<PAGE>
FILED PURSUANT TO
RULE NO. 424(b)(5)
REGISTRATION NO. 333-55995
PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 17, 1998)
$100,000,000
Sotheby's Holdings, Inc.
6 7/8% NOTES DUE 2009
---------------
Interest payable on February 1 and August 1
---------------
Sotheby's Holdings, Inc. may redeem any of the Notes at the redemption
prices described in this Prospectus Supplement.
---------------
PRICE 99.875% AND ACCRUED INTEREST, IF ANY
---------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company
-------- ------------- -----------
<S> <C> <C> <C>
Per Note.................................. 99.875% .650% 99.225%
Total..................................... $99,875,000 $650,000 $99,225,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the Notes to purchasers
on February 5, 1999.
---------------
MORGAN STANLEY DEAN WITTER
CHASE SECURITIES INC.
MERRILL LYNCH & CO.
February 2, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
Statement Regarding Forward-Looking
Statements......................... S-2
Ratio of Earnings to Fixed Charges.. S-2
Recent Developments................. S-3
Use of Proceeds..................... S-3
Description of the Notes............ S-3
Underwriters........................ S-5
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus
Available Information............... 2
Incorporation by Reference of
Certain Documents.................. 2
The Company......................... 3
Use of Proceeds..................... 3
Ratio of Earnings to Fixed Charges.. 3
Description of the Debt Securities.. 4
Plan of Distribution................ 12
Legal Matters....................... 13
Experts............................. 13
</TABLE>
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the documents incorporated by reference
herein contain certain forward-looking statements, as such term is defined in
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, relating to future events and the
financial performance of the Company, particularly with respect to the
adequacy of working capital and additional capital necessary for the planned
expansion of the Company's New York auction facility. Such statements are only
predictions and involve risks and uncertainties, resulting in the possibility
that the actual events or performance will differ materially from such
predictions. Major factors which the Company believes could cause the actual
results to differ materially from the predicted results in the forward-looking
statements include, but are not limited to, the following, which are not
listed in any particular order:
(1) The Company's business is seasonal, with peak revenues and operating
income occurring in the second and fourth quarters of each year as a
result of the traditional spring and fall art auction seasons.
(2) The overall strength of the international economy and financial
markets and, in particular, the economies of the United States, the
United Kingdom, and the major countries of Continental Europe and
Asia (principally Japan and Hong Kong).
(3) Competition with other auctioneers and art dealers.
(4) The volume of consigned property and the marketability at auction of
such property.
(5) The expansion of the New York City auction facility and global
headquarters.
(6) The inability of the Company or its suppliers to remedy potential
equipment and/or information systems problems related to the year
2000.
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below are the consolidated ratios of earnings to fixed charges for
the periods indicated.
<TABLE>
<CAPTION>
For the nine
For the year ended December months ended
31, September 30,
------------------------------ -------------
1993 1994 1995 1996 1997 1997 1998
----- ----- ----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1)....................... 6.19x 6.52x 7.49x 11.48x 7.98x 5.12x 2.09x
</TABLE>
- --------
(1) In the ratio of earnings to fixed charges for the Company and its
subsidiaries, earnings is computed as income before taxes plus fixed
charges. Fixed charges consist of interest on all indebtedness, including
any amortization of debt discount or premium, capitalized interest and the
Company's estimate of that portion of rental expense considered to be
representative of the interest factor.
S-2
<PAGE>
RECENT DEVELOPMENTS
On January 19, 1999 the Company announced its intention to launch
Sothebys.com, a new Internet auction business for art, antiques, jewelry and
collectibles. The Company expects to invest in excess of $25 million in the
initial development phase of the new venture, including personnel, marketing
and capital costs. Although these investments are likely to have some dilutive
effect on the Company's results in the near term, the Company believes that
these expenditures are appropriate in light of the potential of the business.
USE OF PROCEEDS
The net proceeds from the sale of the Notes (after expenses estimated at
$410,000) will be used for general corporate purposes, including the financing
of capital expenditures in connection with the Company's expansion of its New
York City headquarters.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements the general description of Debt Securities set forth in the
Prospectus, to which description reference is hereby made. Capitalized terms
not defined herein have the meanings assigned to them in the Prospectus or the
Indenture (the "Indenture") referred to in the Prospectus.
General
The Notes will mature on February 1, 2009 and will bear interest at the rate
of 6 7/8% per annum from February 5, 1999, payable semiannually on February 1
and August 1 of each year, commencing August 1, 1999, to the persons in whose
name the Notes are registered at the close of business on January 15 or July
15 next preceding such interest payment date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. Principal and interest will
be payable at the offices of the Trustee, provided that, at the option of the
Company, payment of interest will be made by check mailed to the address of
the person entitled thereto as it appears in the register of the Notes
maintained by the Trustee. The Notes will be transferable and exchangeable at
the office of the Trustee and will be issued in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof. The
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection with certain transfers
and exchanges. The registered holder of a Note will be treated as the owner of
it for all purposes.
Optional Redemption
The Notes will be redeemable as a whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (1) 100% of
their principal amount or (2) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in
either case, accrued and unpaid interest on the principal amount being
redeemed to such redemption date.
"Business Day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term ("Remaining Life") of the series of Notes to be redeemed
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Notes.
S-3
<PAGE>
"Independent Investment Banker" means Morgan Stanley & Co. Incorporated or,
if such firm is unwilling or unable to select the Comparable Treasury Issue,
an independent investment banking institution of national standing appointed
by the Trustee.
"Comparable Treasury Price" means (1) the average of five Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Reference Treasury Dealer" means (1) Morgan Stanley & Co. Incorporated,
Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
and their respective successors, provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer and (2) any other Primary Treasury Dealer
selected by the Independent Investment Banker after consultation with the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Independent Investment Banker at 5:00 p.m.,
New York City time, on the third Business Day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Board of Governors of the Federal Reserve System and which establishes yields
on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue shall
be determined and the Treasury Rate shall be interpolated or extrapolated from
such yields on a straight line basis, rounding to the nearest month) or (2) if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date. The Treasury Rate shall be calculated
on the third Business Day preceding the redemption date.
