
principal of, premium, if any, and interest, if any, on the Offered Debt
Securities will be payable; (vii) any redemption, repayment or sinking fund
provisions; (viii) the terms, if any, on which such Debt Securities may be
converted into or exchanged for stock or other securities of the Company or
other entities, any specific terms relating to the adjustment thereof and the
period during which such Debt Securities may be so converted or exchanged;
(ix) whether the Offered Debt Securities will be issuable in registered form
or bearer form ("Bearer Securities") or both, and if Bearer Securities are
issuable, any restrictions applicable to the exchange of one form for another
and to the offer, sale and delivery of Bearer Securities; (x) any applicable
United States federal income tax consequences, including whether and under
what circumstances the Company will pay additional amounts on Offered Debt
Securities held by a person who is not a U.S. person (as defined in the
Prospectus Supplement) in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Company will have the
option to redeem such Offered Debt Securities rather than pay such additional
amounts; and (xi) any other specific terms of the Offered Debt Securities,
including any additional events of default or covenants provided for with
respect to such Offered Debt Securities, and any terms that may be required
by or advisable under applicable laws or regulations.
Debt Securities may be presented for exchange and registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Indenture and the Prospectus
Supplement. Such services will be provided without charge, other than any tax
or other governmental charge payable in connection therewith, but subject to
the limitations provided in the applicable Indenture. Debt Securities in
bearer form and the coupons, if any, appertaining thereto will be transferable
upon delivery.
Debt Securities will bear interest at a fixed rate (a "Fixed Rate
Security") or a floating rate (a "Floating Rate Security"). Debt Securities
bearing no interest or interest at a rate that at the time of issuance is
below the prevailing market rate will be sold at a discount below their stated
principal amount. Special United States federal income tax considerations
applicable to any such discounted Debt Securities or to certain Debt
Securities issued at par that are treated as having been issued at a discount
for United States federal income tax purposes are described in the relevant
Prospectus Supplement.
Debt Securities may be issued, from time to time, with the principal
amount payable on any principal payment date, or the amount of interest
payable on any interest payment date, to be determined by reference to one or
more currency exchange rates, commodity prices, equity indices or other
factors. Holders of such Debt Securities may receive a principal amount on
any principal payment date, or a payment of interest on any interest payment
date, that is greater than or less than the amount of principal or interest
otherwise payable on such dates, depending upon the value on such dates of the
applicable currency, commodity, equity index or other factors. Information as
to the methods for determining the amount of principal or interest payable on
any date, the currencies, commodities, equity indices or other factors to
which the amount payable on such date is linked and certain additional tax
considerations will be set forth in the applicable Prospectus Supplement.
Global Securities
Registered Global Security. The registered Debt Securities of a series
may be issued in the form of one or more fully registered global securities
(each, a "Registered Global Security") that will be deposited with a
depositary (a "Depositary"), or with a nominee for a Depositary, identified in
the Prospectus Supplement relating to such series and registered in the name
of the Depositary or a nominee thereof. In such case, one or more Registered
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding
registered Debt Securities of the series to be represented by such Registered
Global Security or Securities. Unless and until it is exchanged in whole for
Debt Securities in definitive registered form, a Registered Global Security
may not be transferred except as a whole by the Depositary for such Registered
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered
Global Security will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will apply
to all arrangements with a Depositary for the Registered Global Securities.
The information concerning such depositary arrangements has been obtained from
sources the Company believes to be reliable, but the Company takes no
responsibility for the accuracy thereof.
Beneficial ownership of interests in a Registered Global Security will
be limited to persons that have accounts with the Depositary for such
Registered Global Security ("participants") or persons that may hold interests
through participants. Upon the issuance of a Registered Global Security, the
Depositary for such Registered Global Security will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal amounts of the Debt Securities represented by such
Registered Global Security beneficially owned by such participants. The
participants' accounts to be credited shall be designated by any dealers,
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in such Registered Global
Security will be shown on, and the transfer of such ownership interests will
be effected only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants) and on
the records of participants (with respect to interests of persons holding
through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to own, transfer or pledge
beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its
nominee, is the registered owner of such Registered Global Security, such
Depositary or nominee, as the case may be, will be considered the sole owner
or holder of the Debt Securities represented by such Registered Global Security
for all purposes under the applicable Indenture. Except as set forth below,
owners of beneficial interests in a Registered Global Security will not be
entitled to have the Debt Securities represented by such Registered Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of such Debt Securities in definitive form and will not be
considered the owners or holders thereof under the applicable Indenture.
Accordingly, each person owning a beneficial interest in a Registered Global
Security must rely on the procedures of the Depositary for such Registered
Global Security and, if such person is not a participant, on the procedures of
the participant through which such person owns its interest, to exercise any
rights of a holder under the applicable Indenture. Under existing industry
practices, if the Company requests any action of beneficial owners or if an
owner of a beneficial interest in a Registered Global Security desires to give
or take any action that a holder is entitled to give or take under the
applicable Indenture, the Depositary for such Registered Global Security would
authorize the participants holding the relevant beneficial interests to give
or take such action, and such participants would authorize beneficial owners
owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as
the case may be, as the registered owner of such Registered Global Security.
None of the Company, the Trustee or any other agent of the Company or agent of
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial owners of
interests in such Registered Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities
represented by a Registered Global Security, upon receipt of any payment of
principal premium or interest in respect of such Registered Global Security,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in such Registered
Global Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interest in such
Registered Global Security held through such participants will be governed by
standing customer instructions and customary practices, as is now the case
with the securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary
or ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act is
not appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such Registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for all of the Registered Global
Security or Securities representing such Debt Securities. Any Debt Securities
issued in definitive form in exchange for a Registered Global Security will be
registered in such name or names as the Depositary shall instruct the relevant
Trustee. It is expected that such instructions will be based upon directions
received by the Depositary from participants with respect to ownership of
beneficial interests in such Registered Global Security.
Bearer Global Security. The Debt Securities of a series may also be
issued in the form of one or more bearer global Securities (a "Bearer Global
Security") that will be deposited with a common depositary for Morgan Guaranty
Trust Company of New York, as operator of the Euroclear system, and Cedel
Bank, societe anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Debt Securities to be represented by a
Bearer Global Security will be described in the Prospectus Supplement relating
to such series.
Senior Debt
The Debt Securities and, in the case of Bearer Securities, any coupons
appertaining thereto (the "Coupons") that will constitute part of the senior
debt of the Company will be issued under the Senior Debt Indenture and will
rank pari passu with all other unsecured and unsubordinated debt of the
Company.
