<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 23, 1994)
$100,000,000
[LOGO]
6 5/8% NOTES DUE OCTOBER 1, 2005
------------------------
Interest on the 6 5/8% Notes due October 1, 2005 (the "Notes") is payable
semiannually on April 1 and October 1 of each year, beginning April 1, 1996. The
Notes will mature on October 1, 2005 and are not subject to redemption by
Snap-on Incorporated (the "Company") prior to maturity.
Ownership of the Notes will be maintained in book-entry form by or through
the Depository Trust Company ("DTC"). Interests in the Notes will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants. Beneficial owners of the Notes will not have the right to
receive physical certificates evidencing their ownership except under the
limited circumstances described herein. Settlement for the Notes will be made in
immediately available funds. The Notes will trade in the DTC's Same-Day Funds
Settlement System and secondary market trading activity for the Notes will
therefore settle in immediately available funds. All payments of principal and
interest on the Notes will be made by the Company in immediately available funds
so long as the Notes are maintained in book-entry form. Beneficial interests in
the Notes may be acquired, or subsequently transferred, only in denominations of
$1,000 and integral multiples thereof.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT COMPANY (1)(2)
Per Note.............................. 99.697% .650% 99.047%
Total................................. $99,697,000 $650,000 $99,047,000
<FN>
(1) Plus accrued interest, if any, from October 3, 1995.
(2) Before deducting expenses payable by the Company estimated to be $350,000.
</TABLE>
------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued by the Company and accepted by the Underwriters, and
subject to certain conditions. The Underwriters reserve the right to reject
orders in whole or in part. It is expected that delivery of the Notes will be
made through the book-entry facilities of DTC on or about October 3, 1995.
------------------------
MERRILL LYNCH & CO. MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus Supplement is September 28, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is a leading manufacturer and distributor of high-quality hand
tools, power tools, tool storage products, and diagnostic and shop equipment,
primarily for use by professional mechanics and technicians. The Company's
product line consists of approximately 14,000 items. In addition to individual
automotive service technicians, shop owners and other professional tool users,
the Company's products are marketed to industrial and government entities. The
Company's principal executive offices are located at 10801 Corporate Drive,
Kenosha, Wisconsin 53143. See "The Company" in the accompanying Prospectus for
further information concerning the Company.
In 1993, the Company's shareholders approved a general plan of corporate
restructuring described in the Proxy Statement relating the Company's 1993
Annual Meeting of Shareholders (the "1993 Proxy Statement"), whereby the
Company's operations would be incorporated into, and some or substantially all
of the Company's assets would be transferred to, one or more direct or indirect,
wholly-owned subsidiaries. As part of the restructuring, in July 1993, the
Company transferred the assets and liabilities of its credit operations to
wholly-owned subsidiaries of the Company. The Company is in the process of
evaluating a corporate restructuring plan with respect to its remaining domestic
operations. No assurance can be given that the Company will adopt such plan, or
the final form such plan may take if adopted. If adopted, the plan could be
implemented as soon as the beginning of the Company's next fiscal year in
January, 1996. The Company continues to explore other alternatives to streamline
its operations into operating subsidiaries to achieve the benefits described in
the Company's 1993 Proxy Statement.
Snap-on Credit Corporation, an indirect wholly-owned subsidiary of the
Company ("Snap-on Credit"), has entered into and may from time to time enter
into receivables sale facilities wherein all or an undivided interest in a pool
of certain receivables of the Company is sold to banks or investors. Snap-on
Credit presently intends to enter into a facility providing for the sale of up
to $150 million of such receivables. There can be no assurance, however, as to
when or if such facility will be entered into or, if entered into, the final
terms thereof.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered by this
Prospectus Supplement will be used to repay outstanding commercial paper of the
Company, which at September 26, 1995 bore interest at the rate of approximately
5.8% per annum, and for working capital and general corporate purposes.
S-2
<PAGE>
SELECTED FINANCIAL INFORMATION
The following table sets forth in summary form certain consolidated
financial data of the Company. This information is qualified in its entirety by
reference to, and should be read in conjunction with, the consolidated financial
statements of the Company and related notes and other detailed information
contained in the documents incorporated by reference herein. The consolidated
financial information for the twenty-six-week periods ended July 1, 1995 and
July 2, 1994 is unaudited; however, in the opinion of the Company's management,
all adjustments considered necessary for a fair presentation of such information
are reflected. The Company's twenty-six week results should not be considered as
indicative of the results to be expected for the entire year.
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED
FISCAL YEARS --------------------
----------------------------------------------------- JULY 2, JULY 1,
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales................................ $ 931,533 $ 881,591 $ 983,800 $1,132,010 $1,194,296 $ 597,529 $ 635,923
Cost of goods sold....................... 462,384 443,906 474,387 536,282 585,459 287,972 309,407
Operating expenses....................... 359,266 370,708 457,384 509,910 510,361 256,118 266,836
Net finance income....................... 53,182 56,890 63,646 61,115 59,419 29,228 32,116
Interest expense......................... 6,762 5,250 5,969 11,198 10,806 6,052 5,077
Other income (expenses) -- net........... 3,557 (91) (131) 756 6,580 972 2,453
--------- --------- --------- --------- --------- --------- ---------
Earnings before income taxes............. 159,860 118,526 109,575 136,491 153,669 77,587 89,172
Income taxes............................. 59,100 45,300 43,600 50,679 55,355 28,654 32,994
Cumulative effect of accounting change... -- 38,949 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings............................. $ 100,760 $ 34,277 $ 65,975 $ 85,812 $ 98,314 $ 48,933 $ 56,178
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges (1)... 23.7 24.1 20.4 14.1 15.6 15.3 19.1
<CAPTION>
AT
AT FISCAL YEAR END --------------------
----------------------------------------------------- JULY 2, JULY 1,
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
ASSETS
Total current assets..................... $ 675,038 $ 666,623 $ 832,603 $ 854,598 $ 873,020 $ 869,275 $ 958,443
Property and equipment -- net............ 210,414 206,481 226,498 224,810 209,142 223,111 205,455
Deferred items and other assets.......... 22,402 42,270 113,312 139,525 152,743 150,149 181,448
--------- --------- --------- --------- --------- --------- ---------
Total assets........................... $ 907,854 $ 915,374 $1,172,413 $1,218,933 $1,234,905 $1,242,535 $1,345,346
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
LIABILITIES & SHAREHOLDERS' EQUITY
Total current liabilities................ $ 236,802 $ 176,650 $ 317,074 $ 308,037 $ 237,869 $ 304,448 $ 404,404
Long-term debt........................... 7,275 7,179 93,106 99,683 108,980 99,555 114,076
Deferred items and other long-term
liabilities............................. 27,374 78,826 97,568 109,550 121,658 113,081 126,742
--------- --------- --------- --------- --------- --------- ---------
Total liabilities...................... 271,451 262,655 507,748 517,270 468,507 517,084 645,222
Total shareholders' equity............. 636,403 652,719 664,665 701,663 766,398 725,451 700,124
--------- --------- --------- --------- --------- --------- ---------
Total liabilities and shareholders
equity................................ $ 907,854 $ 915,374 $1,172,413 $1,218,933 $1,234,905 $1,242,535 $1,345,346
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<FN>
- ------------------------------
(1) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For the purpose of such computation (i) earnings consist of
earnings from continuing operations before income taxes and the cumulative
effect of accounting changes, plus fixed charges; and (ii) fixed charges
consist of interest, including amounts capitalized, amortization of debt
discount, premium and expense and other interest charges.