Holders of Notes to be redeemed will receive notice thereof by first-class
mail at least 30 and not more than 60 days prior to the date fixed for
redemption. If fewer than all of the Notes are to be redeemed, the Trustee
will select, not more than 60 days prior to the redemption date, the
particular Notes or portions thereof for redemption from the outstanding Notes
not previously called by such method as the Trustee deems fair and
appropriate.
The Trustee
The Chase Manhattan Bank is the Trustee under the Indenture and is an
affiliate of Chase Securities Inc., one of the Underwriters. The Trustee is
under no obligation to exercise any of its powers under the Indenture at the
request of any of the holders of the Notes, unless such holders shall have
offered the Trustee indemnity reasonably satisfactory to it.
Book-Entry, Delivery and Form
The Notes will be issued in the form of one or more fully registered global
notes (the "Global Notes") and will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York ("DTC"), and registered in the
name of Cede & Co., as DTC's nominee. See "Description of the Debt
Securities--Global Debt
S-4
<PAGE>
Securities" in the accompanying Prospectus, which describes the depositary's
procedures and related matters which apply to the Global Notes. The Notes will
not be issued in definitive form except as provided in the accompanying
Prospectus. See "Description of the Debt Securities--Global Debt Securities"
in the accompanying Prospectus.
Structural Subordination
The Notes will be direct, unsecured obligations of the Company. Creditors of
the Company's subsidiaries are entitled to a claim on the assets of such
subsidiaries. Consequently, in the event of a liquidation or reorganization of
any subsidiary, creditors of the subsidiary are likely to be paid in full
before any distribution is made to the Company and holders of the Notes,
except to the extent that the Company is itself recognized as a creditor of
such subsidiary, in which case the claims of the Company would still be
subordinate to any security interests in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company. As of
September 30, 1998, the Company's subsidiaries had $318.3 million of
outstanding indebtedness for borrowed money.
UNDERWRITERS
Under the terms and subject to the conditions set forth in the Underwriting
Agreement, dated February 2, 1999 (the "Underwriting Agreement"), the
underwriters named below (the "Underwriters") have severally agreed to
purchase, and the Company has agreed to sell to them, severally, the
respective principal amount of the Notes set forth opposite their respective
names below:
<TABLE>
<CAPTION>
Principal
Amount of
Name Notes
---- ------------
<S> <C>
Morgan Stanley & Co. Incorporated........................... $ 75,000,000
Chase Securities Inc........................................ 12,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... 12,500,000
------------
Total..................................................... $100,000,000
============
</TABLE>
The Underwriting Agreement provides that the several obligations of the
Underwriters to pay for and accept delivery of the Notes are subject to, among
other things, the approval of certain legal matters by their counsel and
certain other conditions. The Underwriters are obligated to take and pay for
all the Notes if any are taken.
The Underwriters propose initially to offer part of the Notes to the public
at the public offering price set forth on the cover page hereof and in part to
certain dealers at prices that represent a concession not in excess of .40% of
the principal amount of the Notes. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of .25% of the principal
amount of the Notes to certain other dealers. After the initial offering of
the Notes, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the Notes and any such market making may be discontinued at the sole
discretion of the Underwriters. Accordingly, no assurance can be given as to
the liquidity of, or trading markets for, the Notes.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes. Specifically, the Underwriters may over-allot in connection with
this offering, creating short positions in the Notes for its own account. In
addition, to cover over-allotments
S-5
<PAGE>
or to stabilize the price of the Notes, the Underwriters may bid for, and
purchase, Notes in the open market. Finally, the Underwriters may reclaim
selling concessions allowed to an underwriter or dealer for distributing Notes
in this offering, if the Underwriters repurchase previously distributed Notes
in transactions that cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the Notes above independent market levels. The
Underwriters are not required to engage in these activities, and may end any
of these activities at any time.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Underwriters or their affiliates have provided and may in the future
continue to provide investment banking and other financial services, including
the provision of credit facilities, for the Company in the ordinary course of
business for which they have received and will receive customary compensation.
In addition, Diana D. Brooks, the President and Chief Executive Officer of the
Company, serves as a director of Morgan Stanley Dean Witter & Co.
S-6
<PAGE>
$200,000,000
SOTHEBY'S HOLDINGS, INC.
Debt Securities
----------------
Sotheby's Holdings, Inc., a Michigan corporation (the "Company"), may from
time to time offer and issue in one or more series its unsecured debt
securities (the "Debt Securities"), with an aggregate initial public offering
price of up to $200 million (or (i) the equivalent of $200 million in one or
more foreign currencies or currency units, including European Currency Units,
based on the rate of exchange at the time of offering, or (ii) such greater
amount, if the Debt Securities are issued at an original issue discount, as
will result in aggregate gross proceeds to the Company of $200 million) on
terms to be determined at the time of the offering. The Debt Securities may be
sold in U.S. dollars or one or more foreign currencies or currency units, and
the principal of, and premium, if any, and any interest on the Debt Securities
may likewise be payable in U.S. dollars or one or more foreign currencies or
currency units. The Debt Securities will be general, unsecured obligations of
the Company and will rank pari passu with all other unsecured, unsubordinated
indebtedness of the Company.
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered are set forth in an accompanying Prospectus
Supplement (each, a "Prospectus Supplement") and include, where applicable:
(i) the specific designation, aggregate principal amount, premium, ranking,
currency, form, authorized denominations, maturity, interest rate, if any, and
method of calculation, and time of payment of interest, terms for redemption
(mandatory or at the option of the Company or a holder), terms for sinking
fund payments, the initial public offering price (including any premium or
discount), and the other terms in connection with the offering.
