<PAGE> 1
As filed with the Securities and Exchange Commission on February 11, 1994
Registration No. 33-30362
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
POST-EFFECTIVE AMENDMENT NO. 7 TO FORM S-1 ON
FORM S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
R.P. SCHERER INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 38-1207288
(State of Incorporation) (I.R.S. Employer Identification Number)
2075 West Big Beaver Road, Troy, Michigan 48084
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (810) 649-0900
-------------------
ALEKSANDAR ERDELJAN
PRESIDENT
R.P. SCHERER CORPORATION AND
R.P. SCHERER INTERNATIONAL CORPORATION
2075 WEST BIG BEAVER ROAD
TROY, MICHIGAN 48084
(810) 649-0900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
PHILIP T. RUEGGER III, ESQ.
JOHN B. TEHAN, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
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EXPLANATORY NOTE
This Prospectus is to be used by Lehman Brothers Inc.
(``Lehman Brothers'') in connection with offers and sales of the Debentures (as
hereinafter defined) and the Senior Notes (as hereinafter defined) in
market-making transactions in the over-the-counter market at negotiated prices
relating to prevailing market prices at the time of the sale. Lehman Brothers
currently makes a market in the Debentures and the Senior Notes; however, it is
not obligated to do so, and any such market-making may be discontinued at any
time without notice, at its sole discretion. Therefore, no assurance can be
given as to the liquidity of, or the trading market for, the Debentures or the
Senior Notes.
Affiliates of Lehman Brothers currently own 7,024,373 shares
of the common stock of R.P. Scherer Corporation, representing approximately 30%
beneficial ownership on a fully diluted basis of the aggregate voting power of
the capital stock of R.P. Scherer Corporation. Three officers of Lehman
Brothers currently serve on the Board of Directors of R.P. Scherer Corporation
and R.P. Scherer International Corporation. R.P. Scherer International
Corporation is a wholly-owned subsidiary of R.P. Scherer Corporation.
<PAGE> 3
PROSPECTUS
R.P. SCHERER INTERNATIONAL CORPORATION
14% SENIOR SUBORDINATED DEBENTURES DUE 1999
INTEREST PAYABLE NOVEMBER 1 AND MAY 1
6 3/4% SENIOR NOTES DUE 2004
INTEREST PAYABLE FEBRUARY 1 AND AUGUST 1
This Prospectus will be used by Lehman Brothers Inc. (``Lehman
Brothers'') in connection with offers and sales in market-making transactions
of the (i) 14% Senior Subordinated Debentures Due 1999 (the "Debentures") and
(ii) the 6 3/4% Senior Notes Due 2004 (the ``Senior Notes'') of R.P. Scherer
International Corporation (the "Company"), a Delaware corporation and a
wholly-owned subsidiary of R.P. Scherer Corporation. Lehman Brothers may act as
a principal or agent in such transactions. The Debentures and the Senior Notes
may be offered in negotiated transactions or otherwise. Sales will be made at
prices related to prevailing market prices at the time of sale. Lehman Brothers
may be deemed to be an affiliate of the Company.
$169,200,000 principal amount of Debentures were issued by the
Company in a public offering on November 7, 1989. Subsequently, the Company
has retired $44,062,000 principal amount of the Debentures through open market
purchases; $125,138,000 principal amount of the Debentures remains outstanding
at the date of this Prospectus. On and after the Call Date (as defined below),
the Debentures may be redeemed in whole or in part at the option of the
Company, at any time or from time to time, at the redemption prices set forth
herein plus accrued interest. The Company has terminated certain of its
obligations with respect to the Debentures by depositing into an irrevocable
trust account (the ``Trust Account'') for the benefit of the holders of the
Debentures an amount of United States government obligations sufficient to pay,
with respect to the Debentures, all interest thereon through the Call Date, the
call premium thereon and the outstanding principal thereof when due upon
redemption (the "Defeasance"). Amounts deposited in this trust account will be
used to fund the interest costs and all costs of retiring the Debentures. The
Company remains obligated to pay interest and principal on the Debentures when
due but, subject to certain exceptions is no longer subject to the terms,
agreements and covenants contained in the Debenture Indenture (as defined
below). Interest on the Debentures is payable on May 1 and November 1 of each
year. The Debentures will mature on November 1, 1999. The Debentures may not
be redeemed prior to November 1, 1994 (the ``Call Date''). The Company expects
to redeem the Debentures on the Call Date with amounts on deposit in the Trust
Account. Except for the Trust Account, the Debentures are unsecured and
subordinate to all present and future Senior Indebtedness (as defined) of the
Company, including the Senior Notes, and are effectively subordinated to all
existing and future indebtedness and other liabilities of its subsidiaries.
See "Description of the Debentures". As of September 30, 1993, the outstanding
amount of Senior Indebtedness of the Company plus other outstanding
indebtedness of the Company's subsidiaries was approximately $66.2 million
(excluding the Senior Notes). For a discussion of the federal income tax
treatment of the Debentures, see "Certain Federal Income Tax Considerations for
the Debentures".
$100,000,000 principal amount of Senior Notes were issued by
the Company in a public offering on January 20, 1994. The Senior Notes will
mature on February 1, 2004. Interest on the Senior Notes is payable each
February 1 and August 1, commencing August 1, 1994. The Senior Notes are
represented by one or more Global Securities (as defined) registered in the
name of the nominee of The Depository Trust Company (the ``Depositary'').
Beneficial interests in the Global Securities are shown on, and transfers
thereof are effected only through, records maintained by the Depositary and its
participants. Except as defined herein, Senior Notes in definitive form will
not be issued. The Senior Notes are unsecured obligations of the Company,
ranking pari passu with all other unsecured and Senior Indebtedness of the
Company, and senior to all future subordinated indebtedness of the Company.
The Company conducts a
<PAGE> 4
substantial portion of its operations through subsidiaries, and the Senior
Notes are effectively subordinated to all existing and future indebtedness and
other liabilities of its subsidiaries. The outstanding indebtedness of the
Company's subsidiaries at September 30, 1993 was approximately $62.5 million.
Lehman Brothers currently makes a market in the Debentures and
the Senior Notes. However, it is not obligated to do so, and any such
market-making may be discontinued at any time without notice, at its sole
discretion. Therefore, no assurance can be given as to the liquidity of, or the
trading market for, the Debentures or the Senior Notes.
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.
FEBRUARY 11, 1994
2
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The principal executive offices of R.P. Scherer Corporation
and its wholly-owned subsidiary R.P. Scherer International Corporation are
located at 2075 West Big Beaver Road, Troy, Michigan 48084; the telephone
number is (810) 649-0900. Unless otherwise indicated by the context, the
"Company" and "Scherer" mean R.P. Scherer International Corporation and its
direct and indirect subsidiaries.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") (i) a Registration Statement (which term shall
encompass all amendments, exhibits and schedules thereto) on Form S-1 (File No.
33-30362) (the ``Debenture Registration Statement'') pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Debentures
and (ii) a Registration Statement on Form S-3 (File No. 33-51231) (the ``Senior
Notes Registration Statement;'' together with the Debenture Registration
Statement, the ``Registration Statements'') pursuant to the Securities Act with
respect to the Senior Notes. This Prospectus does not contain all of the
information set forth in the Registration Statements, 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 Debentures and the
Senior Notes, reference is made to the Registration Statements, including, the
exhibits and schedules thereto. All of these documents may be inspected
without charge at the office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and may be obtained from the Commission at prescribed
rates. Statements contained in this Prospectus as to the contents of any
document are qualified in all respects by reference to the exhibit for a
complete statement of the provisions thereof.
The Company and R.P. Scherer Corporation are subject to the
information requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, file reports and other
information with the Commission. The Company has agreed to remain subject to
such filing requirements regardless of the number of holders of record of the
Debentures or the Senior Notes. The Registration Statements, as well as such
reports and other information filed by the Company with the Commission, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
are also available for inspection and copying at the regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W. Washington, D.C.
20549 at prescribed rates. Such reports and other information concerning, R.P.
Scherer Corporation may also be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, on which exchange
the Common Stock of R.P. Scherer Corporation is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed pursuant to the
Exchange Act, are incorporated herein and shall be deemed to be a part hereof:
(a) the Company's Annual Report on Form 10-K for the year
ended March 31, 1993 (the "1993 10-K");
(b) the Company's Quarterly Reports on Form 10-Q for the
quarters ended June 30, 1993 and September 30, 1993; and
(c) R.P. Scherer Corporation's Annual Report on Form 10-K for
the year ended March 31, 1993, as amended by the Form 10-K/A, filed with the
Commission on July 22, 1993.
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All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act and all Annual Reports on Form 10-K
filed by R.P. Scherer Corporation pursuant to the Exchange Act (including any
documents incorporated by reference therein) after the date hereof and prior to
the termination of the offering of the Debentures or the Senior Notes shall be
deemed to be incorporated by reference in this Prospectus and made a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference 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 which 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 hereby undertakes to provide without charge to
each person to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference herein (not including the exhibits to such documents, unless such
exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to R.P. Scherer International
Corporation, 2075 West Big Beaver Road, P.O. Box 7060, Troy, Michigan
48007-7060, Attention: President, telephone: (810) 649-0900.
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<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements, including the notes thereto,
included elsewhere herein or in documents incorporated by reference in this
Prospectus. References in this Prospectus to fiscal years are to the Company's
fiscal years ended March 31 of each year (i.e., references to "fiscal 1993" are
to the Company's fiscal year ended March 31, 1993).
THE COMPANY
The Company, an international developer and manufacturer of
oral drug delivery systems, is the world's largest producer of softgels. The
Company has also developed and is commercializing advanced drug delivery
systems, including the Scherersol(R), Zydis(R) and Pulsincap(TM) technologies.
The Company's proprietary drug delivery systems improve the efficacy of drugs
by regulating their dosage, rate of absorption and place of release.
The Company produces over 4,000 products in softgel form, and
softgel products accounted for approximately 90% of the Company's fiscal 1993
sales. Softgels are used for a wide range of drug, vitamin, cosmetic and
recreational products.
The Company has a broad domestic and international customer
base consisting of manufacturers and wholesalers of pharmaceutical, health and
nutritional, cosmetic and recreational products, with more than half of its
total sales made to the pharmaceutical industry. To meet the needs of its
multinational customers and to serve new markets, the Company operates softgel
manufacturing facilities in eleven countries throughout the world and
manufactures hardshell capsules in three of these countries. Approximately 78%
of the Company's fiscal 1993 sales and 76% of the Company's fiscal 1993
operating income were derived from operations outside of the United States.
The Company is a wholly-owned subsidiary of R.P. Scherer
Corporation, a public company with common shares traded on the New York Stock
Exchange under the symbol "SHR." R.P. Scherer Corporation's only asset is the
common stock of the Company, and it essentially has no other operations. The
Company was incorporated in Michigan in 1944 and reincorporated in Delaware in
1969.
5
<PAGE> 8
THE DEBENTURES
Debentures . . . . . . . . . . . $169,200,000 principal amount of 14%
Senior Subordinated Debentures due
1999. The Company has retired
$44,062,000 principal amount of the
Debentures through open market purchases,
therefore the total remaining outstanding
principal amount of the Debentures is
$125,138,000.
Defeasance. . . . . . . . . . . . The Company has terminated certain of its
obligations with respect to the
Debentures by depositing into the Trust
Account an amount of United States
government obligations sufficient to pay,
with respect to the Debentures, all
interest thereon through the Call Date,
the call premium thereon and the
outstanding principal thereof when due
upon redemption. The Company expects to
redeem the Debentures on the Call Date
with amounts on deposit in the Trust
Account.
Maturity Date . . . . . . . . . . November 1, 1999.
Interest . . . . . . . . . . . . The Debentures bear interest of 14% of
their face value, based on semi-annual
compounding. Holders of Debentures may be
required to include amounts in gross
income for federal income tax purposes in
excess of the cash interest they receive.
See "Certain Federal Income Tax
Considerations for the Debentures".
Interest Payment Dates . . . . . May 1 and November 1.
Ranking . . . . . . . . . . . . . Except for the Trust Account, the
Debentures are unsecured and
subordinate in right of payment to all
existing and future Senior Indebtedness
(as defined in the Debenture Indenture),
including all obligations of the Company
under the Credit Agreement (as defined)
and the Senior Notes, and will be
effectively subordinated to indebtedness
and other liabilities of subsidiaries of
the Company. As of September 30, 1993,
the outstanding amount of Senior
Indebtedness of the Company plus other
outstanding indebtedness of the Company's
subsidiaries was approximately $66.2
million (excluding the Senior Notes). The
Debentures are also effectively
subordinated to other liabilities of the
Company.
THE SENIOR NOTES
Senior Notes . . . . . . . . . . $100,000,000 principal amount of 6 3/4%
Senior Notes due 2004.
