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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-61735
PROSPECTUS
$1,500,000,000
THE SHERWIN-WILLIAMS COMPANY
SECURITIES
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The Sherwin-Williams Company (the "Company") may offer from time to
time the following types of securities (each a "Security" and collectively the
"Securities"):
(i) debt securities, in one or more series, which may be
senior debt securities or subordinated debt securities (the "Debt
Securities"), in each case consisting of notes or other unsecured
evidences of indebtedness;
(ii) shares of common stock, $1.00 par value per share (the
"Common Stock"); and
(iii) warrants to purchase Debt Securities or Common Stock.
The Securities will have an aggregate initial offering price of up to
$1,500,000,000 or an equivalent amount in U.S. dollars if any Securities are
denominated in a currency other than U.S. dollars or in currency units. The
Securities may be offered separately or together in any combination and as
separate series. The amounts, prices, form, designation, specific terms and
offering terms of each issuance of Securities will be determined at the time of
sale and will be set forth in a Prospectus Supplement.
The Common Stock of the Company is traded on the New York Stock
Exchange ("NYSE") under the symbol "SHW". On September 4, 1998, the last
reported sale price of the Common Stock was $24 5/16. The Company has not yet
determined whether any of the other Securities will be listed on the NYSE or
other securities exchange. If the Company decides to seek listing of any
Security on an exchange, the Prospectus Supplement relating thereto will
disclose such exchange or market. Where applicable, the Prospectus Supplement
will also contain information about certain material United States federal
income tax considerations relating to the Securities.
The Securities may be sold directly, through agents designated from
time to time or to or through underwriters or dealers. See "Plan of
Distribution". If any agents or underwriters are involved in the sale of any
Securities, their names and any applicable commissions or discounts will be set
forth in a Prospectus Supplement. The net proceeds to the Company from the sale
of Securities also will be set forth in a Prospectus Supplement.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September 8, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information can be inspected and copied at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20459, and the
Commission's Regional Offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20459 at
prescribed rates. In addition, such material may be accessed electronically at
the Commission's site on the World Wide Web located at http://www.sec.gov. Such
reports, proxy statements and other materials concerning the Company may also be
inspected at the office of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (including all amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. Such
additional information is available for inspection and copying at the offices of
the Commission. Statements contained in this Prospectus, in any Prospectus
Supplement or in any document incorporated by reference herein or therein as to
the contents of any contract or other document referred to herein or therein are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to, or incorporated by
reference in, the Registration Statement, each such statement being qualified in
all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company (Commission
File No. 001-04851) with the Commission under the Exchange Act are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998;
(c) The Company's Current Report on Form 8-K filed March 30, 1998;
(d) The description of the Common Stock included in the Company's
Registration Statement on Form S-8 filed with the Commission on April 28, 1989
under Section 12 of the Securities Exchange Act of 1934; and
(e) The description of the Company's Cumulative Redeemable Serial
Preferred Stock Purchase Rights (the "Rights") associated with the Common Stock
included in the Company's Registration Statement on Form 8-A filed with the
Commission on April 24, 1997 under Section 12 of the Securities Exchange Act of
1934.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act prior to the termination of the offering of the
Securities, shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any statement
so modified or superceded shall not be deemed to constitute a part hereof except
as so modified or superseded.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference in this Prospectus other than exhibits to
such documents unless such exhibits are also specifically incorporated by
reference herein. Requests for such copies should be directed to The
Sherwin-Williams Company, 101 Prospect Avenue, N.W., Cleveland, Ohio 44115-1075,
Attention: Corporate Secretary; telephone number (216) 566-2000.
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THE COMPANY
The Company, which was first incorporated under the laws of the State
of Ohio eighteen years after its founding in 1866, is engaged in the
manufacture, distribution and sale of paints, coatings and related products to
professional, industrial, commercial and retail customers.
The Company's principal executive offices are located at 101 Prospect
Avenue, N.W., Cleveland, Ohio 44115-1075, and its telephone number is (216)
566-2000.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
net proceeds from the sale of the Securities will be used for general corporate
purposes, which may include repayment of indebtedness, acquisitions, additions
to working capital and capital expenditures. Additional information on the use
of net proceeds from the sale of any particular Security will be set forth in
the Prospectus Supplement relating to such Security.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for each of 1997, 1996, 1995, 1994 and 1993 and for
the six months ended June 30, 1998 and 1997 on a historical basis.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
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1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings 3.1 2.9 3.2 3.9 4.2 4.1 3.7
to fixed charges *
</TABLE>
* For purposes of computing such ratio, earnings consist of income before
income taxes and the cumulative effect of accounting changes plus fixed
charges, and fixed charges consist of interest expense and gross rent
expense.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities. Accordingly, for
a description of the terms of a particular issue of Debt Securities, reference
must be made to both the Prospectus Supplement relating thereto and to the
following description.
The Debt Securities may be issued, from time to time, in one or more
series, and will constitute either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"). Senior Debt Securities may be issued from time to time under the
indenture dated as of February 1, 1996 (the "Senior Indenture"), between the
Company and The Chase Manhattan Bank (formerly known as Chemical Bank), as
trustee (the "Senior Trustee"). A copy of the form of Senior Indenture has been
filed as an exhibit to the Registration Statement (file no. 333-01093) filed
with the Commission on February 20, 1996 and is incorporated by reference
herein. Subordinated Debt Securities may be issued from time to time under an
indenture (the "Subordinated Indenture") to be entered into between the Company
and The Chase Manhattan Bank, as trustee (the "Subordinated Trustee") A copy of
the form of Subordinated Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part and is incorporated
herein by reference.
The Senior Indenture and the Subordinated Indenture are referred to
herein individually as an "Indenture" and, collectively, as the "Indentures",
and the Senior Trustee and the Subordinated Trustee are referred to herein
individually as the "Trustee" and collectively as the "Trustees". The forms of
Indentures are filed, or incorporated by reference, as exhibits to the
Registration Statement. Capitalized terms used in this section which are not
otherwise defined in the Prospectus shall have the meanings set forth in the
Indenture to which they relate. The following summaries of certain provisions of
the Debt Securities and the Indentures do not purport to be complete and are
subject to, and qualified in their entirety by express reference to, all the
provisions of the Indentures, including the definitions therein of certain
terms.