Senior Subordinated Debt
The Debt Securities and Coupons that will constitute part of the senior
subordinated debt of the Company, if issued, will be issued under the Senior
Subordinated Debt Indenture and will be subordinate and junior in right of
payment, to the extent and in the manner set forth in the Senior Subordinated
Debt Indenture, to all "Senior Indebtedness" of the Company. The Senior
Subordinated Debt Indenture defines "Senior Indebtedness" as the principal of
(and, premium, if any) and unpaid interest (including post-petition interest)
or accrued original issue discount on and other amounts due on or in
connection with any Debt (as defined below) incurred, assumed or guaranteed by
the Company, whether outstanding on the date of the Indenture or thereafter
incurred, assumed or guaranteed, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following will not constitute
Senior Indebtedness: (i) any Debt of the Company as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that such Debt is subordinate in right
of payment to all other Debt of the Company not expressly subordinated to such
Debt; (ii) any Debt of the Company which by its terms refers explicitly to the
senior subordinated Debt Securities and states that such Debt shall not be
senior in right of payment thereto; (iii) any Debt of the Company in respect
of the senior subordinated Debt Securities; (iv) any Debt of the Company to
any subsidiary of the Company; (v) any Debt of the Company to any joint
venture or partnership, which joint venture or partnership is required, under
generally accepted accounting principles, to be consolidated in the Company's
consolidated financial statements; and (vi) the subordinated Debt Securities
and any other Debt of the Company which by its terms ranks pari passu with or
subordinate to the subordinated Debt Securities. (Senior Subordinated Debt
Indenture; Section 13.1) The Company will not issue any Debt which is
subordinated in right of payment to any other Debt of the Company and which is
not expressly made pari passu with, or subordinate and junior in right of
payment to, the senior subordinated Debt Securities. (Senior Subordinated
Debt Indenture Section; 3.7) Debt is defined in the Senior Subordinated Debt
Indenture to mean, with respect to any person at any date, without
duplication, (A) all obligations of such person for borrowed money, (B) all
obligations of such person evidenced by bonds, debentures, notes or other
similar instruments, (C) all Debt of others secured by a lien on any asset of
such person, whether or not such Debt is assumed by such person, (D) all Debt
of others for the payment of which such person is responsible or liable as
obligor or guarantor, (E) all obligations of such person in respect of letters
of credit or other similar instruments (or reimbursement obligations with
respect thereto), (F) all obligations of such person to pay the deferred
purchase price of property or services, except Trade Payables, and (G) all
obligations of such person as lessee under Capital Leases. (Senior
Subordinated Debt Indenture; Section 1.1)
By reason of such subordination, in the event of dissolution,
insolvency, bankruptcy or other similar proceedings, upon any distribution of
assets, (i) holders of Senior Indebtedness will be entitled to be paid in full
before payments may be made on the senior subordinated Debt Securities and the
holders of senior subordinated Debt Securities will be required to pay over
their share of such distribution to the holders of Senior Indebtedness until
such Senior Indebtedness is paid in full and (ii) creditors of the Company who
are neither holders of senior subordinated Debt Securities nor holders of
Senior Indebtedness may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than the holders of the senior
subordinated Debt Securities. (Senior Subordinated Debt Indenture; Section
13.2)
In the event the senior subordinated Debt Securities are declared or
become due and payable prior to their maturity by reason of the occurrence of
an Event of Default, then the Company is obligated to promptly notify holders
of Senior Indebtedness of such acceleration. The Company may not pay the
senior subordinated Debt Securities until 135 days have passed after such
acceleration occurs and may thereafter pay the senior subordinated Debt
Securities only if the terms of the Indenture otherwise permit payment at that
time. (Senior Subordinated Debt Indenture; Section 13.3)
No payment of principal, interest, or any other amount owing with
respect to any of the senior subordinated Debt Securities may be made, nor may
the Company acquire any senior subordinated Debt Securities except as set
forth in the Indenture, if any default with respect to Senior Indebtedness
occurs and is continuing that permits the acceleration of the maturity thereof
and, unless such default relates to a failure by the Company to make any
payment in respect of such Senior Indebtedness when due or within any
applicable grace period (a "Payment Default"), such default is either the
subject of judicial proceedings or the Company receives notice of the default.
Notwithstanding the foregoing, the Company may resume payments in respect of
the senior subordinated Debt Securities and may acquire senior subordinated
Debt Securities if: (i)(a) 135 days pass after, in the case of such a
Payment Default, the later of the date such payment was due and the expiration
of any applicable grace period for such payment or, in the case of any other
such default, the date that the related judicial proceedings commence or that
notice of the default is given to the Company, as the case may be, and (b) the
Senior Indebtedness in respect of which such default exists has not been
declared due and payable in its entirety within such 135 day period or, if
declared due and payable, such declaration has been rescinded, waived or
annulled; or (ii) the default with respect to the Senior Indebtedness is cured
or waived and, in each case described in the foregoing clauses (i) and (ii),
the terms of the Indenture otherwise permit the payment or acquisition of the
senior subordinated Debt Securities at that time. (Senior Subordinated Debt
Indenture; Section 13.4) If this Prospectus is being delivered in connection
with a series of senior subordinated Debt Securities, the accompanying
Prospectus Supplement or the information incorporated herein by reference will
set forth the approximate amount of Senior Indebtedness outstanding as of the
end of the most recent fiscal quarter.
Subordinated Debt
The Debt Securities and Coupons that will constitute part of the
subordinated debt of the Company will be issued under the Subordinated Debt
Indenture and will be subordinate and junior in right of payment, to the
extent and in the manner set forth in the Subordinated Debt Indenture, to all
"Senior Indebtedness" of the Company. The Subordinated Debt Indenture defines
"Senior Indebtedness" as the principal of (and premium, if any) and unpaid
interest (including post-petition interest) or accrued original issue discount
on and other amounts due on or in connection with any Debt (as defined below)
incurred, assumed or guaranteed by the Company, whether outstanding on the
date of the Indenture or thereafter incurred, assumed or guaranteed, and all
renewals, extensions and refundings of any such Debt; provided, however, that
the following will not constitute Senior Indebtedness: (i) any Debt of the
Company as to which, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is expressly provided that such
Debt is subordinate in right of payment to all other Debt not expressly
subordinated to such Debt; (ii) any Debt of the Company which by its terms
refers explicitly to the subordinated Debt Securities and states that such
Debt shall not be senior in right of payment thereto; (iii) any Debt in
respect of the subordinated Debt Securities; (iv) any Debt of the Company to
any Subsidiary of the Company; and (v) any Debt to any joint venture or
partnership, which joint venture or partnership is required, under generally
accepted accounting principles, to be consolidated in the Company's
consolidated financial statements. (Subordinated Debt Indenture; Section;
13.1) The definition of Debt in the Subordinated Debt Indenture is the same
as in the Senior Subordinated Debt Indenture and is described above under
"Senior Subordinated Debt." (Subordinated Debt Indenture; Section 1.1) There
is no provision in the Subordinated Debt Indenture preventing the Company from
issuing any Debt which is subordinated in right of payment to any other debt
of the Company and which is not expressly made pari passu with, or subordinate
and junior in right of payment to, the subordinated debt securities.