Maturity Date . . . . . . . . . . February 1, 2004.
Interest Payment Dates . . . . . February 1 and August 1, commencing
August 1, 1994.
Optional Redemption . . . . . . . None.
6
<PAGE> 9
Mandatory Redemption . . . . . . None.
Ranking . . . . . . . . . . . . . The Senior Notes will be unsecured
obligations of the Company, ranking
pari passu with all other unsecured and
Senior Indebtedness of the Company, and
senior to all existing and future
subordinated indebtedness of the Company.
The Company conducts a substantial
portion of its operations through
subsidiaries, and the Senior Notes will
be effectively subordinated to all
existing and future indebtedness and
other liabilities of its subsidiaries.
The outstanding indebtedness of the
Company's subsidiaries at September 30,
1993 was approximately $62.5 million.
Certain Covenants . . . . . . . . The Senior Notes Indenture (as defined
herein) will contain certain covenants
which, among other things, limit the
ability of the Company and its
subsidiaries to incur liens, to enter
into sale and lease-back transactions, to
engage in certain transactions with
affiliates, and to merge or consolidate
with, or transfer all, or substantially
all of its assets to another person.
MARKET-MAKING ACTIVITIES
This Prospectus is to be used by Lehman Brothers in connection
with offers and sales of the Debentures and the Senior Notes in market-making
transactions in the over-the-counter market at negotiated prices relating to
prevailing market prices at the time of the sale. Lehman Brothers currently
makes a market in the Debentures and the Senior Notes. However, it is not
obligated to do so, and any such market-making may be discontinued at any time
without notice, at its sole discretion. Therefore, no assurance can be given as
to the liquidity of, or the trading market for, the Debentures or the Senior
Notes.
7
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RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges (unaudited) for the six
months ended September 30, 1993 and 1992, and for each of the past five fiscal
years ended March 31 is as follows:
<TABLE>
<CAPTION>
Company Predecessor
-------------------------------------------------------------------------- --------------------------
Six months ended Nine months Three months Year
September 30, Years ended March 31, ended ended ended
----------------------- ----------------------------------- March 31, June 30, March 31,
1993 1992 1993 1992 1991 1990 1989 1989
----------- ----------- ----------- ----------- ----------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges . . . . . . . . 3.4x 3.3x 3.4x 1.4x 1.2x (1) (1) 3.2x
</TABLE>
(1) Earnings were insufficient to cover fixed charges for the nine months
ended March 31, 1990 and the three months ended June 30, 1989, by
$364,000 and $4,095,000, respectively.
For the purpose of computing the ratio of earnings to fixed
charges, earnings have been calculated by adding the amount of fixed charges to
income (loss) from continuing operations before income taxes, minority
interests, extraordinary items and cumulative effect of changes in accounting
principle. Fixed charges consist of interest on debt and a portion of net
rental expense deemed to represent interest. In fiscal 1992 and prior years,
fixed charges also included dividend requirements on preferred stock.
8
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USE OF PROCEEDS
The Company will not receive any proceeds from any sale of
Debentures or Senior Notes made pursuant to this Prospectus.
9
<PAGE> 12
DESCRIPTION OF THE DEBENTURES
The Debentures were issued under an Indenture dated as of
November 1, 1989 (as the same may be amended or supplemented from time to time,
the "Debenture Indenture"), between the Company and The First National Bank of
Boston, as trustee (the "Debenture Trustee"). The following summaries relating
to the Debentures and the Debenture Indenture do not purport to be complete and
are qualified in their entirety by the provisions of the Debenture Indenture,
including the definitions therein of certain terms. A copy of the Debenture
Indenture is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, to which exhibit reference is hereby made.
General
Except for the Trust Account, the Debentures are unsecured,
subordinated obligations of the Company. $169,200,000 principal amount of
Debentures were issued by the Company in a public offering on November 7, 1989.
Subsequently, the Company has retired $44,062,000 principal amount of the
Debentures through open market purchases; $125,138,000 principal amount of the
Debentures remains outstanding at the date of this Prospectus. Interest on the
Debentures is payable on May 1 and November 1 of each year. The Debentures
will mature on November 1, 1999. The Debentures may not be redeemed prior to
the Call Date.
Principal (and premium, if any) and interest are payable and
the Debentures may be presented for transfer at the offices or agencies of the
Company maintained for such purposes in the Borough of Manhattan, The City of
New York and in the City of Boston, provided that payment of interest may, at
the option of the Company, be made by check mailed to the registered address of
the person entitled thereto.
The Debentures are issuable only in registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof.
Defeasance
The Company has terminated certain of its obligations with
respect to the Debentures by depositing into the Trust Account an amount of
United States government obligations sufficient to pay, with respect to the
Debentures, all interest thereon through the Call Date, the call premium
thereon and the outstanding principal thereof when due upon redemption.
Amounts deposited in the Trust Account will be used to fund the interest costs
and all costs of retiring the Debentures.
As a result of the Defeasance, the Company will recognize an
extraordinary loss of approximately $15.5 million, consisting of the after-tax
difference between the recorded value of the Debentures and their face value,
the call premium, the prepayment of net interest through the Call Date and the
write-off of unamorized deferred financing costs related to the Debentures.
The Company remains obligated to pay interest and principal on the Debentures
when due but, subject to certain exceptions is no longer subject to the terms,
agreements and covenants contained in the Debenture Indenture. The Company
expects that amounts deposited in the Trust Account will be sufficient to pay,
with respect to the Debentures, all interest thereon through the Call Date, the
call premium thereon and the principal thereon when due
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<PAGE> 13
upon redemption, without taking into account any reinvestment of income on the
United States government obligations deposited in the Trust Account.
Optional Redemption of Debentures
The Debentures may not be redeemed prior to November 1, 1994.
Thereafter, the Company may redeem the Debentures, as a whole or from time to
time in part, on not less than 20 nor more than 60 days' notice, given as
provided in the Debenture Indenture, at the following prices (expressed as a
percentage of the principal amount as of the date fixed for redemption or, if
such date fixed for redemption is an interest payment date, as of such interest
payment date) if redeemed during the twelve months commencing November 1 of the
years indicated below, plus, in each case, accrued interest to the date fixed
for redemption.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1994 101.751%
1995 100.500%
1996 99.319%
1997 98.209%
1998 99.040%
1999 100.000%
</TABLE>
The Company expects to redeem the Debentures on November 1,
1994 with amounts on deposit in the Trust Account.
Subordination
Except for the Trust Account, the Debentures are unsecured and
subordinated and subject in right of payment to the prior payment in full of
all Senior Indebtedness (as defined) of the Company (including the Senior
Notes) and are effectively subordinated to indebtedness and other liabilities
of subsidiaries of the Company. As of September 30, 1993, the outstanding
amount of Senior Indebtedness of the Company plus other outstanding
indebtedness of the Company's subsidiaries was approximately $66.2 million
(excluding the Senior Notes). Upon any default by the Company in the payment of
Senior Indebtedness (a "Payment Default") when the same becomes due, no payment
may be made on account of principal of or interest on the Debentures until such
default has been cured or waived, after which, subject to the terms of the
Debenture Indenture, the Company shall resume making payments in respect of the
Debentures, including missed payments. The Debenture Indenture provides that
upon (1) the occurrence of any event of default other than a Payment Default (a
"Nonpayment Default") with respect to any Designated Senior Indebtedness
permitting the holders to accelerate the maturity thereof and (2) receipt by
the Company from any holder of Designated Senior Indebtedness of written notice
of such occurrence, no payment shall be made by the Company on account of the
principal of or interest on the Debentures for a period ("Blockage Period")
commencing on the date of receipt by the Company of such notice until (subject
to any blockage of payments that may then be in effect as a result of a Payment
Date) (x) more than 179 days shall have elapsed since receipt of such written
notice by the Company, (y) such Nonpayment Default shall have been cured or
waived or shall have ceased to exist or (z) such Blockage Period shall have
been terminated by written notice to the Company from the holder of Designated
Senior Indebtedness which delivered the same, after which, the case of clause
(x), (y) or (z), the Company shall resume making any and all required payments
in respect of the Debentures, including any missed payments. Only one Blockage
Period may be commenced within any consecutive 365-day period,and no event of
default with respect to Designated Senior Indebtedness which existed or was
continuing on the date of commencement of any
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<PAGE> 14
Blockage Period shall be, or be made, the basis for the commencement of any
subsequent Blockage Period unless such event of default shall have been cured
or waived for a period of not less than 90 consecutive days. Failure to make
payments required in respect of the Debentures due to the foregoing, however,
will not preclude such failure from constituting an Event of Default under the
Debenture Indenture.
The Debenture Indenture further provides that in the event of
any insolvency of bankruptcy proceedings, or any receivership, liquidation,
reorganization of its debt or similar proceedings relating to the Company, and
in the event of any voluntary liquidation, dissolution or other winding up of
the Company or an assignment by the Company for the benefit of creditors, the
holders of all Senior Indebtedness will first be paid in full all amounts due
or to become due thereon before any payment is made on account of the principal
of or interest on the Debentures.
Modification of the Debenture Indenture
With certain exceptions, the Debenture Indenture may, be
modified or amended with the consent of the holders of at least two-thirds in
principal amount of outstanding Debentures; provided, however, that no such
modification or amendment may be made, without the consent of the holder of
each Debenture affected which would (i) reduce the principal amount of (or
premium if any) or the interest on any Debenture, extend the stated maturity of
the principal of, or any installment of interest on, any Debenture, or extend
the other terms of payment (including provisions relating to mandatory
redemption or repurchase), or modify the provisions of the Debenture Indenture
with respect to subordination in a manner adverse to the holders of Debentures,
or (ii) reduce the respective percentages of Debentures, the consent of the
holders of which is required to modify or amend the Debenture Indenture, or
which is required to waive certain past defaults.
Without the consent of any holder of the Debentures, the
Company and the Debenture Trustee may amend or supplement the Debenture
Indenture or the Debentures to cure any ambiguity, omission, defect or
inconsistency, to provide for a successor to the Company, to provide for
uncertificated Debentures in addition to certificated Debentures, to make any
change in the Debenture Indenture that does not adversely affect the rights of
holders, and to comply with any requirements of the Commission.
Concerning the Debenture Trustee
The Debenture Indenture contains certain limitations on the
right of the Debenture Trustee as 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.
DESCRIPTION OF THE SENIOR NOTES
The Senior Notes were issued under an indenture dated as of
January 1, 1994 (as the same may be amended or supplemented from time to time,
the "Senior Notes Indenture"), between the Company and Comerica Bank as trustee
(the "Senior Notes Trustee"). The following summaries related to the Senior
Notes and the Senior Notes Indenture do not purport to be complete and are
qualified in their entirety by the provisions of the Senior Notes Indenture,
including the definitions therein of certain terms. A copy of the Senior Notes
Indenture is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, to which reference is hereby made.
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<PAGE> 15
General
The Senior Notes are unsecured and senior obligations of the
Company and will rank pari passu with all other unsecured and senior
indebtedness of the Company. The Company conducts a substantial portion of its
operations through its subsidiaries. The Senior Notes will be effectively
subordinated to indebtedness and other liabilities of the Company's
subsidiaries. The outstanding indebtedness of the Company's subsidiaries at
September 30, 1993 was approximately $62.5 million. The Company's rights and
the rights of its creditors, including Holders of the Senior Notes, to
participate in the distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization will be subject to prior claims of
the subsidiary's creditors, including trade creditors, except to the extent
that the Company may itself be a creditor with recognized claims against such
subsidiary (in which case the claims of the Company would still be subject to
the prior claims of any secured creditor of such subsidiary and any holder of
indebtedness of such subsidiary that is senior to that held by the Company).
The Senior Notes Indenture does not limit the amount of debt
which the Company or its subsidiaries may incur under the Senior Notes
Indenture or otherwise, or limit the amount of dividends or other distributions
which the Company may declare or pay.
The Senior Notes are limited to $100,000,000 aggregate
principal amount and will mature on February 1, 2004.
Redemption
The Senior Notes may not be redeemed prior to maturity on
February 1, 2004. The Senior Notes do not provide for any mandatory sinking
fund.
Payment and Paying Agents
Payment of principal of and premium, if any, on a Senior Note
will be made in United States dollars against surrender of such Senior Note at
the Corporate Trust Office of the Senior Notes Trustee in Detroit, Michigan.
The Senior Notes will bear interest at the rate of 6 3/4% per annum, payable
semiannually on February 1 and August 1 of each year, commencing August 1,
1994. Interest payable on any Senior Note will be paid to the person whose
name such Senior Notes is registered at the close of business on the January 15
or July 15, as the case may be, preceding such interest payment date. Payments
of such interest will be made at the Corporate Trust Office of the Senior Notes
Trustee in Detroit, Michigan or, at the Company's option, by a check mailed to
the Holder at such Holder's registered address or by transfer to an account
maintained by the payee.