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GENERAL
Neither Indenture limits the aggregate principal amount of Debt
Securities that can be issued thereunder. The Debt Securities may be issued in
one or more series as may be authorized from time to time by the Company.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Debt Securities with respect to which such Prospectus Supplement is
being delivered:
(a) The title of the Debt Securities to be offered;
(b) Any limit on the aggregate principal amount of the Debt Securities
to be offered that may be authenticated and delivered under an Indenture;
(c) The date or dates on which the principal and premium with respect
to the Debt Securities to be offered are payable;
(d) The rate or rates (which may be fixed or variable) at which the
Debt Securities to be offered shall bear interest (if any) or the method of
determining such rate or rates, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be payable or
the method by which such dates will be determined, the record dates for the
determination of holders thereof to whom such interest is payable, and the basis
upon which interest will be calculated if other than that of a 360-day year of
twelve 30-day months;
(e) The place or places, if any, in addition to or instead of the
Corporate Trust Office of the Trustee, where the principal, premium, and
interest with respect to Debt Securities to be offered shall be payable;
(f) The price or prices at which, the period or periods within which,
and the terms and conditions upon which Debt Securities to be offered may be
redeemed, in whole or in part, at the option of the Company or otherwise;
(g) The obligation, if any, of the Company to redeem, purchase, or
repay Debt Securities to be offered pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof and the price or prices at
which, the period or periods within which, and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased, or repaid, in
whole or in part, pursuant to such obligations;
(h) The terms, if any, upon which the Debt Securities to be offered may
be convertible into or exchanged for Common Stock, other Debt Securities, or
warrants for Common Stock or Debt Securities, and the terms and conditions upon
which such conversion or exchange shall be effected, including the initial
conversion or exchange price or rate, the conversion or exchange period, and any
other additional provisions;
(i) If other than denominations of $1,000 or any integral multiple
thereof, the denominations in which Debt Securities to be offered shall be
issuable;
(j) If the amount of principal, premium, if any, or interest with
respect to the Debt Securities to be offered may be determined with reference to
an index or pursuant to a formula, the manner in which such amounts will be
determined;
(k) If the principal amount payable at the stated maturity of Debt
Securities to be offered will not be determinable as of any one or more dates
prior to such stated maturity, the amount that will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any maturity other than the
stated maturity or which will be deemed to be outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined);
(l) Any changes or additions to the provisions of the applicable
Indenture dealing with defeasance, including the addition of additional
covenants that may be subject to the Company's covenant defeasance option;
(m) If other than such coin or currency of the United States as at the
time of payment is legal tender for payment of public and private debts, the
coin or currency in which payment of the principal, premium, if any, and
interest with respect to Debt Securities to be offered shall be payable, and if
necessary, the manner of determining the equivalent thereof in United States
currency;
(n) If other than the principal amount thereof, the portion of the
principal amount of Debt Securities to be offered that shall be payable upon
declaration of acceleration of the maturity thereof or provable in bankruptcy;
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(o) Any addition to or change in the Events of Default with respect to
the Debt Securities to be offered and any change in the right of the Trustee or
the holders to declare the principal, premium, if any, and interest with respect
to such Debt Securities due and payable;
(p) If the Debt Securities to be offered shall be issued in whole or in
part in the form of a Global Security, the terms and conditions, if any, upon
which such Global Security may be exchanged in whole or in part for other
individual Debt Securities in definitive registered form, the Depositary for
such Global Security, and the form of any legend or legends to be borne by any
such Global Security in addition to or in lieu of the legend referred to in the
Indenture;
(q) Any trustee, authenticating or paying agents, transfer agents, or
registrars;
(r) The applicability of, and any addition to or change in, the
covenants and definitions then set forth in the applicable Indenture or in the
terms then set forth in such Indenture relating to permitted consolidations,
mergers, or sales of assets, including conditioning any merger, conveyance,
transfer, or lease permitted by such Indenture upon the satisfaction of an
indebtedness coverage standard by the Company and any successor to the Company;
(s) The terms, if any, of any guarantee of the payment of principal,
premium, and interest with respect to Debt Securities to be offered and any
corresponding changes to the provision of the applicable Indenture as then in
effect;
(t) The terms, if any, of the transfer, mortgage, pledge, or assignment
as security for the Debt Securities to be offered of any properties, assets,
moneys, proceeds, securities, or other collateral, including whether certain
provisions of the Trust Indenture Act are applicable and any corresponding
changes to provisions of the applicable Indenture as then in effect;
(u) With regard to Debt Securities to be offered that do not bear
interest, the dates for certain required reports to the Trustee; and
(v) Any other terms of the Debt Securities to be offered (which terms
shall not be prohibited by the provisions of the applicable Indenture).
The Prospectus Supplement will also describe any material United States
federal income tax consequences or other special considerations applicable to
the series of Debt Securities to which such Prospectus Supplement relates,
including those applicable to (i) Debt Securities with respect to which payments
of principal, premium, if any, or interest are determined with reference to an
index or formula (including changes in prices of particular securities,
currencies or commodities), (ii) Debt Securities with respect to which
principal, premium, if any, or interest is payable in a foreign or composite
currency, (iii) Debt Securities that are issued at a discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Original Issue Discount Debt Securities"), and
(iv) variable rate Debt Securities that are exchangeable for fixed rate Debt
Securities.
Payments of interest on Registered Securities may be made at the option
of the Company by check mailed to the registered holders thereof or, if so
provided in the applicable Prospectus Supplement, at the option of a holder by
wire transfer to an account designated by such holder.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities may be transferred or exchanged at the office of the
Trustee at which its corporate trust business is principally administered in the
United States or at the office of the Trustee or the Trustee's agent in the
Borough of Manhattan, the City and State of New York, at which its corporate
agency business is conducted, subject to the limitations provided in the
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Indenture, without the payment of any service charge, other than any tax or
governmental charge payable in connection therewith.
All funds paid by the Company to a paying agent for the payment of
principal, premium, if any, or interest with respect to any Debt Securities 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 holders of such Debt Securities will thereafter look only to the Company for
payment thereof.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of principal of, and interest on, the Subordinated Debt
Securities will, to the extent set forth in the Subordinated Indenture and as
also may be described in the applicable Prospectus Supplement, be subordinated
in right of payment to the prior payment in full of all Senior Indebtedness of
the Company. "Senior Indebtedness" of the Company (as defined in the
Subordinated Indenture) means, with certain exceptions, the principal of, and
premium, if any, and interest and other amounts due on or in connection with any
Indebtedness of the Company incurred, assumed, or Guaranteed (as defined in the
Subordinated Indenture) by the Company, whether outstanding on the date of the
Subordinated Indenture or thereafter incurred, assumed, or Guaranteed and all
renewals, extensions and refundings of any such Indebtedness of the Company. The
term "Indebtedness" as used in the previous sentence means, with respect to the
Company, (i) the principal of, and premium, if any, in respect of indebtedness
of the Company for borrowed money, (ii) the principal of, and premium, if any,
in respect of obligations of the Company evidenced by bonds, debentures, notes
or similar instruments, (iii) all Capitalized Lease Obligations (as defined in
the Subordinated Indenture) of the Company, (iv) all obligations of the Company
to pay the deferred and unpaid purchase price of property or services (except
Trade Payables, as defined in the Subordinated Indenture), (v) all obligations
of the Company in respect of letters of credit, banker's acceptances or other
similar instruments or credit transactions (including reimbursement obligations
with respect thereto), other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i) through (iv)
above) entered into in the ordinary course business of the Company to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third business day following
receipt by the Company of a demand for reimbursement following on the letter of
credit, (vi) all Indebtedness of other persons secured by a Lien (as defined in
the Subordinated Indenture) on any asset of the Company, whether or not such
Indebtedness is assumed by the Company; provided however, that the amount of
such Indebtedness shall be the lesser of (A) the fair market value of such asset
at such date of determination and (B) the amount of such Indebtedness of such
other persons, (vii) all Indebtedness of other persons to the extent Guaranteed
by the Company, and (viii) to the extent not otherwise included in this
definition, obligations in respect of Hedging Obligations (as defined in the
Subordinated Indenture). Notwithstanding the foregoing, the term "Indebtedness"
excludes (i) any indebtedness of the Company or any Subsidiary (as defined in
the Indenture) to the Company or another Subsidiary, and (ii) any Guarantee by
the Company or any Subsidiary of indebtedness of the Company or another
Subsidiary.