</TABLE>
S-3
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth
under the heading "Description of Debt Securities" in the accompanying
Prospectus, to which reference is hereby made.
GENERAL
The Notes offered by this Prospectus Supplement will be limited to
$100,000,000 aggregate principal amount. The Notes will be issued under an
Indenture, dated as of September 15, 1995, between the Company and Firstar Trust
Company, as Trustee (the "Indenture"). The Indenture is further described under
"Description of Debt Securities" in the accompanying Prospectus. The Notes
constitute one series of Securities (as defined in the Indenture) established by
the Company pursuant to the Indenture. The statements herein concerning the
Notes and the Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Whenever
particular defined terms are referred to, such defined terms are incorporated
herein by reference.
The Notes will be issued in fully registered form and in denominations of
$1,000 and integral multiples thereof. The Company does not intend to apply for
listing of the Notes on a national securities exchange.
The Notes will be unsecured and unsubordinated obligations of the Company.
See "Description of Debt Securities" in the accompanying Prospectus. The Notes
may not be redeemed by the Company, will not be subject to any sinking fund and
will not be redeemable at the option of a holder thereof. The Notes will be
subject to defeasance and covenant defeasance as described in the accompanying
Prospectus under the heading "Description of Debt Securities -- Discharge,
Defeasance and Covenant Defeasance."
Interest on the Notes will be payable semiannually on April 1 and October 1
of each year, commencing April 1, 1996, to the persons in whose name the Notes
are registered at the close of business on the March 15 and September 15,
respectively, immediately preceding such April 1 and October 1. Payments of
principal and interest to owners of book-entry interests (as described below)
are expected to be made in accordance with the procedures of DTC and its
participants in effect from time to time. Payments of principal and interest on
any Notes in definitive form will be made at the Corporate Trust Office of the
Trustee, provided that, at the option of the Company, payments of interest may
be made by check mailed to the holder(s) of Notes or wire transfer to an account
maintained by the holder(s) of Notes at the address or account of such holder(s)
appearing on the security register of the Company on the applicable March 15 and
September 15, respectively, immediately preceding such April 1 and October 1.
Any payment of principal or interest required to be made on a day which is not a
business day need not be made on such day, but may be made on the next
succeeding business day with the same force and effect as if made on such day,
and no additional interest shall accrue as a result of such delayed payment.
Interest on the Notes will be computed on the basis of a 360-day year of twelve
30-day months.
BOOK-ENTRY SYSTEM
The certificates representing the Notes will be issued in the form of one or
more fully registered global securities without coupons ("Global Securities").
It is expected that the Notes initially will be represented by a single
permanent global certificate in definitive fully registered form (the "Global
Note") and will be deposited with, or on behalf of, DTC and registered in the
name of DTC or a nominee thereof. Except under the circumstances described below
and in the accompanying Prospectus under the caption "Description of Debt
Securities -- Book-Entry Debt Securities," the Notes will not be issuable in
definitive form. Unless and until it is exchanged in whole or in part for the
individual Notes represented thereby, interests in the Global Note may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or by DTC or any nominee of DTC to a successor
depository or any nominee of such successor.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System, a "clearing corporation"
S-4
<PAGE>
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provision of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC was created to hold securities of its
participants ("Participants") and to facilitate the clearance and settlement of
securities transactions among its Participants in such securities through
electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, including the
Underwriters. DTC is owned by a number of Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of the Securities Dealers, Inc. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Purchases of Notes must be made by or through Participants, which will
receive a credit on the records of DTC. The ownership interest of each actual
purchaser of each Note (the "Beneficial Owner") is in turn to be recorded on the
Participants' or Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings from the
Participant or Indirect Participant through which the Beneficial Owner entered
into the transaction. Ownership of beneficial interests in Global Notes will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of Participants)
and on the records of Participants (with respect to interests of persons held
through Participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to own, transfer or
pledge beneficial interests in Global Notes.
SO LONG AS DTC OR ITS NOMINEE IS THE REGISTERED OWNER OF A GLOBAL NOTE, DTC
OR ITS NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE SOLE OWNER OR HOLDER
OF THE NOTES REPRESENTED BY SUCH GLOBAL NOTE FOR ALL PURPOSES UNDER THE
INDENTURE. EXCEPT AS PROVIDED BELOW, BENEFICIAL OWNERS OF A GLOBAL NOTE WILL NOT
BE ENTITLED TO HAVE THE NOTES REPRESENTED BY SUCH GLOBAL NOTE REGISTERED IN
THEIR NAMES, WILL NOT RECEIVE OR BE ENTITLED TO RECEIVE PHYSICAL DELIVERY OF THE
NOTES IN DEFINITIVE FORM AND WILL NOT BE CONSIDERED THE OWNERS OR HOLDERS
THEREOF UNDER THE INDENTURE. Accordingly, each person owning a beneficial
interest in a Global Note must rely on the procedures of DTC and if such person
is not a Participant, on the procedures of the Participants 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, in
the event that the Company requests any action of holders or that an owner of a
beneficial interest in such Global Note desires to give or take any action which
a holder is entitled to give or take under the Indenture, DTC 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 to take such action or would otherwise act upon the
instructions of Beneficial Owners. Conveyance of notices and other
communications by DTC to Participants, by Participants to Indirect Participants,
and by Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payment of the principal of, and interest on, Notes registered in the name
of DTC or its nominee will be made to DTC or its nominee, as the case may be, as
the holder of the Global Note or Notes representing such Notes. None of the
Company, the Trustee or any other agent of the Company or agent of the Trustee
will have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests or for
supervising or reviewing any records relating to such beneficial ownership
interests. The Company expects that DTC, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit the accounts of
the Participants with payments in amounts proportionate to their respective
holdings in principal amount of beneficial interest in such Global Note as shown
on the records of DTC. The Company also expects that payments by Participants to
Beneficial Owners will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such Participants.