The Debt Securities may be sold through underwriting syndicates represented
by managing underwriters, by underwriters without a syndicate, through agents
designated from time to time, or directly by the Company to purchasers. The
names of any such managing underwriters, underwriters, or agents of the
Company involved in the sale of the Debt Securities in respect of which this
Prospectus is being delivered and any applicable commissions or discounts are
set forth in the Prospectus Supplement. The net proceeds to the Company from
such sale are also set forth in the Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
----------------
June 17, 1998
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all
amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933 (the "Securities Act") with respect to the Debt Securities offered
hereby. This Prospectus, which constitutes a 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, reference is hereby made to the Registration
Statement. Statements made in this Prospectus as to the contents of any
contract or other document referred to are not complete, and reference is
hereby made to the copy of such contract or document filed as an exhibit to
the Registration Statement for a complete statement of its provisions.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, is
required to file quarterly and annual reports on Forms 10-Q and 10-K,
respectively. Reports and other information filed by the Company with the
Commission, as well as the Registration Statement, can be inspected and copied
at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: 7 World Trade Center; New York, New York
10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can also by obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Company is required to file electronic versions of such
material with the Commission through the Commission's Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") system. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. Electronic filings are publicly available at http://www.sec.gov
within 24 hours of acceptance. The records and other information can also be
inspected at the offices of The New York Stock Exchange, Inc. at 20 Broad
Street, New York, New York 10005. The Company will mail to each registered
holder of the Debt Securities, and will file with the indenture trustee, the
annual and quarterly reports that it files with the Commission under the
Exchange Act.
INCORPORATION BY REFERENCE OF CERTAIN DOCUMENTS
The Company's report on Form 8-K dated May 20, 1998, the Company's Form 10-Q
for the fiscal quarter ended March 31, 1998 and the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, each of which have been
filed with the Commission pursuant to the Exchange Act, are incorporated by
reference into this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act (including any documents incorporated by reference
therein) after the date of this Prospectus and prior to the termination of the
offering of the Debt Securities shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed incorporated by reference in this Prospectus 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 that
also is or is deemed to be incorporated by reference herein or in the
accompanying Prospectus Supplement modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of any
such person, a copy of any or all of the documents incorporated by reference
in this Prospectus (other than exhibits to such documents that are not
specifically incorporated by reference in such documents). Written or oral
requests for copies should be directed to Sotheby's, 1334 York Avenue, New
York, New York 10021, Attention: Investor Relations (telephone: (212) 508-
8070).
2
<PAGE>
THE COMPANY
Sotheby's Holdings, Inc. (together with its subsidiaries, unless the context
otherwise requires, the "Company") is one of the world's two largest
auctioneers of fine arts, antiques and collectibles, offering property in over
80 collecting categories, among them paintings, jewelry, decorative arts, and
books. The worldwide auction business is conducted through a division known as
"Sotheby's" and consists of three principal operating units; Sotheby's North
and South America, Sotheby's Europe, and Sotheby's Asia. In addition to
auctioneering, the Company is engaged in a number of related activities,
including the purchase and resale of art and other collectibles, art-related
financing activities, the brokering of art and collectible purchases and
sales, the marketing and brokering of luxury real estate, and art education
and restoration.
The Company believes it is one of the world's leaders in art-related
financing activities. The Company lends money secured by consigned art in
order to facilitate clients' bringing property to auction. In addition, a
portion of the Company's loan portfolio consists of loans to collectors,
dealers, and museums secured by collections not presently intended for sale.
The Company, through its subsidiary, Sotheby's International Realty, Inc.,
is engaged in the marketing and brokering of luxury residential real estate.
The Company was incorporated in Michigan in August 1983. In October 1983,
the Company acquired Sotheby Parke Bernet Group Limited, which was then a
publicly held company listed on the International Stock Exchange of the United
Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") and
which, through its predecessors, had been engaged in the auction business
since 1744. In 1988, the Company issued shares of Class A Limited Voting
Common Stock to the public. The Class A Limited Voting Common Stock is listed
on the New York Stock Exchange (the "NYSE") and the London Stock Exchange.
USE OF PROCEEDS
Unless otherwise stated in a Prospectus Supplement, the net proceeds from
the sale of Debt Securities will be used for general corporate purposes. Any
specific allocations of the proceeds to a particular purpose that have been
made at the date of a Prospectus Supplement will be described in that
Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below are the consolidated ratios of earnings to fixed charges for
the periods indicated.
<TABLE>
<CAPTION>
For the
three months
ended
For the year ended December 31, March 31,
----------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(1)....... 6.19x 6.52x 7.49x 11.48x 7.98x -- (2) -- (2)
</TABLE>
- --------
(1) In the ratio of earnings to fixed charges for the Company and its
subsidiaries, earnings is computed as income before taxes plus fixed
charges. Fixed charges consist of interest on all indebtedness, including
any amortization of debt discount or premium, capitalized interest and the
Company's estimate of that portion of rental expense considered to be
representative of the interest factor.
(2) Earnings did not cover fixed charges by $10.0 million and $11.1 million
for the three months ended March 31, 1998 and March 31, 1997,
respectively. The Company's business is seasonal, with peak revenues and
operating income occurring in the second and fourth quarters of each year
as a result of the traditional spring and fall art auction seasons.
3
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will be issued under an Indenture, as amended or
supplemented from time to time (the "Indenture"), between the Company and The
Chase Manhattan Bank, as trustee (the "Trustee"). The form of the Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, and the Indenture is available for inspection at the
principal corporate trust office of the Trustee, 450 West 33rd Street, New
York, New York 10001. The Indenture is subject to and governed by the Trust
Indenture Act of 1939, as amended. The statements made hereunder relating to
the Indenture and the Debt Securities to be issued hereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. All section references appearing in this
section "Description of the Debt Securities" are to sections of the Indenture,
and capitalized terms used but not defined herein shall have the respective
meanings set forth in the Indenture.