All monies paid by the Company to a Paying Agent for the
payment of principal of or premium, if any, or interest on any Senior Note that
remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and
the Holder of such Senior Note will thereafter look only to the Company for
payment thereof.
Global Form
The Senior Notes are issued in the form of one or more fully
registered Global Securities registered in the name of the Depositary. The
Senior Notes will be issued in book-entry form only. Unless and until
exchanged in whole or in part for Senior Notes in definitive form, a Global
Security may not be
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transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
So long as the Senior Notes are registered in the name of the
Depositary, the Depositary will be considered the sole owner of the Senior
Notes for all purposes under the Senior Notes Indenture and principal of, and
premium, if any, and interest on, the Senior Notes will be made to the
Depositary. None of the Company, the Senior Notes Trustee, any paying agent or
security registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Security for the Senior Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Certain Covenants
General
The Senior Notes Indenture requires the Company to covenant to
the following: (i) to pay duly and punctually the principal of (and premium, if
any) and interest on the Senior Notes and comply with all other terms,
agreements and conditions contained therein, or made in the Senior Notes
Indenture for the benefit of the Senior Notes; (ii) to maintain an office or
agency in each place where Senior Notes may be presented, surrendered for
payment, transferred or exchanged and where notices upon the Company may by
served; (iii) if the Company shall act as its own Paying Agent for the Senior
Notes, to segregate and hold in trust for the benefit of the persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) and/or
interest so becoming due; (iv) to deliver to the Senior Notes Trustee, within
120 days after the end of each fiscal year a written statement to the effect
that the Company has fulfilled all of its obligations under the Senior Notes
Indenture throughout such year, and (v) to preserve its corporate existence.
Limitation on Liens
The Company will not, and will not permit any Subsidiary (as
defined below), directly or indirectly, to create, incur, assume or permit to
exist any Lien (as defined in the Senior Notes Indenture) on or with respect to
any property or assets of the Company or any Subsidiary or any interest therein
or any income or profits therefrom, unless the Senior Notes are secured equally
and ratably with (or prior to) any and all other indebtedness secured by such
Lien, except for (i) any Lien securing indebtedness incurred to finance the
purchase price or cost of construction of property (or additions, substantial
repairs, alterations or substantial improvements thereto), provided that such
Lien and the indebtedness secured thereby are incurred within twelve months of
the later of acquisition or completion of construction (or addition, repair,
alteration or improvement) and full operation thereof, and provided, further,
that such Lien does not relate to any property acquired or constructed by the
Company or a Subsidiary pursuant to clause (iii) (B) of "-- Limitation on Sale
and Lease-Back Transactions"; (ii) any Lien arising in the ordinary course of
business, other than in connection with indebtedness for borrowed money; (iii)
any Lien on property or assets acquired by the Company or any Subsidiary after
the date of issuance of the Senior Notes, provided that such Lien existed on
the date such property or assets were acquired, and provided, further that,
except as provided in clause (i) above, such Lien was incurred prior to, and
not in anticipation of, such acquisition; (iv) any Lien on the property or
assets of, or on the shares of stock of, any corporation or entity existing at
the time such corporation or entity first becomes a Subsidiary, provided that
such Lien was incurred prior to, and not in anticipation of, such corporation
or entity becoming a Subsidiary; (v) any Lien existing on the date of the
Senior Notes Indenture; (vi) any Lien arising out of judgments or awards
against the Company or any Subsidiary with respect to which the Company or such
Subsidiary shall in good faith be prosecuting an appeal
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or proceedings for review, or Liens which are discharged within 60 days of
entry of judgment or Liens (including, without limitation, appellate bonds)
incurred by the Company or a Subsidiary for the purpose of obtaining a stay or
discharge in the course of any ongoing legal proceeding to which the Company or
such Subsidiary is a party; (vii) any Lien for taxes not yet due and payable by
the Company or any Subsidiary or which the Company or such Subsidiary is
contesting in good faith; (viii) any Lien in favor of the Company or a
Subsidiary; (ix) any Lien (other than a Lien permitted under any of clauses (i)
through (viii) of this paragraph) securing indebtedness of the Company or any
Subsidiary, provided that the total outstanding indebtedness (including the
fair value of all Sale and Lease-Back Transactions permitted under clause (i)
of "-- Limitation on Sale and Lease-Back Transactions" but excluding any
obligations associated with such Sale and Lease-Back Transactions) that may be
secured under this clause (ix) may not exceed 15% of the Consolidated Net
Tangible Assets of the Company (as defined in the Senior Notes Indenture) and
its Subsidiaries at the end of the most recent fiscal quarter; (x) any Lien
extending, renewing or replacing any Lien permitted by clauses (i) through (ix)
above; and (xi) any Lien securing indebtedness the proceeds of which are
deposited, promptly upon receipt, with the Senior Notes Trustee solely for the
purpose of effecting a legal defeasance or covenant defeasance as set forth
under "--Satisfaction and Discharge" and "--Defeasance of Certain Obligations".
In the case of Liens permitted under clauses (i), (iii) and
(iv), such Liens may not relate to any property or assets of the Company or a
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 (x), such Liens (A) may not relate to any property or assets of the
Company or a Subsidiary other than the property or assets to which the Lien
being extended, renewed or replaced relates to, and (B) may not secure
indebtedness in excess of that secured by the Lien being extended, renewed or
replaced. In addition, if any Lien permitted under clause (ix) is extended,
renewed or replaced pursuant to clause (x), then the aggregate amount of
indebtedness secured by all such extended, renewed or replaced Liens
(originally permitted under clause (ix)) shall be included thereafter in all
calculations of Liens permitted under clause (ix).
As used in this section, "Description of the Senior Notes",
the term "Subsidiary" means a corporation or other entity 50% or more of the
outstanding voting stock or other voting interest of which is owned, directly
or indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries.
Limitation on Sale and Lease-Back Transactions
The Company will not, nor will it permit any Subsidiary,
directly or indirectly, to enter into, assume, guarantee, or otherwise become
liable with respect to any Sale and Lease-Back Transaction (as defined below);
provided, however, that the Company or any Subsidiary may enter into (i) a Sale
and Lease-Back Transaction that, had such Sale and Lease-Back Transaction been
structured as a mortgage rather than as a Sale and Lease-Back Transaction, the
Company or such Subsidiary would have been permitted to enter into such
transaction without at least equally and ratably securing (or granting priority
to) the Senior Notes of all series pursuant to the terms of the Senior Notes
Indenture described under the caption "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 and (iii) a Sale and Lease-Back
Transaction, provided that, the proceeds of the sale of the property or assets
to be leased are at least equal to the fair value (the fair value of such
proceeds, if other than cash, to be determined by the chief financial officer
of the Company) and an amount equal to such net proceeds is applied within 180
days of the effective date of such Sale and Lease-Back Transaction to (A) the
retirement (other than any mandatory retirement and other than any prohibited
retirement of securities) of indebtedness for borrowed money (including the
Senior Notes) incurred or assumed by the Company or any Subsidiary (other than
indebtedness for borrowed money owed to the
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Company or any Subsidiary) which by its terms matures on, or is extendable 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 Senior Notes or (B) the purchase or construction of other property,
provided, that, upon the completion of such purchase or construction, such
property is owned by the Company or a Subsidiary free and clear of all Liens.
For the purposes of this paragraph, a Sale and Lease-Back Transaction means any
arrangement with any person or entity providing for the leasing to the Company
or a Subsidiary for a period of more than three years of any property which has
been or is to be sold or transferred by the Company or such Subsidiary to such
person or entity or to any other person or entity to which funds have been or
are to be advanced by such person or entity on the security of the leased
property.
Limitation on Transactions with Affiliates
The Company will not and will not permit any of its
Subsidiaries, directly or indirectly, to enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate of the Company unless (i) any such transaction or series of related
transactions is on terms that are not less favorable to the Company or such
Subsidiary than would be available in a comparable transaction made on an arm's
length basis with an unrelated third party and (ii) with respect to a
transaction or series of related transactions during any fiscal year involving
aggregate consideration in excess of $10 million, such transaction or series of
related transactions is approved by the Board of Directors of the Company. The
provisions described in this paragraph shall not apply to (i) any transaction
between the Company and one or more of its Subsidiaries, or between
Subsidiaries of the Company, (ii) any transaction in the ordinary course of the
Company's business and consistent with past practice, (iii) transactions,
agreements and arrangements with Affiliates in existence on the date of the
Indenture as well as any subsequent renewals, extensions, modifications,
amendments or replacements to such agreements which are not detrimental to the
Company and its Subsidiaries, taken as a whole, (iv) any employment agreement
or any employee compensation or employee benefit agreement, plan or arrangement
entered into by the Company or any of its Subsidiaries in the ordinary course
of business of the Company or the relevant Subsidiary, and (v) payments of
reasonable directors' fees and expenses.
Reports by the Company
If the Company is not required to file information, documents
or reports pursuant to either Section 13 or Section 15(d) of the Exchange Act,
then it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
Consolidation, Merger and Sale of Assets
The Company may not consolidate with or merge into any other
person or entity, and the Company may not, directly or indirectly, sell,
convey, transfer or lease all or substantially all of its properties and assets
to, any person or entity, unless (a) the person or entity formed by or
surviving such consolidation or merger or the person or entity which acquires
or leases all or substantially all of the properties and assets of the Company
(i) is organized and existing under the laws of any United States jurisdiction
and (ii) expressly assumes, by supplemental indenture in a form reasonably
satisfactory to the Senior Notes Trustee, all of the Company's obligations on
the Senior Notes and under the Senior Notes Indenture, and (b) after
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giving effect to such transaction no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing.
Events of Default
The following are defined in the Senior Notes Indenture as
Events of Default with respect to the Senior Notes: (a) failure to pay
principal or premium, if any, when due, whether at maturity or otherwise; (b)
failure to pay any interest within 30 days of the date when due; (c) failure to
make or satisfy any sinking or purchase fund payment when due; (d) failure to
observe or perform any other covenant contained in the Senior Notes Indenture
for the benefit of the Senior Notes, continued for 60 days after written notice
from the Senior Notes Trustee or the Holders of at least 25% in principal
amount of the Outstanding Senior Notes; (e) a default under any evidence of
indebtedness for money borrowed (other than the Senior Notes) by the Company or
any Subsidiary or under any mortgage, indenture or instrument (other than the
Senior Notes Indenture or the Senior Notes), which default shall constitute a
failure to pay any portion of the principal of such indebtedness in an amount
exceeding $20,000,000 when due and payable after the expiration of any
applicable grace period with respect thereto or shall have resulted in such
indebtedness in an aggregate amount exceeding $20,000,000 becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within a period of 10 days
after the date on which payment is due or the date of such acceleration; and
(f) certain events of bankruptcy, insolvency or reorganization. No Event of
Default with respect to the Senior Notes necessarily constitutes an Event of
Default with respect to any other series of securities issued under the Senior
Notes Indenture.
If, an Event of Default described in the preceding paragraph
in clauses (a), (b), (c), or (d), (if other series of securities have been
issued under the Senior Notes Indenture and the Event of Default under such
clause (d) is with respect to less than all of the securities then Outstanding
under the Senior Notes Indenture) occurs and is continuing with respect to the
Senior Notes, the Senior Notes Trustee or the Holders of not less than 25% in
principal amount of the Senior Notes then Outstanding may declare the principal
amount of the Senior Notes, and the interest accrued thereon, to be due and
payable immediately. If an Event of Default described in clause (d) (if the
Event of Default under such clause (d) is with respect to all series of
securities then Outstanding under the Senior Notes Indenture) or (e) occurs and
is continuing, the Senior Notes Trustee or the Holders of not less than 25% in
principal amount of all securities then Outstanding under the Senior Notes
Indenture including the Senior Notes (treated as one class) may declare the
principal amount of all such securities then Outstanding, and the interest
accrued thereon, to be due and payable immediately. If a default of the type
described in clause (f) shall occur and be continuing, the principal amount of
all securities then Outstanding under the Senior Notes Indenture, and the
interest accrued thereon, if any, shall immediately become due and payable.
However, at any time after a declaration of acceleration with respect to the
Senior Notes has been made, but before a judgment or decree based on such
declaration has been obtained, the Holders of a majority in principal amount of
the outstanding Senior Notes may under certain circumstances rescind and annul
such acceleration. Holders of Senior Notes may not enforce the Senior Notes
Indenture or the Senior Notes, except as provided in the Senior Notes
Indenture. The Senior Notes Trustee may require indemnity satisfactory to it
before it enforces the Senior Notes Indenture or the Senior Notes. Subject to
certain limitations, Holders of a majority in principal amount of the
outstanding Senior Notes may direct the Senior Notes Trustee in its exercise of
any trust or power.