S-5
<PAGE>
If (i) DTC is at any time unwilling or unable to continue as depository and
a successor depository is not appointed by the Company within 60 days or (ii)
the Company determines in its discretion not to have the Notes represented by
the Global Notes and delivers to the Trustee an order to such effect, then the
Global Note or Notes will be exchangeable for Notes in definitive form of like
tenor and of an equal aggregate principal amount, in denominations of $1,000 and
integral multiples thereof. Such definitive Notes shall be registered in such
name or names as DTC shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by DTC from Participants with
respect to ownership of beneficial interests in Global Notes. See "Description
of Debt Securities -- Book-Entry Debt Securities" in the accompanying Prospectus
for further information concerning Notes issued in the form of Global
Securities.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of Notes in
book-entry form will be made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
S-6
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement, dated
September 28, 1995, which incorporates by reference the Underwriting Agreement
Basic Provisions, the Company has agreed to sell to each of the Underwriters
named below (the "Underwriters") and each of the Underwriters has severally
agreed to purchase, the principal amount of the Notes set forth opposite their
respective names:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................ $ 50,000,000
Morgan Stanley & Co. Incorporated............................................. 50,000,000
--------------
Total..................................................................... $ 100,000,000
--------------
--------------
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .4% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .25% of the principal amount of the Notes to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or in certain circumstances, to contribute to payments which the Underwriters
may be required to make in respect thereof.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
Merrill Lynch, Pierce, Fenner & Smith Incorporated has, from time to time,
provided investment banking services for the Company and has received customary
compensation for such services.
EXPERTS
The consolidated financial statements and related schedules of the Company
incorporated by reference or included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein by reference in reliance upon such
report of said firm and upon such authority of such firm as experts in
accounting and auditing.
LEGAL OPINIONS
The validity of the Securities will be passed upon for the Company by Susan
F. Marrinan, Vice President, Secretary and General Counsel of the Company, and
for the Underwriters by Skadden, Arps, Slate, Meagher & Flom, 333 West Wacker
Drive, Suite 2100, Chicago, IL 60606. Ms. Marrinan beneficially owns 41,090
shares of Common Stock, which includes shares subject to options that are
currently exercisable. Skadden, Arps, Slate, Meagher & Flom has from time to
time acted as counsel in certain matters to the Company.
S-7
<PAGE>
PROSPECTUS
SNAP-ON INCORPORATED
DEBT SECURITIES, DEBT WARRANTS, PREFERRED STOCK, PREFERRED WARRANTS AND CURRENCY
WARRANTS
------------------------
Snap-on Incorporated (the "Company" or "Snap-on") may offer from time to
time under this Prospectus, together or separately, (i) unsecured debt
securities consisting of notes, debentures and/or other unsecured evidences of
indebtedness (the "Debt Securities"), (ii) warrants to purchase Debt Securities
(the "Debt Warrants"), (iii) shares of its preferred stock, par value $1.00 per
share (the "Preferred Stock"), (iv) warrants to purchase shares of its Preferred
Stock (the "Preferred Warrants"), and (v) warrants to receive from the Company
the cash value in U.S. dollars of the right to purchase ("Currency Call
Warrants") or to sell ("Currency Put Warrants," and, together with the Currency
Call Warrants, the "Currency Warrants") such foreign currency or currency units
as shall be designated by the Company at the time of the offering. The Debt
Securities, Debt Warrants, Preferred Stock, Preferred Warrants and Currency
Warrants (collectively, the "Securities") will be offered in amounts, at prices
and on terms to be determined at the time of offering. The Securities offered
pursuant to this Prospectus may be issued in one or more series or issuances and
will be limited to an aggregate public offering price of not more than U.S.
$300,000,000 (or the equivalent thereof if any of the Securities are denominated
in a currency, currency unit or composite currency other than the U.S. dollar).
The Debt Securities will be direct unsecured obligations of the Company and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company.
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered (the "Offered Securities") are set forth in the
accompanying Prospectus Supplement (the "Prospectus Supplement"), including,
where applicable, the initial public offering price of the Securities, the
listing on any securities exchange, other special terms, and (i) in the case of
Debt Securities, the specific designation, aggregate principal amount, the
denomination, maturity, premium, if any, the rate (which may be fixed or
variable), time and method of calculating payment of interest, if any, the place
or places where principal of, premium, if any, and interest, if any, on such
Debt Securities will be payable, the currency in which principal of, premium, if
any, and interest, if any, on such Debt Securities will be payable, any terms of
redemption at the option of the Company or the holder and any sinking fund
provisions, (ii) in the case of Debt Warrants and Preferred Warrants, the Debt
Securities and Preferred Stock, respectively, for which each such warrant is
exercisable, the exercise price, duration, detachability and call provisions,
(iii) in the case of Preferred Stock, the specific title and stated value, any
dividend, liquidation, redemption, voting and other rights, and (iv) in the case
of Currency Warrants, the base foreign currency or currency units, the formula
for determining the cash settlement value, if any, the procedures and conditions
relating to exercise and any circumstances under which there will be deemed to
be an automatic exercise. If so specified in the applicable Prospectus
Supplement, Offered Securities may be issued in whole or in part in the form of
one or more temporary or permanent global securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
------------------------
The Company may sell Securities to or through underwriters, dealers or
agents, and also may sell Securities directly to other purchasers. See "Plan of
Distribution." The Prospectus Supplement sets forth the names of any
underwriters, dealers or agents involved in the distribution of the Offered
Securities and any applicable discounts, commissions or allowances.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER 23, 1994.