Upon any distribution of assets of the Company upon dissolution,
winding up, liquidation, or reorganization of the Company, whether in
bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise, the holders of all Senior
Indebtedness shall first be entitled to receive payment in full in accordance
with the terms of such Senior Indebtedness of the principal thereof or premium,
if any, and the interest due thereon before the holders of Subordinated Debt
Securities are entitled to receive any payment upon the principal of or premium,
if any, or interest on Indebtedness evidenced by the Subordinated Debt
Securities. In the event and during the continuation of any default in the
payment of principal of, or premium, if any, or interest on, any Senior
Indebtedness, beyond any applicable period of grace, or in the event that any
event of default with respect to any Senior Indebtedness shall have occurred and
be continuing, or would occur as a result of the payment of principal of, or
interest on, the Subordinated Debt Securities, permitting the holders of such
Senior Indebtedness to accelerate the maturity thereof, then, unless and until
such default or event of default shall have been cured or waived or shall have
ceased to exist, no payment of principal of, or interest on, the Subordinated
Debt Securities, or in respect of any retirement, purchase, or other acquisition
of any of the Subordinated Debt Securities shall be made by the Company.
This subordination of the Subordinated Debt Securities will not prevent
the occurrence of any event of default with respect to the Subordinated Debt
Securities. The Subordinated Indenture does not provide for any limitation on
the issuance of additional Senior Indebtedness.
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GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities. A Global Security is a Debt Security
that represents, and is denominated in an amount equal to the aggregate
principal amount of, all outstanding Debt Securities of a series, or any portion
thereof, in either case having the same terms, including the same original issue
date, date or dates on which principal and interest are due, and interest rate
or method of determining interest. A Global Security will be deposited with, or
on behalf of, a Depositary, which will be identified in the Prospectus
Supplement relating to such Debt Securities. Global Securities may be issued in
only fully registered form and in either temporary or definitive form. Unless
and until it is exchanged in whole or in part for the individual Debt Securities
represented thereby, a Global Security may not be transferred except as a whole
by the Depositary to a nominee of the Depositary, or by the Depositary or any
nominee of the Depositary to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the Prospectus Supplement
relating to such Debt Securities. The Company anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Debt Securities represented by
such Global Security to the accounts of persons that have accounts with the
Depositary ("participants"). Such accounts shall be designated by the dealers or
underwriters with respect to such Debt Securities or, if such Debt Securities
are offered and sold directly by the Company or through one or more agents, by
the Company or such agents. Ownership of beneficial interests in a Global
Security will be limited to participants or persons that hold beneficial
interests through participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary (with respect to interests of
participants) or records maintained by participants (with respect to interests
of persons other than participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limitations and laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or nominee, as the
case may be, will be considered the sole owner or holder of the individual Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any of such Debt
Securities in definitive form, and will not be considered the owners or holders
thereof under the applicable Indenture. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of the
Depository for such Global Security and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders or if an owner of a beneficial interest in a Global Security desires to
give or take any action which a holder is entitled to give or take under the
applicable Indenture, the Depositary for such Global Security would authorize
the participants holding the relevant beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal, premium, if any, and interest with respect to
individual Debt Securities represented by a Global Security will be made to the
Depositary or its nominee, as the case may be, as the registered owner or holder
of such Global Security. Neither the Company, the Trustee, any paying agent or
registrar for such Debt Securities, or any agent of the Company or the Trustee
will have any responsibility or liability for (i) any aspect of the records
relating to or payments made by the Depositary, its nominee, or any participants
on account of beneficial interests in the Global Security or for maintaining,
supervising, or reviewing any records relating to such beneficial interests,
(ii) the payment to the owners of beneficial interests in the Global Security of
amounts paid to the Depositary or its nominee, or (iii) any other matter
relating to the actions and practices of the Depositary, its nominee, or its
participants. Neither the Company, the Trustee, any paying agent or registrar
for such Debt Securities, or any agent of the Company or the Trustee will be
liable for any delay by the Depositary, its nominee, or any of its participants
in identifying the owners of beneficial interests in the Global Security, and
the Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Depositary or its nominee for all purposes.
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The Company expects that the Depositary for a series of Debt Securities
or its nominee, upon receipt of any payment of principal, premium, if any, or
interest with respect to a definitive Global Security representing any of such
Debt Securities, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security, as shown on the records of the Depositary or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers and registered in "street
name". Such payments will be the responsibility of such participants.
If the Depositary for a series of Debt Securities is at any time
unwilling, unable, or ineligible to continue as depositary, the Company shall
appoint a successor depositary. If a successor depositary is not appointed by
the Company within 90 days, the Company will issue individual Debt Securities of
such series in exchange for the Global Security representing such series of Debt
Securities. In addition, the Company may at any time and its sole discretion,
subject to any limitations described in the Prospectus Supplement relating to
such Debt Securities, determine no longer to have Debt Securities of a series
represented by a Global Security and, in such event, will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. Furthermore, if the Company so specifies with respect
to the Debt Securities of a series, an owner of a beneficial interest in a
Global Security representing Debt Securities of such series may, on terms
acceptable to the Company, the Trustee, and the Depositary for such Global
Security, receive individual Debt Securities of such series in exchange for such
beneficial interests, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of individual Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name.
CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO SENIOR DEBT SECURITIES
The following discussion of certain covenants which restricts the
Company's ability to create certain liens and enter into certain sale/leaseback
transactions applies only to the Senior Indenture and the Senior Debt Securities
issued under such Senior Indenture.
Limitation on Liens
As required under the Senior Indenture, unless otherwise provided in
the Prospectus Supplement, the Company and its Restricted Subsidiaries will not
create any Liens on any Principal Property or shares of capital stock of any
Restricted Subsidiary unless Senior Debt Securities then outstanding are equally
and ratably secured, with certain exceptions, including but not limited to: (i)
pledges or deposits under worker's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (including government contracts, but excluding contracts for
the payment of indebtedness) or other obligations of like nature, in each case
incurred in the ordinary course of business, (ii) statutory and tax Liens for
sums not yet due or delinquent or being contested in good faith by appropriate
proceedings, (iii) certain encumbrances and easements, (iv) Liens existing at
the date of the Indenture, (v) Liens securing only Indebtedness of a Wholly
Owned Subsidiary of the Company to the Company or one or more Wholly Owned
Subsidiaries of the Company, (vi) Purchase Money Liens, (vii) Liens on property
or shares of stock of another Person at the time such other Person becomes a
Subsidiary of such Person, provided that such Liens are not created in
connection with such other Person becoming a Subsidiary of such Person, (viii)
Liens securing a Hedging Obligation, (ix) Liens created in connection with a
tax-free financing, (x) Liens resulting from the deposit of funds or evidences
of Indebtedness in trust for the purpose of defeasing Indebtedness of the
Company or any of its Subsidiaries, (xi) rights of a common owner of any
interest in property, (xii) Liens placed upon any real property owned or
acquired by the Company or any of its Subsidiaries securing Indebtedness in an
amount up to 80% of the fair market value of such real property, (xiii) Liens to
secure any refinancing, refunding, extension, renewal or replacement of any
Indebtedness secured by certain permitted Liens, and (xiv) additional Liens not
to exceed a total of 15% of Consolidated Net Tangible Assets.
Limitation on Sale/Leaseback Transactions
As required by the Senior Indenture, the Company and its Restricted
Subsidiaries shall not enter into any Sale/Leaseback Transaction with respect to
any Principal Property unless (i) the Company or such Restricted Subsidiary
would be entitled to create a Lien on such Principal Property securing
Indebtedness in an amount equal to the Attributable Indebtedness with respect to
such Sale/Leaseback Transaction without securing the Senior Debt Securities
pursuant to the provisions described above under "-- Limitation on Liens," or
(ii) the Company, within six months from the effective date of such
Sale/Leaseback Transaction, applies an amount equal to the Attributable
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Indebtedness with respect to such Sale/Leaseback Transaction to the voluntary
defeasance or retirement of Senior Debt Securities or other Indebtedness ranking
pari passu with the Senior Debt Securities; provided that the foregoing will not
prevent the Company or any Restricted Subsidiary from (x) entering into any
Sale/Leaseback Transaction involving a lease with a term of less than three
years, or (y) entering into any Sale/Leaseback Transaction between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries.