The Company will furnish the Senior Notes Trustee with an
annual certificate of certain of its officers certifying, to the best of its
knowledge, whether the Company is in default and specifying the nature and
status of any such default. The Senior Notes Trustee may withhold from Holders
of Senior Notes
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notice of any continuing default (except a default in payment) if it determines
in good faith that the withholding of such notice is in the interest of such
Holders.
A judgment for money damages by courts in the United States,
including a money judgment based on an obligation expressed in a foreign
currency, ordinarily will be rendered only in U.S. dollars. If, for the
purpose of obtaining a judgment in any court with respect to any obligation of
the Company under the Senior Notes Indenture, or the Senior Notes, it becomes
necessary to convert into any other currency or currency unit any amount in the
currency or currency unit due under the Senior Notes Indenture, or the Senior
Notes, the conversion will be made by the Currency Determination Agent
appointed pursuant to the Senior Notes Indenture with respect to the Senior
Notes at the Market Exchange Rate in effect on the date of entry of the
judgment (the "Judgment Date"). If pursuant to any such judgment, conversion
is made on a date (the "Substitute Date") other than the Judgment Date and a
change has occurred between the Market Exchange Rate in effect on the Judgment
Date and the Market Exchange Rate in effect on the Substitute Date, the Senior
Notes Indenture requires the Company to pay such additional amounts (if any) as
may be necessary to ensure that the amount paid is equal to the amount in such
other currency or currency unit which, when converted at the Market Exchange
Rate in effect on the Judgment Date, is the amount then due under the Senior
Notes or the Senior Notes. The Company will not, however, be required to pay
more in the currency or currency unit due under the Senior Notes Indenture or
the Senior Notes, at the Market Exchange Rate in effect on the Judgment Date
than the amount of currency or currency unit stated to be due under the Senior
Notes Indenture or the Senior Notes and the Company will be entitled to
withhold (or be reimbursed for, as the case may be), any excess of the amount
actually realized upon any such conversion on the Substitute Date over the
amount due and payable on the Judgment Date.
Directors, officers, employees or shareholders of the Company
will not have any liability for any obligations of the Company under the Senior
Notes or the Senior Notes Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder of Senior
Notes, by accepting a Senior Note, waives and releases all such liability. The
waiver and the release are part of the consideration for the issue of the
Senior Notes.
Satisfaction and Discharge
The Senior Notes Indenture provides that the Company shall be
discharged from its obligations under the Senior Notes (with certain
exceptions) at any time prior to the Stated Maturity or redemption of the
Senior Notes when (a) the Company has irrevocably deposited in a trust fund
pursuant to the terms of the Senior Notes Indenture, (i) sufficient funds in
the currency, currencies, currency unit or units in which the Senior Notes are
payable to pay the principal of (and premium, if any) and interest, if any, to
Stated Maturity (or redemption) on the Senior Notes or (ii) such amount of
direct obligations of, or obligations the principal of (and premium, if any)
and interest, if any, on which are fully guaranteed by the government which
issued the currency, and are payable in the currency in which the Senior Notes
are payable, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay and
discharge when due the principal of (and premium, if any) and interest, if any,
to Stated Maturity (or redemption) on, the Senior Notes, or, (iii) such amount
equal to the amount referred to in clause (i) or (ii) in any combination of
currency or currency unit or government obligations; (b) the Company has paid
all other sums payable with respect to the Senior Notes; (c) the Company has
delivered to the Senior Notes Trustee an opinion of counsel to the effect that
(i) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of the Senior Notes Indenture
there has been a change in applicable United States federal income tax law, in
either case to the effect that, and based upon which such opinion of counsel
shall confirm that, the Holders of Senior Notes
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will not recognize income, gain or loss for United States federal income tax
purposes as a result of such discharge and will be subject to United States
federal income tax on the same amount and in the same manner and at the same
time as would have been the case if such discharge had not occurred and (d)
certain other conditions are met. Upon such discharge, the Holders of the
Senior Notes shall no longer be entitled to the benefits of the Senior Notes
Indenture, except for certain rights, including registration of transfer and
exchange of the Senior Notes and replacement of mutilated, destroyed, lost or
stolen Senior Notes, and shall look only to such deposited funds or
obligations.
Defeasance of Certain Obligations
The Company may omit to comply with certain designated
covenants in the Senior Notes Indenture and any such omission with respect to
such covenants shall not be an Event of Default with respect to the Senior
Notes, if (a) the Company deposits or causes to be deposited in a trust fund
pursuant to the terms of the Senior Notes Indenture an amount of (i) cash in
the currency or currency unit in which the Senior Notes are payable (except as
otherwise specified with respect to the Senior Notes), (ii) government
obligations of the type referred to above under "Satisfaction and Discharge" or
(iii) a combination of such cash and government obligations, which amount, in
the case of (ii) or (iii), together with the predetermined and certain income
to accrue on any such government obligations when due (without the
consideration of any reinvestment thereof), is sufficient to pay and discharge
when due the entire indebtedness on all such Outstanding Senior Notes and any
related coupons for unpaid principal (and premium, if any) and interest, if
any, to the Stated Maturity and (b) certain other conditions are met. The
obligations of the Company under the Senior Notes Indenture with respect to the
Senior Notes other than with respect to the covenants referred to above shall
remain in full force and effect.
Modification and Waiver; Meetings
Modifications and amendments of the Senior Notes Indenture may
be made by the Company and the Senior Notes Trustee with the consent of the
Holders of more than 50% in principal amount of the Outstanding securities of
each series issued under the Senior Notes Indenture affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Senior Note, (a)
change the Stated Maturity of the principal of, or any installment of principal
of or interest, if any, on any Senior Note, (b) reduce the principal amount of
or rate of interest, if any, on the Senior Notes, or any premium payable upon
the redemption thereof, (c) change the Place of Payment, (d) change the
currency or currency unit of payment of principal of (or premium, if any) or
interest, if any, on the Senior Notes, (e) impair the right to institute suit
for the enforcement of any payment on or with respect to the Senior Notes on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date) or (f) reduce the percentage in principal amount of
Outstanding Senior Notes, the consent of the Holders of which is required for
modification or amendment of the Senior Notes Indenture or for waiver of
compliance with certain provisions of the Senior Notes Indenture or for waiver
of certain defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Senior Notes may on behalf of the Holders of all Senior Notes
waive, insofar as the Senior Notes concerned, compliance by the Company with
certain restrictive provisions of the Senior Notes Indenture. The Holders of
not less than a majority in principal amount of the Outstanding Senior Notes
may on behalf of the Holders of all Senior Notes waive any past default under
the Senior Notes Indenture with respect to the Senior Notes, except a default
in the payment of the principal of (or premium, if any) and interest, if any,
on the Senior Notes or in respect of a provision which under the Senior Notes
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Senior Note. The Senior Notes Indenture
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and the Senior Notes may be amended or supplemented, without the consent of any
Holder of Senior Notes to cure any ambiguity or inconsistency or to make any
change that does not have a materially adverse effect on the right of any
Holder of Senior Notes.
Governing Law
The Senior Notes and the Senior Notes Indenture will be
governed by and construed in accordance with the laws of the State of Michigan.
Concerning the Senior Notes Trustee
Comerica Bank is the Senior Notes Trustee under the Senior
Notes Indenture and will act as the Senior Notes Trustee under any Supplemental
Senior Notes Indenture. Comerica Bank has extended lines of credit to the
Company, and, as either principal or fiduciary, also owns or may own debt of
the Company. The Company has other customary banking relationships with
Comerica Bank in the ordinary course of business.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS FOR THE DEBENTURES
The following discussion summarizes certain United States
federal income tax considerations relevant to the acquisition, ownership and
disposition of the Debentures, but does not purport to be a complete analysis
of all potential tax consequences. This summary is for general information
only and does not discuss all of the tax consequences that may be relevant to
holders entitled to special treatment under the Internal Revenue Code of 1986,
as amended (the "Code"), such as insurance companies, tax exempt organizations,
financial institutions, broker-dealers, persons whose functional currency is
not the U.S. dollar, foreign corporations and persons who are not citizens or
residents of the United States. In addition, it does not describe any tax
consequences arising out of the tax laws of any state, locality or foreign
jurisdiction.
The discussion is based upon the current provisions of the
Code, applicable Treasury Regulations, judicial authority and administrative
rulings and practice as of the date hereof. There can be no assurance that the
Internal Revenue Service (the "IRS") will not take a contrary view, and no
ruling from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conclusions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders of the Debentures.
Original Issue Discount on the Debentures
The Debentures were originally issued with original issue
discount within the meaning of Section 1273 of the Code in the amount of $54.33
per $1,000 face amount. Generally, each holder of a Debenture is required to
include certain amounts in ordinary income as interest for federal income tax
purposes before receiving cash to which such interest income is attributable.
On April 8, 1986, the Department of the Treasury issued
proposed regulations relating to the original issue discount provisions of the
Code (the "1986 Proposed Regulations"), which were substantially revised on
December 22, 1992 (the "1992 Proposed Regulations," collectively, the "Proposed
Regulations"). On January 27, 1994, the Department of Treasury adopted the
1992 Proposed Regulations, subject to certain modifications, as final
regulations (the "Final Regulations"). The Final Regulations generally do not
apply to debt instruments, such as the Debentures, issued before April 4, 1994.
However, the notice accompanying
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the Final Regulations indicates that holders of the Debentures may rely on the
1986 Proposed Regulations as "substantial authority" for purposes of reporting
original issue discount. Consequently, except where otherwise noted, this
summary will discuss the application of the 1986 Proposed Regulations to the
Debentures. The Company intends to follow the 1986 Proposed Regulations, as
interpreted below (and report original issue discount on the Debentures in the
manner described below), in preparing its federal income tax returns and
reports. The Proposed Regulations are ambiguous in certain respects and
subject to differing interpretations. PROSPECTIVE PURCHASERS OF THE DEBENTURES
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF
THE 1986 PROPOSED REGULATIONS, 1992 PROPOSED REGULATIONS, OR FINAL REGULATIONS
TO AN INVESTMENT IN THE DEBENTURES.
In general, the amount of original issue discount on a debt
instrument is the amount equal to the excess, if any, of its "stated redemption
price at maturity" over its "issue price," subject to a de minimis exception of
1/4 of one percent of the stated redemption price at maturity multiplied by the
number of complete years to maturity. The stated redemption price at maturity
of a debt instrument is equal to its principal amount as of the date of
original issuance plus all interest (other than "qualified periodic interest
payments") payable prior to or at maturity. A qualified periodic interest
payment is any one of a series of interest payments payable at a fixed rate and
due at fixed periodic intervals of one year or less over the entire term of a
debt instrument. The issue price of a debt instrument issued for cash is
generally the initial offering price to the public at which a substantial
amount of debt instruments is sold. If a debt instrument contains original
issue discount, holders will be required to include such original issue
discount in their incomes for federal income tax purposes as it accrues under
the constant interest rate method described below, generally in advance of the
receipt of the cash to which such income is attributable.
Because the stated redemption price at maturity of the
Debentures exceeded their issue price by more than the de minimis amount, the
Debentures were issued with original issue discount. A holder of a Debenture
will be required to report for federal income tax purposes the qualified
periodic interest in accordance with the holder's method of tax accounting.
Under the constant interest rate method, the portion of
original issue discount accrued (and recognized as ordinary interest income)
with respect to a debt instrument will be determined for each "accrual period"
(in the case of the Debentures, the six-month period between interest payment
dates, except for the shorter period from the date of original issuance) by
multiplying the adjusted issue price at the beginning of the accrual period
(the original issue price, plus any previously accrued original issue discount,
minus any cash payments (other than payments constituting qualified periodic
interest) that were made in prior accrual periods) by the yield to maturity of
the debt instrument (determined on the basis of compounding at the end of each
accrual period) divided by the number of accrual periods in a year, and
subtracting from that product the amount of qualified periodic interest payable
during that accrual period. The resulting amount will be allocated ratably to
each day in the accrual period, and the amount included in a holder's income
(whether computed on the cash or accrual method of accounting) with respect to
the debt instrument will be the sum of the resulting daily portions of original
issue discount for each day of the taxable year in which the holder holds the
debt instrument. A modified rule applies in the case of short accrual periods.
The Final Regulations provide for a method similar to the
constant interest rate method for calculating the accrual of original issue
discount. This method is known as the constant yield method and provides more
flexible rules for the determination of accrual periods.
21
<PAGE> 24
The amount of original issue discount required to be accrued
annually with respect to a debt instrument generally increases each year,
reflecting the compounding of original issue discount on the debt instrument.