<PAGE>
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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: 7 World Trade Center, New York, New York 10048; and 500 West Madison
Street, Chicago, Illinois 60661; and copies of such material can be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Such reports, proxy
statements and other information can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission, and reference is hereby made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company and the Securities. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994;
(ii) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended April 2, 1994, July 2, 1994 and October 1, 1994; and
(iii) the Company's Current Reports on Form 8-K dated January 28, 1994
and April 22, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from and
after the respective dates of filing of 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 of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge, upon written or oral request, to
each person to whom a copy of this Prospectus is delivered a copy of any or all
of the documents incorporated by reference herein (not including the exhibits to
such documents, unless such exhibits are specifically incorporated by reference
in such documents). Requests should be directed to Snap-on Incorporated, Public
Relations Department, 2801-80th Street, Kenosha, Wisconsin 53141-1410, telephone
number (414) 656-4808 (recorded message).
2
<PAGE>
THE COMPANY
The Company was incorporated under the laws of the State of Wisconsin in
1920 and reincorporated under the laws of the State of Delaware in 1930. In
April 1994, the Company changed its name from "Snap-on Tools Corporation" to
"Snap-on Incorporated." The Company's principal executive offices are located at
2801-80th Street, Kenosha, Wisconsin 53141-1410 (telephone number (414)
656-5200).
The Company is a leading manufacturer and distributor of high-quality hand
tools, power tools, tool storage products, and diagnostic and shop equipment,
primarily for use by professional mechanics and technicians. The Company's
product line consists of approximately 14,000 items. In addition to individual
automotive service technicians, shop owners and other professional tools users,
the Company's products are marketed to industrial and government entities.
The Company has operations in the United States, Australia, Belgium, Brazil,
Canada, France, Germany, Japan, Mexico, Puerto Rico, the Netherlands, New
Zealand, Taiwan and the United Kingdom. The Company's products are marketed in
over 100 countries. The Company has four principal operating units:
- The SNAP-ON TOOLS business unit focuses on the Company's worldwide dealer
direct sales programs to automotive and transportation technicians.
- The SNAP-ON DIAGNOSTICS business unit focuses on the development and sale
of diagnostic and shop equipment, primarily to automotive shop owners.
Subsidiaries associated with Snap-on Diagnostics include: Sun Electric
Corporation ("Sun"), a leading manufacturer and distributor of high-end
diagnostic, test and service shop equipment; and Balco, Inc., a developer
of engine diagnostic and wheel balancing equipment.
- The SNAP-ON INDUSTRIAL business unit focuses on the sale of industrial
tools and equipment through a direct sales force as well as through
industrial distributors and other channels. Subsidiaries in this unit
manufacture industrial-quality hand tools, and tools and equipment for
aerospace and other industrial applications.
- SNAP-ON FINANCIAL SERVICES, INC. holds most of the Company's credit assets
in the United States and, through its Snap-on Credit Corporation
subsidiary, manages certain credit services for the Company. Credit
programs support the sale of the Company's products and services,
especially higher-value products such as diagnostic and other shop
equipment.
The Company believes it is the largest single-source manufacturer of
professional hand tools and service equipment for the U.S. automotive service
industry. In 1993, the Company merged its U.S. Snap-on and Sun technical sales
forces into Snap-on/Sun Tech Systems, creating what it also believes to be the
largest technical systems sales and service organization in the industry. In
addition, within its diagnostic and shop equipment operations, the Company has
formed agreements, including minority investments, with information and
technology firms to strengthen its position as a leading supplier of diagnostic
hardware and software for the service and repair of the growing number of
computerized systems employed in modern automotive design.
The Company believes it originated the mobile van dealer method of marketing
hand tools and equipment to automotive technicians. In addition to direct sales
to individual technicians, shop owners, industrial and other customers at their
places of business through mobile van dealers and employee sales
representatives, other methods of marketing and distribution include both direct
and indirect sales to industrial and government customers and indirect sales
through non-U.S. distributors. Prior to 1993 when the Company entered the
industrial distributor marketing channel, which represents the largest segment
of the industrial tool market, the Company's industrial sales historically had
been concentrated among small and mid-sized manufacturing facilities, industrial
maintenance and repair shops, and government service and repair operations.
3
<PAGE>
In recent years, the Company has expanded its product line and marketing and
sales programs to address additional customer needs in the market for
professional tools and equipment and to expand in international markets.
Included in the Company's expanded product line are automotive shop equipment,
electronic equipment service, and tools and instrumentation for aerospace and
medical applications. It has also acquired new manufacturing operations and
brands to address additional channels of distribution, particularly for
industrial customers.
USE OF PROCEEDS
The net proceeds from the sale of the Securities offered hereby will be used
for general corporate purposes and may be used for the repayment of
indebtedness, future acquisitions, capital expenditures and working capital.
Specific allocations of the proceeds for the various purposes have not been made
at this time, and the amount and timing of such offerings will depend upon the
Company's requirements and the availability of other funds. The specific use of
the proceeds of a particular offering of Securities will be described in the
Prospectus Supplement relating thereto.
RISK FACTORS RELATING TO CURRENCIES AND CURRENCY WARRANTS
Debt Securities and Debt Warrants denominated or payable in foreign
currencies and Currency Warrants may entail significant risks. These risks
include, without limitation, the possibility of significant fluctuations in
foreign currency exchange rates. These risks may vary depending upon the
currency or currencies involved, and in the case of any Currency Warrants, the
particular form of such Currency Warrants, and will be more fully described in
the applicable Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated. The ratio of earnings to fixed charges is
computed by dividing earnings by fixed charges. For the purposes of such
computation (i) earnings consist of earnings from continuing operations before
income taxes and the cumulative effect of accounting changes, plus fixed
charges; and (ii) fixed charges consist of interest, including amounts
capitalized, amortization of debt discount, premium and expense and other
interest charges.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------- FISCAL YEAR ENDED
OCTOBER OCTOBER -------------------------------
1, 1994 2, 1993 1993 1992 1991 1990 1989
------- ------- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges*.......... 13.6 13.8 14.1 20.4 24.1 23.7 44.2
<FN>
- ------------------------
*The ratio of earnings to combined fixed charges and preferred stock dividends
is the same as that shown above for each of the years indicated, since the
Company had no preferred stock outstanding in any of those years.
</TABLE>
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture, as supplemented
from time to time (the "Indenture"), between the Company and Firstar Trust
Company, as trustee (the "Trustee"), the form of which is filed as an exhibit to
the Registration Statement. The Indenture is subject to and governed by the
Trust Indenture Act of 1939, as amended (the "TIA"). The following summaries of
certain provisions of the Debt Securities and the Indenture do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all provisions of the Indenture, including the definitions of certain terms
therein. Parenthetical references below are to the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company.
