<PAGE>
REGISTRATION NO. 333-28711
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2534306
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1101 PENNSYLVANIA AVENUE, N.W., BERNARD A. GIROD
SUITE 1010 PRESIDENT
WASHINGTON, D.C. 20004 HARMAN INTERNATIONAL INDUSTRIES,
(202) 393-1101 INCORPORATED
(ADDRESS AND TELEPHONE NUMBER OF 1101 PENNSYLVANIA AVENUE, N.W.,
REGISTRANT'S SUITE 1010
PRINCIPAL EXECUTIVE OFFICES) WASHINGTON, D.C. 20004
(202) 393-1101
(NAME, ADDRESS AND TELEPHONE NUMBER OF
AGENT FOR SERVICE)
---------------
COPIES TO:
William F. Henze, II, Esq. Gary L. Sellers, Esq.
Jones, Day, Reavis & Pogue Simpson Thacher & Bartlett
599 Lexington Avenue 425 Lexington Avenue
New York, New York 10022 New York, New York 10017
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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, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 23, 1997
Prospectus
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
$150,000,000 [LOGO OF HARMAN INTERNATIONAL]
% SENIOR NOTES DUE 2007
Harman International Industries, Incorporated ("Harman" or the "Company") is
offering $150,000,000 aggregate principal amount of % Senior Notes due 2007
(the "Senior Notes"). Interest on the Senior Notes is payable on and
of each year, commencing , 1998. The Senior Notes will mature on
July , 2007. The Senior Notes may not be redeemed prior to maturity and are
not subject to any sinking fund.
The Senior Notes will be represented by one or more permanent global Senior
Notes registered in the name of The Depository Trust Company (the "Depositary")
or its nominee. Beneficial interests in the permanent global Senior Notes will
be shown on records maintained by participants, and transfers thereof will be
effected only through the Depositary or any participant. See "Description of
Notes--Book-Entry System." Except as described herein, Senior Notes in
definitive form will not be issued. Settlement for the Senior Notes will be
made in immediately available funds. The Senior Notes will trade in the
Depositary's Same-Day Funds Settlement System, and secondary trading activity
in the Senior Notes will therefore settle in immediately available funds.
The Senior Notes will be general unsecured obligations of the Company and will
rank senior in right of payment to all existing or future indebtedness of the
Company that is by its terms expressly subordinated in right of payment to the
Senior Notes and will rank pari passu with all other existing or future
indebtedness of the Company.
---------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------------------------------
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(/1/) DISCOUNT(/2/) COMPANY(/1/)(/3/)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER
SENIOR
NOTE % % %
TOTAL $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(3) Before deducting expenses payable by the Company, estimated at $350,000.
---------------------------------------
The Senior Notes are being offered by Chase Securities Inc., NationsBanc
Capital Markets, Inc., Lehman Brothers Inc., Montgomery Securities and Societe
Generale Securities Corporation (collectively, the "Underwriters"), subject to
prior sale, when, as and if issued by the Company and accepted by the
Underwriters, and subject to certain other conditions. The Underwriters reserve
the right to withdraw, cancel or modify such offers and to reject orders in
whole or in part. It is expected that delivery of the Senior Notes will be made
in book-entry form through the facilities of the Depositary on or about
, 1997.
CHASE SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SOCIETE GENERALE
SECURITIES CORPORATION
The date of this Prospectus is June , 1997.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SENIOR NOTES,
INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the offices of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at certain Regional Offices of the Commission: 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Company's Common Stock, $0.01 par value per share, is listed on the New York
Stock Exchange and other information concerning the Company may be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005. The Company is an electronic filer and the Commission
maintains a website (located at http://www.sec.gov) that contains reports,
proxy statements and other information regarding registrants that file
electronically.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, referred to herein as the
"Registration Statement") under the Securities Act with respect to the Senior
Notes. This Prospectus, which constitutes part of the Registration Statement,
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 with respect to the
Company and the Senior Notes offered hereby, reference is made hereby to the
Registration Statement. The Registration Statement and the exhibits thereto
may be inspected at the public reference facilities of the Commission at the
addresses set forth above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1996, December 31, 1996 and March 31, 1997; and
3. The Company's Current Reports on Form 8-K filed March 14, 1997 and April
3, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the date of filing of
such documents. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any
other subsequently filed document which is also incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
2
<PAGE>
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of the documents incorporated herein by reference in this Prospectus
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents). Such requests should be
directed to Harman International Industries, Incorporated, 1101 Pennsylvania
Avenue, N.W., Suite 1010, Washington, D.C. 20004, (telephone number (202) 393-
1101) Attention: Bernard A. Girod, President and Chief Operating Officer.
THE COMPANY
The Company is a worldwide leader in the design, manufacture and marketing
of high-quality, high-fidelity audio products targeted primarily at the
consumer, professional and original equipment manufacturer ("OEM") markets.
For almost 50 years, the Company and its predecessors have been leaders and
innovators in creating loudspeakers and electronic audio products that deliver
superior sound. The Company's JBL, Mark Levinson, Infinity and Harman Kardon
brand names are well-known worldwide for premium quality and performance.
Since its formation in 1980, the Company has developed, internally and through
a series of strategic acquisitions, a broad range of product offerings sold
under renowned brand names in each of its three major markets. Concurrently,
the Company has developed its engineering, manufacturing and distribution
capabilities worldwide to achieve the benefits of vertical integration of
design, manufacturing and marketing.
The Company's total revenues for the fiscal year ended June 30, 1996 were
$1.4 billion. For the nine months ended March 31, 1997, the Company's total
revenues were $1.1 billion, with the Consumer Group, the Professional Group
and the OEM Group accounting for approximately 35%, 32% and 33% of revenues,
respectively.
The key elements of the Company's strategy are to provide superior sound
quality in all of its products, to capitalize on the strength of its brand
names, to leverage the Company's engineering and manufacturing expertise
across all of its businesses and to integrate design, engineering,
manufacturing and marketing.
The Company was incorporated in Delaware in 1980. The Company's principal
executive offices are located at 1101 Pennsylvania Avenue, N.W., Suite 1010,
Washington, D.C. 20004. The Company's telephone number is (202) 393-1101.
FORWARD-LOOKING STATEMENTS
Except for historical information contained in this Prospectus and in the
documents incorporated in this Prospectus by reference, the matters discussed
herein and therein contain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
suggested in the forward-looking statements, including without limitation, the
effect of economic conditions, product demand, currency exchange rates,
competitive products and other risks detailed herein and in the Company's
other filings with the Commission.
3
<PAGE>
THE OFFERING
Issuer...................... Harman International Industries, Incorporated.
Securities Offered.......... $150,000,000 aggregate principal amount of %
Senior Notes due 2007.
Maturity Date............... July , 2007.
Interest Payment Dates...... and of each year, commencing ,
1998.
Redemption.................. The Senior Notes will not be redeemable prior to
maturity.
Ranking..................... The Senior Notes will be general unsecured
obligations of the Company and will rank senior
in right of payment to all existing or future
indebtedness of the Company that is by its terms
expressly subordinated in right of payment to the
Senior Notes and will rank pari passu with all
other existing or future indebtedness of the
Company.
Same-Day Settlement......... Initial settlement for the Senior Notes will be
made in immediately available funds. While held
in global form, the Senior Notes will settle in
DTC's Same-Day Funds Settlement System, and
settlement for any secondary market trades and
all payments of principal and interest will be
made in immediately available funds.
Book-Entry System and Form
and Denomination of Senior
Notes....................... The Senior Notes will be issued in denominations
of $1,000 or any integral multiple thereof.
Payment of principal of, and interest on, Senior
Notes represented by one or more permanent global
Senior Notes registered in the name of or held by
the Depositary or its nominee will be made in
immediately available funds to the Depositary or
its nominee as the registered owner and holder of
such permanent global Senior Note or Senior
Notes. Senior Notes will not be issued in
definitive form except under certain limited
circumstances described herein. See "Description
of Senior Notes--Book-Entry System."
Certain Covenants........... The indenture under which the Senior Notes will
be issued (the "Indenture") limits: (i) the
creation and existence of liens, (ii) sale and
leaseback transactions, (iii) domestic subsidiary
indebtedness and (iv) certain restricted
payments.
Use of Proceeds............. The net proceeds from the sale of the Senior
Notes offered hereby will be used to repay
existing indebtedness of the Company and for
working capital and general corporate purposes.
See "Use of Proceeds."
Governing Law............... The Indenture and the Senior Notes will be
governed by, and will be interpreted and
construed in accordance with, the laws of the
State of New York.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents summary consolidated financial and operating
data of the Company for each of the five fiscal years ended June 30, 1996 and
for the nine month periods ended March 31, 1997 and 1996, which have been
derived from, and are qualified by reference to, the Company's consolidated
financial statements and those records incorporated by reference herein into
this Prospectus. In the opinion of management, the unaudited information
reflects all adjustments necessary for a fair presentation of the results for
such periods. The results of operations for such periods are not necessarily
indicative of results that may be expected for any future period or the full
fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, MARCH 31,
---------------------------------------------------- --------------------
(DOLLARS IN THOUSANDS) 1996 1995 1994 1993 1992 1997 1996
---------- ---------- -------- -------- -------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $1,361,595 $1,170,224 $862,147 $664,913 $604,454 $1,097,462 $988,482
Gross profit............ 408,125 364,081 269,162 190,563 164,622 315,930 300,831
Selling, general and
administrative......... 302,747 276,632 202,830 149,308 137,075 242,939 226,414
Operating income........ 105,378 87,449 66,332 41,255 27,547 72,991 74,417
Interest expense........ 27,510 25,284 22,110 23,566 21,075 18,971 21,682
Income before taxes,
minority interest and
extraordinary item..... 75,024 61,157 42,686 18,570 5,893 53,513 51,612
Net income.............. 52,042 41,161 25,664 11,246 3,487 37,449 35,253
OTHER FINANCIAL DATA:
EBITDA(1)............... $ 156,312 $ 131,899 $ 98,591 $ 64,334 $ 49,688 $ 113,026 $113,125
Depreciation and
amortization........... 50,934 44,450 32,259 23,079 22,141 40,035 38,708
Capital expenditures.... 80,554 54,654 40,720 25,563 21,003 50,594 53,175
Net cash provided by
(used in) operating
activities............. (20,390) 37,537 (16,319) 22,694 (6,412) 18,388 (14,558)
Net cash used in
investing activities... 73,845 63,865 38,587 29,895 26,054 34,214 59,708
Net cash provided by
financing activities... 83,286 27,856 62,451 6,561 31,529 20,474 72,890
FINANCIAL RATIOS:
Ratio of EBITDA to
interest expense....... 5.68x 5.22x 4.46x 2.73x 2.36x 5.96x 5.22x
Ratio of earnings to
fixed charges(2)....... 3.05x 2.84x 2.54x 1.67x 1.24x 2.97x 2.75x
Debt/EBITDA............. 1.84x 2.32x 2.29x 3.32x 4.07x * *
<CAPTION>
JUNE 30, MARCH 31,
---------------------------------------------------- --------------------
(DOLLARS IN THOUSANDS) 1996 1995 1994 1993 1992 1997
---------- ---------- -------- -------- -------- --------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 377,311 $ 257,564 $215,878 $147,492 $102,374 $ 437,463
Total assets............ 996,209 886,872 680,691 431,726 415,909 1,022,177
Short-term debt......... 32,790 40,214 69,254 37,762 69,697 34,572
Long-term debt.......... 254,611 266,021 156,577 175,583 132,675 294,530
Shareholders' equity.... 436,477 289,490 232,021 111,149 111,241 452,087
</TABLE>
- --------
* Not meaningful
(1) "EBITDA" consists of operating income plus depreciation and amortization.
EBITDA is not intended to represent cash flow, or to be used as an
alternative to net income or any other measure of performance in
accordance with generally accepted accounting principles. Reference is
made to the Statement of Cash Flows contained in the Consolidated
Financial Statements of the Company incorporated by reference in this
Prospectus for a complete presentation of cash flows from operating,
investing and financing activities prepared in accordance with generally
accepted accounting principles.
(2) Earnings used in computing the ratio of earnings to fixed charges consist
of income before taxes plus fixed charges charged to income. Fixed charges
consist of interest on indebtedness, amortization of debt issue costs and
that portion of rental expenses representative of interest (deemed to be
one third of rental expenses).
5
<PAGE>
USE OF PROCEEDS
The net proceeds from the offering contemplated hereby are estimated to be
approximately $ million and initially will be used by the Company to repay a
portion of the borrowings outstanding under the $275 million multi-currency,
multi-option credit agreement of the Company and certain of its subsidiaries
(the "Revolving Credit Facility") (of which $158.5 million and $3.1 million
are outstanding under the credit facility and related letters of credit,
respectively, as of April 30, 1997, with interest rates thereon ranging from
0.86% in Japan to 6.44% in the United Kingdom). The Company plans to
thereafter use availability under the Revolving Credit Facility (i) to repay
at maturity the $17.5 million principal amount of its 10.40% Series B Senior
Notes due September 1997, (ii) to redeem in August 1997 the $63.75 million
remaining principal amount outstanding of its 12.00% Senior Subordinated Notes
due 2002 at a redemption price equal to 106% of the principal amount
outstanding, or approximately $67.6 million, and (iii) for working capital and
general corporate purposes.
6
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company (unaudited) as of March 31, 1997 and as adjusted to give effect to the
issuance of the Senior Notes offered hereby, the redemption of the 12.00%
Senior Subordinated Notes due 2002 and the repayment at maturity of the 10.40%
Series B Senior Notes due 1997. See "Use of Proceeds."
<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Notes payable....................................... $ 11,208 $ 11,208
10.40% Series B Senior Notes due 1997............... 17,500 0
Other current portion of long-term debt............. 5,864 5,864
-------- --------
Total short-term debt............................. $ 34,572 $ 17,072
======== ========
Long-term debt:
Borrowings under the Revolving Credit Facility...... $170,398 $104,134
Other senior long-term debt......................... 15,382 15,382
Senior Notes, offered hereby........................ 0 150,000
11.20% Senior Subordinated Notes due 1998........... 45,000 45,000
12.00% Senior Subordinated Notes due 2002........... 63,750 0
-------- --------
Total long-term debt.............................. 294,530 314,516
-------- --------
Shareholders' equity:
Preferred Stock, $0.01 par value; 5,000,000 shares
authorized; none issued and outstanding............ -- --
Common Stock, par value $0.01 per share; 50,000,000
shares authorized; 18,454,068 shares issued and
outstanding........................................ 185 185
Additional paid-in capital.......................... 283,908 283,908
Equity adjustment from foreign currency translation. (13,872) (13,872)
Retained earnings................................... 181,866 179,380
-------- --------
Total net shareholders' equity.................... 452,087 449,601
-------- --------
Total capitalization............................ $746,617 $764,117
======== ========
</TABLE>
- --------
(1) Underwriters' discounts and other expenses in connection with the issuance
and distribution of the Senior Notes are not included herein.
7
<PAGE>
BUSINESS
OVERVIEW
The Company is a worldwide leader in the design, manufacture and marketing
of high-quality, high-fidelity audio products targeted primarily at the
consumer, professional and original equipment manufacturer ("OEM") markets.
For almost 50 years, the Company and its predecessors have been leaders and
innovators in creating loudspeakers and electronic audio products that deliver
superior sound. The Company's JBL, Mark Levinson, Infinity and Harman Kardon
brand names are well known worldwide for premium quality and performance.
Since its formation in 1980, the Company has developed, internally and through
a series of strategic acquisitions, a broad range of product offerings sold
under renowned brand names in each of its three major markets. Concurrently,
the Company has developed its engineering, manufacturing and distribution
capabilities worldwide to achieve the benefits of vertical integration of
design, manufacturing and marketing.
The Company's total revenues for the fiscal year ended June 30, 1996 were
$1.4 billion. For the nine months ended March 31, 1997, the Company's total
revenues were $1.1 billion, with the Consumer Group, the Professional Group
and the OEM Group accounting for approximately 35%, 32% and 33% of revenues,
respectively.
The key elements of the Company's strategy are to provide superior sound
quality in all of its products, to capitalize on the strength of its brand
names, to leverage the Company's engineering and manufacturing expertise
across all of its businesses and to integrate design, engineering,
manufacturing and marketing.
The Company's operations are organized into three primary groups: the
Consumer Group, the Professional Group and the OEM Group.
CONSUMER GROUP
The Company's Consumer Group designs, manufactures and markets loudspeakers
under the JBL and Infinity brand names for home and automotive audio systems.
The Company also designs, manufactures and markets a broad range of consumer
electronics products under the Harman Kardon, Mark Levinson, Citation,
AudioAccess and Proceed brand names. The Company has the preeminent portfolio
of brand names and range of product offerings in the consumer audio market.
The JBL, Infinity and Harman Kardon brands are recognized throughout the world
for superior sound quality and good value. High-end amplifiers and other
electronic components bearing the Mark Levinson, Citation and Proceed brand
names are acclaimed for their superior build quality and state-of-the-art
sound reproduction.
The Company has leveraged its strong brand names in growing consumer audio
markets such as the home theater/multi-channel arena and the mini-systems
market. Sales of Harman Kardon audio/video receivers, JBL and Infinity
surround sound loudspeaker systems and multi-channel amplifiers and digital
signal processing components from Citation and Proceed have benefited from the
vigorous home theater market. Integrated mini-systems, including the JBL ESC
550 Simply Cinema System and the Harman Kardon Festival line, will capitalize
on the Company's strong brand names in this significant segment of the
consumer audio market.
The Company believes the new Digital Versatile Disc (DVD) technology will
provide additional growth opportunities for its consumer brands. Harman
Kardon, Proceed and Mark Levinson plan to introduce DVD players later this
year. Additionally, the Company expects DVD to stimulate loudspeaker sales due
to increased customer traffic in audio dealers' stores and the improvement in
audio performance from DVD over current analog audio/video and digital audio
components. Sales expectations are dependent, to a substantial extent, on
discretionary spending by consumers, which may be affected by economic
conditions.
8
<PAGE>
The Consumer Group's distribution strategy includes sale of its products
through large, multi-location retailers, such as Circuit City in the United
States (accounting for 5.4% of the Company's consolidated net sales for the
first nine months of fiscal 1997) and MediaMarkt in Germany (the Consumer
Group's two largest customers), and through high-fidelity audio specialists.
The Company operates marketing and distribution subsidiaries in its major
European and Asian markets to enhance responsiveness and service for
international customers.
PROFESSIONAL GROUP
The Company's Professional Group is a leading manufacturer and marketer of
professional audio equipment, including loudspeakers, amplifiers, mixing
consoles, signal processing equipment, microphones and effects devices. Such
products are marketed on a worldwide basis under brand names including JBL,
Soundcraft, Allen & Heath, DOD, Digitech, Lexicon, AKG, dbx, BSS, Turbosound,
Orban, Spirit and Studer. The Professional Group is uniquely equipped to
provide turnkey systems solutions for professional audio applications that
offer the customer improved performance, ease of installation and reduced
cost. The principal market segments served by the Professional Group are sound
reinforcement, broadcast and recording and music instrument support.
JBL is the leader in the vibrant cinema market, holding a dominant share of
Dolby and THX theater sound systems and serving customers such as Cineplex
Odeon and United Artists Theaters. Stadiums, concert halls, houses of worship
and major concert tours rely on sound reinforcement products from the
Professional Group, such as JBL and Turbosound loudspeakers, JBL and BSS
amplifiers, AKG microphones, Lexicon, DOD and dbx signal processing equipment,
and Soundcraft and Allen & Heath mixing consoles, to produce top quality
sound.
Customers in the recording and broadcast segment include radio and
television stations and recording studios. These customers, including AMS
Westfunk Radio, Abbey Road Studios and The Hit Factory, are primarily served
by Studer and Orban, with additional offerings from JBL, Lexicon, Soundcraft
and AKG.
JBL, DOD and Spirit serve the music instrument support segment of the
professional audio market. JBL manufactures and markets loudspeakers, monitors
and amplifiers. DOD manufactures and markets guitar amplifiers, sound effects
processors and portable mixing consoles. Spirit markets portable mixing
consoles. Music instrument support products are sold through music retail
stores such as Guitar Center and Sam Ash.
OEM GROUP
Automotive Audio Systems. Harman is one of the world's largest manufacturers
of premium branded automotive OEM audio systems. The Company believes
excellent growth opportunities are still available in the automotive OEM
market through higher penetration levels within existing models, increases in
the number of models offering the Company's audio systems and the addition of
new automotive OEM customers.
The Company's largest automotive OEM customer, Chrysler, offers Infinity
branded audio systems in the majority of its car, truck and sport-utility
vehicle platforms. Through the first nine months of fiscal 1997, sales to
Chrysler represented 9.6 percent of total Company sales. Becker supplies head
units to Mercedes Benz (the Company's second largest customer), BMW and
Porsche. Harman Kardon branded systems are offered in cars produced by BMW,
Saab, Jaguar and Range Rover. Other customers include Mitsubishi, Toyota and
Ford. The loss of, or a material decrease or delay in purchasing the Company's
products by, any of the Company's significant customers could have an adverse
effect on the results of operations of the Company. In addition, sales of the
Company's audio products to the automotive OEM market are dependent on the
sales of the automobile industry and automobile purchasers' willingness to pay
for the option of a premium branded automotive audio system.
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In 1995, the Company withdrew Ford's exclusive use of the JBL brand name for
automotive audio and made the brand name available to other automakers.
Although the Company expects that the number of Ford vehicles offering JBL
systems will continue to decline, the Company believes that this reduction
will ultimately be offset by additional volume from other automakers. For
example, the Company recently reached an agreement with Toyota to provide JBL
branded audio systems in the majority of its broad range of vehicles beginning
in fiscal 1999, including vehicles produced by Toyota for sale in Asia. In
fiscal year 1998, the OEM Group will add the BMW 5-Series (Becker radio), the
Toyota Aristo (JBL audio system), the Peugeot 406 (JBL audio system), the
Hyundai Grandeur (JBL audio system), the Chrysler Durango (Infinity audio
system), and the BMW Z3 (Harman Kardon audio system) to its list of offerings.
The OEM Group offers integrated audio systems that provide a platform for
further expansion into associated automotive electronic products such as
communication, security and navigation.
Audio for Computers. The Company manufactures branded audio systems and
loudspeakers for manufacturers of personal computers, including a line of "JBL
Pro" branded audio systems for Compaq Computer Corporation's Presario line of
personal computers and a higher-powered Harman Kardon branded sound system for
Gateway's new Destination "TV Computer." These audio systems provide high-
quality sound and thus enhance the appeal and capability of the personal
computer as an entertainment device.
STRATEGY
The Company utilizes its technical expertise and reputation for creating
superior sound to increase market share in existing markets and to enter new
markets in which Harman's audio engineering capabilities and strong brand
names generate a competitive advantage. The key elements of the Company's
strategy are:
Provide Superior Sound. Harman strives to provide its customers with
products that deliver high-quality, high-fidelity sound. The Company's
subsidiaries have been leaders and innovators in loudspeaker and electronic
production and technology for almost 50 years. Management believes the
Company's research, development and engineering capabilities are among the
most advanced in the audio industry.
Capitalize on Brand Equity. The Company believes that its brand names are
well recognized worldwide for premium quality and performance. Harman believes
that this strong brand name recognition has enabled it to expand its product
offerings and market share in the consumer, professional and OEM audio
markets, and will continue to facilitate such growth in the future.
Leverage Engineering and Manufacturing Expertise. The Company leverages its
engineering and manufacturing expertise across all segments of its businesses
and utilizes its expertise for entry into new markets, such as the OEM audio
for computers market and the market for intellectual property such as audio
software. Additionally, new segments within the consumer and professional
markets, such as home theater in the consumer market and the conversion to
digital technology in the professional market, offer opportunities for growth.
The Company will continue to pursue new opportunities.