CERTAIN ADDITIONAL COVENANTS OF THE COMPANY
Limitation on Consolidations and Mergers
The Company covenants under both the Senior Indenture and the
Subordinated Indenture that the Company shall not consolidate with or merge
into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets (in one transaction or a series of related
transactions) to another entity unless such entity is a corporation that assumes
all the obligations under the Debt Securities and the Indentures and certain
other conditions are met (whereupon all such obligations of the Company shall
terminate).
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indentures as "Events of
Default" with respect to a series of Debt Securities:
(a) Default in the payment of any installment of interest on any Debt
Securities of that series, as and when the same shall become due and payable and
continuance of such default for a period of 30 days;
(b) Default in the payment of all or any part of the principal or
premium with respect to any Debt Securities of that series as and when the same
shall become due and payable, whether at maturity, upon redemption, by
declaration, upon required repurchase, or otherwise;
(c) Default in the payment of any sinking fund payment with respect to
any Debt Securities of that series as and when the same shall become due and
payable and continuance of such default for a period of 30 days;
(d) Failure on the part of the Company to comply with the provisions of
the Indentures relating to consolidations, mergers, and sales of assets;
(e) Failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the Debt
Securities of that series, in the applicable Indenture with respect to such
series, or in any supplemental Indenture with respect to such series (other than
covenants or agreements included solely by or for the benefit of a series of
Debt Securities thereunder other than that series) continuing for a period of
ninety (90) days after the date on which written notice specifying such failure
and requiring the Company to remedy the same and stating that such notice is a
"Notice of Default" hereunder shall have been given to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Debt Securities of that series at the time
outstanding;
(f) The Company or any of its "Significant Subsidiaries" (defined as
any subsidiary of the Company that would be a "significant subsidiary" as
defined in Rule 405 under the Securities Act as in effect on the date of the
Indenture) shall (i) voluntarily commence any proceeding or file any petition
seeking relief under the United States Bankruptcy Code or other federal or state
bankruptcy, insolvency, or similar law, (ii) consent to the institution of, or
fail to controvert within the time and in the manner prescribed by law, any such
proceeding or the filing of any such petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, or similar official
for the Company or any such Significant Subsidiary or for a substantial part of
its property, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) admit in writing its inability or fail
generally to pay its debts as they become due, (vii) take corporate action for
the purpose of effecting any of the foregoing, or (viii) take any comparable
action under any foreign laws relating to insolvency of the Company or any
Significant Subsidiary;
(g) The entry of an order or decree by a Court having competent
jurisdiction for (i) relief with respect to the Company or any of its
Significant Subsidiaries or a substantial part of any of their property under
the United States Bankruptcy Code or any other federal or state bankruptcy,
insolvency, or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, or similar official for the Company or any such
Significant Subsidiary or for a substantial part of any of their property
(except any decree or order appointing such official of any Significant
Subsidiary pursuant to a plan under which the assets and operations of such
Significant Subsidiary are transferred to
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or combined with another Subsidiary or Subsidiaries of the Company or to the
Company), or (iii) the winding-up or liquidation of the Company or any such
Significant Subsidiary (except any decree or order approving or ordering the
winding-up or liquidation of the affairs of a Significant Subsidiary pursuant to
a plan under which the assets and operations of such Significant Subsidiary are
transferred to or combined with another Subsidiary or Subsidiaries of the
Company or to the Company), and such order or decree shall continue unstayed and
in effect for sixty (60) consecutive days, or any similar relief is granted
under any foreign laws and the order or decree stays in effect for sixty (60)
consecutive days; and
(h) Any other Event of Default provided with respect to Debt Securities
of that series.
An Event of Default with respect to one series of Debt Securities is not
necessarily an Event of Default for another series of Debt Securities.
If an Event of Default described in clause (a), (b), (c), (d), (e), (f)
(other than with respect to the Company), (g) (other than with respect to the
Company) or (h) above occurs and is continuing with respect to any series of
Debt Securities, unless the principal and interest with respect to all the Debt
Securities of such series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debt Securities of such series (each such series voting as a separate class)
then outstanding may declare the principal amount (or, if Original Issue
Discount Debt Securities, such portion of the principal amount as may be
specified in such series) of and interest on all the Debt Securities of such
series due and payable immediately. If an Event of Default described in clause
(f) or (g) (in each case with respect to the Company) above occurs, unless the
principal and interest with respect to all the Debt Securities of all series
shall have become due and payable, the principal amount (or, if any series are
Original Issue Discount Debt Securities, such portion of the principal amount as
may be specified in such series) of and interest on all Debt Securities of all
series then outstanding shall become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any holder of Debt
Securities.
If an Event of Default occurs and is continuing, the Trustee shall be
entitled and empowered to institute any action or proceeding for the collection
of the sums so due and unpaid or to enforce the performance of any provisions of
the Debt Securities of the affected series or the applicable Indenture, to
prosecute any such action or proceeding to judgment or final decree, and to
enforce any such judgment or final decree against the Company or any other
obligor on the Debt Securities of such series. In addition, if there shall be
pending proceedings for the bankruptcy or reorganization of the Company or any
other obligor on the Debt Securities, or if a receiver, trustee, or similar
official shall have been appointed for its property, the Trustee shall be
entitled and empowered to file and prove a claim for the whole amount of
principal, premium, and interest (or, in the case of Original Issue Discount
Debt Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid with respect to the Debt Securities. No
holder of any Debt Security of any series shall have any right to institute any
action or proceeding upon or under or with respect to the applicable Indenture,
for the appointment of a receiver or trustee, or for any other remedy, unless
(i) such holder previously shall have given to the Trustee written notice of an
Event of Default with respect to Debt Securities of that series and of the
continuance thereof, (ii) the holders of not less than 25% in aggregate
principal amount of the outstanding Debt Securities of that series (each such
series voting as a separate class) shall have made written request to the
Trustee to institute such action or proceeding with respect to such Event of
Default and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and (iii) the Trustee, for 60 days after its receipt of such notice,
request, and offer of indemnity shall have failed to institute such action or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to the provisions of the Indenture.
Prior to the acceleration of the maturity of the Debt Securities of any
series, the holders of a majority in aggregate principal amount of the Debt
Securities of that series at the time outstanding may, on behalf of the holders
of all Debt Securities of that series, waive any past default or Event of
Default and its consequences for that series, except (i) a default in the
payment of the principal, premium, if any, or interest with respect to such Debt
Securities, or (ii) a default with respect to a provision of the applicable
Indenture that cannot be amended without the consent of each holder affected
thereby. In case of any such waiver, such default shall cease to exist, any
Event of Default arising therefrom shall be deemed to have been cured for all
purposes, and the Company, the Trustee, and the holders of the Debt Securities
of that series shall be restored to their former positions and rights under the
applicable Indenture.
The Trustee shall promptly after the occurrence of a default known to
it with respect to a series of Debt Securities, give to the holders of the Debt
Securities of such series notice of all uncured defaults with respect to such
series known to it, unless such defaults shall have been cured or waived before
the giving of such notice; provided,
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however, that except in the case of default in the payment of principal,
premium, if any, or interest with respect to the Debt Securities of such series
or in the making of any sinking fund payment with respect to the Debt Securities
of such series, the Trustee shall be protected in withholding such notice if it
in good faith determines that the withholding of such notice is in the interest
of the holders of such Debt Securities.