The Debt Securities may be issued in one or more series. The particular
terms of any Debt Securities offered (the "Offered Debt Securities") (including
any Debt Securities (the "Underlying Debt Securities") issuable upon the
exercise of Debt Warrants), as well as any modifications of or additions to the
general terms of Debt Securities as described herein that may be applicable in
the case of the Offered Debt Securities, are described in the Prospectus
Supplement relating to the Offered Debt Securities. Accordingly, for a
description of the terms of the Offered Debt Securities, reference must be made
to both the Prospectus Supplement relating thereto and the description of Debt
Securities set forth in this Prospectus.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities (including any Underlying Debt Securities) being
offered thereby:
(1) The title of such Debt Securities.
(2) The aggregate principal amount of such Debt Securities and any limit
on the aggregate principal amount of Debt Securities of such series.
(3) The percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the portion
of the principal amount thereof payable upon declaration of acceleration of
the maturity thereof or the method by which such portion shall be
determined.
(4) The date or dates, or the method by which such date or dates will be
determined or extended, on which the principal of such Debt Securities will
be payable.
(5) The rate or rates at which such Debt Securities will bear interest,
if any, or the method by which such rate or rates shall be determined, the
date or dates from which such interest, if any, shall accrue or the method
by which such date or dates shall be determined, the date or dates on which
such interest, if any, will be payable and the Regular Record Date or Dates,
if any, for the interest payable on any Registered Security on any Interest
Payment Date, or the method by which any such date shall be determined, and
the basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months.
(6) The period or periods within which, the price or prices at which,
the currency, currency unit or composite currency ("Currency" or
"Currencies") in which (if other than U.S. dollars), and the other terms and
conditions upon which, such Debt Securities may be redeemed in whole or in
part at the option of the Company and whether the Company is to have that
option.
(7) The obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provision or
at the option of a holder thereof and the period or periods within which or
the date or dates on which, the price or prices at which, the Currency or
Currencies in which and the other terms and conditions upon which, such Debt
Securities shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation.
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<PAGE>
(8) Whether such Debt Securities are to be issuable as Registered
Securities, Bearer Securities or both, any restrictions applicable to the
offer, sale or delivery of Bearer Securities and the terms upon which Bearer
Securities of the series may be exchanged for Registered Securities of the
series and VICE VERSA (if permitted by applicable laws and regulations),
whether such Debt Securities are to be issuable initially in temporary
global form (a "Global Security"), whether any such Debt Securities are to
be issuable in permanent global form with or without coupons and, if so,
whether beneficial owners of interests in any such permanent Global Security
may exchange such interests for Debt Securities of such series and of like
tenor of any authorized form and denomination and the circumstances under
which any such exchanges may occur, if other than in the manner provided in
the Indenture, and, if Registered Securities of the series are to be
issuable as a Global Security, the identity of the depository for such
series.
(9) If other than U.S. dollars, the Currency or Currencies (which may
include composite currencies such as the European Currency Unit ("ECU")) in
which payments of the principal of (and premium, if any) or any interest or
Additional Amounts, if any, on such Debt Securities will be payable or in
which such Debt Securities will be denominated.
(10) Whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may be based on one or more Currencies, commodities, equity indices
or other indices) and the manner in which such amounts shall be determined.
(11) Whether the Company or a holder may elect payment of the principal
of (and premium, if any) or interest, if any, on such Debt Securities in one
or more Currencies, other than that in which such Debt Securities are
denominated or stated to be payable, the period or periods within which, and
the terms and conditions upon which, such election may be made, and the time
and manner of determining the exchange rate between the Currency or
Currencies in which such Debt Securities are denominated or stated to be
payable and the Currency or Currencies in which such Debt Securities are to
be so payable.
(12) The place or places, if any, other than or in addition to New York,
New York, where the principal of (and premium, if any), interest, if any,
on, and any Additional Amounts payable in respect of, such Debt Securities
shall be payable, any Registered Securities may be surrendered for
registration of transfer or exchange and notices or demands to or upon the
Company in respect of such Debt Securities and the Indenture may be served.
(13) If other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of the series
shall be issuable and, if other than the denomination of $5,000, the
denomination or denominations in which any Bearer Securities of the series
shall be issuable.
(14) If other than the Trustee, the identity of each Security Registrar
and/or Paying Agent.
(15) The date as of which any Bearer Securities of the series and any
temporary Global Security representing Outstanding Securities of the series
shall be dated if other than the date of original issuance of the first Debt
Security of the series to be issued.
(16) The applicability, if at all, to such Debt Securities of the
provisions of Article XIV of the Indenture described under "Defeasance and
Covenant Defeasance" and any provisions in modification of, in addition to
or in lieu of any of the provisions of such Article.
(17) The Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name such
Registered Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer Security
of the
6
<PAGE>
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the extent
to which, or the manner in which, any interest payable on a temporary Global
Security on an Interest Payment Date will be paid if other than in the
manner provided in the Indenture.
(18) If the Debt Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a temporary
Debt Security of such series) only upon receipt of certain certificates or
other documents or satisfaction of other conditions, the form and/or terms
of such certificates, documents or conditions.
(19) If such Debt Securities are to be issued upon the exercise of Debt
Warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered.
(20) Whether and under what circumstances the Company will pay Additional
Amounts as contemplated by Section 10.9 of the Indenture on such Debt
Securities to any holder who is not a United States person (including any
modification to the definition of such term as contained in the Indenture as
originally executed) in respect of any tax, assessment or governmental
charge and, if so, whether the Company will have the option to redeem such
Debt Securities rather than pay such Additional Amounts (and the terms of
any such option).
(21) The provisions, if any, granting special rights to the holders of
such Debt Securities upon the occurrence of such events as may be specified.
(22) Any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to such Debt Securities,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth in the general provisions of the
Indenture.
(23) The designation of the initial Exchange Rate Agent, if any.
(24) Any other terms of such Debt Securities; provided, however, that
Debt Securities issued in bearer form shall not be convertible into any
equity security of the Company.
The Company will comply with Section 14(e) of the Securities Exchange Act of
1934, Rule 14e-1 thereunder and any other applicable tender offer rules in
connection with any repurchase of Debt Securities or other Offered Securities
that may be deemed to involve a tender offer.