Integrate Design, Engineering, Manufacturing and Marketing. Harman has
invested significant resources in developing sophisticated manufacturing
processes and facilities in the United States and Europe. Management believes
that its ability to manufacture innovative, high-quality products is
attributable to the Company's integrated facilities, coupled with its policy
of emphasizing workers' education, training and participation in the decision-
making process. The Company seeks to integrate the disciplines of design,
engineering, manufacturing and marketing. As distinguished from the
traditional separation of these functions, management believes that
communication and cooperation among all functional areas significantly reduces
development time, generates products that can be
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more efficiently and competitively produced, and improves the Company's
ability to respond to customer needs.
Market on an International Basis. The Company's subsidiaries have been
actively marketing products worldwide for almost 50 years. Harman strives to
produce products that are responsive to the requirements of different
international markets for functionality, appearance and performance. As a
result, the Company believes that its major brands are well recognized for
high-quality in most major markets worldwide. Approximately 60 percent of the
Company's sales are outside the United States.
OPPORTUNITIES
Within its Consumer, Professional and OEM Groups, the Company foresees
growth opportunities including the following:
Existing and Emerging Market Segments. The Company continues to leverage its
brand names and technical expertise to broaden its product offerings in
existing market segments and enter new segments, including surround sound,
home theater and audio systems for personal computers. The Company continually
seeks to improve its market position in its important loudspeaker business by
introducing new products that offer greater efficiency and reduced size.
Further, the Company's advanced technology in loudspeakers and electronics
permits it to develop integrated systems that offer substantial improvements
in performance, such as loudspeakers with built-in amplifiers. The Company
also intends to pursue opportunities in emerging product categories such as
electronic components that offer simplified digital control, reduced size and
high-quality sound.
Comprehensive, Integrated Professional Product Offerings. Management
believes that the ability to offer professional customers complete turnkey
systems across its principal market segments, including broadcast and
recording, sound reinforcement and musical instrument support, will allow the
Company to continue increasing sales in these segments. The Company believes
that advances in motion picture audio and recording technology will continue
to drive demand for loudspeakers and electronics in movie theaters and
recording studios. Management also expects that emerging markets in Eastern
Europe and Asia will increase demand for its professional audio products and
recording and broadcast equipment to satisfy infrastructure needs.
Fully-Integrated Automotive Audio Systems. The Company believes significant
growth opportunities exist within the automotive audio market to increase
sales by increasing product penetration in OEM models currently supplied,
expanding the number of automobile models offering its systems, adding new OEM
customers and increasing content. The Company now has the capability to
provide fully-integrated automotive audio systems that incorporate a head
unit, amplifiers, loudspeakers and associated electronics. These integrated
systems make possible a potential increase in the unit price of the Company's
audio systems, and they also provide a platform for the Company's expansion
into additional automotive electronic products such as communications and
security and navigation, thereby providing the opportunity for further
increases in system content.
New Technology. Through the extensive development of digital signal
processing capabilities by its electronic engineering organization, the
Company is generating a substantial body of intellectual property, including
proprietary software, titled VMAx(TM), which produces virtual surround audio
from only two speakers. The Company has signed licensing agreements with
Microsoft for the inclusion of VMAx(TM) in Windows and with Medianix
Semiconductor for inclusion of VMAx(TM) on its multimedia chip. Further, the
Company sold its Smart TV software to Intel in fiscal 1997. The Company's 6-
axis(TM) surround sound system employed in the Harman Kardon Citation
Processor is of interest to a number of advanced technology users. These and
other technological developments form a body of intellectual property around
which the Company believes it can develop new revenue sources.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for historical information contained in this Prospectus and in the
documents incorporated in this Prospectus by reference, the matters discussed
herein and therein contain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
suggested in the forward-looking statements, including without limitation, the
effect of economic conditions, product demand, currency exchange rates,
competitive products and other risks detailed herein and in the Company's
other filings with the Commission.
RESULTS OF OPERATIONS
Comparison of the Three-Month and Nine-Month Periods Ended March 31, 1997 and
1996.
Net sales for the quarter ended March 31, 1997 totaled $358.1 million, a 6
percent increase over the comparable period in the prior year. Exclusive of
currency effects, sales rose 10 percent for the quarter ended March 31, 1997,
over the comparable period in the prior year. For the first nine months of
fiscal 1997, sales increased 11 percent to $1.1 billion. Exclusive of currency
effects, sales rose 14 percent in the nine month period ended March 31, 1997,
over the comparable period in the prior year.
The Consumer Group reported sales increases for the quarter ended March 31,
1997 and for the first nine months of fiscal 1997 compared to the same periods
in the prior year, excluding currency effects. JBL sales were particularly
strong in the face of soft market conditions in the United States.
The Professional Group reported sales for the quarter ended March 31, 1997
matching the same period in the prior year and higher sales for the first nine
months of fiscal 1997. Strong gains at JBL Professional, Lexicon and the
Harman Music Group were offset by lower sales at Studer due to delays in
shipment of automated broadcast equipment to customers in emerging nations,
and lower sales at AKG to a large OEM customer.
The OEM Group reported higher sales for the quarter ended March 31, 1997 and
the first nine months of fiscal 1997. Shipments of high-fidelity systems to
the automakers increased over the prior year, reflecting the addition of new
models and growing penetration rates. The addition of the Toyota Camry to the
OEM Group's customer base and higher audio system shipments for Dodge's pickup
truck line contributed to the growth. Sales for the quarter and the first nine
months included shipments to Compaq for its new Presario line.
The gross profit margin for the quarter ended March 31, 1997 was 28.9
percent ($103.5 million) compared to 30.5 percent ($103.4 million) for the
same period in the prior year. The gross profit margin for the first nine
months of fiscal 1997 was 28.8 percent ($315.9 million) compared to 30.4
percent ($300.8 million) in the previous year. The decrease in the gross
profit margin rate for the quarter and the first nine months resulted from the
Studer and AKG third quarter sales shortfalls, the effect of the strong dollar
on the Company's European and Asian distribution companies' profit margins,
and lower than anticipated sales volume and higher factory start-up costs for
the Audio for Computers unit.
Operating income as a percentage of sales was 5.8 percent ($20.7 million)
for the quarter ended March 31, 1997, compared to 8.2 percent ($27.7 million)
for the same period in the prior year. Selling, general and administrative
expenses were 23.1 percent of sales for the third quarter of fiscal 1997
compared to 22.3 percent for the same period in the prior year. The operating
income percentage decreased in the third quarter of fiscal 1997 due to lower
gross profit margins and higher selling, general and administrative expenses
as a percentage of sales. The increase in the selling, general and
administrative cost percentage for the third quarter of fiscal 1997 reflected
a $2.5 million (18 percent) increase in research and development expenditures
over the prior year and lower than anticipated
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sales volume. Major product development efforts included new Harman Kardon
products featuring Dolby Digital (AC-3), home mini-systems and the OEM Group's
development of automotive audio/navigation systems.
For the first nine months of fiscal 1997, operating income as a percentage
of sales was 6.7 percent ($73.0 million) compared to 7.5 percent ($74.4
million) in the prior year. Selling, general and administrative expenses were
22.1 percent of sales for the first nine months of fiscal 1997, down from 22.9
percent for the same period in the prior year. The lower operating income
percentage for the first nine months of fiscal 1997 was due to lower gross
profit margins, partially offset by lower selling, general and administrative
expenses as a percentage of sales resulting from overhead reductions at
Becker.
Interest expense for the quarter ended March 31, 1997 of $6.1 million was
down from $7.2 million in the same period in the prior year. For the nine
months ended March 31, 1997, interest expense was $19.0 million, down from
$21.7 million in the prior year. Average borrowings outstanding were $327.9
million for the third quarter of fiscal 1997 and $320.5 million for the first
nine months of fiscal 1997, down from $379.7 million and $354.6 million,
respectively, for the same periods in the prior year. Lower average borrowings
resulted from the May 1996 secondary stock offering, partially offset by
increased working capital requirements and the January 1997 retirement of
220,000 shares of Common Stock of the Company.
The average interest rate on borrowings was 7.4 percent for the quarter
ended March 31, 1997 and 7.9 percent for the nine months ended March 31, 1997.
The average interest rates for the comparable periods in the prior year were
7.6 percent and 8.2 percent, respectively. The decrease in average interest
rates resulted from lower interest rates in Europe and a decrease in the
percentage of borrowings under the Revolving Credit Facility drawn in the
United States, which generally carry higher interest rates than borrowings in
European currencies and Japanese yen. Also, the interest rate on the Revolving
Credit Facility was reduced in fiscal 1997 from LIBOR plus 0.30 percent to
LIBOR plus 0.25 percent due to the Company's achievement of certain financial
performance criteria. Interest expense as a percentage of sales was 1.7
percent for the third quarter and the first nine months of fiscal 1997, down
from 2.1 percent and 2.2 percent for the same periods in the previous year,
respectively.
Income before income taxes and minority interest for the quarter ended March
31, 1997 was $14.6 million, compared to $20.3 million for the same period in
the prior year. For the nine months ended March 31, 1997, income before income
taxes and minority interest was $53.5 million, compared with $51.6 million in
the prior year.
The effective tax rate for the third quarter of fiscal 1997 was 29.1 percent
compared with 31.5 percent in the same period in the prior year. The effective
tax rate for the first nine months of fiscal 1997 was 29.9 percent compared
with 31.6 percent in the prior year. The lower effective tax rate is due to
the restructuring of certain foreign subsidiaries to realize the benefit of
current and prior year tax losses and the utilization of tax loss
carryforwards at certain foreign subsidiaries. The Company calculates its
effective tax rate based upon its current estimate of annual results.
Net income for the quarter ended March 31, 1997 was $10.3 million, or $0.56
per share, compared with $13.9 million, or $0.86 per share, for the same
period in the prior year. Net income for the first nine months of fiscal 1997
was $37.4 million, or $2.02 per share, compared with $35.3 million, or $2.17
per share, in the prior year. Earnings per share is based on an additional 2.2
million (14 percent) shares outstanding compared to the prior year due to the
May 1996 stock offering.
The Company has assets located outside the United States and a substantial
portion of the Company's sales and earnings are attributable to operations
conducted abroad and to export sales.
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In the nine months ended March 31, 1997, approximately 60 percent of the
Company's gross revenues consisted of sales made outside the United States.
The Company's international operations subject the Company to certain risks,
including exposure to currency exchange rate fluctuations. The Company also
relies on foreign suppliers and sells products it manufactures domestically to
foreign markets. The Company's international operations are subject to other
risks, including adverse political and economic developments in the countries
in which it conducts business, dividend restrictions, tariffs and potential
adverse tax consequences, including payment of taxes in jurisdictions that
have higher tax rates than the United States. There can be no assurance that
one or more of these factors of doing business in an international market will
not have a material effect on the Company's financial position or results of
operations in the future.
FINANCIAL CONDITION
Net working capital at March 31, 1997 was $437.5 million, compared with
$377.3 million at June 30, 1996. Working capital increased primarily due to
higher inventories ($308.1 million at June 30, 1996 and $330.2 million at
March 31, 1997) and lower accounts payable and accrued liabilities ($241.9
million at June 30, 1996 and $213.3 million at March 31, 1997). Inventories
have increased primarily to support sales to new OEM customers (Compaq and
Toyota) and to support generally higher sales volumes. Lower accounts payable
and accrued liabilities reflect the timing of payments to vendors and the
timing of payments for interest and taxes.
Borrowings under the Revolving Credit Facility on March 31, 1997 were $175.5
million, comprised of swing-line borrowings of $5.1 million, which are
included in notes payable, and competitive advance borrowings and revolving
credit borrowings of $170.4 million. Borrowings under the Revolving Credit
Facility at June 30, 1996 were $120.9 million, comprised of swing-line
borrowings of $12.9 million and competitive advance borrowings and revolving
credit borrowings of $108.0 million. Increased borrowings reflect the
financing of higher working capital requirements, the retirement in January
1997 of 220,000 shares of Common Stock and capital expenditures. The Company's
Revolving Credit Facility matures in September 2002.
The Company's borrowings at March 31, 1997 include $63.75 million of
subordinated debt callable on August 1, 1997 and $17.5 million of senior debt
due on September 30, 1997. The Company intends to repay these obligations
using the net proceeds from this offering.
RECENT DEVELOPMENTS
The Company announced in an April 3, 1997 press release that in the second
half of calendar 1998 it will begin supplying JBL branded audio systems to
Toyota. Toyota will offer the JBL systems in the dominant portion of its
United States models and in some vehicles produced for sale in Asia. The
Company currently supplies non-branded audio systems for the Toyota Avalon and
Camry.
The strike at Chrysler's Mound Road Engine Plant, which began on April 10,
1997 and was settled on May 9, 1997, resulted in reduced demand for the
Company's Infinity automotive music systems during the fourth quarter of
fiscal 1997. The Company estimates a reduction in fourth quarter earnings, due
to the impact of lower shipments to Chrysler, of approximately $0.15 per
share, after taxes.
The Company from time to time considers acquisitions and investments in
complementary businesses, assets or technologies. The Company is currently in
negotiation regarding the acquisition of a loudspeaker business which, if
completed, would not be material to the Company's business or results of
operations.
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MANAGEMENT
The following table sets forth the names, ages and positions of the
Directors and Executive Officers of the Company as of June 6, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Sidney Harman................... 78 Chairman of the Board of Directors and
Chief Executive Officer
Bernard A. Girod................ 55 President, Chief Operating Officer,
Secretary and Director
Shirley Mount Hufstedler........ 71 Director
Ann McLaughlin.................. 55 Director
Edward H. Meyer................. 70 Director
Thomas Jacoby................... 42 President--Harman Consumer Group
Philip Hart..................... 52 President--Harman Professional Group
Gregory P. Stapleton............ 50 President--Harman OEM Group
Frank Meredith.................. 40 Vice President, Chief Financial Officer and
Assistant Secretary
Jerome H. Feingold.............. 55 Vice President--Quality
Sandra B. Robinson.............. 37 Vice President--Financial Operations
Floyd E. Toole.................. 58 Vice President--Engineering
William S. Palin................ 54 Vice President--Controller
</TABLE>
The principal occupation of each Director and Executive Officer for at least
the last five years is set forth below.
Sidney Harman, Ph.D., the Company's founder, has been Chairman of the Board
and Chief Executive Officer since the Company's formation in 1980. Dr. Harman
served as Under Secretary of Commerce of the United States from 1977 through
1978.
Bernard A. Girod has been President of the Company since March 1994, Chief
Operating Officer of the Company since March 1993, Secretary of the Company
since November 1992 and a Director of the Company since 1993. From September
1986 to August 1995, Mr. Girod served as Chief Financial Officer of the
Company. From September 1979 to September 1986, Mr. Girod was the Vice
President and General Manager of Permacel, a subsidiary of Avery International
and Vice President of Planning and Business Development for Avery
International. From 1977 to 1979, Mr. Girod was the Chief Financial Officer of
the predecessor of the Company.
Shirley Mount Hufstedler has been a Director of the Company since September
1986. Ms. Hufstedler is and has been for the past fifteen years in private law
practice. She served as Secretary of Education of the United States from 1979
to 1981 and as a judge on the United States Court of Appeals for the Ninth
Circuit from 1968 to 1979. Ms. Hufstedler is a Director of U S WEST, Inc. and
Director Emeritus of Hewlett-Packard Company. She is currently with the firm
of Morrison & Foerster in Los Angeles, California and, from 1981 to March
1995, was with the firm of Hufstedler & Kaus.
Ann McLaughlin has been a Director of the Company since November 1995. She
served as Secretary of Labor of the United States under President Reagan from
1987 until 1989. Ms. McLaughlin is a director of AMR, General Motors
Corporation, Kellogg Company and Nordstrom, Inc. She is a member of the Board
of Overseers of the Wharton School of the University of Pennsylvania and a
member of the Board of the Nixon Center for Peace and Freedom.
Edward H. Meyer, who was elected a Director of the Company in July 1990, has
been the Chairman of the Board, Chief Executive Officer and President of Grey
Advertising, Inc., New York,
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New York, an advertising firm, since 1972. Mr. Meyer serves as a Director for
May Department Stores Company, Bowne & Co., Inc., Ethan Allen Interiors, Inc.,
and as a Director/trustee of 35 mutual funds advised by Merrill Lynch Asset
Management, Inc.
Thomas Jacoby has been President of the Harman Consumer Group since February
1993. Prior to that time, Mr. Jacoby served as President of JBL Consumer since
August 1990. From July 1988 to August 1990, Mr. Jacoby served as Executive
Vice President of Harman Kardon.
Philip J. Hart has been President of the Harman Professional Group since
November 1993. Prior to that time, Mr. Hart served as President of Soundcraft
since its 1988 acquisition by Harman.
Gregory P. Stapleton has been President of the Harman OEM Group since
October 1987. Prior to his association with the Company, he was Senior Vice
President of General Electric Venture Capital Corporation from January 1986 to
September 1987, and was General Manager, Industrial Products Section, Factory
Automation Products Division of General Electric Corporation from October 1982
through December 1985.
Frank Meredith has been the Chief Financial Officer of the Company since
February 1997. Mr. Meredith has served as the Vice President, General Counsel
and Assistant Secretary of the Company since July 1992. Prior to that time,
Mr. Meredith held other positions within the Company since May 1985.
Jerome H. Feingold has been the Vice President-Quality of the Company since
January 1992. Prior to that time, Mr. Feingold served as President of Harman
Speaker Manufacturing since July 1985. Prior to 1985, Mr. Feingold held
various management positions within the manufacturing division of the Company.
Sandra B. Robinson has been Vice President-Financial Operations since
November 1992. Prior to that time, Ms. Robinson was Director of Corporate
Accounting and has been employed by the Company since December 1984.
Floyd E. Toole, Ph.D., joined the Company as Vice President-Acoustic
Research in November 1991. Prior to joining the Company, Dr. Toole spent 25
years, most recently as Senior Research Officer, with the National Research
Council of Canada's Acoustics and Signal Processing Group. At the National
Research Council, Dr. Toole worked to develop psychoacoustic-optimized
adaptive digital techniques for improving loudspeaker performance.
William S. Palin has been Vice President-Controller of the Company since
March 1994. Prior to joining the Company, Mr. Palin was a partner of MacHardy
Palin & Co. from July 1978 to March 1994. From July 1978 to January 1982, Mr.
Palin served as an officer of two of the Company's international subsidiaries.
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DESCRIPTION OF SENIOR NOTES
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all provisions of the Indenture, including the definitions of
certain terms contained in the Indenture. Copies of the Indenture have been
filed as exhibits to the Registration Statement with the Commission.
Capitalized terms not otherwise defined herein shall have the respective
meanings given to them in the Indenture.
GENERAL
The Senior Notes will be issued under an indenture to be dated as of ,
1997 (the "Indenture"), between the Company and PNC Bank, National
Association, as trustee (the "Trustee").
The Senior Notes will be issued in denominations of $1,000 or any integral
multiple thereof. As discussed below, payment of principal of, and interest
on, Senior Notes represented by one or more permanent global Senior Notes
registered in the name of or held by the Depositary or its nominee will be
made in immediately available funds to the Depositary or its nominee as the
registered owner and holder of such permanent global Senior Note or Senior
Notes ("Global Notes").
The Senior Notes will be general unsecured obligations of the Company
limited to $150,000,000 aggregate principal amount and will rank senior in
right of payment to all existing or future indebtedness of the Company which
is by its terms expressly subordinated in right of payment to the Senior Notes
and will rank pari passu with all other existing or future indebtedness of the
Company. See "--Priority."
The Senior Notes will be exchangeable, and transfers thereof will be
registerable, at the office or agency of the Company designated for that
purpose in New York, New York, or any other office or agency of the Company
designated for that purpose, provided that, at the option of the Company,
payment of any interest may be made by check mailed to the address of the
person entitled thereto as it appears in the Senior Note register.
The Company will from time to time execute and deliver Senior Notes to the
Trustee for authentication and delivery, and the Trustee will authenticate and
deliver such Senior Notes upon written order of the Company. No service charge
will be made for any transfer or exchange of the Senior Notes, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
TERMS OF THE NOTES
Interest on the Senior Notes will be payable semi-annually on and
of each year, commencing , 1998, to holders of record on the
preceding and , respectively, at the per annum rate set forth on
the cover page of this Prospectus, with respect to interest accrued (based on
a 360-day year of twelve 30-day months) from the preceding interest payment
date (or from the date of issuance in the case of the first interest payment)
to the current interest payment date.
The Senior Notes are not redeemable prior to maturity and no sinking fund
will be established with respect to the Senior Notes.
PRIORITY
The Senior Notes offered hereby will rank equally with the Company's other
general unsecured and unsubordinated indebtedness, including indebtedness from
time to time outstanding to banks and other unaffiliated lenders. The Senior
Notes will be effectively subordinated to any and all existing and future
secured indebtedness of the Company (to the extent of the value of the related
collateral). In addition, because the Company is a holding company whose
operations are conducted through its operating subsidiaries, the Senior Notes
will be structurally subordinated to any and all
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<PAGE>
existing and future indebtedness (whether or not secured) of any subsidiary of
the Company. As of March 31, 1997, after giving pro forma effect to the sale
of the Senior Notes offered hereby (excluding Underwriters' discounts and
other expenses of the offering) and the use of proceeds described under "Use
of Proceeds," the Company and its subsidiaries would have had approximately
$286.6 million of total unsubordinated indebtedness, approximately $18.9
million of which was secured indebtedness and $139.6 million of which was
indebtedness of the subsidiaries of the Company (including letters of credit,
but excluding subsidiary guarantees of Company indebtedness). See
"Capitalization." The Indenture does not prohibit the Company or its
subsidiaries from issuing additional debt securities or incurring bank or
other loans that may rank pari passu in right of payment to the Senior Notes
offered hereby, nor does it prohibit subsidiaries of the Company from issuing
additional debt securities or incurring bank or other loans that may be
structurally senior in right of payment to the Senior Notes offered hereby.
CERTAIN COVENANTS
Liens. The Indenture provides that so long as any Senior Notes are
outstanding, the Company will not, and will not permit any Principal
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any
property or assets owned or leased by the Company or any Principal Subsidiary
to secure any Indebtedness, without making effective provision whereby
outstanding Senior Notes shall (so long as such other Indebtedness shall be so
secured) be equally and ratably secured.
Under the terms of the Indenture, the foregoing limitation does not apply
to: (a) Liens for taxes not yet due or that are being contested in good faith
by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Company or its Principal
Subsidiaries, as the case may be, in conformity with generally accepted
accounting principles (or, in the case of foreign subsidiaries, generally
accepted accounting principles in effect from time to time in their respective
jurisdictions of incorporation), (b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course
of business that are not overdue for a period of more than 60 days or that are
being contested in good faith by appropriate proceedings, (c) pledges or
deposits in connection with workers' compensation, unemployment insurance and
other social security legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements, (d) deposits to
secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course
of business, (e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Company
or such Principal Subsidiary, (f) Liens in existence on the closing date,
provided that no such Lien is spread to cover any additional property after
the closing date and that the amount of Indebtedness secured thereby is not
increased, (g) Liens arising in connection with trade letters of credit issued
for the account of the Company or a Principal Subsidiary securing the
reimbursement obligations in respect of such letters of credit, provided, that
such Liens encumber only the property being acquired through payments made
under such letters of credit or the documents of title and shipping and
insurance documents relating to such property, (h) Liens on intellectual
property acquired by the Company or a Principal Subsidiary (such as software)
securing the obligation of the Company or such Principal Subsidiary to make
royalty or similar payments to the seller of such intellectual property,
provided, that such Liens encumber only the intellectual property to which
such payments relate, (i) any Lien upon any property or assets created at the
time of the acquisition, purchase, improvement or development of property or
assets used or held by the Company or any Principal Subsidiary or within one
year after such time to secure all or a portion of the purchase price, or the
costs of improvement or development of, for such property or assets, (j) any
Lien upon any property or assets existing thereon at the time of the
acquisition thereof by the Company or any Principal Subsidiary (whether or not
the obligations secured thereby are assumed by the Company or any Principal
Subsidiary), (k) any Lien in
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<PAGE>
favor of the Company or any Principal Subsidiary, (l) any Lien created or
assumed by the Company or any Principal Subsidiary in connection with the
issuance of debt securities the interest on which is excludable from gross
income of the holder of such security pursuant to the Internal Revenue Code of
1986, as amended, for the purpose of financing, in whole or in part, the
acquisition, purchase, improvement or development of property or assets to be
used or held by the Company or any Principal Subsidiary, (m) any Lien securing
any Indebtedness in an amount which, together with (1) all other Indebtedness
secured by a Lien that is not otherwise permitted by the foregoing provisions,
and (2) any Sale and Leaseback Transaction permitted only under clause (e)
below, that does not at the time of the incurrence of the Indebtedness so
secured exceed 10% of the Company's Consolidated Net Tangible Assets, or (n)
any extension, renewal or refunding of any Lien permitted by the foregoing
clauses (f) through (m), inclusive, on substantially the same property or
assets theretofore subject thereto.