MODIFICATION OF THE INDENTURES
The Company and either the Senior Trustee or the Subordinated Trustee,
as the case may be, may enter into supplemental indentures without the consent
of the holders of Debt Securities for one or more of the following purposes:
(a) To evidence the succession of another person to the Company
pursuant to the provisions of the applicable Indenture relating to
consolidations, mergers, and sales of assets and the assumption by such
successor of the covenants, agreements, and obligations of the Company in the
applicable Indenture and in the Debt Securities;
(b) To surrender any right or power conferred upon the Company by the
applicable Indenture, to add to the covenants of the Company such further
covenants, restrictions, conditions, or provisions for the protection of the
holders of all or any series of Debt Securities as the Board of Directors of the
Company shall consider to be for the protection of the holders of such Debt
Securities and to make the occurrence, or the occurrence and continuance, of a
default in any of such additional covenants, restrictions, conditions or
provisions a default or an Event of Default under the applicable Indenture
(provided, however, that with respect to any such additional covenant,
restriction, condition or provision, such supplemental Indenture may provide for
a period of grace after default, which may be shorter or longer than that
allowed in the case of other defaults, may provide for an immediate enforcement
upon such default, may limit the remedies available to the Trustee upon such
default, or may limit the right of holders of a majority in aggregate principal
amount of any or all series of Debt Securities to waive such default);
(c) To cure any ambiguity or to correct or supplement any provision
contained in the applicable Indenture, in any supplemental Indenture, or in any
Debt Securities that may be defective or inconsistent with any other provision
contained therein;
(d) To modify or amend the applicable Indenture in such a manner as to
permit the qualification of such Indenture or any supplemental Indenture under
the Trust Indenture Act as then in effect;
(e) To convey, transfer, assign, mortgage, or pledge any property to or
with the Trustee, or to make such other provisions in regard to matters or
questions arising under the applicable Indenture as shall not adversely affect
the interests of any holders of Debt Securities of any series;
(f) To comply with the provisions of the applicable Indenture relating
to consolidations, mergers, and sales of assets;
(g) To add guarantees with respect to the Debt Securities or to secure
the Debt Securities;
(h) To make any change that does not adversely affect the rights of any
holder;
(i) To add to, change, or eliminate any of the provisions of the
applicable Indenture with respect to one or more series of Debt Securities, so
long as any such addition, change or elimination not otherwise permitted under
the applicable Indenture shall (i) neither apply to any Debt Security of any
series created prior to the execution of such supplemental Indenture and
entitled to the benefit of such provision nor modify the rights of the holders
of any such Debt Security with respect to such provision or (ii) become
effective only when there is no such Debt Security outstanding;
(j) To evidence and provide for the acceptance of appointment by a
successor or separate Trustee with respect to the Debt Securities of one or more
series and to add to or change any of the provisions of the Indenture as shall
be necessary to provide for or facilitate the administration of the applicable
Indenture by more than one Trustee; and
(k) To establish the form or terms of Debt Securities as described
under "Description of Debt Securities - General" above.
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With the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series affected thereby, the
Company and the Trustee may from time to time and at any time enter into a
supplemental Indenture for the purpose of adding any provisions to, changing in
any manner, or eliminating any of the provisions of the applicable Indenture or
of any supplemental Indenture or of modifying in any manner the rights of the
holder of the Debt Securities of such series; provided, however, that without
the consent of the holders of each Debt Security so affected, no such
supplemental Indenture shall (i) reduce the percentage in principal amount of
Debt Securities of any series whose holders must consent to an amendment, (ii)
reduce the rate of or extend the time for payment of interest on any Debt
Security, (iii) reduce the principal of or extend the stated maturity of any
Debt Security, (iv) reduce the premium payable upon the redemption of any Debt
Security or change the time at which any Debt Security may or shall be redeemed,
(v) make any Debt Security payable in a currency other than that stated in the
Debt Security, (vi) release any security that may have been granted with respect
to the Debt Securities, or (vii) make any change in the provisions of the
applicable Indenture relating to waivers of defaults or amendments that require
unanimous consent.
Modifications Specific to the Subordinated Indenture
The Subordinated Indenture provides that the Company and the Trustee
may not modify the provisions of the Subordinated Indenture with respect to the
subordination provisions of any series of Subordinated Debt Securities or the
definition of Senior Indebtedness in a manner adverse to the holders of
Subordinated Debt Securities, without first obtaining the consent of the holders
of each Subordinated Debt Security so affected. The Subordinated Indenture also
provides that the Company and the Trustee may not amend the Subordinated
Indenture to alter the subordination of any of the outstanding Subordinated Debt
Securities without the consent of each holder of Senior Indebtedness then
outstanding that would be adversely affected thereby.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any person,
or sell, convey, transfer, lease or otherwise dispose of all or substantially
all of its assets (in one transaction or a series of related transactions),
unless the following conditions have been satisfied:
(a) Either (i) the Company shall be the continuing person in the case
of a merger, or (ii) the resulting, surviving, or transferee person, if other
than the Company (the "Successor Company"), shall be a corporation organized and
existing under the laws of the United States, any State, or the District of
Columbia and shall expressly assume all of the obligations of the Company under
the Debt Securities and the Indentures;
(b) Immediately after giving effect to such transaction (and treating
any indebtedness that becomes an obligation of the Successor Company or any
subsidiary of the Company as a result of such transaction as having been
incurred by the Successor Company or such subsidiary at the time of such
transaction), no Default or Event of Default under either Indenture would occur
or be continuing; and
(c) The Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, or transfer complies with the Indentures.
SATISFACTION AND DISCHARGE OF AN INDENTURE; DEFEASANCE
An Indenture shall generally cease to be of any further effect with
respect to a series of Debt Securities if (i) the Company has delivered to the
Trustee for cancellation all Debt Securities of such series (with certain
limited exceptions), or (ii) all Debt Securities of such series not theretofore
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year, and the Company shall have deposited with the
Trustee as trust funds the entire amount sufficient (in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee) without consideration of
any reinvestment and after payment of all taxes or other charges and assessments
in respect thereof payable by the Trustee to pay at maturity or upon redemption
all such Debt Securities, no default with respect to the Debt Securities has
occurred and is continuing on the date of such deposit, such deposit does not
result in a breach or violation of, or constitute a default under, the Indenture
or any other agreement or instrument to which the Company is a party and the
Company delivered an officers' certificate and an opinion of counsel each
stating that such conditions have been complied with (and if, in either case,
the Company shall also pay or cause to be paid all other sums payable under the
applicable Indenture by the Company).
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In addition, the Company shall have a "legal defeasance option"
(pursuant to which it may terminate, with respect to the Debt Securities of a
particular series, all of its obligations under such Debt Securities and the
Indenture with respect to such Debt Securities) and a "covenant defeasance
option" (pursuant to which it may terminate, with respect to the Debt Securities
of a particular series, its obligations with respect to such Debt Securities
under certain specified covenants contained in the applicable Indenture). If the
Company exercises its legal defeasance option with respect to a series of Debt
Securities, payments of such Debt Securities may not be accelerated because of
an Event of Default. If the Company exercises its covenant defeasance option
with respect to a series of Debt Securities, payment of such Debt Securities may
not be accelerated because of an Event of Default related to the specified
covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Debt Securities of a series only if (i)
the Company irrevocably deposits in trust with the Trustee cash or U.S.