By reason of such subordination, upon any distribution of assets, in the
event of dissolution, insolvency, bankruptcy or other similar proceedings, (i)
holders of Senior Indebtedness will be entitled to be paid in full before
payments may be made on the subordinated Debt Securities and the holders of
subordinated Debt Securities will be required to pay over their share of such
distribution to the holders of Senior Indebtedness until such Senior
Indebtedness is paid in full and (ii) creditors of the Company who are neither
holders of subordinated Debt Securities nor holders of Senior Indebtedness may
recover less, ratably, than holders of Senior Indebtedness and may recover
more, ratably, than the holders of the subordinated Debt Securities.
(Subordinated Debt Indenture; Section 13.2)
In the event the subordinated Debt Securities are declared or become due
and payable prior to their maturity by reason of the occurrence of an Event of
Default, then the Company is obligated to promptly notify holders of Senior
Indebtedness of such acceleration. The Company may not pay the subordinated
Debt Securities until 135 days have passed after such acceleration occurs and
may thereafter pay the subordinated Debt Securities only if the terms of the
Indenture otherwise permit payment at that time. (Subordinated Debt
Indenture; Section 13.3)
The conditions and limitations on payments by the Company with respect
to any of the subordinated Debt Securities in the event of any default with
respect to any Senior Indebtedness are the same as are provided for under the
Senior Subordinated Debt Indenture and are described above under "Senior
Subordinated Debt." (Subordinated Debt Indenture; Section 13.4) If this
Prospectus is being delivered in connection with a series of subordinated Debt
Securities, the accompanying Prospectus Supplement or the information
incorporated herein by reference will set forth the approximate amount of
Senior Indebtedness outstanding as of the end of the most recent fiscal
quarter.
Certain Covenants of the Company
Merger, Consolidation, Sale, Lease or Conveyance. Each Indenture
provides that the Company will not merge or consolidate with or into any other
person and will not sell, lease or convey all or substantially all its assets
to any person, unless the Company shall be the continuing corporation, or the
successor corporation or person that acquires all or substantially all the
assets of the Company shall be a corporation organized and existing under the
laws of the United States or a State thereof or the District of Columbia and
shall expressly assume all obligations of the Company under such Indenture and
the Debt Securities issued thereunder, and immediately after such merger,
consolidation, sale, lease or conveyance, the Company, such person or such
successor corporation shall not be in default in the performance of the
covenants and conditions of such Indenture to be performed or observed by the
Company. (Indentures; Section 9.1)
Events of Default
An Event of Default is defined under each Indenture with respect to Debt
Securities of any series issued under such Indenture as being: (i) default
for 30 days in payment of any interest on any Debt Securities of such series;
(ii) default in payment of any principal of the Debt Securities of such series,
either at maturity (or upon any redemption), by declaration of acceleration or
otherwise; (iii) default in payment of any sinking fund installment due under
the terms of the Debt Securities of such series; (iv) default in the
performance, or breach, of any other covenant or warranty of the Company in
respect of the Debt Securities of such series for 60 days after written notice
to the Company by the Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the outstanding Securities of
all series affected thereby; (v) certain events of bankruptcy, insolvency or
reorganization; or (vi) any other Event of Default provided in any relevant
Supplemental Indenture or resolution of the Board of Directors under which
such series of Debt Securities is issued or in the form of Debt Security for
such series. (Indentures; Section 5.1)
Each Indenture provides that (i) if an Event of Default due to the
default in payment of principal of, premium, if any, or interest on, or
sinking fund installment in respect of any series of Debt Securities issued
under such Indenture or due to the default in the performance or breach of any
other covenant or warranty of the Company applicable to the Debt Securities of
such series but not applicable to all outstanding Debt Securities issued under
such Indenture shall have occurred and be continuing, either the Trustee, or
the holders of not less than 25% in principal amount of the Debt Securities of
such series (voting as a separate class) issued under such Indenture and then
outstanding may then declare the principal of all Debt Securities of such
series and interest accrued thereon to be due and payable immediately; and
(ii) if an Event of Default due to a cross-default or cross-acceleration or a
default in the performance or breach of any other of the covenants or
agreements in such Indenture applicable to all outstanding Debt Securities
issued thereunder and then outstanding or due to certain events of bankruptcy,
insolvency and reorganization of the Company shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in
principal amount of all Debt Securities issued under such Indenture and then
outstanding (treated as one class) may declare the principal of all such Debt
Securities and interest accrued thereon to be due and payable immediately.
Upon certain conditions such declarations may be annulled and past defaults
may be waived (except a continuing default in payment of principal of (or
premium, if any) or interest on such Debt Securities) by the holders of a
majority in principal amount of the Debt Securities of all such affected
series then outstanding, voting as a separate class or as a single class, as
applicable. (Indentures; Sections 5.1 and 5.10)
Each Indenture contains a provision entitling the Trustee, subject to
the duty of the Trustee during a default to act with the required standard of
care, to be indemnified by the holders of Debt Securities issued under such
Indenture before proceeding to exercise any right or power under such
Indenture at the request of such holders. (Indentures; Section 6.2) Subject
to such provisions in each Indenture for the indemnification of the Trustee
and certain other limitations, the holders of a majority in principal amount
of the Debt Securities of each series affected (with each series voting as a
separate class) issued under such Indenture and then outstanding 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. (Indentures; Section 5.9)
Each Indenture provides that no holder of Debt Securities of any series
issued under such Indenture may institute any action against the Company under
such Indenture (except actions for payment of overdue principal or interest)
unless such holder previously shall have given to the Trustee written notice
of default and continuance thereof and unless the holders of not less than 25%
in principal amount of the Debt Securities of such series issued under such
Indenture and then outstanding shall have requested the Trustee to institute
such action and shall have offered the Trustee reasonable indemnity, the
Trustee shall not have instituted such action within 60 days of such request
and the Trustee shall not have received direction inconsistent with such
written request by the holders of a majority in principal amount of the Debt
Securities of each affected series (with each series voting as a separate
class) issued under such Indenture and then outstanding. (Indentures;
Sections 5.6 and 5.9)
Each Indenture contains a covenant that the Company will file annually
with the Trustee a certificate as to the Company's compliance with the
covenants and conditions under such Indenture. (Indentures; Section 3.5)
Defeasance and Discharge
The Company can discharge or defease its obligations under each
Indenture as set forth below. (Indentures; Section 10)
The Company may discharge certain obligations to holders of any series
of Debt Securities issued under an Indenture that have not already been
delivered to the Trustee for cancellation and that have either become due and
payable or are by their terms due and payable within one year (or scheduled for
redemption within one year) by irrevocably depositing with the Trustee cash
or, in the case of Debt Securities payable only in U.S. dollars, U.S.
