<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 1994
REGISTRATION NO. 33-52075
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MCKESSON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
94-3040479
DELAWARE (I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OF INCORPORATION)ONE POST STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 983-8300
----------------
ARMOR ALL PRODUCTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0178217
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
6 LIBERTY
ALISO VIEJO, CALIFORNIA 92656
(714) 362-0600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
NANCY A. MILLER
VICE PRESIDENT AND CORPORATE SECRETARY
MCKESSON CORPORATION
ONE POST STREET
SAN FRANCISCO, CA 94104
(415) 983-8301
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
TERRY MICHAEL KEE, ESQ. IVAN D. MEYERSON, ESQ. LARRY W. SONSINI, ESQ.
DAVID R. LAMARRE, ESQ. VICE PRESIDENT AND DAVID J. SEGRE, ESQ.
ERIN G. AUSTIN, ESQ. GENERAL COUNSEL TIMOTHY STEVENS, ESQ.
PILLSBURY MADISON & SUTRO MCKESSON CORPORATION WILSON, SONSINI,
235 MONTGOMERY STREET ONE POST STREET GOODRICH & ROSATI
SAN FRANCISCO, CA 94104 SAN FRANCISCO, CA 94104 PROFESSIONAL CORPORATION
TWO PALO ALTO SQUARE
PALO ALTO, CA 94306
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, please check the following box: [X]
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued February 9, 1994
$140,000,000
McKesson Corporation
% EXCHANGEABLE SUBORDINATED DEBENTURES DUE 2004
Exchangeable for Shares of Common Stock of
ARMOR ALL PRODUCTS CORPORATION
-----------
Interest payable February 15 and August 15
-----------
THE DEBENTURES WILL BE EXCHANGEABLE INTO COMMON STOCK OF ARMOR ALL PRODUCTS
CORPORATION ("ARMOR ALL") OWNED BY MCKESSON CORPORATION ("MCKESSON") AT THE
OPTION OF THE HOLDER AFTER 60 DAYS FOLLOWING THE ORIGINAL ISSUANCE THEREOF,
UNLESS PREVIOUSLY REDEEMED. THE EXCHANGE PRICE WILL BE $ PER SHARE OF
ARMOR ALL COMMON STOCK (EQUIVALENT TO AN EXCHANGE RATE OF SHARES OF
ARMOR ALL COMMON STOCK FOR EACH $1,000 PRINCIPAL AMOUNT OF DEBENTURES),
SUBJECT TO ADJUSTMENT IN CERTAIN EVENTS AND SUBJECT TO MCKESSON'S
RIGHT TO PAY CASH EQUAL TO THE AVERAGE MARKET PRICE OF THE SHARES OF
ARMOR ALL COMMON STOCK FOR THE FIVE TRADING DAYS PRECEDING THE DATE
OF NOTICE OF EXCHANGE IN LIEU OF SUCH SHARES. THE ARMOR ALL COMMON
STOCK IS TRADED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"ARMR." ON FEBRUARY 7, 1994, THE REPORTED LAST SALE PRICE OF
THE ARMOR ALL COMMON STOCK ON THE NASDAQ NATIONAL MARKET WAS
$21 1/4. THE DEBENTURES WILL BE SUBORDINATED AS DESCRIBED
HEREIN TO ALL SENIOR INDEBTEDNESS OF MCKESSON.
-----------
THE DEBENTURES WILL NOT BE REDEEMABLE PRIOR TO FEBRUARY 16, 1999. THEREAFTER
THE DEBENTURES WILL BE REDEEMABLE AT ANY TIME ON AT LEAST 30 DAYS' NOTICE
AT THE OPTION OF MCKESSON, IN WHOLE OR IN PART, INITIALLY AT % AND AT
DECREASING PRICES THEREAFTER TO 100% AT MATURITY, TOGETHER IN EACH
CASE WITH ACCRUED INTEREST.
-----------
THE DEBENTURES AND THE ARMOR ALL COMMON STOCK DELIVERABLE UPON EXCHANGE OF THE
DEBENTURES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
PRICE % AND ACCRUED INTEREST, IF ANY
-----------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) McKesson(1)(3)
----------- -------------- --------------
<S> <C> <C> <C>
Per Debenture......................... % % %
Total(3)(4)........................... $ $ $
</TABLE>
- -----
(1) Plus accrued interest, if any, from the date of issuance.
(2) McKesson and Armor All have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933.
(3) Before deducting expenses payable by McKesson estimated at $300,000.
(4) McKesson has granted to the Underwriters an option, exercisable within
30 days of the date hereof, to purchase up to an aggregate of
$15,000,000 additional aggregate principal amount of Debentures at the
price to public less underwriting discounts and commissions, for the
purpose of covering over-allotments, if any. If the Underwriters
exercise such option in full, total price to public, underwriting
discounts and commissions and proceeds to McKesson will be $ ,
$ and $ , respectively. See "Underwriters."
-----------
The Debentures are offered, subject to prior sale, when, as and if accepted
by the Underwriters and subject to the approval of certain legal matters by
Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, counsel to the
Underwriters. It is expected that delivery of the Debentures will be made on or
about , 1994 at the offices of Morgan Stanley & Co. Incorporated, New
York, New York, against payment therefor in New York funds.
-----------
MORGAN STANLEY & CO.
Incorporated
February , 1994
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY MCKESSON, ARMOR ALL, THE UNDERWRITERS OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents By Reference........................... 3
Prospectus Summary........................................................ 5
Use of Proceeds........................................................... 9
Capitalization of McKesson................................................ 9
Armor All Common Stock Price Range and Dividends.......................... 10
McKesson.................................................................. 10
Selected Consolidated Financial Information of McKesson.................. 12
Armor All................................................................. 13
Selected Consolidated Financial Information of Armor All................. 14
Management's Discussion and Analysis of Financial Condition and Results
of Operations of Armor All............................................. 15
Business of Armor All.................................................... 19
Management of Armor All.................................................. 24
Certain Relationships and Transactions.................................... 26
Description of the Debentures............................................. 28
Certain United States Tax Consequences.................................... 35
Underwriters.............................................................. 39
Legal Matters............................................................. 40
Experts................................................................... 40
</TABLE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY OR THE ARMOR ALL COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
McKesson Corporation (together with its subsidiaries, unless the context
otherwise requires, "McKesson") and Armor All Products Corporation (together
with its subsidiaries, unless the context otherwise requires, "Armor All") are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith file reports
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy and information statements and other information
filed by McKesson and Armor All may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. and at certain of its regional offices located
at: Seven World Trade Center, 13th Floor, New York, New York; and 500 West
Madison Street, Suite 1400, Chicago, Illinois. 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. Securities of McKesson are
listed on the New York and Pacific Stock Exchanges, and the Armor All Common
Stock is traded on the Nasdaq National Market. Reports and other information
concerning McKesson may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York, and the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California. Reports and other
information concerning Armor All may be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, Washington, D.C.
McKesson and Armor All have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the Debentures offered hereby
and the shares of Armor All Common Stock deliverable upon exchange of the
Debentures. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by McKesson with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(1) Annual Report on Form 10-K for the year ended March 31, 1993;
(2) Quarterly Report on Form 10-Q for the quarter ended June 30, 1993;
(3) Quarterly Report on Form 10-Q for the quarter ended September 30,
1993; and
(4) Quarterly Report on Form 10-Q for the quarter ended December 31,
1993.
The following documents heretofore filed by Armor All with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(1) Registration Statement on Form 8-A dated September 2, 1986;
(2) Current Report on Form 8-K dated April 23, 1993;
(3) Annual Report on Form 10-K for the year ended March 31, 1993;
(4) Quarterly Report on Form 10-Q for the quarter ended June 30, 1993;
(5) Quarterly Report on Form 10-Q for the quarter ended September 30,
1993; and
(6) Quarterly Report on Form 10-Q for the quarter ended December 31,
1993.
All documents subsequently filed by McKesson pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the
termination of the offering of Debentures made hereby, and all documents
subsequently filed by Armor All pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 prior to the termination of the offering
of Armor All Common Stock made hereby,
3
<PAGE>
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such documents. McKesson and Armor All, as the
case may be, will provide without charge a copy of any and all of such
documents (exclusive of exhibits unless such exhibits are specifically
incorporated by reference therein) without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request to Nancy A.
Miller, Vice President and Corporate Secretary, McKesson Corporation, One Post
Street, San Francisco, California 94104 (telephone number: (415) 983-8301).
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 subsequently filed document which also is incorporated or deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere and
incorporated by reference in this Prospectus.
MCKESSON
McKesson Corporation conducts its operations through three business
segments--Health Care Services, Water Products and Armor All. McKesson's Health
Care Services segment includes McKesson's distribution services operation and
PCS Health Systems, Inc. ("PCS"). Within the United States and Canada, the
distribution services operation is the largest wholesale distributor of ethical
and proprietary drugs and health and beauty care products. Its products are
distributed to chain and independent drug stores, hospitals, food stores and
mass merchandisers throughout the United States and Canada. PCS provides
prescription drug claims processing and pharmacy benefit design, administration
and management to health plan sponsors. Also included in this segment are the
results of McKesson's Central American pharmaceutical operation and equity
interest in a pharmaceutical wholesale distributor in Mexico. The Health Care
Services segment generated 97% of McKesson's total revenues and 78% of its
operating profit in the nine months ended December 31, 1993 and in fiscal 1993.
McKesson's Water Products segment engages in the processing, sale and delivery
of bottled drinking water and the sale of packaged water to retail stores.
In May 1993, McKesson sold 5,175,000 shares of Armor All Common Stock in a
registered public offering. As of February 7, 1994, McKesson owned 11,975,000
shares of Armor All Common Stock, or approximately 57% of Armor All's
outstanding shares.
THE OFFERING
<TABLE>
<S> <C>
Issuer.............................. McKesson Corporation, a Delaware
corporation
Securities Offered.................. $140,000,000 principal amount of %
Exchangeable Subordinated Debentures Due
2004 ($155,000,000 principal amount of the
Debentures if the Underwriters' over-
allotment option is exercised in full).
The Debentures will mature on February 15,
2004, unless previously redeemed or
exchanged.
Interest Payment Dates.............. February 15 and August 15, commencing
August 15, 1994.
Exchange Rights and Cash Option on
Exchange........................... The Debentures will be exchangeable at the
option of the holder at any time after
, 1994 (60 days following
issuance thereof), unless previously
redeemed, into shares of Armor All Common
Stock at an exchange price of $ per
share (equivalent to an exchange rate of
shares of Armor All Common Stock
for each $1,000 principal amount of
Debentures), subject to adjustment in
certain events and subject to McKesson's
right to pay cash equal to the average
market price of the shares for the five
consecutive trading days preceding the
date of notice of exchange in lieu of such
shares.
Redemption.......................... The Debentures will not be redeemable by
McKesson prior to February 16, 1999.
Thereafter, the Debentures will be
redeemable at any time on at least 30
days' notice at the option
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
of McKesson, in whole or in part,
initially at % and at decreasing prices
thereafter to 100% at maturity, together
in each case with accrued interest.
Subordination....................... Subordinated to all Senior Indebtedness (as
defined herein) of McKesson. At January
31, 1994, Senior Indebtedness totalled
approximately $47 million.
Use of Proceeds..................... McKesson will use the net proceeds to repay
domestic short-term borrowings.
Trading Information................. McKesson intends to apply for listing of
the Debentures on the Nasdaq Stock Market.
The Armor All Common Stock is traded on
the Nasdaq National Market under the
symbol "ARMR."
</TABLE>
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL INFORMATION
OF MCKESSON
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
---------------------------------------------------- --------------------
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31, DEC. 31,
1993 1992 1991 1990 1989 1993 1992
--------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................ $11,669.4 $10,312.6 $8,420.6 $7,790.9 $7,046.4 $9,251.3 $8,717.6
Income (loss) after
taxes
Continuing operations.. 114.7 39.6(1) 99.9 93.7 91.9 116.7(2) 80.9
Discontinued
operations............ -- (7.3) (4.6) -- 6.6 -- --
Extraordinary item--
debt extinguishment... -- -- -- -- -- (4.2) --
Cumulative effects of
accounting changes.... -- (110.5) -- -- -- (15.8) --
--------- --------- -------- -------- -------- -------- --------
Net income (loss)...... $ 114.7 $ (78.2) $ 95.3 $ 93.7 $ 98.5 $ 96.7 $ 80.9
========= ========= ======== ======== ======== ======== ========
Fully diluted earnings
per common share
Continuing operations.. $ 2.51 $ 0.84 $ 2.23 $ 2.03 $ 2.09 $ 2.59 $ 1.77
Discontinued
operations............ -- (0.19) (0.10) -- 0.14 -- --
Extraordinary item--
debt extinguishment... -- -- -- -- -- (0.10) --
Cumulative effects of
accounting changes.... -- (2.85) -- -- -- (0.36) --
--------- --------- -------- -------- -------- -------- --------
Total.................. $ 2.51 $ (2.20) $ 2.13 $ 2.03 $ 2.23 $ 2.13 $ 1.77
========= ========= ======== ======== ======== ======== ========
Ratio of earnings to
fixed charges(3)....... 4.21x 2.19x 3.52x 3.54x 3.79x 6.08x 4.08x
<CAPTION>
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31,
1993 1992 1991 1990 1989 1993
--------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 283.3 $ 321.3 $ 311.0 $ 292.3 $ 292.1 $ 209.5
Total assets............ 2,800.1 2,756.9 2,460.9 2,327.2 2,117.3 3,203.4
Total debt(4)........... 434.8 579.2 626.9 538.2 469.7 563.8
Stockholders' equity.... 619.4 554.5 675.6 684.1 692.2 651.4
</TABLE>
- --------
(1) Net of a $56.8 million after tax charge relating to McKesson's program to
restructure its U.S. and Canadian health care services distribution
businesses and the write-off of an investment.
(2) Includes $24.5 million after tax of special items relating to the gain on
the sale and donation of Armor All Common Stock, partially offset by a
donation to the McKesson Foundation, Inc. and a loss on the termination of
interest rate swap arrangements.
(3) The ratio of earnings to fixed charges was computed by dividing fixed
charges (interest expense, including the interest portion of capital and
operating leases) into earnings available for fixed charges (income from
continuing operations plus taxes on income and fixed charges). The ratio of
earnings to combined fixed charges and ESOP dividend requirements was
3.44x, 1.81x, 2.87x, 2.95x and 3.52x in 1993, 1992, 1991, 1990 and 1989,
respectively, and 4.84x and 3.32x for the nine months ended December 31,
1993 and 1992, respectively. The ratios in 1992 include the effect of
restructuring charges of $82.8 million pre-tax and, in the nine months
ended December 31, 1993, the effect of the $37.4 million pre-tax gain
associated with special items.
(4) Total debt includes all interest-bearing debt of McKesson and consolidated
subsidiaries, including the current portion, and capital lease obligations.
6
<PAGE>
ARMOR ALL
Armor All Products Corporation develops and markets branded appearance
enhancement and protection products targeted primarily for the do-it-yourself
automotive aftermarket. Its principal brand, Armor All(R), has the leading
position in the domestic automotive protectant market. A second major brand,
Rain Dance(R), is a strong competitor in the market for automotive waxes,
polishes and washes. Armor All believes that consumer awareness of its brand
names gives it a significant competitive advantage. In a recent market research
study of persons responsible for taking care of the appearance of a car, light
truck or van, 94% of the respondents were aware of the Armor All brand name.
Armor All invests substantial amounts in consumer advertising to maintain a
high level of brand awareness.
Under the leadership of the senior management team assembled in fiscal 1991
and 1992, Armor All is continuing to implement its strategic plan designed to
increase domestic sales of Armor All(R) Protectant, develop and market new
automotive products, increase Armor All's international presence, and enter the
home care market.
Armor All Protectant, Armor All's principal product, is designed to protect
and beautify natural and synthetic polymer materials and is used primarily on
automobile surfaces made of rubber, vinyl and plastic, such as dashboards,
seats, door panels, tire sidewalls, vinyl tops and rubber bumpers. Armor All
Protectant is the leading protectant product in the domestic automotive
aftermarket, and Armor All believes it outsells its nearest competitor by more
than three to one. Armor All Protectant accounted for 70% of Armor All's
revenues in the nine months ended December 31, 1993 and 70% and 77% of its
revenues in fiscal 1993 and 1992, respectively. Since November 1991, Armor All
has introduced eight new products, including Armor All(R) Tire Foam(TM)
Protectant, which has become the leading product in its category since its
introduction. In December 1993, Armor All began shipping Armor All
QuickSilver(TM) Wheel Cleaner, a spray-on cleaner designed for use on
automotive wheels, wheel covers and hubcaps; Armor All Protectant Low-Gloss
Natural Finish(TM), a low-gloss version of Armor All Protectant designed to
minimize dashboard glare for consumers who prefer a less shiny appearance; and
Armor All Spot & Wash(TM) Concentrate, a car wash product designed to remove
bugs, tar residue and tree sap from car finishes. These products will be
supported by national television advertising and by special introductory
pricing and promotional programs. In January 1994, Armor All also acquired the
E-Z Deck Wash(R) product, which cleans and restores wood surfaces.
Armor All's products are marketed in the United States and Canada by its
direct sales force and also through independent manufacturers' representatives
and distributors. Primary customers include mass merchandise retailers, auto
supply stores, warehouse clubs, hardware stores and other retail outlets in the
United States and certain foreign markets. Armor All believes that its products
are sold at over 100,000 retail outlets. In the nine months ended December 31,
1993, sales to Armor All's two largest customers, Wal-Mart Stores, Inc. (and
its affiliates) and Kmart Corporation (and its affiliates), accounted for 15%
and 8%, respectively, of Armor All's revenues. In fiscal 1993, sales to these
same two customers represented 15% and 11%, respectively, of Armor All's
revenues. International sales represented 15% and 12% of Armor All's revenues
in the nine months ended December 31, 1993 and in fiscal 1993, respectively.
Armor All is seeking to expand its international presence, in part through a
marketing and distribution alliance with S.C. Johnson & Son, Inc. ("S.C.
Johnson").
Armor All's products are mixed and packaged by contract packagers. Armor
All's use of packagers permits it to reduce its fixed capital requirements,
limit its employment needs, and minimize its investment in product inventory
because its packagers own most raw materials and finished products until
shipment to Armor All's customers.
7
<PAGE>
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL INFORMATION
OF ARMOR ALL
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
-------------------------------------------- -----------------
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31, DEC. 31,
1993 1992 1991 1990 1989 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................ $168,400 $145,910 $133,804 $165,447 $162,780 $117,361 $108,413
Net income.............. 19,152 12,864 6,843 18,821 27,113 13,108 11,122
Earnings per common
share.................. $ 0.91 $ 0.61 $ 0.33 $ 0.90 $ 1.30 $ 0.62 $ 0.53
</TABLE>
<TABLE>
<CAPTION>
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31,
1993 1992 1991 1990 1989 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 60,373 $ 46,149 $ 38,825 $ 40,615 $ 36,310 $ 65,330
Current assets.......... 93,429 68,485 65,788 90,267 90,516 86,356
Total assets............ 140,560 119,823 121,731 150,069 150,364 131,717
Total debt.............. 0 0 6,549 28,688 26,141 0
Stockholders' equity.... 106,555 96,326 93,307 99,321 93,763 109,779
</TABLE>
8
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Debentures are estimated to be $138.3
million ($153.2 million, if the Underwriters' over-allotment option is
exercised in full). McKesson intends to use the net proceeds to repay a portion
of its domestic short-term borrowings ($199.9 million as of December 31, 1993
with maturities of three to 27 days and interest rates of 3.18% to 3.37%).
CAPITALIZATION OF MCKESSON
The following table sets forth the total capitalization of McKesson at
December 31, 1993 and as adjusted to reflect the application of the proceeds
from the sale by McKesson of $140,000,000 principal amount of Debentures
pursuant to this offering (assuming that the Underwriters' over-allotment
option is not exercised), as described above under "Use of Proceeds." The
capitalization table should be read in conjunction with the financial
statements of McKesson incorporated by reference herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term debt:
Short-term borrowings.................................. $ 251.5 $ 113.2
Current portion of long-term debt...................... 28.0 28.0
-------- --------
Total................................................ $ 279.5 $ 141.2
-------- --------
Long-term debt and capital lease obligations(1)(2)....... $ 284.3 $ 424.3
-------- --------
Stockholders' Equity:
Cumulative preferred stock, $35 par value, 6,000,000
shares authorized, 135,769 Series A shares issued and
outstanding........................................... $ 4.7 $ 4.7
Series preferred stock, $1 par value, 10,000,000 shares
authorized, 2,755,787 Series B ESOP shares issued and
outstanding........................................... 120.9 120.9
Common stock, $2 par value, 120,000,000 shares
authorized, 44,759,322 shares issued(3)............... 89.5 89.5
Other capital.......................................... 173.4 173.4
Retained earnings...................................... 589.4 589.4
Accumulated translation adjustment..................... (20.1) (20.1)
ESOP notes and guarantee(4)............................ (167.5) (167.5)
Treasury common shares, 4,342,946 shares, at cost...... (138.9) (138.9)
-------- --------
Total Stockholders' Equity........................... $ 651.4 $ 651.4
-------- --------
Total Capitalization............................... $1,215.2 $1,216.9
======== ========
</TABLE>
- --------
(1) For additional information on long-term debt, see Note 9 of the Financial
Notes in the Appendix (the "Appendix") to McKesson's definitive Proxy
Statement for the annual meeting of stockholders held on July 28, 1993 (the
"Proxy Statement"), incorporated by reference in the Annual Report on Form
10-K for the year ended March 31, 1993 which is incorporated herein by
reference.
(2) For additional information on capital lease obligations and operating lease
commitments, see Note 10 of the Financial Notes in the Appendix,
incorporated by reference in the Annual Report on Form 10-K for the year
ended March 31, 1993 which is incorporated herein by reference.
(3) For additional information regarding shares reserved for conversion of
preferred stock and convertible debentures and options to purchase common
stock, see Note 12 of the Financial Notes in the Appendix, incorporated by
reference in the Annual Report on Form 10-K for the year ended March 31,
1993 which is incorporated herein by reference.
(4) For additional information regarding the ESOP notes and guarantee, see Note
14 of the Financial Notes in the Appendix, incorporated by reference in the
Annual Report on Form 10-K for the year ended March 31, 1993 which is
incorporated herein by reference.
9
<PAGE>
ARMOR ALL COMMON STOCK
PRICE RANGE AND DIVIDENDS
Armor All Common Stock is traded on the Nasdaq National Market under the
symbol "ARMR." The following table sets forth, for the periods indicated, high
and low sale prices for the Armor All Common Stock, as reported on the Nasdaq
National Market, and the cash dividends declared per common share.
<TABLE>
<CAPTION>
COMMON STOCK
PRICE
-------------- CASH DIVIDENDS
HIGH LOW DECLARED PER SHARE
------- ------ ------------------
<S> <C> <C> <C>
YEAR ENDED MARCH 31, 1992:
First quarter............................... $12 1/4 $9 $.12
Second quarter.............................. 13 9 1/4 .12
Third quarter............................... 11 1/2 9 1/2 .12
Fourth quarter.............................. 13 1/4 10 1/4 .12
YEAR ENDED MARCH 31, 1993:
First quarter............................... 16 5/8 11 .12
Second quarter.............................. 17 3/4 11 1/2 .12
Third quarter............................... 21 12 .12
Fourth quarter.............................. 19 16 1/4 .12
YEAR ENDED MARCH 31, 1994:
First quarter............................... 18 3/4 15 .16
Second quarter.............................. 19 1/4 16 1/2 .16
Third quarter............................... 20 1/2 16 1/4 .16
Fourth quarter (through February 7, 1994)... 21 3/4 19 3/4 .16
</TABLE>
On February 7, 1994, the reported last sale price of the Armor All Common
Stock on the Nasdaq National Market was $21 1/4 per share.
MCKESSON
McKesson conducts its operations through three business segments--Health Care
Services, Water Products and Armor All. McKesson's Health Care Services segment
includes McKesson's distribution services operation and PCS. Within the United
States and Canada, the distribution services operation is the largest wholesale
distributor of ethical and proprietary drugs and health and beauty care
products. PCS provides computer-based prescription drug claims processing and
pharmacy benefit design, administration and management to health plan sponsors.
McKesson principally operates through its wholly-owned Maryland subsidiary of
the same name ("McKesson-Maryland"). McKesson's principal executive offices are
located at McKesson Plaza, One Post Street, San Francisco, CA 94104, and its
telephone number at that address is (415) 983-8300.
HEALTH CARE SERVICES
Wholesale Distribution of Pharmaceutical & Health Care Products. Within the
United States and Canada, McKesson is the largest distributor of ethical and
proprietary drugs and health and beauty care products. Its products are
distributed to chain and independent drug stores, hospitals, food stores and
mass merchandisers throughout the United States and Canada. This business
requires large inventories, significant amounts of which are financed by
related payables.
Using the names "Economost" and "Econolink" and a number of related service
marks, McKesson has promoted electronic order entry systems and a wide range of
computerized merchandising and asset management services for drug retailers and
hospitals. McKesson is also a supplier of computer systems and software for
pharmacists.
10
<PAGE>
In the United States, McKesson does business under the McKesson Drug Co. and
S-P Drug tradenames. In Canada, McKesson does business under the Medis and
Groupe Pharmaceutique Focus names. In April 1993, McKesson acquired a 22.7%
equity interest in Nadro S.A. de C.V. ("Nadro"), the leading pharmaceutical
wholesale distributor in Mexico. McKesson also received an option to acquire an
additional 9% of Nadro's common stock.
Voluntary Marketing Program. Under the Valu-Rite(R) pharmacy program,
McKesson provides its independent U.S. retail drug store customers with a
common marketing identity, group advertising, purchasing programs and
promotional merchandise. At December 31, 1993, approximately 4,500 stores were
participating in the Valu-Rite program. Similar programs are available to
independent drug stores through other drug wholesalers. McKesson provides
similar services to retail drug stores in Canada.
Service Merchandising. Service merchandising distributes health and beauty
care products, general merchandise and specialty foods to supermarkets, drug
stores and discount department stores. The distribution services provided often
include review of inventory levels and restocking of retail sales areas for
customers. McKesson does business under the names McKesson Service
Merchandising Co. and Millbrook Distributors, Inc.
PCS Health Systems, Inc. PCS provides computer-based prescription drug claims
processing and pharmacy benefit design, administration and management to health
plan sponsors including insurance companies, third party administrators, self-
insured employers and health maintenance and Blue Cross/Blue Shield
organizations that underwrite or administer prescription benefit plans. It
helps these customers manage the cost of prescription plans by providing drug
utilization reviews, clinically based formularies and generic substitution
programs. Clinically based drug formulary services are provided by McKesson's
subsidiary, Clinical Pharmaceuticals, Inc. PCS also operates an on-line
electronic network to transmit medical, hospital, laboratory, clinical and
billing information that links health care providers (physicians, hospitals and
clinics) with health plan sponsors. RECAP,SM PCS's on-line prescription claims
management system, is linked with over 95% of retail pharmacies in the U.S.
Other. Through its Sunmark operations, McKesson supplies durable medical
equipment to the home health care industry. Through its Central American
operation, McKesson manufactures a full line of McKesson branded generic
pharmaceuticals that are distributed directly and indirectly to retailers in
Central America. Through Zee Medical, Inc., McKesson distributes first-aid
products and supplies to industrial and commercial customers.
WATER PRODUCTS
McKesson Water Products Company is primarily engaged in the processing and
sale of bottled drinking water delivered to homes and businesses under its
Sparkletts(R), Alhambra(R) and Crystal(R) brands. It also sells packaged water
through retail stores in California, Arizona, Nevada and Texas, and sells and
leases processed water dispensers and coolers. In addition, under the Aqua-
Vend(R) trademark, McKesson sells processed water though vending machines in
California, Arizona, Nevada, Texas, Louisiana and Florida.
ARMOR ALL
See "Armor All," "Business of Armor All" and "Certain Relationships and
Transactions."
11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
OF MCKESSON
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
The selected consolidated financial data of McKesson set forth below as of
March 31 and for the years then ended, with the exception of the ratio of
earnings to fixed charges, have been derived from McKesson's consolidated
financial statements incorporated by reference in McKesson's Annual Reports on
Form 10-K. Such consolidated financial statements for the years ended March 31,
1993, 1992 and 1991, together with the report thereon of Deloitte & Touche,
independent auditors, are incorporated herein by reference from the Appendix to
the Proxy Statement, incorporated by reference in McKesson's Annual Report on
Form 10-K for the year ended March 31, 1993 which is incorporated herein by
reference. The selected data should be read in conjunction with such financial
statements and related notes. The selected financial data as of December 31,
1993 and 1992 and for the nine months then ended, with the exception of the
ratio of earnings to fixed charges, have been derived from McKesson's unaudited
condensed consolidated financial statements which, in the opinion of McKesson's
management, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for such periods.
The results for the nine-month periods are not necessarily indicative of the
results to be expected for the full year.
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
---------------------------------------------------- ---------------------
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31, DEC. 31,
1993 1992 1991 1990 1989 1993 1992
--------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues................ $11,669.4 $10,312.6 $8,420.6 $7,790.9 $7,046.4 $9,251.3 $8,717.6
Costs and expenses
Cost of sales.......... 10,536.2 9,251.9 7,429.5 6,808.2 6,104.8 8,405.3 7,896.3
Selling, distribution
and administration.... 886.8 838.5 766.2 762.8 728.0 652.0 646.4
Special items.......... -- -- -- -- -- (37.4)(2) --
Restructuring charges.. -- 82.8(1) -- -- -- -- --
Interest............... 49.5 57.7 55.8 53.3 47.1 30.7 37.0
--------- --------- -------- -------- -------- -------- --------
Total................ 11,472.5 10,230.9 8,251.5 7,624.3 6,879.9 9,050.6 8,579.7
--------- --------- -------- -------- -------- -------- --------
Income before income
taxes.................. 196.9 81.7 169.1 166.6 166.5 200.7 137.9
Income taxes............ 78.8 39.9 68.0 68.4 68.2 79.1 55.1
Income before minority
interest............... 118.1 41.8 101.1 98.2 98.3 121.6 82.8
Minority interest in net
income of subsidiaries. (3.4) (2.2) (1.2) (4.5) (6.4) (4.9) (1.9)
Income (loss) after
taxes
Continuing operations.. 114.7 39.6(1) 99.9 93.7 91.9 116.7(2) 80.9
Discontinued
operations............ -- (7.3) (4.6) -- 6.6 -- --
Extraordinary item--
debt extinguishment... -- -- -- -- -- (4.2) --
Cumulative effects of
accounting changes.... -- (110.5) -- -- -- (15.8) --
--------- --------- -------- -------- -------- -------- --------
Net income (loss)....... $ 114.7 $ (78.2) $ 95.3 $ 93.7 $ 98.5 $ 96.7 $ 80.9
========= ========= ======== ======== ======== ======== ========
Fully diluted earnings
per common share
Continuing operations.. $ 2.51 $ 0.84 $ 2.23 $ 2.03 $ 2.09 $ 2.59 $ 1.77
Discontinued
operations............ -- (0.19) (0.10) -- 0.14 -- --
Extraordinary item--
debt extinguishment... -- -- -- -- -- (0.10) --
Cumulative effects of
accounting changes.... -- (2.85) -- -- -- (0.36) --
--------- --------- -------- -------- -------- -------- --------
Total................ $ 2.51 $ (2.20) $ 2.13 $ 2.03 $ 2.23 $ 2.13 $ 1.77
========= ========= ======== ======== ======== ======== ========
Fully diluted shares.... 44.8 38.8(3) 44.6 46.3 45.8 44.0 44.9
========= ========= ======== ======== ======== ======== ========
Primary earnings per
common share
Continuing operations.. $ 2.69 $ 0.84 $ 2.41 $ 2.18 $ 2.17 $ 2.74 $ 1.90
Discontinued
operations............ -- (0.19) (0.12) -- 0.16 -- --
Extraordinary item--
debt extinguishment... -- -- -- -- -- (0.10) --
Cumulative effects of
accounting changes.... -- (2.85) -- -- -- (0.39) --
--------- --------- -------- -------- -------- -------- --------
Total................ $ 2.69 $ (2.20) $ 2.29 $ 2.18 $ 2.33 $ 2.25 $ 1.90
========= ========= ======== ======== ======== ======== ========
Primary shares.......... 40.0 38.8 38.5 40.4 42.1 40.6 39.7
========= ========= ======== ======== ======== ======== ========
Cash dividends declared
per common share....... $ 1.60 $ 1.60 $ 1.60 $ 1.44 $ 1.44 $ 1.24 $ 1.20
========= ========= ======== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges(4)....... 4.21x 2.19x 3.52x 3.54x 3.79x 6.08x 4.08x
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31,
1993 1992 1991 1990 1989 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........... $ 283.3 $ 321.3 $ 311.0 $ 292.3 $ 292.1 $ 209.5
Total assets.............. 2,800.1 2,756.9 2,460.9 2,327.2 2,117.3 3,203.4
Total debt(5)............. 434.8 579.2 626.9 538.2 469.7 563.8
Stockholders' equity...... 619.4 554.5 675.6 684.1 692.2 651.4
</TABLE>
- --------
(1) $82.8 million for restructuring ($56.8 million after tax) relates to
McKesson's program to restructure its U.S. and Canadian health care
services distribution businesses and the write-off of an investment.
(2) $37.4 million of special items ($24.5 million after tax) relates to the
gain on the sale and donation of Armor All Common Stock, partially offset
by a donation to the McKesson Foundation, Inc. and a loss on the
termination of interest rate swap arrangements.
(3) Excludes convertible securities that were anti-dilutive.
(4) The ratio of earnings to fixed charges was computed by dividing fixed
charges (interest expense, including the interest portion of capital and
operating leases) into earnings available for fixed charges (income from
continuing operations plus taxes on income and fixed charges). The ratio of
earnings to combined fixed charges and ESOP dividend requirements was
3.44x, 1.81x, 2.87x, 2.95x and 3.52x in 1993, 1992, 1991, 1990 and 1989,
respectively, and 4.84x and 3.32x for the nine months ended December 31,
1993 and 1992, respectively. The ratios in 1992 include the effect of
restructuring charges of $82.8 million pre-tax and, in the nine months
ended December 31, 1993, the effect of the $37.4 million pre-tax gain
associated with special items.
(5) Total debt includes all interest-bearing debt of McKesson and consolidated
subsidiaries, including the current portion, and capital lease obligations.
ARMOR ALL
Armor All develops and markets a broad line of branded appearance enhancement
and protection products targeted primarily for the do-it-yourself automotive
aftermarket. Its principal brand, Armor All(R), has a leading position in the
domestic automotive protectant market. A second major brand, Rain Dance(R), is
a strong competitor in the market for automotive waxes, polishes and washes.
Armor All also markets automotive appearance products under the Rally(R) and
No. 7(R) brand names. Armor All believes that consumer awareness of its brand
names gives it a significant competitive advantage. In a recent market research
study of persons responsible for maintaining vehicle appearance, 94% of the
respondents were aware of the Armor All brand name. See "Business of Armor
All." Armor All invests substantial amounts in consumer advertising to maintain
a high level of consumer brand awareness.