General
The Indenture does not limit the amount of Debt Securities that can be
issued thereunder and provides that Debt Securities of any series may be
issued thereunder up to the aggregate principal amount which may be authorized
from time to time by the Company. The Indenture does not limit the amount of
other indebtedness or securities that may be issued by the Company or its
subsidiaries.
The Debt Securities will be direct, unsecured obligations of the Company.
Creditors of the Company's subsidiaries are entitled to a claim on the assets
of such subsidiaries. Consequently, in the event of a liquidation or
reorganization of any subsidiary, creditors of the subsidiary are likely to be
paid in full before any distribution is made to the Company and holders of
Debt Securities, except to the extent that the Company is itself recognized as
a creditor of such subsidiary, in which case the claims of the Company would
still be subordinate to any security interests in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Company.
Reference is made to the Prospectus Supplement for the following and other
possible terms of each series of the Debt Securities in respect of which this
Prospectus is being delivered, (i) the designation of the Debt Securities;
(ii) any limit upon the aggregate principal amount of the Debt Securities and
any limitation on the ability of the Company to increase such aggregate
principal amount after the initial issuance of the Debt Securities of that
series; (iii) the date or dates on which the principal of the Debt Securities
will be payable; (iv) the rate or rates at which the Debt Securities will bear
interest, if any, the date or dates from which any such interest will accrue
and on which such interest will be payable, and the record dates for the
determination of the holders to whom interest is payable; (v) if other than as
provided therein, the place or places where the principal of and interest, if
any, on the Debt Securities will be payable; (vi) the price or prices at
which, the period or periods within which and the terms and conditions upon
which Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (vii) the obligation, if any, of the Company to redeem, purchase
or repay Debt Securities, whether pursuant to any sinking fund or analogous
provisions or pursuant to other provisions set forth therein or at the option
of a Holder thereof; (viii) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which Debt Securities shall be
issuable; (ix) if other than the principal amount thereof, the portion of the
principal amount at which the Debt Securities will be payable upon declaration
of acceleration of the maturity thereof; (x) if other than the currency of the
United States of America, the currency or currencies in which payment of the
Principal and interest on the Debt Securities of the series shall be payable
and the manner in which such amounts shall be determined; (xi) whether and
under what circumstances the Company will pay additional amounts on the Debt
Securities of the series held by a person who is not a U.S. person in respect
of any tax, assessment or governmental charge withheld or deducted and, if so,
whether the Company will have the option to redeem such Debt Securities rather
than pay such additional amounts; (xii) if the Debt Securities of the series
are to be issuable in definitive form (whether upon original issue or upon
exchange of a temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, the form
and terms of such certificates, documents or conditions; (xiii) any trustees,
depositaries, authenticating or paying agents, transfer agents or the
registrar or any other
4
<PAGE>
agents with respect to the Debt Securities of the series; (xiv) provisions, if
any, for the defeasance of the Debt Securities of the series (including
provisions permitting defeasance of less than all Debt Securities of the
series); (xv) if the Debt Securities of the series are issuable in whole or in
part as one or more Global Securities, the identity of the Depositary for such
Global Security or Securities; (xvi) any other events of default or covenants
with respect to the Debt Securities of the series; and (xvii) any other terms
or conditions not inconsistent with the provisions of the Indenture under
which the Debt Securities will be issued. (Section 2.03) "Principal" when used
herein includes, when appropriate, the premium, if any, on the Debt
Securities.
Unless otherwise provided in the Prospectus Supplement relating to any Debt
Securities, principal, and interest, if any, will be payable, and the Debt
Securities will be transferable, at the office or offices or agency maintained
by the Company for such purposes, provided that payment of interest on the
Debt Securities may, at the option of the Company, be paid at such place of
payment by check mailed to the persons entitled thereto at the addresses of
such persons appearing on the security register. Interest on the Debt
Securities will be payable on any interest payment date to the persons in
whose name the Debt Securities are registered at the close of business on the
record date with respect to such interest payment date.
Unless otherwise provided in the Prospectus Supplement relating to any Debt
Securities, the Debt Securities will be issued in fully registered form in
minimum denominations of $1,000 and any integral multiple thereof.
Additionally, the Debt Securities may be represented in whole or in part by
one or more global notes registered in the name of a depository or its nominee
and, if so represented, interests in such global note will be shown on, and
transfers thereof will be effected only through, records maintained by the
designated depository and its participants.
The Debt Securities may be exchanged for an equal aggregate principal amount
of Debt Securities of the same series and date of maturity in such authorized
denominations as may be requested upon surrender of the Debt Securities at an
agency of the Company maintained for such purpose and upon fulfillment of all
other requirements of such agent. No service charge will be made for any
transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Section 2.07)
The Indenture requires the quarterly filing by the Company with the Trustee
of a certificate as to compliance with certain covenants contained in the
Indentures. (Section 4.06)
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in the foreign currency markets. These risks will
vary depending upon the currency or currencies involved and will be more fully
described in the Prospectus Supplement relating thereto.
Unless otherwise described in a Prospectus Supplement relating to any Debt
Securities, the covenants or provisions contained in the Indenture may not
afford the holders of Debt Securities protection in the event of a decline in
the Company's credit quality resulting from a highly leveraged transaction
involving the Company.