Government Obligations (as defined in such Indenture), or a combination
thereof, as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest of such Debt
Securities.
The Company may also discharge any and all of its obligations to holders
of any series of Debt Securities issued under an Indenture at any time
("defeasance"), but may not thereby avoid its duty to register the transfer or
exchange of such series of Debt Securities, to replace any temporary,
mutilated, destroyed, lost or stolen series of Debt Securities or to maintain
an office or agency in respect of such series of Debt Securities and certain
other obligations. The Company may instead be released with respect to any
outstanding series of Debt Securities issued under the relevant Indenture from
the obligations imposed by Section 9.1 of the applicable Indenture (which
contains the covenant described above limiting consolidations, mergers, asset
sales and leases), and omit to comply with such Section without creating an
Event of Default ("covenant defeasance"). Defeasance or covenant defeasance
may be effected only if, among other things: (i) the Company irrevocably
deposits with the Trustee cash or, in the case of Debt Securities payable only
in U.S. dollars, U.S. Government Obligations, or a combination thereof, as
trust funds in an amount certified to be sufficient to pay at maturity (or upon
redemption or repayment at the option of the holders) the principal of and
interest on all outstanding Debt Securities of such series issued under such
Indenture; (ii) the Company delivers to the Trustee an opinion of counsel to
the effect that the holders of such series of Debt Securities will not
recognize income, gain or loss for United States federal income tax purposes
as a result of such defeasance or covenant defeasance and that defeasance or
covenant defeasance will not otherwise alter such holders' United States
federal income tax treatment of principal and interest payments on such series
of Debt Securities; and (iii) (a) in the case of the Senior Subordinated and
Subordinated Debt Indentures, no event or condition shall exist that, pursuant
to certain provisions described under "Senior Subordinated Debt" and
"Subordinated Debt" above, would prevent the Company from making payments of
principal of (and premium, if any) and interest on the relevant Debt
Securities at the date of the irrevocable deposit referred to above or at any
time during the period ending on the 91st day after such deposit date and (b)
the Company delivers to the Trustee an opinion of counsel to the effect that
(1) in the case of the Senior Subordinated and Subordinated Debt Indentures,
the trust funds will not be subject to any rights of holders of Senior
Indebtedness (as defined in the applicable Indenture) and (2) in the case of
all Debt Securities, after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, except
that if a court were to rule under any such law in any case or proceeding that
the trust funds remained property of the Company, then the Trustee and the
holders of the relevant Debt Securities would be entitled to certain rights as
secured creditors in such trust funds.
Modification of the Indentures
Each Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (i) secure any Debt Securities; (ii) evidence the assumption by a
successor corporation of the obligations of the Company; (iii) add covenants
for the protection of the holders of Debt Securities; (iv) cure any ambiguity
or correct any inconsistency in such Indenture; (v) establish the forms or
terms of Debt Securities of any series; (vi) evidence the acceptance of
appointment by a successor trustee; or (vii) add to, change or eliminate any
provisions of the relevant Indenture, provided that any such addition, change
or elimination shall not apply to any Debt Security of any series created
prior to the execution of such supplemental indenture and entitled to the
benefit of such provision or modify the rights of the holder of any such Debt
Security with respect to such provision. (Indentures; Section 8.1)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of Debt Securities of all series issued under such Indenture
then outstanding and affected (voting as one class), to add any provisions to,
or change in any manner or eliminate any of the provisions of, such Indenture
or modify in any manner the rights of the holders of the Debt Securities of
each series so affected; provided that the Company and the Trustee may not,
without the consent of the holder of each outstanding Debt Security affected
thereby, (i) extend the stated maturity of the principal of any Debt Security,
or reduce the principal amount thereof or reduce the rate or extend the time
of payment of interest thereon, or reduce any amount payable on redemption or
repayments thereof or make the principal thereof (including any amount in
respect of original issue discount), or interest thereon payable in any coin
or currency other than that provided in the Debt Securities or reduce the
amount of any original issue discount security payable upon acceleration or
provable in bankruptcy or modify the percentage of holders required to waive
any default or rescind and annul any declaration of acceleration or impair the
right to institute suit for the enforcement of any payment on any Debt
Security when due or if the Debt Securities provide therefor, any right of
repayment of the holder thereof, or (ii) reduce the aforesaid percentage of
Debt Securities of any series issued under such Indenture, the consent of the
holders of which is required for any such modification. (Indentures; Section
8.2)
The Senior Subordinated and Subordinated Debt Indentures may not be
amended to alter the subordination of any outstanding Debt Securities issued
under such Indenture without the consent of each holder of Senior Indebtedness
(as defined therein) then outstanding that would be adversely affected
thereby. (Indentures; Section 8.6)
Applicable Law
The Indentures will provide that the Debt Securities and the Indentures
will be governed by and construed in accordance with the laws of the State of
New York. (Indentures; Section 11.8)
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
Except as may otherwise be provided in the Prospectus Supplement
applicable thereto, in compliance with United States federal income tax laws
and regulations, Bearer Securities (including Bearer Securities in global
form) will not be offered, sold, resold or delivered, directly or indirectly,
in the United States or its possessions or to United States persons (as
defined below), except as otherwise permitted by the United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D). Any underwriters, agents and dealers
participating in the offerings of Bearer Securities, directly or indirectly,
must agree that they will not, in connection with the original issuance of any
Bearer Securities or during the restricted period (as defined in United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)) (the "restricted period"),
offer sell, resell or deliver, directly or indirectly, any Bearer Securities
in the United States or its possessions or to United States persons (other
than as permitted by the applicable Treasury Regulations described above). In
addition, any such underwriters, agents and dealers must have procedures
reasonably designed to ensure that its employees or agents that are directly
engaged in selling Bearer Securities are aware of the above restrictions to
the offering, sale, resale or delivery of Bearer Securities. Moreover, Bearer
Securities (other than temporary global Debt Securities and Bearer Securities
that satisfy the requirements of United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(3)(iii)) and any Coupons appertaining thereto will not be
delivered in definitive form unless the Company has received a signed
certificate in writing (or an electronic certificate described in United
States Treasury Regulations Section 1.163-5(2)(i)(D)(3)(ii)) stating that on
such date such Bearer Security (i) is owned by a person that is not a United
States person, (ii) is owned by a United States person that (a) is a foreign
branch of a United States financial institution (as defined in the United
States Treasury Regulations Section 1.165-12(c)(1)(v)) (a "financial
institution") purchasing for its own account or for resale, or (b) is
acquiring such Bearer Security through a foreign branch of a United States
financial institution and that holds the bearer Security through such
financial institution through such date (and in either case (a) or (b), each
such United States financial institution agrees, on its own behalf or through
its agent, that the Company may be advised that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder) or (iii) is owned by a
United States or foreign financial institution for the purposes of resale
during the restricted period and, in addition, if the owner of such Bearer
Security is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or (ii)), such
financial institution certifies that it has not acquired the Bearer Security
for purposes of resale directly or indirectly to a United States person or to
a person within the United States or its possessions.