Armor All's principal executive offices are located at 6 Liberty, Aliso
Viejo, CA 92656, and its telephone number at that address is (714) 362-0600.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
OF ARMOR ALL
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The selected consolidated financial data of Armor All set forth below as of
March 31 and for the years then ended have been derived from Armor All's
consolidated financial statements incorporated by reference in Armor All's
Annual Reports on Form 10-K. Such consolidated financial statements of Armor
All as of March 31, 1993 and 1992 and for each of the three years in the period
ended March 31, 1993, together with the report thereon of Deloitte & Touche,
independent auditors, are incorporated herein by reference from Armor All's
Annual Report on Form 10-K for the year ended March 31, 1993. The selected
financial data for the nine months ended December 31, 1993 and 1992 have been
derived from unaudited condensed consolidated financial statements prepared on
the same basis as the audited financial statements. In the opinion of Armor
All's management, such unaudited consolidated condensed financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the information set forth therein. The results for
the nine months ended December 31, 1993 are not necessarily indicative of the
results to be expected for the full year. The selected consolidated financial
data should be read in conjunction with the consolidated financial statements
and notes thereto incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
---------------------------------------------- -----------------
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31, DEC. 31,
1993 1992 1991 1990 1989 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues................ $168,400 $145,910 $133,804 $165,447 $162,780 $117,361 $108,413
-------- -------- -------- -------- -------- -------- --------
Costs and expenses:
Cost of sales......... 68,841 59,709 57,980 68,118 63,578 48,095 44,490
Selling, general and
administrative....... 63,670 60,465 58,133 60,654 50,985 45,144 42,734
Amortization of
intangibles.......... 3,768 4,314 4,315 4,357 2,760 2,102 2,966
-------- -------- -------- -------- -------- -------- --------
Total costs and
expenses........... 136,279 124,488 120,428 133,129 117,323 95,341 90,190
-------- -------- -------- -------- -------- -------- --------
Operating income........ 32,121 21,422 13,376 32,318 45,457 22,020 18,223
Interest income
(expense), net......... 1,245 1,080 (704) (677) 511 1,074 920
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes.................. 33,366 22,502 12,672 31,641 45,968 23,094 19,143
Income taxes............ 14,214 9,638 5,829 12,820 18,855 9,986 8,021
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 19,152 $ 12,864 $ 6,843 $ 18,821 $ 27,113 $ 13,108 $ 11,122
======== ======== ======== ======== ======== ======== ========
Earnings per common
share.................. $ 0.91 $ 0.61 $ 0.33 $ 0.90 $ 1.30 $ 0.62 $ 0.53
======== ======== ======== ======== ======== ======== ========
Cash dividends declared
per common share....... $ 0.48 $ 0.48 $ 0.64 $ 0.64 $ 0.52 $ 0.48 $ 0.36
======== ======== ======== ======== ======== ======== ========
Weighted average common
shares outstanding..... 21,024 20,953 20,945 20,931 20,914 21,107 21,011
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, DEC. 31,
1993 1992 1991 1990 1989 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital......... $ 60,373 $ 46,149 $ 38,825 $ 40,615 $ 36,310 $ 65,330
Current assets.......... 93,429 68,485 65,788 90,267 90,516 86,356
Total assets............ 140,560 119,823 121,731 150,069 150,364 131,717
Total debt.............. 0 0 6,549 28,688 26,141 0
Stockholders' equity.... 106,555 96,326 93,307 99,321 93,763 109,779
</TABLE>
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF ARMOR ALL
RESULTS OF OPERATIONS
Net income for the nine months ended December 31, 1993 increased 18% from the
corresponding period in the prior year, and net income in fiscal 1993 and 1992
increased 49% and 88% from the respective prior years. These improvements were
primarily due to higher revenues from both existing and new products, as well
as to improved promotional and administrative cost efficiencies.
REVENUES
The following table sets forth a summary of revenues by major geographic
region (in millions):
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED MARCH 31, ENDED DEC. 31,
----------------------- ---------------
1993 1992 1991 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
United States........................... $ 148.6 $ 126.6 $ 110.7 $ 99.5 $ 94.3
International........................... 19.8 19.3 23.1 17.9 14.1
------- ------- ------- ------- -------
Total............................... $ 168.4 $ 145.9 $ 133.8 $ 117.4 $ 108.4
======= ======= ======= ======= =======
Percentage change from prior period..... 15% 9% 8%
</TABLE>
Substantially all of the $5.2 million increase in Armor All's U.S. revenues
in the nine months ended December 31, 1993 in comparison with the prior-year
period resulted from higher sales of Armor All(R) Tire Foam(TM) Protectant,
which has become the leader in its category since its introduction in November
1991, and Rain Dance(R) Dark Car Formula Polish and Rain Dance(R) Light Car
Formula Polish, which were introduced in January 1993, and from initial sales
of Armor All QuickSilver(TM) Wheel Cleaner, Armor All Protectant Low-Gloss
Natural Finish(TM) and Armor All Spot & Wash(TM) Concentrate in December 1993.
The $3.8 million increase in international revenues in the nine-month period
reflects higher sales in each of Armor All's principal foreign markets: Canada,
Europe, Asia, Latin America and Australia.
Approximately half of the increase in Armor All's U.S. revenues in fiscal
1993 from fiscal 1992 was due to higher sales of Armor All Tire Foam
Protectant. In part because trade customers were still reducing their retail
inventory levels during the first two quarters of fiscal 1992, sales of Armor
All Protectant also increased in fiscal 1993. The introduction of Armor All
Protectant with additional sunscreen in January 1993, accompanied by a 5%
selling price increase, also contributed to higher sales in the fourth quarter.
Sales of Armor All's line of waxes and washes rose moderately in fiscal 1993,
mainly due to higher sales of Rain Dance(R) Advanced Formula Car Polish, which
was introduced in November 1991, and initial sales of Rain Dance Dark Car
Formula Polish and Rain Dance Light Car Formula Polish.
The increase in Armor All's U.S. revenues in fiscal 1992 from fiscal 1991 was
primarily attributable to higher sales of Armor All Protectant. This
improvement resulted from several factors, including increased consumer demand
and the effect of changes in Armor All's trade management practices initiated
at the end of fiscal 1990. In March 1990, Armor All discontinued certain trade
promotions and pricing practices that encouraged inventory buildups by trade
customers. These high retail inventory levels in turn dampened sales by Armor
All in fiscal 1991. In addition, during the second half of fiscal 1991, Armor
All's retail customers were extremely cautious in their purchasing practices in
response to the deepening economic recession and the outbreak of war in the
Middle East. In fiscal 1992, Armor All strengthened its support of key
customers' inventory management and promotional efforts, in part by initiating
electronic data interchange links with retailers. Also contributing to the
increased revenues in fiscal 1992 was the introduction of three new products in
November 1991: Armor All Tire Foam Protectant, Armor All Leather Care(TM)
Protectant and Rain Dance Advanced Formula Car Polish. Sales of Armor All's
line of waxes and washes declined slightly, primarily due to the discontinuance
of certain products.
The increase in international revenues of $0.5 million in fiscal 1993 and the
decrease in fiscal 1992 were due to several, sometimes offsetting, factors. One
significant factor affecting both fiscal 1993 and 1992 in several countries,
notably Japan and Germany, was the distribution agreement with S.C. Johnson,
which was
15
<PAGE>
entered into in September 1991. Under the agreement, which is effective through
June 2001, S.C. Johnson has the right to distribute Armor All (R) Protectant
and certain of Armor All's other products in a number of international markets
on a country-by-country basis, subject to agreement with Armor All on a
business and marketing plan for each country and thereafter the attainment of
certain performance targets. Armor All and S.C. Johnson share in the profits or
losses on sales in these markets. Sales are at much lower prices to S.C.
Johnson, which incurs virtually all associated selling and marketing expenses
previously borne by Armor All. The net effect is that Armor All records lower
revenues and selling and marketing expenses.
Offsetting the S.C. Johnson impact, international revenues in fiscal 1993
benefited from increased sales to its largest Canadian customer, which had
reduced its high inventory levels of the previous year, and increased market
penetration in Asia, Latin America and the United Kingdom. On the other hand,
sales were adversely affected in Germany due to the economic recession in that
country. In addition to the S.C. Johnson effects, international revenues
decreased in fiscal 1992, primarily because Armor All's largest Canadian
customer slowed purchases while working down high retail inventory levels.
OPERATING EXPENSES
The following table sets forth the percentage relationships of operating
expenses and operating income to revenues for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED MARCH 31, ENDED DEC. 31,
------------------------- ----------------
1993 1992 1991 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales..................... 40.9 40.9 43.3 41.0 41.0
Selling, General and
Administrative................... 37.8 41.4 43.5 38.5 39.4
Amortization...................... 2.2 3.0 3.2 1.8 2.8
------- ------- ------- ------- -------
Operating Income.................. 19.1% 14.7% 10.0% 18.7% 16.8%
======= ======= ======= ======= =======
</TABLE>
Cost of sales as a percentage of revenues was unchanged in the nine months
ended December 31, 1993 in comparison with the prior-year period due to the
effects of several offsetting factors. The cost percentage was increased by
changes in the product mix, higher shipments of certain promotional items and
the higher cost of the additional-sunscreen formula for Armor All Protectant.
However, the effect of these factors was offset by the 5% selling price
increase on Armor All Protectant and the absorption of fixed manufacturing and
distribution costs over a higher sales volume.
Cost of sales as a percentage of revenues in fiscal 1993 was unchanged from
fiscal 1992 due to the effects of several offsetting factors. The cost
percentage was increased slightly due to changes in the product mix and higher
sales of certain promotional items. Additionally, margins were lower in the
markets served by S.C. Johnson due to the billing method described above under
"Revenues." However, the effect of these factors was offset as fixed
manufacturing and distribution costs were absorbed over a higher sales volume.
The decrease in cost of sales as a percentage of revenues in fiscal 1992 from
fiscal 1991 was partially due to a favorable shift in the product mix, with a
greater proportion of higher-margin sales of Armor All Protectant than sales of
Armor All's waxes and washes. In addition, Armor All did not repeat a lower-
margin promotional program. Armor All also incurred lower freight costs and was
able to spread its fixed manufacturing and distribution costs over a higher
sales volume.
The decrease in selling, general and administrative (SG&A) expenses as a
percentage of revenues in the nine months ended December 31, 1993 from the
prior-year period was principally due to the absorption of media advertising
and fixed administrative expenses over a higher sales volume, partially offset
by the introduction of several new consumer promotions.
SG&A expenses as a percentage of revenues decreased in fiscal 1993 from
fiscal 1992 primarily due to more efficient trade promotion practices.
Beginning in late fiscal 1992, Armor All implemented a new trade promotion
approach in which Armor All offers its trade customers fixed sums in return for
specific
16
<PAGE>
promotional activities. Also contributing to the decrease was the spreading of
fixed administrative expenses over a higher sales volume. The S.C. Johnson
agreement reduced fiscal 1993 SG&A expenses, as noted above. In addition,
fiscal 1992 was adversely affected by expenses associated with certain
litigation settled in that year. Partially offsetting these factors were
increased expenditures in fiscal 1993 on media advertising and certain consumer
promotions in the United States.
The decrease in SG&A expenses as a percentage of revenues in fiscal 1992 from
fiscal 1991 was principally due to lower advertising expenditures for waxes.
Also contributing to the decrease were the spreading of fixed administrative
expenses over a higher sales volume and lower trade marketing expenses under
the new approach described above. These factors were partially offset by the
implementation of several new consumer promotional programs.
Amortization expense, principally relating to intangible assets associated
with Armor All's acquisition of several brands in September 1988, declined by
$0.9 million in the nine months ended December 31, 1993 and by $0.5 million in
fiscal 1993, and is expected to decline further in fiscal 1995 as certain of
such assets become fully amortized.
Interest income increased by $0.2 million in the nine months ended December
31, 1993 and by $0.2 million in fiscal 1993 due to higher cash balances during
those periods. Cash balances increased primarily as a result of profitable
operations without significant investments in working capital or fixed assets.
However, the effect of the improved cash position was partially offset by lower
interest rates. Net interest income increased by $1.8 million in fiscal 1992
from fiscal 1991, also primarily because of higher cash balances. The
improvement in Armor All's cash position in that year was largely due to
management's decision to shorten customer payment terms during the winter
promotional season.
Armor All's effective income tax rates were 43.2% and 41.9% in the nine
months ended December 31, 1993 and 1992, respectively. The higher effective
rate in the current nine-month period principally reflects the enactment of the
Omnibus Budget Reconciliation Act of 1993, which increased the federal
corporate income tax rate from 34% to 35% retroactive to January 1993.
Approximately 0.4% of the increase represents the additional taxes which will
be paid for the fiscal year ended March 31, 1993 due to the retroactive
provision of the Act. Armor All's effective income tax rates were 42.6%, 42.8%
and 46.0% in fiscal 1993, 1992 and 1991, respectively. The tax rate in fiscal
1991 was relatively high because a greater proportion of Armor All's expenses
was composed of nondeductible intangible asset amortization and foreign
subsidiary operating losses.
QUARTERLY RESULTS AND SEASONALITY
The following table sets forth unaudited quarterly income statement and
dividend information for Armor All's last eight fiscal quarters.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------
DEC. 31, SEPT. 30, JUN. 30, MAR. 31, DEC. 31, SEPT. 30, JUN. 30, MAR. 31,
1993 1993 1993 1993 1992 1992 1992 1992
-------- --------- -------- -------- -------- --------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $33,407 $36,232 $47,722 $59,987 $30,927 $35,198 $42,288 $50,455
------- ------- ------- ------- ------- ------- ------- -------
Cost of sales........... 13,870 14,972 19,253 24,351 12,945 14,335 17,210 20,102
Selling, general and
administrative......... 13,087 13,455 18,602 20,936 12,132 14,009 16,593 17,676
Amortization of
intangibles............ 494 804 804 802 803 1,085 1,078 1,078
------- ------- ------- ------- ------- ------- ------- -------
Total costs and
expenses............... 27,451 29,231 38,659 46,089 25,880 29,429 34,881 38,856
------- ------- ------- ------- ------- ------- ------- -------
Operating income........ 5,956 7,001 9,063 13,898 5,047 5,769 7,407 11,599
Interest income, net.... 405 405 264 325 360 335 225 212
------- ------- ------- ------- ------- ------- ------- -------
Income before income
taxes.................. 6,361 7,406 9,327 14,223 5,407 6,104 7,632 11,811
Income taxes............ 2,739 3,376 3,871 6,193 2,266 2,557 3,198 5,063
------- ------- ------- ------- ------- ------- ------- -------
Net income.............. $ 3,622 $ 4,030 $ 5,456 $ 8,030 $ 3,141 $ 3,547 $ 4,434 $ 6,748
======= ======= ======= ======= ======= ======= ======= =======
Earnings per common
share.................. $ .17 $ .19 $ .26 $ .38 $ .15 $ .17 $ .21 $ .32
Dividends per common
share.................. $ .16 $ .16 $ .16 $ .12 $ .12 $ .12 $ .12 $ .12
Weighted average common
shares outstanding..... 21,123 21,105 21,094 21,064 21,027 21,010 20,995 20,953
</TABLE>
17
<PAGE>
Armor All's revenues typically peak in the fourth fiscal quarter (from
January through March) as customers purchase inventory to prepare for increased
consumer purchasing activity in the spring and summer. Interest income is
generally highest in the summer and autumn, due to the improvement in Armor
All's cash position which accompanies the collection of receivables associated
with fourth and first quarter sales. Quarterly results may also be affected by
Armor All's method of allocating annual media advertising expenses and certain
trade promotional expenses among interim periods in proportion to estimated
annual sales volume.
FINANCIAL RESOURCES AND LIQUIDITY
Armor All's working capital requirements fluctuate during the year,
traditionally peaking in the spring due to extended payment terms offered to
customers in connection with winter promotional activities. Cash inflow is
strongest during the summer months as these receivables are collected.
Reflecting these seasonal factors, at December 31, 1993, Armor All had balances
of cash and cash equivalents of $53.2 million and no short-term or long-term
debt. At December 31, 1993, Armor All had working capital of $65.3 million.
Armor All does not have substantial investments in inventory as its contract
packagers generally own the raw materials and finished goods in their
possession and transfer title to Armor All just prior to shipment to Armor
All's customers. Armor All's use of contract packagers also permits it to avoid
significant investments in machinery and other fixed assets. See "Business of
Armor All-Manufacturing and Packaging."
During the nine months ended December 31, 1993 and 1992, respectively, cash
flow from operations was $31.7 million and $37.2 million. Despite higher net
income in the current period, cash flow from operations was lower due to the
timing of payments for income taxes and certain accrued advertising and selling
expenses. During fiscal 1993 and 1992, cash flow from operations was $24.7
million and $30.4 million, respectively. Cash flow from operations declined in
fiscal 1993, despite a higher net income, primarily due to the increase in
receivables associated with the higher fourth quarter sales volume. Cash
outflows for investing activities during the two years were relatively small,
as Armor All did not have significant capital expenditures. In addition, Armor
All paid dividends on its Common Stock of $9.3 million in the nine months ended
December 31, 1993, $10.1 million in fiscal 1993 and $10.9 million in fiscal
1992.
Armor All's sources of liquidity at December 31, 1993 included a $48.8
million balance under a cash management program administered by McKesson, $4.4
million of other cash balances, and a $3.0 million (Canadian) line of credit
with a Canadian bank that is renewable annually. In addition, as long as Armor
All continues to participate in the cash management program, McKesson will make
available the cash necessary to provide Armor All with sufficient funds to meet
its needs as defined in its annual capital and operating plans. There are no
advance notification requirements or other limitations on Armor All's access to
cash under the program. Participation in the cash management program is
provided as part of a Services Agreement with McKesson, and amounts deposited
under the program are deposited in a separate bank account in Armor All's name.
See "Certain Relationships and Transactions." In the event that Armor All
ceases to participate in the cash management program, Armor All believes that
it would be able to obtain a line of credit from other sources at competitive
terms. At December 31, 1993, Armor All had a payable to McKesson of $1.2
million for payroll, freight and other expenses paid by McKesson on Armor All's
behalf; Armor All repaid this amount in January 1994.
Armor All believes that its current sources of liquidity, combined with cash
flow from operations, will be sufficient to meet its needs for the foreseeable
future.
18
<PAGE>
BUSINESS OF ARMOR ALL
Armor All Products Corporation develops and markets a broad line of branded
appearance enhancement and protection products targeted primarily for the do-
it-yourself automotive aftermarket. Its principal brand, Armor All(R), has the
leading position in the domestic automotive protectant market. A second major
brand, Rain Dance(R), is a strong competitor in the market for automotive
waxes, polishes and washes. Armor All believes that consumer awareness of its
brand names gives it a significant competitive advantage. In a September 1993
study conducted by a market research and consulting firm, which involved a
national sampling of approximately 460 persons aged 16 to 54 years who were
responsible for taking care of the appearance of a car, light truck or van (the
"1993 Market Research Study"), 94% of the respondents were aware of the Armor
All brand name (either unprompted or when given name and product attributes).
BUSINESS STRATEGY
Under the leadership of the senior management team assembled in fiscal 1991
and 1992, Armor All has adopted and is continuing to implement a strategic
business plan to build on the strength of Armor All's well-established brand
names to increase domestic sales of Armor All Protectant, introduce new
automotive products, increase Armor All's international presence, and enter the
home care market.
Increase Domestic Sales of Armor All Protectant
Armor All seeks to increase sales of Armor All Protectant through targeted
advertising and promotion to enlarge the user base, increase the frequency of
product use, and expand the number of surfaces on which the product is applied.
Armor All believes that sales of Armor All Protectant represent approximately
two-thirds of all domestic sales of automotive protectants. According to the
1993 Market Research Study, 99% of all respondents who were current users of
Armor All Protectant expressed satisfaction with the product, with 70%
indicating that they were "very" satisfied with it. While 59% of the
respondents had used Armor All Protectant during the preceding six months, 35%
had used no protectant product, which Armor All believes demonstrates an
opportunity to expand the user base.
As part of its plan to expand the protectant market, Armor All intends to add
line extensions to attract new users. In December 1993, Armor All introduced a
new product, Armor All Protectant Low-Gloss Natural Finish(TM), described
below.
Introduce New Automotive Products
Since November 1991, Armor All has introduced eight new products, including
Armor All Tire Foam (TM) Protectant, which together accounted for approximately
15% of revenues in the nine months ended December 31, 1993 and for
approximately 13% of revenues in the fiscal year ended March 31, 1993. In
December 1993, Armor All began shipping Armor All QuickSilver(TM) Wheel
Cleaner, a spray-on wheel cleaner designed for use on wheels, wheel covers and
hubcaps; Armor All Protectant Low-Gloss Natural Finish(TM), a low-gloss version
of Armor All Protectant designed to minimize dashboard glare for consumers who
prefer a less shiny appearance; and Armor All Spot & Wash(TM) Concentrate, a
car wash product designed to remove bugs, tar residue and tree sap from car
finishes. These products will be supported by national television advertising
and by special introductory pricing and promotional programs.
Armor All intends to continue to develop new products and product line
extensions under its well-established Armor All and Rain Dance brand names. To
that end, Armor All's research and development and marketing personnel seek to
develop and acquire promising technologies and invest in consumer market
research. Armor All also seeks to anticipate industry trends that affect care
of automotive surfaces, such as increased exposure of automobile interiors to
sunlight, use of leather upholstery, and changes in vinyls, rubbers, paints and
other automotive surfaces.
Increase International Presence
Armor All's management believes that foreign markets will, over time, present
a significant growth opportunity for the company. Armor All Protectant already
enjoys a leading position in several international
19
<PAGE>
markets, including Canada, Australia and Mexico. International sales are
effected through sales offices in Canada and the United Kingdom, through
foreign distributors, and through a marketing and distribution alliance with
S.C. Johnson. The S.C. Johnson arrangement provides Armor All with access to
certain international markets, primarily Germany, Japan and Mexico, without the
high selling and marketing costs incurred in a direct sales program. However,
Armor All plans to continue identifying foreign markets attractive for direct
sales or distribution by entities other than S.C. Johnson, based on a number of
factors, including economic, political and competitive conditions, cultural and
demographic trends, and car care habits.
Enter the Home Care Market
Armor All's management believes that the home care market represents a growth
opportunity for Armor All. Armor All has established a new division intended to
utilize its marketing and new product development strengths to penetrate this
market. On January 28, 1994, Armor All acquired the E-Z Deck Wash(R) brand. The
E-Z Deck Wash product cleans and restores wood surfaces such as decks and
siding and will be marketed under the Armor All name. An application for patent
protection on the E-Z Deck Wash formula is pending.
PRODUCTS
Armor All markets a broad line of automotive appearance chemicals under four
brand names: Armor All(R) , Rain Dance(R) , Rally(R) and No. 7(R) .
Armor All Brand
Armor All markets protectants, waxes, washes and other cleaning aids under
the Armor All name.
Armor All's principal product, Armor All Protectant, is designed to protect
and beautify natural and synthetic polymer materials and is primarily used on
automobile surfaces made of rubber, vinyl and plastic, such as dashboards,
seats, vinyl tops, door panels, tire sidewalls and rubber bumpers. Armor All
Protectant is the leading protectant product in the domestic automotive
aftermarket, and Armor All believes it outsells its nearest competitor by more
than three to one. Armor All Protectant accounted for 70% of Armor All's
revenues in the nine months ended December 31, 1993 and for 70% and 77% of its
revenues in fiscal 1993 and 1992, respectively.
Armor All Tire Foam Protectant, introduced in November 1991, cleans, shines
and protects tire sidewalls without wiping. Sales of this product represented a
majority of the revenues attributable to new products in the nine months ended
December 31, 1993 and fiscal 1993. Armor All Leather Care (TM) Protectant, also
introduced in November 1991, is designed primarily for leather upholstery.
Armor All also markets a liquid car wax, a multi-purpose cleaner, and a car
wash liquid concentrate under the Armor All name.
In December 1993, Armor All started shipping three additions to the Armor All
product line: Armor All QuickSilver (TM) Wheel Cleaner, Armor All Protectant
Low-Gloss Natural Finish (TM) and Armor All Spot & Wash (TM) Concentrate.
Rain Dance Brand
Armor All markets polishes, waxes and car wash products under the Rain Dance
name. In November 1991, Armor All introduced Rain Dance Advanced Formula Car
Polish, and in January 1993, Armor All introduced two additional car polishes,
Rain Dance Light Car Formula Polish and Rain Dance Dark Car Formula Polish,
with different light reflectant characteristics. Liquid and paste car wax and a
variety of car wash products are also marketed under the Rain Dance name.
Rally and No. 7 Brands
Armor All markets cream and liquid waxes under the Rally name. Under the No.
7 name, Armor All markets a variety of polishing and rubbing compounds and
other cleaning aids.
20
<PAGE>
GEOGRAPHIC MARKETS
Armor All's products are sold predominantly in the United States and Canada,
with additional sales occurring in several other countries. In the nine months
ended December 31, 1993, 85% of sales were in the United States, 6% in Canada
and 9% in other foreign countries, principally Australia, Germany, Japan,
Mexico and the United Kingdom. In fiscal 1993, 88% of sales were in the United
States, 5% in Canada and 7% in other foreign countries. Armor All does not have
large fixed capital investments in its foreign operations. Foreign currency
exchange fluctuations have not had a significant impact on Armor All's
operating results.
SALES AND MARKETING
In the United States and Canada, a sales force of 13 employees accounted
directly for over 50% of revenues in the first nine months of fiscal 1994 and
in fiscal 1993. In addition, Armor All's sales force oversees 21 independent
manufacturers' representative organizations that also market Armor All's
products. Primary customers include mass merchandise retailers, auto supply
stores, warehouse clubs, hardware stores and other retail outlets. Armor All
believes that its products are sold at over 100,000 retail outlets.
Armor All's largest customers have represented an increasing percentage of
its revenues. Sales to Armor All's 20 largest customers accounted for 64% of
Armor All's consolidated revenues in the nine months ended December 31, 1993
and for 63%, 59% and 49% of Armor All's consolidated revenues in fiscal 1993,
1992 and 1991, respectively. In the nine months ended December 31, 1993, sales
to Armor All's two largest customers, Wal-Mart Stores, Inc. (and its
affiliates) and Kmart Corporation (and its affiliates), accounted for 15% and
8%, respectively, of Armor All's revenues. In fiscal 1993, sales to these same
two customers accounted for 15% and 11%, respectively, of Armor All's revenues.
Armor All's direct sales force works closely with customers on joint
marketing and promotional activities. Armor All also assists its customers with
inventory management. Its efforts to help customers manage their inventories
are supported, in certain cases, by electronic data interchange ("EDI") links
between Armor All and the customer. In addition, EDI provides Armor All with
valuable marketing information. Among other things, Armor All uses EDI point-
of-sale statistics to analyze geographic purchasing patterns, measure the
success of test marketing programs and monitor sales of holiday gift packs and
other time-sensitive promotions. Armor All intends to establish additional EDI
links with its customers and to expand the use of existing links.
Armor All's management assists in sales and marketing efforts by providing
national advertising and promotional support and retail merchandising
management assistance, including product information and sales training.
Although Armor All's promotional activities target both trade accounts and
retail consumers, Armor All has increased the proportion of marketing funds
devoted to consumer promotion over the last three years. Armor All has also
increased the proportion of its marketing expenses which are offered to trade
customers as fixed sums in return for specific promotional activities, as
opposed to more general cooperative advertising arrangements. From time to
time, Armor All uses various retail sales incentive devices, such as coupons,
rebates, "Bonus Packs" (e.g., 20 ounces for the price of 16), merchandise with
attached free samples, and other special offers to stimulate retail sales.
Armor All believes that it invests more in consumer advertising than do its
competitors in the automotive appearance chemicals industry. Management
attempts to allocate Armor All's advertising spending among media which provide
the greatest potential exposure to desired audiences per dollar. Armor All
intends to continue to invest in consumer advertising to maintain the high
level of consumer brand awareness which Armor All currently enjoys.
Retail sales of Armor All's products are seasonal and are highest between
April and September. However, sales to Armor All's customers are highest in its
fourth fiscal quarter (from January through March). Consistent with industry
practice, Armor All offers extended payment terms in conjunction with its
winter promotional activities.
21
<PAGE>
International sales are effected through sales offices in Canada and the
United Kingdom, through foreign distributors, and through a marketing and
distribution alliance with S.C. Johnson. Under an agreement between Armor All
and S.C. Johnson, S.C. Johnson is the exclusive distributor of Armor All
Protectant and certain of Armor All's other products in Germany, Japan and
Mexico, subject to agreement with Armor All on annual business and marketing
plans for each country. Under the agreement, S.C. Johnson pays virtually all
selling and marketing expenses, and Armor All and S.C. Johnson share in the
profits or losses. The S.C. Johnson agreement expires in June 2001, with
automatic five-year renewals unless either party provides 12 months' prior
notice. Armor All will have the right to terminate the agreement on a country-
by-country basis if S.C. Johnson fails to meet certain revenue objectives over
specified periods, subject to S.C. Johnson's right to avoid termination by
compensating Armor All for any shortfall. S.C. Johnson is also the exclusive
distributor of Armor All (R) Protectant in several Southeast Asian countries
under separate agreements that do not involve profit or loss sharing.
MANUFACTURING AND PACKAGING
Armor All's products are manufactured by contract packagers. Armor All's
relationships with its two most important packagers have lasted for 8 and 20
years, respectively. Subject to contractual arrangements, Armor All
periodically reevaluates its selection of packagers, and believes that other
acceptable packagers are readily available.
Armor All avoids significant investments in inventory. In general, Armor
All's full-service packagers are responsible for purchasing product ingredients
and approved component packaging materials. Armor All negotiates the raw
material supply arrangements on behalf of its packagers. The packagers blend,
package and warehouse the finished product. With certain exceptions, the full-
service packagers own all the raw materials and finished products in their
possession and transfer title to Armor All just prior to shipment to Armor
All's customers. In the case of Armor All Protectant, Armor All premixes a
concentrate which it sells to the full-service packagers. For certain products,
Armor All has title to raw materials and finished products and pays a
manufacturing fee to the packager.
Armor All's products are manufactured in four principal locations in the
United States, one location in Canada and one location in Australia.
Protectants are manufactured at five of these locations, and waxes at the
sixth. Armor All's management believes that the existing packagers can
accommodate Armor All's production needs for the foreseeable future.
Armor All has alternative sources for the ingredients used in, and packaging
components for, all of its products. Armor All has contracts with certain
suppliers to provide a continued supply of the primary chemical ingredients and
packaging components used in producing its products, which expire by their
terms on various dates through March 1995.
TRADEMARKS AND PATENTS
Armor All's principal trademarks are: The ARMOR ALL(R) trademark, the symbol
of a male VIKING figure surrounded by a rainbow design, the RAIN DANCE(R)
trademark, the RALLY(R) trademark and the NO. 7(R) trademark. Armor All also
owns other registered and unregistered trademarks. All five principal
trademarks are registered in the United States and Canada. In addition, the
ARMOR ALL trademark is registered in 82 countries, the VIKING trademark is
registered in 83 countries, the RAIN DANCE trademark is registered in 55
countries, the RALLY trademark is registered in 35 countries and the NO. 7
trademark is registered in 3 countries. Armor All believes it has taken all
necessary steps to preserve the registration of its trademarks. Armor All also
owns a process patent on ARMOR ALL Protectant and a patent on RAIN DANCE wax,
and has applied for patents on ARMOR ALL QuickSilver(TM) Wheel Cleaner and
ARMOR ALL Spot & Wash(TM) Concentrate. Armor All's process patent on ARMOR ALL
Protectant will expire in 1996. Armor All's management believes that Armor
All's trademarks are more important assets than its patents, and that the
termination or invalidity of its patents would not have a materially adverse
effect on Armor All.
22
<PAGE>
COMPETITION
In the domestic protectant market, Armor All has two principal competitors,
STP Son-of-a-Gun(R) Protectant and Turtle Wax Formula 2001(R), and several
secondary competitors. Armor All estimates that domestic sales of Armor All
Protectant account for approximately two-thirds of all domestic protectant
sales. Armor All Tire Foam Protectant has two principal competitors, No
Touch(R) and STP Son-of-a-Gun(R) Tire Care, and several secondary competitors.
Armor All brand cleaner competes against many specialty automotive cleaner
products. Armor All brand wax and wash products and all of the Rain Dance and
Rally brand products compete with numerous wash, wax and polish products in the
automotive aftermarket. The No. 7 brand products compete with many wash and
specialty cleaning products. Competition in international markets varies by
country.
Armor All believes that brand recognition and loyalty, access to retail shelf
space, product convenience and effectiveness, trade promotion and consumer
advertising, support of customers' inventory management and marketing efforts,
and pricing are important competitive factors in the appearance protection
market. Armor All believes that it competes favorably with respect to these
factors.
EMPLOYEES
At December 31, 1993, Armor All employed 127 persons. None of Armor All's
employees is represented by a union. Armor All believes its employee relations
are good.
PROPERTIES
Armor All owns its headquarters facility located in Aliso Viejo, California.
The facility, which was built in 1989, comprises 45,000 square feet of office
space on a 4.6 acre site.
Armor All also leases approximately 17,000 square feet of warehouse space in
Aliso Viejo, California. The facility is used primarily for warehousing certain
components, finished goods and promotional items. Armor All also mixes the
Armor All Protectant concentrate and performs various special product-packaging
functions at this location. Armor All also utilizes limited space in various
public warehouses in the United States and abroad for temporary inventory
storage and shipping.
Armor All maintains sales offices in Canada and the United Kingdom, each with
less than 2,000 square feet. It conducts its laboratory research and
development activities at a leased facility of approximately 5,000 square feet
located near Armor All's headquarters in Aliso Viejo, California.
Armor All believes that these properties will be sufficient to meet its needs
for the next several years.
23
<PAGE>
MANAGEMENT OF ARMOR ALL
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of Armor All are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Kenneth M. Evans................. 52 President, Chief Executive Officer
and Director
Mervyn J. McCulloch.............. 50 Executive Vice President and Chief
Financial Officer
Michael A. Caron................. 42 Senior Vice President and President,
Armor All International
Steven L. Kliff.................. 35 Senior Vice President, Consumer
Products
David E. McDowell................ 51 Chairman of the Board
William A. Armstrong............. 52 Director
Jon S. Cartwright................ 56 Director
David L. Mahoney................. 39 Director
Joseph A. Sasenick............... 53 Director
Alan Seelenfreund................ 57 Director
OTHER OFFICERS
Other non-executive officers of Armor All are as follows:
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Niels F. Hayns................... 58 Vice President, International, Asia-
Pacific/Americas
Lawrence R. Kahn................. 36 Vice President, Product Development
Gayle Metzler.................... 40 Vice President, Human Resources
Nancy A. Miller.................. 50 Vice President and Secretary
Stephen J. Sarich................ 43 Vice President, Sales
Garret A. Scholz................. 54 Vice President and Treasurer
John F. Schueller................ 49 Vice President, Manufacturing and
Corporate Quality
Donald N. Weinberger............. 57 Vice President, Operations
</TABLE>
Kenneth M. Evans has been President and Chief Executive Officer of Armor All
since April 1991. From 1989 to April 1991, he was Group Vice President of the
Do-it-Yourself Products Group of L. & F. Products, a subsidiary of Eastman
Kodak. Mr. Evans was President of the Thompson & Formby Division of L. & F.
Products from 1985 to 1989. Mr. Evans has been a director of Armor All since
July 1991 and is also a director of the O'Brien Corporation.
Mervyn J. McCulloch has been Executive Vice President and Chief Financial
Officer of Armor All since March 1990. From 1972 to March 1990, he was a
Partner of Deloitte & Touche, a public accounting firm.
Michael A. Caron has been Senior Vice President of Armor All since October
1991. He has been President of Armor All International, a division of Armor
All, since August 1993. From October 1991 to August 1993, Mr. Caron was Senior
Vice President-Marketing, and from April 1989 to October 1991, he was Senior
Vice President, Marketing/International Operations. Mr. Caron served as Armor
All's Vice President, Marketing and International Operations from February 1987
to April 1989.
Steven L. Kliff has been Armor All's Senior Vice President, Consumer
Products, since August 1993. Mr. Kliff was Armor All's Vice President, Sales
and Product Development from November 1991 to August
24
<PAGE>
1993 and was Vice President, Product and Business Development from September
1991 to November 1991. From February 1986 to August 1991, he held various
positions with Blistex Incorporated, a manufacturer of over-the-counter topical
medications, including Director of Marketing/Chief Marketing Officer and
Director of Strategic Planning.
David E. McDowell has been Chairman of the Board of Armor All since April 1,
1992 and was first elected to the Board in January 1992. Mr. McDowell has been
President and Chief Operating Officer and a director of McKesson since January
1992. From November 1990 to January 1992, he was Vice President and General
Manager, Quality and Chief Information Officer of International Business
Machines Corporation ("IBM"), and he served as President of IBM's National
Service Division from July 1987 to November 1990.