Limitation on Liens
The Indenture provides that the Company will not, and will not permit any
Significant Subsidiary to, directly or indirectly, issue, incur, assume or
guarantee any indebtedness for borrowed money secured by any Lien on or with
respect to any Property of the Company or any such Significant Subsidiary or
any interest therein or any income or profits therefrom, unless the Debt
Securities are secured equally and ratably with (or prior to) any and all
other indebtedness secured by such Lien, except for (i) indebtedness secured
by any Lien arising in the ordinary course of business; (ii) indebtedness
secured by any Lien on Property acquired by the Company or any Significant
Subsidiary after the date of issuance of the Debt Securities, provided that
such Lien existed on the date such Property was acquired; (iii) any Lien
securing indebtedness existing on the date of the Indenture; (iv) any Lien
securing indebtedness incurred to finance the purchase price or cost of
construction of Property (or
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additions, substantial repairs, alterations or substantial improvements
thereto), provided that such Lien and the indebtedness secured thereby are
incurred within one year of the later of acquisition or completion of
construction (or addition, repair, alteration or improvement) and full
operation thereof; (v) indebtedness secured by any Lien arising out of
judgments or awards against the Company or any Significant Subsidiary having
an outstanding principal amount which do not exceed $10 million in the
aggregate or with respect to which the Company or such Significant Subsidiary
shall in good faith be prosecuting an appeal or proceedings for review, Liens
which are discharged within 60 days of entry of judgment or Liens incurred by
the Company or a Significant Subsidiary for the purpose of obtaining a stay or
discharge in the course of any legal proceeding to which the Company or such
Significant Subsidiary is a party; (vi) indebtedness secured by any Lien for
taxes not yet due and payable by the Company or any Significant Subsidiary or
which the Company or such Significant Subsidiary is contesting in good faith;
(vii) indebtedness secured by any Lien on or with respect to Property of a
Significant Subsidiary in favor of the Company or another Subsidiary; (viii)
any Lien securing indebtedness in respect of capital leases on the Property
subject to such capital leases; (ix) any Lien securing indebtedness the
proceeds of which are deposited, promptly upon receipt, with the Trustee
solely for the purpose of effecting a legal defeasance or covenant defeasance
as set forth under "Satisfaction and Discharge of Indenture" and "Defeasance";
(x) indebtedness secured by any Lien on a note made in favor of, or loan
advance made by, the Company or any Subsidiary in connection with the
Company's or such Subsidiary's lending and financing activities; (xi)
indebtedness secured by any Lien extending, renewing or replacing any Lien
permitted by clauses (i) through (x) above; and (xii) any Lien (other than a
Lien permitted under any of clauses (i) through (xi) of this paragraph)
securing indebtedness of the Company or of any Significant Subsidiary,
provided that the aggregate principal amount of all Secured Debt together with
all Attributable Debt of the Company and its Significant Subsidiaries in
respect of Sale and Lease-Back Transactions which would not otherwise be
permitted but for the provisions of clause (vi) described under "Limitation on
Sale and Lease-Back Transactions", does not exceed, at the time of incurrence
of such indebtedness, 15% of Consolidated Net Tangible Assets of the Company
and its Subsidiaries.
In the case of Liens permitted under clauses (ii) and (iv) above, such Liens
may not relate to any Property of the Company or a Significant Subsidiary
other than the Property so acquired, constructed, added, repaired, altered or
improved, as the case may be. In the case of Liens permitted under clause
(xi), unless such Liens are otherwise permitted under clauses (xii), such
Liens (A) may not relate to any Property of the Company or a Significant
Subsidiary other than the Property to which the Lien being extended, renewed
or replaced relates, and (B) may not secure indebtedness in excess of that
secured by the Lien being extended, renewed or replaced.
Limitation on Sale and Lease-Back Transactions
The Indenture provides that, as of the date of the Indenture, the Company
will not, nor will it permit any Significant Subsidiary to, directly or
indirectly, enter into, assume, guarantee or otherwise become liable with
respect to any Sale and Lease-Back Transaction; provided, however, that the
Company or any Significant Subsidiary may enter into (i) a Sale and Lease-Back
Transaction that, had such Sale and Lease-Back Transaction been structured as
a mortgage or other secured financing rather than as a Sale and Lease-Back
Transaction, the Company or such Significant Subsidiary would have been
permitted to enter into such transaction pursuant to the terms of the
Indenture described under "Limitation on Liens," (ii) a Sale and Lease-Back
Transaction between or among the Company and any of its Subsidiaries or
between or among Subsidiaries, (iii) a Sale and Lease-Back Transaction entered
into prior to the date of issuance of the Debt Securities, (iv) a Sale and
Lease-Back Transaction, provided that within 180 days of the effective date of
any such Sale and Lease-Back Transaction, the Company or such Significant
Subsidiary shall apply an amount equal to the Value of such Sale and Lease-
Back Transaction to the (A) retirement (other than any mandatory retirement
and other than any prohibited retirement of securities) of indebtedness for
borrowed money incurred or assumed by the Company or any Subsidiary (other
than indebtedness for borrowed money owed to the Company or any Subsidiary)
which by its terms matures on, or is extendible or renewable at the option of
the obligor to, a date more than 12 months after the date of the creation of
such indebtedness and, in the case of such indebtedness of the Company which
ranks on a parity with, or senior in right of payment to, the Debt Securities
or (B) the purchase or construction
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of other Property, provided that such Property is owned by the Company or a
Subsidiary free and clear of all Liens, (v) a Sale and Lease-Back Transaction
involving the taking back of a lease for a period of three years or less, or
(vi) a Sale and Lease-Back Transaction, provided that after giving effect to
the Sale and Lease-Back Transaction, the aggregate principal amount of all
Attributable Debt of the Company and its Significant Subsidiaries in respect
of Sale and Lease-Back Transactions which would not otherwise be permitted but
for the provisions of this clause (vi), plus all Secured Debt which would not
otherwise be permitted but for the provisions of Section (xii) described under
"Limitation on Liens," does not exceed, at the time of such Sale and Lease-
Back Transaction, 15% of the Consolidated Net Tangible Assets of the Company
and its Subsidiaries.
Certain Definitions
The term "Attributable Debt" means with respect to any Sale and Lease-Back
Transaction the total net amount of rent required to be paid during the
remaining term of any lease, discounted at the weighted average rate per annum
then borne by the outstanding Debt Securities.
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities, and (b) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other
like intangibles, all as set forth on the books and records of the Company and
its consolidated subsidiaries and computed in accordance with generally
accepted accounting principles.