In addition, the amount of original issue discount for any accrual period may
be greater than the amount of cash payments denominated as interest that are
made during the accrual period. Generally, the tax basis of a debt instrument
in the hands of the holder will be increased by the amount of any original
issue discount on the debt instrument that is included in the holder's income
pursuant to these rules and will be decreased by the amount of any cash
payments (other than payments constituting qualified periodic interest)
received with respect to the debt instrument whether such payments are
denominated as principal or interest.
If the Company is considered to have issued the Debentures
with an intention to call such Debentures prior to maturity, any gain realized
on a sale, exchange or redemption of a Debenture prior to maturity would be
considered ordinary income to the extent of any unamortized original issue
discount for the period remaining to the date of the stated maturity of the
Debentures. Although the 1986 Proposed Regulations do not indicate what
circumstances indicate an intention to call prior to maturity, the Final
Regulations, if applicable, would exempt the Debentures from this rule because
they were issued pursuant to a public offering.
The Company is required to redeem a certain percentage of the
Debentures prior to maturity pursuant to a mandatory sinking fund. The 1986
Proposed Regulations do not expressly address the computation of original issue
discount when notes are issued subject to sinking fund provisions. It is
possible that the sinking fund provisions could affect the computation of the
yield to maturity on the Debentures and thereby accelerate the amount of
original issue discount which must be included in income. However, the Final
Regulations would not treat the sinking fund provisions as affecting the yield
to maturity of the Debentures provided that the sinking fund provisions meet
"reasonable commercial standards." The Company does not intend to treat the
sinking fund as affecting the yield to maturity of the Debentures.
A subsequent holder of a Debenture who purchases the Debenture
at a price in excess of the Debenture's adjusted issue price (but equal to or
less than its remaining stated redemption price at maturity) at the time of
purchase shall reduce original issue discount includable in income determined
by the amount of such excess (the "acquisition premium"). For such a holder,
each daily portion will be reduced by an amount equal to (i) the daily portion
multiplied by (ii) a fraction the numerator of which is equal to the amount of
the acquisition premium and the denominator of which is equal to the sum of the
daily portions of original issue discount for the period from the subsequent
holder's acquisition of the Debenture to the maturity of the Debenture.
The Company was required to furnish certain information to the
IRS within 30 days after the date of issuance stating, among other things, the
total amount of original issue discount for the entire issue. Additionally,
the Company will provide annual information statements to the holders of the
Debentures and to the IRS stating the amount of interest and original issue
discount attributable to such Debentures for each calendar year. The amount of
original issue discount set forth in such statement is not binding on the IRS
with respect to any holder and may not be accurate as to a subsequent holder of
a Debenture, who will be required to make his own determination of whether he
must report in income a different amount of original issue discount. Each
Debenture will bear a legend setting forth its issue date, the amount of
original issue discount, its yield to maturity and certain other information.
Such information will be accurate only as to an initial holder who purchased
the Debenture in the initial offering at the initial offering price at which a
substantial amount of the Debentures were sold.
22
<PAGE> 25
Market Discount
Purchasers of the Debentures should be aware that the
Debentures may be affected by the market discount provisions of the Code.
These rules generally provide that, subject to a statutorily-defined de minimis
exception, if a holder of a debt instrument purchases it at a market discount
and thereafter recognizes gain on its disposition (including nonsale
dispositions such as gifts), the lesser of such gain (or appreciation, in the
case of a gift) and the portion of the market discount amount accrued while the
debt instrument was held by such holder will be treated as ordinary interest
income at the time of the disposition. For this purpose, in the case of a debt
instrument issued with original issue discount a purchase at a market discount
includes a purchase after the original issue at a price below (a) its "issue
price" plus (b) the amount of original issue discount includable in income by
all prior holders of the debt instrument minus (c) all cash payments (other
than payments constituting qualified periodic interest) received by such
previous holders. The market discount rules also provide that a holder who
acquires a debt instrument at a market discount (and who does not elect to
include such market discount in income on a current basis) may be required to
defer a portion of any interest expense that may otherwise be deductible on any
indebtedness incurred or maintained to purchase or carry such debt instrument
until the holder disposes of the debt instrument in a taxable transaction.
The Company expects to redeem the Debentures on the Call Date
with amounts on deposit in the Trust Account. Each holder of a Debenture
acquired at a market discount will be required to treat the principal payment
received in redemption as ordinary interest income to the extent of any accrued
market discount on such Debenture.
A holder of a Debenture acquired at a market discount may
elect to include the market discount in income as the discount thereon accrues,
either on a straight line basis or, if elected, on a constant interest rate
basis. The current inclusion election, once made, applies to all market
discount obligations acquired by such holder on or after the first day of the
first taxable year to which the election applies, and may not be revoked
without the consent of the IRS. If a holder of a Debenture elects to include
market discount in income in accordance with the preceding sentence, the
foregoing rules with respect to the recognition of ordinary income on a sale or
certain other dispositions of such Debenture and the deferral of interest
deduction on indebtedness related to such Debenture would not apply.
Amortizable Bond Premium
Generally, if a holder's tax basis (generally, its purchase
price) of a Debenture, which is held as a capital asset exceeds the amount
payable at maturity of the obligation, such excess may constitute amortizable
bond premium that the holder may elect to amortize under the constant interest
rate method and treat as an offset to interest income on the related obligation
over the period from its acquisition date to the obligation's maturity date.
In the case of a debt instrument, such as a Debenture, that
may be called at a premium prior to maturity, an earlier call date of the debt
instrument is treated as the maturity date of the debt instrument and the
amount of bond premium is determined by treating the amount payable on such
call date as the amount payable at maturity if such a calculation produces a
smaller amortizable bond premium than the method described in the preceding
paragraph. If a holder of a debt instrument is required to amortize bond
premium by reference to a certain call date, the debt instrument will be
treated for such purposes as maturing on such date for the amount payable, and,
if not redeemed on such date, as reissued on such date for the amount so
payable. If a debt instrument purchased at a premium is redeemed prior to its
maturity, a purchaser who has elected to amortize bond premium may deduct any
remaining unamortized bond premium as an ordinary loss in the taxable year of
redemption.
23
<PAGE> 26
Prospective purchasers are urged to consult their own tax
advisors as to the consequences of the treatment of such premium as an offset
to interest income for federal income tax purposes.
Election to Treat All Interest as Original Issue Discount
The Final Regulations provide that, for a Debenture acquired
on or after April 4, 1994, a holder may elect to treat all interest on such
Debenture as original issue discount and calculate the amount includable in
gross income under the constant yield method described above. For the purposes
of this election, interest includes stated interest, acquisition discount,
original issue discount, de minimis original issue discount, market discount,
de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. If a holder makes this
election for a Debenture with market discount or amortizable bond premium, the
election is treated as an election under the market discount or amortizable
bond premium provisions, described above, and the electing holder will be
required to amortize bond premium or include market discount in income
currently for all of the holder's other debt instruments with market discount
or amortizable bond premium. The election is to be made for the taxable year
in which the holder acquired the Debenture, and may not be revoked without the
consent of the IRS.
Prospective purchasers are urged to consult with their own tax advisors
about this election.
Disposition of Debentures
In general, a holder of a Debenture will recognize gain or
loss upon the sale, exchange, redemption or other taxable disposition of the
Debenture in an amount equal to the difference between the amount realized on
the sale or exchange (less any amount received in payment of accrued interest
if the interest constitutes qualified periodic interest) and the holder's tax
basis in the Debenture. Subject to the original issue discount and market
discount rules discussed above, any gain or loss on the sale or exchange of a
Debenture will be capital gain or loss, provided the Debenture is held as a
capital asset, and will be long- term capital gain or loss if the Debenture had
been held for more than one year.
A holder's initial tax basis in a Debenture will generally be
equal to its cost for the Debenture. At any time, a holder's tax basis in a
Debenture will be equal to its initial tax basis, plus any original issue
discount (and market discount) previously included in the holder's gross income
with respect to the Debenture minus any payments included in the stated
redemption price at maturity previously received by the holder and any
amortizable bond premium previously applied to offset interest income on the
related Debenture.
Backup Withholding
A holder of a Debenture may be subject to backup withholding
at the rate of 31% with respect to interest paid on, original issue discount
accrued on, and gross proceeds of a sale of, the Debenture, unless such holder
(a) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A holder of a Debenture who does not provide the Company
with its orrect taxpayer identification number may be subject to penalties
imposed by the IRS. Any amount withheld under these rules will be creditable
against the holder's federal income tax liability.
24
<PAGE> 27
The Company will report to the holders of the Debentures and
the IRS the amount of any "reportable payments" (including any interest paid
and any original issue discount accrued thereon) and any amount withheld with
respect to the Debentures during the calendar year.
Non-United States Holders
The following discussion summarizes certain United States
federal income tax consequences of the ownership of the Debentures by a
non-U.S. holder (as defined below). It is not intended to cover all such
United States tax consequences. NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE UNITED STATES TAX CONSEQUENCES OF THE OWNERSHIP OF
THE DEBENTURES TO THEM IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES.
A beneficial owner of a Debenture that is not a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States, or an estate or
trust, the income of which is subject to U.S. federal income taxation
regardless of its source (a "non-U.S. holder"), generally will not be subject
to United States federal income taxes, including withholding taxes, on the
interest income on, or gain from the sale or disposition of, any Debenture
provided that (1) the interest income or gain is not effectively connected with
the conduct by the non-U.S. holder of a trade or business within the United
States, (2) the non-U.S. holder does not own, actually or constructively, 10%
or more of the total combined voting power of all classes of voting stock of
the Company, (3) the non-U.S. holder is not a controlled foreign corporation
related to the Company through stock ownership, (4) the non-U.S. holder is not
a bank receiving interest income on an extension of credit made pursuant to a
loan agreement entered into in the ordinary course of its trade or business,
(5) with respect to any gain, the non-U.S. holder, if an individual, is not
present in the United States for 183 days or more during the taxable year, and
(6) the non-U.S. holder provides the correct certification of his status. The
certification requirement referred to in (6) will be satisfied if, during the
year of payment (or in either of the two preceding years), the beneficial owner
of the Debentures provides to the Company (or, if appropriate, to the relevant
financial institution and it then provides to the Company) a statement under
penalties of perjury on Internal Revenue Service Form W-8 (or a substantially
similar substitute form) as to its status as a non U.S. holder.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE,
ACCORDINGLY, PROSPECTIVE PURCHASERS OF THE DEBENTURES SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP
AND DISPOSITION OF THE DEBENTURES, INCLUDING THE APPLICABILITY AND EFFECT OF
STATE, LOCAL FOREIGN AND OTHER TAX LAWS.
DESCRIPTION OF THE CREDIT AGREEMENT
The Company is a party to a Credit Agreement, dated as of June
29, 1992, among the Company, certain of its subsidiaries and the financial
institutions party thereto (as amended and as may be further renewed, extended
or refinanced from time to time, the "Credit Agreement"). Pursuant to the
Credit Agreement, the Company and certain of its subsidiaries may incur up to
approximately $120,000,000 (or its U.S. dollar equivalent) in U.S. dollar or
other currency-based revolving credit loans. As of September 30, 1993,
approximately $34.3 million was outstanding under the Credit Agreement. The
Credit Agreement refinanced the then outstanding revolving credit indebtedness
under the credit agreements, dated as of October 1, 1989, among the Company,
certain of its subsidiaries and the lending parties thereto.
25
<PAGE> 28
Interest on loans outstanding under the Credit Agreement is
payable at one of the following rates per annum, as selected by the Company
from time to time: (i) the Prime-based Rate (as defined in the Credit
Agreement) which shall not be less than the Prime Rate (as defined in the
Credit Agreement) plus 1/4% (as such percentage maybe adjusted form time to
time); (ii) the London interbank offering rate plus 1 1/2% (as such percentage
may be adjusted from time to time); or (iii) a negotiated fixed rate at rates
and for terms acceptable to the lenders under the Credit Agreement.
The Credit Agreement contains restrictive covenants with
respect to the Company that, among other things, create limitations (subject to
certain exceptions) on: (i) the incurrence or existence of additional
indebtedness or contingent obligations or the granting of liens onr assets;
(ii) the making of investments in, or making loans or advances to, or the
acquisition of, any person or entity; (iii) mergers, dispositions of assets and
consolidations; (iv) declaring or paying any dividends on the capital stock of
the Company; making any payment to purchase, redeem, cancel or acquire any such
capital stock or applying or setting apart any of its assets therefor, or
making any other distribution in respect of such shares; (v) capital
expenditures; (vi) the ability to make certain fundamental changes or to change
materially the present method of conducting its business; (vii) certain
transactions with affiliates; (viii) the prepayment of certain other
indebtedness; and (ix) the amendment of the Debenture Indenture. The Credit
Agreement also requires the Company to satisfy certain financial ratios and
tests including among other things, the maintenance of: (i) specific levels of
consolidating tangible net worth; (ii) a fixed charge coverage ratio; (iii) a
ratio of current assets to current liabilities; and (iv) a consolidated ratio
of debt to debt plus net worth. The Company is in compliance with all
covenants contained in the Credit Agreement as of the date of this Prospectus.