William A. Armstrong became a director of Armor All in July 1991. Mr.
Armstrong has been Vice President Human Resources and Administration of
McKesson since April 1993. He was Vice President Administration of McKesson
from July 1991 to April 1993, Executive Assistant to the Office of the Chief
Executive of McKesson from April 1990 to January 1992 and Staff Vice President
of Management Development of McKesson from April 1988 to April 1990. From 1980
to 1988, Mr. Armstrong was Vice President Personnel of McKesson's former
Beverage Group.
Jon S. Cartwright became a director of Armor All on January 21, 1993. He has
been the Executive Director of the Center for Telecommunications Management, a
nonprofit research and education center affiliated with the University of
Southern California Graduate School of Business Administration, since January
1990. In January 1991, he was appointed Associate Professor of Management and
Organization at the USC Graduate School of Business Administration. Before
joining USC, Mr. Cartwright had a 33-year career with IBM, including service as
Corporate Resident Manager from 1987 to 1990 and Vice President and Western
Area Manager for the IBM National Service Division from 1984 to 1987.
David L. Mahoney was elected to Armor All's Board of Directors in 1992. Mr.
Mahoney has been Vice President, Strategic Planning of McKesson since July
1990. From 1987 to July 1990, he was a Principal of McKinsey & Co., an
international management consulting firm.
Joseph A. Sasenick has been a director of Armor All since July 1990. He has
been President and Chief Executive Officer of Alcide Corporation, a developer
and manufacturer of disinfecting systems, since February 1992 and was Alcide's
President and Chief Operating Officer from February 1991 to February 1992. From
1988 to February 1991, Mr. Sasenick was Managing Director/Partner of Vista
Resource Group, and from March 1988 to August 1988, he was President of Bioline
Laboratories.
Alan Seelenfreund became a director of Armor All in June 1986. He has been
Chairman of the Board and Chief Executive Officer of McKesson since November
1989 and a director of McKesson since July 1988. Mr. Seelenfreund served as
Executive Vice President of McKesson from November 1986 to November 1989 and
was Chief Financial Officer of McKesson from April 1984 to April 1990.
Niels F. Hayns has been Armor All's Vice President, International, Asia-
Pacific/Americas since August 1993. From January 1988 to August 1993, he was
Vice President, International Operations. Mr. Hayns was Vice President of
Operations of Hang-Ten International, a marketer of sportswear and footwear,
from January 1985 to January 1988.
Lawrence R. Kahn has been Vice President, Product Development of Armor All
since August 1993. From October 1987 to August 1993, he was Armor All's
Marketing Director. Mr. Kahn joined Armor All in September 1985.
Gayle Metzler has been Armor All's Vice President, Human Resources since
November 1992. Before assuming her current position, she served Armor All in
various other capacities, including Vice President, Personnel and
Administration, since September 1978.
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<PAGE>
Nancy A. Miller has been Armor All's Vice President and Secretary since July
1986. She has been Vice President and Corporate Secretary of McKesson since
December 1989 and was Staff Vice President and Corporate Secretary of McKesson
from November 1986 to December 1989.
Stephen J. Sarich has been Armor All's Vice President, Sales since February
1987. He served as Armor All's National Sales Manager from October 1986 to
February 1987 and joined Armor All in 1984.
Garret A. Scholz has been Armor All's Vice President and Treasurer since July
1986. He has been Vice President Finance of McKesson since April 1990 and was
Vice President and Treasurer of McKesson from November 1984 to April 1990.
John F. Schueller has been Armor All's Vice President, Manufacturing and
Corporate Quality since April 1993. From October 1991 to April 1993, he was
Vice President, Corporate Quality. Mr. Schueller was Vice President, Credit and
Customer Service from April 1990 to October 1991, Executive Vice President,
Finance from July 1988 to March 1990 and Executive Vice President, Operations
and Finance from July 1986 to July 1988.
Donald N. Weinberger has been Armor All's Vice President, Operations since
May 1989. He was Vice President, Manufacturing of Beecham Products U.S.A., a
consumer packaged goods concern, from March 1980 to May 1989.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On July 1, 1986, Armor All entered into a Services Agreement (the "Services
Agreement") with a subsidiary of McKesson. Pursuant to the Services Agreement,
McKesson has agreed to provide to Armor All, and Armor All has agreed to
purchase, certain corporate staff services. For fiscal 1992, fiscal 1993 and
the first nine months of fiscal 1994, the amount charged Armor All by McKesson
for such services was $566,000, $622,000 and $448,000, respectively, exclusive
of insurance and outside professional services that are billed separately.
Armor All believes that these expenses would not have been materially different
if Armor All operated on a stand-alone basis. These charges are modified
annually to reflect changes in McKesson's costs of providing these services.
The services provided by McKesson include treasury and financial, risk
management support, legal, corporate secretary, investor relations, tax,
internal audit, planning and corporate development, accounting advice, and
employee benefit, personnel and payroll services. Armor All can request, and
McKesson may provide, data processing, computer programming and other services
to supplement the capabilities of Armor All. McKesson has agreed to make
available to Armor All certain employee benefit plans and also has agreed to
allow Armor All employees to continue to participate in McKesson's retirement
plan and employee stock ownership plans. Armor All has agreed to contribute
annually to the plans the amount necessary to fund employee participation.
Armor All is also insured under McKesson's property and casualty insurance
program for limits of liability and deductibles deemed appropriate for Armor
All's risk exposures and size. Premiums are based on Armor All's risk exposure
and historical loss experience.
The Services Agreement is automatically renewed for successive one-year terms
unless terminated and is reviewed annually by Armor All's Chief Financial
Officer with Armor All's independent directors. The Services Agreement will be
terminated if McKesson should own less than fifty percent of the outstanding
voting stock of Armor All, or upon 120 days' prior written notice by either
party, or upon such earlier date as the parties may mutually agree in writing.
The Services Agreement provides that McKesson's liability with respect to any
loss or damages arising in connection with the provision of services to Armor
All is limited to amounts billed or billable for such services.
Pursuant to the Services Agreement, Armor All's U.S. operations participate
on a daily basis in a cash management program administered by McKesson. Under
this arrangement, Armor All invests any excess
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<PAGE>
cash under the cash management program, has unrestricted access to the cash
invested and meets cash requirements through borrowings from McKesson. Prior to
March 23, 1993, Armor All invested excess cash with McKesson. Effective on that
date, all amounts invested with McKesson were deposited in a separate bank
account in Armor All's name. Armor All receives interest under the program
through McKesson on funds deposited in the separate bank account, or pays
interest to McKesson on funds received, at a rate equal to the monthly Federal
Reserve Composite Rate for 7-day commercial paper less one-tenth of one percent
for funds deposited under the program and plus one-half of one percent for
funds borrowed from McKesson. The Services Agreement provides that McKesson
will make available that amount of cash necessary to provide Armor All with
sufficient funds to meet its needs as defined in its annual capital and
operating budget, and that Armor All will pay McKesson an annual credit
facility fee of $25,000. At December 31, 1993, Armor All had invested
$48,793,000 under the cash management program at an interest rate of 3.1%.
During most of fiscal 1993, Armor All also had a $3,000,000 (Canadian) demand
note receivable from a Canadian subsidiary of McKesson. The demand note was
repaid in March 1993. The maximum amount invested by Armor All under the cash
management program at any month-end during fiscal 1992 and 1993 and the first
nine months of fiscal 1994 was $23,239,000, $41,900,000 and $51,396,000,
respectively. In fiscal 1992 and 1993 and the first nine months of fiscal 1994,
Armor All received from McKesson net interest in the amount of $764,000,
$1,113,000 and $948,000, respectively, pursuant to this arrangement.
At December 31, 1993, Armor All had a payable to McKesson of $1,150,000 for
payroll, freight and other expenses paid by McKesson on Armor All's behalf;
Armor All repaid this amount in January 1994. Before establishing its own cash
management bank account in March 1993, Armor All reimbursed McKesson for such
items through automatic transfers from Armor All's amounts on deposit with
McKesson under the cash management program.
Sales by Armor All to divisions of McKesson were $654,000, $889,000, and
$1,111,000 in fiscal 1991, 1992 and 1993, respectively, and $575,000 in the
nine months ended December 31, 1993.
Under the terms of the Acquisition Agreement dated July 1, 1986 pursuant to
which McKesson transferred the business of its Armor All Products Division to
Armor All, McKesson and Armor All have agreed that McKesson has no obligation
to refer to Armor All ideas or products whether or not related to appearance
protection products applicable to the automotive aftermarket. McKesson is not
obligated to fund, or permit Armor All to fund, development of any product or
idea, if McKesson concludes that such development is not in Armor All's best
interests.
Armor All is included in McKesson's consolidated federal income tax returns
for tax periods ending before May 19, 1993. Pursuant to a Tax Allocation
Agreement dated as of July 1, 1986 between Armor All and McKesson (the "Tax
Allocation Agreement"), adjustments to federal income tax liabilities for
periods in which Armor All was included in McKesson's consolidated federal
income tax returns are allocated between Armor All and the other businesses
conducted by McKesson and its affiliates. The agreement requires Armor All to
reimburse McKesson for any tax audit adjustment of taxes attributable to it
which were reported on McKesson's consolidated federal income tax returns. Tax
refunds will be the property of the party bearing economic responsibility for
the applicable tax. The Tax Allocation Agreement also provides for the
allocation of state franchise or corporate income taxes which Armor All and
McKesson are required or permitted to pay on a combined or "unitary" basis so
that, in general, Armor All is treated as a separate taxpayer.
As of February 7, 1994, McKesson owned 11,975,000 shares of Armor All Common
Stock, representing approximately 57% of all outstanding shares. In May 1993,
McKesson sold 5,175,000 shares of Armor All Common Stock in an underwritten
public offering. If all of the Debentures offered hereby were exchanged for
shares of Armor All Common Stock, McKesson would own shares of Armor All
Common Stock, representing approximately % of the shares of Armor All Common
Stock outstanding on the above date.
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<PAGE>
DESCRIPTION OF THE DEBENTURES
The Debentures will be issued under an Indenture (the "Indenture") dated as
of February , 1994 between McKesson and The First National Bank of Chicago,
as trustee (the "Trustee"). The following description of the terms of the
Debentures is subject to the detailed provisions of the Indenture and is
qualified in its entirety by reference to the Indenture, a copy of which is an
exhibit to the Registration Statement. Capitalized terms not defined herein
have the meanings ascribed to them in the Indenture. Wherever particular
provisions of the Indenture are referred to, such provisions are incorporated
by reference as a part of the statements made, and the statements are qualified
in their entirety by such reference.
GENERAL
The Debentures will constitute unsecured general obligations of McKesson
subordinate in right of payment to certain other obligations of McKesson as
described below under "Subordination" and exchangeable for Armor All Common
Stock, subject to McKesson's right to pay cash in lieu of delivering Armor All
Common Stock in exchange, as described below under "Exchange Rights and Cash
Option on Exchange."
The Debentures will be limited to $155,000,000 aggregate principal amount
(including $15,000,000 subject to the Underwriters' over-allotment option),
will be issued in fully registered form only in denominations of $1,000 or any
multiple thereof and will mature on February 15, 2004, unless earlier redeemed
at the option of McKesson.
The Indenture does not contain any restrictions on the payment of dividends
or the repurchase of securities of McKesson or any financial covenants.
Interest at the annual rate set forth on the cover page hereof is payable
semiannually on February 15 and August 15, commencing on August 15, 1994, to
holders of record at the close of business on the preceding February 1 and
August 1, respectively, and may, at McKesson's option, be paid by check mailed
to such holders.
Principal and premium, if any, will be payable, and the Debentures may be
presented for exchange, registration of transfer and substitution, without
service charge, at the office of the Trustee in New York, New York.
EXCHANGE RIGHTS AND CASH OPTION ON EXCHANGE
The Debentures (or portions thereof in integral multiples of $1,000) are
exchangeable for Armor All Common Stock, cash and other property deliverable in
exchange for the Debentures (collectively, "Exchange Property") at the option
of the holder at any time after 60 days following the original issuance thereof
and from time to time prior to maturity at the Exchange Price of $ per
share (equivalent to an exchange rate of shares of Armor All Common
Stock per $1,000 principal amount of Debentures), subject to adjustment and
subject to McKesson's right to deliver cash in lieu of shares of Armor All
Common Stock under the circumstances described below. In the event the
Debentures are called for redemption, the exchange rights will terminate at the
close of business on the date immediately prior to the date of redemption.
Prior to and in connection with the issuance of the Debentures, McKesson will
deposit the number of shares of Armor All Common Stock deliverable in exchange
for the Debentures with The First National Bank of Chicago, who will act as
exchange agent for Debentureholders (the "Exchange Agent") on behalf of
McKesson. McKesson will thereafter deposit with the Exchange Agent any cash and
other property deliverable in exchange for the Debentures. McKesson will not be
permitted to pledge, mortgage, hypothecate
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<PAGE>
or grant a security interest in, or permit any mortgage, pledge, security
interest or other lien upon, the Armor All Common Stock or other Exchange
Property so deposited. The deposit arrangements with the Exchange Agent will
terminate at such time as the right to exchange Debentures shall have expired
pursuant to the Indenture.
In order to exercise the right of exchange, the holder of any Debenture must
surrender such Debenture to the Exchange Agent at its office maintained for
such purpose in New York, New York. Each Debenture to be surrendered must be
accompanied by written notice to McKesson and the Exchange Agent that the
holder elects to exchange such Debenture. Upon surrender of the Debentures for
exchange to the Exchange Agent, Debentureholders will receive either (1) shares
of Armor All Common Stock and/or other Exchange Property, with any fractional
shares or interests paid in cash; or (2) at McKesson's option, cash in the
amount determined as set forth below. Delivery of the certificates for Armor
All Common Stock or any other Exchange Property may be delayed at the request
of McKesson in order to effectuate the calculation of the adjustments of the
Armor All Common Stock or other Exchange Property, to obtain any certificate
representing securities to be delivered, to complete any reapportionment of the
Armor All Common Stock or other Exchange Property which is required by the
Indenture or to comply with any applicable law. If Debentures not called for
redemption are surrendered for exchange during the period from the close of
business on a record date for the payment of interest and prior to the next
succeeding interest payment date, such Debentures must be accompanied by funds
equal to the interest payable on such succeeding interest payment date on the
principal amount so exchanged. No fractional shares of Armor All Common Stock
or fractional interests in other Exchange Property will be delivered on any
exchange of Debentures and in lieu thereof a cash adjustment based on the
Market Price (as defined below) of the Armor All Common Stock or other Exchange
Property will be paid.
In lieu of delivering certificates representing Armor All Common Stock in
exchange for any Debentures, McKesson may pay to the holder surrendering such
Debentures an amount in cash equal to the market price of the Armor All Common
Stock or other Exchange Property for which such Debentures are exchangeable
(the "Market Price"), based on (1) in the case of Armor All Common Stock or
other Exchange Property which consists of publicly traded securities, the
average closing market price (or average bid and asked prices, if closing
prices are not available) for the five consecutive trading days immediately
preceding the date of receipt by the Exchange Agent of the notice of exchange
relating to such Debentures (or, if such date is not a business day, on the
business day next preceding such date), and (2) in the case of Exchange
Property which does not consist of publicly traded securities, the market value
of such property on the date of receipt by the Exchange Agent of the notice of
exchange relating to such Debentures determined in such manner as shall be
satisfactory to the Exchange Agent. Prior to so directing the Exchange Agent to
make any such cash payment, McKesson will deposit with the Exchange Agent the
cash so payable.
McKesson will be entitled to vote the shares of Armor All Common Stock
deposited with the Exchange Agent and to receive all ordinary cash dividends
thereon. In addition, McKesson will be entitled to any interest earned or
ordinary cash dividends paid on securities or other property issued in exchange
for Armor All Common Stock upon merger, consolidation or sale, conveyance or
lease of all or substantially all of the assets of Armor All, although the
securities or other property so issued in exchange for Armor All Common Stock
shall be Exchange Property. If there is a nontaxable distribution on Exchange
Property of any securities or other noncash items of property, McKesson may, at
its option, cause the sale of some or all of such property and, although the
cash proceeds and/or the remainder of such property after payment of any taxes
thereon will be Exchange Property, McKesson will be entitled to all interest
earned or ordinary cash dividends paid thereafter on such Exchange Property. If
there is a nontaxable distribution on Exchange Property of any options,
warrants or similar rights, McKesson may, at its option, (1) cause the sale of
such options, warrants or similar rights in the manner stated above and the
cash proceeds, after payment of any taxes thereon, will be Exchange Property,
(2) to the extent there is sufficient cash among the Exchange Property or to
the extent McKesson may contribute sufficient cash to the Exchange Property,
cause the exercise of such options, warrants or similar rights and thereafter,
either (a) retain the securities received upon such exercise as Exchange
Property, or (b) cause some or all of such securities to be sold and the cash
proceeds and the remainder of such property, if any, after payment of any taxes
thereon, will be Exchange Property, (3) retain such options, warrants or
similar rights as Exchange Property provided that the
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<PAGE>
exercisability of such options, warrants or similar rights shall not, if
feasible, be allowed to expire, or (4) cause the pro rata distribution of such
options, warrants or similar rights to Debentureholders, except that in the
event option (1) or (2) is chosen, McKesson will be entitled to all interest
earned or ordinary cash dividends paid thereon. Because any subsequent
distribution to Debentureholders of securities, options, warrants or similar
rights or other noncash items of property received with respect to Exchange
Property may give rise to tax liability for McKesson, McKesson may be more
likely to elect to cause the sale of such items (or, in the case of options,
warrants or similar rights, to cause the sale of the securities received upon
the exercise of such items) and to cause the cash proceeds (after the payment
of any taxes) to be treated as Exchange Property, in lieu of causing the pro
rata distribution of such items to the Debentureholders. If there is a taxable
distribution on Exchange Property of any securities, options, warrants or
similar rights or other noncash items of property, McKesson will instruct the
Exchange Agent to sell all such property so received for cash in such manner as
McKesson shall instruct and, although the cash proceeds of such property after
payment of taxes thereon will be Exchange Property, McKesson will be entitled
to all interest earned thereafter on such Exchange Property. If extraordinary
cash dividends are paid on securities constituting Exchange Property pursuant
to a plan of liquidation, partial liquidation, recapitalization or
restructuring, or if securities constituting Exchange Property are otherwise
converted into cash pursuant to a merger or tender offer for any or all
securities of such class, then, after payment of any taxes thereon, the
remainder will be Exchange Property, but McKesson will be entitled to all
interest earned thereon. In the event that a distribution or grant of cash,
securities or other property on Exchange Property is effected as contemplated
by this paragraph, a notice stating that such distribution or grant has
occurred and setting forth the additional cash, securities or other property
distributed on the Exchange Property will as soon as practicable be mailed by
or on behalf of McKesson to Debentureholders at their addresses as they appear
in the Debenture register.
If Armor All should issue any Armor All Common Stock in subdivision or by way
of stock dividend, the exchange rate will be proportionately increased, and if
Armor All should effect a combination of Armor All Common Stock, the exchange
rate will be proportionately reduced, subject in each case to adjustments for
tax consequences, if any. In the case of any merger or consolidation of Armor
All with or into any other person which results in shares of Armor All Common
Stock, as constituted prior to the consummation of such transaction, being
converted into other securities and/or property, including cash, or any sale of
all or substantially all the assets of Armor All (if in connection with such
sale or transfer holders of Armor All Common Stock receive other securities
and/or property, including cash, in exchange for their shares of Armor All
Common Stock), the holder of any Debenture surrendered for exchange thereafter
will, subject to the following paragraph, be entitled to receive the kind and
amount of shares of stock and other securities and property receivable upon or
in connection with such transaction by a holder of the number of shares of
Armor All Common Stock or other Exchange Property for which such Debenture
might have been exchanged immediately prior to such transaction, as well as a
pro rata share of any cash held for exchange by McKesson in accordance with the
preceding paragraph.
Upon the occurrence of any such merger, consolidation, sale of all or
substantially all the assets of Armor All described in the preceding paragraph
or any voluntary or involuntary dissolution, liquidation or winding up of Armor
All, or any stock dividend, subdivision, combination or reclassification of
shares of Armor All Common Stock or other Exchange Property, which is taxable
to McKesson or the Exchange Agent, or upon the happening of any other event
with respect to the Armor All Common Stock or other Exchange Property, which is
taxable or treated as being taxable to McKesson or the Exchange Agent, the
Exchange Agent will deliver cash which it holds for exchange (including cash
received in such transaction) to McKesson or to itself for payment of the taxes
arising from such transaction. If the cash held for exchange is insufficient to
pay the amount of such taxes, the Exchange Agent will sell such of the shares
of Armor All Common Stock or other Exchange Property as may be necessary to pay
the amount of the insufficiency and any taxes payable by McKesson or the
Exchange Agent arising from such sale. The remaining shares of Armor All Common
Stock or other Exchange Property will be held by the Exchange Agent for
distribution pro rata to Debentureholders requesting exchange of their
Debentures.
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<PAGE>
From time to time, McKesson may require the Exchange Agent to segregate such
property as McKesson determines may be necessary for McKesson or the Exchange
Agent to pay taxes with respect to the transactions or events described above,
subject to the determination of taxability (and any expenses incurred in
determining taxability), and such property (or any portion thereof) will be
deliverable to holders of Debentures only after determination that such
withholding is not necessary for the payment of such taxes and after deducting
the expenses incurred in connection with such determination.
McKesson is required to give to Debentureholders notice of certain dividends
on the Armor All Common Stock deliverable upon exchange of Debentures, the
granting of subscription rights, options, warrants or other similar rights to
holders of Armor All Common Stock, any reclassification of Armor All Common
Stock (other than a subdivision or combination of outstanding shares of Armor
All Common Stock), certain mergers involving Armor All, the sale of all or
substantially all of the assets of Armor All and the dissolution, liquidation
or winding up of Armor All.
Any cash held by the Exchange Agent that is deliverable upon exchange of
Debentures will be invested by the Exchange Agent at the direction of McKesson
in U.S. Government Obligations with maturity dates of twelve months or less.
Any interest or gain on such investments will be for the benefit of McKesson
and McKesson will be responsible for any losses on such investments. To the
extent that Debentures are redeemed prior to exchange, McKesson will be
entitled to receive from the Exchange Agent such number of shares of Armor All
Common Stock, other Exchange Property and such amount of cash, if any, held by
the Exchange Agent for exchange as exceeds the number of shares of Armor All
Common Stock or other Exchange Property required to be held by the Exchange
Agent for the exchange of all Debentures remaining then outstanding.
In the event of a tender offer or exchange offer for any class of securities
included within the Exchange Property (i) if McKesson owns securities of such
class which are not subject to the Exchange Agent Agreement, McKesson will
cause the Exchange Agent to tender such securities of such class in the same
proportion that McKesson tenders its securities in such class which are not
subject to the Exchange Agent Agreement, and (ii) if McKesson does not own
securities of a class which are subject to the Exchange Agent Agreement,
McKesson may, at its option and in its sole discretion, elect to cause the
Exchange Agent to tender all or any portion or none of such class of security
included within the Exchange Property held by the Exchange Agent. The proceeds
of the sale of any such Exchange Property pursuant to any such tender or
exchange offer will be held by the Exchange Agent for the benefit of holders as
provided in the Indenture. As a result of the receipt by the Exchange Agent of
cash or other property upon the tender or exchange of Exchange Property,
Debentureholders will not participate in any subsequent appreciation or
depreciation in the market price of such Exchange Property tendered or
exchanged upon any subsequent exchange of Debentures.
The right of a Debentureholder to exchange Debentures for Armor All Common
Stock or other Exchange Property could be adversely affected in the event of
the bankruptcy, insolvency or liquidation of McKesson. In such event, the Armor
All Common Stock or other Exchange Property could be assets of McKesson subject
to the claims of its general creditors.
REPURCHASE RIGHTS
The Exchange Agent will act as agent for McKesson in connection with
McKesson's exchange obligations under the Indenture and will not act as escrow
agent for the benefit of holders of Debentures. Accordingly, McKesson may at
any time obtain from the Exchange Agent or otherwise authorize or direct the
Exchange Agent to release all or a part of the Armor All Common Stock or other
Exchange Property. In the event that McKesson obtains or otherwise releases any
Armor All Common Stock or other Exchange Property, other than Exchange Property
in excess of that which would be deliverable upon exchange of all Debentures
then outstanding, each Debentureholder will have the right (a "Repurchase
Right"), at such holder's option, to require McKesson to repurchase all of such
holder's Debentures, or a portion thereof which is $1,000 or any integral
multiple thereof, in the manner and at the price described below.
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Promptly (and in any event within 10 days) after McKesson has obtained or
released any Exchange Property in any manner otherwise than as contemplated by
the Indenture, the Exchange Agent will mail to all Debentureholders of record a
notice thereof and the Repurchase Right arising as a result thereof (a
"Repurchase Notice"). To exercise the Repurchase Right, a Debentureholder must
deliver on or before the 15th day after the date of the Repurchase Notice
irrevocable written notice to the Exchange Agent of the holder's exercise of
such right, together with the Debentures with respect to which such right is
being exercised, duly endorsed for transfer.
On the date (the "Repurchase Date") that is 30 days after the date of the
Repurchase Notice, McKesson will be required to repurchase all Debentures in
respect of which the Repurchase Right has been exercised at the following
repurchase price: (i) if the date on which McKesson first obtains or releases
Exchange Property in a manner not contemplated by the Indenture (the
"Triggering Date") is before February 16, 1999, the product of (1) 120% and (2)
the greater of the principal amount at maturity of such Debentures (plus
accrued and unpaid interest, if any, to the Repurchase Date) and the Market
Price of the Exchange Property deliverable in exchange for such Debentures on
the Triggering Date (or if such date is not a business day, on the next
succeeding business day); and (ii) if the Triggering Date occurs on or after
February 16, 1999, the greater of (1) the redemption price as specified under
"--Redemption Provisions" on the Triggering Date and (2) the Market Price of
the Exchange Property deliverable in exchange for such Debentures on the
Triggering Date (or if such date is not a business day, on the next succeeding
business day).
The obligation of McKesson to deliver Exchange Property (or cash in lieu
thereof) in exchange for Debentures shall survive and continue to apply in full
force and effect following and notwithstanding the occurrence of any event
triggering a Repurchase Right. Failure by McKesson to exchange Debentures in
accordance with the Indenture or to repurchase Debentures upon exercise of a
Repurchase Right will constitute an Event of Default with respect to the
Debentures, and holders of Debentures will have the remedies provided for in
the Indenture, including acceleration of the indebtedness evidenced by the
Debentures, in the event of any such failure. See "--Events of Default and
Remedies."
The exchange obligations of McKesson may not be assigned or otherwise
transferred by McKesson except in accordance with a transfer of the
indebtedness evidenced by the Debentures in the manner permitted by the
Indenture.
If an offer is made to repurchase Debentures in connection with a Repurchase
Right, McKesson will comply with all tender offer rules, including but not
limited to Sections 13(e) and 14(e) under the Exchange Act and Rules 13e-1 and
14e-1 thereunder, to the extent applicable to such offer.
REDEMPTION PROVISIONS
The Debentures will not be redeemable prior to February 16, 1999. At any time
on or after that date, the Debentures may be redeemed at the option of
McKesson, in whole or from time to time in part, on not less than 30 nor more
than 60 days' notice by mail, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the 12-month period
beginning February 15 of the following years:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1999.......................... %
2000.......................... %
2001.......................... %
2002.......................... %
2003.......................... %
</TABLE>
and 100% at February 15, 2004, in each case together with accrued interest to
the redemption date; provided, however, that installments of interest on
Debentures whose stated maturity is on or prior to the redemption date shall be
payable to the holders of such Debentures, registered as such at the close of
business on the relevant record dates. If fewer than all of the Debentures are
to be redeemed, the Trustee will select the
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Debentures to be redeemed by lot or, in its discretion, on a pro rata basis. If
any Debenture is to be redeemed in part only, a new Debenture or Debentures in
principal amount equal to the unredeemed principal portion thereof will be
issued. There is no sinking fund applicable to the Debentures.
CONSOLIDATION, MERGER AND SALE OF ASSETS
McKesson may merge or consolidate into or with any other corporation or sell,
convey or lease all or substantially all of its property to any other
corporation, provided that (i) the corporation formed by such consolidation or
merger or which has acquired or leased such property is organized under the
laws of any State of the United States or the District of Columbia and such
corporation expressly assumes all of the covenants and conditions of the
Indenture by executing and delivering a supplemental indenture to the Trustee
providing for the applicable exchange rights set forth in the Indenture, and
(ii) at the time of such transaction and immediately after giving effect
thereto, no Event of Default shall have occurred and be continuing.
SUBORDINATION OF DEBENTURES
The indebtedness evidenced by the Debentures is subordinate to the prior
payment in full of all Senior Indebtedness (as defined). During the continuance
beyond any applicable grace period of any default in the payment of principal,
premium, interest or any other payment due on any Senior Indebtedness, no
payment of principal of, or premium, if any, or interest on the Debentures
shall be made by McKesson. In addition, upon any distribution of assets of
McKesson upon any dissolution, winding up, liquidation or reorganization, the
payment of the principal of, or premium, if any, and interest on the Debentures
is to be subordinated to the extent provided in the Indenture in right of
payment to the prior payment in full of all Senior Indebtedness. By reason of
the subordination, in the event of McKesson's dissolution, holders of Senior
Indebtedness may receive more, ratably, and holders of the Debentures may
receive less, ratably, than the other creditors of McKesson. Such subordination
will not prevent the occurrence of any Event of Default under the Indenture.
Subject to the qualifications described below, the term "Senior Indebtedness"
means the principal of, premium, if any, interest on, and any other payment due
pursuant to any of the following whether outstanding on the date of the
Indenture or thereafter incurred or created:
(a) All indebtedness of McKesson for money borrowed (including any
indebtedness secured by a mortgage or other lien which is (i) given to
secure all or part of the purchase price of property subject thereto,
whether given to the vendor of such property or to another, or (ii)
existing on property at the time of acquisition thereof);
(b) All indebtedness of McKesson evidenced by notes, debentures, bonds or
similar instruments (excluding any such indebtedness for trade payables or
constituting the deferred purchase price of assets or services incurred in
the ordinary course of business) and all indebtedness of McKesson
consisting of reimbursement obligations due and owing with respect to
letters of credit;
(c) All lease obligations of McKesson which are capitalized on the books
of McKesson in accordance with generally accepted accounting principles;
(d) All indebtedness consisting of commitment or standby fees due and
payable to lending institutions with respect to credit facilities available
to McKesson;
(e) All indebtedness consisting of obligations of McKesson due and
payable under interest rate and currency swaps, floors, caps or other
similar arrangements intended to fix interest rate obligations;
(f) All indebtedness of others of the kinds described in any of the
preceding clauses (a), (b), (d), or (e) and all lease obligations of the
kind described in the preceding clause (c) assumed by or guaranteed in any
manner by McKesson or in effect guaranteed by McKesson through an agreement
to purchase, contingent or otherwise; and
(g) All renewals, extensions, refundings, deferrals, amendments,
modifications or supplements of indebtedness of the kinds described in any
of the preceding clauses (a), (b), (d), (e) or (f) and all renewals or
extensions of lease obligations of the kinds described in any of the
preceding clauses (c) or (f);
33
<PAGE>
unless in the case of any particular indebtedness, lease, renewal, extension,
refunding, amendment, modification or supplement, the instrument, lease or
other document creating or evidencing the same or the assumption or guarantee
of the same expressly provides that such indebtedness, lease, renewal,
extension, refunding, amendment, modification or supplement is not superior in
right of payment to the Debentures. Notwithstanding the foregoing, Senior
Indebtedness shall not include any indebtedness or lease obligations of any
kind of McKesson to any subsidiary of McKesson, a majority of the voting stock
of which is owned, directly or indirectly, by McKesson.
As of January 31, 1994, McKesson had outstanding Senior Indebtedness of
approximately $47 million. The amount of Senior Indebtedness may change in the
future. The Indenture contains no limitation on the incurrence of additional
Senior Indebtedness.
Because substantially all of the assets of McKesson are owned by its
subsidiaries, McKesson's rights and the rights of its creditors, including
Debentureholders, to participate in the assets of any McKesson subsidiary upon
the subsidiary's liquidation, recapitalization or otherwise will be effectively
subordinated to the prior claims of the subsidiary's creditors (including trade
creditors), except to the extent that McKesson may itself be a creditor with
recognized claims against the subsidiary. As of January 31, 1994, McKesson's
subsidiaries had total interest-bearing indebtedness (which does not include
trade debt) of approximately $537 million.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default is defined in the Indenture as being default in payment
of the principal of or premium, if any, on the Debentures; default for 30 days
in payment of any installment of interest on the Debentures; failure by
McKesson to deliver Armor All Common Stock or other Exchange Property (or cash
in lieu thereof) upon exchange of the Debentures; failure by McKesson to
repurchase Debentures upon the exercise of a Repurchase Right; default by
McKesson in any material respect for 60 days after notice in the observance or
performance of any other covenants contained in the Indenture for the benefit
of holders of the Debentures; or certain events involving bankruptcy,
insolvency or reorganization of McKesson or, under certain circumstances,
McKesson-Maryland. The Indenture provides that the Trustee may withhold notice
to the holders of Debentures of any default (except in payment of principal, or
premium, if any, or interest with respect to the Debentures) if the Trustee
considers it in the interest of the holders of the Debentures to do so.
The Indenture provides that if any Event of Default shall have occurred and
be continuing, the Trustee or the holders of not less than 25% in principal
amount of the Debentures then outstanding may declare the principal of the
Debentures to be due and payable immediately, but if McKesson shall cure all
defaults (except the nonpayment of interest on, premium, if any, and principal
of any Debentures which shall have become due by acceleration) and certain
other conditions are met, such declaration may be cancelled and past defaults
may be waived by the holders of a majority in principal amount of Debentures
then outstanding.
The holders of a majority in principal amount of the Debentures then
outstanding shall have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
MODIFICATIONS OF THE INDENTURE
The Indenture contains provisions permitting McKesson and the Trustee, with
the consent of the holders of not less than a majority in principal amount of
the Debentures at the time outstanding, to modify the Indenture or any
supplemental indenture or the rights of the holders of the Debentures, except
that no such modification shall (i) extend the fixed maturity of any Debenture,
reduce the rate or extend the time or payment of interest thereon, reduce the
principal amount thereof or premium, if any, thereon, impair or affect the
right of a holder to institute suit for the payment thereof, change the
currency in which the Debentures are payable, modify the subordination
provisions of the Indenture in a manner adverse to the holders of the
34
<PAGE>
Debentures, or impair the right of holders to exchange the Debentures for
Exchange Property or to cause the repurchase of the Debentures, subject to the
terms set forth in the Indenture, without the consent of the holder of each
Debenture so affected, or (ii) reduce the aforesaid percentage of Debentures,
without the consent of the holders of all of the Debentures then outstanding.
SATISFACTION AND DISCHARGE
McKesson may discharge its obligations under the Indenture when either the
Debentures have been delivered to the Trustee for cancellation or if not so
delivered (a) have become due and payable, or (b) will become due and payable
at their scheduled maturity within one year, or (c) are to be called for
redemption within one year, or (d) are delivered to the Trustee for exchange or
repurchase, and in each such case, McKesson has deposited with the Trustee an
amount sufficient to discharge the entire indebtedness on such Debentures on
the date of their scheduled maturity or the scheduled date of redemption.
GOVERNING LAW
The Indenture and the Debentures will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
such State's conflict of laws principles.
CONCERNING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture and has
been appointed by McKesson as the paying agent, registrar and custodian with
regard to the Debentures. The First Chicago Trust Company of New York, an
affiliate of the Trustee, is the transfer agent of McKesson's Common Stock and
of the Armor All Common Stock. The Trustee and its affiliates provide and may
continue to provide banking services to McKesson and/or Armor All in the
ordinary course of their business.