The term "Lien" means any mortgage, pledge, hypothecation, charge,
assignment, deposit arrangement, encumbrance, security interest, lien
(statutory or other), or preference, priority, or other security or similar
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any agreement to give or grant a Lien or any
lease, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
The term "Property" with respect to any person, means any interest of such
person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, capital Stock in any
other person.
The term "Real Property" means with respect to any person, any interest of
such person in any kind of realty or estate in real property.
The term "Sale and Lease-Back Transaction" means with respect to any person,
any direct or indirect arrangement pursuant to which Real Property is sold or
transferred by such person or a Subsidiary of such person and is thereafter
leased back from the purchaser or transferee thereof by such person or one of
its Subsidiaries.
"Secured Debt" means any indebtedness for borrowed money incurred under
clause (12) of Section 4.03 of the Indenture, which would not be permitted
otherwise but for such clause (12) of Section 4.03.
"Significant Subsidiary" means each Subsidiary which is a "significant
subsidiary" as defined in Rule 1-02(w) of the Commission's Regulation S-X.
The term "Subsidiary" means (i) a corporation, a majority of whose capital
stock with voting power, under ordinary circumstances, to elect directors is,
at the date of determination, directly or indirectly owned by the Company, by
one or more Subsidiaries of the Company or by the Company and one or more
Subsidiaries of the Company, (ii) a partnership, joint venture or similar
entity in which the Company, a Subsidiary of the Company or the Company and
one or more Subsidiaries of the Company, directly or indirectly, holds a
majority interest in the equity capital or profits or other similar interests
of such entity, or (iii) any other person (other than a corporation) in which
the Company, a Subsidiary of the Company or the Company and one or more
Subsidiaries of the Company, directly or indirectly, at the date of
determination, has (x) at least a majority ownership interest or (y) the power
to elect or direct the election of a majority of the directors or other
governing body of such person.
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The term "Value" means, with respect to a Sale and Lease-Back Transaction,
as of any particular time, the amount equal to the greater of (i) the net
proceeds of the sale or transfer of the property leased pursuant to such Sale
and Lease-Back Transaction or (ii) the fair value in the opinion of the Board
of Directors (as evidenced by a Board Resolution) of such property at the time
of entering into such Sale and Lease-Back Transaction, in either case divided
first by the number of full years of the term of the lease and then multiplied
by the number of full years of such term remaining at the time of
determination, without regard to any renewal or extension options contained in
the lease.
Events of Default
An Event of Default with respect to the Debt Securities of any series is
defined in the Indenture as: (i) default in the payment of interest on any of
the Debt Securities of such series as and when the same shall become due and
payable and continuance of such default for a period of 30 days; (ii) default
in the payment of the principal of any of the Debt Securities of such series
when the same becomes due and payable at maturity, upon acceleration,
redemption or mandatory repurchase, including as a sinking fund installment or
otherwise; (iii) default in the performance, or breach, of any other covenant
or agreement of the Company in the Indenture with respect to Debt Securities
of such series or in the Debt Securities of such series and continuance of
such default or breach for a period of 60 consecutive days after written
notice by the Trustee or by the holders of 25% or more in aggregate principal
amount of the outstanding securities of all series affected thereby; or (iv)
certain events of bankruptcy, insolvency or reorganization of the Company and
its Significant Subsidiaries. (Section 6.01) Additional Events of Default may
be added for the benefit of holders of certain series of Debt Securities
which, if added, will be described in the Prospectus Supplement relating to
such Debt Securities. The Indenture provides that the Trustee shall notify the
holders of Debt Securities of each series of any continuing default known to
the Trustee which has occurred with respect to that series within 90 days
after the occurrence thereof. The Indenture provides that notwithstanding the
foregoing, except in the case of default in the payment of the principal of,
or interest, if any, on any of the Debt Securities of such series, the Trustee
may withhold such notice if the Trustee in good faith determines that the
withholding of such notice is in the interests of the holders of Debt
Securities of such series. (Section 7.05)
The Indenture provides that if an Event of Default with respect to any
series of Debt Securities shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in aggregate principal amount of
Debt Securities of that series then outstanding may declare the entire
principal amount of all Debt Securities of that series, and the interest
accrued thereon, if any, to be due and payable immediately, but upon certain
conditions such declaration may be annulled. (Section 6.02) Any existing
defaults and the consequences thereof (except a default in the payment of
principal of or interest, if any, on Debt Securities of that series) may be
waived by the holders of a majority in principal amount of the Debt Securities
of that series then outstanding. (Section 6.04) The Indenture also permits the
Company to omit compliance with certain covenants in such Indentures with
respect to Debt Securities of any series upon waiver by the holders of a
majority in principal amount of the Debt Securities of such series then
outstanding. (Section 6.04)
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default with respect to any series of Debt
Securities shall occur and be continuing, the Trustee shall not be under any
obligation to exercise any of the trusts or powers vested in it by the
Indentures at the request or direction of any of the holders of that series,
unless such holders shall have offered to such Trustee reasonable security or
indemnity. (Sections 7.01 and 7.02) The holders of at least a majority in
aggregate principal amount of the Debt Securities of each series affected and
then outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee under the
Indenture or exercising any trust or power conferred on the Trustee with
respect to the Debt Securities of that series; provided that the Trustee may
refuse to follow any direction which is in conflict with any law or the
Indenture and subject to certain other limitations. (Section 6.05)
No holder of any Debt Security of any series will have any right by virtue
or by availing of any provision of the Indenture to institute any proceeding
at law or in equity or in bankruptcy or otherwise upon or under or
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with respect to the Indentures or for any remedy thereunder, unless: such
holder shall have previously given the Trustee written notice of an Event of
Default with respect to Debt Securities of that series; the holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
that series shall also have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee; the Trustee
shall have failed to institute such proceeding within 60 days after its
receipt of such request; and the Trustee shall not have received from the
holders of a majority in aggregate principal amount of the outstanding Debt
Securities of that series a direction inconsistent with such request. (Section
6.06) However, the right of a holder of any Debt Security to receive payment
of the principal of or interest, if any, on such Debt Security on or after the
due dates expressed in such Debt Security, or to institute suit for the
enforcement of any such payment on or after such dates, shall not be impaired
or affected without the consent of such holder. (Section 6.07)
Merger
The Indenture provides that the Company may consolidate with or sell, convey
or lease all or substantially all of its assets to, or merge with or into, any
other corporation, if (i) either the Company is the continuing corporation or
the successor corporation is a domestic corporation and expressly assumes the
due and punctual payment of the principal of and interest on all the Debt
Securities outstanding under the Indenture according to their tenor and the
due and punctual performance and observance of all of the covenants of such
Indenture to be performed or observed by the Company, and (ii) the Company or
such successor corporation, as the case may be, is not, immediately after such
merger or consolidation, or such sale, conveyance or lease, in material
default in the performance or observance of any such covenant or condition.