Sale and Leaseback Transactions. The Indenture provides that so long as any
Senior Notes are outstanding, the Company will not, and will not permit any
Principal Subsidiary to, enter into any Sale and Leaseback Transaction with
respect to any property or assets of the Company or any Principal Subsidiary,
unless (a) such Sale and Leaseback Transaction involves a lease for a term of
not more than three years, (b) such Sale and Leaseback Transaction is between
the Company and its Principal Subsidiaries or between Principal Subsidiaries,
(c) the Company or a Principal Subsidiary would be entitled to incur
Indebtedness secured by a Lien on such property or assets involved in such
Sale and Leaseback Transaction without equally and ratably securing the Senior
Notes pursuant to the covenant concerning future Liens described above, (d)
the cash proceeds of such Sale and Leaseback Transaction are at least equal to
the fair market value thereof or to the debt attributable thereto and the
Company applies the amount equal to the greater of the net proceeds of such
sale or the Indebtedness with respect to such Sale and Leaseback Transaction
within 180 days of such sale to either (or a combination) of (1) the
retirement (other than the mandatory retirement, mandatory prepayment or
sinking fund payment or by payment at maturity) of long-term debt of the
Company or a Subsidiary (other than long-term debt that is subordinated to the
Senior Notes) or (2) the purchase, construction or development of other
comparable property, or (e) any Sale and Leaseback Transaction in an amount
which, together with (1) all other Sale and Leaseback Transactions under this
clause (e), and (2) all other Indebtedness secured by a Lien that is not
otherwise permitted by the provisions at clauses (a) through (l) above, does
not at the time of such transaction exceed 10% of the Company's Consolidated
Net Tangible Assets.
Domestic Subsidiary Indebtedness. The Indenture provides that so long as any
Senior Notes are outstanding, the Company shall not permit any Domestic
Subsidiary to Incur any Funded Indebtedness. Notwithstanding the foregoing,
any Domestic Subsidiary may Incur the following Funded Indebtedness: (a)
Funded Indebtedness of any Domestic Subsidiary outstanding on the date of the
Indenture, (b) Funded Indebtedness owed by a Domestic Subsidiary to the
Company or to a wholly-owned Subsidiary; provided, however, that upon either:
(1) the transfer or other disposition by the Company or such wholly-owned
Subsidiary of any Funded Indebtedness so permitted to a Person other than the
Company or another wholly-owned Subsidiary, or (2) the issuance (other than
directors' qualifying shares), sale, lease, transfer or other disposition of
shares of Capital Stock (including by consolidation or merger) of such wholly-
owned Subsidiary to a Person other than the Company or another wholly-owned
Subsidiary, the provisions of this clause (b) shall no longer be applicable to
such Funded Indebtedness and such Funded Indebtedness shall be deemed to have
been Incurred at the time of such transfer or other disposition, (c) Funded
Indebtedness Incurred by a Person before such Person became a Domestic
Subsidiary in an acquisition by the Company from a non-Affiliate (whether
through a stock acquisition, merger, consolidation or otherwise) after the
date of the Indenture; provided, that such Funded Indebtedness was not
Incurred in anticipation of or in connection with, and was outstanding prior
to, such acquisition, (d) Funded Indebtedness Incurred in connection with the
acquisition, purchase, improvement or development of property or assets used
or held by any Subsidiary of the Company prior to, or within one year after,
the time of such
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acquisition, purchase, improvement or development, (e) Funded Indebtedness
Incurred in connection with the issuance of debt securities the interest on
which is excludable from gross income of the holder of such security pursuant
to the Code for the purpose of financing in whole or in part the acquisition,
purchase, improvement or development of property or assets to be used or held
by any Domestic Subsidiary, (f) Funded Indebtedness Incurred in connection
with a Sale and Leaseback Transaction permitted by clauses (a) through (d)
pursuant to "--Sale and Leaseback Transactions" above, or (g) Funded
Indebtedness Incurred to extend, renew, refinance or refund (or successive
extensions, renewals, refinancings or refundings) in whole or in part, of any
Funded Indebtedness referred to in the foregoing clauses (a) or (c) through
(f); provided, that the principal amount of Funded Indebtedness Incurred
pursuant to this clause (g) shall not exceed the principal amount of Funded
Indebtedness so extended, renewed, refinanced or refunded plus the aggregate
amount of premiums, other payments, costs and expenses required to be paid or
Incurred in connection with such extension, renewal, refinancing or refunding.
In addition to the foregoing, any Domestic Subsidiary may Incur Funded
Indebtedness if, immediately after the Incurrence thereof, the aggregate
principal amount of such Funded Indebtedness plus all other Funded
Indebtedness (without duplication) of all Domestic Subsidiaries of the Company
then outstanding (other than Funded Indebtedness permitted by clauses (a)
through (g) inclusive, above) does not exceed 10% of Consolidated Net Tangible
Assets (the "Debt Basket"); provided, however, that the Debt Basket shall be
reduced, without duplication, by the amount of Indebtedness secured by a Lien
permitted only under clause (m) pursuant to "--Liens" above and by any Sale
and Leaseback Transaction permitted only under clause (e) pursuant to "--Sale
and Leaseback Transactions" above, in each case to the extent such secured
Indebtedness or the debt attributable to such a Sale and Leaseback Transaction
may from time to time be outstanding.
Restricted Payments. The Indenture provides that until such time as the
Senior Notes are rated Baa2 by Moody's Investors Service, Inc., and its
successors, or BBB by Standard & Poor's Ratings Group, a division of McGraw-
Hill Companies, Inc., and its successors, or higher, the Company will not, and
will not permit any Principal Subsidiary to, directly or indirectly, (a)
declare or pay any dividend on, or make any distribution in respect of, the
Company's or any Principal Subsidiary's Capital Stock, (b) purchase, redeem or
otherwise acquire or retire for consideration any Capital Stock of the Company
or a Principal Subsidiary or (c) voluntarily purchase, redeem or otherwise
acquire or retire for consideration, prior to a scheduled mandatory sinking
fund payment date, mandatory amortization or mandatory prepayment or maturity
date (including, but not limited to, by legal defeasance), any Indebtedness of
the Company that is junior in right of payment to the Senior Notes, other than
in connection with the refinancing of such Indebtedness to the extent not
prohibited under the Indenture (each such declaration, distribution, purchase,
redemption, acquisition or retirement being referred to as a "Restricted
Payment") if, at the time of such action, or after giving effect to such
Restricted Payment, (1) an Event of Default shall have occurred and be
continuing, or (2) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments declared or made after the date of the
Indenture, exceeds the sum of (i) 50% of the aggregate cumulative Consolidated
Net Income of the Company accrued on a cumulative basis during the period
beginning on the date of the Indenture and ending on the last day of the
Company's last fiscal quarter ending prior to the date of such Restricted
Payment (or, if such aggregate cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss), (ii) the aggregate Net Cash Proceeds and the
fair market value (as determined in good faith by the board of directors of
the Company) of marketable securities and other property, if any, received by
the Company or a wholly-owned Subsidiary (other than from a Principal
Subsidiary) from the issuance and sale of either Capital Stock (other than
Capital Stock that is redeemable) or Indebtedness that is convertible into
Capital Stock, to the extent such Indebtedness is converted into Capital Stock
after the date of the Indenture, (iii) the fair market value (as determined in
good faith by the board of directors of the Company) of any shares of Capital
Stock (other than Capital Stock that is redeemable) or options in respect
thereof of the Company issued
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after the date of the Indenture, pursuant to a plan or other arrangement
approved by the Compensation Committee of the board of directors of the
Company, to or for the benefit of any employee or director of the Company or
any Subsidiary or to or by any stock ownership plan or similar trust for the
benefit of any such employee or director, in each case to the extent such
value is includible as compensation expense in the computation of Consolidated
Net Income, (iv) 50% of the aggregate Net Cash Proceeds received after the
date of the Indenture by the Company or a wholly-owned Subsidiary of the
Company, from an Asset Sale, and (v) $75,000,000.
The foregoing will not prohibit, so long as no Event of Default shall have
occurred and be continuing, (a) the payment of any dividend within 60 days
after the date of the declaration, if at the date of declaration thereof such
payment would comply with such provisions or (b) the declaration or payment of
any dividend on or purchase, redemption or retirement of shares of Capital
Stock payable solely in shares of Capital Stock (other than Capital Stock that
is redeemable) of the Company or any Subsidiary that does not constitute a
Principal Subsidiary.
For purposes of the Indenture:
"Asset Sale" means, with respect to any Person, the sale, lease, conveyance,
disposition or other transfer by such Person of all or substantially all of
the properties and assets of any division or line of business of such Person
or any other properties or assets of such Person other than in the ordinary
course of business (including by way of a sale and leaseback and including the
sale or other transfer of any of the Capital Stock of any related
transactions). For the purposes of this definition, the term "Asset Sale"
shall not include any transfer of properties and assets (a) that is (1)
permitted under "--Limitation on Consolidations and Mergers" below or (2) from
the Company to any Subsidiary or from any Subsidiary to the Company or another
Subsidiary, (b) that is a Sale and Leaseback Transaction permitted pursuant to
"--Sale and Leaseback Transactions" above or (c) in any given fiscal year
(other than in the ordinary course of business) if the aggregate fair market
value (as determined in good faith by the board of directors of the Company)
of all such properties and assets transferred (other than in the ordinary
course of business) in such fiscal year is less than $1,000,000, it being
understood that if such aggregate fair market value exceeds $1,000,000, the
entire aggregate fair market value shall be included.
"Capital Stock" means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and
all equivalent ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"Consolidated Net Income" means, for any fiscal period, the net income of
the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Tangible Assets" means total assets (less applicable
reserves and other properly deductible items) after deducting therefrom (a)
all current liabilities and (b) all goodwill, trade names, trademarks,
patents, organization expenses and other like intangibles, all as set forth on
the most recent balance sheet of the Company and its consolidated subsidiaries
and computed in accordance with GAAP.
"Domestic Subsidiary" means any Principal Subsidiary organized and
incorporated under the laws of the United States, or any state thereof, or any
Principal Subsidiary whose principal place of business is located within the
United States, or any state thereof.
"Funded Indebtedness" means Indebtedness that by its terms (a) matures more
than one year from the date of original issuance or creation or (b) matures
within one year from such date but is renewable or extendible at the option of
any obligor to a date more than one year from such date.
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"GAAP" means generally accepted accounting principles in effect from time to
time in respect of a Person's jurisdiction of incorporation.
"Incur" means, with respect to any Indebtedness of any Person, to create,
issue, incur (by conversion, exchange or otherwise), assume, guarantee or
otherwise become, directly or indirectly, liable in respect of such
Indebtedness or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Indebtedness on the balance
sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in GAAP that results in an obligation of such Person
that exists at such time becoming Indebtedness shall not be deemed an
Incurrence of such Indebtedness.
"Indebtedness" of any Person at any date means all indebtedness or
obligations of such Person, as reflected on the balance sheet of such Person
prepared in accordance with generally accepted accounting principles, other
than current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices.
"Lien" means any mortgage, pledge, hypothecation, encumbrance, lien or other
security interest.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Temporary
Cash Investments (except to the extent that such obligations are financed or
sold with recourse to the Company or any Principal Subsidiary) net of (1)
brokerage commissions and other actual fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset Sale, (2)
provisions for all taxes payable as a result of such Asset Sale, (3) payments
made to retire Indebtedness where payment of such Indebtedness is secured by
the assets or properties which are the subject of such Asset Sale, (4) amounts
required to be paid to any Person (other than the Company or any Subsidiary)
owning a beneficial interest in the assets subject to the Asset Sale and (5)
appropriate amounts to be provided by the Company or the Principal Subsidiary,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or
Principal Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected
in an officer's certificate delivered to the Trustee and (b) with respect to
any issuance or sale of Capital Stock or Indebtedness or Capital Stock that
have been converted into or exchanged for Capital Stock, the proceeds of such
issuance or sale in the form of cash or Temporary Cash Investments, including
payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company or any Principal Subsidiary), net of attorney's
fees, accountants' fees and brokerage, consultation, underwriting and other
fees and expenses actually incurred in connection with such issuance or sale
and net of taxes paid or payable as a result thereof.
"Principal Subsidiary" means (a) each Subsidiary of the Company existing on
the closing date and (b) any Subsidiary created or acquired after the closing
date, including its Subsidiaries, which meets either of the following
conditions: (1) the Company and its other subsidiaries' investments in and
advances to the Subsidiary exceeds 10% of the total assets of the Company and
its subsidiaries consolidated as of the end of the most recently completed
fiscal year (for a proposed business combination to be accounted for as a
pooling of interests, this condition is also met when the number of common
shares exchanged by the Company exceeds 10% of its total common shares
outstanding at the date the combination is initiated) or (2) the Company and
its other subsidiaries' proportionate
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share of the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10% of the total assets of the Company and its subsidiaries
consolidated as of the end of the most recently completed fiscal year.
"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Principal Subsidiary of real
or personal property that is to be sold or transferred by the Company or such
Principal Subsidiary to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property or
rental obligations of the Company or such Principal Subsidiary.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of capital stock, entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (b) any partnership (1) the sole general
partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (2) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination
thereof).
"Temporary Cash Investments" means (a) any evidence of Indebtedness issued
by the United States of America, or an instrumentality or agency thereof and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, maturing not more than one year after the date of
acquisition, (b) any certificate of deposit, maturing not more than one year
after the date of acquisition, issued by, or time deposit of, a commercial
banking institution that is a member of the Federal Reserve System and that
has combined capital and surplus and undivided profits of not less than
$500,000,000, whose debt has a rating of, at the time of which any investment
therein is made, "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P, (c) commercial paper, maturing not more than one year after
the date of acquisition, issued by a corporation (other than the Company or
its Subsidiaries) organized and existing under the laws of the United States
of America with a rating, at the time as of which any investment therein is
made, of "P-1" (or higher) according to Moody's or "A-1" (or higher) according
to S&P or (d) any money market deposit accounts issued or offered by a
domestic commercial bank having capital and surplus in excess of $500,000,000.
LIMITATION ON MERGERS AND CONSOLIDATIONS
The Indenture provides that the Company will not consolidate or merge with
or into any Person, or sell, lease, convey or otherwise dispose of all or
substantially all of its assets, or assign any of its obligations under the
Indenture or the Senior Notes, to any Person, unless: (i) the Person formed by
or surviving such consolidation or merger (if other than the Company), or to
which such sale, lease, conveyance or other disposition or arrangement shall
be made (collectively, the "Successor"), is a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and the Successor assumes by supplemental indenture in a
form reasonably satisfactory to the Trustee all of the obligations of the
Company under the Indenture and under the Senior Notes; and (ii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing.
EVENTS OF DEFAULT AND NOTICE THEREOF
The Indenture defines an Event of Default as being any one of the following
events: (a) failure to pay interest on the Senior Notes when due, which
failure continues for 30 days, (b) failure to pay principal of the Senior
Notes when due, (c) failure to comply with "--Limitation on Mergers and
Consolidations," (d) failure to observe or perform any other covenant of the
Company set forth in the Indenture for the Senior Notes, which failure
continues for 60 days after notice as provided in the
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Indenture, (e) certain events of bankruptcy, insolvency or reorganization in
respect of the Company, (f) any default or event of default under any
Indebtedness of the Company or any of its Subsidiaries (other than any
indebtedness of the Company or any Subsidiary to the seller of a business or
asset incurred in connection with the purchase thereof) which default or event
of default results in at least $20 million of aggregate principal amount of
such Indebtedness being declared due and payable prior to maturity, and (g)
failure by the Company or any of its Subsidiaries to pay at maturity at least
$20 million aggregate principal amount of such Indebtedness at any one time,
which failure continues for 15 days after notice from the Trustee or the
holders of 25% of the Senior Notes.
Within 60 days after the occurrence of a Default known to the Trustee, the
Trustee is required to transmit notice thereof to the holders of the Senior
Notes. Except in the case of a default in the payment of the principal of or
interest on the Senior Notes, the Trustee may withhold such notice if and so
long as the Trustee, in good faith, determines that the withholding of such
notice is in the interests of the holders of the Senior Notes. If an Event of
Default shall occur and be continuing, the Trustee or the holders of not less
than 25% in aggregate principal amount of the Senior Notes outstanding may
declare the principal immediately due and payable. However, if prior to the
entry of any judgment or decree for the accelerated amount, the Company shall
pay or deposit with the Trustee all principal and interest arrearage, the
holders of not less than a majority in aggregate principal amount of the
Senior Notes shall have the right to waive all defaults and the consequences
of having all principal payments due. Such waiver will not, however, be
operative as against nor impair any rights arising as a result of any
subsequent Event of Default. The Trustee will not be charged with knowledge of
any Event of Default other than the Company's failure to make principal and
interest payments unless actual written notice thereof is received by the
Trustee.
The Indenture contains provisions regarding limitations on the right to
institute legal proceedings. No holder of Senior Notes shall have the right to
institute an action or proceeding for rights arising under the Indenture
unless (a) such holder has given written notice of default to the Trustee, (b)
the holders of not less than 25% of the aggregate principal amount of Senior
Notes outstanding shall have made a written request to the Trustee to
institute an action and offered the Trustee such indemnification satisfactory
to it, (c) the Trustee shall have not commenced such action within 60 days of
receipt of such notice and indemnification offer, and (d) no direction
inconsistent with such request has been given to the Trustee by the holders of
not less than a majority of the aggregate principal amount of the Senior Notes
then outstanding. Notwithstanding the foregoing, subject to applicable law,
nothing shall prevent the holders of Senior Notes from enforcing payment of
the principal of or interest on their Senior Notes.
The holders of a majority in aggregate principal amount of the Senior Notes
outstanding at the time may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee, provided, however, that the Trustee shall
have the right to decline to follow such direction if, after being advised by
counsel, the Trustee determines that the action so directed may not lawfully
be taken, or if the Trustee in good faith determines that the action so
directed would be unduly prejudicial to the holders of the Senior Notes not
taking part in such action, or that such action would involve the Trustee in
personal liability.
The Indenture provides that, in case an Event of Default shall occur (which
shall not have been cured or waived), the Trustee will be required to use the
degree of care a prudent person would use in the conduct of their own affairs.
Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
of the holders of the Senior Notes unless they shall have offered the Trustee
security or indemnity satisfactory to it.
The Company will be required to furnish to the Trustee annually a statement
as to the fulfillment by the Company of all its obligations under the
Indenture.
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BOOK-ENTRY SYSTEM
Upon issuance, the Senior Notes will be represented by one or more Global
Notes. Each Global Note will be deposited with, or on behalf of, the
Depositary and registered in the name of a nominee of the Depositary. Except
under the limited circumstances described below, Global Notes will not be
exchangeable for definitive certificated Senior Notes.
Ownership of beneficial interests in Global Notes will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold interests through participants. In
addition, ownership of beneficial interests by participants in such Global
Notes will be evidenced only by, and the transfer of that ownership will be
effected only through, records maintained by the Depositary or its nominee for
such Global Notes. Ownership of beneficial interests in such Global Notes by
persons that hold through participants will be evidenced only by, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The Depositary has no
knowledge of the actual beneficial owners of the Senior Notes. Beneficial
owners will not receive written confirmation from the Depositary of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the participants though which the beneficial owners entered the
transaction. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in such Global Notes.
The Company has been advised by the Depositary that upon the issuance of
Global Notes and the deposit of such Global Notes with the Depositary, the
Depositary will immediately credit, on its book-entry registration and
transfer system, the respective principal amounts represented by such Global
Notes to the accounts of participants.
Payment of principal of, and interest on, Senior Notes represented by Global
Notes registered in the name of or held by the Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the
registered owner and holder of the Global Notes representing such Senior
Notes. The Company has been advised by the Depositary that upon receipt of any
payment of principal of, or interest on, a Global Note, the Depositary will
immediately credit, on its book-entry registration and transfer system,
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown in the records of the Depositary. Payments by participants to owners of
beneficial interests in a Global Note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the sole responsibility of such
participants subject to any statutory or regulatory requirements as may be in
effect from time to time.
None of the Company, the Trustee or any other agent of the Company or the
Trustee will have any responsibility or liability for any aspect of the
records of the Depositary, any nominee or any participant relating to, or
payments made on account of, beneficial interests in a Global Note or for
maintaining, supervising or reviewing any of the records of the Depositary,
any nominee or any participant relating to such beneficial interests.
A Global Note is exchangeable for definitive Senior Notes registered in the
name of, and a transfer of a Global Note may be registered to, any person
other than the Depositary or its nominee, only if:
(a) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Note or if at any time the
Depositary ceases to be registered or in good standing under the Exchange
Act;
(b) the Company in its sole discretion determines that such Global Note
shall be exchangeable for definitive Senior Notes in registered form; or
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(c) there shall have occurred and be continuing an Event of Default or an
event which, with the giving of notice or lapse of time or both, would
constitute and Event of Default under the Senior Notes.
Any Global Note that is exchangeable pursuant to the preceding sentence will
be exchangeable in whole for definitive Senior Notes in registered form, of
like tenor and of an equal aggregate principal amount as the Global Note, in
denominations of $1,000 and integral multiples thereof. Such definitive Senior
Notes will be registered in the name or names of such persons as the
Depositary shall instruct the Trustee. It is expected that such instructions
may be based upon directions received by the Depositary from its participants
with respect to ownership of beneficial interests in such Global Note. Any
principal and interest will be payable, the transfer of the definitive Senior
Notes will be registerable and the definitive Senior Notes will be
exchangeable at the office or agency of the Company in the Borough of
Manhattan, the City of New York (which will initially be the Trustee), except
that, at the option of the Company, interest may be paid by mailing a check to
the address of the person entitled thereto as it appears in the Senior Note
register.
Except as provided above, owners of beneficial interests in such Global
Notes will not be entitled to receive physical delivery of Senior Notes in
definitive form and will not be considered the holders thereof for any purpose
under the Indenture, and no Global Note shall be exchangeable except for
another Global Note of like denomination and tenor to be registered in the
name of the Depositary or its nominee. Accordingly, each person owning a
beneficial interest in such Global Note must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any
rights of a holder under the Global Note or the Indenture.
The Company understands that, under existing industry practices, in the
event that the Company requests any action of holders, or an owner of a
beneficial interest in such Global Notes desires to give or take any action
that a holder is entitled to give or take under the Indenture, the Depositary
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize beneficial
owners owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a limited
purpose trust company organized under the laws of the State of New York, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary's book-entry system is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly. The rules applicable to the Depositary and its
participants are on file with the Securities and Exchange Commission.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Senior Notes will be made in immediately available funds.
So long as the Senior Notes are represented by one or more permanent Global
Notes, all payments of principal and interest will be made by the Company in
immediately available funds.
26
<PAGE>
So long as the Senior Notes are represented by one or more Global Notes
registered in the name of the Depositary or its nominee, the Senior Notes will
trade in the Depositary's Same-Day Funds Settlement System, and secondary
market trading activity in the Senior Notes will therefore be required by the
Depositary to settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on the
trading activity in the Senior Notes.