Government Obligations (as defined in the Indentures) for the payment of
principal, premium, if any, and interest with respect to such Debt Securities to
maturity or redemption, as the case may be, (ii) the Company delivers to the
Trustee a certificate from a nationally recognized firm of independent public
accountants expressing their opinion that the payments of principal and interest
when due and without reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide cash at such times and
in such amounts as will be sufficient to pay the principal, premium, if any, and
interest when due with respect to all the Debt Securities of such series to
maturity or redemption, as the case may be, (iii) 91 days pass after the deposit
is made and during the 91 day period no default described in clauses (f) or (g)
under "Description of Debt Securities - Events of Default and Remedies" above
with respect to the Company occurs that is continuing at the end of such period,
(iv) the deposit does not constitute a default under any other agreement binding
on the Company, (v) the Company delivers to the Trustee an opinion of counsel to
the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940, (vi) the Company shall have delivered to the Trustee an opinion of counsel
addressing certain federal income tax matters relating to the defeasance, and
(vii) the Company delivers to the Trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent to the defeasance
and discharge of the Debt Securities of such series as contemplated by the
applicable Indenture have been complied with.
The Trustee shall hold in trust cash or U.S. Government Obligations
deposited with it as described above and shall apply the deposited cash and the
proceeds from deposited U.S. Government Obligations to the payment of principal,
premium, if any, and interest with respect to the Debt Securities of the
defeased series.
THE TRUSTEE
The Company may appoint a separate Trustee for any series of Debt
Securities. As used herein in the description of a series of Debt Securities,
the term "Trustee" refers to the Trustee appointed with respect to such series
of Debt Securities. In addition, the Company has the right to replace the
Trustee under certain circumstances, including (subject to certain conditions)
if the Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to another corporation
or banking association.
The Company may maintain banking and other commercial relationships
with the Trustee and its affiliates in the ordinary course of business, and the
Trustee may own Debt Securities.
DESCRIPTION OF COMMON STOCK
The Company may issue, from time to time, shares of its common stock,
the general terms and provisions of which are summarized below. This summary
does not purport to be complete and is subject to, and is qualified in its
entirety by express reference to, the provisions of the Company's Amended
Articles of Incorporation, the Company's Regulations and the applicable
Prospectus Supplement.
GENERAL
Under the Company's Amended Articles of Incorporation, the Company has
the authority to issue 300,000,000 shares of common stock, par value $1.00 per
share ("Common Stock"). As of July 31, 1998, the Company had 172,895,006 shares
of Common Stock outstanding. Each share of Common Stock shall be equal to every
other share of Common Stock. The outstanding shares of Common Stock are, and the
shares offered hereby will be, validly issued, fully paid and nonassessable and
the holders thereof are not and will not be subject to any liability as
shareholders.
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The Company's Amended Articles of Incorporation authorize the Company
to issue 30,000,000 shares of Serial Preferred Stock, without par value ("Serial
Preferred Stock") of which 3,000,000 shares, without par value, have been
designated as Cumulative Redeemable Serial Preferred Stock ("Cumulative
Redeemable Serial Preferred Stock"). As of July 31, 1998 the Company had no
shares of Serial Preferred Stock outstanding. The Common Stock is, however,
subject to the rights of any outstanding shares of any series of the Serial
Preferred Stock which the Company may issue from time to time.
DIVIDENDS
Subject to the rights of any series of the Serial Preferred Stock, the
holders of shares of Common Stock will be entitled to receive dividends on such
Common Stock out of assets legally available for distribution, when, as and if
authorized and declared by the Company's Board of Directors. The payment of
dividends on the Common Stock will be a business decision to be made by the
Company's Board of Directors from time to time based upon the results of
operations and financial condition of the Company and such other factors as the
Company's Board of Directors considers relevant. So long as any Serial Preferred
Stock is outstanding, no dividends, except a dividend payable in Common Stock or
other shares ranking junior to the Serial Preferred Stock, if any, shall be paid
or declared or any distribution be made except as aforesaid on the Common Stock
or any other shares ranking junior to the Serial Preferred Stock, nor shall any
Common Stock or any other shares ranking junior to the Serial Preferred Stock be
purchased, retired or otherwise acquired by the Company (except out of the
proceeds of the sale of Common Stock or other shares ranking junior to the
Serial Preferred Stock received by the Company subsequent to August 31, 1966)
unless (i) all accrued and unpaid dividends on Serial Preferred Stock, including
the full dividends for the current quarterly dividend period, shall have been
declared and paid or a sum sufficient for payment thereof set apart, and (ii)
there shall be no arrearages with respect to the redemption of Serial Preferred
Stock of any series from any sinking fund provided for shares of such series in
accordance with the provisions of the Amended Articles of Incorporation. Payment
of dividends on the Common Stock may be restricted by loan agreements,
indentures, and other transactions entered into by the Company from time to
time. The applicable Prospectus Supplement will describe any material
contractual restrictions on dividend payments.
VOTING RIGHTS
Holders of shares of Common Stock are entitled to one vote per share on
all matters presented to the shareholders. Except as otherwise provided in the
Amended Articles of Incorporation or as required by law, the holders of the
Serial Preferred Stock and the holders of the Common Stock shall vote together
as one class on all matters. The Company's Amended Articles of Incorporation
prevent any shareholder from cumulating his voting power.
Except as outlined below or otherwise expressly required by statute,
the vote, consent, waiver or release of the holders of shares of Common Stock
entitling them to exercise a majority of the voting power of the Company, or
class if a class vote is required, shall be sufficient for any purpose requiring
the vote, consent, waiver or release of the holders of such shares. However, the
affirmative vote (i) of the holders of shares entitling them to exercise
two-thirds of the voting power of the Company, and (ii) of the holders of
two-thirds of the shares of Common Stock at the time outstanding, given in
person or by proxy at a meeting called for the purpose at which the holders of
Common Stock shall vote separately as a class, shall be necessary:
(a) To approve the (i) the sale, exchange, lease, transfer or other
disposition by the Company of all, or substantially all, of its assets or
business to the related corporation or an affiliate of a related corporation,
(ii) the consolidation of the Company with or its merger into a related
corporation or an affiliate of a related corporation, (iii) the merger into the
Company of a related corporation or an affiliate of a related corporation, or
(iv) a combination or majority share acquisition in which the Company is the
acquiring corporation and its voting shares are issued or transferred to a
related corporation or an affiliate of a related corporation or to shareholders
of a related corporation or an affiliate of a related corporation;
(b) To approve any agreement, contract or other arrangement with a
related corporation providing for any of the transactions described in
subparagraph (a) above; or
(c) To effect any amendment of the Amended Articles of Incorporation of
the Company which changes the voting provisions described above.
For the purpose of the above voting requirements: (i) a "related
corporation" in respect of a given transaction shall be any corporation which,
together with its affiliates and associated persons, owns of record or
beneficially, directly or indirectly, more than five percent (5%) of the shares
of any outstanding class of stock of the
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Company entitled to vote upon such transaction, as of the record date used to
determine the shareholders of the Company entitled to vote upon such
transaction, (ii) an "affiliate" of a related corporation shall be any
individual, joint venture, trust, partnership or corporation which, directly or
indirectly through one or more intermediaries, controls, or its controlled by,
or is under common control with, the related corporation, (iii) an "associated
person" of a related corporation shall be any officer or director or any
beneficial owner, directly or indirectly, of ten percent (10%) or more of any
class of equity security, of such related corporation or any of its affiliates,
and (iv) the terms "combination", "majority share acquisition" and "acquiring
corporation" shall have the same meaning as that contained in Section 1701.01 of
the Ohio General Corporation Law or any similar provision hereafter enacted.
RIGHT TO ACQUIRE SHARES
The Company may from time to time, pursuant to authorization by the
Board of Directors and without action by the shareholders, purchase or otherwise
acquire shares of the Company of any class or classes in such manner, upon such
terms and in such amounts as the Board of Directors shall determine. The
Company's right to acquire shares of the Company is subject, however, to such
limitation or restriction, if any, as is contained in the express terms of any
class of shares of the Company outstanding at the time of the purchase or
acquisition in question.