The Indenture does not limit the amount of Debt Securities which can be
issued thereunder, and provides that Debt Securities of any series may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by or pursuant to authority granted by the Board of Directors of
the Company (the "Board of Directors"). (Section 3.1)
Some or all of the Debt Securities may provide for less than the entire
principal amount thereof to be payable upon declaration of acceleration of the
Maturity thereof ("Original Issue Discount Securities"). Federal income tax
consequences and other special considerations applicable to any such Original
Issue Discount Securities will be described in the Prospectus Supplement
relating thereto.
The general provisions of the Indenture do not contain any provisions that
would limit the ability of the Company to incur indebtedness or that would
afford holders of Debt Securities protection in the event of a highly leveraged
or similar transaction involving the Company. However, subject to certain
exceptions, the general provisions of the Indenture do limit the ability of the
Company and its Restricted Subsidiaries to incur Secured Debt unless the Debt
Securities issued under the Indenture are secured equally and ratably with such
Secured Debt. See "Limitation on Secured Debt." Reference is made to the
Prospectus Supplement related to the Offered Debt Securities for information
applicable to such Debt Securities with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company that are described below, including any addition of a covenant or other
provision providing event risk or similar protection.
7
<PAGE>
Under the Indenture, the Company will have the ability, in addition to the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, without the consent of the holders, to reopen a
previous issue of a series of Debt Securities and issue additional Debt
Securities of such series (unless such reopening was restricted when such series
was created), in an aggregate principal amount determined by the Company.
(Section 3.1)
DENOMINATIONS, REGISTRATION AND TRANSFER
Debt Securities of any series may be issuable solely as Registered
Securities, solely as Bearer Securities or as both Registered Securities and
Bearer Securities. Unless otherwise indicated in the Prospectus Supplement,
Registered Securities will be issuable in denominations of $1,000 and integral
multiples thereof and any Bearer Securities will be issuable in the denomination
of $5,000 or, in each case, in such other denominations as may be specified in
the terms of the Debt Securities of any particular series. The Indenture also
provides that Debt Securities of a series may be issuable in global form. See
"Book-Entry Debt Securities." Bearer Securities will be offered, sold and
delivered only outside the United States to non-U.S. persons and to offices
located outside the United States of certain U.S. financial institutions. For
purposes of this Prospectus, "United States" means the United States of America,
including the States and the District of Columbia, its territories, its
possessions and all other areas subject to its jurisdiction. "U.S. person" means
a citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or a
political subdivision thereof, or an estate or trust, income of which is
includable in gross income for U.S. federal income tax purposes regardless of
its source. See "Certain Limitations on Issuance of Bearer Securities."
Particular restrictions on the offer, sale and delivery of Bearer Securities and
any special federal income tax considerations applicable to Bearer Securities
will be described in the Prospectus Supplement relating thereto. Unless
otherwise indicated in the Prospectus Supplement, Bearer Securities will have
interest coupons attached. (Section 2.1)
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount, tenor and rank, and of different authorized denominations. Unless
otherwise specified in the Prospectus Supplement, Bearer Securities will not be
issued in exchange for Registered Securities. (Section 3.5) Bearer Securities
may be exchanged for Registered Securities as specified in the applicable
Prospectus Supplement.
Debt Securities may be presented for exchange as described above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a written instrument of transfer), initially at the
Corporate Trust Office of the Trustee or at the office of any transfer agent
designated by the Company for such purpose with respect to any series of Debt
Securities and referred to in the Prospectus Supplement. No service charge will
be made for any transfer or exchange of Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 3.5) If a Prospectus Supplement
refers to any transfer agent (in addition to the Trustee) initially designated
by the Company with respect to any series of Debt Securities, the Company may at
any time rescind the designation of any such transfer agent or approve a change
in the location through which any such transfer agent acts, except that, if Debt
Securities of a series are issuable solely as Registered Securities, the Company
will be required to maintain a transfer agent in each Place of Payment for such
series and, if Debt Securities of a series are issuable solely as Bearer
Securities or both as Registered Securities and as Bearer Securities, the
Company will be required to maintain (in addition to the applicable Trustee) a
transfer agent in a Place of Payment for such series located outside the United
States. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities. (Section 10.2)
In the event of any redemption, the Company shall not be required to (i)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on (A) if Debt Securities of the series are issuable only as Registered
Securities, the
8
<PAGE>
day of mailing of the relevant notice of redemption and (B) if Debt Securities
of the series are issuable as Bearer Securities, the day of the first
publication of the relevant notice of redemption, or, if Debt Securities of the
series are also issuable as Registered Securities and there is no publication,
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Registered Security, or portion thereof, called for
redemption, except the unredeemed portion of any Registered Security being
redeemed in part; (iii) exchange any Bearer Security called for redemption,
except to exchange such Bearer Security for a Registered Security of that series
and like tenor which is simultaneously surrendered for redemption; or (iv)
issue, register the transfer of or exchange any Debt Security which has been
surrendered for repayment at the option of the holder, except the portion, if
any, of such Debt Security not to be so repaid. (Section 3.5)
CERTAIN LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered, sold, resold or delivered in connection with
their original issue in the United States or to United States persons (each as
defined in the Code and the regulations thereunder) other than to offices
located outside of the United States of United States financial institutions
which agree to comply with the requirements of Section 165(j)(3)(A), (B) or (C)
of the Internal Revenue Code of 1986 (the "Code") and the regulations
thereunder, and any underwriters, agents and dealers participating in the
offering of Debt Securities must agree that they will not offer any Bearer
Securities for sale or resale in the United States or to United States persons
(other than the financial institutions described above) or deliver Bearer
Securities within the United States. In addition, any such underwriters, agents
and dealers must agree to send confirmations to each purchaser of a Bearer
Security confirming that such purchaser represents that it is not a United
States person or that it is a financial institution described above and, if such
person is a dealer, that it will send similar confirmations to purchasers from
it.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code, holders
that are United States persons, with certain exceptions, will not be entitled to
deduct any loss on Bearer Securities and must treat as ordinary income any gain
realized on the sale or other disposition (including the receipt of principal)
of Bearer Securities.
Other restrictions and additional tax considerations may apply to the
issuance and holding of Bearer Securities. A description of such restrictions
and tax consequences will be set forth in the applicable Prospectus Supplement.