DEFEASANCE
The Company at any time may terminate all its obligations under the Senior
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register
the transfer or exchange of the Senior Notes, to replace mutilated, destroyed,
lost or stolen Senior Notes and to maintain a registrar and paying agent in
respect of the Senior Notes. The Company at any time may also terminate its
obligations under the covenants described under "--Certain Covenants" (other
than "--Limitations on Mergers and Consolidations"), the operation of the
cross acceleration provision, the bankruptcy provisions (but only with respect
to a Subsidiary) and the other Indebtedness default provision described under
"--Events of Default and Notice Thereof" above ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Senior Notes may not be accelerated
because of an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, payment of the Senior Notes may not be
accelerated because of an Event of Default specified in clauses (c) and (e)
through (g) under "--Events of Default and Notice Thereof" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or non-
callable U.S. Government Obligations (as specified in the Indenture)
sufficient to pay all remaining principal and interest on the Senior Notes,
and must comply with certain other conditions, including delivery to the
Trustee of an Opinion of Counsel (as specified in the Indenture) to the effect
that holders of such Senior Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance (and in the case of
legal defeasance only, such Opinion of Counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable Federal income tax
law). Purchasers of such Senior Notes should consult their own advisors with
respect to the tax consequences to them of defeasance, including the
applicability and effect of tax laws other than the Federal income tax law.
MODIFICATION OF THE INDENTURE
With the consent of the holders of not less than a majority in the aggregate
principal amount of the outstanding Senior Notes, the Indenture, the rights
and obligations of the Company and the rights of the holders of Senior Notes
may be modified by the Company and the Trustee. However, without the consent
of each holder of an outstanding Senior Note affected thereby, no modification
may, among other things, (i) modify the terms of payment of principal or
interest on the Senior Notes, or (ii) reduce the percentage of outstanding
Senior Notes required for modification. The Company and the Trustee may also
enter into supplemental indentures, without obtaining the consent of the
holders of the Senior Notes, to cure any ambiguity or to correct or supplement
any provisions of the Indenture or any supplemental indenture which may be
defective or inconsistent with any other provision, to pledge any property to
or with the Trustee or to make any other provisions with respect to matters or
questions arising under the Indenture, provided that such action shall not
adversely affect the interests of the holders of the Senior Notes. Such
supplemental indentures may also be entered into without the consent of
holders of the Senior Notes to evidence the succession of another person to
the Company or to add to the covenants of the Company.
27
<PAGE>
CERTIFICATES AND OPINIONS TO BE FURNISHED TO TRUSTEE
The Indenture provides that, in addition to such other certificates or
opinions as may be specifically required by other provisions of the Indenture,
every application by the Company for action by the Trustee thereunder shall be
accompanied by a certificate of certain officers of the Company and an opinion
of counsel for the Company stating that, in the opinion of the signers, all
conditions precedent to such action have been complied with.
REPORT TO HOLDERS OF SENIOR NOTES
The Trustee is required to submit an annual report to the holders of the
Senior Notes regarding, among other things, the Trustee's eligibility to serve
as such, the priority of the Trustee's claims regarding certain advances made
by it, and any action taken by the Trustee materially affecting the Senior
Notes.
THE TRUSTEE
PNC Bank, National Association, whose Corporate Trust Office is currently
located at 1600 Market Street, Philadelphia, Pennsylvania, will be the Trustee
under the Indenture.
The Company and its affiliates maintain other banking relationships in the
ordinary course of business with the Trustee and its affiliates.
The Trustee may resign or be removed by the Company and a successor trustee
may be appointed. The holders of a majority in aggregate principal amount of
the Senior Notes then outstanding may remove the Trustee.
The Indenture contains certain limitations on the rights of the Trustee
thereunder, in the event that it becomes a creditor of the Company, to obtain
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim as security or otherwise.
28
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") dated , 1997 among the Company and
the several Underwriters named below, the Company has agreed to sell to the
Underwriters, and the Underwriters have severally agreed to purchase from the
Company, the following respective principal amounts of the Senior Notes:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER SENIOR NOTES
----------- ------------
<S> <C>
Chase Securities Inc........................................ $
NationsBanc Capital Markets, Inc............................
Lehman Brothers Inc.........................................
Montgomery Securities.......................................
Societe Generale Securities Corporation.....................
------------
Total..................................................... $150,000,000
============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Senior Notes
offered hereby if any of the Notes are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Senior Notes to the public initially at the respective
public offering price set forth on the cover page of this Prospectus, and to
certain dealers initially at such price less a discount not in excess of %
of the principal amount of the Senior Notes. The Underwriters may allow, and
such dealers may reallow, a concession to certain other dealers not in excess
of % of the principal amount on sales to certain other dealers. After the
public offering, the public offering price and such concessions may be
changed.
Chase Securities Inc. is an affiliate of The Chase Manhattan Bank which is
the agent for and a lender to the Company under the Company's Revolving Credit
Facility. NationsBanc Capital Markets, Inc. is an affiliate of NationsBank,
N.A. which also is a lender to the Company under the Company's Revolving
Credit Facility. Societe Generale Securities Corporation is an affiliate of
Societe Generale which also is a lender to the Company under the Company's
Revolving Credit Facility. In addition, The Chase Manhattan Bank, NationsBank,
N.A., Societe Generale and their respective affiliates participate on a
regular basis in various general financing and banking transactions for the
Company and its affiliates.
The Company expects to use a portion of the net proceeds from the sale of
the Senior Notes to repay outstanding borrowings under the Revolving Credit
Facility. See "Use of Proceeds." The Chase Manhattan Bank, NationsBank, N.A.
and Societe Generale will receive their proportionate share of such repayment.
Because more than 10% of the net proceeds of the offering will be paid to
affiliates of members of the National Association of Securities Dealers, Inc.
(the "NASD") which are participating in the distribution of the Senior Notes,
the offering is being conducted pursuant to the provisions of Rule 2710(c)(8)
of the Conduct Rules of the NASD.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act, and to contribute
to payments which the Underwriters might be required to make in respect
thereof.
In connection with the offering and sale of the Senior Notes, Chase
Securities Inc., on behalf of the Underwriters, may engage in overallotment,
stabilizing transactions and syndicate covering
29
<PAGE>
transactions in accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size, which creates a
short position for the Underwriters. Stabilizing transactions permit bids to
purchase the Senior Notes in the open market for the purpose of pegging,
fixing or maintaining the price of the Senior Notes. Syndicate covering
transactions involve purchases of the Senior Notes in the open market after
the distribution has been completed in order to cover short positions. Such
stabilizing transactions and syndicate covering transactions may cause the
price of the Senior Notes to be higher than it would otherwise be in the
absence of such transactions. Such activities, if commenced, may be
discontinued at any time.
The Senior Notes are a new series of securities with no established trading
market and will not be listed on any securities exchange. The Underwriters
have advised the Company that they intend to make a market in the Senior
Notes, but are under no obligations to do so and such market making may be
terminated at any time. Therefore, no assurance can be given as to the
liquidity of, or the trading market for, the Senior Notes.
EXPERTS
The consolidated financial statements and schedules of Harman International
Industries, Incorporated and subsidiaries as of June 30, 1996 and 1995, and
for each of the years in the three-year period ended June 30, 1996, have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference, and upon the authority of said firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the Senior Notes offered hereby will be passed upon for the
Company by Jones, Day, Reavis & Pogue, Washington, D.C. Certain legal matters
will be passed upon for the Underwriters by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), New York, New York.
30
<PAGE>
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information 2
Incorporation of Certain Information
by Reference 2
The Company 3
Forward-Looking Statements 3
The Offering 4
Summary Consolidated Financial
and Operating Data 5
Use of Proceeds 6
Capitalization 7
Business 8
Management's Discussion and
Analysis of Financial Condition and
Results of Operations 12
Management 15
Description of Senior Notes 17
Underwriting 29
Experts 30
Legal Matters 30
</TABLE>
Prospectus
HARMAN INTERNATIONAL
INDUSTRIES, INCORPORATED
$150,000,000
% SENIOR NOTES DUE 2007
[LOGO OF HARMAN INTERNATIONAL APPEARS HERE]
CHASE SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SOCIETE GENERALE SECURITIES CORPORATION
Dated June , 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the issuance and distribution of the
securities to be registered are as follows:
<TABLE>
<CAPTION>
ITEM AMOUNT
---- --------
<S> <C>
SEC Registration Fee............................................ $ 45,455
Rating Agency Fees.............................................. 97,500
Trustee's Fees and Expenses..................................... 5,000
Blue Sky Fees................................................... 3,750
Legal Fees and Expenses......................................... 150,000
Accounting Fees and Expenses.................................... 20,000
Printing and Engraving Expenses................................. 25,000
Miscellaneous Expenses.......................................... 3,295
--------
Total......................................................... $350,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Set forth below is a description of certain provisions of the Restated
Certificate of Incorporation of the Company, as amended (the "Certificate"),
the Bylaws of the Company (the "Bylaws") and the General Corporation Law of
the State of Delaware (the "DGCL"), as such provisions relate to the
indemnification of directors, officers, employees and agents of the Company.
This description is intended only as a summary and is qualified in its
entirety by reference to the Certificate, the Bylaws and the DGCL.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
Article Tenth of the Certificate provides that to the fullest extent
provided by law a director will not be personally liable for monetary damages
to the Company or its stockholders for or with respect to any acts or
omissions in the performance of his or her duties as a director. The DGCL
provides that a corporation may limit or eliminate a director's personal
liability for monetary damages to the corporation or its stockholders, except
for liability (i) for any breach of the director's duty of loyalty to such
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for paying a dividend or approving a stock repurchase in violation of Section
174 of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit.
While Article Tenth of the Certificate provides directors with protection
from awards for monetary damages for breaches of the duty of care, it does not
eliminate the directors' duty of care. Accordingly, the Certificate will have
no effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of the duty of care. The provisions of
Article Tenth as described above apply to officers of the Company only if they
are directors of the Company and are acting in their capacity as directors,
and does not apply to officers of the Company who are not directors.
INDEMNIFICATION AND INSURANCE
Section 145 of the DGCL provides that a corporation may indemnify directors
and officers as well as other employees and agents of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, in connection with specified actions, suits or
II-1
<PAGE>
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation, as a derivative action),
if they acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. A similar standard is applicable in the case of actions
by or in the right of the corporation, except that indemnification only
extends to expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action, and no
indemnification shall be made where the person seeking indemnification has
been found liable to the corporation, unless and only to the extent that a
court determines is fair and reasonable in view of all circumstances.
Article Tenth of the Certificate and Article VIII of the Bylaws provide to
directors, officers, employees and agents of the Company indemnification to
the fullest extent provided by Delaware law, thereby affording such persons
the protections available to directors, officers, employees and agents of
Delaware corporations as summarized above. The Company maintains directors'
and officers' liability insurance which insures against liabilities that
directors or officers of the Company may incur in such capacities.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement among Registrant and the Underwriters
4.1* Restated Certificate of Incorporation of the Company (filed as Exhibit
4.1 to Registrant's Form S-3 Registration Statement No. 33-50683, and
incorporated herein by reference)
4.2* By-Laws of the Company (filed as Exhibit 4(b) to Registrant's Form S-8
Registration Statement No. 33-60236, and incorporated herein by
reference)
4.3 Form of Indenture between Registrant and the Trustee relating to the
Senior Notes
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
24.1* Power of Attorney (set forth at page II-4 of this Registration
Statement)
25.1* Form T-1 Statement of Eligibility under Trust Indenture Act of PNC
Bank, National Association
</TABLE>
- --------
* Previously filed
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
II-2
<PAGE>
(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 (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes that, (i) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as of the time
it was declared effective and (ii) for the purpose of determining any
liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act of 1939.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to the Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on this 23rd day of June, 1997.
HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED
By: /s/ Bernard A. Girod
----------------------------------
Bernard A. Girod
President, Chief Operating Officer
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-3 has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Sidney Harman* Chairman of the Board and June 23, 1997
---------------------------------- Chief Executive Officer
Sidney Harman (Principal Executive
Officer)
/s/ Bernard A. Girod Director, President, Chief June 23, 1997
- ------------------------------------ Operating Officer and
Bernard A. Girod Secretary
/s/ Frank Meredith* Vice President, Chief June 23, 1997
- ------------------------------------ Financial Officer and
Frank Meredith Assistant Secretary
(Principal Financial and
Accounting Officer)
/s/ Shirley M. Hufstedler* Director June 23, 1997
- ------------------------------------
Shirley M. Hufstedler
/s/ Ann McLaughlin* Director June 23, 1997
- ------------------------------------
Ann McLaughlin
/s/ Edward H. Meyer* Director June 23, 1997
- ------------------------------------
Edward H. Meyer
*By: /s/ Bernard A. Girod
- ------------------------------------
Bernard A. Girod
Attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
------- ------------------- -------------
<S> <C> <C>
1.1 Form of Underwriting Agreement among Registrant and
the Underwriters
4.1* Restated Certificate of Incorporation of the Company
(filed as Exhibit 4.1 to Registrant's Form S-3
Registration Statement No. 33-50683 and incorporated
herein by reference)
4.2* By-Laws of the Company (filed as Exhibit 4(b) to
Registrant's Form S-8 Registration Statement No. 33-
60236 and incorporated herein by reference)
4.3 Form of Indenture between Registrant and the Trustee
relating to the Senior Notes
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 5.1)
24.1* Power of Attorney (set forth at page II-4 of this
Registration Statement)
25.1* Form T-1 Statement of Eligibility under Trust
Indenture Act of PNC Bank, National Association
</TABLE>
- --------
* Previously filed
<PAGE>
EXHIBIT 1.1
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
[______]% Senior Notes due 2007
UNDERWRITING AGREEMENT
_____________, 1997
Chase Securities Inc.,
as Representative of the several
Underwriters named in Schedule I
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Harman International Industries, Incorporated, a Delaware corporation (the
"Company"), proposes to issue and sell $150,000,000 aggregate principal amount
of its [______]% Senior Notes due 2007 (the "Senior Notes"). The Senior Notes
are to be issued under an Indenture (the "Indenture") to be dated as of
__________, 1997 by and between the Company and PNC Bank, National Association,
as trustee (the "Trustee"), the form of which has been filed as an exhibit to
the Registration Statement (as defined herein). This is to confirm the
agreement concerning the purchase of the Senior Notes from the Company by the
several Underwriters named in Schedule I hereto (the "Underwriters") for which
Chase Securities Inc. is acting as Representative (the "Representative").
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants to, and agrees with, each of the Underwriters
that:
(a) A registration statement on Form S-3 (File No. 333-28711), including a
form of prospectus, relating to the Senior Notes has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") and
has been filed by the Company with the Commission. The Company has filed one or
more amendments thereto, including the related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file with the
Commission either (i) prior to effectiveness of such registration statement, a
further amendment to such registration statement (including the form of final
prospectus) or (ii) after effectiveness of such registration statement, a final
prospectus in accordance with Rules 430A and 424(b)(1) or (4).
<PAGE>
2
In the case of clause (ii), the Company has included in such registration
statement, as amended at the Effective Time (as defined below), all information
(other than information permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A ("Rule 430A Information"))
required by the Securities Act and the rules thereunder to be included in the
final prospectus with respect to the Senior Notes and the offering thereof. As
filed, such amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other such required
information, with respect to the Senior Notes and the offering thereof and,
except to the extent the Representative shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the execution of this Agreement or, to the extent not completed at such
time, shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company has
advised you, prior to the execution of this Agreement, will be included or made
therein. For purposes of this Agreement, "Effective Time" means the date and
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was or is declared effective by the Commission.
"Preliminary Prospectus" means each prospectus included in such registration
statement, or amendments thereof, before it becomes effective under the
Securities Act, any prospectus filed with the Commission by the Company pursuant
to Rule 424(a) and the prospectus included in the Registration Statement at the
Effective Time that omits Rule 430A Information. Such registration statement,
as amended at the Effective Time, including all Rule 430A Information, if any,
is hereinafter referred to as the "Registration Statement", and the form of
prospectus relating to the Senior Notes, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) or, if no such filing is
required, as included in the Registration Statement is hereinafter referred to
as the "Prospectus". Any reference herein to any Preliminary Prospectus, the
Prospectus or the Registration Statement shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Form S-3 under the
Securities Act, as of the date of such Preliminary Prospectus, Prospectus or
Registration Statement, as the case may be.
(b) At the Effective Time, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule 424(b)
and on the Closing Date (as hereinafter defined), the Prospectus (and any
supplements thereto) will, comply in all material respects with the applicable
requirements of the Securities Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the respective rules thereunder; at the
Effective Time, the Registration Statement did not or will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; at the Effective Time and on the Closing Date, the Indenture did or
will comply in all material respects with the applicable requirements of the
Trust Indenture Act and the rules thereunder; and, at the Effective Time, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not, and on
the date of any filing pursuant to Rule 424(b) and on the Closing Date, the
Prospectus (together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The preceding sentence does not apply to (i)
that part of the Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) of the Trustee under the Trust
Indenture Act or (ii) information contained in or omitted from the Registration
Statement or the Prospectus (or any supplement thereto) in reliance upon and in
<PAGE>
conformity with written information furnished to the Company through the
Representative by or on behalf of any Underwriter specifically for use therein
(the "Underwriters' Information"). The parties acknowledge and agree that the
Underwriters' Information consists solely of paragraphs three and seven, and the
second sentence of paragraph eight under the caption "Underwriting" in the
Prospectus.
(c) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has conformed
in all material respects to the requirements of the Securities Act and the Rules
and Regulations. The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material respects to
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder, and
none of such documents, when they were filed with the Commission, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
(d) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed on
Schedule II hereto. The Company and each of its principal subsidiaries, as
defined in Schedule II hereto, have been duly incorporated and are validly
existing as corporations in good standing under the laws of their respective
jurisdictions of incorporation, with full power and authority (corporate and
other) to own and lease their properties and conduct their respective businesses
as described in the Prospectus; all of the outstanding capital stock of the
Company's subsidiaries owned beneficially by the Company, directly or
indirectly, is free and clear of all claims, liens, charges and encumbrances;
the Company and each of its subsidiaries are in possession of and operating in
compliance with all authorizations, licenses, permits, consents, certificates
and orders material to the conduct of their respective businesses, all of which
are valid and in full force and effect; the Company and each of its subsidiaries
are duly qualified to do business and in good standing as foreign corporations
in each jurisdiction in which the ownership or leasing of properties or the
conduct of their respective businesses requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company and its subsidiaries taken as a whole; and no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
(e) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable.
All the outstanding shares of capital stock of each subsidiary of the Company
have been duly authorized and validly issued, are fully paid and nonassessable.
(f) The Indenture, when duly executed by the proper officers of the Company
and delivered by the Company, will constitute a valid and binding agreement of
the Company enforceable against the Company in accordance with its terms, except
as enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and (ii) general equitable principles (regardless of
<PAGE>
4
whether such enforceability is considered in a proceeding in equity or at law).
The Senior Notes, when duly executed, authenticated, issued and delivered as
provided in the Indenture, will be duly and validly issued and outstanding and
will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as enforceability may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and (y) general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Indenture conforms to the descriptions thereof contained in the Prospectus.
(g) The Company has full right, power and authority to execute and
deliver this Agreement, the Indenture and the Senior Notes and to perform its
obligations hereunder and thereunder; and all corporate action required to be
taken for the due and proper authorization, execution and delivery of this
Agreement, the Indenture and the Senior Notes and the consummation of the
transactions contemplated by this Agreement and the Indenture have been duly and
validly taken.
(h) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company in
accordance with its terms. The making and performance of this Agreement by the
Company and the consummation of the transactions herein contemplated will not
violate any provisions of the certificate of incorporation or bylaws, or other
organizational documents, of the Company or any of its subsidiaries, and will
not conflict with, result in the breach or violation of, or constitute, either
by itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of its respective
properties may be bound or affected, any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
any of its subsidiaries or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Securities Act,
the Blue Sky laws applicable to the public offering of the Senior Notes by the
several Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(i) There are no persons with registration or other similar rights either
to have any securities registered pursuant to the Registration Statement or to
have any securities otherwise registered by the Company under the Securities Act
in connection with or as a result of the execution, delivery and performance of
this Agreement.
(j) To the best of the Company's knowledge, KPMG Peat Marwick LLP, who have
expressed their opinion with respect to the financial statements and schedules
filed with the Commission as a part of the Registration Statement and included
in or incorporated by reference into the Prospectus and in the Registration
Statement, are independent accountants as required by the Securities Act and the
Rules and Regulations.
<PAGE>
5
(k) The consolidated financial statements and schedules of the Company and
its subsidiaries, and the related notes thereto, included in or incorporated by
reference into the Registration Statement and the Prospectus present fairly the
financial position of the Company and its subsidiaries as of the respective
dates of such financial statements and schedules, and the results of operations
and cash flows of the Company and its subsidiaries for the respective periods
covered thereby. Such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis as certified by the independent accountants named in
subsection 2(j) above. No other financial statements or schedules are required
to be included in the Registration Statement. The selected financial data set
forth in the Prospectus under the captions "Capitalization" and "Summary
Consolidated Financial and Operating Data" fairly present the information set
forth therein on the basis stated in the Registration Statement.
(l) Except as disclosed in the Prospectus, and except as to any breaches,
violations or defaults which individually or in the aggregate would not be
material to the Company and its subsidiaries taken as a whole, neither the
Company nor any of its subsidiaries is in violation or default of any provision
of its certificate of incorporation or bylaws, or other organizational
documents, or is in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties are bound; is in violation in respect of any
law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject; and there does not exist any state of facts
which constitutes an event of default on the part of the Company or any such
subsidiary as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default, except where any such event
of default would not individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries taken as a whole.
(m) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been described or filed as required. The contracts described in the Prospectus
are in full force and effect on the date hereof; and neither the Company nor any
of its subsidiaries, nor to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts which, in the case of any
such breach or default by a third party, would give rise to rights of the
Company or any of its subsidiaries under any such document.
(n) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or may be a party or of which property owned or leased by the Company or any
of its subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might, individually
or in the aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
prospects of the Company and its subsidiaries; and no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent which
is likely to
<PAGE>
6
affect materially and adversely such condition, properties, business, results of
operations or prospects. Neither the Company nor any of its subsidiaries is a
party or subject to the provisions of any material injunction, judgment, decree
or order of any court, regulatory body, administrative agency or other
governmental body which has had or could reasonably be expected to have a
material adverse effect on its condition (financial or otherwise), properties,
business, results of operations or prospects.
(o) The Company and each of its subsidiaries has good and marketable title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements (or elsewhere in the Prospectus), or (ii)
those which are not material in amount and do not adversely affect the use made
and proposed to be made of such property by the Company and its subsidiaries.
The Company and each of its subsidiaries holds its respective leased properties
under valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company. Except as disclosed in
the Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(p) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
or which could result in a material reduction in the future earnings of the
Company and its subsidiaries; (ii) the Company and its subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether or
not covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock and the
Company and its subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any change
in the capital stock (other than upon the exercise of options) or indebtedness
material to the Company and its subsidiaries (other than in the ordinary course
of business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company and its subsidiaries taken as a whole.
(q) Except as disclosed in or specifically contemplated by the Prospectus,
the Company and its subsidiaries have sufficient trademarks, trade names, patent
applications, patent rights, mask works, copyrights, trademark registrations,
servicemarks, servicemark registrations, licenses, approvals and governmental
authorizations to conduct their businesses as described in the Prospectus; the
expiration of or inability to use any trademarks, trade names, patent rights,
mask works, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), licenses, approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company and its subsidiaries taken as
a whole; and the Company has no knowledge of any material infringement by it or
its subsidiaries of trademark, trade name rights, patent rights, mask works,
copyrights,
<PAGE>
7
licenses, trade secret or other similar rights of others, and there is no claim
currently being made against the Company or its subsidiaries regarding
trademark, trade name, patent, mask work, copyright, license, trade secret or
other infringement which could have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company and its subsidiaries taken as a whole.