CERTAIN UNITED STATES TAX CONSEQUENCES
The following summary is a general discussion of certain United States
federal income tax consequences of acquiring, holding and disposing of the
Debentures, including the exchange of the Debentures for Armor All Common
Stock, and of acquiring, holding and disposing of Armor All Common Stock
received in such exchange. The summary is based upon laws, regulations, rulings
and decisions now in effect or about to come into effect, all of which are
subject to change. This summary does not discuss all aspects of federal income
taxation that may be relevant to a particular investor in light of the
investor's personal investment circumstances and does not discuss any aspects
of state, local or foreign tax laws that may be applicable to the Debentures,
to Armor All Common Stock or to the holders thereof. This discussion is limited
to persons who hold Debentures and Armor All Common Stock as "capital assets"
(generally, property held for investment) within the meaning of section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"), and does not cover
special rules applicable to taxpayers who may fall into special classes, such
as financial institutions, insurance companies, mutual funds, S corporations,
trusts and exempt institutions. This discussion also does not deal with
circumstances where all or a portion of the Exchange Property is other than
Armor All Common Stock. Accordingly, prospective purchasers should consult
their own tax advisors with respect to the application of federal, state, local
and foreign tax laws to them in light of their particular circumstances
concerning the matters discussed below.
INTEREST AND ORIGINAL ISSUE DISCOUNT
Stated Interest
Stated interest on the Debentures will be includable in and taxable as
ordinary income in accordance with the holder's method of accounting.
35
<PAGE>
Original Issue Discount
On February 2, 1994, the U.S. Treasury Department promulgated final
regulations which provide, among other things, that the exchange right
contained in a Debenture (i.e., the right to exchange the Debenture for Armor
All Common Stock) is to be ignored for purposes of applying the original issue
discount provisions of the Code. While those final regulations are generally
effective for obligations issued on or after April 4, 1994, taxpayers may rely
on the final regulations, other than portions dealing with an election not here
relevant, for obligations issued after December 21, 1992; McKesson intends to
rely on these recently promulgated final regulations with respect to the
Debentures.
Accordingly, the Debentures will be viewed as issued with original issue
discount only if their issue price (in general, the first price at which a
substantial amount of Debentures is sold for cash) exceeds their stated
redemption price at maturity (in this case the principal amount of $1,000) by
more than a de minimis amount (generally, .0025 multiplied by the Debentures'
stated redemption price at maturity (here $1,000) multiplied by the number of
complete years to maturity from the issue date). As it is expected that the
issue price of the Debentures will be $1,000, it is not expected that the
Debentures will be issued with original issue discount.
If the Debentures were issued with original issue discount, then a holder of
a Debenture generally would be required to include in gross income
(irrespective of such holder's method of accounting) a portion of the original
issue discount for each year during which the Debenture is held, even though
the holder may not have received payment in respect of such income. The amount
of any original issue discount included in income for each year would be
calculated under a constant yield to maturity formula that would result in the
inclusion of less original issue discount in the early years of the term of the
Debenture and more original issue discount in the later years.
TAX BASIS OF DEBENTURES
The federal income tax basis of a Debenture will be equal to the full amount
paid for the Debenture, increased, were the Debentures issued with original
issue discount, by any original issue discount included in the holder's income.
DISPOSITION OF DEBENTURES
Generally the redemption by McKesson (including the exercise of its option to
pay cash in lieu of Armor All Common Stock or other Exchange Property to an
exchanging Debentureholder) or the sale of the Debentures will result in
taxable gain or loss equal to the difference between the amount of cash and
fair market value of other property received and the holder's tax basis in the
Debentures. Such gain or loss will be capital gain or loss and will be long-
term gain or loss if the holding period exceeds one year. To the extent that
the amount received is attributable to accrued interest, however, that amount
will be taxed as ordinary income.
EXCHANGE OF DEBENTURES FOR ARMOR ALL COMMON STOCK
If a Debentureholder exercises the right to exchange a Debenture for Armor
All Common Stock, such exchange will be treated as a taxable disposition, and
the holder will be required to recognize taxable gain (or loss) to the extent
that the fair market value of the Armor All Common Stock received in such
exchange exceeds (or is less than) the holder's adjusted tax basis in the
Debenture immediately prior to such exchange. Any gain or loss on the exchange
generally will be long-term capital gain or loss if the Debenture has been held
for more than one year. The holder's tax basis for the Armor All Common Stock
would equal its fair market value at the time of the exchange, and the holder's
holding period for the Armor All Common Stock would not include any portion of
the holding period for the exchanged Debenture.
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<PAGE>
ADJUSTMENT OF EXCHANGE RATE AND MODIFICATION OF EXCHANGE PROPERTY
Holders of Debentures may be deemed to have received constructive
distributions where the exchange rate is adjusted to reflect property
distributions with respect to Armor All Common Stock into which such Debentures
are exchangeable. Adjustments to the exchange rate made pursuant to a bona fide
reasonable adjustment formula which has the effect of preventing the dilution
of the interest of the holders of the Debentures, however, will generally not
be considered to result in a constructive distribution of Armor All Common
Stock. Certain of the possible adjustments provided in the Debentures may not
qualify as being pursuant to a bona fide reasonable adjustment formula. If such
adjustments were made, the holders of Debentures could be deemed to have
received constructive distributions taxable as dividends to the extent of Armor
All earnings and profits. See "--Distributions on Armor All Common Stock." In
addition, distributions with respect to Exchange Property of any securities,
options, warrants, similar rights or other noncash items of property could be
viewed as equivalent to exchange rate adjustments giving rise to constructive
distributions to holders of Debentures.
DISTRIBUTIONS ON ARMOR ALL COMMON STOCK
Distributions with respect to shares of Armor All Common Stock that are
received in exchange for Debentures will be treated as dividends for federal
income tax purposes and will be taxed as ordinary income to the extent of Armor
All's earnings and profits for such purposes. Certain corporations may qualify
for a 70% dividends received deduction (80% for certain corporate stockholders
owning at least 20%, by vote and value, of Armor All's stock) if various
conditions are met.
Distributions will constitute dividends taxable as ordinary income to the
extent Armor All has either (a) current earnings and profits determined at the
end of the taxable year in which the distribution is made or (b) accumulated
earnings or profits determined at the time the distribution is made. To the
extent that the entire distribution is greater than the amount of earnings and
profits determined above, the excess will be treated as a nontaxable return of
capital which will reduce the recipient's basis for the Armor All Common Stock.
To the extent that a recipient receives aggregate distributions that are not
out of current or accumulated earnings and profits and such distributions
exceed the tax basis of the Armor All Common Stock, the excess will be taxed as
a gain from the sale or exchange of the Armor All Common Stock. See "--
Dispositions of Armor All Common Stock."
To be entitled to the dividends received deduction, stockholders taxed as
regular corporations must, among other requirements, hold the Armor All Common
Stock for a period of more than 45 days, not counting days on which the
stockholder's risk of loss is diminished, for example, by a short sale. One
item of tax preference for corporations is 75% of the excess of adjusted
current earnings over alternative minimum taxable income (determined without
regard to this preference or any alternative minimum tax net operating loss
carryovers). Thus, a corporation's alternative minimum tax base would generally
be increased by 75% of the dividends received deduction, although special rules
may apply to dividends eligible for an 80% dividends received deduction.
To the extent a corporation incurs indebtedness directly attributable to
investment in portfolio stock in another corporation (which would include Armor
All Common Stock received upon exchange of the Debentures), the dividends
received deduction will be reduced by a percentage equal, in general, to the
amount of such indebtedness divided by the total adjusted tax basis in the
investment. In addition, the dividends received deduction cannot exceed 70% of
taxable income with certain adjustments (80% in the case of dividends
qualifying for the 80% dividends received deduction). Finally, corporate
stockholders may be required in certain circumstances to reduce the tax basis
of their shares of Armor All Common Stock to reflect the dividends received
deduction allowed with respect to certain "extraordinary dividends," if any,
paid on the Armor All Common Stock.
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<PAGE>
DISPOSITIONS OF ARMOR ALL COMMON STOCK
Generally, any sale or other disposition of Armor All Common Stock will be a
taxable event and will result in capital gain or loss if the Armor All Common
Stock is held as a capital asset. The amount of such gain or loss will
generally be the difference between the federal income tax basis of the Armor
All Common Stock on the date of the sale or other disposition and the cash and
fair market value of property received. Such gain or loss will be long-term
gain or loss if the Armor All Common Stock is held for more than one year.
BACKUP WITHHOLDING
Under the backup withholding provisions of the Code and applicable U.S.
Treasury Department regulations, a holder of Debentures or Armor All Common
Stock may be subject to backup withholding at the rate of 31% with respect to
interest on and any original issue discount with respect to Debentures,
dividends on Armor All Common Stock and the gross proceeds of a sale, exchange,
retirement or redemption of Debentures or Armor All Common Stock. However,
backup withholding generally will not be required if such holder (a) is a
corporation or comes within certain other exempt categories and when required
demonstrates this fact or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. The
amount of any backup withholding from a payment to a holder will be allowed as
a credit against the holder's federal income tax liability and may entitle such
holder to a refund, provided that the required information is furnished to the
Internal Revenue Service ("IRS").
McKesson or Armor All will cause to be reported to the holders of Debentures
or Armor All Common Stock and the IRS for each calendar year the amount of
interest or dividends paid and original issue discount accrued during such
year, if any, and the amount of tax withheld, if any, with respect to the same.
FOREIGN HOLDERS
Interest and original issue discount, if any, on the Debentures held by
nonresident alien individuals or foreign corporations will generally be exempt
from United States federal income tax. To obtain such exemption, the Code
requires the beneficial owner to submit a statement that such owner is not a
United States person, which statement must be filed with the person who would
otherwise be responsible for withholding such tax. Temporary regulations issued
by the U.S. Treasury Department require that statement to be signed by the
beneficial owner under penalties of perjury and to provide such owner's
address. Interest and original issue discount, if any, on the Debentures may be
subject to United States federal income tax (and branch profits tax for foreign
corporate holders) if they are effectively connected with the conduct of a
trade or business within the United States. There are also special rules for
controlled foreign corporations, certain other types of foreign stockholders
and foreign partnerships, estates and trusts. In general, dividends paid on
shares of Armor All Common Stock held by a nonresident alien individual or
foreign corporation will be subject to withholding tax at a rate of 30% but
will not be subject to backup withholding. The withholding rate may be lower
under an applicable tax treaty. Prospective nonresident purchasers should
consult their tax advisors as to the scope of and procedural requirements under
any such treaties and with regard to the exemption from United States federal
income tax for interest and original issue discount, if any, on the Debentures
and the special backup withholding rules and provisions regarding gain from the
sale, exchange, redemption or other disposition of Debentures or Armor All
Common Stock applicable to such purchasers.
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UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the Underwriters named below have severally
agreed to purchase, and McKesson has agreed to sell to them, severally, the
respective principal amounts of Debentures set forth opposite their respective
names below:
<TABLE>
<CAPTION>
NAME AMOUNT
---- ------------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
------------
Total................................................... $140,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Debentures are subject to
the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the
Debentures if any are taken.
The Underwriters propose to offer part of the Debentures directly to the
public at the public offering price set forth on the cover page hereof and part
to certain dealers at a price that represents a concession not in excess of
. % of the principal amount of the Debentures. Any Underwriter may allow, and
such dealers may reallow, a concession not in excess of . % of the principal
amount of the Debentures to other Underwriters or to certain other dealers.
McKesson and Armor All have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
McKesson has granted to the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to an additional $15,000,000
principal amount of Debentures at the public offering price set forth on the
cover page hereof, less underwriting discounts and commissions. The
Underwriters may exercise such option solely for the purpose of covering over-
allotments, if any, incurred in the sale of the Debentures.
McKesson and Armor All have agreed in the Underwriting Agreement not to offer
to sell, sell, contract to sell or otherwise dispose of any shares of Armor All
Common Stock or any securities convertible into or exchangeable for Armor All
Common Stock for a period of 90 days after the date of this Prospectus, without
the prior written consent of Morgan Stanley & Co. Incorporated, as
representative of the several Underwriters, provided that Armor All may issue
shares under its stock option and restricted stock plans during such 90-day
period, and except that, commencing 30 days after the offering of Debentures
made hereby, McKesson may contribute up to 350,000 shares of Armor All Common
Stock to the McKesson Foundation, Inc. (the "Foundation"), a non-profit,
charitable foundation, without restrictions on the subsequent disposition of
such shares by the Foundation.
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LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
Pillsbury Madison & Sutro, San Francisco, California, counsel for McKesson and
Armor All. Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo
Alto, California, are acting as counsel for the Underwriters in connection with
certain legal matters relating to the securities offered hereby.
EXPERTS
The consolidated financial statements of McKesson as of March 31, 1993, 1992
and 1991 and for the years then ended and the related consolidated financial
statement schedules included in the Appendix to the Proxy Statement and
incorporated by reference in McKesson's Annual Report on Form 10-K, which is
incorporated by reference in this Prospectus, and the financial statements of
Armor All as of March 31, 1993 and 1992 and for each of the three years in the
period ended March 31, 1993 and the related financial statement schedules
appearing in and incorporated by reference in Armor All's Annual Report on
Form10-K, which is incorporated by reference in this Prospectus, have been
audited by Deloitte & Touche, independent auditors, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
40
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(McKesson Logo)
(Armor All Logo)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable in connection with the
issuance and distribution of the securities being registered. All of the
amounts shown are estimates, except for the filing fee. All of the expenses
payable in connection with this offering will be paid by McKesson.
<TABLE>
<CAPTION>
AMOUNT
ITEM TO BE PAID
---- ----------
<S> <C>
SEC filing fee................................................. $ 53,449
Accounting fees and expenses................................... 50,000
Legal fees and expenses........................................ 100,000
Printing and engraving expenses................................ 50,000
Blue Sky fees and expenses..................................... 10,000
Miscellaneous.................................................. 36,551
---------
Total...................................................... $ 300,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits McKesson and
Armor All to indemnify any person against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with any threatened, pending or completed
action, suit or proceeding in which such person is made a party by reason of
his or her being or having been a director, officer, employee or agent of
McKesson or Armor All, respectively, in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
The statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise.
Article Six of McKesson's Restated Certificate of Incorporation and Articles
VIII and IX, respectively, of the Bylaws of McKesson and Armor All provide for
indemnification of its directors, officers, employees and other agents to the
maximum extent permitted by law. McKesson has agreed under certain
circumstances to indemnify its directors and officers and Armor All's directors
against certain liabilities, including liabilities under applicable securities
laws. McKesson also provides indemnity insurance pursuant to which directors
and officers of McKesson and Armor All are indemnified or insured against
liability or loss under certain circumstances which may include liability or
related loss under the Securities Act of 1933 and the Securities Exchange Act
of 1934.
Under the terms of the Underwriting Agreement (to be filed by amendment),
directors, certain officers and controlling persons of McKesson and Armor All
are entitled to indemnification under certain circumstances, including
proceedings under the Securities Act of 1933 and the Securities Exchange Act of
1934.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
4.1 Form of Indenture by and between McKesson and The First National Bank
of Chicago, as Trustee (including Form of Debenture as Exhibit A).
4.2 Form of Exchange Agent Agreement by and between McKesson and The
First National Bank of Chicago, as Exchange Agent.
5.1 Opinion of Pillsbury Madison & Sutro.*
12.1 Computation of Ratio of Earnings to Fixed Charges.**
23.1 Consent of Deloitte & Touche (see Page II-6).
23.2 Consent of Pillsbury Madison & Sutro (included in Exhibit 5.1).*
24.1 Powers of Attorney of certain directors and officers of McKesson.**
24.2 Powers of Attorney of certain directors and officers of Armor All.**
24.3 Certified resolutions of McKesson.**
24.4 Certified resolutions of Armor All.**
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of the Trustee.**
</TABLE>
- --------
*To be filed by amendment.
**Previously filed.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of McKesson and Armor All pursuant to the foregoing provisions
(excluding the insurance described under Item 15), or otherwise, McKesson and
Armor All have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by McKesson or
Armor All of expenses incurred or paid by a director, officer or controlling
person of McKesson or Armor All in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, McKesson or Armor All (as the
case may be) 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 Act and will be governed by the final adjudication of such
issue.
The registrants hereby undertake that, for purposes of determining any
liability under the Act:
(1) each filing of their respective annual reports 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 the registration statement 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;
(2) the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by McKesson and Armor All pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and
(3) 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.
II-2
<PAGE>
Armor All hereby undertakes:
(1) to file, during any period in which offers or sales of Armor All
Common Stock are being made pursuant to this Registration Statement, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Act;
(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 the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs contained in periodic reports filed by Armor All pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) that, for the purpose of determining any liability under the Act,
each such post-effective amendment 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.
(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 of Armor All Common Stock.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MCKESSON
CORPORATION 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
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN FRANCISCO, STATE OF
CALIFORNIA, ON THE 8TH DAY OF FEBRUARY, 1994.
McKesson Corporation
By /s/ Garret A. Scholz*
----------------------------------
Garret A. Scholz
Vice President Finance
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON THE 8TH DAY OF FEBRUARY, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Alan Seelenfreund* Chairman of the Board and Chief Executive
- ---------------------------------------- Officer (Principal Executive Officer)
Alan Seelenfreund
/s/ Tully M. Friedman* Director
- ----------------------------------------
Tully M. Friedman
/s/ James R. Harvey* Director
- ----------------------------------------
James R. Harvey
/s/ George M. Keller* Director
- ----------------------------------------
George M. Keller
/s/ Leslie L. Luttgens* Director
- ----------------------------------------
Leslie L. Luttgens
/s/ David E. McDowell* Director
- ----------------------------------------
David E. McDowell
/s/ John M. Pietruski* Director
- ----------------------------------------
John M. Pietruski
/s/ Jane E. Shaw* Director
- ----------------------------------------
Jane E. Shaw
Director
- ----------------------------------------
Robert H. Waterman, Jr.
/s/ Garret A. Scholz* Vice President Finance (Principal Financial
- ---------------------------------------- Officer)
Garret A. Scholz
/s/ Richard H. Hawkins* Vice President and Controller (Principal
- ---------------------------------------- Accounting Officer)
Richard H. Hawkins
</TABLE>
/s/ Nancy A. Miller
*By__________________________________
Attorney-in-Fact
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ARMOR ALL
PRODUCTS CORPORATION 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 AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN FRANCISCO,
STATE OF CALIFORNIA, ON THE 8TH DAY OF FEBRUARY, 1994.
Armor All Products Corporation
/s/ Kenneth M. Evans*
By___________________________________
Kenneth M. Evans
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON THE 8TH DAY OF FEBRUARY, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ David E. McDowell* Chairman of the Board of Directors
- ----------------------------------------
David E. McDowell
/s/ Kenneth M. Evans* President, Chief Executive Officer and
- ---------------------------------------- Director (Principal Executive Officer)
Kenneth M. Evans
/s/ William A. Armstrong* Director
- ----------------------------------------
William A. Armstrong
/s/ Jon S. Cartwright* Director
- ----------------------------------------
Jon S. Cartwright
/s/ David L. Mahoney* Director
- ----------------------------------------
David L. Mahoney
/s/ Joseph A. Sasenick* Director
- ----------------------------------------
Joseph A. Sasenick
/s/ Alan Seelenfreund* Director
- ----------------------------------------
Alan Seelenfreund
/s/ Mervyn J. McCulloch* Executive Vice President and Chief
- ---------------------------------------- Financial Officer (Principal Financial and
Mervyn J. McCulloch Accounting Officer)
</TABLE>
/s/ Nancy A. Miller
*By__________________________________
Attorney-in-Fact
II-5
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 33-52075 of McKesson Corporation and Armor All
Products Corporation on Form S-3 of (1) our reports dated May 18, 1993
appearing in and incorporated by reference in the 1993 Annual Report on Form
10-K of McKesson Corporation and appearing in the Appendix to McKesson
Corporation's Proxy Statement for the annual meeting of the stockholders held
on July 28, 1993, and (2) our reports dated April 23, 1993, appearing in and
incorporated by reference in the Annual Report on Form 10-K of Armor All
Products Corporation for the year ended March 31, 1993. We also consent to the
references to us under the headings "Selected Consolidated Financial
Information of McKesson," "Selected Consolidated Financial Information of Armor
All" and "Experts" in the Prospectus, which is part of this Registration
Statement.
Deloitte & Touche
San Francisco, California
February 9, 1994
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NO.
------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement.*
4.1 Form of Indenture by and between McKesson and The First
National Bank of Chicago, as Trustee (including Form of
Debenture as Exhibit A).
4.2 Form of Exchange Agent Agreement by and between McKesson and
The First National Bank of Chicago, as Exchange Agent.
5.1 Opinion of Pillsbury Madison & Sutro.*
12.1 Computation of Ratio of Earnings to Fixed Charges.**
23.1 Consent of Deloitte & Touche (see Page II-6).
23.2 Consent of Pillsbury Madison & Sutro (included in Exhibit
5.1).*
24.1 Powers of Attorney of certain directors and officers of
McKesson.**
24.2 Powers of Attorney of certain directors and officers of Armor
All.**
24.3 Certified resolutions of McKesson.**
24.4 Certified resolutions of Armor All.**
25.1 Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee.**
</TABLE>
- --------
*To be filed by amendment.
**Previously filed.
<PAGE>
Exhibit 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
McKESSON CORPORATION
A Delaware Corporation
AND
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
INDENTURE
Dated as of _________, 1994
______% Exchangeable Subordinated Debentures Due 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET*
--------------------------
Between
Provisions of Trust Indenture Act of 1939 and Indenture dated as of
____________, 1994 between McKesson Corporation, a Delaware corporation, and The
First National Bank of Chicago, Trustee, providing for ______% Exchangeable
Subordinated Debentures Due 2004:
<TABLE>
<CAPTION>
Section of the Act Section of Indenture
- ------------------------------- -------------------------------
<S> <C>
310(a)(1) and (2)............... 8.9
310(a)(3) and (4)............... Inapplicable
310(b).......................... 8.8 and 8.10(b) and (d)
310(c).......................... Inapplicable
311(a).......................... 8.13
311(b).......................... 8.13
311(c).......................... Inapplicable
312(a).......................... 6.1 and 6.2(a)
312(b).......................... 6.2(b)
312(c).......................... 6.2(c)
313(a).......................... 6.3(a)
313(b)(1)....................... Inapplicable
313(b)(2)....................... 6.3(a)
313(c).......................... 6.3(a)
313(d).......................... 6.3(b)
314(a).......................... 6.4
314(b).......................... Inapplicable
314(c)(1) and (2)............... 16.5
314(c)(3)....................... Inapplicable
314(d).......................... Inapplicable
</TABLE>
- ------------------
* This Cross Reference Sheet is not part of the Indenture.
-i-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I. DEFINITIONS ............................................ 1
Section 1.1 Definitions ...................................... 1
ARTICLE II. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OR DEBENTURES ................................. 7
Section 2.1 Designation, Amount and Issue of
Debentures ....................................... 7
Section 2.2 Form of Debentures ............................... 7
Section 2.3 Date and Denomination of Debentures;
Payments of Interest ............................. 8
Section 2.4 Execution of Debentures .......................... 9
Section 2.5 Substitution and Registration of Transfer
of Debentures; Restrictions on Transfer;
Depositary ....................................... 10
Section 2.6 Mutilated, Destroyed, Lost or Stolen
Debentures ....................................... 11
Section 2.7 Temporary Debentures ............................. 12
Section 2.8 Cancellation of Debentures Paid, etc ............. 12
ARTICLE III. REDEMPTION OF DEBENTURES ............................... 13
Section 3.1 Redemption Prices ................................ 13
Section 3.2 Notice of Redemption; Selection of
Debentures ....................................... 13
Section 3.3 Payment of Debentures Called for
Redemption ....................................... 14
Section 3.4 Exchange Arrangement on Call for
Redemption ....................................... 15
ARTICLE IV. SUBORDINATION OF DEBENTURES ............................ 16
Section 4.1 Agreement of Subordination ....................... 16
Section 4.2 Payments to Debenturesholders .................... 16
Section 4.3 Subrogation of Debentures ........................ 18
Section 4.4 Authorization by Debentureholders ................ 19
Section 4.5 Notice to Trustee ................................ 19
Section 4.6 Trustee's Relation to Senior Indebtedness ........ 20
Section 4.7 No Impairment of Subordination ................... 21
ARTICLE V. PARTICULAR COVENANTS OF THE COMPANY .................... 21
Section 5.1 Payment of Principal, Premium and Interest ....... 21
Section 5.2 Maintenance of Office or Agency .................. 21
Section 5.3 Appointments To Fill Vacancies in
Trustee's Office ................................. 22
Section 5.4 Provisions as to Paying Agent .................... 22
Section 5.5 Corporate Existence .............................. 23
Section 5.6 Statement as to Compliance ....................... 23
ARTICLE VI. DEBENTUREHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE ................................ 24
Section 6.1 Debentureholders' Lists .......................... 24
Section 6.2 Preservation and Disclosure of Lists ............. 24
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued)
Page
----
<C> <S> <C>
Section 6.3 Reports by Trustee................................ 24
Section 6.4 Reports by Company................................ 25
ARTICLE VII. REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON
AN EVENT OF DEFAULT.................................... 25
Section 7.1 Events of Default................................. 25
Section 7.2 Payments of Debentures on Default; Suit
Therefor.......................................... 27
Section 7.3 Application of Monies Collected by Trustee........ 29
Section 7.4 Proceedings by Debentureholder.................... 30
Section 7.5 Proceedings by Trustee............................ 31
Section 7.6 Remedies Cumulative and Continuing................ 31
Section 7.7 Direction of Proceedings and Waiver of
Defaults by Majority of Debentureholders.......... 31
Section 7.8 Notice of Defaults................................ 32
Section 7.9 Undertaking To Pay Costs.......................... 32
ARTICLE VIII. CONCERNING THE TRUSTEE................................. 33
Section 8.1 Duties and Responsibilities of Trustee............ 33
Section 8.2 Reliance on Documents, Opinions, etc.............. 34
Section 8.3 No Responsibility for Recitals, etc............... 35
Section 8.4 Trustee, Paying Agents, Exchange Agent or
Registrar May Own Debentures...................... 35
Section 8.5 Monies To Be Held in Trust........................ 36
Section 8.6 Compensation and Expenses of Trustee.............. 36
Section 8.7 Officer's Certificate as Evidence................. 36
Section 8.8 Conflicting Interests of Trustee.................. 37
Section 8.9 Eligibility of Trustee............................ 37
Section 8.10 Resignation or Removal of Trustee................. 37
Section 8.11 Acceptance by Successor Trustee................... 38
Section 8.12 Succession by Merger, etc......................... 39
Section 8.13 Limitation on Rights of Trustee as
Creditor.......................................... 40
ARTICLE IX. CONCERNING THE DEBENTUREHOLDERS........................ 40
Section 9.1 Action by Debentureholders........................ 40
Section 9.2 Proof of Execution by Debentureholders............ 40
Section 9.3 Who Are Deemed Absolute Owners.................... 41
Section 9.4 Company-Owned Debentures Disregarded.............. 41
Section 9.5 Revocation of Consents; Future Holders
Bound............................................. 41
ARTICLE X. DEBENTUREHOLDERS' MEETINGS............................. 42
Section 10.1 Purpose of Meetings............................... 42
Section 10.2 Call of Meetings by Trustee....................... 42
Section 10.3 Call of Meetings by Company or
Debentureholders.................................. 43
Section 10.4 Qualifications for Voting......................... 43
Section 10.5 Regulations....................................... 43
Section 10.6 Voting............................................ 44
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 10.7 No Delay of Rights by Meeting .................... 44
ARTICLE XI. SUPPLEMENTAL INDENTURES ................................ 45
Section 11.1 Supplemental Indentures Without Consent of
Debentureholders ................................. 45
Section 11.2 Supplemental Indentures with Consent of
Debentureholders ................................. 46
Section 11.3 Compliance with Trust Indenture Act;
Effect of Supplemental Indentures ................ 47
Section 11.4 Notation on Debentures ........................... 47
Section 11.5 Evidence of Compliance of Supplemental
Indenture To Be Furnished Trustee ................ 47
ARTICLE XII. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND
LEASE .................................................. 48
Section 12.1 Company May Consolidate, etc. on Certain
Terms ............................................ 48
Section 12.2 Successor Corporation To Be Substituted .......... 48
Section 12.3 Opinion of Counsel To Be Given Trustee ........... 49
ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE ................ 49
Section 13.1 Discharge of Indenture ........................... 49
Section 13.2 Deposited Monies To Be Held in Trust by
Trustee .......................................... 50
Section 13.3 Paying Agent To Repay Monies Held ................ 50
Section 13.4 Return of Unclaimed Monies ....................... 50
Section 13.5 Reinstatement .................................... 50
ARTICLE XIV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS ................................. 51
Section 14.1 Indenture and Debentures Soley Corporate
Obligations ...................................... 51
ARTICLE XV. EXCHANGE OF DEBENTURES ................................. 51
Section 15.1 Right To Exchange ................................ 51
Section 15.2 Method of Exchange ............................... 52
Section 15.3 Fractional Interests ............................. 53
Section 15.4 Adjustment of Exchange Price ..................... 54
Section 15.5 Exchange Agent Agreement ......................... 55
Section 15.6 Company To Give Notice of Certain Events ......... 60
Section 15.7 Merger of Armor All .............................. 61
Section 15.8 Certain Tender or Exchange Offers for
Exchange Property ................................ 62
Section 15.9 Tax Adjustments in Exchange Price ................ 62
Section 15.10 Cash Equivalent .................................. 64
Section 15.11 Repurchase Rights ................................ 64
Section 15.12 Withdrawals of Exchange Property ................. 65
Section 15.13 Obligations of Trustee and Exchange Agent ........ 66
Section 15.14 Covenants by the Company ......................... 66
Section 15.15 Transfer Taxes ................................... 66
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 15.16 Fully Paid Shares ................................ 67
Section 15.17 Cancellation ..................................... 67
Section 15.18 Registration of Armor All Common Stock ........... 67
ARTICLE XVI. MISCELLANEOUS PROVISIONS ............................... 67
Section 16.1 Provisions Binding on Company's Successors ....... 67
Section 16.2 Official Acts by Successor Corporation ........... 67
Section 16.3 Addresses for Notices, etc ....................... 68
Section 16.4 Governing Law .................................... 68
Section 16.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee .......................... 68
Section 16.6 Legal Holidays ................................... 69
Section 16.7 Trust Indenture Act .............................. 69
Section 16.8 No Security Interest Created ..................... 69
Section 16.9 Benefits of Indenture ............................ 69
Section 16.10 Table of Contents, Headings, etc ................. 69
Section 16.11 Authenticating Agent ............................. 69
Section 16.12 Execution in Counterparts ........................ 70
</TABLE>
-iv-
<PAGE>
INDENTURE dated as of _____________, 1994 between McKESSON CORPORATION, a
Delaware corporation (hereinafter sometimes called the "Company," as more fully
set forth in Section 1.1), and THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association (hereinafter sometimes called the "Trustee," as more fully
set forth in Section 1.1),
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue of its _______% Exchangeable Subordinated Debentures Due 2004
(hereinafter sometimes called the "Debentures"), in an aggregate principal
amount not to exceed $155,000,000 and, to provide the terms and conditions upon
which the Debentures are to be authenticated, issued and delivered, the Company
has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Debentures, the certificate of authentication to be borne by
the Debentures, a form of assignment, a form of exchange notice, a form of
repurchase election and a certificate of transfer to be borne by the Debentures
are to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Debentures have in
all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Debentures
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Debentures by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the
Debentures (except as otherwise provided below), as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Section 1.1 (except as
-----------
herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture, which are defined in the Trust Indenture Act or
-1-
<PAGE>
which are by reference therein defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as
the singular.
Armor All Common Stock: The term "Armor All Common Stock" shall mean any
----------------------
stock of any class of Armor All Products Corporation ("Armor All") which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of Armor All and
which is not subject to redemption by Armor All delivered to the Exchange Agent
by the Company pursuant to this Indenture and the Exchange Agent Agreement and
which shall initially constitute the Exchange Property.
Board of Directors: The term "Board of Directors" shall mean the Board of
------------------
Directors of the Company or a committee of such Board duly authorized to act for
it hereunder.
Business Day: The term "Business Day" shall mean any day excluding: (i)
------------
any Saturday, Sunday and any day which is a legal holiday under the laws of the
State of California or New York or at the Corporate Trust Office of the Trustee,
or (ii) any day on which banking institutions in either state are required or
permitted by law or other governmental action to close.
Commission: The term "Commission" shall mean the Securities and Exchange
----------
Commission.
Company: The term "Company" shall mean McKesson Corporation, a Delaware
-------
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.
Corporate Trust Office of the Trustee: The term "Corporate Trust Office of
-------------------------------------
the Trustee," or other similar term, shall mean the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date as of which this Indenture is dated,
located at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126,
Attention: Corporate Trust Services Division; except that for purposes of
Section 5.2, such term shall mean the office or agent of the Trustee in the
Borough of Manhattan, the City of New York, which office this date hereof is
located at 14 Wall Street, 8th Floor, New York, New York 10005.
Debenture or Debentures: The terms "Debenture" or "Debentures" shall mean
-----------------------
any Debenture or Debentures, as the case may be, authenticated and delivered
under this Indenture.
-2-
<PAGE>
Debenture register: The term "Debenture register" shall have the meaning
------------------
specified in Section 2.5.
Debenture registrar: The term "Debenture registrar" shall have the meaning
-------------------
specified in Section 2.5.
Debentureholder; holder: The terms "Debentureholder" or "holder" as
-----------------------
applied to any Debenture, or other similar terms, shall mean any person in
whose name at the time a particular Debenture is registered on the Debenture
registrar's books.
Event of Default: The term "Event of Default" shall mean any event
----------------
specified in Section 7.1(a), (b), (c), (d), (e), (f) or (g).
Exchange Act: The term "Exchange Act" means the Securities Exchange Act of
------------
1934, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time during the term hereof.
Exchange Agent: The term "Exchange Agent" means the Exchange Agent under
--------------
the Exchange Agent Agreement, until a successor Exchange Agent shall have become
such pursuant to the provisions of Section 16 of the Exchange Agent Agreement,
and thereafter "Exchange Agent" shall mean such successor Exchange Agent
thereunder and from time to time any subsequent successor pursuant to such
provisions.
Exchange Agent Agreement: The term "Exchange Agent Agreement" means the
------------------------
Exchange Agent Agreement entered into pursuant to the provisions of Section 15.5
hereof, as the same may be supplemented and amended from time to time.
Exchange Price: The term "Exchange Price" means initially $____ per share,
--------------
which is equivalent to an exchange rate of ____ shares of Armor All Common Stock
per $1,000 principal amount of Debentures, and thereafter means such price as
from time to time adjusted and in effect in accordance with the provisions of
Article XV hereof.
Exchange Property: The "Exchange Property" shall initially be fully paid
-----------------
and nonassessable shares of Armor All Common Stock, the amount to be determined
by dividing the aggregate principal amount of the Debentures by the Exchange
Price, delivered to the Exchange Agent by the Company pursuant to the Exchange
Agent Agreement simultaneously with the execution delivery of this Indenture,
and thereafter may also include such other securities, cash or other property
attributable to the Armor All Common Stock or other Exchange Property, which at
the time are deliverable upon surrender of the Debentures for exchange in
accordance with Article XV of this Indenture.
Indenture: The term "Indenture" shall mean this instrument as originally
---------
executed or, if amended or supplemented as herein
-3-
<PAGE>
provided, as so amended or supplemented, pursuant to which the principal amount
of up to $155,000,000 of ____% Exchangeable Subordinated Debentures Due 2004
shall be issued by the Company.