Bearer Securities (other than temporary global Debt Securities) and any
Coupons appertaining thereto will bear a legend substantially to the following
effect: "Any United States person who holds this obligation will be subject
to limitations under the United States federal income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code." The sections referred to in such legend provide that,
with certain exceptions, a United States person will not be permitted to
deduct any loss, and will not be eligible for capital gain treatment with
respect to any gain, realized on the sale, exchange or redemption of such
Bearer Security or Coupon.
As used herein "United States person" means a citizen, national 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 any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue (i) 100,000,000 shares of Common
Stock, of which 38,827,586 shares were outstanding as of November 8, 1996,
(ii) 25,000,000 shares of Special Common Stock, none of which is outstanding
and (iii) 10,000,000 shares of preferred stock, par value $1.00 per share
("Preferred Stock"), none of which is outstanding. At November 8, 1996, there
were 2,182 holders of record of the Common Stock. The following summaries of
certain provisions of the Company's Certificate of Incorporation and
Shareholder Rights Plan do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, the Company's Certificate of
Incorporation and Shareholder Rights Plan, copies of which have been
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part.
Common Stock and Special Common Stock
The holders of Common Stock and Special Common Stock generally have
identical rights except that holders of Common Stock are entitled to one vote
per share while holders of Special Common Stock are entitled to one-tenth of a
vote per share on all matters to be voted on by stockholders. Holders of
shares of Common Stock and Special Common Stock are not entitled to cumulate
their votes in the election of directors. Generally all matters to be voted
on by stockholders must be approved by a majority of the combined voting power
of the outstanding shares of Common Stock and Special Common Stock, voting
together as a single class, subject to any voting rights of holders of
outstanding Preferred Stock, if any, amendments to the Company's Certificate
of Incorporation must be approved by a majority of the combined voting power
of all shares of Common Stock and Special Common Stock, voting together as a
single class. However, amendments to the Company's Certificate of
Incorporation (i) that adversely affect the rights of the Common Stock or
Special Common Stock also must be approved by a majority of the shares of such
class voting as a separate class, (ii) that modify the classified board
provisions contained in the Certificate of Incorporation must be approved by
an 80% supermajority of the combined voting power of all shares of outstanding
capital stock (including Common Stock and any outstanding Special Common Stock
and voting Preferred Stock) and (iii) that modify the "fair price" provisions
contained in the Company's Certificate of Incorporation must likewise be
approved by an 80% supermajority of the combined voting power of all shares of
outstanding voting stock excluding voting stock held by a Related Person (see
"Additional Provisions of the Company's Certificate of Incorporation") and its
Affiliates and Associates (as defined in the Certificate of Incorporation).
Preemptive Rights; Redemption; Nonassessable. The holders of Common
Stock and Special Common Stock have no preemptive or other subscription or
conversion rights and there are no redemption provisions with respect to such
shares. All the outstanding shares of Common Stock are fully paid and
nonassessable and the shares of Special Common Stock if issued will be fully
paid and nonassessable.
Dividends. Subject to the prior dividend rights of holders of
outstanding Preferred Stock, if any, the holders of Common Stock and Special
Common Stock are entitled to receive such dividends and distributions, if any,
as may be declared from time to time by the Board of Directors in its
discretion from funds legally available therefor, and shall share equally in
all such dividends and distributions on a per share basis. In the case of
dividends or other distributions payable in capital stock other than Preferred
Stock (including stock splits) only shares of Common Stock shall be
distributed with respect to Common Stock and only shares of Special Common
Stock shall be paid or distributed with respect to Special Common Stock, in
each case in an amount per share equal to the amount per share distributed
with respect to the Common Stock or the Special Common Stock, as the case may
be. In the case of any combination or reclassification of Common Stock or
special Common Stock, the shares of each such class shall be combined or
reclassified in such manner so as to retain the proportionate interest of each
such class after giving effect to such combination or reclassification.
Distributions on Liquidation. The holders of Common Stock and Special
Common Stock are entitled to share pro rate in any distribution upon the
liquidation, dissolution or winding up of the Company, after giving effect to
any liquidation preference of any Preferred Stock.
Reorganization, Consolidation or Merger. In the event of a
reorganization, consolidation or merger of the Company, each holder of a share
of Common Stock shall be entitled to receive the same kind and amount of
property receivable by a holder of a share of Special Common Stock and each
holder of a share of Special Common Stock shall be entitled to receive the
same kind and amount of property receivable by a holder of Common Stock.
Preferred Stock
The Company is authorized to issue Preferred Stock in one or more series
with such designations, rights, preferences and limitations as the Board of
Directors may determine, including the consideration to be received therefor,
the number of shares comprising each series, dividend rates, redemption
provisions, liquidation preferences, mandatory retirement provisions,
conversion rights and voting rights, all without any stockholder approval.
The future issuance of Preferred Stock with voting rights could make an
acquisition of control of the Company more difficult and could adversely
affect the rights of holders of Common Stock. Preferred stockholders
typically would be entitled to satisfaction in full of specified dividend and
liquidation rights before any payment of dividends or distribution of
assets on liquidation is made to holders of the Common Stock. If voting
rights are granted to the holders of Preferred Stock, the voting power of
the Common Stock will be diluted and under some circumstances control of
the Company would shift from the holders of the Common Stock to the holders
of Preferred Stock. Certain fundamental matters requiring stockholder
approval (such as mergers, sale of assets, and certain amendments to the
Certificate of Incorporation) may require approval by the separate vote of
the holders of the Common Stock and the Preferred Stock.
Shareholder Rights Plan
On January 11, 1989, the Board of Directors declared a dividend of one
Preferred Stock share purchase right (a "Right") for each share of Common
Stock outstanding on March 7, 1989. Each Right entitles the registered
holder, subject to the occurrence of certain events, to purchase from the
Company one one-hundredth of a share (a "Unit") of Series A Participating
Cumulative Preferred Stock of the Company (the "Rights Preferred Stock"), at a
purchase price of $30.00 per Unit subject to adjustment. The terms of the
Rights are set forth in a rights agreement (the "Shareholder Rights Plan")
between the Company and the Bank of America National Trust and Savings
Association, successor-by-merger to Security Pacific National Bank, as Rights
Agent.