(Section 5.01)
Satisfaction and Discharge of Indenture
The Indenture with respect to any series of Debt Securities (except for
certain specified surviving obligations including, among other things, the
Company's obligation to pay the principal of and interest on the Debt
Securities of such series) will be discharged and cancelled upon the
satisfaction of certain conditions, including the payment of all the Debt
Securities of such series or the deposit with the Trustee under such Indenture
of cash or appropriate U.S. Government Obligations or a combination thereof
sufficient for such payment or redemption in accordance with the Indenture and
the terms of the Debt Securities of such series. (Section 8.01)
Modification of the Indenture
The Indenture contains provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of not less than a majority in
principal amount of the outstanding Debt Securities of each series at the time
outstanding under the Indenture, to execute supplemental indentures adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, the Indenture or any supplemental indenture with respect to the Debt
Securities of such series or modifying in any manner the rights of the holders
of the Debt Securities of such series; provided that such supplemental
indenture may not, among other things (i) extend the final maturity of any
Debt Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of any interest thereon, or reduce any amount
payable in any redemption thereof, or impair or affect the right of any holder
of Debt Securities to institute suit for payment thereof or, if the Debt
Securities provide therefor, any right of repayment at the option of the
holders of the Debt Securities, without the consent of the holder of each Debt
Security so affected or (ii) reduce the aforesaid percentage of Debt
Securities of such series, the consent of the holders of which is required for
any such supplemental indenture, without the consent of the holders of all
Debt Securities of such series so affected or (iii) reduce the amount of
principal payable upon acceleration of the maturity of any Original Issue
Discount Security. (Section 9.02) Additionally, in certain prescribed
instances, the Company and the Trustee may execute supplemental indentures
without the consent of the holders of Debt Securities. (Section 9.01)
Defeasance
Defeasance and Discharge. The Indenture provides that the Company may elect
to terminate (and be deemed to have satisfied) all its obligations with
respect to such Debt Securities (except for the obligations to
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register the transfer or exchange of such Debt Securities, to replace
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of the Debt Securities, to compensate and indemnify the
Trustee and to punctually pay or cause to be paid the principal of and
interest, if any, on all Debt Securities of such series when due)
("defeasance") upon the deposit with the Trustee, in trust for such purpose,
of money and/or U.S. Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient (in the opinion of a nationally recognized firm of
independent public accountants) to pay the principal of and premium and
interest, if any, on the outstanding Debt Securities of such series, and any
mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor. Such a trust may be established only if, among other things,
(a) the Company has delivered to the Trustee an opinion of counsel (as
specified in the applicable Indenture) with regard to certain matters,
including an opinion to the effect that the Holders of such Debt Securities
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and discharge and will be subject to federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance or covenant defeasance, as the
case may be, had not occurred, and which opinion of counsel must be based upon
(x) a ruling of the U.S. Internal Revenue Service to the same effect or (y) a
change in applicable U.S. federal income tax law after the date of the
Indenture such that a ruling is no longer required, (b) no Default or Event of
Default shall have occurred or be continuing, and (c) such deposit shall not
result in a breach or violation of, or constitute a default under, any other
material agreement or instrument to which the Company is a party or by which
the Company is bound. The Prospectus Supplement may further describe these or
other provisions, if any, permitting defeasance with respect to the Debt
Securities of any series. (Section 8.02)
Defeasance of Certain Covenants. The Company at its option need not comply
with certain restrictive covenants of the Indenture ("covenant defeasance")
upon, among other things, (a) the deposit with the Trustee, in trust, of money
and/or U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
or a combination of money and U.S. Government Obligations in an amount
sufficient to pay in the currency in which such Debt Securities are payable
all the principal of, and interest on, such Debt Securities on the date such
payments are due in accordance with the terms of such Debt Securities, and (b)
the delivery by the Company to the Trustee of an Opinion of Counsel, to the
effect that, among other things, the holders of such Debt Securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a
result of such deposit and defeasance of certain covenants and will be subject
to U.S. federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such deposit and defeasance had
not occurred; and provided that no Default or Event of Default shall have
occurred or be continuing, and such deposit shall not result in a breach or
violation of, or constitute a default under any other material agreement or
instrument to which the Company is a party or by which the Company is bound.
The Prospectus Supplement may further describe these or other provisions, if
any, permitting defeasance of certain covenants with respect to the Debt
Securities of any series. (Section 8.03)
Global Debt Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each, a "Global Security") that will be
deposited with or on behalf of a Debt Depository identified in the applicable
Prospectus Supplement. Global Securities may be issued in other registered or
bearer form and in either temporary or permanent form. Unless otherwise
provided in such Prospectus Supplement, Debt Securities that are represented
by a Global Security will be issued in denominations of $1,000 or any integral
multiple thereof and will be issued in registered form only, without coupons.