Market Price: The term "Market Price" means, when used with respect to
------------
Armor All Common Stock or any other security as of any date, (i) the last
reported sale price regular way or, in case no such reported sales take place on
such days, the average of the reported closing bid and asked prices regular way,
for the 5 consecutive trading days immediately preceding such date, in either
case, on the New York Stock Exchange, or (ii) if the Armor All Common Stock or
other Exchange Property, as the case may be, is not listed or admitted to
trading on the New York Stock Exchange, the last reported sale price regular way
or, in the case no such reported sales take place on such days, the average of
the reported closing bid and asked prices regular way, for the 5 consecutive
trading days immediately preceding such date, on the principal national
securities exchange on which the Armor All Common Stock or other Exchange
Property, as the case may be, is listed or admitted to trading, or (iii) if the
Armor All Common Stock or other Exchange Property, as the case may be, is not
listed or admitted to trading on any national securities exchange, the last
reported sale price of the Armor All Common Stock or other Exchange Property, as
the case may be, for the 5 consecutive trading days immediately preceding such
date, on the Nasdaq National Market, or (iv) if the Armor All Common Stock or
other Exchange Property, as the case may be, is not listed or admitted to
trading on any national securities exchange or Nasdaq National Market, the
closing sale price (or the quoted closing bid price if there were no sales) for
the 5 consecutive trading days immediately preceding such date, as reported by
The Nasdaq Stock Market. If none of the conditions set forth above is met, the
Market Price shall be the fair market value of the Armor All Common Stock or
Other Exchange Property, as the case may be, as determined by a member firm of
the New York Stock Exchange selected by the Exchange Agent.
McKesson-Maryland: The term "McKesson-Maryland" shall mean McKesson
-----------------
Corporation, a wholly owned subsidiary of the Company incorporated in the State
of Maryland, and any successor Person which is a wholly owned subsidiary of the
Company.
Officer's Certificate: The term "Officer's Certificate," when used with
---------------------
respect to the Company, shall mean a certificate signed by the Chairman, Chief
Executive Officer, President, Treasurer, Secretary, Controller or any Vice
President, Assistant Treasurer or Assistant Secretary of the Company. Each such
certificate shall include the statements provided for in Section 16.5 if and to
the extent required by the provisions of such Section.
Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in
------------------
writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel acceptable to the Trustee. Each such opinion shall
include the statements provided for in Section 16.5 if and to the extent
required by the provisions of such Section.
outstanding: The term "outstanding," when used with reference to
-----------
Debentures, shall, subject to the provisions of Section 9.4, mean, as of any
particular time, all Debentures authenticated and delivered by the Trustee under
this Indenture, except
(a) Debentures theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Debentures, or portions thereof, for the payment or redemption of
which monies in the necessary amount shall have
-4-
<PAGE>
been deposited in trust with the Trustee or with any paying agent (other
than the Company) or shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own paying agent); provided
--------
that if such Debentures are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as in Article III provided,
or provision satisfactory to the Trustee shall have been made for giving
such notice;
(c) Debentures in lieu of or in substitution for which other
Debentures shall have been authenticated and delivered pursuant to the
terms of Section 2.6 unless proof satisfactory to the Trustee is presented
that any such Debentures are held by bona fide holders in due course; and
(d) Debentures exchanged for Exchange Property pursuant to Article XV
and Debentures not deemed outstanding pursuant to Section 3.2.
Person: The term "Person" shall mean a corporation, an association, a
------
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
Predecessor Debenture: The term "Predecessor Debenture" of any particular
---------------------
Debenture shall mean every previous Debenture evidencing all or a portion of the
same debt as that evidenced by such particular Debenture; and, for the purposes
of this definition, any Debenture authenticated and delivered under Section 2.6
in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the
same debt as the lost, destroyed or stolen Debenture.
Responsible Officer: The term "Responsible Officer," when used with
-------------------
respect to the Trustee, shall mean an officer of the Trustee assigned and duly
authorized by the Trustee to administer its corporate trust matters.
Securities Act: The term "Securities Act" means the Securities Act of
--------------
1933, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time during the term hereof.
Senior Indebtedness: The term "Senior Indebtedness" shall mean the
-------------------
principal of, premium, if any, interest on, and any other payment due pursuant
to any of the following, whether outstanding at the date hereof or hereafter
incurred or created:
(a) all indebtedness of the Company for money borrowed (including any
indebtedness secured by a mortgage or other lien which is (i) given to
secure all or part of the purchase price of property subject thereto,
whether given to the vendor of such property or to another, or (ii)
existing on property at the time of acquisition thereof);
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<PAGE>
(b) all indebtedness of the Company evidenced by notes, debentures,
bonds or similar instruments (excluding any such indebtedness for trade
payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business) and all indebtedness of the
Company consisting of reimbursement obligations due and owing with respect
to letters of credit;
(c) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;
(d) all indebtedness consisting of commitment or standby fees due and
payable to lending institutions with respect to credit facilities available
to the Company;
(e) all indebtedness consisting of obligations of the Company due and
payable under interest rate and currency swaps, floors, caps or other
similar arrangements intended to fix interest rate obligations;
(f) all indebtedness of others of the kinds described in the
preceding clauses (a), (b), (d) or (e) and all lease obligations of others
of the kind described in the preceding clause (c) assumed by or guaranteed
in any manner by the Company or in effect guaranteed by the Company through
an agreement to purchase, contingent or otherwise; and
(g) all renewals, extensions, refundings, deferrals, amendments,
modifications or supplements of indebtedness of the kinds described in any
of the preceding clauses (a), (b), (d), (e) or (f) and all renewals or
extensions of lease obligations of the kinds described in any of the
preceding clauses (c) or (f);
unless, in the case of any particular indebtedness, lease, renewal, extension,
refunding, amendment, modification or supplement, the instrument, lease or other
document creating or evidencing the same or the assumption or guarantee of the
same expressly provides that such indebtedness, lease, renewal, extension,
refunding, amendment, modification or supplement is not superior in right of
payment to the Debentures. Notwithstanding the foregoing, Senior Indebtedness
shall not include any indebtedness or lease obligations of any kind of the
Company to any subsidiary of the Company.
Trust Indenture Act: The term "Trust Indenture Act" shall mean the Trust
-------------------
Indenture Act of 1939, as amended, as it was in force at the date of execution
of this Indenture, except as provided in Sections 11.3 and 15.7; provided,
---------
however, that in the event the Trust Indenture Act of 1939 is amended after the
- -------
date hereof, the term "Trust Indenture Act" shall mean, to the extent required
by such amendment, the Trust Indenture Act of 1939 as so amended.
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<PAGE>
Trustee: The term "Trustee" shall mean The First National Bank of Chicago,
-------
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.
U.S. Government Obligations: The term "U.S. Government Obligations" shall
---------------------------
mean direct non-callable obligations of, or non-callable obligations the payment
of principal of and interest on which is guaranteed by, the United States of
America, or to the payment of which obligations or guarantees the full faith and
credit of the United States of America is pledged, or beneficial interests in a
trust the corpus of which consists exclusively of money or such obligations or a
combination thereof.
The definitions of certain other terms are as specified in Article XV.
ARTICLE II.
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF DEBENTURES
Section 2.1 Designation, Amount and Issue of Debentures. The Debentures
-------------------------------------------
shall be designated as "______% Exchangeable Subordinated Debentures Due 2004."
Debentures not to exceed the aggregate principal amount of $155,000,000 upon the
execution of this Indenture, or from time to time thereafter, may be executed by
the Company and delivered to the Trustee for authentication, and the Trustee
shall thereupon authenticate and deliver said Debentures to or upon the written
order of the Company, signed by its (a) Chairman, Chief Executive Officer,
President or any Vice President and (b) its Treasurer or Assistant Treasurer or
its Secretary or any Assistant Secretary, without any further action by the
Company hereunder.
Section 2.2 Form of Debentures. The Debentures and the Trustee's
------------------
certificate of authentication to be borne by the Debentures shall be
substantially in the form set forth in Exhibit A, which is incorporated in and
made a part of this Indenture.
Any of the Debentures may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange on which the Debentures may be listed, or to conform to
usage.
The terms and provisions contained in the form of Debenture attached as
Exhibit A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
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<PAGE>
Section 2.3 Date and Denomination of Debentures; Payments of Interest.
---------------------------------------------------------
The Debentures shall be issuable in registered form without coupons in
denominations of $1,000 principal amount and any integral multiple thereof.
Every Debenture shall be dated the date of its authentication, shall bear
interest from the applicable date and shall be payable on the dates specified on
the face of the form of Debenture, attached as Exhibit A hereto.
The Person in whose name any Debenture (or its Predecessor Debenture) is
registered at the close of business on any record date with respect to any
interest payment date (including any Debenture that is exchanged after the
record date and on or before the interest payment date) shall be entitled to
receive the interest payable on such interest payment date notwithstanding the
cancellation of such Debenture upon any transfer, substitution or exchange
subsequent to the record date and prior to such interest payment date. Interest
may, at the option of the Company, be paid by check mailed to the address of
such Person on the registry kept for such purposes. The term "record date" with
respect to any interest payment date shall mean the February 1 or August 1
preceding said February 15 or August 15.
Interest on the Debentures shall be computed on the basis of a year of
twelve 30-day months.
Any interest on any Debenture which is payable, but is not punctually paid
or duly provided for, on any said February 15 or August 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Debentureholder
on the relevant record date by virtue of his having been such Debentureholder;
and such Defaulted Interest shall be paid by the Company, at its election in
each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Debentures (or their respective
Predecessor Debentures) are registered at the close of business on a
special record date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest to be paid on each Debenture
and the date of the payment (which shall be not less than 25 days after the
receipt by the Trustee of such notice, unless the Trustee shall consent to
an earlier date), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the payment and not less than 10 days
after the
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<PAGE>
receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record date and, in the
name and at the expense of the Company, shall cause notice of the payment
of such Defaulted Interest and the special record date therefor to be
mailed, first-class postage prepaid, to each Debentureholder at his address
as it appears in the Debenture register, not less than 10 days prior to
such special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Debentures (or their respective Predecessor Debentures) were registered at
the close of business on such special record date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Section 2.4 Execution of Debentures. The Debentures shall be signed in
-----------------------
the name and on behalf of the Company by the facsimile signature of its
Chairman, its Chief Executive Officer, its President or any of its Vice
Presidents and attested by the facsimile signature of its Secretary or any of
its Assistant Secretaries (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Debentures as shall
bear thereon a certificate of authentication substantially in the form set forth
on the form of Debenture attached as Exhibit A hereto, manually executed by the
Trustee (or an authenticating agent appointed by the Trustee as provided by
Section 16.11), shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Debenture executed by the Company shall be
conclusive evidence that the Debenture so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
In case any officer of the Company who shall have signed any of the
Debentures shall cease to be such officer before the Debentures so signed shall
have been authenticated and delivered by the Trustee, or disposed of by the
Company, such Debentures nevertheless may be authenticated and delivered or
disposed of as though the Person who signed such Debentures had not ceased to be
such officer of the Company; and any Debenture may be signed on behalf of the
Company by such Persons as, at the actual date of the execution of such
Debenture, shall be the proper officers of the Company, although at the date of
the execution of this Indenture any such Person was not such an officer.
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<PAGE>
Section 2.5 Substitution and Registration of Transfer of Debentures;
--------------------------------------------------------
Restrictions on Transfer; Depositary. The Company shall cause to be kept at the
- ------------------------------------
Corporate Trust Office of the Trustee a register (the register maintained in
such office and in any other office or agency of the Company designated pursuant
to Section 5.2 being herein sometimes collectively referred to as the "Debenture
register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Debentures and of transfers of
Debentures. Such register shall be in written form or in any form capable of
being converted into written form within a reasonable period of time. The
Trustee is hereby appointed "Debenture registrar" for the purpose of registering
Debentures and transfers of Debentures as herein provided. The Company may
appoint one or more co-registrars in accordance with Section 5.2.
Upon surrender for registration of transfer of any Debenture to the
Debenture registrar or any co-registrar, and satisfaction of the requirements
for such transfer set forth in this Section 2.5, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Debentures of any authorized
denominations and of a like aggregate principal amount.
Debentures may be substituted for other Debentures of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Debentures to be substituted at any such office or agency. Whenever any
Debentures are so surrendered for substitution, the Company shall execute, and
the Trustee shall authenticate and deliver, the Debentures which the
Debentureholder making the substitution is entitled to receive.
All Debentures issued upon any registration of transfer or substitution of
Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Debentures
surrendered upon such registration of transfer or substitution.
Every Debenture presented or surrendered for registration of transfer or
for substitution shall (if so required by the Company or the Debenture
registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, and the Debenture shall be duly
executed by the Debentureholder thereof or his attorney duly authorized in
writing.
No service charge shall be charged to the Debentureholders for any
registration of transfer or substitution of Debentures, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
substitution of Debentures.
In the event of a redemption of the Debentures in part, the Company will
not be required to register the transfer or substitution of Debentures for a
period of 15 days immediately preceding the date notice is given identifying the
serial numbers of the Debentures called for such redemption; or to register the
transfer
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<PAGE>
or substitution of any such Debenture, or portion thereof, called for
redemption.
Section 2.6 Mutilated, Destroyed, Lost or Stolen Debentures. In case any
-----------------------------------------------
Debenture shall become mutilated or be destroyed, lost or stolen, the Company in
its discretion may execute, and upon its request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and deliver, a
new Debenture, bearing a number not contemporaneously outstanding, in
substitution for the mutilated Debenture, or in lieu of and in substitution for
the Debenture so destroyed, lost or stolen. In every case the applicant for a
substituted Debenture shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company, to
the Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Debenture and of the
ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Debenture and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Debenture, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Debenture which has matured or is
about to mature or has been called for redemption or is about to be exchanged
for Exchange Property shall become mutilated or be destroyed, lost or stolen,
the Company may, instead of issuing a substitute Debenture, pay or authorize the
payment of or exchange or authorize the exchange of the same (without surrender
thereof except in the case of a mutilated Debenture), as the case may be, if the
applicant for such payment or exchange shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in case of destruction, loss or theft, evidence satisfactory to the Company, the
Trustee and, if applicable, any paying agent or the Exchange Agent of the
destruction, loss or theft of such Debenture and of the ownership thereof.
Every substitute Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Debenture is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debenture shall be found at any
time, and shall be entitled to all the benefits of (but shall be subject to all
the limitations set forth in) this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder. To the extent permitted by
law, all Debentures shall be held and owned
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<PAGE>
upon the express condition that the foregoing provisions are exclusive with
respect to the substitution or payment or exchange of mutilated, destroyed, lost
or stolen Debentures and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the substitution or payment or exchange of negotiable
instruments or other securities without their surrender.
Section 2.7 Temporary Debentures. Pending the preparation of definitive
--------------------
Debentures, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall authenticate and deliver temporary Debentures
(printed or lithographed). Temporary Debentures shall be issuable in any
authorized denomination, and substantially in the form of the definitive
Debentures but with such omissions, insertions and variations as may be
appropriate for temporary Debentures, all as may be determined by the Company.
Every such temporary Debenture shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Debentures. Without unreasonable delay the Company will execute
and deliver to the Trustee or such authenticating agent definitive Debentures
and thereupon any or all temporary Debentures may be surrendered in substitution
therefor, at each office or agency maintained by the Company pursuant to Section
5.2 and the Trustee or such authenticating agent shall authenticate and deliver
in substitution for such temporary Debentures an equal aggregate principal
amount of definitive Debentures. Such substitution shall be made by the Company
at its own expense and without any charge therefor. Until so substituted, the
temporary Debentures shall in all respects be entitled to the same benefits and
subject to the same limitations under this Indenture as definitive Debentures
authenticated and delivered hereunder.
Section 2.8 Cancellation of Debentures Paid, etc. All Debentures
-------------------------------------
surrendered for the purpose of payment, redemption, exchange, substitution or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Debenture registrar or the Exchange Agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Debentures shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee shall destroy canceled Debentures (unless the Company directs it to do
otherwise) and, after such destruction, shall deliver a certificate of such
destruction to the Company. If the Company shall acquire any of the Debentures,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Debentures unless and until the same are
delivered to the Trustee for cancellation.
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<PAGE>
ARTICLE III.
REDEMPTION OF DEBENTURES
Section 3.1 Redemption Prices. The Company may, at its option, redeem
-----------------
all or from time to time any part of the Debentures on any date prior to
maturity, upon notice as set forth in Section 3.2, and at the optional
redemption prices set forth in the form of Debenture attached as Exhibit A
hereto, together with accrued interest to the date fixed for redemption;
provided, however, that no such redemption shall be effected before February 16,
- -----------------
1999.
Section 3.2 Notice of Redemption; Selection of Debentures. In case the
---------------------------------------------
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Debentures pursuant to Section 3.1, it shall fix a date for
redemption and, in the case of any redemption pursuant to Section 3.1, it or, at
its request, the Trustee in the name of and at the expense of the Company (where
such request must be received by the Trustee at least 10 Business Days prior to
the date the Trustee is requested to give notice as described below unless a
shorter period is agreed to by the Trustee) shall mail or cause to be mailed a
notice of such redemption at least 30 and not more than 60 days prior to the
date fixed for redemption to the holders of Debentures so to be redeemed as a
whole or in part at their last addresses as the same appear on the Debenture
register of the Company (provided that if the Company shall give such notice, it
--------
shall also give such notice, and notice of the Debentures to be redeemed, to the
Trustee). Such mailing shall be by first-class mail. The notice, if mailed in
the manner herein provided, shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any
Debenture designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Debenture.
Each such notice of redemption shall specify the aggregate principal
amount of Debentures to be redeemed, the date fixed for redemption, the
redemption price at which Debentures are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Debentures, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portion thereof to be redeemed will cease to accrue. Such notice shall
also state the current Exchange Price and the date on which the right to
exchange such Debentures or portions thereof into Exchange Property will expire.
If fewer than all the Debentures are to be redeemed, the notice of redemption
shall identify the Debentures to be redeemed. In case any Debenture is to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Debenture, a new Debenture or
Debentures in
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<PAGE>
principal amount equal to the unredeemed portion thereof will be issued.
On or prior to the Business Day prior to the redemption date specified
in the notice of redemption given as provided in this Section 3.2, the Company
will deposit with the Trustee or with one or more paying agents (or, if the
Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 5.4) an amount of money sufficient to redeem on the
redemption date all the Debentures so called for redemption (other than those
theretofore surrendered for exchange into Exchange Property) at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If any Debenture called for redemption is exchanged pursuant
hereto, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Debenture shall be paid
to the Company upon its request, or, if then held by the Company shall be
discharged from such trust. If fewer than all the Debentures are to be
redeemed, the Company will give the Trustee written notice in the form of an
Officer's Certificate not fewer than 45 days (or such shorter period of time as
may be acceptable to the Trustee) prior to the redemption date as to the
aggregate principal amount of Debentures to be redeemed.
If fewer than all the Debentures are to be redeemed, the Trustee shall
select, by lot or, in its sole discretion, on a pro rata basis, the Debentures
or portion thereof (in integral multiples of $1,000) to be redeemed. If any
Debenture selected for partial redemption is exchanged in part after such
selection, the exchanged portion of such Debenture shall be deemed (so far as
may be) to be the portion to be selected for redemption. The Debentures (or
portions thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Debenture is exchanged as a
whole or in part before the mailing of the notice of redemption.
Upon any redemption of less than all Debentures, the Company and the
Trustee may treat as outstanding any Debentures surrendered for exchange during
the period of 15 days next preceding the mailing of a notice of redemption and
need not treat as outstanding any Debenture authenticated and delivered during
such period in substitution for the unexchanged portion of any Debenture
exchanged in part during such period.
Section 3.3 Payment of Debentures Called for Redemption. If notice of
-------------------------------------------
redemption has been given as above provided, the Debentures or portion of
Debentures with respect to which such notice has been given shall, unless
exchanged into Exchange Property pursuant to the terms hereof, become due and
payable on the date and at the place or places stated in such notice at the
applicable redemption price, together with interest accrued to the date fixed
for redemption, and on and after said date (unless the Company shall default in
the payment of such Debentures at the redemption price, together with interest
accrued to said date) interest on the
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<PAGE>
Debentures or portion of Debentures so called for redemption shall cease to
accrue and such Debentures shall cease after the close of business on the
Business Day next preceding the date fixed for redemption to be exchangeable
into Exchange Property and, except as provided in Sections 8.5 and 13.5, to be
entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Debentures except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Debentures at a place of
payment in said notice specified, the said Debentures or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption;
provided that any semi-annual payment of interest becoming due on the date fixed
- --------
for redemption shall be payable to the holders of such Debentures registered as
such on the relevant record date subject to the terms and provisions of Section
2.3 hereof.
Upon presentation of any Debenture redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the holder
thereof, at the expense of the Company, a new Debenture or Debentures, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Debentures so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any
Debentures or mail any notice of optional redemption during the continuance of a
default in payment of interest or premium on the Debentures or of any Event of
Default of which, in the case of any Event of Default other than under Section
7.1(a) or (b), a Responsible Officer of the Trustee has knowledge. If any
Debenture called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and premium, if any, shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Debenture and such Debenture shall remain exchangeable into Exchanged
Property until the principal and premium, if any, shall have been paid or duly
provided for.
Section 3.4 Exchange Arrangement on Call for Redemption. In connection
-------------------------------------------
with any redemption of Debentures, the Company may arrange for the purchase and
exchange of any Debentures by an agreement with one or more investment bankers
or other purchasers to purchase such Debentures by paying to the Trustee in
trust for the Debentureholders, on or before the date fixed for redemption, an
amount not less than the applicable redemption price, together with interest
accrued to the date fixed for redemption, of such Debentures. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Debentures, together with interest
accrued to the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, a copy of which will be filed with the Trustee prior
to the date fixed for redemption, any
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<PAGE>
Debentures not duly surrendered for exchange by the holders thereof may, at the
option of the Company, be deemed, to the fullest extent permitted by law,
acquired by such purchasers from such holders and (notwithstanding anything to
the contrary contained in Article XV) surrendered by such purchasers for
exchange, all as of immediately prior to the close of business on the date fixed
for redemption (and the right to exchange any such Debentures shall be deemed to
have been extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it in the same manner as it would monies deposited
with it by the Company for the redemption of Debentures. Without the Trustee's
prior written consent, no arrangement between the Company and such purchasers
for the purchase and exchange of any Debentures shall increase or otherwise
affect any of the powers, duties, responsibilities or obligations of the Trustee
as set forth in this Indenture, and the Company agrees to indemnify the Trustee
from, and hold it harmless against, any loss, liability or expense arising out
of or in connection with any such arrangement for the purchase and exchange of
any Debentures between the Company and such purchasers to which the Trustee has
not consented in writing, including the costs and expenses incurred by the
Trustee in the defense of any claim or liability arising out of or in connection
with the exercise or performance of any of its powers, duties, responsibilities
or obligations under this Indenture.
ARTICLE IV.
SUBORDINATION OF DEBENTURES
Section 4.1 Agreement of Subordination. The Company covenants and
--------------------------
agrees, and each holder of Debentures issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Debentures shall be issued subject to
the provisions of this Article IV; and each Person holding any Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest on all
Debentures issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.
No provision of this Article IV shall prevent the occurrence of any Event
of Default hereunder.
Section 4.2 Payments to Debentureholders. In the event and during the
----------------------------
continuation of any default in the payment of principal, premium, interest or
any other payment due on any Senior Indebtedness continuing beyond the period of
grace, if any, specified in the instrument or lease evidencing such Senior
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Indebtedness, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no payment shall be made by the Company
with respect to the principal of, or premium, if any, or interest on the
Debentures except payments made pursuant to Article XIII from monies deposited
with the Trustee pursuant thereto prior to the happening of such default.
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full, or payment thereof provided for
in money in accordance with its terms, before any payment is made on account of
the principal (and premium, if any) or interest on the Debentures (except
payments made pursuant to Article XIII from monies deposited with the Trustee
pursuant thereto prior to the happening of such dissolution, winding-up,
liquidation or reorganization); and upon any such dissolution or winding-up or
liquidation or reorganization for any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the holders of the Debentures or the Trustee would be
entitled, except for the provision of this Article IV, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the holders of the Debentures or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company, or as otherwise required by
law or a court order) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness, before any payment
or distribution is made to the holders of the Debentures or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the holders of the Debentures before all Senior Indebtedness is paid
in full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
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the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
For purposes of this Article IV, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article IV with respect to
the Debentures to the payment of all Senior Indebtedness which may at the time
be outstanding; provided that (i) if a new corporation results from such
--------
reorganization or readjustment, such corporation assumes the Senior
Indebtedness (other than leases which need not be assumed), and (ii) the rights
of the holders of Senior Indebtedness (other than leases which are not assumed
by the Company or by the new corporation, as the case may be) are not, without
the consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article XII shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 4.2 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article XII. Nothing in this Section 4.2 shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
8.6.
Section 4.3 Subrogation of Debentures. Subject to the payment in full
-------------------------
of all Senior Indebtedness, the rights of the holders of the Debentures shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal of (and premium, if
any) and interest on the Debentures shall be paid in full; and, for the purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article IV, and no payment pursuant to the provisions of this Article IV to or
for the benefit of the holders of Senior Indebtedness by holders of the
Debentures or the Trustee, shall, as between the Company, its creditors other
than holders of Senior Indebtedness, and the holders of the Debentures, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this Article IV are and
are intended solely for the purposes of defining the relative rights of the
holders of the Debentures, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
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Nothing contained in this Article IV or elsewhere in this Indenture or
in the Debentures is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures the principal of (and premium, if any)
and interest on the Debentures as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the holder of any Debenture from exercising all remedies
otherwise permitted by applicable law upon an Event of Default under this
Indenture, subject to the rights, if any, under this Article IV of the holders
of Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article IV, the Trustee, subject to the provisions of Section 8.1, and the
holders of the Debentures shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the holders of the Debentures, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon, and all
other facts pertinent thereto or to this Article IV.
Section 4.4 Authorization by Debentureholders. Each holder of a
---------------------------------
Debenture by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article IV and appoints the Trustee his
attorney-in-fact for any and all such purposes.
Section 4.5 Notice to Trustee. The Company shall give prompt written
-----------------
notice in the form of an Officer's Certificate to a Responsible Officer of the
Trustee of any fact known to the Company which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Debentures pursuant to
the provisions of this Article IV. Notwithstanding the provisions of this
Article IV or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article IV, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof at
the Corporate Trust Office of the Trustee from the Company (in the form of an
Officer's Certificate) or a holder or holders of Senior Indebtedness or from any
trustee thereof; and before the receipt of any
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such written notice, the Trustee, subject to the provisions of Section 8.1,
shall be entitled in all respects to assume that no such facts exist; provided
--------
that if on a date not fewer than two Business Days prior to the date upon which
by the terms hereof any such monies may become payable for any purpose
(including, without limitation, the payment of the principal of, or premium, if
any, or interest on any Debenture) the Trustee shall not have received, with
respect to such monies, the notice provided for in this Section 4.5, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Notwithstanding anything to the contrary hereinbefore set forth, nothing
shall prevent any payment by the Company or the Trustee to the Debentureholders
of monies in connection with a redemption of Debentures if (i) notice of such
redemption has been given pursuant to Article III or Section 13.1 prior to the
receipt by the Trustee of written notice as aforesaid, and (ii) such notice of
redemption is given not earlier than 60 days before the redemption date.
The Trustee, subject to the provisions of Section 8.1, shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee on behalf of such
holder) to establish that such notice has been given by a holder of Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article IV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article IV, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 4.6 Trustee's Relation to Senior Indebtedness. The Trustee in
-----------------------------------------
its individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to
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the holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the provisions of Section 8.1,
the Trustee shall not be liable to any holder of Senior Indebtedness if it shall
pay over or deliver to holders of Debentures, the Company or any other Person
money or assets to which any holder of Senior Indebtedness shall be entitled by
virtue of this Article IV or otherwise.
Section 4.7 No Impairment of Subordination. No right of any present or
------------------------------
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
ARTICLE V.
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal, Premium and Interest. The Company
------------------------------------------
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Debentures at
the places, at the respective times and in the manner provided herein and in the
Debentures. Each installment of interest on the Debentures due on any
semi-annual interest payment date may be paid by mailing checks for the interest
payable to or upon the written order of the holders of Debentures entitled
thereto as they shall appear on the registry books of the Company.
Section 5.2 Maintenance of Office or Agency. The Company will maintain
-------------------------------
in the Borough of Manhattan, the City of New York, an office or agency where the
Debentures may be surrendered for registration of transfer or substitution or
for presentation for payment or for exchange or redemption and where notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency not
designated or appointed by the Trustee. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee or
the office of the Trustee in the Borough of Manhattan, the City of New York.
The Company may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for any
or all such purposes and may from time to time
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rescind such designations; provided that no such designation or rescission shall
--------
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York, for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee as paying agent,
Debenture registrar and Exchange Agent and each of the Corporate Trust Office of
the Trustee and the office of the Trustee in the Borough of Manhattan, the City
of New York, as one such office or agency of the Company for each of the
aforesaid purposes.
So long as the Trustee is the Debenture registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11.
Section 5.3 Appointments To Fill Vacancies in Trustee's Office. The
--------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4 Provisions as to Paying Agent.
-----------------------------
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, it will cause
such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of
this Section 5.4:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest on the
Debentures (whether such sums have been paid to it by the Company or by any
other obligor on the Debentures) in trust for the benefit of the holders of
the Debentures;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Debentures) to make any payment of
the principal of and premium, if any, or interest on the Debentures when
the same shall be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the Trustee
all sums so held in trust.
The Company shall, before each due date of the principal of, premium,
if any, or interest on the Debentures, deposit with the paying agent a sum
sufficient to pay such principal, premium, if any, or interest, and (unless
such paying agent is
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the Trustee) the Company will promptly notify the Trustee of any failure to
take such action.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest on
the Debentures, set aside, segregate and hold in trust for the benefit of
the holders of the Debentures a sum sufficient to pay such principal,
premium, if any, or interest so becoming due and will notify the Trustee of
any failure to take such action and of any failure by the Company (or any
other obligor under the Debentures) to make any payment of the principal
of, premium, if any, or interest on the Debentures when the same shall
become due and payable.
(c) Anything in this Section 5.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust by the Company or any paying
agent hereunder as required by this Section 5.4, such sums to be held by
the Trustee upon the trusts herein contained and upon such payment by the
Company or any paying agent to the Trustee, the Company or such paying
agent shall be released from all further liability with respect to such
sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
Section 5.5 Corporate Existence. Subject to Article XII, the Company will
-------------------
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence.
Section 5.6 Statement as to Compliance. The Company will deliver to the
--------------------------
Trustee, within 120 days after the end of each fiscal year, an Officer's
Certificate stating that:
(1) a review of the activities of the Company during such year and of
performance under this Indenture has been made under such officer's
supervision; and
(2) to the best of such officer's knowledge, based on such review,
the Company has fulfilled all its obligations under this Indenture
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof.
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ARTICLE VI.
DEBENTUREHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 6.1 Debentureholders' Lists. The Company covenants and agrees
-----------------------
that it will furnish or cause to be furnished to the Trustee, semi-annually, not
more than 15 days after each February 15 and August 15 in each year beginning
with August 15, 1994, and at such other times as the Trustee may request in
writing, within 30 days after receipt by the Company of any such request (or
such lesser time as the Trustee may reasonably request in order to enable it to
timely provide any notice to be provided by it hereunder), a list in such form
as the Trustee may reasonably require of the names and addresses of the holders
of Debentures as of a date not more than 15 days (or such other date as the
Trustee may reasonably request in order to so provide any such notices) prior to
the time such information is furnished, except that no such list need be
furnished so long as the Trustee is acting as Debenture registrar.
Section 6.2 Preservation and Disclosure of Lists.
-------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders
of Debentures contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Debenture
registrar, if so acting. The Trustee may destroy any list furnished to it
as provided in Section 6.1 upon receipt of a new list so furnished.
(b) The rights of Debentureholders to communicate with other holders
of Debentures with respect to their rights under this Indenture or under
the Debentures, and the corresponding rights and duties of the Trustee,
shall be as provided by the Trust Indenture Act.
(c) Every Debentureholder, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of
Debentures made pursuant to the Trust Indenture Act.
Section 6.3 Reports by Trustee.
------------------
(a) Within 60 days after February 15 of each year commencing with the
year 1995, the Trustee shall transmit to holders of Debentures such reports
dated as of February 15 of the year in which such reports are made
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto.
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(b) A copy of such reports shall, at the time of such transmission to
holders of Debentures, be filed by the Trustee with each securities
exchange upon which the Debentures are listed, if any, with the Commission
and with the Company. The Company will notify the Trustee within a
reasonable time when the Debentures are listed on any securities exchange.
Section 6.4 Reports by Company. The Company shall file with the Trustee
------------------
and the Commission, and transmit to holders of Debentures, such information,
documents and other reports and such summaries thereof as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act; provided that any such information, documents or reports
--------
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within 15 days after the same are
so required to be filed with the Commission.
ARTICLE VII.
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON AN EVENT OF DEFAULT
Section 7.1 Events of Default. In case one or more of the following
-----------------
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest upon any of
the Debentures as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of and premium, if any,
on any of the Debentures as and when the same shall become due and payable
either at maturity or in connection with any redemption, by declaration or
otherwise; or
(c) failure on the part of the Company to deliver Exchange Property
(or cash in lieu thereof in accordance with Section 15.10) for any
Debenture surrendered for exchange in accordance with the provisions of
Article XV; or
(d) failure on the part of the Company to repurchase any Debenture
surrendered by a Debentureholder upon proper exercise of his Repurchase
Right on the Repurchase Date; or
(e) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Company in the Debentures or
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<PAGE>
in this Indenture specifically contained for the benefit of the
Debentureholders (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and continuance of such failure for a period of 60 days after the
date of written notice of such failure. Such notice shall state that it is
a "Notice of Default" hereunder, shall require the Company to remedy the
same and shall have been given to the Company by the Trustee or to the
Company and a Responsible Officer of the Trustee by the holders of at least
25 percent in aggregate principal amount of the Debentures at the time
outstanding determined in accordance with Section 9.4; or
(f) the Company or, so long as the assets of McKesson-Maryland
comprise at least 50% of the consolidated assets of the Company,
McKesson-Maryland, shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due; or
(g) an involuntary case or other proceeding shall be commenced
against the Company, or so long as the assets of McKesson-Maryland comprise
at least 50% of the consolidated assets of the Company, McKesson-Maryland,
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 90 consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(f) or (g)), unless the principal of all of the Debentures shall
have already become due and payable, either the Trustee or the holders of not
less than 25 percent in aggregate principal amount of the Debentures then
outstanding hereunder determined in accordance with Section 9.4, by notice in
writing to the Company (and to the Trustee if given by Debentureholders) may
declare the principal of and premium, if any, on all the Debentures and the
interest accrued thereon to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Debentures contained to the contrary
notwithstanding. If an Event of Default specified in Section 7.1(f) or (g)
occurs and is continuing, the principal of and premium, if any, on all the
Debentures and the interest
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accrued thereon shall be immediately due and payable. This provision, however,
is subject to the conditions that if, at any time after the principal of the
Debentures shall have been so declared due and payable, and before any judgment
or decree for the payment of the monies due shall have been obtained or entered
as hereinafter provided, the Company shall pay or shall deposit with the Trustee
a sum sufficient to pay all matured installments of interest upon all Debentures
and the principal of and premium, if any, on any and all Debentures which shall
have become due otherwise than by acceleration (with interest on overdue
installments of interest (to the extent that payment of such interest is
enforceable under applicable law) and on such principal and premium, if any, at
the rate borne by the Debentures, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 8.6, and if any and all Events of
Default under this Indenture, other than the nonpayment of principal of and
premium, if any, and accrued interest on Debentures which shall have become due
by acceleration, shall have been cured or waived pursuant to Section 7.7, then
and in every such case the holders of a majority in aggregate principal amount
of the Debentures then outstanding, by written notice to the Company and to the
Trustee, may waive all Events of Default and rescind and annul such declaration
and its consequences; but no such waiver or rescission and annulment shall
extend to or shall affect any subsequent Event of Default, or shall impair any
right consequent thereon. The Company shall notify a Responsible Officer of the
Trustee, promptly upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Debentures and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Debentures and the Trustee
shall continue as though no such proceeding had been taken.