Until the Rights Distribution Date (as defined below) or the earlier
redemption, expiration or termination of the Rights, (i) the Rights are
evidenced by the Common Stock certificates and are transferred with, and only
with such certificates which contain a notation incorporating the Shareholder
Rights Plan by reference and (ii) the surrender for transfer of any
certificates for Common Stock constitutes a transfer of the Rights associated
with the Common Stock represented by such certificate. The Rights will
separate from the Common Stock and will be distributed on the date (the "Rights
Distribution Date") which occurs upon the earlier of (a) ten days following
the date (the "Stock Acquisition Date") of a public announcement that a person
has become an Acquiring Person (as defined below) or (b) ten business days
following the commencement of a tender offer or exchange offer that would
result in a person becoming an Acquiring Person. Under the Shareholder Rights
Plan, an "Acquiring Person" means any person who or which, together with all
Affiliates and Associates (as defined in the Shareholder Rights Plan) of such
person, beneficially owns 20% or more of the aggregate voting power of the
outstanding Common Stock, but does not include (x) the Company or any of its
subsidiaries or any of their respective employee benefit plans or (y) a
specifically designated individual formerly affiliated with the Company or
certain of his Affiliates or Associates.
The Rights are not exercisable until the Rights Distribution Date and
will expire at the close of business on March 7, 1999, unless earlier redeemed
by the Company as described below.
As soon as practicable after the Rights Distribution Date, Rights
Certificate will be mailed to holders of Record of the Common Stock as of the
close of business on the Rights Distribution Date and, thereafter, the
separate Rights Certificates alone will represent the Rights. Except (i) in
connection with the exercise of employee stock options or under any employee
benefit plan or arrangement, (ii) in connection with the exercise, conversion
or exchange of securities issued by the Company after the date of the
Shareholder Rights Plan and (iii) as otherwise determined by the Board of
Directors, only Common Stock issued prior to the Rights Distribution Date will
be issued with Rights. Notwithstanding the foregoing, no such Rights shall be
issued (i) if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the person to whom such Rights would be issued,
(ii) if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof and (iii) after the earlier of the
redemption and expiration of the Rights.
If at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction or (ii) 50% or
more of the Company's assets or earning power is sold, each holder of a Right
shall thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the current purchase price
of the Right.
If (i) any person becomes an Acquiring Person or (ii) the Company is the
surviving corporation in a merger with an Acquiring Person and the Common
Stock is not changed or exchanged, proper provision will be made so that each
holder of a Right originally issued to a holder of Common Stock, other than
Rights that are, or (under certain circumstances specified in the Shareholder
Rights Plan) were, beneficially owned by an Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Common Stock (the "Exercise Number") having a market
value equal to two times the exercise price of the Right. The events
described in this and the immediately preceding paragraph are referred to as
the "Triggering Events."
The purchase price payable for a Unit and the number of Units issuable
upon exercise of the Rights is subject to adjustment from time to time in
certain cases. In addition, the number of Rights associated with each share
of Common Stock is subject to adjustment from time to time in the event of a
stock dividend on, or a subdivision or combination of, Common Stock.
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least one percent of the
purchase price. No fractional shares of Common Stock will be issued and in
lieu thereof, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading date prior to the date on which such
fractional shares would have been otherwise issuable.
The Board of Directors may redeem the Rights in whole, but not in part,
at the redemption price of $.01 per Right at any time prior to the expiration
of a ten day period following the Stock Acquisition Date. The foregoing
redemption period can be extended by a majority of Continuing Directors (as
defined in the Shareholder Rights Plan) at any time prior to the date on which
the Rights would otherwise become nonredeemable. Immediately upon the action
of the Board of Directors ordering redemption of the Rights, the Rights will
terminate, no further Rights will be issued and the only right of the holders
of Rights will be to receive the redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Prior to the Rights Distribution Date, the Company may, subject to
certain exceptions, amend any provision of the Shareholder Rights Plan without
the approval of any holders of Common Stock.
Additional Provisions of the Company's Certificate of Incorporation
The Company's Certificate of Incorporation contains "fair price"
provisions which are intended to protect the Company's stockholders from
certain possible pricing abuses in connection with, among other things,
unsolicited attempts to gain control of the Company. These provisions require
the affirmative vote of the holders of 80% of the outstanding shares of voting
stock of the Company held by persons other than a Related Person in order to
permit certain mergers and other major corporate transactions involving the
Company and a Related Person, unless the merger or other transaction is
approved by at least two-thirds of the Continuing Directors (as defined in the
Certificate of Incorporation) or certain "fair price" criteria are met. A
"Related Person" is defined as any individual, corporation, partnership or
entity that, together with its Affiliates and Associates (as defined in the
Certificate of Incorporation), beneficially owns in the aggregate 20% or more
of the Company's outstanding voting stock, except for (i) any person or entity
whose acquisition of such voting stock was approved in advance by at least
two-thirds of the Continuing Directors, (ii) any fiduciary in respect of any
employee benefit plan of the Company or its subsidiaries or (iii) a
specifically designated corporation formerly affiliated with the Company or
any of its Affiliates or Associates. The "fair price" provisions are deemed
to have been satisfied if, in general, the cash or other consideration
received per share by holders of each class or series of the Company's
outstanding voting stock in the merger or other transaction is not less than
the highest price paid at any time by the Related Person in acquiring stock of
such class or series, as determined by two-thirds of the Continuing Directors.
The term "Continuing Director" means a director of the Company who was a
member of the Board of Directors prior to the time that a Related Person
involved in a merger or other major corporate transaction became a Related
Person.
The Company has also adopted certain defensive measures that include
classifying the Board of Directors into three classes of directors, requiring
a supermajority vote of the Company's stockholders to effect certain
amendments to its Certificate of Incorporation and bylaws, restricting
stockholders' ability to call special meetings of stockholders, implementing
the Shareholder Rights Plan and amending the Certificate of Incorporation to
provide that Section 203 of the Delaware General Corporation Law shall apply
to the Company. In addition, the Certificate of Incorporation prohibits
stockholder action by written consent.
The foregoing defensive measures, together with the provisions of the
Shareholder Rights Plan and the Certificate of Incorporation, in certain
circumstances could require a potential acquiror of the Company and to pay a
higher price than might otherwise be the case or to obtain the approval of a
larger percentage of the stockholders than might otherwise be the case, any
may have the effect of discouraging a proxy contest or making more difficult a
merger involving the Company, or a tender offer, open-market purchase program
or other purchase of the Company's shares, in circumstances that would give
stockholders the opportunity to realize a premium over the then-prevailing
market prices for their shares.