LIQUIDATION RIGHTS
In the event of a liquidation, dissolution or winding up of the
Company, holders of shares of Common Stock will be entitled to share ratably in
all assets remaining after payments to all creditors and payments required to be
made in respect of any outstanding Serial Preferred Stock (including accrued and
unpaid dividends thereon, if any).
ABSENCE OF OTHER RIGHTS
Holders of Common Stock have no preferences, preemptive, conversion or
exchange rights.
TRANSFER AGENT; LISTING
The Bank of New York is the transfer agent and registrar for the
Company's Common Stock. The shares of Common Stock are listed in the New York
Stock Exchange under the symbol "SHW".
RIGHTS PLAN
On April 23, 1997, the Board of Directors of the Company adopted a
shareholder's rights plan ("Rights Plan"). In connection therewith, the Board
declared a dividend distribution consisting of one right (a "Right") to purchase
one one-hundredth (1/100) of a share of Cumulative Redeemable Serial Preferred
Stock of the Company, for each share of Common Stock of the Company outstanding
as of May 6, 1997 (the "Record Date"). When exercisable, each Right entitles the
registered holder to purchase one one-hundredth (1/100) of a share of the
Cumulative Redeemable Serial Preferred Stock for one hundred ten dollars
($110.00), subject to adjustment (the "Purchase Price").
The Rights will become exercisable after the "Distribution Date" which
shall be the earlier of (i) the first date of public announcement by the Company
that a person or group of affiliated persons ("Acquiring Person") has become the
beneficial owner of ten percent (10%) or more (fifteen percent (15%) or more in
the case of any person or group of affiliated persons who has reported or may
report such ownership on Schedule 13G under the Exchange Act) of the outstanding
Common Stock, or (ii) ten business days, or such later date as specified by the
Board of Directors, after the commencement of a tender offer or exchange offer
by a person or group of affiliated persons that would result in such person or a
group of affiliated persons beneficially owning ten percent (10%) or more of the
outstanding Common Stock.
Until the Rights become exercisable, the Rights will (i) be evidenced
by the certificates representing shares of Common Stock, (ii) trade with the
Common Stock, and any transfer of shares of Common Stock will also constitute a
transfer of the associated Rights, and (iii) be surrendered for transfer with
any shares of Common Stock, with which such Rights are associated, surrendered
for transfer. Prior to the Distribution Date (or, if earlier, the expiration,
redemption or exchange of the Rights as described below), share certificates
issued after the Record Date upon the transfer or new issuance of Common Stock
shall reference the Rights by appropriate notation. When the Rights become
exercisable, they will detach and trade separately from the shares of Common
Stock. As soon as practicable thereafter, separate certificates representing the
Rights will be mailed to registered holders.
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The Rights will "flip-in" and entitle the holder to purchase at the
Purchase Price that number of shares of Common Stock having a market value of
two times such Purchase Price (or, under certain circumstances, an amount of
cash equal to two times such Purchase Price) upon the occurrence of any or all
of the following events: (i) a person or group of affiliated persons becomes an
Acquiring Person; (ii) an Acquiring Person engages in certain self-dealing
transactions with the Company; or (iii) the Company consummates a capital
restructuring that has the effect of increasing by more than one percent (1%)
the proportionate share of the equity of the Company or a subsidiary thereof
owned by an Acquiring Person. Upon the occurrence of any of the events listed in
clauses (i) through (iii) (or the Distribution Date, if earlier), Rights held by
an Acquiring Person (from and after the date upon which the Acquiring Person
became such) shall become null and void and nontransferable.
If (i) the Company is acquired in a merger or other business
combination by an Acquiring Person and the Company is not the surviving
corporation, (ii) an Acquiring Person merges with the Company and the Company is
the surviving corporation, but its shares of Common Stock are changed or
exchanged, or (iii) fifty percent (50%) or more of its assets or earning power
are sold to an Acquiring Person, then each of the Rights will "flip-over" and
will entitle the holder to purchase that number of shares of common or other
capital stock of the acquiring entity which at the time of such transaction
would have a market value of two times the Purchase Price (or, under certain
circumstances, an amount of cash equal to two times such Purchase Price). Upon
the occurrence of any such event (or the Distribution Date, if earlier), Rights
held by the Acquiring Person (from and after the date upon which the Acquiring
Person became such) engaging in the transactions set forth in the preceding
sentence shall become null and void and nontransferable.
At any time after a person or group of affiliated persons becomes an
Acquiring Person and until any person or group of affiliated persons
beneficially owns fifty percent (50%) or more of the then-outstanding Common
Stock, the Board of Directors may exchange all or part of the then-outstanding
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per one Right. In such event, the right to exercise the Rights terminates
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the exchange ratio.
The Purchase Price and the number of shares of Cumulative Redeemable
Serial Preferred Stock or Common Stock (or common shares of an acquiror) to be
purchased or received upon exercise or exchange of the Rights are subject to
adjustment from time to time.
The Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.005 per Right (the "Redemption Price") at any time prior to the
earlier of (i) the first date of public announcement by the Company that an
Acquiring Person has become an Acquiring Person or (ii) April 22, 2007 (the
"Final Expiration Date").
The terms of the Rights are set forth in a Rights Agreement, dated as
of April 23, 1997 (the "Rights Agreement"), by and between the Company and The
Bank of New York, as successor Rights Agent to KeyBank National Association (the
"Rights Agent"). Prior to the date the Rights cease to be redeemable, the
provisions of the Rights Agreement may be supplemented or amended by the Board
of Directors and the Rights Agent, without the approval of any holders of the
Rights or Common Stock, in any manner, except for a supplement or amendment
which decreases the stated Redemption Price to an amount less than $.005 per
Right. From and after the date the Rights cease to be redeemable, the Rights
Agreement may be supplemented or amended without the approval of any holders of
the Rights or Common Stock to (i) cure any ambiguity, (ii) correct or supplement
defective or inconsistent provisions, (iii) shorten or lengthen any time period
under the Rights Agreement, or (iv) supplement or amend any other provision as
the Board of Directors may deem necessary or desirable, provided that such
supplement or amendment shall not decrease the stated Redemption Price to an
amount less than $.005 per Right or otherwise adversely affect the interests of
the Rights holders.
The foregoing description of the Rights Plan does not purport to be
complete and is qualified in its entirety to the Rights Agreement, which is
incorporated herein by reference and was filed with the Commission as an Exhibit
to a Registration Statement on Form 8-A, dated April 24, 1997.
DESCRIPTION OF WARRANTS
The Company may issue warrants for the purchase of Debt Securities
("Debt Warrants") or Common Stock ("Common Stock Warrants" and, together with
the Debt Warrants, the "Warrants"). Warrants may be issued independently or
together with any other Securities and may be attached to or separate from such
other Securities.
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The Warrants will be issued under Warrant Agreements (as defined below)
to be entered into between the Company and a bank or trust company, as warrant
agent (the "Warrant Agent"), all to be set forth in the applicable Prospectus
Supplement relating to any or all Warrants in respect of which this Prospectus
is being delivered. Copies of the form of agreement for each Warrant (each a
"Debt Securities Warrant Agreement" or a "Common Stock Warrant Agreement", as
the case may be, or collectively, the "Warrant Agreements"), including the forms
of certificates representing the Warrants (the "Debt Warrant Certificates" or
the "Common Stock Warrant Certificates", as the case may be, or collectively,
the "Warrant Certificates"), and reflecting the provisions to be included in
such agreements that will be entered into with respect to the particular
offerings of each type of warrant, are or will be filed as exhibits to the
Registration Statement of which this Prospectus forms a part.