PLAN OF DISTRIBUTION
This Prospectus is to be used by Lehman Brothers in connection
with offers and sales of the Debentures and the Senior Notes in market-making
transactions in the over-the-counter market at negotiated prices related to
prevailing market prices at the time of sale. Lehman Brothers may act as
principal or agent in such transactions. Lehman Brothers has no obligation to
make a market in the Debentures or the Senior Notes, and may discontinue its
market-making activities at any time without notice, at its sole discretion.
Frederick Frank is a Senior Managing Director of Lehman Brothers. James A.
Stern is a Managing Director of Lehman Brothers, and Lori G. Koffman is a
Senior Vice President of Lehman Brothers. All are directors of R.P. Scherer
Corporation and R.P. Scherer International Corporation, and Ms. Koffman is
Assistant Secretary of R.P. Scherer Corporation.
Affiliates of Lehman Brothers currently own 7,024,373 shares
of common stock of R.P. Scherer Corporation, representing approximately 30%
beneficial ownership of the aggregate voting power of the capital stock of R.P.
Scherer Corporation.
Lehman Brothers acted as underwriter (i) in connection with
the original offering of the Debentures and received underwriting commissions
of $5,601,000 in connection therewith and (ii) in connection with the original
offering of the Senior Notes and received underwriting commissions of $675,000
in connection therewith.
26
<PAGE> 29
EXPERTS
The audited consolidated financial statements and schedules of the Company and
its subsidiaries and of R.P. Scherer Corporation and subsidiary incorporated by
reference in this Prospectus have been audited by Arthur Andersen & Co.,
independent public accountants as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports. Reference is made to
said reports, which included an explanatory paragraph with respect to the change
in the methods of accounting for income taxes for the year ended March 31,
1993, and for postretirement benefits other than pensions for the year ended
March 31, 1992, as discussed in Notes 5 and 10, respectively, to the audited
consolidated financial statements.
27
<PAGE> 30
====================================================
No dealer, salesperson or any other person has
been authorized to give any information or to make
any representations not contained 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 Lehman
Brothers. This Prospectus does not constitute an
offer of any securities other than those to which
it relates or an offer to sell, or a solicitation
of an offer to buy, to any person in any
jurisdiction where such an offer or solicitation
would be unlawful. Neither the delivery of this
Prospectus nor any sale may hereunder shall, under
any circumstances, create any implication that the
information contained herein is correct as of any
time subsequent to the date hereof.
---------------------------
TABLE OF CONTENTS
Page
----
Available Information . . . . . . . . . . . . . 3
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . . . 3
Prospectus Summary . . . . . . . . . . . . . . 5
Description of the Debentures . . . . . . . . . 10
Description of the Senior Notes . . . . . . . . 12
Certain Federal Income Tax Considerations
for the Debentures . . . . . . . . . . 19
Description of the Credit Agreement . . . . . . 25
Plan of Distribution . . . . . . . . . . . . . 26
Experts . . . . . . . . . . . . . . . . . . . . 27
====================================================
====================================================
R.P. SCHERER INTERNATIONAL
CORPORATION
14% SENIOR SUBORDINATED DEBENTURES
DUE 1999
6 3/4% SENIOR NOTES
DUE 2004
--------------------------
PROSPECTUS
FEBRUARY 11, 1994
--------------------------
=====================================================
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not applicable for this post-effective amendment.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the General Corporation Law of the State of
Delaware ("Delaware Law") empowers a Delaware corporation to indemnify any
persons who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was an officer
or director of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided that such officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe
his conduct was illegal. A Delaware corporation may indemnify officers and
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation
in the performance of his duty. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against expenses which such officer or director
actually and reasonably incurred.
In accordance with Delaware Law, the Restated Certificate of
Incorporation of R.P. Scherer International Corporation contains a provision to
limit the personal liability of the directors of the Company for violations of
their fiduciary duty. Such provision states that except as otherwise provided
by the Delaware Law, as it exists or may subsequently be amended, no director
of the Company will be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director. The provision
also states that any repeal or modifications by the stockholders of the Company
of such section will not adversely affect any right or protection of a director
of the Company existing at the time of such repeal or modification.
Article Seventh of the Restated Certificate of Incorporation
of the Company and Article IV of the By-Laws of the Company provide
indemnification of the officers and directors of the Company to the fullest
extent permitted by applicable law.
Pursuant to the merger agreement executed in connection with
the acquisition of R.P. Scherer International Corporation by R.P. Scherer
Corporation, R.P. Scherer International Corporation is required to maintain in
effect, if available, for a period of six years following the acquisition,
directors' and officers' liability insurance covering those persons who were
covered by R.P. Scherer International Corporation's and its subsidiaries'
directors' and officers' liability insurance polices at the time of the
execution of such merger agreement, on terms not significantly less favorable
than the terms of the then
II-1
<PAGE> 32
current insurance coverage in terms of coverage and amounts, subject to certain
premium cost limitations. R.P. Scherer International currently carries such
policies.
Officers and directors of the Company who are employees of
Lehman are entitled to indemnification under the certificate of incorporation
and by-laws of American Express Company to the fullest extent permitted by
applicable law.
ITEM 16. EXHIBITS
The following exhibits are filed as part of the registration
statement or, where indicated, wee heretofore filed and are hereby incorporated
by reference:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
4.1 Form of Senior Subordinated Indenture, dated as of November 1, 1989, between R.P. Scherer
International Corporation and the First National Bank of Boston, as Trustee (including form of
Senior Subordinated Debenture). Incorporated by reference to Exhibit 4.1 filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1989.
4.2 Indenture, dated as of January 1, 1994, between R.P. Scherer International Corporation and Comerica
Bank, as Trustee. Incorporated by reference to Exhibit 4.1 filed with the Company's Registration
Statement on Form S-3, No. 33-51231.
5.1 Opinion of Simpson Thacher & Bartlett regarding the legality of the Debentures. Incorporated by
reference to Exhibit 5 filed with the Company's Amendment No. 3 to its Registration Statement on
Form S-1, No. 33-30362.
5.2 Opinion of Clark, Klein & Beaumont regarding the legality of the Senior Notes.
10.1 Market-Making Agreement, dated February 11, 1994, between R.P. Scherer International Corporation
and Lehman Brothers Inc.
12.1 Schedule regarding computation of earnings of fixed charges ratio.
23.1 Consent of Arthur Andersen & Co.
24.1 Previously filed.
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
II-2
<PAGE> 33
(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, as amended (the "Securities Act"); (ii) to
reflect in the prospectus any fact or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement; (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change of such
information in the registration statement; provided, however, that
clauses (i) and (ii) do not apply if the information required to be
included in the post-effective amendment by those clauses is contained
in periodic reports filed by the Company or R.P. Scherer Corporation
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are included by reference in this registration statement.
(2) That, 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.
(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.
(4) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing
provisions, or otherwise, the registrants have been advised that in
the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by a registrant of expenses
incurred or paid by a director, officer or controlling person of such
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, such
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 34
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIED THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS ON FORM S-3/A AND HAS DULY CAUSED THIS POST-EFFECTIVE
AMENDMENT TO ITS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF TROY, STATE OF MICHIGAN,
ON FEBRUARY 11, 1994.
R.P. SCHERER INTERNATIONAL CORPORATION
By: /s/ Thomas J. Stuart
----------------------------------------
Thomas J. Stuart
Controller
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, AS AMENDED, THIS
POST-EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
** Chairman and Co-Chief February 11, 1994
------------------------------ Executive Officer
John P. Cashman
** President and Co-Chief Executive February 11, 1994
----------------------------- Officer
Aleksandar Erdeljan
** Executive Vice President, February 11, 1994
---------------------------- Finance, Chief Financial Officer,
Nicole S. Williams Treasurer and Secretary
/s/ Thomas J. Stuart Controller February 11, 1994
---------------------------- (Principal Accounting Officer)
Thomas J. Stuart
** Director February 11, 1994
----------------------------
Frederick Frank
** Director February 11, 1994
-----------------------------
Lori G. Koffman
** Director February 11, 1994
-----------------------------
Gilbert H. Lamphere
</TABLE>
II-4
<PAGE> 35
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
** Director February 11, 1994
------------------------------
Louis Lasagna
** Director February 11, 1994
------------------------------
Robert H. Rock
** Director February 11, 1994
-----------------------------
James A. Stern
** By: /s/ Thomas J. Stuart
---------------------------------------
Thomas J. Stuart
(Attorney-In-Fact)
</TABLE>
II-5
<PAGE> 36
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
<S> <C>
4.1 Form of Senior Subordinated Indenture,
dated as of November 1, 1989, between
R.P. Scherer International Corporation and
the First National Bank of Boston, as Trustee
(including form of Senior Subordinated
Debenture). Incorporated by reference to
Exhibit 4.1 filed with the Company's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1989.
4.2 Indenture, dated as of January 1, 1994,
between R.P. Scherer International Corporation
and Comerica Bank, as Trustee. Incorporated
by reference to Exhibit 4.1 filed with the
Company's Registration Statement on Form S-3,
No. 33-51231.
5.1 Opinion of Simpson Thacher & Bartlett regarding
the legality of the Debentures. Incorporated by
reference to Exhibit 5 filed with the Company's
Amendment No. 3 to its Registration Statement on
Form S-1, No. 33-30362.
5.2 Opinion of Clark, Klein & Beaumont regarding the
legality of the Senior Notes.
10.1 Market-Making Agreement, dated February 11, 1994,
between R.P. Scherer International Corporation
and Lehman Brothers Inc.
12.1 Schedule regarding computation of earnings of fixed
charges ratio.
23.1 Consent of Arthur Andersen & Co.
24.1 Previously filed.
</TABLE>
II-6
<PAGE> 1
Exhibit 5.2
[Letterhead of Clark, Klein & Beaumont]
January 27, 1994
Lehman Brothers Inc.
PaineWebber Incorporated
Wertheim Schroder & Co.
Robert W. Baird & Co.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, NY 10285
Attn: Ms. Lori Koffman
Ladies and Gentlemen:
We have acted as counsel to R.P. Scherer International
Corporation, a Delaware corporation (the "Company"), in connection with the
preparation and filing with the Securities and Exchange Commission of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), including a Prospectus for
$175,000,000 Debt Securities, a Preliminary Prospectus Supplement thereto (the
"Preliminary Prospectus Supplement") for the offering of $100,000,000 aggregate
principal amount of 6 3/4% Senior Notes due 2004, and a completed Prospectus
Supplement (the "Prospectus Supplement") for the offering of $l00,000,000 face
amount of 6 3/4% Senior Notes due 2004 (the "Securities"), pursuant to an
Indenture in substantially the form set forth as an Exhibit to the Registration
Statement (the "Indenture"), between the Company and Comerica Bank, as Trustee
(the "Trustee"), as supplemented by a Terms Agreement dated January 20, 1994
(the "Terms Agreement") among yourselves and the Company. This opinion is
being furnished to you in connection with Section 6(f) of the Form of
Underwriting Agreement Basic Provisions filed as Exhibit 1.1 to the
Registration Statement.
In rendering the opinions expressed herein, we have examined
and relied upon the following documents (the "Transaction Documents"):
1. The Registration Statement.
2. The Indenture.
3. The Form of Underwriting Agreement Basic Provisions.
4. The Prospectus.
5. The Preliminary Prospectus Supplement.
6. The Prospectus Supplement.
<PAGE> 2
7. The Terms Agreement.
In addition, we have examined the originals or certified or
other copies of such documents, corporate or otherwise, and such matters of law
as we have deemed necessary or relevant as a basis for the opinion set forth
herein. In such examinations, we have assumed: that where certificates of
governmental or corporate officials were issued prior to the date hereof there
have been no changes in any facts to which such certificates relate, the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, the conformity with the originals of all documents submitted
to us as certified or photostatic copies, and the authenticity of all originals
of all such copies. Where matters of fact were not independently established,
we have relied upon records, certificates, documents and discussions with
officers of the Company to establish the factual basis upon which this opinion
is rendered.
Based on and subject to the foregoing, it is our opinion that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement,
the Prospectus, the Preliminary Prospectus Supplement and the Prospectus
Supplement.