(r) The Company has not been advised, and has no reason to believe, that
either it or any of its subsidiaries is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except, in each case,
where failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business, results of operations or prospects
of the Company and its subsidiaries taken as a whole.
(s) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns or have requested extensions
thereof (except when the failure to so file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole) and have paid all
taxes shown as due thereon, except for taxes which are being contested in good
faith and for which adequate reserves have been provided; and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company or its subsidiaries which could materially and
adversely affect the business, operations or properties of the Company and its
subsidiaries taken as a whole.
(t) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(u) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including,
but not limited to, insurance covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(v) Neither the Company nor any of its subsidiaries has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state, governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
(w) The Company has not taken, directly or indirectly, any action designed
to or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Senior Notes to facilitate the sale or resale
of the Senior Notes.
(x) The Company is eligible to use a Registration Statement on Form S-3
under the Securities Act and the Rules and Regulations thereunder for purposes
of registering the Senior Notes under the Securities Act.
<PAGE>
8
2. PURCHASE BY THE UNDERWRITERS.
On the basis of the representations, warranties and agreements contained
herein, and subject to the terms and conditions set forth herein, the Company
agrees to issue and sell to each of the Underwriters, severally and not jointly,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company, the principal amount of Senior Notes set forth opposite the name of
such Underwriter in Schedule I hereto at a purchase price equal to [ ]% of the
principal amount thereof plus accrued interest, if any, from _______ to the
Closing Date.
The Company shall not be obligated to deliver any of the Senior Notes
except upon payment for all the Senior Notes to be purchased as provided herein.
The Company acknowledges and agrees that each Underwriter may sell Senior
Notes to any of its affiliates and that any such affiliate may sell Senior Notes
purchased by it to an Underwriter.
3. DELIVERY OF AND PAYMENT FOR THE SENIOR NOTES.
Delivery of and payment for the Senior Notes shall be made at the offices
of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017,
or at such other place as shall be agreed upon by the Representative and the
Company, at 10:00 A.M., New York City time, on __________, 1997 (such date and
time being referred to herein as the "Closing Date"). On the Closing Date, the
Company shall deliver or cause to be delivered to the Underwriters for the
account of each Underwriter through the book-entry facilities of The Depository
Trust Company (the "DTC") certificates for the Senior Notes (with any transfer
taxes payable in connection with the transfer of such Senior Notes to the
Underwriters duly paid by the Company) against payment of the purchase price to
or upon the order of the Company by wire transfer of same day funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each of the Underwriters
hereunder. The Senior Notes so to be delivered will be represented by one or
more permanent global certificates registered in the name of the DTC or its
nominee. The Company shall make the certificates for the Senior Notes available
for inspection by the Underwriters and for delivery to the DTC in New York, New
York, at least one full business day prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY.
The Company agrees with each of the Underwriters:
(a) That, if the Effective Time is prior to the execution and delivery of
this Agreement, to file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) of Rule 424(b) (or, if applicable and if
consented to by the Representative subparagraph (4) of Rule 424(b)) within the
time period prescribed by such rule, and provide evidence satisfactory to the
Representative of such timely filing;
<PAGE>
9
(b) To advise the Representative promptly of any proposal to amend or
supplement (i) the registration statement as filed, (ii) the related prospectus,
(iii) the Registration Statement or (iv) the Prospectus, and not to effect such
amendment or supplementation without the consent of the Representative; to
advise the Representative promptly of the receipt of any comments from the
Commission and of the effectiveness of the Registration Statement (in each case
if the Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplement to the Registration Statement or
the Prospectus, or of any request by the Commission therefor, and of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose; to
advise the Representative promptly of any order preventing or suspending the use
of any prospectus relating to the Senior Notes, of the suspension of the
qualification of the Senior Notes for offering or sale in any jurisdiction, and
of the initiation or threatening of any proceeding for any such purpose; and to
use its best efforts to prevent the issuance of any stop order or of any such
order preventing or suspending the use of any prospectus relating to the Senior
Notes or suspending any such qualification and, if any such stop order or order
of suspension is issued, to obtain the lifting thereof at the earliest possible
time;
(c) To furnish promptly to each of the Representative and counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith; and to deliver promptly
without charge to the Representative such number of the following documents as
the Representative from time to time may reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits other than this
Agreement and the Indenture) and (ii) each Preliminary Prospectus, the
Prospectus (not later than 10:00 A.M., New York City time, on the day following
the execution and delivery of this Agreement) and any amended or supplemented
Prospectus (not later than 10:00 A.M. New York City time, on the day following
the date of such amendment or supplement);
(d) To furnish promptly to each of the Underwriters and counsel for the
Underwriters, without charge, as many copies of the Preliminary Prospectus and
the Prospectus (and any amendments or supplements thereto) as may reasonably be
requested;
(e) If the delivery of a prospectus is required at any time in connection
with the sale of the Senior Notes and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or if for any other reason it shall be necessary at such time to
amend or supplement the Prospectus in order to comply with the Securities Act,
then to notify the Representative immediately thereof, and promptly to prepare
and file with the Commission an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(f) To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
reasonable
<PAGE>
10
judgment of the Company and the Representative, be required by the Securities
Act or requested by the Commission or advisable in connection with the
distribution of the Senior Notes;
(g) As soon as practicable to make generally available to the holders of
the Senior Notes and to deliver to the Representative an earning statement of
the Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158);
(h) For so long as any of the Senior Notes are outstanding, to furnish to
the Representative within 15 days thereof, copies of all materials furnished by
the Company to its shareholders and all public reports and all reports and
financial statements furnished by the Company to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder as the
Underwriters may reasonably request;
(i) The Company shall apply the net proceeds of its sale of the Senior
Notes as set forth in the Prospectus;
(j) The Company will maintain a registrar for the Senior Notes;
(k) The Company will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be expect to
constitute, the stabilization or manipulation of the price of any securities of
the Company; and
(l) For a period of 30 days from the date of the Prospectus, not to offer
for sale, sell, contract to sell or otherwise dispose of, directly or
indirectly, or file a registration statement for, or announce any offering of,
any debt securities (or securities convertible into debt securities) of the
Company (other than the Senior Notes in connection with this Offering) without
the prior written consent of the Representative.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The respective obligations of each of the Underwriters hereunder are
subject to the accuracy, when made and on the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Underwriters shall not have discovered and disclosed to the Company
on or prior to the Closing Date that the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion
of Simpson Thacher & Bartlett, counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
<PAGE>
11
(b) If the Effective Time is not prior to the execution and delivery of
this Agreement, then the Registration Statement shall have become effective and
the Indenture shall have been qualified under the Trust Indenture Act, and the
Representative shall have received notice thereof, not later than (i) 6:00 P.M.
New York City time, on the date of determination of the public offering price,
if such determination occurred at or prior to 3:00 P.M., New York City time, on
such date or (ii) 12:00 Noon, New York City time, on the business day following
the day on which the offering price was determined if such determination
occurred after 3:00 P.M., New York City time, on such date. If the Effective
Time is prior to the execution and delivery of this Agreement, then the
Prospectus shall have been timely filed with the Commission in accordance with
Section 4 of this Agreement. Prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with to the reasonable
satisfaction of the Representative.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Senior Notes, the
Indenture, the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated hereby,
shall be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that such counsel may reasonably request to enable them to pass
upon such matters.
(d) There shall have been furnished to you, in form and substance
satisfactory to you, except as otherwise expressly provided below:
(i) An opinion of Jones, Day, Reavis & Pogue, as counsel
to the Company, addressed to the Underwriters and dated the Closing
Date, in the form attached as Exhibit A.
(ii) An opinion of Frank Meredith, Esquire, Tax/Legal
Counsel for the Company, addressed to the Underwriters and dated the
Closing Date, in the form attached as Exhibit B.
(e) The Underwriters shall have received from Simpson Thacher & Bartlett,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to such matters as the Representative may reasonably require, and
the Company shall have furnished to such counsel such documents as such counsel
reasonably request for enabling them to pass upon such matters.
(f) The Company shall have furnished to the Underwriters a letter (the
"bring-down letter") of KPMG Peat Marwick LLP ("KPMG"), addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the bring-
down letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of the bring-
down letter), the conclusions and findings of such firm with respect to the
financial
<PAGE>
12
information and other matters covered by the letter delivered to the
Representative concurrently with the execution of this Agreement, the substance
of which shall have been agreed upon and confirmed in writing between the
Representative and KPMG.
(g) The Company shall have furnished to the Underwriters a certificate,
dated the Closing Date, of its Chairman of the Board or its President and its
Chief Financial Officer stating that:
(i) such officers have carefully examined the Registration Statement
and the Prospectus;
(ii) in their opinion, as of the Effective Time, the Registration
Statement did not, and as of its date and the Closing Date, the Prospectus
did not and does not include any untrue statement of a material fact and
did not and does not omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
since the Effective Time, no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement or the
Prospectus; and
(iii) to the best of their knowledge after reasonable
investigation, as of the Closing Date (A) the representations and
warranties of the Company in this Agreement are true and correct, (B) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing
Date, (C) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission, and subsequent to the
date of the most recent financial statements in the Prospectus, there has
been no material adverse change in the financial position or results of
operation of the entities purported to be shown thereby, or any change, or
any development including a prospective change, in or affecting the
condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, except as
set forth in the Prospectus.
(h) The Indenture shall have been duly executed and delivered by the
Company and the Trustee and the Senior Notes shall have been duly executed and
delivered by the Company and authenticated by the Trustee.
(i) At the Closing Date, there shall exist no default or event of default
under the Indenture.
(j) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or consolidated long-term debt of the Company and its subsidiaries or any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole, the effect of which, in
any such case described above, is, in the judgment of the Underwriters so
material and adverse as to make it impracticable or inadvisable
<PAGE>
13
to proceed with the public offering or the delivery of the Senior Notes on the
terms and in the manner contemplated in the Prospectus (exclusive of any
supplement).
(k) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Senior Notes, or any
of the Company's other debt securities by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) of the Rules and Regulations, and (ii) no such organization shall
have publicly announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its rating of
the Senior Notes or any of the Company's other debt securities.
(l) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the over-the-counter
market shall have been suspended or limited, or minimum prices shall have been
established on either of such exchanges or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority having
jurisdiction, or trading in securities of the Company on any exchange or in the
over-the-counter market shall have been suspended, (ii) a general moratorium on
commercial banking activities shall have been declared by Federal or New York
State authorities, (iii) an outbreak or escalation of hostilities involving the
United States or a declaration by the United States of a national emergency or
war or (iv) such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the reasonable
judgment of the Representative impracticable or inadvisable to proceed with the
public offering or the delivery of the Senior Notes on the terms and in the
manner contemplated in the Prospectus.
(m) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance and sale of the Senior
Notes; and no injunction, restraining order or order of any other nature by a
federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance or sale of the Senior Notes.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in substance reasonably satisfactory to
counsel for the Underwriters.
6. TERMINATION.
This Agreement shall become effective (other than Sections 8 and 12 which
shall become effective upon the execution hereof) upon the later of when (i) the
Underwriters and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. The obligations of the Underwriters hereunder may be terminated by
the Underwriters in its absolute discretion, by notice given to and received by
the Company prior to delivery of and payment for the Senior Notes, if, prior to
that time, any of the events described in Sections 5(j), 5(k), 5(l) or 5(m)
shall have occurred.
<PAGE>
14
7. DEFAULTING UNDERWRITERS.
If, on the Closing Date, any Underwriter or Underwriters default in the
performance of its or their obligations under this Agreement, the Underwriters
may make arrangements for the purchase of such Senior Notes by other persons
satisfactory to the Company and the Underwriters, including any of the
Underwriters, but if no such arrangements are made by the Closing Date, then
each remaining non-defaulting Underwriter shall be obligated severally to
purchase the Senior Notes which the defaulting Underwriter or Underwriters
agreed but failed to purchase on the Closing Date in the respective proportions
which the principal amount of Senior Notes set forth opposite the name of each
remaining non-defaulting Underwriter in Schedule I hereto bears to the aggregate
principal amount of Senior Notes set forth opposite the names of all the
remaining non-defaulting Underwriters in Schedule I hereto; provided, however,
that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Senior Notes on the Closing Date if the aggregate principal
amount of Senior Notes which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds one-eleventh of the aggregate
principal amount of the Senior Notes to be purchased on the Closing Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase in
total more than 110% of the principal amount of the Notes which it agreed to
purchase on the Closing Date pursuant to the terms of Section 2 hereof. If the
foregoing maximums are exceeded and the remaining Underwriter or other
underwriters satisfactory to the Underwriters and the Company do not elect to
purchase the Senior Notes which the defaulting Underwriter or Underwriters
agreed but failed to purchase, this Agreement shall terminate without liability
on the part of the non-defaulting Underwriters or the Company, except that the
Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 8 and 12 hereof and except that the provisions of Sections 9
and 10 hereof shall not terminate and shall remain in effect. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement
-----------
unless the context otherwise requires, any party not listed in Schedule I hereto
who, pursuant to this Section 7 purchases Senior Notes which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have for damages caused by its default. If other underwriters
are obligated or agree to purchase the Senior Notes of a defaulting Underwriter,
either the Underwriters or the Company may postpone the Closing Date for up to
seven full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement,
and the Company agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus that would effect any such changes.
8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If (a) notice shall have been given pursuant to Section 6 terminating this
Agreement or if this Agreement (other than this Section 8 or Section 12) does
not become effective pursuant to Section 6, (b) the Company shall fail to tender
the Senior Notes for delivery to the Underwriters for any reason permitted under
this Agreement or (c) the Underwriters shall decline to purchase the Senior
Notes for any reason permitted under this Agreement, the Company shall
<PAGE>
15
reimburse the Underwriters for the fees and expenses of their counsel and for
such other reasonable out-of-pocket expenses as shall have been incurred by them
in connection with this Agreement and the proposed purchase of the Senior Notes,
and upon demand the Company shall pay the full amount thereof to the
Underwriters. If this Agreement is terminated pursuant to Section 7 solely by
reason of the default of one or more of the Underwriters, the Company shall not
be obligated to reimburse the defaulting Underwriters on account of those
expenses.
9. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Underwriter,
its affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
the purposes of this Section 9 and Section 10 as the Underwriter), from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, without limitation, any loss, claim, damage,
liability or action relating to purchases and sales of the Senior Notes), to
which that Underwriter may become subject, whether commenced or threatened,
under the Securities Act, the Exchange Act, any other federal or state statutory
law or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and shall reimburse each
Underwriter for any legal or other expenses reasonably incurred by that
Underwriter in connection with investigating or preparing to defend or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with any Underwriters' Information; provided, further, that the
indemnification contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Senior Notes by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
Rules and Regulations, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers who signed the Registration Statement,
directors, employees, representatives and agents, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act or the
Exchange Act (collectively referred to for the purposes of this Section 9 and
Section 10 as the Company), from and against any loss, claim,
<PAGE>
16
damage or liability, joint or several, or any action in respect thereof, to
which the Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory authority
law or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Underwriters' Information, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending or preparing to defend or
defending against or appearing as third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent it has
been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and, provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 9. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or
<PAGE>
17
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
The obligations of the Company and the Underwriters in this Section 9
and in Section 10 are in addition to any other liability which the Company or
the Underwriters, as the case may be, may otherwise have, including in respect
of any breaches of representations, warranties and agreements made herein by any
such party.
10. CONTRIBUTION.
If the indemnification provided for in Section 9 is unavailable or
insufficient to hold harmless an indemnified party under Section 9(a) or (b),
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Senior Notes or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Senior Notes purchased under this
Agreement (before deducting expenses) received by or on behalf of the Company,
on one hand, and the total discounts and commissions received by the
Underwriters with respect to the Senior Notes purchased under this Agreement, on
the other hand, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Company or
information supplied by the Company on the one hand or to any Underwriters'
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or
<PAGE>
18
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Underwriter with respect to the
Senior Notes purchased by it under this Agreement exceeds the amount of any
damages which such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 10 are
several in proportion to their respective underwriting obligations and not
joint.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters and the Company and
their respective successors and the controlling persons and officers and
directors referred to in Sections 9 and 10 hereof, and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. The term
"successors" shall not include a purchaser of any of the Senior Notes from any
of the several Underwriters merely because of such purchase.
12. EXPENSES.
The Company agrees with the Underwriters to pay (a) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Senior Notes
and any taxes payable in that respect; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto (including the filing fees of
the Commission); (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of printing, reproducing and distributing this
Agreement and any other underwriting and selling group documents by mail, telex
or other means of communications; (e) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of sale of the Senior Notes; (f) the fees and expenses of qualifying the
Senior Notes under the securities laws of the several jurisdictions, as provided
in Section 4 hereof, and of preparing, printing and distributing Blue Sky
Memoranda and Legal Investment Surveys (including related fees and expenses of
<PAGE>
19
counsel to the Underwriters); (g) any fees charged by securities rating services
for rating the Senior Notes; (h) all fees and expenses of the Trustee and any
agent thereof; (i) all fees and expenses and all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement (including without limitation legal fees and expenses of counsel to
the Company (including special regulatory counsel to the Company and the fees
and expenses of KPMG); and (j) all expenses in connection with
any meetings with prospective investors (including, without limitation, slides);
provided that, except as otherwise provided in this Section 12 and in Section 8
hereof, the Underwriters shall pay their own costs and expenses, including the
costs and expenses of their counsel, and the expenses of advertising any
offering of the Notes made by the Underwriters.
13. SURVIVAL.
The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Senior Notes and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any person controlling any of them.
14. NOTICES, ETC.
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to:
c/o Chase Securities Inc.
270 Park Avenue
4th Floor
New York, New York 10017
Attention: John Judson
Phone: (212) 834-3144
Facsimile: (212) 834-6170
and
<PAGE>
20
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to:
Harman International Industries, Incorporated
1101 Pennsylvania Avenue, N.W.
Suite 1010
Washington, D.C. 20004
Attention: Frank Meredith
Phone: (202) 393-1101
Facsimile: (202) 393-2402
with a copy to:
Jones, Day, Reavis & Pogue
1450 G. Street, N.W.
Suite 700
Washington, D.C. 20005
Attention: R. Todd Johnson
Phone: (202) 879-4640
Facsimile: (202) 737-2832
provided, however, that any notice to an Underwriter pursuant to Section 9(d)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its acceptance telex to the
Underwriters, which address will be supplied to any other party hereto by the
Underwriters upon request.
Any such statements, requests, notices or agreements shall take effect at
the time of receipt thereof. The Company shall be entitled to act and rely upon
any request, consent, notice or agreement given or made by the Underwriters on
behalf of the Underwriters.
15. DEFINITIONS OF CERTAIN TERMS.
For purposes of this Agreement, (a) "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading and (b) "subsidiary"
means, with respect to any person, (i) any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
capital stock, entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such person or one or more of
the other Subsidiaries of that person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such person or a Subsidiary of such person or (b) the only general
partners of which are such person or one or more Subsidiaries of such person (or
any combination thereof).
<PAGE>
21
16. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
17. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same instrument.
18. HEADINGS.
The headings herein are inserted for convenience of reference only and are
not intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of the agreement
between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
Harman International Industries, Incorporated
By: ______________________________
Name:
Title:
Accepted:
Chase Securities Inc.
NationsBanc Capital Markets, Inc.
Lehman Brothers Inc.
Montogomery Securities
Societe General Securities Corporation
By: CHASE SECURITIES INC.,
As Representative
By: _____________________________
Name:
Title:
<PAGE>
Schedule I
to Underwriting Agreement
Aggregate Principal
-------------------
Underwriter Amount of Senior Notes
- ----------- ----------------------
Chase Securities Inc. $
NationsBanc Capital Markets, Inc.
Lehman Brothers Inc.
Montgomery Securities
Societe Generale Securities Corporation
Total: $150,000,000
============
<PAGE>
Schedule II
to Underwriting Agreement
SUBSIDIARIES
* Denotes a principal subsidiary
<PAGE>
SCHEDULE A to
Underwriting Agreement
[FORM OF COMPANY COUNSEL'S OPINION]
________ __, 1997
Chase Securities Inc.,
as Representative of the several
Underwriters named in Schedule I
to the Underwriting Agreement
270 Park Avenue
New York, New York 10017
Re: Public Offering of $150,000,000 aggregate amount of
Senior Notes of Harman International Industries, Incorporated
Ladies and Gentlemen:
We have acted as counsel to Harman International Industries,
Incorporated, a Delaware corporation (the "Company"), in connection with the
issuance and sale by the Company of $150,000,000 aggregate principal amount of
its [______]% Senior Notes due 2007 (the "Senior Notes") pursuant to the
Underwriting Agreement, dated as of _________, 1997 (the "Underwriting
Agreement") among the Company, Chase Securities Inc., NationsBanc Capital
Markets Inc., Lehman Brothers Inc., Montgomery Securities and Societe Generale
Securities Corporation (collectively, the "Underwriters"). This opinion is
being furnished to you pursuant to Section 5(c)(i) of the Underwriting
Agreement. Unless otherwise defined herein, capitalized terms used in this
opinion that are defined in the Underwriting Agreement are used herein as so
defined.
For purposes of this opinion (i) Domestic Subsidiaries shall mean
Harman Investment Company, a Delaware corporation, JBL Incorporated, a Delaware
corporation and, Harman Motive, Inc., a Delaware corporation and (ii)
Subsidiaries shall mean the Domestic Subsidiaries and all other direct and
indirect subsidiaries of the Company.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering the opinions
herein, we are expressing no opinion as to the laws of any jurisdiction other
than the United States, the District of Columbia and the States of Delaware and
New York.
Based upon the foregoing, and subject to the qualifications,
assumptions and limitations set forth herein, we are of the opinion that:
<PAGE>
2
1. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified to
transact business as a foreign corporation and is in good standing in the
District of Columbia and the States of California and New York, and has full
corporate power and authority to own its properties and conduct its business as
described in the Registration Statement.
2. Each Domestic Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
as set forth opposite its name in Schedule A attached hereto, is duly qualified
to transact business as a foreign corporation and is in good standing in the
states set forth opposite its name on Schedule A attached hereto, and has full
corporate power and authority to own its properties and conduct its business as
described in the Registration Statement.
3. The authorized capital stock of the Company is as set forth under
the caption "Capitalization" in the Prospectus, and all of the outstanding
shares of capital stock of the Company that were issued in the Company's initial
public offering or at any time thereafter have been duly authorized and validly
issued and are fully paid and nonassessable.
4. All of the issued and outstanding shares of capital stock of each
Domestic Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable. To our knowledge, all of the issued and outstanding
shares of each Domestic Subsidiary beneficially owned by the Company, directly
or indirectly, are free and clear of all liens, encumbrances, security
interests, voting trusts or claims.
5. The Indenture complies as to form in all material respects with
the requirements of the Trust Indenture Act and the rules and regulations of the
Commission thereunder.
6. The statements made in the Prospectus under the caption
"Description of Notes," insofar as such statements purport to summarize certain
provisions of certain terms of documents referred to therein, constitute
accurate summaries of the terms of such documents in all material respects.
7. The Company has full corporate authority to execute and deliver
the Underwriting Agreement, the Indenture and the Senior Notes and to perform
its obligations hereunder and thereunder; and all corporate action required to
be taken by the Company for the due and proper authorization, execution and
delivery of the Indenture and the Senior Notes and for the consummation of the
transactions contemplated by the Underwriting Agreement, the Indenture and the
Senior Notes have been duly and validly taken; and the Indenture constitutes a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally.
8. The Senior Notes are in the form contemplated by the Indenture
and, upon the due authentication and delivery thereof by the Trustee pursuant to
the Indenture, will
<PAGE>
3
be duly and validly issued and outstanding and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally.