Section 203 of the Delaware General Corporation Law
As a Delaware corporation, the Company is subject to the provisions of
Section 203 of the General Corporation Law of the State of Delaware. Section
203 generally provides that if a person or group acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder")
without prior board approval, such interested stockholder may not, for a
period of three years, engage in a wide range of business combination
transactions with the corporation. However, this restriction does not apply
to a person who becomes an interested stockholder in a transaction resulting
in the interested stockholder owning at least 85% of the corporation's voting
stock (excluding from the outstanding shares, shares held by officer-directors
or pursuant to employee stock plans without confidential tender offer
decisions), or to a business combination approved by the board of directors and
authorized by the affirmative vote of a least 66 2/3% of the outstanding
voting stock not owned by the interested stockholder. In addition, Section
203 does not apply to certain business combinations proposed subsequent to the
public announcement of specified business combination transactions which are
not opposed by the board of directors.
Transfer Agent
The transfer agent and registrar for the Company's Common Stock is
ChaseMellon Shareholder Services, L.L.C.
DESCRIPTION OF WARRANTS
The Company may issue warrants to purchase Debt Securities (the "Debt
Warrants"), Preferred Stock (the "Preferred Stock Warrants") or Common Stock
(the "Common Stock Warrants", collectively with the Debt Warrants and the
Preferred Stock Warrants, the "Warrants"). Warrants may be issued
independently or together with any Securities and may be attached to or
separate from such Securities. The Warrants are to be issued under warrant
agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as warrant agent (the "Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to the Warrants being
offered pursuant thereto.
Debt Warrants
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the debt warrant certificates representing such Debt Warrants, including
the following: (i) the title of such Debt Warrants; (ii) the aggregate number
of such Debt Warrants; (iii) the price or prices at which such Debt Warrants
will be issued; (iv) the designation, aggregate principal amount and terms of
the Debt Securities purchasable upon exercise of such Debt Warrants, and the
procedures and conditions relating to the exercise of such Debt Warrants; (v)
the date, if any, on and after which such Debt Warrants and the related Debt
Securities will be separately transferable; (vi) the principal amount of Debt
Securities purchasable upon exercise of each Debt Warrant, and the price at
which such principal amount of Debt Securities may be purchased upon such
exercise; (vii) the date on which the right to exercise such Debt Warrants
shall commence, and the date on which such right shall expire; (viii) the
maximum or minimum number of such Debt Warrants which may be exercised at any
time; (ix) a discussion of material federal income tax considerations, if any;
and (x) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
Debt Warrant certificates will be exchangeable for new Debt Warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement. Prior to the exercise of their Debt Warrants,
holders of Debt Warrants will not have any of the rights of holders of the
securities purchasable upon such exercise and will not be entitled to payments
of principal of (or premium, if any) or interest, if any, on the securities
purchasable upon such exercise.
Other Warrants
The applicable Prospectus Supplement will describe the following terms
of Preferred Stock Warrants and Common Stock Warrants in respect of which this
Prospectus is being delivered: (i) the title of such Warrants; (ii) the
Securities for which such Warrants are exercisable; (iii) the price or prices
at which such Warrants will be issued; (iv) the number of such Warrants issued
with each share of Preferred Stock or Common Stock; (v) any provisions for
adjustment of the number or amount of shares of Preferred Stock or Common
Stock receivable upon exercise of such Warrants or the exercise price of such
Warrants; (vi) if applicable, the date on and after which such Warrants and
the related Preferred Stock or Common Stock will be separately transferable;
(vii) if applicable, a discussion of material federal income tax
considerations; (viii) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants; (ix) the date on which the right to exercise such Warrants shall
commence, and the date on which such right shall expire; (x) the maximum or
minimum number of such Warrants which may be exercised at any time.
Exercise of Warrants
Each Warrant will entitle the holder of Warrants to purchase for cash
such principal amount of Debt Securities or shares of Preferred Stock or
Common Stock at such exercise price as shall in each case be set forth in, or
be determinable as set forth in, the Prospectus Supplement relating to the
Warrants offered thereby. Warrants may be exercised at any time up to the
close of business on the expiration date set forth in the Prospectus
Supplement relating to the Warrants offered thereby. After the close of
business on the expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
warrant certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward the
Debt Securities or shares of Preferred Stock or Common Stock purchasable upon
such exercise. If less than all of the Warrants represented by such warrant
certificate are exercised, a new warrant certificate will be issued for the
remaining Warrants.
PLAN OF DISTRIBUTION
The Securities may be sold (i) through agents, (ii) through
underwriters, (iii) through dealers or (iv) directly to purchasers (through a
specific bidding or auction process or otherwise). The distribution of
Securities may be effected from time to time in one or more transactions at a
fixed price or prices, which may be changed, or at market prices prevailing at
the time of sale, at prices relating to such prevailing market prices or at
negotiated prices.
Offers to purchase the Securities may be solicited by agents designated
by the Company from time to time. Any such agent involved in the offer or
sale of the Securities will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment. Any such
agent may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold.
If an underwriter or underwriters are utilized in the sale of
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales
of the Securities.
If a dealer is utilized in the sale of the Securities, the Company will
sell such Securities to the dealer, as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such
dealer at the time of resale. The name of the dealer and the terms of the
transactions will be set forth in the Prospectus Supplement relating thereto.
Offers to purchase the Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales, including the terms of any
bidding or auction process, if utilized, will be described in the Prospectus
Supplement relating thereto.
Agents, underwriters and dealers may be entitled under agreements which
may be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and any
such agents, underwriters or dealers, or their affiliates may be customers of,
engage in transactions with or perform services for the Company in the
ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Debt Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Such Contracts will be subject to only those conditions set forth
in the Prospectus Supplement. A commission indicated in the Prospectus
Supplement will be paid to underwriters and agents soliciting purchases of
Debt Securities pursuant to Contracts accepted by the Company.
EXPERTS
The consolidated and combined financial statements of the Company
included in the Annual Report on Form 10-K of the Company for the year ended
November 30, 1995 and in the Current Report on Form 8-K dated March 12, 1996
have been audited by Ernst & Young LLP, independent auditors, as stated in its
report dated January 4, 1996, except as to Note 13, as to which the date is
January 22, 1996, and are incorporated herein by reference in reliance upon
the report of such firm, which report is given upon their authority as
experts in accounting and auditing.
Any financial statements and schedules hereafter incorporated by
reference in the registration statement of which this prospectus is a part
that have been audited and are the subject of a report by independent auditors
will be incorporated herein by reference in reliance upon such reports and
upon the authority of such firms as experts in accounting and auditing to the
extent covered by consents filed with the Commission.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for
the Company by Davis Polk & Wardwell, New York, New York.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
Registration fee.............................. $ 60,606.06
Legal fees and expenses....................... 40,000.00
Accounting fees and expenses.................. 10,000.00
Blue sky fees and expenses.................... 10,000.00
Total................................... $120,606.06
==============
==============
</TABLE>
All amounts estimated except for registration fees.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor, against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or such other court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses which the Court of Chancery or
such other court shall deem proper.