2. Neither the execution nor the delivery of the
Securities nor consummation of the transactions contemplated by the Transaction
Documents will, to the best of our knowledge, result in a violation of, or
constitute a default under, the certificate of incorporation, bylaws or other
governing documents of the Company or any agreement, indenture or instrument to
which the Company is a party or by which it is bound, or to which any of its
properties is subject, other than a default which will occur under an indenture
dated as of November 1, 1989 (the "Subordinated Debentures Indenture") between
the Company and The First National Bank of Boston, as Trustee, relating to the
Company's 14% Senior Subordinated Debentures due 1999. The Company has advised
us of its intention to terminate its obligations under the Subordinated
Debentures Indenture by defeasance of the 14% Senior Subordinated Debentures as
provided in Section 8.01(b) of the Subordinated Debentures Indenture. Upon
completion of such defeasance within 30 days of the date hereof, such default
will have been cured. The performance by the Company of its obligations
hereunder will not violate any Michigan or Federal law, rule, administrative
regulation or, to the best of our knowledge, decree of any Michigan or Federal
governmental agency or body having jurisdiction over the Company or its
properties, or result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of the Company. Except for consents,
approvals, permits and authorization required under the Securities Act and the
state securities or "Blue Sky" laws of Michigan and for such permits and
authorizations which have been obtained, no consent, approval, authorization or
order of any Michigan or Federal court or governmental agency or body is
required in connection with the consummation of the transactions contemplated
by this Agreement.
3. The form of Underwriting Agreement Basic Provisions
has been duly authorized, executed and delivered by the Company.
4. The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture Act and
is a valid and legally binding instrument of the Company enforceable in
accordance with its terms except as may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, to general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5. The Securities are in a form contemplated by the
Indenture and have been duly authorized by all necessary corporate action, have
been duly executed and authenticated as specified in the Indenture and are
legal, valid and binding obligations of the Company enforceable in accordance
with their terms except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other
<PAGE> 3
similar laws relating to or affecting creditors' rights generally, to general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
6. The Securities and the Indenture conform to the
statements concerning them in the Registration Statement and the Prospectus.
7. The statements made in the Prospectus under the
caption "Description of Debt Securities and Indenture" (and in the Preliminary
Prospectus Supplement and the Prospectus Supplement under the caption
"Description of the Senior Notes") insofar as they purport to summarize in all
material respects the provisions of documents or agreements specifically
referred to therein, fairly present the information called for with respect
thereto by Form S-3.
8. The Terms Agreement has been duly authorized,
executed and delivered by the Company; the execution, delivery and performance
of the Terms Agreement (including the provisions of the "Underwriting Agreement
Basic Provisions") and compliance by the Company with the provisions of the
Securities and the Indenture will not conflict with, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the assets of the
Company pursuant to the terms of, or constitute a default under, any agreement,
indenture or instrument known to us, after reasonable inquiry, or result in a
violation of the corporate charter or bylaws of the Company (as in effect on
the date of such opinion) or any order, rule or regulation (also as in effect
on the date of such opinion) of any court or governmental agency having
jurisdiction over the Company or its properties, the effect of which conflict,
lien, charge or encumbrance, default or violation would be material and adverse
to the Company and its subsidiaries taken as a whole; and no consent,
authorization or order of, or filing or registration with, any court or
governmental agency is required for the execution, delivery and performance by
the Company of the Terms Agreement (including the provisions of this
"Underwriting Agreement Basic Provisions"), except such as may be required by
the Act, the Trust Indenture Act, the Exchange Act or state securities laws.
9. The Registration Statement and all post-effective
amendments thereto have become effective under the Securities Act and, to the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending before or contemplated by the Commission, and
any and all filings required by Rule 424 and Rule 430A of the Rules and
Regulations under the Securities Act have been made; each document, if any,
filed pursuant to the Exchange Act and incorporated by reference in the
Registration Statement, the Prospectus, the Preliminary Prospectus Supplement
and the Prospectus Supplement (except for financial statements and schedules as
to which we express no opinion) complied when so filed as to form in all
material respects with the Exchange Act and the applicable Rules and
Regulations thereunder, and as of their respective effective dates, comply as
to form in all material respects with the requirements of the Securities Act
and the Rules and Regulations under the Securities Act (except that we express
no opinion on the financial statements and schedules or other financial and
statistical data).
10. We do not know of any contracts or documents of a
character required to be summarized or described in the Registration Statement,
the Preliminary Prospectus Supplement or the Prospectus Supplement or the
Prospectus or to be filed as exhibits thereto which are not so summarized,
described or filed, nor do we know of any pending or threatened litigation or
any governmental proceeding, statute or regulation required to be described in
the Registration Statement or the Prospectus which is not so described.
<PAGE> 4
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, your representatives and your counsel, at which
the contents of the Registration Statement, the preliminary Prospectus and the
Prospectus Supplement, and related matters, were discussed and, although we are
not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements made or included in the Registration
Statement, the Prospectus, the Preliminary Prospectus Supplement or the
Prospectus Supplement, on the basis of the foregoing, no fact has come to our
attention that would lead us to believe that the Registration Statement or any
supplement thereto, at the time such Registration Statement or supplement
became effective, contained an untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, the Preliminary
Prospectus Supplement or the Prospectus Supplement 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, in light of the
circumstances under which they were made, not misleading; it being understood
that we express no view with respect to the financial statements and schedules
and other financial and statistical data included in the Registration
Statement, the Prospectus, the Preliminary Prospectus Supplement or the
Prospectus Supplement.
This opinion is limited to matters governed by the Federal
laws of the United States of America, the laws of the State of Michigan and the
General Corporation Law of the State of Delaware.
This opinion is rendered solely for your benefit in connection
with the Transaction Documents, and may not be quoted or relied upon by any
other person except Simpson Thacher & Bartlett, or used for any purpose without
our prior written consent.
Very truly yours,
CLARK, KLEIN & BEAUMONT
<PAGE> 1
Exhibit 10.1
R.P. SCHERER INTERNATIONAL CORPORATION
14% Senior Subordinated Debentures Due 1999
6 3/4% Senior Notes Due 2004
MARKET-MAKING AGREEMENT
February 11, 1994
LEHMAN BROTHERS INC.
World Financial Center
200 Vesey Street
New York, New York 10285
Ladies and Gentlemen:
R.P. Scherer International Corporation, a Delaware corporation
(the "Company"), has issued in public offerings (i) its 14% Senior Subordinated
Debentures Due 1999 (the Debentures") issued under an indenture dated as of
November 1, 1989 between the Company and the First National Bank of Boston, as
trustee (as the same may be amended or supplemented from time to time, the
"Debenture Indenture") and (ii) its 6 3/4% Senior Notes due 2004 (the "Senior
Notes" and collectively with the Debentures, the "Securities") issued under an
indenture dated as of January 1, 1994 between the Company and Comerica Bank, as
trustee (as the same may be amended or supplemented from time to time, the
"Senior Note Indenture" and collectively with the Debenture Indenture, the
"Indentures"). This is to confirm certain agreements of the Company in
connection with market-making transactions in respect of the Securities which
may be entered into by Lehman Brothers Inc. (the "Market-Maker").
1. The Company represents, warrants and agrees that:
(a) A registration statement on Form S-3/A constituting
Post-Effective Amendment No. 7 to a Registration Statement on Form S-1 (File
No. 33-30362) with respect to the Securities (i) has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, (ii) has been filed with the Commission under the Act and (iii) has
become effective under the Act. Copies of such registration statement as
amended to date have been delivered by the Company to the Market-Maker. As
used in this Agreement, "Effective Time" means the date and the time as of
which such registration statement has been declared effective by the
Commission; "Effective Date" means the date of the Effective Time;
"Registration Statement" means such registration statement, as amended at the
Effective Time; and
<PAGE> 2
"Prospectus" means the prospectus included in the Registration Statement with
any changes thereto made by the Company. The Commission has not issued any
order suspending the effectiveness of the Registration Statement, and no
stop-order proceeding has been initiated or threatened by the Commission.
(b) The Registration Statement, any post-effective amendment
to the Registration Statement filed with the Commission after the Effective
Time, the Prospectus and the Prospectus as amended or supplemented will conform
in all material respects to the requirements of the Act and the Rules and
Regulations; the Registration Statement, any post-effective amendment to the
Registration Statement filed with the Commission after the Effective Time, the
Prospectus and the Prospectus as amended and supplemented will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided that the Company makes no representation or warranty as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Market-Maker specifically for
inclusion therein.
(c) Neither the Company nor any of its subsidiaries is in
violation of its corporate charter or by-laws or is in default under any
agreement, indenture or instrument, the effect of which violation or default
would be material to the Company or the Company and its subsidiaries taken as a
whole; the execution, delivery and performance of this Agreement will not
conflict with, result in the creation or imposition of any lien, charge or
encumbrance upon any assets of the Company or any of its subsidiaries pursuant
to the terms of, or constitute a material default under, any material
agreement, indenture or instrument, or result in a violation of the corporate
charter or by-laws of the Company or any of its subsidiaries or any order, rule
or regulation of any court or governmental agency having jurisdiction over the
Company, any of its subsidiaries or its respective properties; and except as
required by the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and applicable state securities laws, no consent,
authorization or order of, or filing or registration with, any court or
governmental agency, which has not been made or obtained, is required for the
execution, delivery and performance of this Agreement.
(d) The Indentures have been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and constitute the valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their terms; the Debentures have been duly authorized, executed
and issued by the Company against payment therefor and constitute valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits of the Debenture
Indenture; the Senior Notes have been duly authorized, executed and issued by
the Company against payment therefor and constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance with
their terms and entitled to the benefits of the Senior Notes Indenture; and the
Securities and the Indentures conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(e) The Company and each of its subsidiaries have been duly
incorporated, are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do business
and in good standing as foreign corporations in each jurisdiction in which
<PAGE> 3
their respective ownership of property or the conduct of their respective
businesses requires such qualification except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries taken as a whole, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged.
2. The Company agrees:
(a) To furnish promptly to the Market-Maker and to counsel
for the Market-Maker a signed copy of the Registration Statement as originally
filed, and each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;
(b) To deliver promptly to the Market-Maker one conformed
copy of the Registration Statement as originally filed and each amendment
thereto (in each case excluding exhibits other than the computation of the
ratio of earnings to fixed charges, the Indenture and this Agreement) and of
the Prospectus and any amended or supplemented Prospectus as the Market-Maker
may request;
(c) To prepare and file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or any supplement to
the Prospectus that may, in the judgment of the Company, be required by the Act
or requested by the Commission or that will correct an untrue statement of a
material fact or an omission of a material fact if any event occurs as a result
of which the Registration Statement or the Prospectus would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;
(d) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, or to filing any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Market-Maker and its counsel;
(e) To advise the Market-Maker promptly (i) when the
Registration Statement and any post-effective amendment to the Registration
Statement becomes effective, (ii) of any request or proposed request by the
Commission for an amendment to the Registration Statement, a supplement to the
Prospectus or any additional information, (iii) of the issuance by the
Commission of any stop-order suspending the effectiveness of the Registration
Statement or the initiation or threat of any stop-order proceeding, (iv) of
receipt by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose, and (v) of the
happening of any event which makes untrue any statement of a material fact made
in the Registration Statement or the Prospectus, or which requires the making
of a change in the Registration Statement or the Prospectus in order to make
any material statement therein not misleading;
(f) If the Commission shall issue a stop-order suspending the
effectiveness of the Registration Statement, to make every reasonable effort to
obtain the lifting of that order at the earliest possible time;
<PAGE> 4
(g) Subject to Section 6, to pay the following costs: the
costs incident to the preparation, printing and filing under the Act of the
Registration Statement and any amendments, supplements and exhibits thereto;
the costs incident to the preparation, printing and filing of any document and
any amendments and exhibits thereto required to be filed by the Company under
the Exchange Act; the fees and disbursements of counsel to the Company; and all
other costs and expenses incident to the performance of the Company's
obligations under this Agreement.
3. (a) The Company will indemnify and hold harmless the
Market-Maker and each person, if any, who controls the Market-Maker (within the
meaning of the Act) against any losses, claims, damages or liabilities, joint
or several, and any action in respect thereof, to which the Market-Maker or
such controlling person may become subject, under the Act or otherwise, insofar
as such losses, claims, damages, liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Market-Maker and each such controlling person for any legal
and other expenses reasonably incurred by the Market-Maker or such controlling
person in connection with investigating, defending or preparing to defend
against, or appearing as a third-party witness in connection with, any such
loss, claim, damage, liability or action as such expenses are incurred
nothwithstanding the possibility that payments for such expenses might later be
held to be improper, in which case the person receiving them shall promptly
refund them; provided, however, that the Company will 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 any untrue statement or alleged untrue statement
contained in, or omission or alleged omission from, any such documents in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Market-Maker specifically for use therein; and
provided further 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 any failure by the Market-Maker to comply with the provisions of
Section 7 hereof if compliance therewith would have cured the untrue statement
or omission giving rise to such loss, claim, damage or liability.