9. The execution, delivery and performance of the Underwriting
Agreement, the Indenture and the Senior Notes by the Company and the
consummation of the transactions contemplated thereby will not (or have not, as
the case may be) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under any indenture, mortgage,
deed of trust, loan agreement, or other agreement or instrument, that is
material to the Company and its Subsidiaries, taken as a whole, and now known to
us to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is subject; nor will such actions result (or
have resulted, as the case may be) in any violation of the provisions of the
charter or by-laws of the Company or any of its Subsidiaries or any statute or
any order, rule or regulation known to us of any court or governmental agency or
body having jurisdiction over the Company or any of its Subsidiaries or any of
their properties or assets; and except for (A) the registration of the Senior
Notes under the Securities Act, (B) the qualification of the Indenture under the
Trust Indenture Act and (C) such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase and
distribution of the Senior Notes by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for (x) the execution, delivery and
performance of the Underwriting Agreement, the Indenture or the Senior Notes by
the Company, and (y) the consummation of the transactions contemplated thereby.
10. Except as disclosed on Schedule B attached hereto, we are not
acting as counsel for the Company or any Subsidiary in any pending litigation in
which the Company or any Subsidiary is a party involving a loss contingency in
excess of $250,000, and we have not had referred to us by the Company or any
Subsidiary for legal advice or legal representation any litigation matter or
other matter that we believe might be deemed to be overtly threatened litigation
in which the Company or any Subsidiary may become a party involving a loss
contingency in excess of $250,000. The statement set forth in the preceding
sentence is limited to those matters that the Company or any Subsidiary has
referred to us for legal representation or about which the Company or any
Subsidiary has consulted us as counsel and with respect to which we have given
substantive attention subsequent to June 30, 1996. We have identified those
matters by making inquiry of lawyers currently in our firm who, according to our
records, have been engaged in legal services on behalf of the Company or any
Subsidiary during that period, and by examining certain current records that we
maintain for our internal operations. In that process, we have not undertaken
any independent review of documents or records that are in our possession
concerning the Company or any Subsidiary.
11. The Company is not an investment company as that term is defined
in the Investment Company Act of 1940, as amended.
<PAGE>
4
We are of the opinion that the Registration Statement and the
Prospectus (except for the operating statistics, financial statements, financial
schedules and other financial data included therein and except for the
information referred to under the caption "Experts" as having been included in
the Registration Statement and the Prospectus on the authority of KPMG Peat
Marwick LLP as experts, as to which we express no view) comply as to form in all
material respects with the Securities Act and the Rules and Regulations. We do
not know of any contracts or other documents of a character required to be filed
as exhibits to the Registration Statement that are not filed as required.
We have not independently verified and are not passing upon, and do
not assume any responsibility for, the accuracy, completeness or fairness
(except as set forth in the preceding paragraph) of the information contained in
the Registration Statement and the Prospectus. We have participated in the
preparation of the Registration Statement and the Prospectus. From time to time
we have had discussions with officers, directors and employees of the Company,
KPMG Peat Marwick LLP, the independent certified public accountants who examined
the consolidated financial statements of the Company and its Subsidiaries
incorporated by reference in the Registration Statement and the Prospectus, and
representatives of the Underwriters concerning the information contained in the
Registration Statement and the Prospectus and proposed responses to various
items in Form S-3 under the Securities Act. Based thereon, no facts have come
to our attention that cause us to believe that the Registration Statement
(except for operating statistics, financial statements, financial schedules and
other financial data included therein and except for the information referred to
under the caption "Experts" as having been included in the Registration
Statement and the Prospectus on the authority of KPMG Peat Marwick LLP as
experts, as to which we express no view), at the time it became effective and at
the date hereof, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus (except for
the operating statistics, financial statements, financial schedules and other
financial data included therein and except for the information referred to under
the caption "Experts" as having been included in the Registration Statement and
the Prospectus on the authority of KPMG Peat Marwick LLP as experts, as to which
we express no view) at the time it became effective and at the date hereof
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
The opinions set forth herein are subject to the following
assumptions, qualifications and limitation:
a. We have assumed, with your permission and without independent
investigation: (i) that the signatures on all documents examined by
us are genuine and that where any such signature purports to have been
made in a corporate, governmental, fiduciary or other capacity, the
person who affixed such signature to such documents had authority to
do so (other than if such person is an officer of the Company or its
Subsidiaries), (ii) the authenticity of documents submitted to us as
originals, and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or
<PAGE>
4
photostatic copies, and (iii) the correctness of public files, records
and certificates of, or furnished by, governmental or regulatory
agencies or authorities.
b. We have assumed, with your permission and without independent
investigation, that the Underwriting Agreement has been duly
authorized, executed and delivered by each of the parties thereto
(other than the Company) and constitutes the valid and binding
obligation of such parties, enforceable against such parties in
accordance with its terms.
c. In rendering the opinions set forth in paragraph 1 as to the good
standing of the Company and each of the Domestic Subsidiaries under
the laws of the jurisdiction of its incorporation or formation and the
good standing of the Company and the Domestic Subsidiaries as foreign
corporations in the specific jurisdictions, we have relied exclusively
on certificates of public officials, all of which have been furnished
to you.
d. In rendering the opinions set forth in paragraph 4, as to the matters
set forth in the certificates of officers of the Company and its
Domestic Subsidiaries, copies of which have been furnished to you
previously today or are attached hereto, we have assumed the
correctness of, and are relying solely upon, the statements set forth
in such certificates without making any independent investigation or
inquiry whatsoever with respect to the accuracy of such statements,
other than a review of the relevant minute books and stock transfer
records (excluding the stock certificates for the Domestic
Subsidiaries, which were not available for our review).
e. In rendering the opinion set forth in paragraph 4 hereof with respect
to the ownership of shares of capital stock of each Domestic
Subsidiary, we have relied exclusively upon a review of the relevant
stock transfer records of each of the Domestic Subsidiaries which
records have been certified to us as correct by an officer of each
such Domestic Subsidiary, without making any independent investigation
with respect to the completeness and accuracy of such records.
f. In rendering the opinion set forth in paragraph 9 hereof as to
material agreements and other material instruments of the Company and
its Subsidiaries, we have assumed the completeness and accuracy of,
and are relying solely upon, the statements in the certificates of
officers of the Company and the Subsidiaries, copies of which have
been furnished to you, identifying all of the material agreements and
other material instruments to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound, without
making any independent investigation with respect to the completeness
and accuracy of the statements contained therein and, based solely
upon our review of the reports filed by the Company prior to the date
hereof pursuant to the Exchange Act, we have no knowledge of any other
material agreements or
<PAGE>
6
material instruments to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary is bound.
g. As to matters of fact, we have relied solely upon certificates of
executive officers of the Company, copies of which have been delivered
to you.
h. We express no opinion as to the enforceability of (i) exculpation and
indemnity clauses in the Underwriting Agreement to the extent that
such clauses are determined to be against public policy of the State
of New York or the United States of America and (ii) clauses in the
Underwriting Agreement waiving or purporting to waive rights or
defenses of the Company or its Subsidiaries that under applicable law
that may not be waived.
This opinion is furnished by us, as counsel for the Company, to you
solely for your benefit and solely with respect to the purchase of Senior Notes
from the Company by you, upon the understanding that we are not hereby assuming
any professional responsibility to any other person whatsoever.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE>
SCHEDULE A
to Company Counsel Opinion
Name of Subsidiary Jurisdiction of Incorporation
<PAGE>
SCHEDULE B
to Company Counsel Opinion
MATERIAL LITIGATION
<PAGE>
EXHIBIT B to
Underwriting Agreement
[FORM OF OPINION OF FRANK MEREDITH]
________ __, 1997
Chase Securities Inc.,
as Representative of the several
Underwriters named in Schedule I
to the Underwriting Agreement
270 Park Avenue
New York, New York 10017
Re: Public Offering of $150,000,000 aggregate amount of
Senior Notes of Harman International Industries, Incorporated
-------------------------------------------------------------
Ladies and Gentlemen:
I am Vice President, Chief Financial Officer and Assistant Secretary
of Harman International Industries, Incorporated, a Delaware corporation (the
"Company"), and I am admitted to the Bar of the State of California. I have
participated in advising the Company with respect to the issuance and sale by
the Company $150,000,000 aggregate principal amount of its [ ]% Senior Notes
due 2007 (the "Senior Notes") pursuant to the Underwriting Agreement, dated as
of __________, 1997 (the "Underwriting Agreement") among the Company, Chase
Securities Inc., NationsBanc Capital Markets Inc., Lehman Brothers Inc.,
Montgomery Securities and Societe Generale Securities Corporation (collectively,
the "Underwriters") and I am furnishing this opinion to you pursuant to Section
5(d)(ii) of the Underwriting Agreement. Unless otherwise defined herein
capitalized terms used herein shall have the meanings ascribed to them in the
Underwriting Agreement.
Subject to the qualifications set forth herein, I am of the opinion
that:
1. Neither the Company nor any subsidiary is in violation of its
certificate of incorporation or bylaws, or other organizational documents
or to the best of such counsel's knowledge, in breach of or default with
respect to any provision of any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument known to such
counsel to which the Company or any such subsidiary is a party or by which
it or any of its properties may be bound or affected, except where such
default would not materially adversely affect the Company and its
subsidiaries; and, to the best of such counsel's knowledge, the Company and
its subsidiaries are in compliance with all judgments, decrees and orders
of any court or jurisdiction to which they are subject, except where
noncompliance would not materially adversely affect the Company and its
subsidiaries taken as a whole;
<PAGE>
2
2. To the best of such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to include securities owned or
to be owned by such person in the securities registered pursuant to the
Registration Statement; and such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not so
filed or described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are fairly
summarized in all material respects;
I have participated in the preparation of the Registration and the
Prospectus. From time to time I have had discussions with officers, directors
and employees of the Company, KPMG Peat Marwick LLP, the independent certified
public accountants who examined certain of the consolidated financial statements
of the Company and its subsidiaries included in the Registration Statement and
the Prospectus, and the Underwriters concerning the information contained in the
Registration and the Prospectus and proposed responses to various items in the
Form S-3 under the Act. I have not independently verified and am not passing
upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the information contained in the Registration Statement and the
Prospectus.
Based thereon, no facts have come to my attention that cause me to
believe that the Registration Statement (except for the operating statistics,
financial statements, financial schedules and other financial data included
therein and except for the information referred to under the caption "Experts"
as having been included in the Registration Statement and the Prospectus on the
authority of KPMG Peat Marwick LLP, as experts, as to which I express no
opinion), at the time it became effective and at the date hereof, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus (except for the operating statistics,
financial statements, financial schedules and other financial data included
therein and except for the information referred to under the caption "Experts"
as having been included in the Registration Statement and the Prospectus on the
authority of KPMG Peat Marwick LLP, as experts, as to which I express no
opinion) at such times contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein, in light of the
circumstances under which they were made, not misleading. References to the
Prospectus in this letter include any supplements thereto at the Closing Date.
This opinion is furnished by me, as Vice President, Chief Financial
Officer and Assistant Secretary of the Company, to you solely for your benefit
and solely with respect to the purchase by you of the Senior Notes referred to
above, upon the understanding that we are not hereby assuming any professional
responsibility to any other person whatsoever.
Very truly yours,
<PAGE>
EXHIBIT 4.3
=======================================
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
[ ] Senior Notes due 2007
=====================
INDENTURE
Dated as of ___________, 1997
====================
PNC BANK, NATIONAL ASSOCIATION,
as Trustee
=======================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)................... 6.10
(a)(2)..................... 6.10
(a)(3)..................... N.A.
(a)(4)..................... N.A.
(b)........................ 6.8; 6.10
(c)........................ N.A.
311(a)...................... 6.11
(b)........................ 6.11
(c)........................ N.A.
312(a)...................... 2.5
(b)........................ N.A.
(c)........................ N.A.
313(a)...................... 6.6
(b)(1)..................... N.A.
(b)(2)..................... 6.6
(c)........................ 6.6
(d)........................ 6.6
314(a)...................... 9.2
(b)........................ N.A.
(c)(1)..................... 9.4
(c)(2)..................... 9.4
(c)(3)..................... N.A.
(d)........................ N.A.
(e)........................ 9.5
(f)........................ N.A.
315(a)...................... 6.1
(b)........................ 6.5; 9.2
(c)........................ 6.1
(d)........................ 6.1
(e)........................ 5.11
316(a)(last sentence)....... 9.6
(a)(1)(A).................. 5.5
(a)(1)(B).................. 5.4
(a)(2)..................... N.A.
(b)........................ 5.7
317(a)(1)................... 5.8
(a)(2)..................... 5.9
(b)........................ 2.4
318(a)...................... 9.1
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference....... 1
SECTION 1.1. Definitions 1
SECTION 1.2. Other Definitions.................................. 5
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.. 5
SECTION 1.4. Rules of Construction.............................. 6
ARTICLE II
The Senior Notes................................. 6
SECTION 2.1. Form and Dating.................................... 6
SECTION 2.2. Execution and Authentication....................... 7
SECTION 2.3. Registrar and Paying Agent......................... 8
SECTION 2.4. Paying Agent To Hold Money in Trust................ 8
SECTION 2.5. Noteholder Lists................................... 8
SECTION 2.6. Transfer and Exchange.............................. 9
SECTION 2.7. Replacement Senior Notes........................... 11
SECTION 2.8. Outstanding Senior Notes........................... 12
SECTION 2.9. Temporary Senior Notes............................. 12
SECTION 2.10. Cancellation...................................... 12
SECTION 2.11. Defaulted Interest................................ 12
SECTION 2.12. CUSIP Numbers..................................... 13
ARTICLE III
Covenants....................................... 13
SECTION 3.1. Payment of Senior Notes............................ 13
SECTION 3.2. Maintenance of Office or Agency for Registration
of Transfer, Exchange and Payment of Senior Notes..
SECTION 3.3. Appointment to Fill a Vacancy in the Office of
Trustee............................................ 14
SECTION 3.4. Provision as to Paying Agent....................... 14
SECTION 3.5. Maintenance of Corporate Existence................. 15
SECTION 3.6. Limitation on Liens................................ 15
SECTION 3.7. Limitation on Sale and Leaseback Transactions...... 17
SECTION 3.8. Compliance Certificate............................. 18
SECTION 3.9. Further Instruments and Acts....................... 18
SECTION 3.10. Reports by the Company to the Holders............. 18
- i -
<PAGE>
Page
ARTICLE IV
Successor Company............................. 19
SECTION 4.1. When Company May Merge or Transfer Assets........ 19
ARTICLE V
Defaults and Remedies.......................... 20
SECTION 5.1. Events of Default................................ 20
SECTION 5.2. Acceleration..................................... 21
SECTION 5.3. Other Remedies................................... 22
SECTION 5.4. Waiver of Past Defaults.......................... 22
SECTION 5.5. Control by Majority.............................. 22
SECTION 5.6. Limitation on Suits.............................. 23
SECTION 5.7. Rights of Holders to Receive Payment............. 23
SECTION 5.8. Collection Suit by Trustee....................... 23
SECTION 5.9. Trustee May File Proofs of Claim................. 23
SECTION 5.10. Priorities...................................... 24
SECTION 5.11. Undertaking for Costs........................... 24
ARTICLE VI
Trustee........................................ 24
SECTION 6.1. Duties of Trustee................................ 24
SECTION 6.2. Rights of Trustee................................ 25
SECTION 6.3. Individual Rights of Trustee..................... 26
SECTION 6.4. Trustee's Disclaimer............................. 27
SECTION 6.5. Notice of Defaults............................... 27
SECTION 6.6. Reports by Trustee to Holders.................... 27
SECTION 6.7. Compensation and Indemnity....................... 27
SECTION 6.8. Replacement of Trustee........................... 28
SECTION 6.9. Successor Trustee by Merger...................... 29
SECTION 6.10. Eligibility; Disqualification................... 29
SECTION 6.11. Preferential Collection of Claims Against
Company......................................... 29
ARTICLE VII
Discharge of Indenture; Defeasance............. 29
SECTION 7.1. Discharge of Liability on Senior Notes;
Defeasance....................................... 29
SECTION 7.2. Conditions to Defeasance......................... 30
SECTION 7.3. Application of Trust Money....................... 32
SECTION 7.4. Repayment to Company............................. 32
SECTION 7.5. Indemnity for U.S. Government Obligations........ 32
SECTION 7.6. Reinstatement.................................... 32
- ii -
<PAGE>
Page
ARTICLE VIII
Amendments....................................... 32
SECTION 8.1. Without Consent of Holders......................... 32
SECTION 8.2. With Consent of Holders............................ 33
SECTION 8.3. Compliance with Trust Indenture Act................ 34
SECTION 8.4. Revocation and Effect of Consents and Waivers...... 34
SECTION 8.5. Notation on or Exchange of Senior Notes............ 34
SECTION 8.6. Trustee To Sign Amendments......................... 34
ARTICLE IX
Miscellaneous.................................... 35
SECTION 9.1. Trust Indenture Act Controls........................ 35
SECTION 9.2. Notices 35
SECTION 9.3. Communication by Holders with other Holders......... 35
SECTION 9.4. Certificate and Opinion as to Conditions Precedent.. 36
SECTION 9.5. Statements Required in Certificate or Opinion....... 36
SECTION 9.6. When Senior Notes Disregarded....................... 36
SECTION 9.7. Rules by Trustee, Paying Agent and Registrar........ 36
SECTION 9.8. Legal Holidays...................................... 36
SECTION 9.9. Governing Law....................................... 36
SECTION 9.10. No Recourse Against Others......................... 37
SECTION 9.11. Successors 37
SECTION 9.12. Multiple Originals................................. 37
SECTION 9.13. Variable Provisions................................ 37
SECTION 9.14. Table of Contents; Headings........................ 37
SCHEDULES
Schedule 3.6(f) Existing Liens
EXHIBITS
Exhibit A Form of Global Note
- iii -
<PAGE>
INDENTURE dated as of ___________, 1997, between HARMAN INTERNATIONAL
INDUSTRIES, INCORPORATED, a Delaware corporation (the "Company"), and PNC BANK,
NATIONAL ASSOCIATION, a banking association organized under the laws of the
United States, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's [ ]% Senior
Notes due 2007 (the "Senior Notes"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) any Person who is a director
or officer (A) of such Person, (B) of any Subsidiary of such Person or (C) of
any Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Attributable Debt" means, as to any Sale and Leaseback Transaction,
at any date as of which the amount of which thereof is to be determined, the
total net amount of rent required to be paid under such lease during the
remaining primary term thereof, discounted from the respective due dates thereof
to such date at the rate of interest of the Senior Notes. The net amount of
rent required to be paid under any such Sale and Leaseback Transaction for any
such period shall be the aggregate amount of rent payable by the lessee with
respect to such period after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water rates and similar
charges. In the case of any lease which is terminable by the lessee upon the
payment of a penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board of
Directors.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City and Philadelphia, Pennsylvania are
authorized or required by law to close.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent
<PAGE>
2
ownership interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Harman International Industries, Incorporated, a
Delaware corporation.
"Consolidated Net Tangible Assets" means total assets (less applicable
reserves and other properly deductible items) after deducting therefrom (a) all
current liabilities and (b) all goodwill, trade names, trademarks, patents,
organization expenses and other like intangibles, all as set forth on the most
recent balance sheet of the Company and its consolidated subsidiaries and
computed in accordance with GAAP.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted principles in the United States of
America as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as are approved by a significant segment of the accounting
profession.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" or "Noteholder" means the Person in whose name a Senior Note
is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person on any date of
determination, all indebtedness or obligations of such Person, as reflected on
the balance sheet of such Person prepared in accordance with GAAP, other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Issue Date" means the date on which the Senior Notes are originally
issued.
<PAGE>
3
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or security interest.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers (in
the case of the annual Officers' Certificate delivered pursuant to Section 3.10,
at least one of such Officers shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company) and
that complies with Sections 9.4 and 9.5 of this Indenture and is delivered to
the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee and that complies with Sections 9.4 and 9.5
of this Indenture and delivered to the Trustee. The counsel may be an employee
of or counsel to the Company or the Trustee.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"principal" of a Senior Note means the principal of the Senior Note
payable on the security which is due or overdue or is to become due at the
relevant time.
"Principal Subsidiary" means (i) each Subsidiary of the Company
existing on the date hereof and (ii) any Subsidiary created or acquired after
the date hereof, including its Subsidiaries, which meets either of the following
conditions: (a) the Company and its other subsidiaries' investments in and
advances to the Subsidiary exceeds 10% of the total assets of the Company and
its subsidiaries consolidated as of the end of the most recently completed
fiscal year (for a proposed business combination to be accounted for as a
pooling of interests, this condition is also met when the number of common
shares exchanged by the Company exceeds 10% of its total common shares
outstanding at the date the combination is initiated) or (b) the Company and its
other subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of the Subsidiary exceeds 10% of the total assets of the Company
and its subsidiaries consolidated as of the end of the most recently completed
fiscal year..
"Revolving Credit Facility" means the Multi-Currency, Multi-Option
Credit Agreement, dated as of September 30, 1994, among the Company, the
Subsidiary Borrowers and Subsidiary Guarantors parties thereto (each as defined
therein), the lenders parties thereto, NationsBank, N.A., as Co-Agent, Chase
Securities Inc., as arranger and The Chase Manhattan Bank, as Administrative
Agent, as the same may be amended, supplemented or otherwise modified from time
to time.
"Sale and Leaseback Transaction" means an arrangement with any Person
providing for the leasing by the Company or any Principal Subsidiary of real or
personal property that is to be sold or transferred by the Company or such
Principal Subsidiary to such
<PAGE>
4
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Company or such Principal Subsidiary.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Notes Custodian" means the custodian with respect to the
Global Note (as appointed by the Depositary), or any successor Person thereto
and shall initially be the Trustee.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock, entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa
77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
<PAGE>
5
"Wholly-Owned Subsidiary" means a Subsidiary of the Company, all of
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly-Owned Subsidiary.
SECTION 1.2. Other Definitions.
Defined in
Term Section
"Agent Member"................ 2.1(c)
"Authenticating Agent"........ 2.2
"Bankruptcy Law".............. 5.1
"covenant defeasance option".. 7.1(b)
"Custodian"................... 5.1
"Definitive Senior Notes"..... 2.6(b)
"Event of Default"............ 5.1
"legal defeasance option"..... 7.1(b)
"Legal Holiday"............... 9.8
"Paying Agent"................ 2.3
"Underwriting Agreement"...... 2.1(b)
"Registrar"................... 2.3
"Successor Company"........... 4.1
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture notes" means the Senior Notes.
"indenture noteholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by the TIA by reference to another statute or defined by an SEC
rule have the meanings assigned to them by such definitions.
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6
SECTION 1.4. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "including" means including without limitation;
(iv) words in the singular include the plural and words in the
plural include the singular; and
(v) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP.
ARTICLE II
The Senior Notes
SECTION 2.1. Form and Dating. (a) The Senior Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A which is hereby incorporated by reference and expressly made a part of
this Indenture. The Senior Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage, in addition to those set forth on
Exhibit A. The Company and the Trustee shall approve the form of the Senior
Notes and any notation, endorsement or legend on them. Each Senior Note shall
be dated the date of its authentication. The terms of the Senior Notes set
forth in Exhibit A are part of the terms of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to be bound by such terms.
(b) Global Notes. The Senior Notes are being offered and sold by the
Company pursuant to an Underwriting Agreement, dated ___________, 1997, between
the Company and Chase Securities Inc., NationsBanc Capital Markets, Inc., Lehman
Brothers Inc., Montgomery Securities and Societe Generale Securities Corporation
(the "Underwriting Agreement").
Senior Notes shall be issued initially in the form of one or more
permanent global Senior Notes in definitive, fully registered form only, without
interest coupons, in denominations of $1,000 and any integral multiple thereof,
which shall bear the legend set forth in Exhibit A hereto (each, a "Global
Note"), and shall be deposited on behalf of the purchasers of the Senior Notes
represented thereby with the Trustee, at its corporate trust office, as
custodian for the Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the Global
Notes may from time
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7
to time be increased or decreased by endorsements made on such Global Notes by
the Trustee, the Senior Notes Custodian or the Depositary or its nominee as
hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply only to
Global Notes deposited with the Trustee, as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Note, and the Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices of
the Depositary governing the exercise of the rights of an owner of a beneficial
interest in any Global Note.