CERTAIN COVENANTS
LIMITATIONS ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends
or make any other distributions on its Capital Stock or (ii) pay any
Indebtedness owed to the Company or a Restricted Subsidiary, (b) make loans or
advances to the Company or a Restricted Subsidiary or (c) transfer any of its
properties or assets to the Company or a Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) any restrictions
contained in Indebtedness with respect to the Company or its Restricted
Subsidiaries in existence on the Issue Date; (ii) any restrictions, with respect
to a Restricted Subsidiary that is not a Restricted Subsidiary on the date of
the Indenture, under any agreement in existence at the time such Restricted
Subsidiary becomes a Restricted Subsidiary (unless such agreement was entered
into in connection with, or in contemplation of, such entity becoming a
Restricted Subsidiary on or after the date of the Indenture); (iii) any
restrictions under any agreement evidencing any Acquired Indebtedness of a
Restricted Subsidiary; provided that such restrictions shall not restrict or
encumber any assets of the Company or its
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Restricted Subsidiaries other than such Restricted Subsidiary; (iv) restrictions
existing under any agreement that refinances or replaces the agreements
containing restrictions described in clauses (c) (i), (ii) and (iii) above;
provided that the terms and conditions of any such restrictions are in the good
faith determination of the Board of Directions no less favorable to the holders
of the Debt Securities than those under the agreement so refinanced or replaced;
or (v) any encumbrance or restriction due to applicable law. (Section 10.4)
LIMITATION ON SECURED DEBT. The Indenture provides that the Company will
not, and will not permit any Restricted Subsidiary to, create, assume or
guarantee any Secured Debt without making effective provision for securing the
Debt Securities (and, if the Company shall so determine, any other indebtedness
of or guaranteed by the Company or such Restricted Subsidiary), equally and
ratably with such Secured Debt; provided that this covenant does not apply to
debt secured by (a) certain mortgages, pledges, liens, security interests or
encumbrances to secure payment of all or part of the purchase price or the cost
of construction or improvement of property of the Company or any Restricted
Subsidiary, (b) mortgages, pledges, liens, security interests or encumbrances on
property existing at the time of acquisition thereof, whether or not assumed by
the Company or any Restricted Subsidiary, (c) mortgages, pledges, liens,
security interests or encumbrances on property, shares of stock or indebtedness
of a corporation existing at the time such corporation becomes a Restricted
Subsidiary, (d) mortgages, pledges, liens, security interests or encumbrances on
property of a corporation existing at the time such corporation is merged into
or consolidated with the Company or any Restricted Subsidiary or at the time of
a sale, lease or other disposition of the properties of a corporation or firm as
an entirety or substantially as an entirety to the Company or any Restricted
Subsidiary, (e) mortgages, including mortgages, pledges, liens, security
interests or encumbrances, on property of the Company or any Restricted
Subsidiary in favor of the United States of America, any State thereof, or any
other country, or any agency, instrumentality or political subdivision thereof,
to secure certain payments pursuant to any contract or statute or to secure
indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of construction or improvement of the property
subject to such mortgages, (f) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
mortgage, pledge, lien or encumbrance referred to in the foregoing clauses (a)
to (e), inclusive, provided that the principal amount of such indebtedness shall
not exceed the principal amount outstanding at the time of such extension,
renewal or replacement, and that such extension, renewal or replacement shall be
limited to property which secured the mortgage so extended, renewed or replaced
and additions to such property, or (g) any mortgage, pledge, lien, security
interest or encumbrance securing indebtedness owing by the Company or any
Restricted Subsidiary to the Company or to one or more Restricted Subsidiaries
or both. (Section 10.5) In addition to the foregoing specific exceptions, the
Company and one or more Restricted Subsidiaries may, without securing the Debt
Securities, create, assume or guarantee Secured Debt which would otherwise be
subject to the foregoing restrictions, provided that, after giving effect
thereto, the aggregate amount of all Secured Debt then outstanding (not
including Secured Debt permitted under the foregoing exceptions) and the
aggregate "value" of Sale and Leaseback Transactions (as defined below) (other
than such transactions in connection with which indebtedness has been, or will
be, retired in accordance with clause (b) of the paragraph below entitled
"Limitation on Sale and Leaseback Transactions") at such time does not exceed 5%
of Consolidated Net Tangible Assets. (Section 10.5)
In addition, the Indenture provides that no consolidation or merger of the
Company and no conveyance or transfer of the property or assets of the Company,
substantially as an entirety, shall be made with or to another corporation if as
a result thereof any property or assets of the Company would become subject to a
mortgage, pledge, lien, security interest or encumbrance not permitted by the
terms of the Indenture unless effective provision shall be made to secure the
Debt Securities equally and ratably with (or prior to) all indebtedness thereby
secured. See "Merger or Consolidation" below.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Indenture provides that
the Company will not, and will not permit any Restricted Subsidiary to, sell or
transfer (except to the Company or one or
10
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more Restricted Subsidiaries, or both) any Principal Property owned by it with
the intention of taking back a lease on such property except a lease for a
period not exceeding three years with the intent that the use by the Company or
such Restricted Subsidiary of such property will be discontinued on or before
the expiration of such period (a "Sale and Leaseback Transaction") unless (a)
the Company or such Restricted Subsidiary would be entitled pursuant to the
provisions of the Indenture summarized above to incur Secured Debt in an amount
equal to the amount realized or to be realized upon such sale or transfer
secured by a mortgage on the property to be leased without equally and ratably
securing the Debt Securities, or (b) the Company or such Restricted Subsidiary
shall apply an amount equal to the value of the property so leased to the
retirement (other than payment at maturity or mandatory prepayment), within 120
days after the effective date of such arrangement, of indebtedness for money
borrowed by the Company or any Restricted Subsidiary which was recorded as
funded debt as of the date of its creation and which, in the case of such
indebtedness of the Company, is not subordinate and junior in right of payment
to the Debt Securities, subject to credits for certain voluntary retirements of
such indebtedness. The term "value" means, with respect to a Sale and Leaseback
Transaction, as of any particular time, the amount equal to the greater of (i)
the net proceeds of the sale of the property leased pursuant to such Sale and
Leaseback Transaction, or (ii) the fair value of such property at the time of
entering into such Sale and Leaseback Transaction, as determined by the Board of
Directors, in either case divided first by the number of full years of the term
of the lease and then multiplied by the number of full years of such term
remaining at the time of determination, without regard to any renewal or
extension options contained in the lease. (Section 10.6)
LIMITATION ON TRANSFER OF PRINCIPAL PROPERTY. The Indenture provides that
the Company will not, and will not permit any Restricted Subsidiary to, transfer
any Principal Property to any Unrestricted Subsidiary unless it applies an