(b) The Market-Maker will indemnify and hold harmless the
Company and each director and officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company
(within the meaning of the Act) against any losses, claims, damages or
liabilities to which the Company or any such director, officer or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein 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 written information furnished to the Company by or on behalf of the
Market-Maker specifically for use therein, and will reimburse the Company and
each such director, officer or controlling person for any legal and other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in in connection with investigating, defending or preparing
to defend against, or appearing as a third-party
<PAGE> 5
witness in connection with, any such loss, claim, damage, liability or action
as such expenses are incurred nothwithstanding the possibility that payments
for such expenses might later be held to be improper, in which case the person
receiving them shall promptly refund them.
(c) Promptly after receipt by an indemnified party under this
Section of any claim or notice of the commencement of any action, the
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify the indemnifying party of the
commencement of the action; provided however that the failure to notify the
indemnifying party will not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section. If any such claim or
action shall be brought against an indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it wishes, jointly
with any other 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 will not be liable to
the indemnified party under this Section for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided that the
Market-Maker shall have the right to employ counsel to represent the
Market-Maker and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Market-Maker against the Company under this Section if, in the reasonable
judgment of the Market-Maker, it is advisable for the Market-Maker and such
controlling persons to be represented by separate counsel, and in that event
the fees and expenses of such separate counsel shall be paid by the Company;
provided that the indemnifying party shall not be responsible for the fees and
expenses of such separate counsel so long as counsel to such indemnifying party
(which, in the case of the Company, shall be nationally recognized counsel
reasonably satisfactory to the Market-Maker) is able to conclude in a written
opinion (which may be requested at any time by the Market-Maker (it being
understood that the Market-Maker shall be entitled to reimbursement from the
date such opinion was requested if the indemnifying party's counsel is unable
to so conclude)) addressed to the indemnifying party, that there may be one or
more legal defenses available to it which are materially different from or
additional to those available to the indemnified party and in the reasonable
judgment of such counsel it is advisable to employ separate counsel; and
The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiffs, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under Section
3(a) or 3(b) in respect of any loss, claim, damage or liability (or any action
in respect thereof) referred to therein, 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) in such proportion as shall be
appropriate to reflect the relative fault of the Company on the one hand and
the Market-Maker 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
fault shall be determined by reference to, among other things, whether
<PAGE> 6
the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Market-Maker and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Market-Maker agree that it would not be just and
equitable if contributions pursuant to this Section were to be determined by
pro rata allocation 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
shall be deemed to include, for purposes of this Section, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity agreements contained in this Section
and the representations, warranties and agreements of the Company in Sections 1
and 2 shall survive all offers and sales of the Securities by the Market-Maker
in market-making transactions 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 indemnified party.
4. This Agreement shall become effective at the Effective
Time and may be terminated by the Company at any time upon 30 days' written
notice to the Market-Maker or by the Market-Maker by such notice to the
Company.
5. Prior to or simultaneous with the Effective Date, each of
the following shall have occurred:
(a) Clark, Klein & Beaumont shall have furnished to the
Market-Maker (at the Market-Maker's expense up to $5,000, with the Company to
bear any costs above such amount) their opinion addressed to the Market-Maker
and dated the Effective Date, as counsel to the Company, to the effect that:
(i) The Securities and the Indentures conform in all
material respects to the statements concerning them in the
Registration Statement and the Prospectus;
(ii) The Registration Statement has been declared
effective under the Act; and, to the knowledge of such
counsel, no stop-order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for
that purpose is pending or threatened by the Commission;
(iii) The Registration Statement and the Prospectus
(other than the financial statements and related schedules
therein, as to which such counsel are not called upon to
express an opinion) comply as to form in all material respects
with the requirements of the Act and the Rules and
Regulations;
(iv) The statements made in the Prospectus under the
captions "Description of the Debentures" and "Description of
the Senior Notes," insofar as they purport to
<PAGE> 7
summarize the provisions of documents or agreements
specifically referred to therein, fairly present the
information called for with respect thereto by the Form S-3/A;
and
(v) This Agreement has been duly authorized, executed and
delivered by the Company; the execution, delivery and
performance of this Agreement will not conflict with or result
in a violation of the corporate charter or by-laws of the
Company; and no consent, authorization or order of, or filing
or registration with, any court or governmental agency, which
has not been made or obtained, is, to the best of their
knowledge, required for the execution, delivery and
performance of this Agreement, except such as may be required
by the Act, the Exchange Act or state securities laws.
Such counsel shall also have furnished to the Market-Maker a statement,
addressed to the Market-Maker, dated the Effective Date, to the effect that (x)
such counsel has acted as counsel to the Company in connection with the
preparation of the Registration Statement and (y) based on the foregoing, no
facts have come to the attention of such counsel which lead them to believe
that the Registration Statement (other than the financial statements and
related schedules therein, as to which such counsel are not called upon to
express a belief), as of the Effective Date, 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 as aforesaid), as amended and supplemented, if
applicable, contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except for the statements made in the
Prospectus under the captions "Description of the Debentures" and "Description
of the Senior Notes" insofar as such statements relate to the Securities and
concern legal matters.
(b) The Company shall have furnished to the Market-Maker on
the Effective Date a certificate, dated the Effective Date, of its Chairman of
the Board, President or Chief Financial Officer stating that:
(i) The representations, warranties and agreements
of the Company in Section 1 are true and correct as of the
Effective Date; the Company have complied with all their
agreements contained herein; and
(ii) Such person has carefully examined the Registration
Statement and the Prospectus and, in the opinion of such
person, (A) as of the Effective Date, the Registration
Statement and the Prospectus did not include any untrue
statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
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 form and substance satisfactory to
counsel for the Market-Maker.
<PAGE> 8
6. The Company further agrees that if requested by the Market
Maker but at the Market Maker's expense:
(a) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented, the Company shall, concurrently
with such amendment or supplement, furnish the Market-Maker with a certificate
of its Chairman of the Board, President or Chief Financial Officer to the
effect that the statements contained in the certificate referred to in Section
5(b) which was last furnished to the Market-Maker are true and correct at the
time of such amendment, supplement or filing, as the case may be, as though
made at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a certificate of
the same tenor as the certificate referred to in said Section 5(b), modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such certificate.
(b) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented, the Company shall, concurrently
with such amendment or supplement, furnish the Market-Maker and its counsel
with the written opinion of Clark, Klein & Beaumont, dated the date of delivery
thereof, of the same tenor as the opinion referred to in Section 5(a), but
modified, as necessary, to relate to the Registration Statement and the
Prospectus as amended or supplemented to the time of delivery of such opinion
or, in lieu of such opinion, counsel shall furnish the Market-Maker with a
letter to the effect that they may rely on such prior opinion to the same
extent as though it were dated the date of such letter authorizing reliance
(except that statements in such last opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented to the
time of delivery of such letters authorizing reliance).
(c) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented to include additional financial
information, the Company shall cause Arthur Anderson & Co. to furnish to the
Market-Maker, concurrently with such amendment or supplement, a letter, dated
the date of delivery of such letter, of the type described in the American
Institute of Certified Public Accountants' Statement on Auditing Standards No.
49 and covering such specified financial statement items and procedures as the
Market-Maker may request; provided, however, that if the Registration Statement
or the Prospectus is amended or supplemented solely to include financial
information as of and for a fiscal quarter, Arthur Andersen & Co. may limit the
scope of such letter to the unaudited financial statements included in such
amendment or supplement unless there is contained therein any other accounting,
financial or statistical information that, in the reasonable judgment of the
Market-Maker, should be covered by such letter in which event such letter shall
also cover such other information.
7. The Market-Maker agrees that (a) if instructed by the
Company, it will refrain from delivering to any person any Prospectus during
such period as may reasonably be necessary for the Company to prepare any
necessary amendment or supplement to the Registration Statement or Prospectus
in accordance with the terms of this Agreement; and (b) in connection with its
market- making activities, the Market-Maker shall deliver at any time the
Prospectus as most recently amended or supplemented at such time.
<PAGE> 9
8. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement by the Market- Maker. Any notice by the
Company to the Market-Maker shall be sufficient if given in writing addressed
to Lehman Brothers Inc., World Financial Center, 200 Vesey Street, New York,
New York 10285, Attention: Lori G. Koffman and any notice by the Market-Maker
to the Company shall be sufficient if given in writing addressed to the Company
at R.P. Scherer International Corporation, 2075 West Big Beaver Road, Troy,
Michigan 48084, Attention: Corporate Secretary.
9. This Agreement shall be binding upon the Market-Maker, the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(a) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control the Market-Maker within the meaning of
Section 15 of the Act, and (b) the indemnity agreement of the Market-Maker
contained in Section 3 of this Agreement shall be deemed to be for the benefit
of directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this paragraph, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
10. This Agreement shall be governed by and construed in
accordance with the laws of New York, without giving effect to the choice of
law or conflicts of laws principles thereof. This Agreement may be executed in
one or more counterparts, and if executed in more than one counterpart the
executed counterparts shall together constitute a single instrument.
<PAGE> 10
If the foregoing correctly sets forth the agreement between
the Company and the Market-Maker, please indicate your acceptance in the space
provided for that purpose below.
<TABLE>
<S> <C>
Very truly yours,
R.P. SCHERER INTERNATIONAL
CORPORATION
By: /s/ Aleksandar Erdeljan
-------------------------
Title: President
Accepted:
LEHMAN BROTHERS INC.
By: /s/ Rodger Krouse
--------------------------
Title: Senior Vice President
</TABLE>
<PAGE> 1
Exhibit 12.1
R.P. SCHERER INTERNATIONAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO
(US$ - THOUSANDS)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
-------------------------------------------------------------------------- --------------------------
THREE
NINE MONTHS MONTHS YEAR
SIX MONTHS ENDED ENDED ENDED ENDED
SEPTEMBER 30, FOR THE YEARS ENDED MARCH 31, MARCH 31, JUNE 30, MARCH 31,
----------------------- ----------------------------------- -------------- ------------- ------------
1993 1992 1993 1992 1991 1990 1989 1989
----------- ----------- ----------- ----------- ----------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (loss) from
continuing
operations
before income
taxes, minority
interests, and
extraord. items $ 30,453 $ 35,378 $ 66,291 $ 32,019 $ 20,297 $ 2,992 (4,143) $ 24,702
Add:
Interest on indebtedness
and capital
leases . . . . 11,727 14,104 25,436 35,348 45,045 35,352 765 2,986
Interest element of lease
and rental
expenses (1) . 1,217 1,265 2,530 2,498 3,122 2,068 654 2,661
Amortization of
capitalized
interest . . . 0 0 0 0 0 0 57 226
-------- -------- -------- -------- -------- ------- -------- -------
Total . . . . $ 43,397 $ 50,747 $ 94,257 $ 69,865 $ 68,464 $40,412 $(2,667) $30,575
======== ======== ======== ======== ======== ======= ======== =======
Fixed charges:
Interest on indebtedness
and capital
leases . . . . $ 11,727 $ 14,104 $ 25,436 $ 35,348 $ 45,045 $35,352 $ 765 $ 2,986
Preferred dividend
requirements (2) 0 0 0 11,585 10,416 3,356 9 3,921
Interest element of lease
and rental
expenses (1) $ 1,217 $ 1,265 $ 2,530 $ 2,498 $ 3,122 $ 2,068 $ 654 $ 2,661
-------- -------- -------- -------- -------- ------- -------- -------
Fixed charges . . . . . . . $ 12,944 $ 15,369 $ 27,966 $ 49,431 $ 58,583 $40,776 $ 1,428 $ 9,568
======== ======== ======== ======== ======== ======= ======== =======
Ratio of Earnings to Fixed
Charges . . . . . . . . 3.4 3.3 3.4 1.4 1.2 N/A N/A 3.2
======== ======== ======== ======== ======== ======= ======== =======
Deficiency in Earnings
Available to Cover Fixed N/A N/A N/A N/A N/A $ 364 $ 4,095 N/A
Charges . . . . . . . .
======== ======== ======== ======== ======== ======= ======== =======
</TABLE>
(1) Reflects 33-1/3% of lease and rental expense, representing the portion
deemed to be interest.
<PAGE> 2
(2) Represents the amount of estimated pre-tax earnings required to pay
declared preferred stock dividends. (Preferred stock was redeemed in
conjunction with R.P. Scherer Corporation's initial public offering of
common stock in October 1991.)
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Post-Effective Amendment No. 7 to the Registration Statement
on Form S-1 (Registration File No. 33-30362) of our reports dated April 16,
1993 (except with respect to the matters discussed in note 14 to the
consolidated financial statements, as to which the date is May 14, 1993)
included in R.P. Scherer International Corporation's Annual Report on Form 10-K
and in R.P. Scherer Corporation's Annual Report on Form 10-K, respectively,
for the year ended March 31, 1993, and to all references to our Firm included
in this post-effective amendment.
ARTHUR ANDERSEN & CO.
Detroit, Michigan,
February 10, 1994.