(d) Certificated Senior Notes. Except as provided in Section 2.6,
owners of beneficial interests in Global Notes will not be entitled to receive
Definitive Senior Notes (as hereinafter defined).
SECTION 2.2. Execution and Authentication. Two Officers shall sign
the Senior Notes for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Senior Notes and may be in facsimile form.
If an Officer whose signature is on a Senior Note no longer holds that
office at the time the Trustee authenticates the Senior Note, the Senior Note
shall be valid nevertheless.
A Senior Note shall not be valid until an authorized signatory of the
Trustee manually authenticates the Senior Note. The signature of the Trustee on
a Senior Note shall be conclusive evidence that such Senior Note has been duly
and validly authenticated and issued under this Indenture.
The Trustee shall authenticate and deliver Senior Notes for original
issue in an aggregate principal amount of $150,000,000 upon a written order of
the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify
the date on which the original issue of Senior Notes is to be authenticated.
The aggregate principal amount of Senior Notes outstanding at any time may not
exceed $150,000,000 except as provided in Section 2.7.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Senior Notes. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Senior Notes whenever
<PAGE>
8
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent.
SECTION 2.3. Registrar and Paying Agent. The Company shall maintain
an office or agency where Senior Notes may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where Senior
Notes may be presented for payment (the "Paying Agent"). The Registrar shall
keep a register of the Senior Notes and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee in writing of the name and address of each such agent. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate compensation therefor pursuant to
Section 6.7. The Company or any of its domestically incorporated Wholly-Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Paying Agent or the Registrar may resign as such upon 30 days' prior written
notice to the Company and the Trustee; upon resignation of any Paying Agent or
Registrar, the Company shall appoint a successor Paying Agent or Registrar, as
the case may be, no later than 30 days thereafter and shall provide notice in
writing to the Trustee of such successor Paying Agent or Registrar.
The Company initially appoints the Trustee as Registrar and Paying
Agent for the Senior Notes.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least 10:00
a.m. (New York City time) on the date on which any principal of or interest on
any Senior Note is due and payable, the Company shall deposit with the Paying
Agent a sum sufficient to pay such principal or interest when due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that such Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by such Paying Agent for the payment of principal of or
interest on the Senior Notes and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
(other than the Trustee) to pay all money held by it to the Trustee and to
account for any funds disbursed by such Paying Agent. Upon complying with this
Section 2.4, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money delivered to the Trustee. Upon any
bankruptcy, reorganization or similar proceeding with respect to the Company,
the Trustee shall serve as Paying Agent for the Senior Notes.
SECTION 2.5. Noteholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and
<PAGE>
9
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee, in writing at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. (i) The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary or the Trustee, as the custodian for the Depositary, in
accordance with this Indenture (including applicable restrictions on transfer
set forth herein) and the procedures of the Depositary therefor.
(ii) A Global Note shall be exchangeable pursuant to this Section
2.6(a) for definitive Senior Notes ("Definitive Senior Notes") registered in the
names of Persons owning beneficial interests in such Global Note only if (A)
such exchange is made in compliance with the provisions of this Section 2.6 and
(B) any of the following events shall have occurred: (1) the Depositary for
such Global Note notifies the Company that it is unwilling or unable to continue
as Depositary for such Global Note or such Depositary ceases to be a clearing
agency registered under the Exchange Act, at a time when such Depositary is
required to be so registered in order to act as Depositary, and a successor
depositary is not appointed by the Company within 90 days thereafter, (2) the
Company executes and delivers to the Trustee an Officers' Certificate stating
that such Global Note shall be so exchangeable or (3) there shall have occurred
and be continuing an Event of Default with respect to the Senior Notes and any
of the Company, the Depositary or the Trustee so requests. Upon exchange of a
Global Note for one or more Definitive Senior Notes, such Definitive Senior
Notes shall not thereafter be exchangeable for beneficial interests in a Global
Note.
(iii) Any Global Note that is exchangeable for Definitive Senior
Notes registered in the name of the owners of beneficial interests therein
pursuant to this Section 2.6 shall be surrendered by the Depositary to the
Trustee to be so exchanged, without charge, and the Company shall sign and the
Trustee shall authenticate and deliver, upon such exchange of such Global Note,
an equal aggregate principal amount of Definitive Senior Notes of authorized
denominations. Definitive Senior Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.6 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. The Trustee shall deliver such Definitive
Senior Notes to the Persons in whose names such Senior Notes are so registered
in accordance with the instructions of the Depositary.
(iv) The registered Holder of a Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Senior Notes.
<PAGE>
10
(v) In the event of the occurrence of any of the events specified in
Section 2.6(a)(ii), the Company will promptly make available to the Trustee a
reasonable supply of Definitive Senior Notes.
(vi) Notwithstanding any other provision of this Indenture, a Global
Note may not be transferred except as a whole by the Depositary for such Global
Note to a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary.
(b) Cancellation or Adjustment of Global Note. At such time as all
beneficial interests in a Global Note have either been exchanged for Definitive
Senior Notes or canceled, such Global Note shall be returned to the Depositary
for cancellation or retained and canceled by the Trustee.
(c) Transfer and Exchange of Definitive Senior Notes. When
Definitive Senior Notes are presented by a Holder to the Registrar or a co-
registrar with a request (i) to register the transfer of such Definitive Senior
Notes; or (ii) to exchange such Definitive Senior Notes for an equal principal
amount of Definitive Senior Notes of other authorized denominations, the
Registrar or co-registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided,
however, that such Definitive Senior Notes shall be duly endorsed or accompanied
by a written instrument of transfer in form reasonably satisfactory to the
Company and the Registrar or co-registrar, duly executed by such Holder or his
attorney duly authorized in writing.
(d) Obligations with Respect to Transfers and Exchanges of Senior
Notes.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive Senior
Notes and Global Notes at the Registrar's or co-registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charges payable upon exchange or
transfer pursuant to Section 2.6 or pursuant to paragraph 5 of the Senior
Notes).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Senior Note for a period
beginning 15 Business Days before an interest payment date and ending on
such interest payment date.
(iv) Prior to the due presentation for registration of transfer
of any Senior Note, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name a
Senior Note is registered as the absolute owner of such Senior Note for the
purpose of receiving payment of principal of and interest on such Senior
Note and for all other purposes whatsoever, whether or
<PAGE>
11
not such Senior Note is overdue, and none of the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by notice
to the contrary.
(v) All Senior Notes issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the Senior
Notes surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any owner of a beneficial interest in a Global
Note, a member of, or a participant in the Depositary or any other Person with
respect to the accuracy of the records of the Depositary or its nominee or of
any participant or member thereof, with respect to any ownership interest in the
Senior Notes or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice or
the payment of any amount or delivery of any Senior Notes (or other security or
property) under or with respect to such Senior Notes. All notices and
communications to be given to the Holders and all payments to be made to Holders
in respect of the Senior Notes shall be given or made only to or upon the order
of the registered Holders (which shall be the Depositary or its nominee in the
case of a Global Note). The rights of owners of beneficial interests in any
Global Note shall be exercised only through the Depositary subject to the
applicable rules and procedures of the Depositary. The Trustee may rely and
shall be fully protected in relying upon information furnished by the Depositary
with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Senior Note (including any transfers between or among Depositary
participants, members or owners of beneficial interests in any Global Note);
provided that the Trustee shall have the right to require such certifications,
Opinions of Counsel or other documentation in respect of exchanges of beneficial
ownership interests in Global Notes for Definitive Senior Notes as it may
reasonably request.
SECTION 2.7. Replacement Senior Notes. If a mutilated Senior Note is
surrendered to the Registrar or if the Holder of a Senior Note claims that the
Senior Note has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Senior Note if the
Company provides the Trustee with an Officer's Certificate stating that the
requirements of Section 8-405 of the Uniform Commercial Code are met and the
Holder satisfies any other reasonable requirements of the Trustee. Mutilated
Senior Notes must be surrendered to the Registrar. If required by the Trustee
or the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Senior Note is replaced. The Company and the Trustee may charge
the Holder for their expenses in replacing a Senior Note. Every replacement
Senior Note is an additional obligation of the Company.
<PAGE>
12
SECTION 2.8. Outstanding Senior Notes. Senior Notes outstanding at
any time are all Senior Notes authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section 2.8 as not outstanding. A Senior Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Senior
Note.
If a Senior Note is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Senior Note is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Senior Notes (or portions
thereof) to be maturing, and the Paying Agent is not prohibited from paying such
money to the Noteholders on that date pursuant to the terms of this Indenture,
then on and after that date such Senior Notes (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Senior Notes. Until Definitive Senior Notes
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Senior Notes. Temporary Senior Notes shall be
substantially in the form of definitive Senior Notes but may have variations
that the Company considers appropriate for temporary Senior Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
Definitive Senior Notes. After the preparation of definitive Senior Notes, the
temporary Senior Notes shall be exchangeable for Definitive Senior Notes upon
surrender of the temporary Senior Notes at any office or agency maintained by
the Company for that purpose and such exchange shall be without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Senior
Notes, the Company shall execute, and the Trustee shall authenticate and deliver
in exchange therefor, one or more Definitive Senior Notes representing an equal
principal amount of Senior Notes. Until so exchanged, the Holder of temporary
Senior Notes shall in all respects be entitled to the same benefits under this
Indenture as a holder of Definitive Senior Notes.
SECTION 2.10. Cancellation. The Company at any time may deliver
Senior Notes to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Senior Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Senior Notes surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver canceled Senior
Notes to the Company. The Company may not issue new Senior Notes to replace
Senior Notes it delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Senior Notes, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who
are Noteholders on a subsequent special record date.
<PAGE>
13
The Company shall fix or cause to be fixed (or upon the Company's failure to do
so the Trustee shall fix pursuant to a written instruction of Holders of at
least a majority in principal amount of the Senior Notes) any such special
record date and payment date to the reasonable satisfaction of the Trustee which
specified record date shall not be less than 10 days prior to the payment date
for such defaulted interest and shall promptly mail or cause to be mailed to
each Noteholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Senior Note and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed 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 so deposited to be held in trust for the
benefit of the Person entitled to such defaulted interest as provided in this
Section 2.11.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Senior Notes
may use "CUSIP" numbers (if then generally in use).
ARTICLE III
Covenants
SECTION 3.1. Payment of Senior Notes. The Company shall promptly pay
the principal of and interest on the Senior Notes on the dates and in the manner
provided in the Senior Notes and in this Indenture. Principal and interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Noteholders on that date
pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Senior Notes, and subject to Section 2.11, it shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 3.2. Maintenance of Office or Agency for Registration of
Transfer, Exchange and Payment of Senior Notes. So long as any of the Senior
Notes shall remain outstanding, the Company will maintain an office or agency in
the Borough of Manhattan, the City of New York, State of New York, where the
Senior Notes may be surrendered for exchange or registration of transfer as in
this Indenture provided, and where notices and demands to or upon the Company in
respect to the Senior Notes may be served, and where
<PAGE>
14
the Senior Notes may be presented or surrendered for payment. The Company may
also from time to time designate one or more other offices or agencies where
Senior Notes may be presented or surrendered for any and all such purposes and
may from time to time rescind such designations; provided, however, 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, State of New York for such purposes. The Company will give to the
Trustee prompt written notice of the location of any such office or agency and
of any change of location thereof. The Company initially appoints the Trustee
c/o DTC, 55 Water Street, New York, New York 10005 for each of said purposes.
In case the Company shall fail to maintain any such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, such surrenders, presentations and demands may be made and notices may
be served at the principal office of the Trustee in the City of Philadelphia,
Commonwealth of Pennsylvania, and the Company hereby appoints the Trustee its
agent to receive at the aforesaid office all such surrenders, presentations,
notices and demands. The Trustee will give the Company prompt notice of any
change in location of the Trustee's principal office.
SECTION 3.3. Appointment to Fill a Vacancy in the Office of Trustee.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.8, a Trustee, so that
there shall at all times be a Trustee hereunder.
SECTION 3.4. Provision as to Paying Agent. (a) If the Company shall
appoint a paying agent other than the Trustee, it will cause such Paying Agent
to execute and deliver to the Trustee an instrument in which such agent shall
undertake, subject to the provisions of this Section 3.4,
(i) that it will hold all sums held by it as such agent for the
payment of the principal of or interest on the Senior Notes such sums which
have been paid to it by the Company (or by any other obligor on the Senior
Notes) in trust for the benefit of the holders of the Senior Notes and will
notify the Trustee of the receipt of sums to be so held,
(ii) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Senior Notes) to make any payment
of the principal of or interest on the Senior Notes when the same shall be
due and payable,
(iii) that it will at any time during the continuance of any
Event of Default specified in Section 5.1(i) or 5.1(ii), upon the written
request of the Trustee, deliver to the Trustee all sums so held in trust by
it, and
(iv) acknowledge, accept and agree to comply in all aspects with
the provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent.
<PAGE>
15
(b) If the Company shall not act as its own Paying Agent, it will, by
10:00 a.m. (New York City time) on the Business Day prior to each due date of
the principal of or interest on any Senior Notes, deposit with such Paying Agent
a sum in same day funds sufficient to pay the principal of or interest so
becoming due, such sum to be held in trust for the benefit of the holders of
Senior Notes entitled to such principal of or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
failure so to act.
(c) If the Company shall act as its own Paying Agent, it will, on or
before each due date of the principal of or interest on the Senior Notes, set
aside, segregate and hold in trust for the benefit of the persons entitled
thereto, a sum sufficient to pay such principal or interest so becoming due and
will notify the Trustee of any failure to take such action.
(d) Anything in this Section 3.4 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 it, or any Paying Agent hereunder, as
required by this Section 3.4, such sums to be held by the Trustee upon the
trusts herein contained.
(e) Anything in this Section 3.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
the provisions of Sections 7.4 and 7.6.
SECTION 3.5. Maintenance of Corporate Existence. So long as any of
the Senior Notes shall remain outstanding, the Company will at all times (except
as otherwise provided or permitted elsewhere in this Indenture) do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence and franchises and the corporate existence and franchises of
each Subsidiary.
SECTION 3.6. Limitation on Liens. So long as any of the Senior Notes
are outstanding, the Company will not, and will not permit any Principal
Subsidiary to, create, incur, assume or suffer to exist any Lien upon, any
property or assets owned or leased by the Company or any Principal Subsidiary to
secure any Indebtedness, without making effective provision whereby the Senior
Notes then outstanding shall (so long as such other Indebtedness shall be so
secured) be equally and ratable secured; provided, however, that this
restriction shall not apply to or prevent the creation or existence of:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or its Principal
Subsidiaries, as the case may be, in conformity with GAAP (or, in the case
of foreign subsidiaries, generally accepted accounting principles in effect
from time to time in their respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a
<PAGE>
16
period of more than 60 days or that are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or such Principal Subsidiary;
(f) any Lien in existence on the date hereof listed on Schedule
3.6(f), provided that no such Lien is spread to cover any additional
property after the date hereof and that the amount of Indebtedness secured
thereby is not increased;
(g) any Lien arising in connection with trade letters of credit issued
for the account of the Company or a Principal Subsidiary securing the
reimbursement obligations in respect of such letters of credit, provided,
that such Liens encumber only the property being acquired through payments
made under such letters of credit or the documents of title and shipping
and insurance documents relating to such property;
(h) any Lien upon intellectual property acquired by the Company or a
Principal Subsidiary (such as software) securing the obligation of the
Company or such Principal Subsidiary to make royalty or similar payments to
the seller of such intellectual property, provided, that such Liens
encumber only the intellectual property to which such payments relate;
(i) any Lien upon any property or assets created at the time of the
acquisition, purchase, improvement or development of property or assets
used or held by the Company or any Principal Subsidiary or within one year
after such time to secure all or a portion of the purchase price for, or
the costs of improvement or development of, such property or assets;
(j) any Lien upon any property or assets existing thereon at the time
of the acquisition thereof by the Company or any Principal Subsidiary
(whether or not the obligations secured thereby are assumed by the Company
or any Principal Subsidiary);
(k) any Lien in favor of the Company or any Principal Subsidiary;
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17
(l) any Lien created or assumed by the Company or any Principal
Subsidiary in connection with the issuance of debt securities the interest
on which is excludable from gross income of the holder of such security
pursuant to the Code, as amended, for the purpose of financing, in whole or
in part, the acquisition, purchase, improvement or development of property
or assets to be used or held by the Company or any Principal Subsidiary;
(m) any Lien securing any Indebtedness in an amount which, together
with (i) all other Indebtedness secured by a Lien that is not otherwise
permitted by the provisions of this Section 3.6, and (ii) all Attributable
Debt of the Company and its Subsidiaries with respect to Sale and Leaseback
Transactions permitted only under Section 3.7(e), that does not at the time
of the incurrence of the Indebtedness so secured exceed 10% of the
Company's Consolidated Net Tangible Assets; or
(n) any extension, renewal or refunding of any Lien referred to in the
foregoing clauses (f) through (m), inclusive, on substantially the same
property or assets theretofore subject thereto.
In case the Company or any Subsidiary shall propose to pledge, mortgage,
hypothecate or grant a security interest in any property or assets owned by the
Company or any Principal Subsidiary to secure any Indebtedness other than as
permitted by subdivisions (a) to (n), inclusive, of this Section 3.6, the
Company will prior thereto give written notice thereof to the Trustee, and the
Company will, or will cause such Principal Subsidiary to, prior to or
simultaneously with such Lien by supplemental indenture executed to the Trustee
(or to the extent legally necessary to another trustee or additional or separate
trustee), in form satisfactory to the Trustee, effectively secure (for so long
as such other Indebtedness shall be so secured) each Senior Note then
outstanding equally and ratably with such Indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. Such
supplemental indenture shall contain the provisions concerning the possession,
control, release and substitution of mortgaged and pledged property and
securities and other appropriate matters which are required by the Trustee
Indenture Act of 1939 (as in effect at the date of execution of such
supplemental indenture) and may also contain such additional and amendatory
provisions permitted by the Trust Indenture Act of 1939 as the Company and the
Trustee shall deem advisable or appropriate or as the Trustee shall deem
necessary in connection with such pledge, mortgage, hypothecation or grant of
security interest.
For the purpose of this Section 3.6, the term "security interest" shall
include the interest of the lessor under a lease with a term of three years or
more that should be, in accordance with GAAP, recorded as a capital lease, and
any such lease of property or assets not acquired from the Company or any
Principal Subsidiary in contemplation of such lease shall be treated as though
the lessee had purchased such property or assets from the lessor.
SECTION 3.7. Limitation on Sale and Leaseback Transactions. So long
as any Senior Notes are outstanding, the Company will not enter into and will
not permit any Principal Subsidiary to enter into any Sale and Leaseback
Transaction with respect to any
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18
property or assets owned by the Company or any Principal Subsidiary on the date
of this Indenture, unless (a) such Sale and Leaseback Transaction involves a
lease for a term of not more than three years; (b) such Sale and Leaseback
Transaction is between the Company and such Principal Subsidiary or between
Principal Subsidiaries; (c) the Company or such Principal Subsidiary would be
entitled to incur Indebtedness secured by a Lien on such property or assets
involved in such Sale and Leaseback Transaction at least equal in amount to the
Attributable Debt with respect to such Sale and Leaseback Transaction without
equally and ratably securing the Senior Notes pursuant to the covenant
concerning future Liens described in Section 3.6(m) above; (d) the cash proceeds
of such Sale and Leaseback Transaction are at least equal to the fair market
value thereof (as determined in good faith by the Board of Directors of the
Company) and the Company applies an amount equal to the greater of the net
proceeds of such sale or the Attributable Debt with respect to such Sale and
Leaseback Transaction within 180 days of such sale to either (or a combination
of) (i) the retirement (other than the mandatory retirement, mandatory
prepayment or sinking fund payment or by payment at maturity) of long-term debt
of the Company or a Subsidiary (other than long-term debt that is subordinated
to the Senior Notes) or (ii) the purchase, improvement or development of other
comparable property; or (e) any Sale and Leaseback Transaction in an amount
which, together with (i) all Attributable Debt of the Company and its
Subsidiaries with respect to Sale and Leaseback Transactions not otherwise
permitted under clauses (a) through (d) above, and (ii) all other Indebtedness
secured by a Lien permitted only under clause (m) of Section 3.6, that does not
at the time of such transaction exceed 10% of Consolidated Net Tangible Assets.
SECTION 3.8. Compliance Certificate. The Company shall deliver to
the Trustee within 90 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during such period. If they
do, the certificate shall describe the Default or Event of Default, its status
and what action the Company is taking or proposes to take with respect thereto.
The Company also shall comply with TIA (S) 314(a)(4).
SECTION 3.9. Further Instruments and Acts. The Company will execute
and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of this
Indenture or as may be reasonably requested by the Trustee.
SECTION 3.10. Reports by the Company to the Holders. The Company
covenants and agrees to transmit by mail to (i) the Holders as their names and
addresses appear on the Senior Note register maintained by the Registrar, (ii)
such Holders of Senior Notes, within the two years preceding the transmission,
as have filed their names and addresses for such purpose and (iii) to all
Holders whose names and addresses have been furnished to or received by the
Trustee pursuant to Section 2.5, within 120 days after the end of each fiscal
year of the Company, copies of audited financial statements, on a consolidated
basis, if applicable, including balance sheets, statements of operations,
statements of
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19
shareholders' equity and statements of changes in financial position, together
with respective reports of independent certified accountants relating thereto.
ARTICLE IV
Successor Company
SECTION 4.1. When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") is a corporation organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) expressly assumes by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of the
Company under the Senior Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default shall have occurred
and be continuing; and
(iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but in
the case of a lease of all or substantially all of the Company's assets, the
Company shall not be released from the obligation to pay the principal of and
interest on the Senior Notes.
Notwithstanding Section 4.1(ii) and 4.1(iii), (i) any Subsidiary of
the Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or another Wholly-Owned Subsidiary of the
Company; and (ii) the Company may merge with an Affiliate incorporated solely
for the purpose of reincorporating the Company in another jurisdiction to
realize tax or other benefits.
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20
ARTICLE V
Defaults and Remedies
SECTION 5.1. Events of Default. An "Event of Default" occurs if:
(i) the Company defaults in any payment of interest on any
Senior Note when the same becomes due and payable and such default
continues for a period of 30 days;
(ii) the Company defaults in the payment of the principal of
any Senior Note when the same becomes due and payable at its Stated
Maturity, upon declaration or otherwise;
(iii) the Company fails to comply with Section 4.1;
(iv) the Company fails to comply with any of its agreements in
the Senior Notes or this Indenture (other than those referred to in (i),
(ii) or (iii) above) and such failure continues for 60 days after the
notice specified below;
(v) the Company or any Subsidiary fail to pay at maturity at
least $20 million (or its foreign currency equivalent at the time)
aggregate principal amount of Indebtedness at any one time, and such
failure continues for 15 days after notice delivered thereunder;
(vi) any default or event of default under any Indebtedness of
the Company or any Subsidiary (other than any indebtedness of the Company
or any Subsidiary to the seller of a business or asset incurred in
connection with the purchase thereof), which default or event of default
results in at least $20 million (or its foreign currency equivalent at the
time) aggregate principal amount of such Indebtedness being declared due
and payable prior to maturity;
(vii) the Company or a Subsidiary pursuant to or within the meaning
of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency; or
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21
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Subsidiary in an
involuntary case;
(B) appoints a Custodian of the Company or any Subsidiary or for
any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
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.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under Section 5.1(iv) will
not constitute an Event of Default until the Trustee or the Holders of at least
25% in principal amount of the outstanding Senior Notes notify the Company of
the Default and the Company does not cure such Default within the time specified
in said clause (iv) after receipt of such notice. Such notice must specify the
Default, demand that it be remedied and state that such notice is a "Notice of
Default."