Article 6(d) of the Company's Certificate of Incorporation provides that
each person who was or is made a party to (or is threatened to be made a party
to) or is otherwise involved in any action, suit or proceeding by reason of
the fact that such person is or was a director, officer, employee or agent of
the Company shall be indemnified and held harmless by the Company to the full
extent permitted by the General Corporation Law of Delaware against all
expenses, liability and loss (including without limitation attorney's fees,
judgments, fines and amounts paid in settlement) reasonably incurred by such
person in connection therewith. The rights conferred by Article 6(d) are
contractual rights and include the right to be paid by the Company the
expenses incurred in defending such action, suit or proceeding in advance of
the final disposition thereof.
Article 6(c) of the Company's Certificate of Incorporation provides that
the Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of their fiduciary
duty as directors except (i) for any breach of the duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the General Corporation Law of Delaware, which makes
directors liable for unlawful dividends or unlawful stock repurchases or
redemptions or (iv) for transactions from which directors derive an improper
personal benefit.
The Company has purchased directors' and officers' liability insurance
policies which insure against certain liabilities incurred by directors and
officers of the Company, with aggregate annual coverage of up to $30,000,000.
Item 16. List of Exhibits and Exhibit Index
Exhibit 1.1- Form of Underwriting Agreement relating to Debt Securities.
Exhibit 1.2- Form of Underwriting Agreement relating to Common Stock and
Preferred Stock.
Exhibit 1.3 - Form of Underwriting Agreement relating to Warrants.*
Exhibit 3(i).1- Amended Certificate of Incorporation, filed as an exhibit to
the Company's Registration Statement No. 33-6471 on Form S-1, is
incorporated by reference herein.
Exhibit 3(i).2 - Amendment to Certificate of Incorporation, filed as an
exhibit to the Company's Registration Statement No. 33-6471 on
Form S-1 (Post-Effective Amendment No. 3), is incorporated by
reference herein.
Exhibit 3(i).3- Amendment to Certificate of Incorporation, filed as an exhibit
to the Company's Registration Statement No. 33-30140 on Form S-1,
is incorporated by reference herein.
Exhibit 3(ii)- By-Laws, filed as an exhibit to the Company's Registration
Statement No. 33-30140 on Form S-1, is incorporated by reference
herein.
Exhibit 4.1- Form of Senior Debt Indenture.
Exhibit 4.2- Form of Senior Subordinated Debt Indenture.
Exhibit 4.3- Form of Subordinated Debt Indenture.
Exhibit 4.4- Form of Floating Rate Note.*
Exhibit 4.5- Form of Fixed Rate Note.*
Exhibit 4.6- Form of certificate for Common Stock.
Exhibit 4.7- Certificate of Designation of Preferred Stock.*
Exhibit 4.8- Form of certificate for Preferred Stock.*
Exhibit 4.9- Rights Agreement between the Company and ChaseMellon Shareholder
Services, L.L.C. (assignee of Bank of America National Trust and
Savings Association, successor-by-merger to Security Pacific
National Bank), as Rights Agent, dated February 21, 1989, filed
as an exhibit to the Company's 1989 Annual Report on Form 10-K,
is incorporated by reference herein.
Exhibit 4.10- Form of Warrant Agreement pertaining to Debt Securities
(including the form of certificate representing a Warrant for
Debt Securities).*
Exhibit 4.11- Form of Warrant Agreement pertaining to Preferred Stock
(including the form of Certificate representing a Warrant for
Preferred Stock).*
Exhibit 4.12- Form of Warrant Agreement pertaining to Common Stock (including
the form of certificate representing a Warrant for Common Stock).*
Exhibit 5.1- Opinion of Davis Polk & Wardwell as to the legality of Securities
to be issued.
Exhibit 12 - Statement re: Computation of Consolidated Ratio of Earnings to
Fixed Charges of the Company and of Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
Exhibit 23.1- Consent of Ernst & Young LLP.
Exhibit 23.2- Consent of Davis Polk & Wardwell (included in Exhibit 5.1).
Exhibit 24 - Powers of Attorney (included on page II-4).
Exhibit 25 - Statement of Eligibility and Qualification of the Trustee under
the Trust Indenture Act (to be filed in accordance with
Section 305(b)(2) of the Trust Indenture Act of 1939).*
________________
* To be filed by a post-effective amendment to the Registration Statement
or incorporated by reference in the event of an offering of the
specified Securities.
Item 17. Undertakings. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in this registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions set forth or described in Item 15
of this Registration Statement, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person, in
connection with the securities registered hereby, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section 305(b)(2)
of the Trust Indenture Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Los Angeles, California, on the 12th day of
November, 1996.
KAUFMAN AND BROAD HOME CORPORATION
By /s/ MICHAEL F. HENN
Michael F. Henn
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael F. Henn, Albert Z. Praw
and Kimberly N. King, and each of them, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name,
and in any and all capacities, to sign all amendments (including post-
effective amendments) to the Registration Statement to which this power of
attorney is attached, and to file all such amendments and all exhibits to
them and other documents to be filed in connection with them, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities as Directors and Officers of Kaufman and Broad Home Corporation
and on the date indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ BRUCE KARATZ Chairman, President and Chief November 12, 1996
Bruce Karatz Executive Officer
/s/ MICHAEL F. HENN Senior Vice President and Chief November 12, 1996
Michael F. Henn Financial Officer
/s/ RONALD W. BURKLE Director November 12, 1996
- --------------------
Ronald W. Burkle
/s/ JANE EVANS Director November 12, 1996
- --------------
Jane Evans
/s/ DR. RAY R. IRANI Director November 12, 1996
- --------------------
Dr. Ray R. Irani
/s/ ANTOINE JEANCOURT-GALIGNANI Director November 12, 1996
- -------------------------------
Antoine Jeancourt-Galignani
/s/ JAMES A. JOHNSON Director November 12, 1996
- --------------------
James A. Johnson
/s/ GUY NAFILYAN Director; Executive Vice November 12, 1996
- ---------------- President, European Operations
Guy Nafilyan
/s/ LUIS G. NOGALES Director November 12, 1996
- -------------------
Luis G. Nogales
/s/ CHARLES R. RINEHART Director November 12, 1996
- -----------------------
Charles R. Rinehart
/s/ SANFORD C. SIGOLOFF Director November 12, 1996
- -----------------------
Sanford C. Sigoloff
</TABLE>