Payments of principal of, and interest, if any, on Debt Securities represented
by a Global Security will be made by the Company to the Trustee under the
applicable Indenture, and then forwarded to the Debt Depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York ("DTC"), and
that such Global Securities will be registered in the name of Cede & Co, DTC's
nominee. The Company further anticipates that the following provisions will
apply to the depository arrangements with respect to any such Global
Securities. Any additional or differing terms of the
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depository arrangements will be described in the Prospectus Supplement
relating to a particular series of Debt Securities issued in the form of
Global Securities.
One fully registered Debt Security certificate will be issued with respect
to each $200 million of principal amount of the Debt Securities of a series,
and an additional certificate will be issued with respect to any remaining
principal amount of such series. So long as DTC or its nominee is the
registered owner of a Global Security, DTC or its nominee, as the case may be,
will be considered the sole Holder of the Debt Securities represented by such
Global Security for all purposes under the applicable Indenture. Except as
described below, owners of beneficial interests in a Global Security will not
be entitled to have Debt Securities represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities in certificated form and will not be considered
the owners or Holders thereof under the applicable Indenture. The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in certificated form; accordingly, such laws may limit the
transferability of beneficial interests in a Global Security.
If DTC is at any time unwilling or unable to continue as depository or if at
any time DTC ceases to be a clearing agency registered under the Exchange Act
if so required by applicable law or regulation, and, in either case, a
successor Debt Depository is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities in certificated form in exchange
for the Global Securities. In addition, the Company may at any time, and in
its sole discretion, determine not to have any Debt Securities represented by
one or more Global Securities, and, in such event, will issue individual Debt
Securities in certificated form in exchange for the relevant Global
Securities. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery of individual Debt
Securities in certificated form of like tenor and rank, equal in principal
amount to such beneficial interest and to have such Debt Securities in
certificated form registered in its name. Unless otherwise described in the
applicable Prospectus Supplement, Debt Securities so issued in certificated
form will be issued in denominations of $1,000 or any integral multiple
thereof, and will be issued in registered form only, without coupons.
DTC is a limited purpose trust company organized under the New York Banking
Law, 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 pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others, such as securities
brokers and dealers, and banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Debt Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written
confirmation from DTC of its purchase, but is expected to receive a written
confirmation providing details of the transaction as well as periodic
statements of its holdings, from the Direct or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities are accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
do not receive certificates representing their ownership interests in Debt
Securities except in the event that use of the book-entry system for the Debt
Securities is discontinued.
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To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co. will
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the
identity of the Direct Participants to whose accounts Debt Securities are
credited, which may or may not be the Beneficial Owners. The Participants
remain responsible for keeping account of their holdings on behalf of their
customers.
Delivery of notice and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners are governed by arrangements
among them subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its procedures, DTC mails a proxy (an "Omnibus Proxy") to
the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Debt Securities were credited on the record date
(identified on a list attached to the Omnibus Proxy).
Principal and interest payments, if any, on the Debt Securities are made to
DTC. DTC's practice is to credit Direct Participants' accounts on the payment
date in accordance with their respective holdings as shown on DTC's records,
unless DTC has reason to believe that it will not receive payment on the
payment date. Payments by Participants to Beneficial Owners are governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and are the responsibility of such Participant and not of DTC, the
Trustee or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest, if any,
to DTC is the responsibility of the Company or the Trustee, disbursement of
such payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the Trustee. Under such circumstances, in the event that a
successor securities depository is not appointed, Debt Security certificates
will be required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
PLAN OF DISTRIBUTION
The Company may sell all or part of the Debt Securities from time to time on
terms determined at the time such Debt Securities are offered for sale. The
Debt Securities may be sold (i) directly to purchasers; (ii) through agents;
(iii) through underwriters; or (iv) through dealers. The Prospectus Supplement
relating to the particular series of the Debt Securities offered thereby, will
set forth the terms of the offering of such series of the Debt Securities,
including the name or names of any underwriters, dealers or agents, the
purchase price of such Debt Securities, the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters' or
agents' compensation, any initial public offering price, any discounts or
sales agent's commissions or concessions allowed or reallowed or paid to
dealers, and any securities exchanges on which the Debt Securities of such
series may be listed.
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The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices, related to such
prevailing market prices, or at negotiated prices.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. The
Debt Securities may be offered to the public through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise set forth in the relevant Prospectus Supplement or the
applicable Pricing Supplement, the obligations of the underwriters to purchase
Debt Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all the Debt Securities of a
series, if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer
or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the relevant Prospectus Supplement. Unless
otherwise indicated in the relevant Prospectus Supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
If so indicated in the relevant Prospectus Supplement, the Company will
authorize agents, underwriters, or dealers to solicit offers by certain
specified entities to purchase Debt Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement. Such Prospectus Supplement will set forth the
commissions payable for solicitation of such contracts.
Agents and underwriters may from time to time purchase and sell Debt
Securities in the secondary market, but are not obligated to do so, and there
can be no assurance that there will be a secondary market for the Debt
Securities or liquidity in the secondary market if one develops. From time to
time, agents and underwriters may make a market in the Debt Securities.
By agreement, agents and underwriters may be entitled to indemnification by
the Company against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments that the agents or
underwriters may be required to make in respect thereof. Agents and
underwriters may engage in transactions with, or perform services for, the
Company or its affiliates in the ordinary course of business.
LEGAL MATTERS
The validity of the Debt Securities will be passed upon for the Company by
Miro Weiner & Kramer, 500 North Woodward Avenue, Suite 100, Bloomfield Hills,
Michigan 48304. Jeffrey H. Miro, a member of Miro Weiner & Kramer, is a
director of the Company. Certain legal matters relating to offerings of Debt
Securities will be passed upon for any underwriters or agents by Davis Polk &
Wardwell, New York, New York.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference from The Company's Annual Report
on Form 10-K for the year ended December 31, 1997 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
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