The Company shall deliver to the Trustee: (i) within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (vi) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (iv)
or (viii), its status and what action the Company is taking or proposes to take
with respect thereto; and (ii) within 120 days after the end of each fiscal
year, written notice in the form of an Officer's Certificate indicating whether
the Officers signing such Officer's Certificate knew or were aware of any
Default that occurred during such previous fiscal year.
SECTION 5.2. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 5.1(vii) or (viii) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Senior Notes by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest on all the Senior Notes to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable
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22
immediately. If an Event of Default specified in Section 5.1(vii) or (viii)
with respect to the Company occurs and is continuing, the principal of and
accrued and unpaid interest on all the Senior Notes shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holders. The Holders of a majority in principal amount of
the Senior Notes by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or Event
of Default or impair any right consequent thereto.
SECTION 5.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Senior Notes or to enforce the performance of
any provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Notes or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 5.4. Waiver of Past Defaults. The Holders of a majority in
outstanding principal amount of the Senior Notes by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except (i) a
Default or Event of Default in the payment of the principal of or interest on a
Senior Note or (ii) a Default or Event of Default in respect of a provision that
under Section 8.2 cannot be amended without the consent of each Holder affected.
When a Default or Event of Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any consequent right.
SECTION 5.5. Control by Majority. The Holders of a majority in
outstanding principal amount of the Senior Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 6.1, that the Trustee reasonably determines is unduly
prejudicial to the rights of other Holders (it being understood that, subject to
Section 6.1, the Trustee shall have no duty to ascertain whether or not such
actions or forebearances are unduly prejudicial to such Holders) or would
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
<PAGE>
23
SECTION 5.6. Limitation on Suits. Except to enforce the right to
receive payment of principal or interest when due, a Holder may not pursue any
remedy with respect to this Indenture or the Senior Notes unless:
(i) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(ii) the Holders of at least 25% in outstanding principal
amount of the Senior Notes make a written request to the Trustee to pursue
the remedy;
(iii) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or indemnity;
and
(v) the Holders of a majority in principal amount of the Senior
Notes do not give the Trustee a direction that, in the opinion of the
Trustee, is inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 5.7. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Senior Notes held by such Holder, on
or after the respective due dates expressed in the Senior Notes, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 5.8. Collection Suit by Trustee. If an Event of Default
specified in Section 5.1(i) or (ii) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
6.7.
SECTION 5.9. Trustee May File Proofs of Claim. The Trustee may 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 the Holders allowed in
any judicial proceedings relative to the Company, its Subsidiaries or their
respective creditors or properties and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the compensation,
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24
expenses, disbursements and advances of the Trustee, its agents and its counsel,
and any other amounts due the Trustee under Section 6.7.
SECTION 5.10. Priorities. If the Trustee collects any money or
property pursuant to this Article V, it shall pay out the money or property in
the following order:
FIRST: Costs and expenses of collection, including all sums paid or
advanced by the Trustee hereunder and the compensation, expenses and
disbursements of the Trustee, its agents, and counsel and all other amounts
due to the Trustee under Section 6.7;
SECOND: to Holders for amounts due and unpaid on the Senior Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Senior Notes for
principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 5.10. At least 15 days before such record
date, the Company shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and amount to be paid.
SECTION 5.11. Undertaking for Costs. 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, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 5.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 5.7 or a suit by Holders of more
than 10% in outstanding principal amount of the Senior Notes.
ARTICLE VI
Trustee
SECTION 6.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise 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 Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations
shall be read into this Indenture against the
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25
Trustee; and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that: (i) this paragraph does not limit the effect of Section 6.1(b);
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.5.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) 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 6.1 and to the provisions of the TIA.
SECTION 6.2. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed in good
faith.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
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26
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Senior
Notes shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) Prior to the occurrence of an Event of Default hereunder and after
the curing or waiving of all Events of Default, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
Officer's Certificate, or other certificated statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond, debenture,
note, coupon, security, or other paper or document unless requested in writing
so to do by the Holders of not less than a majority in aggregate principal
amount of the Senior Notes then outstanding; provided 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 liabilities as a condition to
proceeding; the reasonable expenses of every such examination shall be paid by
the Company or, if advanced by the Trustee, shall be repaid by the Company upon
demand.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its power and duties hereunder.
(h) The Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions, or agreements on the
part of the Company, except as otherwise set forth herein, but the Trustee may
require of the Company full information and advice as to the performance of the
covenants, conditions and agreements contained herein and shall be entitled in
connection herewith to make a reasonable examination in scope and time of the
books, records and premises of the Company.
(i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its negligence or willful default.
(j) Except for (i) a default under Sections 5.1(i) or (ii) hereof, or
(ii) any other event of which the Trustee has "actual knowledge" and which
event, with the giving of notice or the passage of time or both, would
constitute an Event of Default under this Indenture, the Trustee shall not be
deemed to have notice of any default or event unless specifically notified in
writing of such event by the Company or the Holders of not less than 25% in
aggregate principal amount of the Senior Notes outstanding; as used in this
Article VI, the term "actual knowledge" means the actual fact or state of
knowing by a Trust Officer, without any duty to make any investigation with
regard thereto.
SECTION 6.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Senior Notes
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee.
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27
Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Trustee must comply with Sections 6.10 and 6.11.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Senior Notes, it shall not be accountable for the
Company's use of the proceeds from the Senior Notes, it shall not be responsible
for the use or application of any money received by any Paying Agent (other than
itself as Paying Agent), and it shall not be responsible for any statement of
the Company in this Indenture or in any document issued in connection with the
sale of the Senior Notes or in the Senior Notes other than the Trustee's
certificate of authentication.
SECTION 6.5. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Holder notice of the Default or Event of Default
within 60 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, or interest on, any Senior Note, the Trustee
may withhold the notice if and so long as its board of directors, the Executive
Committee of its board of directors or a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Holder a brief report dated as of such May 15 that complies
with TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b). The
Trustee shall also transmit by mail all reports required by TIA (S) 313(c).
A copy of each report at the time of its mailing to Holders shall be
filed by the Company with the SEC and each stock exchange (if any) on which the
Senior Notes are listed. The Company agrees to notify promptly the Trustee
whenever the Senior Notes become listed on any stock exchange and of any
delisting thereof.
SECTION 6.7. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time, and the Trustee shall be entitled to,
compensation for its services as set forth in a separate fee agreement between
the Trustee and the Company. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, costs of preparing and
reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to Holders and reasonable costs of counsel retained by the
Trustee in addition to the compensation for its services. Such expenses shall
include the reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts. The Company shall
indemnify and hold harmless the Trustee against any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by it in connection with
the administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 6.7) and of defending itself against any claims (whether asserted by any
Holder, the Company or otherwise). The
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28
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct or negligence.
To secure the Company's payment obligations in this Section 6.7, the
Trustee shall have a lien prior to the Senior Notes on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Senior Notes. The Trustee's right
to receive payment of any amounts due under this Section 6.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section 6.7 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 5.1(vii) or (viii) with respect
to the Company, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 6.8. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in outstanding
principal amount of the Senior Notes may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if: (i) the Trustee fails to comply with Section 6.10; (ii) the Trustee
is adjudged bankrupt or insolvent; (iii) a receiver or other public officer
takes charge of the Trustee or its property; or (iv) the Trustee otherwise
becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the Holders
of a majority in outstanding principal amount of the Senior Notes and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 6.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in outstanding principal amount of the Senior Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
<PAGE>
29
If the Trustee fails to comply with Section 6.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 6.8, the Company's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
SECTION 6.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
If at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Senior Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Senior Notes so
authenticated; and if at that time any of the Senior Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Senior Notes
either in the name of any predecessor hereunder or in the name of the successor
to the Trustee; and in all such cases such certificates shall have the full
force which it is anywhere in the Senior Notes or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 6.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $400 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 6.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
ARTICLE VII
Discharge of Indenture; Defeasance
SECTION 7.1. Discharge of Liability on Senior Notes; Defeasance. (a)
When the Company delivers to the Trustee all outstanding Senior Notes (other
than Senior Notes replaced pursuant to Section 2.7) for cancellation, and the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.1(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company (accompanied by an Officers' Certificate and an
<PAGE>
30
Opinion of Counsel stating that all conditions precedent specified herein
relating to the satisfaction and discharge of this Indenture have been complied
with) and at the cost and expense of the Company.
(b) Subject to Sections 7.1(c) and 7.2, the Company at any time may
terminate (i) all its obligations under the Senior Notes and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 3.2 through
3.7, and the operation of Sections 5.1(iii), 5.1(iv), 5.1(v) and 5.1(vi),
5.1(vii) (but only with respect to a Subsidiary), 5.1(viii) (but only with
respect to a Subsidiary) and 5.1(ix) ("covenant defeasance option"); provided,
however, no deposit under this Article VII shall be effective to terminate the
obligations of the Company under the Senior Notes or this Indenture prior to 91
days following any such deposit. The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Senior Notes may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Senior Notes
may not be accelerated because of an Event of Default specified in Sections
5.1(iii), 5.1(v), 5.1(vi), 5.1(vii) (but only with respect to a Subsidiary) or
5.1(viii) (but only with respect to a Subsidiary).
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 7.1(a) and (b), the
Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 6.7, 6.8, 7.4, 7.5
and 7.6 shall survive until the Senior Notes have been paid in full.
Thereafter, the Company's obligations in Sections 6.7, 7.4 and 7.5 shall
survive.
SECTION 7.2. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(i) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of and
interest on the Senior Notes to maturity;
(ii) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment of the deposited U.S. Government Obligations plus any
deposited money without reinvestment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Senior Notes to maturity;
(iii) (A) no Event of Default (excluding a Default or Event of
Default arising from breach of Section 3.3 as a result of the creation of a
Lien in connection with the incurrence of Indebtedness the proceeds of
which are applied to such deposit)
<PAGE>
31
shall have occurred or be continuing on the date of such deposit and (B) 91
days pass after the deposit is made and during the 91-day period no Default
specified in Section 5.1(vii) or 5.1(viii) with respect to the Company
occurs which is continuing at the end of such period;
(iv) the deposit does not constitute a default under any other
agreement binding on the Company;
(v) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the
Investment Company Act of 1940;
(vi) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (B) since the date hereof there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such legal defeasance had not occurred;
(vii) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant defeasance
had not occurred;
(viii) the Holders shall have a perfected security interest
under applicable law in the cash or U.S. Government Obligations deposited
pursuant to Section 7.2(i) above;
(ix) the Company shall have delivered to the Trustee an Opinion
of Counsel, in form and substance reasonably satisfactory to the Trustee,
to the effect that, after the passage of 91 days following the deposit, the
trust funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally;
(x) such defeasance shall not cause the Trustee to have a
conflicting interest with respect to any securities of the Company; and
(xi) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Senior Notes and this
Indenture as contemplated by this Article VII have been complied with.
<PAGE>
32
SECTION 7.3. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Senior Notes.
SECTION 7.4. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal of or interest on the Senior Notes that remains
unclaimed for two years, and, thereafter, Holders entitled to the money must
look to the Company for payment as general creditors.
SECTION 7.5. Indemnity for U.S. Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 7.6. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Senior Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VII until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VII; provided, however, that, if the
Company has made any payment of interest on or principal of any Senior Notes
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Senior Notes to receive such payment from
the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE VIII
Amendments
SECTION 8.1. Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Senior Notes without notice to or consent of any
Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to comply with Article IV;
<PAGE>
33
(iii) to provide for uncertificated Senior Notes in addition
to or in place of certificated Senior Notes; provided, however, that the
uncertificated Senior Notes are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Senior Notes are described in Section 163(f)(2)(B) of the Code;
(iv) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company;
(v) to comply with any requirement of the SEC in connection
with qualifying this Indenture under the TIA; or
(vi) to make any change that does not adversely affect the
rights of any Holder.
After an amendment under this Section 8.1 becomes effective, the
Company shall mail to each Holder a notice briefly describing such amendment.
The failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 8.1.
SECTION 8.2. With Consent of Holders. The Company and the Trustee
may amend this Indenture or the Senior Notes with the written consent of the
Holders of at least a majority in principal amount of the outstanding Senior
Notes. However, without the consent of each Holder affected, an amendment may
not:
(i) reduce the amount of Senior Notes whose Holders must
consent to an amendment;
(ii) reduce the rate of or extend the time for payment of
interest on any Senior Note;
(iii) reduce the principal of or extend the Stated Maturity of
any Senior Note;
(iv) make any Senior Note payable in money other than that
stated in the Senior Note;
(v) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Senior Notes; or
(vi) make any change in Section 5.4 or 5.7 or the second
sentence of this Section 8.2.
<PAGE>
34
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section 8.2 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 8.2.
SECTION 8.3. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Senior Notes shall comply with the TIA as then in effect.
SECTION 8.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Senior Note shall bind the
Holder and every subsequent Holder of that Senior Note or portion of the Senior
Note that evidences the same debt as the consenting Holder's Senior Note, even
if notation of the consent or waiver is not made on the Senior Note. However,
any such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Senior Note or portion of the Senior Note if the Trustee receives the
notice of revocation before the date the amendment or waiver becomes effective.
After an amendment or waiver becomes effective, it shall bind every Holder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
SECTION 8.5. Notation on or Exchange of Senior Notes. If an
amendment changes the terms of a Senior Note, the Trustee may require the Holder
of the Senior Note to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Senior Note regarding the changed terms and return
it to the Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Senior Note shall issue and the Trustee shall
authenticate a new Senior Note that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Senior Note shall not affect the
validity of such amendment.
SECTION 8.6. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article VIII if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 6.1) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
<PAGE>
35
ARTICLE IX
Miscellaneous
SECTION 9.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 9.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Harman International Industries, Incorporated
1101 Pennsylvania Avenue N.W.
Suite 1010
Washington D.C. 20004
Attention: Frank Meredith
if to the Trustee:
PNC Bank, National Association
1600 Market Street
30th Floor
Philadelphia, PA 19103
Attention: Corporate Trust Administration.
The Company or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 9.3. Communication by Holders with other Holders. Holders
may communicate pursuant to TIA (S) 312(b) with other Holders with respect to
their rights under this Indenture or the Senior Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
<PAGE>
36
SECTION 9.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall, if requested,
furnish to the Trustee: (i) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and (ii) an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of such counsel, all such conditions precedent have been
complied with.
SECTION 9.5. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include: (i) a statement that the
individual making such certificate or opinion 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 or opinions contained in such
certificate or opinion are based; (iii) a statement that, in the opinion of such
individual, 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 (iv) a statement as to whether or not, in
the opinion of such individual, such covenant or condition has been complied
with.
SECTION 9.6. When Senior Notes Disregarded. In determining whether
the Holders of the required principal amount of Senior Notes have concurred in
any direction, waiver or consent, Senior Notes owned by the Company or by any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company shall be disregarded and deemed not to
be outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Senior Notes which the Trustee knows are so owned shall be so disregarded.
Also, subject to the foregoing, only Senior Notes outstanding at the time shall
be considered in any such determination.
SECTION 9.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 9.8. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York or in the Commonwealth of Pennsylvania. If a payment date is
a Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 9.9. Governing Law. This Indenture and the Senior Notes
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York.
<PAGE>
37
SECTION 9.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Senior Notes or this Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Senior Note, each Holder shall waive and release all
such liability. The waiver and release shall be part of the consideration for
the issue of the Senior Notes.
SECTION 9.11. Successors. All agreements of the Company in this
Indenture and the Senior Notes shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 9.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 9.13. Variable Provisions. The Company initially appoints
the Trustee as Paying Agent and Registrar and custodian with respect to any
Global Notes.
SECTION 9.14. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
38
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
By: ______________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as Trustee
By: ______________________________
Name:
Title:
<PAGE>
Schedule 3.6(f) to
Indenture
EXISTING LIENS
<PAGE>
EXHIBIT A to
Indenture
[FORM OF FACE OF SENIOR NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
---
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
No. 1 Principal Amount $150,000,000
CUSIP NO. _______________
[ ]% Senior Note due 2007
Harman International Industries, Incorporated, a Delaware corporation,
promises to pay to CEDE & CO., or registered assigns, the principal sum of One
Hundred Fifty Million Dollars on _______________, 2007.
Interest Payment Dates: ______________ and _______________ or each
year, commencing ______________, 1998.
Record Dates: ______________ and ___________.
<PAGE>
2
Additional provisions of this Senior Note are set forth on the other
side of this Senior Note.
Dated: HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED
by
-----------------------------------
[SEAL]
---------------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
PNC BANK, NATIONAL ASSOCIATION
as Trustee, certifies
that this is one of
the Senior Notes referred
to in the Indenture.
by
-----------------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF Senior Note]
[ ]% Senior Note due 2007
1. Interest
Harman International Industries, Incorporated, a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Senior Note at the rate per annum shown
above.
The Company will pay interest semiannually on _________________ and
__________________ of each year, commencing _____________, 1998. Interest on
the Senior Notes will accrue from the most recent date to which interest has
been paid on the Senior Notes or, if no interest has been paid, from
______________, 1997. The Company shall pay interest on overdue principal and
interest, at the rate borne by the Senior Notes to the extent lawful. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Senior Note is due and payable, the Company
shall transfer by wire to the accounts specified by the Trustee or the Paying
Agent money sufficient to pay such principal and/or interest. The Company will
pay interest (except defaulted interest) to the Persons who are registered
Holders of Senior Notes at the close of business on the _______________ or
_________________ next preceding the interest payment date even if Senior Notes
are cancelled after the record date and on or before the interest payment date.
Holders must surrender Senior Notes to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, PNC Bank, National Association, a banking association
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice to any
Noteholder. The Company or any of its domestically incorporated Wholly-Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
<PAGE>
2
4. Indenture
The Company issued the Senior Notes under an Indenture dated as of
_____________, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), between the Company and the
Trustee. The terms of the Senior Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture
------
(the "Act"). Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture. The Senior Notes are subject to all
such terms, and Noteholders are referred to the Indenture and the Act for a
statement of those terms.
The Senior Notes are general unsecured unsubordinated obligations of
the Company limited to $150,000,000 aggregate principal amount (subject to
Section 2.7 of the Indenture). This Senior Note is one of the Senior Notes
referred to in the Indenture. The Indenture imposes certain limitations on the
creation and existence of liens, sale and leaseback transactions and mergers,
consolidations and transfers of all or substantially all of the Company's
assets.
5. Denominations; Transfer; Exchange
The Senior Notes are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Senior Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Senior Notes for a period beginning 15 days before an interest
payment date and ending on such interest payment date.
6. Persons Deemed Owners
The registered holder of this Senior Note may be treated as the owner
of it for all purposes.
7. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
<PAGE>
3
8. Defeasance
Subject to certain conditions set forth in the Indenture, the Company
at any time may terminate some or all of its obligations under the Senior Notes
and the Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Senior
Notes to maturity.
9. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Senior Notes may be amended with the written consent of the
Holders of at least a majority in outstanding principal amount of the Senior
Notes and (ii) any default or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in outstanding principal
amount of the Senior Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Noteholder, the Company and the Trustee
may amend the Indenture or the Senior Notes to cure any ambiguity, omission,
defect or inconsistency, or to comply with Article 4 of the Indenture, or to
provide for uncertificated Senior Notes in addition to or in place of
certificated Senior Notes, or to add additional covenants for the benefit of the
Holders or surrender rights and powers conferred on the Company, or to make any
change that does not adversely affect the rights of any Noteholder.
10. Defaults and Remedies
Under the Indenture, Events of Default include: (i) default for 30
days in payment of interest on the Senior Notes when the same becomes due and
payable; (ii) default in payment of principal on the Senior Notes when the same
becomes due and payable at maturity, upon declaration or otherwise; (iii)
failure by the Company to comply with other agreements in the Indenture or the
Senior Notes, in certain cases subject to notice and lapse of time; (iv) failure
to pay other Indebtedness of the Company or any of its Subsidiaries, if the
amount unpaid exceeds $20 million and such failure to pay is not cured within 15
days; (v) certain accelerations of other Indebtedness of the Company or any of
its Subsidiaries, if the amount accelerated exceeds $20 million; (vi) certain
events of bankruptcy or insolvency with respect to the Company or any
Subsidiary; and (vii) failure to comply with the limitations on mergers and
consolidations. If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the Senior Notes may declare
all the Senior Notes to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the Senior
Notes being due and payable immediately upon the occurrence of such Events of
Default.
Noteholders may not enforce the Indenture or the Senior Notes except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Senior Notes unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Senior Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Noteholders notice of any
<PAGE>
4
continuing Default or Event of Default (except a Default or Event of Default in
payment of principal or interest) if it determines that withholding notice is in
their interest.
11. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Senior Notes and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
12. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Senior
Notes or the Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting a Senior Note, each Noteholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
13. Authentication
This Senior Note shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Senior Note.
14. Abbreviations
Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
15. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Senior Note Identification Procedures the Company has caused CUSIP numbers to be
printed on the Senior Notes. No representation is made as to the accuracy of
such numbers either as printed on the Senior Notes and reliance may be placed
only on the other identification numbers placed thereon.
<PAGE>
5
16. Governing Law
This Senior Note shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York.
The Company will furnish to any Noteholder upon written
request and without charge to the Noteholder a copy of the Indenture
which has in it the text of this Senior Note in larger type. Requests
may be made to: Harman International Industries, Incorporated, 1101
Pennsylvania Avenue, N.W., Suite 1010, Washington D.C. 20004,
Attention: Frank Meredith.
<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
I or we assign and transfer this Senior Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Senior Note
on the books of the Company. The agent may substitute another to act for
him.
Date: ____________________ Your Signature: ___________________
Signature Guarantee: ______________________________
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Senior Note.
<PAGE>
2
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been
made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Senior Note following officer
Global Senior Note Global Senior Note such decrease or increase of Trustee or Senior Notes
Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 5.1
June 23, 1997
Harman International Industries, Incorporated
1101 Pennsylvania Avenue, N.W., Suite 1010
Washington, D.C. 20004
Re: Registration Statement on Form S-3 of Harman International Industries,
Incorporated Relating to $150,000,000 % Senior Notes due 2007
Ladies and Gentlemen:
We have acted as counsel for Harman International Industries, Incorporated,
a Delaware corporation (the "Company"), in connection with the creation and
authorization of the issuance and sale of up to $150,000,000 aggregate
principal amount of % Senior Notes due 2007 (the "Securities"), to be issued
pursuant to an Indenture (the "Indenture") to be entered into between the
Company and PNC Bank, National Association, as trustee (the "Trustee").
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion, and based thereupon, but
subject to the assumptions and qualifications set forth below, we are of the
opinion that:
1. The Indenture, when duly authorized, executed and delivered by the
Company and the Trustee, will constitute a valid and binding instrument of
the Company.
2. The Securities, when duly authorized, and when duly executed,
authenticated and delivered to and paid for by the purchasers thereof in
accordance with the terms of such Securities, the Indenture and the
Underwriting Agreement relating thereto, will be valid and binding
obligations of the Company and will be entitled to the benefits of the
Indenture.
In rendering the foregoing opinions we have assumed that (i) the definitive
information, including, without limitation, the definitive terms of the
Securities, remaining to be completed in the form of the Indenture relating to
the Securities as filed as Exhibit 4.3 to the Registration Statement on Form
S-3 filed by the Company to effect registration of the Securities under the
Securities Act of 1933 (the "Registration Statement"), will be so completed
and the Indenture and Securities will be duly authorized by the Board of
Directors of the Company or its designee in such form with such completions,
and (ii) the Underwriting Agreement will be authorized by the Board of the
Company and executed and delivered by the Company and the Underwriters in
substantially the form filed as Exhibit 1.1 to the Registration Statement.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement filed by the Company to effect registration of the
Securities under the Securities Act of 1933 and to the reference to us under
the caption "Legal Matters" in the Prospectus constituting a part of such
Registration Statement.
Very truly yours,
/s/ Jones, Day, Reavis & Pogue
------------------------------
Jones, Day, Reavis & Pogue
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
The Board of Directors
Harman International Industries, Incorporated:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
Los Angeles, California /s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
June 23, 1997