Section 7.2 Payments of Debentures on Default; Suit Therefor. The Company
------------------------------------------------
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Debentures as and when the same shall
become due and payable, and such default shall have continued for a period of 30
days, or (b) in case default shall be made in the payment of the principal of or
premium, if any, on any of the Debentures as and when the same shall have become
due and payable, whether at maturity of the Debentures or in connection with any
redemption, by declaration or otherwise, then, upon demand of the Trustee, the
Company will pay to the Trustee, for the benefit of the holders of the
Debentures, the whole amount that then shall have become due and payable on all
such Debentures for principal and premium, if any, or interest, or both, as the
case may be, with interest upon the overdue principal and premium, if any, and
(to the extent that payment of such
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interest is enforceable under applicable law) upon the overdue installments of
interest at the rate borne by the Debentures; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any expenses or liabilities incurred by the Trustee
hereunder other than through its negligence or bad faith. Until such demand by
the Trustee, the Company may pay the principal of and premium, if any, and
interest on the Debentures to the registered holders, whether or not the
Debentures are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the
Debentures and collect in the manner provided by law out of the property of the
Company or any other obligor on the Debentures wherever situated the monies
adjudged or decreed to be payable.
In the event there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Debentures under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Debentures, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Debentures shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Debentures, and, in case of
any judicial proceedings, to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and of the Debentureholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Debentures, its or their
creditors, or its or their property, and to collect and receive any monies or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of any amounts due the Trustee under Section 8.6; and
any receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
custodian or similar official is hereby authorized by each of the
Debentureholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Debentureholders, to pay to the Trustee any amount due it for
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reasonable compensation, expenses, advances and disbursements, including counsel
fees incurred by it up to the date of such distribution. To the extent that
such payment of reasonable compensation, expenses, advances and disbursements
out of the estate in any such proceedings shall be denied for any reason,
payment of the same shall be secured by a lien on, and shall be paid out of, any
and all distributions, dividends, monies, securities and other property which
the holders of the Debentures may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or adopt on behalf of any Debentureholder any plan of
reorganization or arrangement affecting the Debentures or the rights of any
Debentureholder, or to authorize the Trustee to vote in respect of the claim of
any Debentureholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Debentures, may be enforced by the Trustee without the possession of
any of the Debentures, or the production thereof on any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Debentures.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the
Debentures, and it shall not be necessary to make any holders of the Debentures
parties to any such proceedings.
Section 7.3 Application of Monies Collected by Trustee. Any monies
------------------------------------------
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Debentures, and stamping
thereon the payment, if only partially paid, and upon surrender thereof, if
fully paid:
First: To the payment of all amounts due the Trustee under Section
8.6;
Second: Subject to the provisions of Article IV, in case the
principal of the outstanding Debentures shall not have become due and be
unpaid, to the payment of interest on the Debentures in default in the
order of the maturity of the installments of such interest, with interest
(to the extent that such interest has been collected by the Trustee) upon
the overdue installments of interest at the rate borne by the
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Debentures, such payments to be made ratably to the persons entitled
thereto;
Third: Subject to the provisions of Article IV, in case the principal
of the outstanding Debentures shall have become due, by declaration or
otherwise, and be unpaid, to the payment of the whole amount then owing and
unpaid upon the Debentures for principal and premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the
extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Debentures; and in case
such monies shall be insufficient to pay in full the whole amounts so due
and unpaid upon the Debentures, then to the payment of such principal and
premium, if any, and interest without preference or priority of principal
and premium, if any, over interest, or of interest over principal and
premium, if any, or of any installment of interest over any other
installment of interest, or of any Debenture over any other Debenture,
ratably to the aggregate of such principal and premium, if any, and accrued
and unpaid interest; and
Fourth: Subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other Person lawfully entitled
thereto.
Section 7.4 Proceedings by Debentureholder. No holder of any Debenture
------------------------------
shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than 25 percent
in aggregate principal amount of the Debentures then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity shall have neglected
or refused to institute any such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 7.7; it being understood and intended, and being expressly
covenanted by the taker and holder of every Debenture with every other taker and
holder and the Trustee, that no one or more holders of Debentures shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other holder of
Debentures, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided
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and for the equal, ratable and common benefit of all holders of Debentures
(except as otherwise provided herein). For the protection and enforcement of
this Section 7.4, each and every Debentureholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Debenture, the right of any holder of any Debenture to receive payment of
the principal of and premium, if any, and interest on such Debenture, on or
after the respective due dates expressed in such Debenture, or to institute suit
for the enforcement of any such payment on or after such respective dates
against the Company shall not be impaired or affected without the consent of
such holder.
Anything in this Indenture or the Debentures to the contrary
notwithstanding, the holder of any Debenture, without the consent of either the
Trustee or the holder of any other Debenture, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his or her rights of exchange or repurchase as provided in Article
XV.
Section 7.5 Proceedings by Trustee. In case of an Event of Default the
----------------------
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 7.6 Remedies Cumulative and Continuing. Except as provided in
----------------------------------
Section 2.6, all powers and remedies given by this Article VII to the Trustee or
to the Debentureholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the holders of the Debentures, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Debentures to exercise any right
or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 7.4, every power and remedy given by this Article VII or
by law to the Trustee or to the Debentureholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Debentureholders.
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of
--------------------------------------------------------------
Debentureholders. The holders of a majority in aggregate principal amount of
- ----------------
the Debentures at the time outstanding
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determined in accordance with Section 9.4 shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee; provided,
however, that (a) such direction shall not be in conflict with any rule of law
-----------------
or with this Indenture, and (b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction. The
holders of a majority in aggregate principal amount of the Debentures at the
time outstanding determined in accordance with Section 9.4 may on behalf of the
holders of all of the Debentures waive any past Event of Default hereunder and
its consequences except (i) a default in the payment of interest or premium, if
any, on, or the principal of, the Debentures, (ii) a failure by the Company to
exchange any Debentures into Exchange Property or (iii) a default in respect of
a covenant or provisions hereof which under Article XI cannot be modified or
amended without the consent of the holders of all Debentures then outstanding.
Upon any such waiver the Company, the Trustee and the holders of the Debentures
shall be restored to their former positions and rights hereunder; but no such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereon. Whenever any Event of Default hereunder shall have
been waived as permitted by this Section 7.7, said Event of Default shall for
all purposes of the Debentures and this Indenture be deemed to have been cured
and to be not continuing; but no such waiver shall extend to any subsequent or
other Event of Default or impair any right consequent thereon.
Section 7.8 Notice of Defaults. The Trustee shall, within 90 days after
------------------
the occurrence of an Event of Default, mail to all Debentureholders, as the
names and addresses of such holders appear upon the registry books of the
Company, notice of all defaults known to a Responsible Officer, unless such
defaults shall have been cured or waived before the giving of such notice; and
provided that, except in the case of default in the payment of the principal of,
- --------
or premium, if any, or interest on any of the Debentures, the Trustee shall be
protected in withholding such notice if and so long as a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the Debentureholders.
Section 7.9 Undertaking To Pay Costs. All parties to this Indenture
------------------------
agree, and each holder of any Debenture by his acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section 7.9 shall not
--------
apply to any suit instituted by the Trustee, to any suit instituted by any
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Debentureholder, or group of Debentureholders, holding in the aggregate more
than ten percent in principal amount of the Debentures at the time outstanding
determined in accordance with Section 9.4, or to any suit instituted by any
Debentureholder for the enforcement of the payment of the principal of or
premium, if any, or interest on any Debenture on or after the due date expressed
in such Debenture or to any suit for the enforcement of the right to exchange
any Debenture in accordance with the provisions of Article XV.
ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.1 Duties and Responsibilities of Trustee. The Trustee, prior to
--------------------------------------
the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture and the
Trust Indenture Act, and the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Indenture and no implied covenants or obligations shall
be read into this Indenture and the Trust Indenture Act against the
Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the
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same to determine whether or not they conform to the requirements of
this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it
shall be provided that the Trustee was negligent in ascertaining the
pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less than a majority in principal amount of the
Debentures at the time outstanding determined as provided in Section 9.4
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or
affording protection to, the Trustee shall be subject to the provisions of
this Section 8.1.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 8.2 Reliance on Documents, Opinions, etc. Except as otherwise
-------------------------------------
provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
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<PAGE>
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Debentureholders pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; provided, however, that if the payment within a reasonable time
-----------------
to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expenses or liability as a condition to so
proceeding; the reasonable expenses of every such examination shall be paid
by the Company or, if paid by the Trustee or any predecessor Trustee, shall
be repaid by the Company upon demand; and
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due
care hereunder.
Section 8.3 No Responsibility for Recitals, etc. The recitals contained
------------------------------------
herein and in the Debentures (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for the correctness of the same. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Debentures. The Trustee shall not be accountable for the use or
application by the Company of any Debentures or the proceeds of any Debentures
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture.
Section 8.4 Trustee, Paying Agents, Exchange Agent or Registrar May Own
-----------------------------------------------------------
Debentures. The Trustee, any paying agent, the Exchange Agent or Debenture
- ----------
registrar, in its individual or any other capacity, may become the owner or
pledgee of Debentures with the same rights it would have if it were not Trustee,
paying agent, Exchange Agent or Debenture registrar.
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<PAGE>
Section 8.5 Monies To Be Held in Trust. Subject to the provisions of
--------------------------
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed from time to time by the Company and the Trustee.
Section 8.6 Compensation and Expenses of Trustee. The Company covenants
------------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
the Trustee in any capacity under this Indenture and its agents and any
authenticating agent for, and to hold them harmless against, any loss, liability
or expense incurred without negligence or bad faith on the part of the Trustee
or such agent or authenticating agent, as the case may be, and arising out of or
in connection with the acceptance or administration of this trust or the
exercise or performance of any of its rights or powers or in any other capacity
hereunder, including the costs and expenses of defending themselves against any
claim of liability in the premises. The obligations of the Company under this
Section 8.6 to compensate or indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall be secured by a lien
prior to that of the Debentures upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the holders
of particular Debentures. The obligation of the Company under this Section shall
survive the satisfaction and discharge of this Indenture.
When the Trustee and its agents and any authenticating agent incur expenses
or render services after an Event of Default specified in Section 7.1(f) or (g)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency or
similar laws.
Section 8.7 Officer's Certificate as Evidence. Except as otherwise
---------------------------------
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the
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<PAGE>
part of the Trustee, be deemed to be conclusively proved and established by an
Officer's Certificate delivered to the Trustee, and such Officer's Certificate,
in the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 8.8 Conflicting Interests of Trustee. If the Trustee has or shall
--------------------------------
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to the provisions of, the Trust Indenture
Act and this Indenture.
Section 8.9 Eligibility of Trustee. There shall at all times be a Trustee
----------------------
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 8.10 Resignation or Removal of Trustee.
---------------------------------
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and the Company shall mail, or cause to be
mailed, notice thereof to the holders of Debentures at their addresses as
they shall appear on the registry books of the Company. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board
of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment 60 days
after the mailing of such notice of resignation to the Debentureholders,
the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee, or any Debentureholder who has been
a bona fide holder of a Debenture or Debentures for at least six months
may, subject to the provisions of Section 7.9, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
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(1) the Trustee shall fail to comply with Section 8.8 after
written request therefor by the Company or by any Debentureholder who
has been a bona fide holder of a Debenture or Debentures for at least
six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Debentureholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee, or, subject
to the provisions of Section 7.9, any Debentureholder who has been a bona
fide holder of a Debenture or Debentures for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment
of a successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten days after notice to the Company of such
nomination the Company objects thereto, in which case the Trustee so
removed or any Debentureholder, upon the terms and conditions and otherwise
as in Section 8.10(a) provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.11.
Section 8.11 Acceptance by Successor Trustee. Any successor trustee
-------------------------------
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee
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shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as trustee herein; but, nevertheless, on the written request of the
Company or of the successor trustee, the trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of Section 8.6,
execute and deliver an instrument transferring to such successor trustee all the
rights and powers of the trustee so ceasing to act. Upon request of any such
successor trustee, the Company shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a lien upon all property and funds held or collected by such trustee as
such, except for funds held in trust for the benefit of holders of particular
Debentures, to secure any amounts then due it pursuant to the provisions of
Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, the Company shall mail or cause to be mailed notice of the
succession of such trustee hereunder to the holders of Debentures at their
addresses as they shall appear on the registry books of the Company. If the
Company fails to mail such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
Section 8.12 Succession by Merger, etc. Any corporation into which the
--------------------------
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the trust business of the Trustee, shall be the successor to the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation shall be
--------
qualified under the provisions of Section 8.8 and eligible under the provisions
of Section 8.9.
In case any of the Debentures shall have been authenticated but not
delivered at the time such successor to the Trustee shall succeed to the trusts
created by this Indenture, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee or authenticating agent
appointed by such predecessor trustee, and deliver such Debentures so
authenticated; and in case at that time any of the Debentures shall not have
been authenticated, any successor to the Trustee or an authenticating agent
appointed by such successor trustee may authenticate such Debentures either in
the name of any predecessor trustee hereunder
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or in the name of the successor trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Debentures or in this
Indenture provided that the certificate of the Trustee shall have; provided,
---------
however, that the right to adopt the certificate of authentication of any
- -------
predecessor Trustee or authenticate Debentures in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 8.13 Limitation on Rights of Trustee as Creditor. If and when the
-------------------------------------------
Trustee shall be or become a creditor of the Company (or any other obligor upon
the Debentures), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).
ARTICLE IX.
CONCERNING THE DEBENTUREHOLDERS
Section 9.1 Action by Debentureholders. Whenever in this Indenture it is
--------------------------
provided that the holders of a specified percentage in aggregate principal
amount of the Debentures may take any action (including the making of any demand
or request, the giving of any notice, consent or waiver or the taking of any
other action), the fact that at the time of taking any such action, the holders
of such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by
Debentureholders in person or by agent or proxy appointed in writing, or (b) by
the record of the holders of Debentures voting in favor thereof at any meeting
of Debentureholders duly called and held in accordance with the provisions of
Article X, or (c) by a combination of such instrument or instruments and any
such record of such a meeting of Debentureholders. Whenever the Company or the
Trustee solicits the taking of any action by the holders of the Debentures, the
Company or the Trustee may fix in advance of such solicitation a date as the
record date for determining holders entitled to take such action. The record
date shall be not more than 15 days prior to the date of commencement of
solicitation of such action.
Section 9.2 Proof of Execution by Debentureholders. Subject to the
--------------------------------------
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Debentureholder or his agent or proxy shall be sufficient if
made in accordance with such reasonable rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee. The holding of Debentures shall be proved by the registry of such
Debentures or by a certificate of the Debenture registrar.
The record of any Debentureholders' meeting shall be proved in the manner
provided in Section 10.6.
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Section 9.3 Who Are Deemed Absolute Owners. The Company, the Trustee, any
------------------------------
paying agent, the Exchange Agent and any Debenture registrar may deem the Person
in whose name such Debenture shall be registered upon the books of the Company
to be, and may treat him as, the absolute owner of such Debenture (whether or
not such Debenture shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and interest on such Debenture,
for exchange of such Debenture and for all other purposes; and neither the
Company nor the Trustee nor any paying agent nor the Exchange Agent nor any
Debenture registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being, or upon his order, shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for monies payable upon any such Debenture.
Section 9.4 Company-Owned Debentures Disregarded. In determining whether
------------------------------------
the holders of the requisite aggregate principal amount of Debentures have
concurred in any direction, consent, waiver or other action under this
Indenture, Debentures which are owned by the Company or any other obligor on the
Debentures or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Debentures shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that for the purposes of determining
--------
whether the Trustee shall be protected in relying on any such direction,
consent, waiver or other action only Debentures which a Responsible Officer
knows are so owned shall be so disregarded. Debentures so owned which have been
pledged in good faith may be regarded as outstanding for the purposes of this
Section 9.4 if the pledgee shall establish to the satisfaction of the Trustee
the pledgee's right to vote such Debentures and that the pledgee is not the
Company, any other obligor on the Debentures or a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In the case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officer's Certificate listing and identifying
all Debentures, if any, known by the Company to be owned or held by or for the
account of any of the above described Persons; and, subject to Section 8.1, the
Trustee shall be entitled to accept such Officer's Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Debentures not
listed therein are outstanding for the purpose of any such determination.
Section 9.5 Revocation of Consents; Future Holders Bound. At any time
--------------------------------------------
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Debentures specified in this Indenture in connection
with such action, any holder of a Debenture which is shown by the evidence to be
included
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in the Debentures the holders of which have consented to such action may, by
filing written notice with the Trustee at its Corporate Trust Office and upon
proof of holding as provided in Section 9.2, revoke such action so far as
concerns such Debenture. Except as aforesaid, any such action taken by the
holder of any Debenture shall be conclusive and binding upon such holder and
upon all future holders and owners of such Debenture and of any Debentures
issued in exchange or substitution therefor, irrespective of whether any
notation in regard thereto is made upon such Debenture or any Debenture issued
in substitution therefor.
ARTICLE X.
DEBENTUREHOLDERS' MEETINGS
Section 10.1 Purpose of Meetings. A meeting of Debentureholders may be
-------------------
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to give
any directions to the Trustee permitted under this Indenture, or to consent
to the waiving of any Event of Default hereunder and its consequences, or
to take any other action authorized to be taken by Debentureholders
pursuant to any of the provisions of Article VII;
(2) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VIII;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of the
Debentures under any other provision of this Indenture or under applicable
law.
Section 10.2 Call of Meetings by Trustee. The Trustee may at any time
---------------------------
call a meeting of Debentureholders to take any action specified in Section 10.1,
to be held at such time and at such place in San Francisco, California or the
Borough of Manhattan, the City of New York, New York as the Trustee shall
determine. Notice of every meeting of the Debentureholders, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting and the establishment of any record date pursuant to
Section 9.1, shall be mailed to holders of Debentures at their addresses as they
shall appear on the Debenture register of the Company. Such notice shall also
be mailed to the Company. Such notices shall be mailed not less than 20 nor
more than 90 days prior to the date fixed for the meeting.
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Any meeting of Debentureholders shall be valid without notice if the
holders of all Debentures then outstanding are present in Person or by proxy or
if notice is waived before or after the meeting by the holders of all Debentures
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Debentureholders. In case at
-----------------------------------------------
any time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent in aggregate principal amount of the Debentures
then outstanding, shall have requested the Trustee to call a meeting of
Debentureholders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or such Debentureholders may determine the time and the place
in San Francisco, California or the Borough of Manhattan, the City of New York,
New York for such meeting and may call such meeting to take any action
authorized in Section 10.1 by mailing notice thereof as provided in Section
10.2.
Section 10.4 Qualifications for Voting. To be entitled to vote at any
-------------------------
meeting of Debentureholders a Person shall (a) be a holder of one or more
Debentures on the record date pertaining to such meeting or (b) be a Person
appointed by an instrument in writing as proxy by a holder of one or more
Debentures. The only Persons who shall be entitled to be present or to speak at
any meeting of Debentureholders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.
Section 10.5 Regulations. Notwithstanding any other provisions of this
-----------
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Debentureholders, in regard to proof of the holding
of Debentures and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Debentureholders as provided in Section 10.3, in which case the
Company or the Debentureholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the holders of a
majority in principal amount of the Debentures represented at the meeting and
entitled to vote at the meeting.
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Subject to the provisions of Section 9.4, at any meeting each
Debentureholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Debentures held or represented by him; provided, however,
-----------------
that no vote shall be cast or counted at any meeting in respect of any Debenture
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Debentures held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Debentureholders. Any
meeting of Debentureholders duly called pursuant to the provisions of Section
10.2 or 10.3 may be adjourned from time to time by the holders of a majority of
the aggregate principal amount of Debentures represented at the meeting, whether
or not constituting a quorum, and the meeting may be held as so adjourned
without further notice.
Section 10.6 Voting. The vote upon any resolution submitted to any
------
meeting of Debentureholders shall be by written ballot on which shall be
subscribed the signatures of the holders of Debentures or of their
representatives by proxy and the principal amount of the Debentures held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Debentureholders shall
be prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was mailed as provided in Section 10.2. The record shall show the
principal amount of the Debentures voting in favor of or against any resolution.
The record shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 No Delay of Rights by Meeting. Nothing in this Article X
-----------------------------
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Debentureholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Debentureholders under any of the provisions of this Indenture or of the
Debentures.
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ARTICLE XI.
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without Consent of
------------------------------------------
Debentureholders. The Company, when authorized by the resolutions of the Board
- ----------------
of Directors, and the Trustee may from time to time and at any time enter into
an indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to make provision with respect to the exchange rights of the
holders of Debentures pursuant to the requirements of Section 15.7;
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Debentures, any property or
assets;
(c) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation
of the covenants, agreements and obligations of the Company pursuant to
Article XII;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Debentures, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions an Event of Default
permitting the enforcement of all or any of the several remedies provided
in this Indenture as herein set forth; provided, however, that in respect
-----------------
of any such additional covenant, restriction or condition such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Debentures in
coupon form (including Debentures registerable as to principal only) and to
provide for substitution of such Debentures with the Debentures issued
hereunder in fully registered form and to make all appropriate changes for
such purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture which shall not
materially adversely affect the interests of the holders of the Debentures;
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(g) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Debentures; or
(h) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Debentures at the time outstanding, notwithstanding any of
the provisions of Section 11.2.
Section 11.2 Supplemental Indentures with Consent of Debentureholders.
--------------------------------------------------------
With the consent (evidenced as provided in Article IX) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Debentures; provided, however, that no such
-----------------
supplemental indenture shall (i) extend the fixed maturity of any Debenture, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, or impair or affect the right of any
Debentureholder to institute suit for the payment thereof, or make the principal
thereof or interest or premium, if any, thereon payable in any coin or currency
other than that provided in the Debentures, or modify the provisions of this
Indenture with respect to the subordination of the Debentures in a manner
adverse to the Debentureholders, or impair the right of the holders of
Debentures to exchange the Debentures for Exchange Property or cause the
repurchase of the Debentures subject to the terms set forth herein, including
Article XV, without the consent of the holder of each Debenture so affected, or
(ii) reduce the aforesaid percentage of Debentures, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Debentures then outstanding.
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Upon the request of the Company, accompanied by a copy of the resolutions
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Debentureholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Debentureholders under
this Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 Compliance with Trust Indenture Act; Effect of Supplemental
-----------------------------------------------------------
Indentures. Any supplemental indenture executed pursuant to the provisions of
- ----------
this Article XI shall comply with the Trust Indenture Act, as then in effect.
Upon the execution of any supplemental indenture pursuant to the provisions of
this Article XI, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitation of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of Debentures shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
Section 11.4 Notation on Debentures. Debentures authenticated and
----------------------
delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article XI may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company or the Trustee shall so determine, new Debentures so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may,
at the Company's expense, be prepared and executed by the Company, authenticated
by the Trustee (or an authenticating agent duly appointed by the Trustee
pursuant to Section 16.11) and delivered in substitution for the Debentures then
outstanding, upon surrender of such Debentures then outstanding.
Section 11.5 Evidence of Compliance of Supplemental Indenture To Be
------------------------------------------------------
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.1 and
- -----------------
8.2, may receive an Officer's Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
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ARTICLE XII.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 Company May Consolidate, etc. on Certain Terms. Subject to
----------------------------------------------
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Debentures shall prevent any consolidation or merger of the Company with or
into any other corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the Company or any
successor shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other corporation (whether or not
affiliated with the Company), authorized to acquire and operate the same and
which shall be organized under the laws of any state of the United States or the
District of Columbia; provided, however, and the Company hereby covenants and
-----------------
agrees, that upon any such consolidation, merger, sale, conveyance or lease: (i)
the due and punctual payment of the principal of and premium, if any, and
interest on all of the Debentures, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company, shall be expressly assumed, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee by the corporation (if other than the Company) formed
by such consolidation, or into which the Company shall have been merged, or by
the corporation which shall have acquired or leased such property, and such
supplemental indenture shall provide for the applicable exchange rights and
repurchase rights set forth in Article XV, and (ii) no Event of Default shall
have occurred and be continuing at the time of such transaction and immediately
after giving effect to such transaction no Event of Default shall have occurred
and be continuing.
Section 12.2 Successor Corporation To Be Substituted. In case of any
---------------------------------------
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Debentures and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of McKesson Corporation, any or all of the
Debentures issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee; and, upon the order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver, or cause to be authenticated and delivered, any Debentures which
previously shall have been signed and delivered by the officers of the Company
to the Trustee for authentication, and any Debentures which such successor
corporation thereafter shall cause
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to be signed and delivered to the Trustee for that purpose. All the Debentures
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debentures theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Debentures had been issued at
the date of the execution hereof. In the event of any such consolidation,
merger, sale, conveyance or lease, the Person named as the "Company" in the
first paragraph of this Indenture or any successor which shall thereafter have
become such in the manner prescribed in this Article XII may be dissolved, wound
up and liquidated at any time thereafter and such Person shall be released from
its liabilities as obligor and maker of the Debentures and from its obligations
under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate.
Section 12.3 Opinion of Counsel To Be Given Trustee. The Trustee, subject
--------------------------------------
to Sections 8.1 and 8.2, shall receive an Officer's Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.
ARTICLE XIII.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 Discharge of Indenture. When (a) the Company shall deliver
----------------------
to the Trustee for cancellation all Debentures theretofore authenticated (other
than any Debentures which have been destroyed, lost or stolen and in lieu of or
in substitution for which other Debentures shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Debentures not
theretofore canceled or delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, or shall
have been delivered to the Trustee for exchange or repurchase pursuant to
Article XV, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay at maturity or upon redemption of all of the Debentures
(other than any Debentures which shall have been mutilated, destroyed, lost or
stolen and in lieu of or in substitution for which other Debentures shall have
been authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest
due or to become due to such date of maturity or redemption date, as the case
may be, and if in either case the Company shall also pay or cause to be paid
all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect (except as to (i) remaining rights of
registration of transfer, substitution, exchange and repurchase
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of Debentures, (ii) rights hereunder of Debentureholders to receive payments of
principal of and premium, if any, and interest on, the Debentures and the other
rights, duties and obligations of Debentureholders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on demand of the Company accompanied by an Officer's Certificate and an Opinion
of Counsel as required by Section 16.5 and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Debentures.
Section 13.2 Deposited Monies To Be Held in Trust by Trustee. Subject
-----------------------------------------------
to Article IV and Section 13.4, all monies deposited with the Trustee pursuant
to Section 13.1 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Debentures for the payment or
redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest and premium, if
any.
Section 13.3 Paying Agent To Repay Monies Held. Upon the satisfaction
---------------------------------
and discharge of this Indenture, all monies then held by any paying agent of the
Debentures (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such monies.
Section 13.4 Return of Unclaimed Monies. Subject to the requirements of
--------------------------
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Debentures and not applied
but remaining unclaimed by the holders of Debentures for two years after the
date upon which the principal of, premium, if any, or interest on such
Debentures, as the case may be, shall have become due and payable, shall be
repaid to the Company by the Trustee on demand and all liability of the Trustee
shall thereupon cease with respect to such monies; and the holder of any of the
Debentures shall thereafter look only to the Company for any payment which such
holder may be entitled to collect unless an applicable abandoned property law
designates another Person.
Section 13.5 Reinstatement. If (i) the Trustee or the paying agent is
-------------
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application and (ii) the holders of at least 51% in
principal amount of the then outstanding Debentures so request by written
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notice to the Trustee, the Company's obligations under this Indenture and the
Debentures shall be revived and reinstated as though no deposit had occurred
pursuant to Section 13.1 until such time as the Trustee or the paying agent is
permitted to apply all such money in accordance with Section 13.2; provided,
---------
however, that if the Company makes any payment of interest on or principal of
- -------
any Debenture following the reinstatement of its obligations, the Company shall
be subrogated to the rights of the holders of such Debentures to receive such
payment from the money held by the Trustee or paying agent.
ARTICLE XIV.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 Indenture and Debentures Solely Corporate Obligations. No
-----------------------------------------------------
recourse for the payment of the principal of or premium, if any, or interest on
any Debenture, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture or in any supplemental indenture or in any Debenture,
or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Debentures.
ARTICLE XV.
EXCHANGE OF DEBENTURES
Section 15.1 Right To Exchange. Subject to and upon compliance with
-----------------
the provisions of this Indenture, the holder of any Debenture shall have the
right at his or her option, to exchange any Debenture or any portion of the
principal amount thereof which is $1,000 or any integral multiple thereof
(unless the Company shall have elected, pursuant to Section 15.10, to pay to the
holder an amount in cash equal to the value of the Exchange Property, in which
case the provisions of Section 15.10 shall be followed), at any time after
_______________, 1994 and on or before the close of business on February 15,
2004, or in the case of Debentures or portions thereof called for redemption,
on or before the close of business on the Business Day next preceding the
Redemption Date (unless the Company defaults in payment of the redemption
price), be exchanged for Exchange Property, which may include fully paid and
nonassessable shares of Armor All Common Stock or such other securities,
property or cash
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apportioned to such Armor All Common Stock or other Exchange Property pursuant
to this Article XV, at the Exchange Price hereinafter provided.
The rate at which Exchange Property shall be deliverable upon exchange
(herein called the "Exchange Price") shall be initially $____ per share, which
is equivalent to an exchange rate of ______ shares of Armor All Common Stock for
each $1,000 principal amount of Debentures exchanged. The Exchange Price shall
be subject to adjustment as provided in this Article XV.
Section 15.2 Method of Exchange. In order to exercise the right of
------------------
exchange, the holder of any Debenture to be exchanged shall surrender such
Debenture to the Exchange Agent for exchange by delivering such Debenture to, or
mailing such Debenture by registered mail, postage prepaid, addressed to the
Exchange Agent at the office or agency of the Company, maintained for that
purpose pursuant to Section 5.2 hereof, accompanied in each case by written
notice to the Company and the Exchange Agent that the holder elects to exchange
such Debenture, or, if less than the entire principal amount of such Debenture
is to be exchanged, the portion thereof to be exchanged. Such notice shall also
state the name or names (with address) in which the certificate or certificates
for shares of Armor All Common Stock or, to the extent applicable, other
Exchange Property issuable upon such exchange shall be issued. Debentures
surrendered for exchange shall be accompanied (if so required by the Company or
the Exchange Agent) by proper assignments thereof to the Company or in blank for
transfer; provided, however, that any Debenture surrendered for exchange during
-------- -------
the period from the close of business on any record date for the payment of
interest through the close of business on the Business Day next preceding the
following interest payment date (unless it or the portion being exchanged shall
have been called for redemption on a date in such period) must be accompanied by
an amount, in funds acceptable to the Company, equal to the interest payable on
such interest payment date on the principal amount being exchanged.
If the Company does not elect to deliver cash in lieu of Exchange
Property pursuant to Section 15.10, as promptly as practicable after the proper
surrender of such Debenture for exchange and in accordance with the procedures
set forth in the Exchange Agent Agreement (subject, however, to the following
paragraph of this Section 15.2), the Company shall or shall cause the Exchange
Agent to deliver to such holder, or on his written order a certificate or
certificates for the number of whole shares of Armor All Common Stock and/or
whole interests of any other Exchange Property deliverable upon exchange of such
Debenture (or specified portion thereof). Such exchange shall be deemed to have
been effected immediately prior to the close of business on the date on which
such Debenture shall have been properly surrendered for exchange, which shall be
the date on which such Debenture and notice and any such required payment and
assignment shall be received by the Exchange Agent, and at such time the rights
of the holder of such Debenture as a Debentureholder shall cease and the
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Person or Persons in whose name or names any certificate or certificates for
shares of Armor All Common Stock or other Exchange Property shall be deliverable
upon such exchange shall, as between such Person or Persons and the Company, be
deemed to have become the holder or holders of record of the shares or other
property represented thereby.
Delivery of such certificate or certificates of shares of Armor All Common
Stock or other Exchange Property and of any check for any cash apportioned
thereto may be delayed for a reasonable period of time at the request of the
Company in order to effectuate the calculations of the adjustments of the Armor
All Common Stock or other Exchange Property or cash apportioned thereto pursuant
to this Article XV, to obtain any certificate representing securities to be
delivered, to complete any reapportionment of the Armor All Common Stock or
other Exchange Property or cash apportioned thereto which is required by this
Article XV or to comply with any applicable law. If, between the date an
exchange under this Section 15.2 is deemed effected and the date of delivery of
the applicable security or securities, such security or securities shall cease
to have any or certain rights, or a record date or effective date of a
transaction to which Section 15.4, 15.5 or 15.7 applies shall occur, the person
entitled to receive such security or securities shall be entitled only to
receive such security or securities as so modified and any dividends or proceeds
received thereon on or after the date such exchange is deemed effected and none
of the Company, the Trustee and the Exchange Agent shall be otherwise liable
with respect to the modification of such security or securities from the date
such exchange is deemed effected and the date of such delivery.
Except as otherwise expressly provided in this Article XV, no payment or
adjustment shall be made upon any exchange on account of any interest accrued on
the Debentures surrendered for exchange or on account of any dividends on the
Armor All Common Stock or other Exchange Property delivered upon such exchange;
provided, however, that interest accrued on any Debentures surrendered for
- -----------------
exchange on or after any Regular Record Date and before any Interest Payment
Date relating thereto shall be paid to, as applicable, the holder of record as
of such record date.
In the case of any Debenture which is exchanged in part only, upon such
exchange the Company shall execute and the Trustee shall authenticate and
deliver to the holder thereof, at the expense of the Company, a new Debenture or
Debentures of authorized denominations in principal amount equal to the
unexchanged portion of such Debenture.
Section 15.3 Fractional Interests. No fractional shares of Armor All
--------------------
Common Stock (or any form of fractional interest in any other security or
property which is part of the Exchange Property) shall be delivered upon
exchanges of Debentures. If more than one Debenture shall be surrendered for
exchange at one time by the same holder, the number of whole shares (or other
integral units of such
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other securities or property), which shall be delivered upon exchange shall be
computed by the Company on the basis of the aggregate principal amount of the
Debentures (or specified portions thereof to the extent permitted hereby) so
surrendered. Instead of any fractional interest which would otherwise be
deliverable upon exchange of any Debenture or Debentures (or specified portions
thereof), the Exchange Agent on behalf of the Company shall pay, on the date the
exchange is deemed to be effected, a cash adjustment in respect of such
fractional interest in an amount equal to the same fraction of the Market Price
per share of the Armor All Common Stock (or per unit of such other security or
Exchange Property) on the date of exchange. The Company shall authorize the
Exchange Agent to obtain the funds necessary, or anticipated by the Exchange
Agent to be necessary, for payment of such fractional interests by: (i) the
sale of Armor All Common Stock or other Exchange Property held by such Exchange
Agent, provided that after such sale the number of shares of Armor All Common
Stock and any other Exchange Property held by the Exchange Agent shall be
sufficient to permit the exchange of all outstanding Debentures for Armor All
Common Stock and any other Exchange Property, on the basis of the Exchange Price
then in effect; or (ii) at the option of the Company, sufficient cash
contributions from the Company. The Company agrees to furnish or cause to be
furnished to the Exchange Agent any additional funds required to permit such
cash payments with respect to fractional interests.
Section 15.4 Adjustment of Exchange Price. In the event Armor All shall
----------------------------
(i) pay a dividend on Armor All Common Stock in shares of Armor All Common
Stock, (ii) subdivide the outstanding shares of Armor All Common Stock into a
greater number of shares of Armor All Common Stock, (iii) combine outstanding
shares of Armor All Common Stock into a smaller number of shares of Armor All
Common Stock, or (iv) issue, by reclassification of shares of Armor All Common
Stock, any shares of its common stock (which in any such case shall apply to the
shares of Armor All Common Stock held by the Exchange Agent under the Exchange
Agent Agreement), the Exchange Price in effect immediately prior thereto shall
be proportionately adjusted so that the holder of any Debentures thereafter
surrendered for exchange shall be entitled (subject to Section 15.10 hereof) to
receive the number and kind of shares of Armor All Common Stock which such
holder would have owned or have been entitled to receive after the happening of
any of the events described above had such Debentures been exchanged immediately
prior to the record date (or if there is no record date, the effective date) of
such event. Such adjustments shall be made whenever any of the events listed
above shall occur and shall become effective as of immediately after the close
of business on the record date in the case of a stock dividend and shall become
effective as of immediately after the close of business on the effective date in
the case of a subdivision or combination or reclassification. Any holder
surrendering any Debentures for exchange after such record date or such
effective date, as the case may be, shall be entitled to receive shares of Armor
All Common
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<PAGE>
Stock at the Exchange Price as so adjusted pursuant to this Section 15.4 and any
other Exchange Property apportioned thereto.