The following description sets forth certain general terms and
provisions of the Warrants to which any Prospectus Supplement may relate. The
particular terms of the Warrants to which any Prospectus Supplement may relate
and to the extent, if any, to which such general provisions may apply to the
Warrant so offered will be described in the applicable Prospectus Supplement.
The following summary of certain provisions of the Warrants, Warrant Agreements
and Warrants Certificates does not purport to be complete and is subject to, and
is qualified in its entirety by express reference to, all of the provisions of
the Warrant Agreements and Warrant Certificates, including the definitions
therein of certain terms.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and Debt Warrant Certificates representing such Debt Warrants, including the
following:
(a) the title for such Debt Warrants;
(b) the aggregate number of such Debt Warrants;
(c) the price or prices at which such Debt Warrants will be issued;
(d) the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants, and the procedures
and conditions relating to the exercise of such Debt Warrants;
(e) the designation and terms of any related Debt Securities with which
such Debt Warrants are issued, and the number of such Debt Warrants issued with
each such security;
(f) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable;
(g) the principal amount of Debt Securities purchasable upon exercise
of each Debt Warrant, and the price at which such principal amount of Debt
Securities may be purchased upon such exercise;
(h) the date on which such right shall expire;
(i) the maximum or minimum number of such Debt Warrants which may be
exercised at any time;
(j) a discussion of the material United States federal income tax
considerations applicable to the exercise of such Debt Warrants; and
(k) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
COMMON STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of the
Common Stock Warrants offered thereby, the Warrant Agreement relating to such
Common Stock Warrants and the Common Stock Warrant Certificates representing
such Common Stock Warrants, including the following:
(a) the title of such Common Stock Warrants;
(b) the securities for which such Common Stock Warrants are
exercisable;
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(c) the price or prices at which such Common Stock Warrants will be
issued;
(d) the number of shares of Common Stock purchasable upon exercise of
each Common Stock Warrant and the price at which such shares may be purchased
upon such exercise;
(e) the number of such Common Stock Warrants issued with each share of
Common Stock;
(f) any provisions for adjustment of the number or amount of shares of
Common Stock receivable upon exercise of such Common Stock Warrants or the
exercise price of such Common Stock Warrants;
(g) if applicable, the date on and after which such Common Stock
Warrants and the related shares of Common Stock will be separately transferable;
(h) if applicable, a discussion of the material United States federal
income tax considerations applicable to the exercise of such Common Stock
Warrants;
(i) any other terms of such Common Stock Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such Common
Stock Warrants;
(j) the date on which the right to exercise such Common Stock Warrants
shall commence, and the date on which such right shall expire; and
(k) the maximum or minimum number of such Common Stock Warrants which
may be exercised at any time.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such
principal amount of Debt Securities or such number of shares of Common Stock, as
the case may be, at such exercise price as shall in each case be set forth in,
or to be determinable as set forth in, the applicable Prospectus Supplement
relating to the Warrants offered thereby. Unless otherwise specified in the
applicable Prospectus Supplement, Warrants may be exercised at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement at any time up to the close of business New
York City time on the expiration date set forth in the applicable Prospectus
Supplement. After the close of business New York City time on the expiration
date, unexercised Warrants will become void. Upon receipt of payment and the
Warrant Certificate properly completed and duly executed, the Company will, as
soon as practicable, issue the Debt Securities or Common Stock, as the case may
be, purchasable upon such exercise. If less than all of the Warrants represented
by such Warrant Certificate are exercised, a new Warrant Certificate will be
issued for the remaining amount of Warrants.
NO RIGHTS OF SECURITY HOLDER PRIOR TO EXERCISE
Prior to the exercise of their Warrants, holders of Warrants will not
have any of the rights of holders of the Debt Securities or Common Stock, as the
case may be, purchasable upon such exercise and will not be entitled to (i) in
the case of Debt Warrants, payments of principal, premium, if any, or interest
on the Debt Securities purchasable upon such exercise or (ii) in the case of
Common Stock Warrants, the right to vote or to receive dividend payments on the
Common Stock purchasable upon such exercise.
EXCHANGE OF WARRANT CERTIFICATES
Warrant Certificates will be exchangeable for new Warrant Certificates
of different denominations at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company may sell Securities offered hereby to one or more
underwriters for public offering and sale by them or may offer and sell
Securities to investors directly or through agents or dealers. Any such
underwriter, agent or dealer involved in the offer and sale of the Securities
will be named in the Prospectus Supplement. Securities offered pursuant to a
particular Prospectus Supplement are referred to herein as "Offered Securities".
The Company may also sell Offered Securities to an agent as principal.
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Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Company may also, from time to time,
authorize underwriters acting as its agents to offer and sell the Offered
Securities upon the terms and conditions set forth in any Prospectus Supplement.
In connection with the sale of Offered Securities, underwriters or agents acting
on the Company's behalf may be deemed to have received compensation from the
Company or from purchasers of Offered Securities for whom they may act as agent
in the form of underwriting discounts or commissions. Underwriters may sell
Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions (which may be changed from time to time) from
the purchasers for whom they may act as agent.
If a dealer is used in the sale of the Offered Security in respect of
which this Prospectus is delivered, the Company will sell such Offered Security
to such dealer, as principal. The dealer may then resell such Offered Security
to the public at varying prices to be determined by such dealer at the time of
resale.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be "underwriters" under the Securities Act, and any discounts and
commission received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled under
agreements with the Company to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by the Company for certain expenses.
If so indicated in an applicable Prospectus Supplement, the Company
will authorize dealers acting as its agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount or offering price of
Offered Securities sold pursuant to Contracts shall not be less nor more than,
the respective amounts stated in such Prospectus Supplement. Institutions with
whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. The underwriters may
over-allot shares of the Common Stock in connection with an offering of Common
Stock, thereby creating a short position in the underwriters' account. Syndicate
covering transactions involve purchases of Debt Securities in the open market
after distribution has been completed in order to cover syndicate short
positions. Stabilizing and syndicate covering transactions may cause the price
of Debt Securities to be higher than it would otherwise be in the absence of
such transactions. These transactions, if commenced, may be discontinued at any
time.
The anticipated date of delivery of Offered Securities will be set
forth in the applicable Prospectus Supplement relating to each offer.
The Securities may or may not be listed on a national securities
exchange or a foreign securities exchange. No assurances can be given that there
will be a market for any of the Securities.
LEGAL MATTERS
Certain legal matters in connection with the Securities will be passed
upon for the Company by Louis E. Stellato, Vice President, General Counsel and
Secretary of the Company. At June 30, 1998, Mr. Stellato beneficially owned
approximately 37,500 shares of Common Stock of the Company and held options to
purchase an additional 120,600 shares of Common Stock of which 84,266 shares
were exercisable at such date.
EXPERTS
The consolidated financial statements and schedule of the Company
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Ernst & Young LLP, independent
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auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements and schedule are
incorporated by reference herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER
OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
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TABLE OF CONTENTS
Page
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PROSPECTUS
Available Information.................................... 2
Incorporation of Certain Documents
by Reference........................................... 2
The Company.............................................. 3
Use of Proceeds.......................................... 3
Ratio of Earnings to Fixed Charges....................... 3
Description of Debt Securities........................... 3
Description of Common Stock.............................. 13
Description of Warrants.................................. 16
Plan of Distribution..................................... 18
Legal Matters............................................ 19
Experts.................................................. 19
U.S. $1,500,000,000
The Sherwin-Williams
Company
Securities
[SW LOGO]
Prospectus
September 8, 1998