Notwithstanding the foregoing provisions, no adjustment in the Exchange
Price shall be required unless such adjustment would require an increase or
decrease in such Exchange Price of more than 1%; provided, however, that any
-----------------
adjustments which by reason of this paragraph are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 15.4 shall be made to the nearest one-ten
thousandth (0.0001) of a share or of an interest.
Whenever the Exchange Price is adjusted as herein provided, the Company
shall determine the adjusted Exchange Price in accordance with this Section 15.4
and shall prepare an Officer's Certificate setting forth such adjusted Exchange
Price and any cash or other property apportioned to the Armor All Common Stock
or other Exchange Property and showing in detail the facts upon which such
adjustment is based. Such certificate shall forthwith be filed with the
Exchange Agent and the Trustee, who may rely on such Officer's Certificate as
conclusive evidence of the correctness of the adjustment. A notice stating that
the Exchange Price has been adjusted and setting forth the adjusted Exchange
Price and any cash or other property apportioned to the Armor All Common Stock
shall as soon as practicable be mailed by or on behalf of the Company to the
Debentureholders at their last addresses as they shall appear upon the Debenture
register.
Section 15.5 Exchange Agent Agreement.
------------------------
(a) The Company, simultaneously with the execution and delivery of
this Indenture, is entering into the Exchange Agent Agreement with The
First National Bank of Chicago, as Exchange Agent, pursuant to which the
Company is depositing with the Exchange Agent _________ shares of Armor All
Common Stock, which shall initially constitute the Exchange Property. The
Company shall deposit with the Exchange Agent from time to time such
additional number of shares of Armor All Common Stock not already held by
such Exchange Agent as the holders of all outstanding Debentures shall from
time to time be entitled to receive from the Exchange Agent pursuant to
this Article XV upon exchange thereof.
(b) All cash received by the Exchange Agent as herein provided will
be invested upon written request of the Company by the Exchange Agent from
time to time as so requested by the Company in U.S. Government Obligations
pursuant to the Exchange Agent Agreement. The Company shall be entitled to
all cash dividends paid on the Exchange Property held by the Exchange Agent
other than dividends paid pursuant to a plan of liquidation or partial
liquidation or a recapitalization or restructuring or other extraordinary
cash dividends, and shall be entitled to all interest payments on any debt
securities included in the Exchange Property which holders of Debentures
may be entitled to receive on exchange
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<PAGE>
hereunder; provided, that if the Exchange Agent shall receive any such cash
--------
dividends or interest to which the Company is entitled pursuant hereto, the
Exchange Agent shall not be required to transfer to the Company any such
dividends or interest to which the Company is entitled pursuant hereto
until receipt of an Officer's Certificate to the effect that the Company is
entitled to such dividends or interest pursuant hereto. The Exchange Agent
shall hold and apply as hereinafter provided all other dividends paid on
the Exchange Property held by the Exchange Agent under the Exchange Agent
Agreement.
(c) In case there shall be, at any time while any Debentures are
outstanding, a nontaxable distribution of cash, securities or other
property on Exchange Property (other than (i) cash dividends and interest
paid on debt securities to which the Company is entitled, (ii) dividends,
subdivisions, combinations and reclassifications for which an adjustment in
the Exchange Price is made pursuant to Section 15.4 hereof, (iii)
securities or other property received in a transaction to which Section
15.7 hereof applies, and (iv) subscription rights, options, warrants or
other similar rights to which paragraph (d) of this Section 15.5 applies)
the Company shall, as soon as reasonably practicable after its receipt
thereof, notify the Exchange Agent of such receipt and promptly, and in any
event within five business days of the receipt thereof, deposit with the
Exchange Agent all such securities and other property pursuant to the
Exchange Agent Agreement, and the Company shall either:
(1) instruct the Exchange Agent to sell any or all securities
and other property so received by way of distribution for cash in such
manner as the Company may instruct in writing; or
(2) instruct the Exchange Agent to retain and hold such
securities and other property;
and the proceeds of any such sale and such securities or other property
retained and held shall be additional Exchange Property for apportionment
equally among other Exchange Property for which Debentures are exchangeable
as of immediately after the close of business on the record date for the
distribution to which this Section 15.5(c) applies, or, if there is no such
record date, the effective date of such distribution.
(d) In case there shall be, at any time while any Debentures are
outstanding, a nontaxable distribution of any subscription rights, options,
warrants or other similar rights with respect to any Exchange Property, the
Company shall, as soon as reasonable practicable after its receipt thereof,
notify the Exchange Agent of such receipt and promptly, and in any event
within five business days of the receipt thereof,
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<PAGE>
deposit with the Exchange Agent all such rights, pursuant to the Exchange
Agent Agreement, and the Company shall either:
(1) instruct the Exchange Agent to sell any rights so distributed
for cash in such manner as the Company may instruct in writing; or
(2) instruct the Exchange Agent to retain and hold such
securities and other property; provided, however, that, to the extent
-----------------
feasible, the Exchange Agent shall exercise or sell such securities or
other property before the expiration of their exercisability; or
(3) to the extent there is sufficient cash apportioned to the
Exchange Property or to the extent the Company contributes sufficient
cash to the Exchange Property, instruct the Exchange Agent in writing
to exercise any rights so distributed and to thereafter either (i)
retain and hold any securities and other property received upon
exercise of such rights, or (ii) cause the sale of some or all of such
securities or other property received upon exercise of such rights; or
(4) instruct the Exchange Agent to cause such rights to be
distributed pro rata to the holders of record of Debentures on the
register as of immediately after the close of business on the record
date (and if there is no record date, the close of business on the
effective date) for such distribution;
and, in the event option (1), (2) or (3) is chosen, the proceeds of any
such sale and any such securities or other property retained and held shall
be additional Exchange Property for apportionment equally among other
Exchange Property for which Debentures are exchangeable as of immediately
after the close of business on the record date for the distribution to
which this Section 15.5(d) applies, or, if there is no such record date,
the effective date of such distribution.
(e) In case there shall be a cash dividend or distribution of cash on
the Exchange Property pursuant to a plan of liquidation or partial
liquidation or a recapitalization or restructuring or other extraordinary
cash dividend (other than a transaction to which Section 15.7 hereof
applies), after payment of any taxes thereon pursuant to Section 15.5(h)
hereof, the remainder of such dividend or distribution shall be held as
Exchange Property for apportionment equally among other Exchange Property
for which Debentures are exchangeable as of immediately after the close of
business on the record date for such dividend or distribution to which
this Section 15.5(e) applies or, if there is no such record date, the
effective date of such dividend or distribution.
(f) In case there shall be, at any time while any Debentures are
outstanding, a taxable distribution of securities or other noncash items of
property (including subscription rights, options, warrants or other similar
rights, but excluding securities or other property received in a
transaction to which Section 15.7 hereof applies) with respect to any
Exchange Property, the Company shall, as soon as reasonably practicable
after its receipt thereof, notify the Exchange Agent of such receipt and
promptly, and in any event within five (5) business days of the receipt
thereof, deposit with the Exchange Agent all such rights, pursuant to the
Exchange Agent Agreement, and the Company shall instruct the Exchange Agent
to sell such property so received by way of distribution for cash in such
manner as the Company shall instruct in writing and the proceeds of such
sale, after payment of taxes thereon pursuant to Section 15.5(h) hereof,
shall be held as additional Exchange Property for apportionment equally
among other Exchange
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Property for which Debentures are exchangeable as of immediately after the
close of business on the record date for the distribution to which this
Section 15.5(f) applies, or, if there is no such record date, the
effective date of such distribution.
(g) Concurrently with any instruction to the Exchange Agent pursuant
to subsections (c) and (d) of this Section 15.5, the Company shall promptly
deliver to the Exchange Agent an Opinion of Counsel to the effect that the
subject distribution is a nontaxable distribution.
(h) To the extent that the Company shall, within 10 days of its
notification to the Exchange Agent of the Company's receipt of such cash,
securities or other property, including any rights, warrants or options,
furnish the Exchange Agent with an Opinion of Counsel to the effect that
such distribution or any sale of the securities, rights or other property
received on such distribution is taxable to the Company or the Exchange
Agent and an Officer's Certificate as to the amount of federal, state and
local tax payable by the Company and the Exchange Agent as a result of such
distribution or grant and estimated to be payable as a result of any such
sale (computed by the Company at the marginal tax rate applicable to such
transaction), the Exchange Agent shall pay to, or to the order of the
Company, in the case of taxes payable by the Company, or itself, in the
case of taxes payable by it, from the cash received in such distribution,
if any, or cash apportioned to the Armor All Common Stock or other Exchange
Property hereunder or from the net cash proceeds received from any such
sale, the amount of such tax as so computed by the Company. In the case of
taxes estimated to be payable as a result of any such sale, the Company
shall deliver an Officer's Certificate within 10 days after completion of
such sale stating the actual taxes payable as so computed and appropriate
adjustment of such payments shall be made. The remaining Exchange Property
held by the Exchange Agent shall be proportionately adjusted so as to be
apportioned equally to the Debentures outstanding as of immediately after
the close of business on the record date for the dividend, distribution or
grant to which this paragraph applies, or, if there is no such record date,
immediately after the close of business on the effective date of such
dividend, distribution or grant. Any holder surrendering any Debentures
after such record date, or such effective date, as the case may be, shall
be entitled to receive any Exchange Property apportioned thereto as so
adjusted pursuant to this Article XV.
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(i) In the event of any reduction of the principal amount of
Debentures outstanding (other than as a result of surrender for exchange
for Exchange Property), as evidenced by the delivery to the Trustee by the
Company of Debentures for cancellation, the Company shall be entitled to
the kind and amount of Exchange Property as shall at the time be in excess
of the kind and amount of Exchange Property which would be required for the
exchange of all Debentures then outstanding for the Exchange Property on
the basis of the then applicable Exchange Price and the other terms and
provisions of this Article XV and the Exchange Agent Agreement. Upon
expiration of the right to surrender Debentures for exchange pursuant to
this Article XV and the Exchange Agent Agreement and when all other
obligations of the Company shall have been satisfied under this Indenture
and the Exchange Agent Agreement, the Company's obligation to exchange
Debentures for Exchange Property shall be terminated and all cash and
investments and other property held by the Exchange Agent under the
Exchange Agent Agreement which are not required with respect to Debentures
previously surrendered for exchange will, subject to the limitations
contained in the Exchange Agent Agreement and subsection (i) below, be
delivered by the Exchange Agent to the Company.
(j) The Exchange Agent shall not make any distribution of Exchange
Property to the Company prior to the receipt by the Exchange Agent from the
Company of an Officer's Certificate to the effect that no Event of Default
exists hereunder and no event or condition which with notice or lapse of
time or both would become such an Event of Default exists and which states
in detail the basis asserted by the Company for such distribution.
(k) The Company shall be entitled to any net income or gain resulting
from investments of cash made by the Exchange Agent pursuant to the
Exchange Agent Agreement and shall reimburse the Exchange Agent for any
losses realized in respect of such investments.
(l) The Company shall have the full and unqualified right and power
to exercise any rights to vote, or to give consents or take any other
action in respect of, the Armor All Common Stock or any other securities
included in the Exchange Property at any time held by the Exchange Agent
and the Exchange Agent shall have no duty to exercise any such rights. The
Company shall not be liable to any holder as a result of any vote, or
failure to vote, consent or failure to consent, or any other act or failure
to act taken by the Company in respect of the Armor All Common Stock or any
other securities included in the Exchange Property.
(m) The obligations, covenants and agreements contained in the
Exchange Agent Agreement shall not constitute obligations, covenants or
agreements contained in this
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Indenture or any of the Debentures and neither the failure by the Company
to observe any obligation, covenant or agreement contained in the Exchange
Agent Agreement (unless such obligation, covenant or agreement shall also
be contained in this Indenture) nor the failure of the Exchange Agent to
fulfill any obligations, agreements or covenants set forth therein shall
constitute (with or without the giving of notice, the passage of time or
both) an Event of Default; provided, however, that nothing in this
-----------------
subsection shall impair the right of a holder to receive the Exchange
Property apportioned to such holder's Debentures in exchange for such
Debentures in accordance with the terms and conditions of this Article XV,
and nothing in this subsection shall impair the rights and remedies of the
Trustee and the holders under this Indenture with respect to a failure by
the Company to observe its express agreements and covenants to cause the
exchange of Debentures actually surrendered for exchange for Exchange
Property apportioned thereto in accordance with the terms and conditions of
this Article XV.
Section 15.6 Company To Give Notice of Certain Events. If at any time:
----------------------------------------
(a) Armor All shall declare a dividend (or any other distribution) on
the Armor All Common Stock or other Exchange Property which the Exchange
Agent would be required to apply for the benefit of the holders of the
Debentures in accordance with Section 15.5 hereof; or
(b) Armor All shall authorize the granting of subscription rights,
options, warrants or other similar rights to holders of Armor All Common
Stock or other Exchange Property; or
(c) there shall occur any reclassification of Armor All Common Stock
(other than a subdivision or combination of outstanding shares of Armor All
Common Stock) or any consolidation or merger to which Armor All is a party
and for which approval of any stockholders of Armor All is required, or the
sale or transfer of all or substantially all of the assets of Armor All; or
(d) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of Armor All;
then the Company shall as promptly as practicable cause to be filed at each
office or agency maintained pursuant to this Indenture and cause to be mailed to
the holders of Debentures at their last addresses as they shall appear upon the
Debenture register, a notice stating (i) the date, if known by the Company, on
which a record is to be taken for the purpose of such dividend, distribution or
grant of rights, or, if a record is not to be taken, the date as of which the
holders of Armor All Common Stock of record to be entitled to such dividend or
distribution or grant
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of rights are to be determined, or (ii) the date, if known by the Company, on
which such reclassification, merger, consolidation, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Armor All Common Stock of record shall be
entitled to exchange their shares of Armor All Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up.
Section 15.7 Merger of Armor All. In case of any consolidation or merger
-------------------
of Armor All with or into any other Person which results in shares of Armor All
Common Stock, as constituted prior to the consummation of such transaction,
being converted into other securities and/or property (including cash), or in
case of any sale or transfer of all or substantially all of the assets of Armor
All (if in connection with such sale or transfer holders of Armor All Common
Stock receive other securities and/or property including cash, in exchange for
their shares of Armor All Common Stock), or of any voluntary or involuntary
dissolution, liquidation or winding up of Armor All, the Company shall execute
and deliver to the Trustee a supplemental indenture (which shall conform to the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture), and to the Exchange Agent a supplement to the Exchange Agent
Agreement, each providing that the holder of each Debenture then outstanding
shall have the right thereafter (subject to Section 15.9 hereof) to exchange
such Debenture (i) for the kind and amount of securities and other property
receivable upon such consolidation, merger, sale, transfer, dissolution,
liquidation or winding up by a holder of the number of shares of Armor All
Common Stock for which such Debenture was exchangeable immediately prior to such
consolidation, merger, sale, transfer, dissolution, liquidation or winding up
and (ii) the kind and amount of securities (other than Armor All Common Stock)
and other Exchange Property for which such Debenture was exchangeable
immediately prior to such consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Such supplemental indenture shall provide for
adjustments, rights to receive and retain dividends or their equivalents, which
shall be as nearly equivalent as may be practicable to the adjustments, rights
to receive and retain dividends or their equivalents, provided for in this
Article XV. The above provisions of this Section 15.7 shall similarly apply to
any successive consolidation, merger, sale, transfers, dissolution, liquidation
or winding up.
Notice of such supplemental indenture shall as soon as practicable be filed
with the Exchange Agent and mailed by or on behalf of the Company to the holders
of Debentures at their last addresses as they shall appear on the Debenture
register.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any such supplemental indenture
relating either to the kind or amount of shares of stock or securities or
property or cash receivable by the
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Debentureholders upon the exchange of their Debentures as herein provided after
any such consolidation, merger, sale, transfer, dissolution, liquidation or
winding up or to any adjustment to be made with respect thereto.
Section 15.8 Certain Tender or Exchange Offers for Exchange Property. In
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the event of a tender offer or exchange offer for any class of securities
included within the Exchange Property (i) if the Company owns shares of such
class which are not subject to the Exchange Agent Agreement, the Company will
cause the Exchange Agent to tender such shares of such class in the same
proportion that the Company tenders its securities in such class which are not
subject to the Exchange Agent Agreement, and (ii) if the Company does not own
securities of a class which are subject to the Exchange Agent Agreement, the
Company may, at its option and in its sole discretion, elect to cause the
Exchange Agent to tender all or any portion or none of such class of security
included within the Exchange Property held by the Exchange Agent. The proceeds
of the sale of any such Exchange Property pursuant to any such tender or
exchange offer will be held by the Exchange Agent for the benefit of holders as
provided in this Indenture, except that the Company shall be entitled to any
interest earned or dividends paid thereon.
Section 15.9 Tax Adjustments in Exchange Price. If an event shall occur
---------------------------------
which causes the Exchange Price to be subject to adjustment pursuant to Section
15.4 hereof, or a merger, consolidation or sale or transfer of assets or of any
voluntary or involuntary dissolution, liquidation or winding up of Armor All
shall occur requiring a supplemental indenture under Section 15.7 hereof, and
if, within 10 days after the effective date of such transaction, the Company
shall furnish the Exchange Agent with an Opinion of Counsel to the effect that
such transaction is taxable to the Company or the Exchange Agent and an
Officer's Certificate as to the amount of federal, state and local tax payable
by the Company or the Exchange Agent as a result of such transaction (computed
by the Company at the marginal tax rate applicable to such transaction), the
Exchange Agent shall pay to, or to the order of, the Company, in the case of
taxes payable by the Company, or itself, in the case of taxes payable by it, the
cash held by it and apportioned or to be apportioned to the Exchange Property
for which outstanding Debentures are exchangeable, up to the amount of such
taxes. In the event that the cash held by the Exchange Agent and so apportioned
or to be apportioned is insufficient to pay to the Company or the Exchange Agent
the amount of such taxes, the Exchange Agent shall, as soon as reasonably
practicable and to the extent legally permissible, sell in accordance with
written instructions received from the Company, or if no such instructions are
received, as determined by the Exchange Agent, such Exchange Property (including
any securities or other property included therein) as may be necessary to pay,
from the proceeds thereof after payment of any taxes by the Company or the
Exchange Agent on such sale, the amount of any such insufficiency. The Exchange
Agent shall notify the Company and the Trustee of any such sale and the Exchange
Property sold. Following payment of all necessary
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<PAGE>
amounts to the Company or the Exchange Agent, such Exchange Property held by the
Exchange Agent and any cash apportioned thereto shall be proportionately
adjusted so as to be apportioned equally to the Debentures outstanding as of
immediately after the close of business on the record date or the effective date
for the transaction to which this section applies (as shall be specified in
Section 15.4 or 15.7 hereof, whichever is applicable). Any holder surrendering
any Debentures after such record date, or such effective date, as the case may
be, shall be entitled to receive the Exchange Property and any cash apportioned
thereto as so adjusted pursuant to this paragraph. If this Section 15.9 shall
apply to a transaction and the sale by the Company of the consideration
receivable therein shall not be legally permissible and the amount of cash
apportioned to the Exchange Property shall not be sufficient to pay all taxes
payable by the Company or the Exchange Agent which arise from such transaction,
the Company may direct the Exchange Agent to segregate for the benefit of the
Company or the Exchange Agent or deliver to the Company or the Exchange Agent an
amount of Exchange Property theretofore held by the Exchange Agent for exchange
of Debentures having a Market Price equal to the unsatisfied portion of the tax
payable by the Company or the Exchange Agent with respect to such transaction
including any tax payable upon the delivery or sale thereof in order to satisfy
the aforementioned tax, and such Exchange Property shall thereafter be solely
for the account of the Company or the Exchange Agent and holders of Debentures
shall have no rights thereto.
In the event that an Opinion of Counsel given pursuant to this Indenture
concludes that whether taxes are payable by the Company or the Exchange Agent is
uncertain under the then state of the law or facts or both, the Company shall
have the option of requesting the Exchange Agent to segregate the amount of
funds that would be payable (or securities or other property in lieu thereof),
if such taxes were deemed payable, together with the amount estimated in good
faith to be the reasonable costs and expenses (including attorneys' fees) of
obtaining a determination as set forth below. The holders shall have no rights
to such funds or securities or other property, which shall be held by the
Exchange Agent for the Company (or itself, as the case may be), and the Exchange
Property and any cash apportioned thereto deliverable upon exchange of
Debentures pursuant to this Article XV shall be reapportioned as though such
segregated amounts had been paid to the Company or the Exchange Agent for such
taxes, and any holder surrendering any Debenture after the record or effective
date of the applicable transaction giving rise to an adjustment pursuant to this
Section 15.9 shall be entitled to receive only such Exchange Property and any
cash apportioned thereto upon exchange of Debentures pursuant to this Article XV
as so reapportioned. The Company shall thereupon in good faith seek an
appropriate determination from the appropriate agencies and, if judged necessary
by the Company in good faith, from appropriate courts, as to whether taxes are
so payable. If an appropriate determination is made that such taxes are so
payable, then the Exchange Agent shall immediately pay the funds or deliver the
securities or other property so segregated to
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<PAGE>
the Company (or, if taxes are payable by the Exchange Agent, retain such funds
or securities or other property for itself), and if an appropriate determination
is made that such taxes are not payable or an amount of tax is payable which is
less than the amount of funds or property so segregated, then the Exchange
Agent, after paying to the Company (or itself, as the case may be) out of such
funds or securities or other property the reasonable expenses and costs
(including attorneys' fees) of obtaining such determination (and any taxes so
payable), shall apportion such remaining funds or securities or other property
which had been so segregated among the Exchange Property and cash apportioned
thereto as of immediately after the close of business on the record date or the
effective date of such transaction giving rise to an adjustment pursuant to
Section 15.4 or 15.7 hereof, whichever is applicable. If any Debenture has been
exchanged on or after such record date or such effective date, as the case may
be, and before a determination is made that no taxes are payable or an amount of
tax is payable which is less than the amount of funds or securities or other
property so segregated, the Company to the extent not previously delivered,
shall deliver such Exchange Property and any cash apportioned thereto as
reapportioned following such determination, to the Person to which and in the
manner in which the other proceeds of the exchange of such Debenture were
delivered.
Section 15.10 Cash Equivalent. Notwithstanding any other provisions in
---------------
this Article XV, in lieu of delivering certificates representing shares of Armor
All Common Stock or other Exchange Property in exchange for Debentures
surrendered in accordance with Section 15.2 hereof, the Company may, at the
Company's option, pay to the holder surrendering such Debentures an amount in
cash equal to the value of the Exchange Property for which such Debentures are
exchangeable (based on the Market Price as calculated on the date of receipt by
the Exchange Agent of the notice of exchange delivered by such holder). Prior
to so directing the Exchange Agent to make any such cash payment, the Company
shall deposit with the Exchange Agent the cash so payable.
Section 15.11 Repurchase Rights. In the event that the Company obtains or
-----------------
otherwise releases any Armor All Common Stock or other Exchange Property in any
manner otherwise than as contemplated by Section 15.12 hereof, each holder will
have the right ("Repurchase Right"), at such holder's option, to require the
Company to purchase for cash all of such holder's Debentures, or a portion
thereof which is $1,000 or any integral multiple thereof, in the manner and at
the price described below.
Promptly (and in any event within 10 days) after the Company has obtained
or released any Armor All Common Stock or any other Exchange Property in any
manner otherwise than as contemplated by Section 15.12 hereof, the Exchange
Agent will mail to all holders of record of Debentures a notice thereof and the
Repurchase Right arising as a result thereof (a "Repurchase Notice"). To
exercise the Repurchase Right, a Debentureholder must deliver on or before the
15th day after the date of the Repurchase Notice irrevocable
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<PAGE>
written notice to the Exchange Agent of the holder's exercise of such right,
together with the Debentures with respect to which the right is being exercised,
duly endorsed for transfer.
On the date ("Repurchase Date") that is 30 days after the date of the
Repurchase Notice, the Company will be required to repurchase all Debentures in
respect of which the Repurchase Right has been exercised at the following
repurchase prices: (i) if the date on which the Exchange Property was obtained
or released in a manner not contemplated by Section 15.12 hereof (the
"Triggering Date") is before February 16, 1999, the repurchase price shall be
120% of the greater of (a) the principal amount of such Debentures (plus accrued
and unpaid interest, if any, to the Repurchase Date) and (b) the Market Price of
the Exchange Property deliverable in exchange for such Debentures on the
Triggering Date (or if such date is not a Business Day, on the next succeeding
Business Day); and (ii) if the Triggering Date occurs on or after February 16,
1999, the repurchase price shall be the greater of (a) the redemption price on
the Triggering Date and (b) the Market Price of the Exchange Property
deliverable in exchange for such Debentures on the Triggering Date (or if such
date is not a Business Day, on the next succeeding Business Day).
The obligation of the Company to deliver Exchange Property (or cash in lieu
thereof) in exchange for Debentures shall survive and continue to apply in full
force and effect following and notwithstanding the occurrence of any event
triggering a Repurchase Right. Failure by the Company to exchange Debentures in
accordance with this Indenture or to repurchase Debentures upon exercise of a
Repurchase Right will constitute an Event of Default with respect to the
Debentures and holders of Debentures will have the remedies provided for in the
Indenture, including acceleration of the indebtedness evidenced by the
Debentures, in the event of any such failure.
If an offer is made to repurchase Debentures in connection with a
Repurchase Right, the Company will comply with all tender offer rules, including
but not limited to Sections 13(e) and 14(e) under the Exchange Act and Rules
13e-1 and 14e-1 thereunder, to the extent applicable to such offer.
Section 15.12 Withdrawals of Exchange Property. The Company shall be
--------------------------------
entitled, out of the Armor All Common Stock or other Exchange Property held by
the Exchange Agent, to such kind and quantity of Exchange Property and such
amount of any cash (the investments contemplated by Section 15.5 hereof being
deemed for these purposes to be cash and to be valued at their outstanding
principal balance) and other Exchange Property as shall be in excess of the
quantity of Exchange Property held by the Exchange Agent, which would be
deliverable by the Exchange Agent upon the exchange of all Debentures then
outstanding, and such excess shall be held by the Exchange Agent for the account
of the Company and, upon delivery of the Officer's Certificate provided for in
the following sentence, released to the Company upon demand. Upon
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demand of any withdrawal of Exchange Property from the Exchange Agent, the
Company shall deliver to the Trustee an Officer's Certificate (and a copy
thereof to the Exchange Agent) which shall state (i) the principal amount of
Debentures then outstanding and the kind and amount of Exchange Property
required for delivery to the holders thereof upon exchange, (ii) that the
withdrawal of the kind and amount of Exchange Property referred to in such
demand is permitted by the provisions of this Indenture and (iii) that the
Exchange Property so to be withdrawn would not be deliverable upon exchange of
all Debentures then outstanding. In delivering such certificate, the Company
may rely on information furnished to it by the Exchange Agent as to the kind and
amount of Exchange Property held by it and the kind and amount thereof
previously delivered to holders of Debentures.
Section 15.13 Obligations of Trustee and Exchange Agent. Subject to the
-----------------------------------------
provisions of Section 8.1 of this Indenture, neither the Trustee nor the
Exchange Agent shall at any time be under any duty or responsibility to any
holder of Debentures to determine whether any facts exist which may require any
adjustment of the Exchange Price, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor the Exchange Agent shall be accountable with respect to
the validity or value (or the kind or amount) of any Exchange Property which may
at any time be issued or delivered upon the exchange of any Debenture or the
market conditions existing at the time of sale of any Exchange Property; and
neither the Trustee nor the Exchange Agent shall be responsible for any failure
of the Company to transfer or deliver any Exchange Property or certificates or
other evidence thereof to an Exchange Agent as provided herein, or subject to
the provisions of Section 8.1 of this Indenture and the obligations assumed
under the Exchange Agent Agreement, to comply with any of the covenants of the
Company contained in this Article XV.
Section 15.14 Covenants by the Company. So long as any Debentures shall
------------------------
be outstanding and exchangeable for Armor All Common Stock or other Exchange
Property pursuant to this Article XV, the Company shall (i) preserve unimpaired
the right of each holder of Debentures, upon exchange thereof, to receive shares
of Armor All Common Stock or other Exchange Property as such holder shall from
time to time be entitled to receive in accordance with the provisions of this
Article XV, and (ii) not pledge, mortgage, hypothecate or grant a security
interest in, or permit any mortgage, pledge, security interest or other lien
upon, the Exchange Property.
Section 15.15 Transfer Taxes. The Company will pay any and all taxes that
--------------
may be payable in respect of the transfer and delivery of shares of Armor All
Common Stock (or other securities included in the Exchange Property) pursuant
hereto, other than income, capital gains and similar taxes imposed on any holder
by reason of exchange of Debentures for Exchange Property; provided,
---------
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<PAGE>
however, that the Company shall not be required to pay any tax which may be
- -------
payable in respect of any transfer involved in the delivery, upon an exchange of
Debentures, of shares of Armor All Common Stock (or other securities included in
the Exchange Property) in a name other than that in which the Debentures so
exchanged were registered, and no such transfer shall be made unless and until
the Person requesting such transfer has paid to the Company or the applicable
Exchange Agent the amount of any such tax, or has established to the
satisfaction of the Company and such Exchange Agent that such tax has been paid.
Section 15.16 Fully Paid Shares. The Company warrants and covenants that
-----------------
all shares of Armor All Common Stock delivered upon the exchange of Debentures
will be fully paid and nonassessable and that each holder of Debentures who
receives shares of Armor All Common Stock or other Exchange Property in exchange
for his Debentures, pursuant to this Article XV, will receive valid and
marketable title to such Exchange Property, free and clear of all claims, liens
and encumbrances. Except as provided in Section 15.15 hereof, the Company will
pay all taxes, liens and charges with respect to the delivery of Exchange
Property in exchange for Debentures hereunder.
Section 15.17 Cancellation of Debentures. All Debentures delivered for
--------------------------
exchange shall be delivered by the applicable Exchange Agent to the Trustee and
be canceled by the Trustee, and the Trustee shall dispose of the same as
provided in Section 2.8 of this Indenture.
Section 15.18 Registration of Armor All Common Stock. The Company hereby
--------------------------------------
covenants that so long as Debentures remain outstanding which may be exchanged
for shares of Armor All Common Stock held by the Exchange Agent pursuant to the
Exchange Agent Agreement, it will use its best efforts to cause to be
maintained an effective registration statement on file with the Commission
covering the delivery of such Armor All Common Stock, and any qualification
under state blue sky or securities laws required for such delivery will also be
maintained.
ARTICLE XVI.
MISCELLANEOUS PROVISIONS
Section 16.1 Provisions Binding on Company's Successors. All the
------------------------------------------
covenants, stipulations, promises and agreements in this Indenture by the
Company shall bind its successors and assigns whether so expressed or not.
Section 16.2 Official Acts by Successor Corporation. Any act or
--------------------------------------
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corpora-
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tion that shall at the time be the lawful sole successor of the Company.
Section 16.3 Addresses for Notices, etc. Any notice or demand which by
---------------------------
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Debentures on the Company shall be deemed to
have been sufficiently given or made, for all purposes if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to McKesson Corporation, McKesson Plaza, One Post Street, San
Francisco, California 94104, Attention: General Counsel. Any notice,
direction, request or demand hereunder to or upon the Trustee shall be deemed to
have been sufficiently given or made, for all purposes, if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office of the Trustee, which office
is, at the date as of which this Indenture is dated, located at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate
Trust Services Division.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Debentureholder shall be mailed to
him by first-class mail, postage prepaid, at his address as it appears on the
Debenture register and shall be sufficiently given to him if so mailed within
the time prescribed.
Failure to mail a notice or communication to a Debentureholder or any
defect in it shall not affect its sufficiency with respect to other
Debentureholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 16.4 Governing Law. This Indenture and each Debenture shall be
-------------
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York.
Section 16.5 Evidence of Compliance with Conditions Precedent;
-------------------------------------------------
Certificates to Trustee. Upon any application or demand by the Company to the
- -----------------------
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a
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<PAGE>
condition or covenant provided for in this Indenture shall include (1) a
statement that the Person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based; (3) a statement that, in the opinion of
such Person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such Person, such condition or covenant has been complied with.
Section 16.6 Legal Holidays. In any case where the date of maturity of
--------------
interest on or principal of the Debentures or the date fixed for redemption of
any Debenture will not be a Business Day, then payment of such interest on or
principal of the Debentures need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest shall
accrue for the period from and after such date.
Section 16.7 Trust Indenture Act. This Indenture is hereby made subject
-------------------
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act.
Section 16.8 No Security Interest Created. Nothing in this Indenture or
----------------------------
in the Debentures, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its subsidiaries is located.
Section 16.9 Benefits of Indenture. Nothing in this Indenture or in the
---------------------
Debentures, expressed or implied, shall give to any Person, other than the
parties hereto, any paying agent, any authenticating agent, any Debenture
registrar and their successors hereunder, the holders of Debentures and the
holders of Senior Indebtedness, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 16.10 Table of Contents, Headings, etc. The table of contents and
---------------------------------
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 16.11 Authenticating Agent. The Trustee may appoint an
--------------------
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Debentures in connection
with the original issuance thereof and transfers and substitutions of Debentures
hereunder, including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all
intents and purposes as though the authenticating agent had
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<PAGE>
been expressly authorized by this Indenture and those Sections to authenticate
and deliver Debentures. For all purposes of this Indenture, the authentication
and delivery of Debentures by the authenticating agent shall be deemed to be
authentication and delivery of such Debentures "by the Trustee" and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Debentures for the Trustee's certificate of authentication. Such
authenticating agent shall at all times be a Person eligible to serve as trustee
hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section 16.11,
the Trustee shall promptly appoint a successor authenticating agent (which may
be the Trustee), shall give written notice of such appointment to the Company
and shall mail notice of such appointment to all holders of Debentures as the
names and addresses of such holders appear on the Debenture register.
The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services, and the Trustee shall be entitled to
be reimbursed for such payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 16.11 shall
be applicable to any authenticating agent.
Section 16.12 Execution in Counterparts. This Indenture may be executed
-------------------------
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
The First National Bank of Chicago hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed, and their respective corporate seals to be hereunto affixed and
attested, all as of the date first written above.
McKESSON CORPORATION,
A Delaware Corporation
By:
---------------------------
Title:
------------------------
Attest:
- ----------------------------------
[SEAL]
THE FIRST NATIONAL BANK OF CHICAGO
By:
---------------------------
Title:
------------------------
Attest:
- ------------------------------------
[SEAL]
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<PAGE>
Exhibit 4.1A
EXHIBIT A - FORM OF DEFINITIVE DEBENTURE
[FORM OF FACE OF DEBENTURE]
No. _______________ $ _______________
McKESSON CORPORATION
A Delaware Corporation
_____% Exchangeable Subordinated Debenture Due 2004
McKESSON CORPORATION, a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the "Company"), which
term includes any successor corporation under the Indenture referred to on the
reverse hereof, for valued received hereby promises to pay to _______________,
___________________________________________ Dollars on February 15, 2004 at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City of New York, or, at the option of the holder of this
Debenture, at the Corporate Trust Office of the Trustee, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and pay interest,
semi-annually on February 15 and August 15 of each year, commencing August 15,
1994, on said principal sum at said office or agency, in like coin or currency,
at the rate per annum specified in the title of this Debenture, from the
February 15 or August 15, as the case may be, next preceding the date of this
Debenture to which interest has been paid or duly provided for, unless the date
hereof is a date to which interest has been paid or duly provided for, in which
case from the date of this Debenture, or unless no interest has been paid or
duly provided for on the Debentures, in which case from ______, 1994, until
payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after any February 1 or
August 1, as the case may be, and before the following February 15 or August 15,
this Debenture shall bear interest from such February 15 or August 15; provided,
---------
however, that if the Company shall default in the payment of interest due on
- -------
such February 15 or August 15, then this Debenture shall bear interest from the
next preceding February 15 or August 15 to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on such
Debenture, from ______________, 1994. The interest so payable on any February
15 or August 15 will be paid to the person in whose name this Debenture (or one
or more Predecessor Debentures) is registered at the close of business on the
record date, which shall be the February 1 or August 1 (whether or not a
Business Day) next preceding such February 15 or August 15; provided that any
-------------
such interest not punctually paid or duly provided for shall be payable as
provided in the
-1-
<PAGE>
Indenture. Interest may, at the option of the Company, be paid by check mailed
to the registered address of such person.
Reference is made to the further provisions of this Debenture set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Debentures to
the prior payment in full of all Senior Indebtedness as defined in the Indenture
and provisions giving the holder of this Debenture the right to exchange this
Debenture into Exchange Property and the right to cause the Company to
repurchase this Debenture in certain events, in each case on the terms and
subject to the limitations referred to on the reverse hereof and as more fully
specified in the Indenture. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Debenture shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State.
This Debenture shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed under its corporate seal.
McKESSON CORPORATION,
A Delaware Corporation
By:
----------------------------
Chairman of the Board and
Chief Executive Officer
Dated:
-------------------------------
Attest:
- ---------------------------------------
Vice President and Secretary
-2-
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-named Indenture.
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:
-----------------------------
As Authenticating Agent
(if different from Trustee)
By:
-----------------------------
Authorized Officer
[FORM OF REVERSE OF DEBENTURE]
McKESSON CORPORATION
A Delaware Corporation
______% Exchangeable Subordinated Debenture Due 2004
This Debenture is one of a duly authorized issue of Debentures of the
Company, designated as its _____% Exchangeable Subordinated Debentures Due 2004
(herein called the "Debentures"), limited to the aggregate principal amount of
$155,000,000 all issued or to be issued under and pursuant to an Indenture dated
as of __________, 1994 (herein called the "Indenture"), between the Company and
The First National Bank of Chicago (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Debentures.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all
Debentures may be declared, and upon said declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
In the case of certain events, holders of Debentures shall have a
Repurchase Right, as defined in the Indenture, to cause the Company to
repurchase such Debentures on the terms and subject to the conditions provided
in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debentures at the time outstanding, evidenced as in the
Indenture provided,
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<PAGE>
to execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Debentures; provided, however, that no such supplemental indenture shall (i)
-----------------
extend the fixed maturity of any Debenture, or reduce the rate or extend the
time of payment of interest thereon, or reduce the principal amount thereof or
premium, if any, thereon, or reduce any amount payable on redemption thereof, or
impair or affect the right of any Debentureholder to institute suit for the
payment thereof, or make the principal thereof or interest or premium, if any,
thereon payable in any coin or currency other than that provided in the
Debentures, or modify the provisions of the Indenture with respect to the
subordination of the Debentures in a manner adverse to the Debentureholders, or
impair the right to exchange the Debentures into Exchange Property or impair the
right of the holders of the Debentures to cause the repurchase thereof, in each
case subject to the terms set forth in the Indenture, including Article 15
thereof, without the consent of the holder of each Debenture so affected, or
(ii) reduce the aforesaid percentage of Debentures, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Debentures then outstanding. It is also provided in the
Indenture that, prior to any declaration accelerating the maturity of the
Debentures, the holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may on behalf of the holders of all of the
Debentures waive any past default or Event of Default under the Indenture and
its consequences except a default in the payment of interest or any premium on
or the principal of any of the Debentures or a default in respect of a covenant
or provision of the Indenture which under Article 11 thereof cannot be modified
or amended without the consent of the holders of all Debentures then
outstanding. Any such consent or waiver by the holder of this Debenture (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Debenture and any
Debentures which may be issued in substitution hereof, irrespective of whether
or not any notation thereof is made upon this Debenture or such other
Debentures.
The indebtedness evidenced by the Debentures is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Debenture is issued subject to the provisions of
the Indenture with respect to such subordination. Each holder of this
Debenture, by accepting the same, agrees to and shall be bound by such
provisions and authorizes the Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for such purpose.
-4-
<PAGE>
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Debenture at the place, at the respective times, at the rate and in the
coin or currency herein prescribed.
Interest on the Debentures shall be computed on the basis of a year of
twelve 30-day months.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
substitution of Debentures, Debentures may be substituted for a like aggregate
principal amount of Debentures of other authorized denominations.
The Debentures will not be redeemable at the option of the Company prior to
February 16, 1999. On or after such date and prior to maturity the Debentures
may be redeemed at the option of the Company as a whole, or from time to time in
part, upon mailing a notice of such redemption not less than 30 nor more than 60
days before the date fixed for redemption to the holders of Debentures at their
last registered addresses, all as provided in the Indenture, at the following
redemption prices (expressed as percentages of the principal amount),
together in each case with accrued interest to the date fixed for redemption.
The Debentures will not be redeemable prior to February 16, 1999. At any
time on or after that date, the Debentures are redeemable at the following
redemption prices if redeemed during the 12-month period beginning February 15:
<TABLE>
<CAPTION>
Year Percentage Year Percentage
- ---------------- ---------- ---------------- ----------
<S> <C> <C> <C>
1999 ............ 2002 ............
2000 ............ 2003 ............
2001 ............
</TABLE>
and 100% at February 15, 2004; provided that if the date fixed for redemption is
-------------
a February 15 or August 15, then the interest payable on such date shall be paid
to the holder of record on the next preceding February 1 or August 1,
respectively.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 60 days following the original issuance
of the Debentures and prior to the close of business on February 15, 2004, or,
as to all or any portion hereof called for redemption, prior to the close of
business on the Business Day next preceding the date fixed for
-5-
<PAGE>
redemption (unless the Company shall default in payment due upon redemption
thereof), to exchange the principal hereof or any portion of such principal
which is $1,000 or an integral multiple thereof, into Exchange Property, as said
Exchange Property shall be constituted at the date of exchange, obtained by
dividing the principal amount of this Debenture or portion thereof to be
exchanged by the Exchange Price, which shall initially be equivalent to an
exchange rate of ________ shares of Armor All Common Stock for each $1,000
principal amount of Debentures, or such Exchange Price as adjusted from time to
time as provided in the Indenture, upon surrender of this Debenture, together
with an exchange notice as provided in the Indenture, to the Company at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City of New York, or at the option of such holder, the Corporate
Trust Office of the Trustee, and, unless any securities included in the Exchange
Property issuable on exchange are to be issued in the same name as this
Debenture, duly endorsed by, or accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney. No adjustment in respect of interest or dividends will be
made upon any exchange; provided, however, that if this Debenture shall be
-----------------
surrendered for exchange during the period from the close of business on any
record date for the payment of interest through the close of business on the
Business Day next preceding the following interest payment date, this Debenture
(unless it or the portion being exchanged shall have been called for redemption
on a date in such period) must be accompanied by an amount, in funds acceptable
to the Company, equal to the interest payable on such interest payment date on
the principal amount being exchanged. No fractional shares or interests will be
issued upon any exchange, but an adjustment in cash will be made, as provided in
the Indenture, in respect of any fractional share or interest which would
otherwise be issuable upon the surrender of any Debenture or Debentures for
exchange.
Any Debentures called for redemption, unless surrendered for exchange on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Debentures at an amount equal to the
applicable redemption price, together with accrued interest to the date fixed
for redemption, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Debentures from the holders thereof and
exchange them into Exchange Property and to make payment for such Debentures as
aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Debenture at
the Corporate Trust Office of the Trustee, a new Debenture or Debentures of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in substitution thereof, subject to the limitations provided
in the
-6-
<PAGE>
Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company, the Trustee, the Exchange Agent, any authenticating agent,
any paying agent and any Debenture registrar may deem and treat the registered
holder hereof as the absolute owner of this Debenture (whether or not this
Debenture shall be overdue and notwithstanding any notation of ownership or
other writing hereon made by anyone other than the Company or any Debenture
registrar), for the purpose of receiving payment hereof, or on account hereof,
for the exchange hereof and for all other purposes, and neither the Company nor
the Trustee nor any other authenticating agent nor any paying agent nor the
Exchange Agent nor any Debenture registrar shall be affected by any notice to
the contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, satisfy and discharge liability
for monies payable on this Debenture.
No recourse for the payment of the principal of or any premium or
interest on this Debenture, or for any claim based hereon or otherwise in
respect hereto, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Terms used in this Debenture and defined in the Indenture
are used herein as therein defined.
-7-
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Debenture, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the ________________ Custodian
entireties (Cust)
JT TEN - as joint tenants with ________________ under
right of survivorship (Minor)
and not as tenants in
common Uniform Gifts to
Minors Act _______________
(State)
</TABLE>
Additional abbreviations may also be used
though not in the above list.
-8-
<PAGE>
[FORM OF EXCHANGE NOTICE]
EXCHANGE NOTICE
To: The First National Bank of Chicago
The undersigned registered owner of this Debenture hereby irrevocably
exercises the option to exchange this Debenture, or the portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Armor
All Products Corporation Common Stock and other Exchange Property in accordance
with the terms of the Indenture referred to in this Debenture, and directs that
any shares of Armor All Products Corporation Common Stock or other Exchange
Property deliverable upon such exchange, together with any check in payment for
fractional shares or interests and any Debentures representing any unexchanged
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If shares of Armor All
Products Corporation Common Stock or other Exchange Property or any portion of
this Debenture not exchanged are to be issued in the name of a person other than
the undersigned, the undersigned will so indicate below and pay all transfer
taxes payable with respect thereto. Any amount required to be paid to the
undersigned on account of interest accompanies this Debenture.
Dated:
-----------------------
-------------------------------------
-------------------------------------
Signature(s)
Signature(s) must be guaranteed by
an eligible guarantor institution
(banks, stock brokers, savings and
loan associations and credit
unions) with membership in an
approved signature guarantee
medallion program pursuant to
Securities and Exchange Commission
Rule 17Ad-15 if shares of Armor
All Products Corporation Common
Stock or other Exchange Property
are to be issued, or Debentures to
be delivered, other than to and in
the name of the registered holder.
- ------------------------------
Signature Guarantee
-9-
<PAGE>
Fill in for registration of shares
of Armor All Products Corporation
Common Stock or other Exchange
Property if to be issued, and
Debentures if to be delivered,
other than to and in the name of
the registered holder:
- -------------------------------
(Name)
- -------------------------------
(Street Address)
- -------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be
exchanged (if less than all):
$
---------------
---------------------------
Social Security or Other
Taxpayer Identification
Number
-10-
<PAGE>
[FORM OF ASSIGNMENT]
For value received ______________________________ hereby sells(s),
assign(s) and transfer(s) unto ________________________________________ (Please
insert Social Security or other identifying number of assignee) the within
Debenture, and hereby irrevocably constitutes and appoints __________________
________________________ attorney to transfer the said Debenture on the books of
the Company, with full power of substitution in the premises.
Dated:
--------------------------
- ---------------------------------
- ---------------------------------
Signature(s)
Signature(s) must be guaranteed by
an eligible guarantor institution
(banks, stock brokers, savings and
loan associations and credit unions)
with membership in an approved
signature medallion program
pursuant to Securities and Exchange
Commission Rule 17Ad-15
- ---------------------------------
Signature Guarantee
NOTICE: The signature on the exchange notice or the assignment must correspond
with the name as written upon the face of the Debenture in every particular
without alteration or enlargement or any change whatever.
-11-
<PAGE>
[FORM OF OPTION TO EXERCISE REPURCHASE RIGHT]
To: The First National Bank of Chicago
The undersigned registered owner of this Debenture hereby irrevocably
acknowledges receipt of a notice from The First National Bank of Chicago (the
"Exchange Agent") as to the triggering of a Repurchase Right with respect to
this Debenture and requests and instructs the Exchange Agent to repay the entire
principal amount of this Debenture, or the portion thereof (which is $1,000 or
an integral multiple thereof) below designated, in accordance with the terms of
the Indenture referred to in this Debenture to the registered holder hereof.
Dated:
------------------
------------------------------
------------------------------
Signature(s)
------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if
less than all): $
-------------
-12-
<PAGE>
Exhibit 4.2
EXCHANGE AGENT AGREEMENT
------------------------
THIS EXCHANGE AGENT AGREEMENT (this "Agreement"), dated as of ___________,
1994, entered into between McKESSON CORPORATION, a Delaware corporation (the
--------------------
"Company"), and THE FIRST NATIONAL BANK OF CHICAGO, as Exchange Agent for
----------------------------------
holders of Debentures (the "Exchange Agent"),
W I T N E S S E T H:
WHEREAS, the Company has executed and delivered an Indenture dated as of
___________, 1994 (the "Indenture") to The First National Bank of Chicago, as
trustee (the "Trustee"); and
WHEREAS, under and pursuant to the Indenture the Company may issue up to
$155,000,000 aggregate principal amount of ________% Exchangeable Subordinated
Debentures due February 15, 2004 (the "Debentures"); and
WHEREAS, pursuant and subject to the terms of the Debentures and the
Indenture, each $1,000 principal amount of Debentures is exchangeable at the
option of the holder thereof for a number of shares of the common stock, par
value $0.01 per share, of Armor All Products Corporation, a Delaware corporation
("Armor All"), at the Exchange Price (as defined in the Indenture) and other
Exchange Property (as hereinafter defined) as provided in the Indenture:
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and in order to set forth the terms upon which the
Armor All Common Stock deposited with the Exchange Agent by the Company for
delivery upon exchange of the Debentures and all other Exchange Property as may
from time to time be held by the Exchange Agent hereunder shall be held and
dealt with by the Exchange Agent and its successors, the Company and the
Exchange Agent hereby agree as follows:
Section 1. Definitions. All terms used in this Agreement unless otherwise
-----------
defined herein shall have the respective meanings specified in the Indenture:
"Armor All Common Stock" means the common stock of Armor All of the class
authorized and designated as common stock, par value $0.01 per share, as such
common stock may be changed or reclassified from time to time.
"Cash Dividend" means a dividend on Armor All Common Stock or on other
Exchange Property held in the form of stock paid in cash (other than a dividend
paid pursuant to a plan of liquidation or partial liquidation or a
recapitalization or restructuring or other extraordinary cash dividend).
-1-
<PAGE>
"Exchange Property" means initially the _________ shares of Armor All
Common Stock delivered to the Exchange Agent by the Company pursuant to this
Agreement simultaneously with the execution and delivery of the Indenture, and
thereafter means the securities, cash and other property, if any, attributable
to Armor All Common Stock and which at the time are deliverable upon surrender
of the Debentures for exchange in accordance with Article 15 of the Indenture.
"Interest Payment" means an interest payment on any Exchange Property held
in the form of debt securities attributable to Armor All Common Stock.
"Officer's Certificate" means a certificate signed by any officer of the
applicable entity. Each certificate with respect to compliance with a condition
or covenant provided for in this Agreement shall include (i) a statement that
the person making such certificate has read such covenant or condition; (ii) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements contained in such certificate are based; (iii) a
statement that, in the opinion of such person, such person has made such
examination or investigation as is necessary to enable such person to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (iv) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
"Opinion of Counsel" means an opinion in writing, signed by legal counsel
who shall be satisfactory to the Exchange Agent and who may be an employee of or
counsel to the Company.
"Stock Record Date" means the record date for determining the holders of
Armor All Common Stock, or any other securities included within the Exchange
Property, entitled to notice of, and to vote on, a matter to be voted upon by
holders of such securities.
Section 2. Deposit. The Company will from time to time (i) cause The
-------
Depository Trust Company to make the appropriate book-entry transfers, and/or
(ii) deliver to the Exchange Agent to be held by the Exchange Agent hereunder a
certificate or certificates, registered in the name of the Company or its
nominee and endorsed in blank or accompanied by stock powers endorsed in blank,
in each case representing such number of shares of Armor All Common Stock and
such other Exchange Property, if any, not already held by the Exchange Agent as
the holders of outstanding Debentures shall from time to time be entitled to
receive upon exchange thereof as provided in the Indenture. The Exchange Agent
will acknowledge in writing receipt of such certificate or certificates and such
other Exchange Property, if any.
-2-
<PAGE>
Section 3. Record Owner. The record owner of the Exchange Property shall
------------
be the Company or its nominee; provided, however, that if at any time in the
judgment of the Exchange Agent it shall be necessary or desirable for the
purpose of facilitating the present or future exchange of Debentures pursuant to
Article 15 of the Indenture, the Exchange Agent may register the Exchange
Property or any part thereof in its name, as Exchange Agent, or in the name of
its nominee; provided, further, that if any Exchange Property shall be
registered in the name of the Exchange Agent, or its nominee, the Exchange
Agent shall cause any Cash Dividends or Interest Payments which the Company is
entitled to receive and retain under Article 15 of the Indenture to be paid or
delivered to the Company, and except as expressly permitted by this Agreement
or required by the Indenture, no action may be taken by the Exchange Agent
with respect to the Exchange Property without the prior written consent of the
Company.
Section 4. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants that it has and will have full legal right, power and
authority to transfer and deliver the Exchange Property in the manner provided
in this Agreement and the Indenture.
Section 5. Covenants of the Exchange Agent. The Exchange Agent covenants
-------------------------------
and agrees that it will perform all of the undertakings, duties and obligations
described in Article 15 of the Indenture, which Article 15 of the Indenture is
hereby incorporated by reference herein in its entirety, as the undertakings,
duties or obligations of the Exchange Agent. The Exchange Agent covenants and
agrees that the Exchange Property received by it pursuant to this Agreement
shall be held for and applied only in conformity with the purposes and upon the
terms and conditions set forth in this Agreement and Article 15 of the
Indenture.
Section 6. Voting. With respect to each matter that is voted upon by
------
securities included within the Exchange Property, the Company shall be entitled
to cast all votes to which the securities included within the Exchange Property
are entitled, or to execute any written consent with respect thereto, so long as
such securities included within the Exchange Property, on the Stock Record Date,
shall not have been registered in the name of a holder other than the Company or
the Exchange Agent or a nominee of either of them.
If the Exchange Agent or its nominee is the record owner of any securities
included within the Exchange Property as of the Stock Record Date, the Exchange
Agent shall from time to time deliver, or cause to be delivered, to the Company
such proxies, duly executed and in the form required by applicable law, as may
be necessary or appropriate to permit the Company to vote on each matter
submitted to the holder of the securities included within the Exchange Property
so deposited.
-3-
<PAGE>
Section 7. Exchanges and Adjustment of the Armor All Shares and the Cash
-------------------------------------------------------------
Apportioned Thereto. (a) The Company will notify the Exchange Agent in an
- -------------------
Officer's Certificate of any adjustment of the Exchange Price or the Exchange
Property or of the cash apportioned thereto pursuant to the Indenture which is
deliverable upon exchange of a Debenture. The Company will, upon request,
notify the Exchange Agent in writing of the amount of cash adjustments to be
paid upon exchanges in lieu of fractional shares.
(b) Subject to the terms and conditions of this Agreement and the
Indenture, upon proper surrender to the Exchange Agent of any Debenture (or any
portion of the principal amount thereof in the amount of $1,000 or integral
multiples) for exchange by the holder thereof in accordance with the terms
thereof and of the Indenture, the Exchange Agent shall promptly accept the same
for exchange, subject to subsection (c) of this Section, and upon such
acceptance promptly (unless the Company shall have elected, pursuant to Section
15.10 of the Indenture, to pay to the holder an amount in cash equal to the
value of the Exchange Property, in which case the provisions of Section 15.10 of
the Indenture shall be followed): (i) present a certificate or certificates
representing at least the number of whole securities included within the
Exchange Property which the holder of such Debenture shall be entitled to
receive, in accordance with the terms thereof and the Indenture, to the transfer
agent or agents for the Exchange Property and deliver or cause to be delivered,
to or on the order of the holder of such Debenture (or portion thereof), a
certificate or certificates representing such number of whole securities
included within the Exchange Property, together with a check in payment of any
cash adjustment in lieu of fractional shares or units computed by the Company in
accordance with the Indenture and such additional cash or property as may have
been apportioned under the Indenture to the Exchange Property which the holder
or holders of such Debenture (or portion thereof) shall be entitled to receive
in accordance with the terms thereof and of the Indenture, (ii) deliver to the
Trustee the Debenture so exchanged, and (iii) if only a portion of said
Debenture is exchanged, obtain from the Trustee and deliver to or on the order
of the holder of the Debenture surrendered for exchange a new Debenture or
Debentures for the principal amount thereof not exchanged.
(c) If the Company shall deliver an Officer's Certificate to the effect
that, in connection with a specific exchange or a category of exchanges or all
exchanges by the Exchange Agent, the transfer and delivery of any Exchange
Property upon the exchange of any Debenture would (in the opinion of counsel of
the Company) violate any applicable law (including, without limitation, the
Securities Act of 1933, as amended, the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, or any successors thereto), then the Exchange Agent
shall not, and shall not be required to, accept such Debenture for exchange or
-4-
<PAGE>
effect the exchange of such Debenture and shall so notify the holder
surrendering such Debenture; provided, however, that the provisions of this
-----------------
subsection (c) shall not relieve the Company of any of its obligations under the
Indenture.
Section 8. Covenants of the Company. The Company hereby authorizes the
------------------------
Exchange Agent to apply to any transfer agent of the Exchange Property for any
division of share certificates which may be required in connection with
exchanges of Debentures. The Company covenants and agrees to pay (i) any and
all documentary, stamp, transfer or other similar taxes that may be payable to
the United States of America or any state thereof or political subdivision
thereof in respect of the deposit of Exchange Property hereunder, or the
delivery of Exchange Property upon exchange of Debentures; (ii) any income or
other taxes incurred by the Exchange Agent as a result of its acting in its
capacity as such under this Agreement (except for any such taxes incurred by
reason of the payment or accrual of its own fees); and (iii) all reasonable fees
or charges of the Exchange Agent (including reasonable fees and expenses of its
agents and counsel) in connection with or arising out of this Agreement or any
exchange of Debentures in accordance with the terms hereof. The Company further
covenants and agrees to deposit with the Exchange Agent from time to time (i)
cash in an amount equal to the amount necessary to make payments in lieu of
fractional securities included within the Exchange Property (after the Exchange
Agent shall have applied to such payments any other monies held by the Exchange
Agent and not needed for the exchange of Debentures) and (ii) cash in an amount
equal to any losses on investments made pursuant to Section 11 of this Agreement
to the extent necessary to maintain on deposit with the Exchange Agent funds
(investment securities held pursuant to such Section being valued as funds at
the outstanding principal balance thereof) equal from time to time to the
aggregate amount of cash apportioned to all Exchange Property at each such time
deliverable upon exchange by the Exchange Agent of all Debentures then
outstanding. Notwithstanding the foregoing provisions of this Section, the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the delivery of Exchange Property in a name other than
that in which the Debentures so exchanged were registered, and no such transfer
or delivery shall be made unless and until the person requesting such transfer
has paid to the Company the amount of any such tax or has established, to the
satisfaction of the Company, that such tax has been paid.
Section 9. Withdrawals of Exchange Property. The Company may demand
--------------------------------
(which demand must be in writing), at its election, that the Exchange Agent
release to the Company any Exchange Property held by the Exchange Agent. Upon
demand of any withdrawal of Exchange Property from the Exchange Agent, the
Company shall deliver to the Trustee an Officer's Certificate (and a copy
thereof to the Exchange Agent) which shall state (i) the principal amount of
Debentures then outstanding and the
-5-
<PAGE>
kind and amount of Exchange Property required for delivery to the holders
thereof upon exchange, (ii) that the withdrawal of the kind and amount of
Exchange Property referred to in such demand is permitted by the provisions of
the Indenture, and (iii) that the Exchange Property so to be withdrawn would
not be deliverable upon exchange of all Debentures then outstanding. Upon
receipt of such Officer's Certificate, the Exchange Agent shall, as promptly as
possible, forthwith deliver to the Company the kind and amount of Exchange
Property requested to be withdrawn as specified in such written demand.
Section 10. Cash Dividends and Interest Payments. The Company shall be
------------------------------------
entitled to all Cash Dividends and Interest Payments, other than Cash Dividends
or Interest Payments after an exchange of Debentures or Exchange Property has
been deemed effected under Section 15.2 of the Indenture.
Section 11. Investments. All money apportioned to Exchange Property
-----------
pursuant to the Indenture and this Agreement or otherwise held pursuant to this
Agreement shall be invested by the Exchange Agent from time to time in
accordance with the written instructions of the Company in U.S. Government
Obligations (as defined in the Indenture) with maturity dates of twelve months
or less. Any interest or gain on such investments shall be for the sole account
of the Company and shall be paid over to the Company by the Exchange Agent on
demand by the Company. Any loss on such investments shall be for the account of
the Company. The Company shall have the option either to furnish to the
Exchange Agent all money payable to holders upon any exchange of Debentures or
to require the Exchange Agent to sell investment securities in an amount
necessary to permit the Exchange Agent to make such payments.
Section 12. Merger, etc., of the Company. (a) Nothing contained in this
----------------------------
Agreement, the Indenture or any of the Debentures shall prevent any merger,
liquidation or consolidation of the Company with or into another corporation or
corporations, or successive consolidations or mergers in which the Company or
its successor or successors shall be a party or parties, or any sale or other
conveyance of all or substantially all the property of the Company to another
corporation; provided, however, and the Company hereby covenants and agrees,
-----------------
that upon any such merger, liquidation, consolidation or merger in which the
Company is not the continuing corporation: (i) the rights and obligations of the
Company under this Agreement shall be expressly assumed, by a supplemental
agreement satisfactory in form to the Exchange Agent, executed and delivered to
the Exchange Agent by the corporation formed by such consolidation, or into
which the Company shall have merged, or to which the assets of the Company shall
have been distributed in liquidation, or which shall have acquired such
property, and (ii) no Event of Default shall have occurred and be continuing at
the time of such transaction and immediately after giving effect to such
transaction no Event of Default shall have occurred and be continuing.
(b) In the case of any consolidation, merger, sale or conveyance of or by
the Company referred to in subsection (a)
-6-
<PAGE>
hereof, and upon the execution and delivery to the Exchange Agent of the
supplemental agreement referred to therein by the successor or acquiring
corporation and the delivery to the Exchange Agent of an Officer's Certificate
and an Opinion of Counsel stating that such transaction complies with this
Section 12, such successor or acquiring corporation shall succeed to the rights
and obligations of and be substituted for the Company under this Agreement, with
the same effect as if such corporation had been named herein as the Company, and
in the event of any such sale or conveyance, the Company (which term shall for
this purpose mean the corporation named as the "Company" in the first paragraph
of this Agreement or any successor corporation which shall theretofore have
become such in the manner described in this Section) shall be discharged from
all obligations and covenants under this Agreement and may (but need not) be
dissolved and liquidated.
(c) The Exchange Agent may receive an Officer's Certificate and an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale or
conveyance of or by the Company complies with the provisions of this Section 12.
Section 13. Reliance on Information Supplied. The Exchange Agent may rely
--------------------------------
on the contents of any Officer's Certificate furnished hereunder and, in
delivering any such certificate, the Company may rely on information furnished
to the Company by the Exchange Agent as to the quantity and identity of Exchange
Property held by the Exchange Agent and the quantity and identity of Exchange
Property delivered to holders of Debentures upon exchange thereof and on
published information as of no earlier than the end of the preceding year as to
matters concerning Exchange Property and Armor All. The Exchange Agent will
furnish on request to the Company such information as to the Exchange Agent's
holdings hereunder and as to the Exchange Property delivered to holders of
Debentures on exchange.
Section 14. Expenses and Indemnification of the Exchange Agent. The
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Company covenants and agrees to pay to the Exchange Agent from time to time, and
the Exchange Agent shall be entitled to, reasonable compensation, and the
Company will pay or reimburse the Exchange Agent upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Exchange
Agent in connection with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel,
dealers engaged pursuant to Section 22 hereof and of all persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its gross negligence or willful misconduct. The Company also covenants to
indemnify the Exchange Agent for, and to hold it harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
the part of the Exchange Agent and arising out of or in connection with its
duties under this Agreement including the costs and
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expenses of defending itself against any claim of liability in the premises.
The obligations of the Company pursuant to this Section 14 will survive the
resignation or removal of the Exchange Agent and the termination of this
Agreement.
Promptly after receipt by the Exchange Agent of notice of the commencement
of any action, the Exchange Agent shall, if a claim in respect thereof is to be
made against the Company under the preceding paragraph, notify the Company in
writing of the commencement thereof. In case any such action shall be brought
against the Exchange Agent, it shall notify the Company of the commencement
thereof.
Section 15. Resignation and Removal of the Exchange Agent. (a) The
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Exchange Agent may at any time resign by giving written notice of such
resignation to the Company and by mailing notice thereof to the holders of
Debentures at their addresses as they shall appear on the Debenture register (as
defined in the Indenture). Upon such resignation, a successor Exchange Agent
shall be appointed in any manner provided in the Indenture for the appointment
of a successor Trustee thereunder. If at any time the Exchange Agent also
serves as Trustee and resigns hereunder, it shall also resign in its capacity as
Trustee under the Indenture. The Exchange Agent may be removed as Exchange
Agent hereunder in any manner provided in the Indenture for the removal of the
Trustee thereunder.
(b) Any resignation or removal of the Exchange Agent and any appointment
of a successor Exchange Agent pursuant to any of the provisions of the Indenture
shall become effective upon acceptance of appointment by the successor as
provided in Section 16 hereof. In the event of any resignation of the Exchange
Agent, the Company shall appoint a successor Exchange Agent.
Section 16. Acceptance by Successor Exchange Agent. Any successor
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Exchange Agent appointed as provided above shall execute, acknowledge and
deliver to the Company and to its predecessor Exchange Agent an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Exchange Agent shall become effective and such successor
Exchange Agent, without any further act, deed or conveyance shall become vested
with all the right, title and interest of its predecessor to all property held
hereunder, and all other rights, powers, duties and obligations of such
predecessor Exchange Agent hereunder; but nevertheless such predecessor Exchange
Agent shall forthwith deliver to such successor Exchange Agent physical
possession of the certificates evidencing the Armor All Common Stock deposited
hereunder and of all other Exchange Property, and such predecessor Exchange
Agent shall, on the written request of the Company or such successor Exchange
Agent and upon payment of any amounts then due it pursuant to the provisions of
Sections 8 and 15 hereof, execute and deliver to such successor Exchange Agent
an instrument
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transferring to such successor Exchange Agent all right, title and interest
hereunder in and to the Armor All Common Stock deposited hereunder and the other
Exchange Property, and all other rights and powers of such predecessor Exchange
Agent hereunder. The Company shall give written notice of (i) the identity and
address of any successor Exchange Agent or (ii) an effective resignation or
removal of the Exchange Agent pursuant to the last sentence of Section 15(b)
hereof, by mailing notice thereof to the holders of Debentures at their
addresses as they shall appear on the Debenture register.
Section 17. Succession by Merger, etc. Any Person into which the Exchange
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Agent may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Exchange Agent shall be a party, or any corporation succeeding to the business
of the Exchange Agent, shall be the successor of the Exchange Agent hereunder
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation shall comply
-----------------
with Section 16 hereof.
Section 18. Amendments. (a) The Company and the Exchange Agents may by
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mutual accord enter into supplemental agreements, all without the consent of the
holders of any of the Debentures, notwithstanding the further provisions of this
Section 18 (i) to cure any ambiguity or correct or otherwise amend any provision
contained herein which may be defective or inconsistent with any other provision
contained herein or in the Indenture or any additional supplemental indenture;
or (ii) to evidence the succession of another Person to the Company or the
Exchange Agent, or successive successions and the assumption by such successor
Person of the covenants, agreements and obligations of the Company or the
Exchange Agent pursuant to Section 12 or 17 hereof as applicable; or (iii) to
make such other provisions in regard to matters or questions arising under this
Agreement which shall not adversely affect the interests of the holders of the
Debentures in any material respect.
(b) With the consent of the holders of not less than a majority in
aggregate principal amount at maturity of the Debentures at the time
outstanding, the Company and the Exchange Agent may from time to time and at any
time enter into an amendment or amendments hereof for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of any amendment hereof or of modifying in any manner the
rights of the holders of the Debentures hereunder or revoking any or all of the
powers of the Exchange Agent under this Agreement; provided, however, that
without the consent of the holder of each Debenture so affected no such
amendment or modification or revocation shall (i) affect adversely the right to
exchange any Debenture for Exchange Property at the price and upon the terms set
forth in the Indenture or (ii) reduce the aforesaid percentage of Debentures
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the holders of which are required to consent to any such amendment or
modification or revocation.
(c) This Agreement may be amended or supplemented without the consent of
Armor All.
(d) The Exchange Agent shall be entitled to receive and rely on an
Officer's Certificate to the effect that any amendment is authorized or
permitted by this Section 18.
Section 19. Termination of Agreement. This Agreement shall terminate when
------------------------
the rights of all holders under the Indenture to surrender Debentures for
exchange pursuant to Article XV of the Indenture shall have expired or been
terminated, which termination or expiration shall be evidenced by an Officer's
Certificate of the Company to that effect, and all other obligations of the
Company hereunder shall have been satisfied. Upon termination of this
Agreement, any Exchange Property remaining in the hands of the Exchange Agent
hereunder shall be delivered to the Company, free and clear of any and all
interests of the Exchange Agent, the Trustee and holders of the Debentures, or
any of them.
Section 20. Rights and Duties of the Exchange Agent. (a) The Exchange
---------------------------------------
Agent in performing its duties as such pursuant to this Agreement is not acting
as a fiduciary for the Company or the holders. The Exchange Agent shall be
obligated to perform only such duties as are herein specifically set forth and
no duties or obligation shall be implied against the Exchange Agent. The
Exchange Agent shall not be liable for any action taken, omitted or suffered by
it in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, and may conclusively rely
and shall be protected in acting or refraining from acting in reliance upon an
Opinion of Counsel or upon any certificate, request or other document reasonably
believed by it to be genuine and to have been signed or presented by the proper
party or parties. Without limiting the generality of the foregoing, it is
expressly agreed that the Exchange Agent shall not be responsible for any
governmental approvals which may be required in connection with the issuance or
delivery of Exchange Property and further that the Exchange Agent shall be
entitled to rely upon an Opinion of Counsel. The Exchange Agent shall not be
required to take any action hereunder which, in the opinion of its counsel, will
be contrary to law. The Exchange Agent shall not be responsible for any failure
of the Company to comply with any covenants of the Company contained in this
Agreement or the Indenture.
(b) The Exchange Agent shall not be under any duty to give the Exchange
Property held by it hereunder any greater degree of care than it gives its own
similar property. The Exchange Agent shall in no event be liable for any loss
incurred in connection with any investment of money in accordance with Section
11
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<PAGE>
hereof or in connection with any withdrawal of Exchange Property pursuant to
Section 9 hereof, including without limitation any liability for any delays (not
resulting from its gross negligence or willful misconduct) in making such
investment or sale.
Section 21. Use of Dealer by Exchange Agent. The Company and the Exchange
-------------------------------
Agent agree that the Exchange Agent shall use a registered securities dealer in
effecting exchanges of the Armor All Common Stock or any other Exchange Property
held in the form of a security.
Section 22. No Lien Created Hereby. Nothing in this Agreement, the
----------------------
Indenture or any of the Debentures shall grant, and the Exchange Agent shall not
assert, any lien, pledge or mortgage on or of the Exchange Property as security
for any indebtedness for money borrowed.
Section 23. Benefits of Agreement. Nothing in this Agreement or the
---------------------
Debentures, expressed or implied, shall give or be construed to give any person,
firm or corporation, other than the parties hereto, the holders of Debentures as
such and the Trustee as such holders' representative, any legal or equitable
right, remedy or claim under any covenant, condition or provisions contained in
this Agreement. This Agreement is for the sole benefit of the parties hereto,
the holders of the Debentures as such and the Trustee as such holders'
representative.
Section 24. Headings. The headings contained in this Agreement are for
--------
convenience of reference only and shall have no effect on the interpretation or
operation of this Agreement.
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<PAGE>
Section 25. Choice of Law. This Agreement shall be construed in
-------------
accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by duly authorized officers as of the day and year first above written.
McKESSON CORPORATION,
a Delaware corporation
By:
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Its:
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THE FIRST NATIONAL BANK OF CHICAGO
By:
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Its:
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