amount equal to the fair value of such property at the time of transfer, as
determined by the Board of Directors, to the retirement (other than mandatory
retirement), within 120 days after the effective date of such transfer, of
indebtedness for money borrowed by the Company or any Restricted Subsidiary
which was recorded as funded debt as of the date of its creation and which, in
case of such indebtedness of the Company, is not subordinated and junior in
right of payment of the Debt Securities. (Section 10.7)
EVENTS OF DEFAULT
The Indenture provides, with respect to any series of Debt Securities
outstanding thereunder that the following shall constitute Events of Default:
(i) default in the payment of any installment of interest upon or any Additional
Amounts payable in respect of any Debt Security of that series when the same
becomes due and payable, continued for 30 days; (ii) default in the payment of
all or any part of the principal of or any premium on any Debt Security of that
series at its Maturity; (iii) default in the deposit of any sinking fund payment
when due by the terms of any Debt Security of that series; (iv) failure by the
Company for 60 days after written notice to it to comply with any of its other
agreements in the Debt Securities of such series, in the Indenture or in any
supplemental indenture under which the Debt Securities of that series may have
been issued (other than covenants relating only to other series); (v) certain
events in bankruptcy, insolvency or reorganization of the Company or any of its
Subsidiaries; (vi) a default on any Indebtedness of the Company or any of its
Subsidiaries (other than a default with respect to Debt Securities of such
series) having an outstanding principal amount of more than $15 million in the
aggregate, whether such Indebtedness exists on the date of the Indenture or
shall thereafter be created, and such default relates to the obligation to pay
the principal of, interest on, any Additional Amounts payable in respect of or
any other payment obligation on any such Indebtedness when due and such default
continues for 15 days; (vii) an event of default or default as defined or
designated in any Indebtedness of the Company or any of its Subsidiaries, (other
than a default with respect to Debt Securities of such series) having an
outstanding aggregate principal amount of more than $15 million, whether such
Indebtedness exists on the date of the Indenture or shall thereafter be created,
shall happen and such default shall result in such Indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
become due and
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payable; (viii) if any judgment or order by a court of competent jurisdiction
shall be rendered against the Company or any of its Subsidiaries for the payment
of money in an amount in excess of $15 million and such judgment or order shall
not be discharged, and there shall be any period of 60 consecutive days
following entry of such judgment or order during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; and (ix) any other Event of Default provided with respect to Debt
Securities of that series. (Section 5.1) The Company is required to file with
the Trustee, annually, an Officers' Certificate as to the Company's compliance
with all conditions and covenants under the Indenture. (Section 10.8) The
Indenture provides that the Trustee may withhold notice to the holders of a
series of Debt Securities of any default (except payment defaults on such Debt
Securities) if it considers it in the interest of the holders of such series of
Debt Securities to do so. (Section 6.5)
If an Event of Default with respect to Debt Securities of a particular
series (other than an Event of Default specified in clause (v) in the
immediately preceding paragraph) shall occur and be continuing, the Trustee or
the holders of not less than 25% in principal amount of Outstanding Debt
Securities of that series may declare the principal amount of (or, if the Debt
Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount as may be specified in the
terms of that series) and any accrued and unpaid interest on and any Additional
Amounts payable in respect of all of the Outstanding Debt Securities of that
series due and payable immediately. If an Event of Default specified in clause
(v) of the immediately preceding paragraph shall occur and be continuing, then
the principal amount of (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms of that series) and any accrued and
unpaid interest on and any Additional Amounts payable in respect of that series
shall immediately become due and payable without any declaration or other act on
the part of the Trustee or any holder. (Section 5.2)
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default with respect to Debt Securities of a
particular series shall occur and be continuing, the Trustee shall be under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders of Debt Securities of that
series, unless such holders shall have offered to the Trustee reasonable
indemnity against the expenses and liabilities which might be incurred by it in
compliance with such request. (Section 5.7) Subject to such provisions for the
indemnification of the Trustee, the holders of a majority in principal amount of
the Outstanding Debt Securities of such series shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee under the Indenture, or exercising any trust or power conferred
on the Trustee with respect to the Debt Securities of that series. (Section
5.12)
The holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series under the Indenture may on behalf of
the holders of all the Debt Securities of such series waive any past default
under the Indenture with respect to such series and its consequences, except a
default (i) in the payment of the principal of (or premium, if any) or interest
on or Additional Amounts payable in respect of any Debt Security of such series,
or (ii) in respect of a covenant or provision that cannot be modified or amended
without the consent of the holder of each Outstanding Debt Security of such
series affected thereby. (Section 5.13)
MERGER OR CONSOLIDATION
The Indenture provides that the Company may not consolidate with or merge
with or into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, unless either the Company is
the continuing corporation or such corporation or Person assumes by supplemental
indenture all the obligations of the Company under the Indenture and the Debt
Securities issued thereunder and immediately after the transaction no Event of
Default and no event which, after notice or lapse of time, or both, would become
an Event of Default shall exist. The Company will deliver to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental indenture
comply with the terms of the Indenture.
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In addition, no such consolidation, merger, conveyance or transfer may be
made if as a result thereof any Principal Property of the Company or a
Restricted Subsidiary would become subject to any mortgage, pledge, lien,
security interest or encumbrance unless either (i) such mortgage, pledge, lien,
security interest or encumbrance could be created pursuant to Section 10.4 of
the Indenture (see "Limitation on Secured Debt" above) without equally and
ratably securing the Debt Securities issued under the Indenture or (ii) such
Debt Securities are secured equally and ratably with the debt secured by such
mortgage, pledge, lien, security interest or encumbrance. (Sections 8.1 and 8.2)
MODIFICATION OR WAIVER
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the holders of not less than a majority in
principal amount of all Outstanding Debt Securities issued under the Indenture
that are affected by such modification or amendment; PROVIDED that no such
modification or amendment may, without the consent of the holders of each
Outstanding Debt Security affected thereby, among other things: (i) change the
Stated Maturity of the principal of (or premium, if any, on) or any installment
of principal of or interest on any such Debt Security; (ii) reduce the principal
amount or the rate of interest on or any Additional Amounts payable in respect
of, or any premium payable upon the redemption of, any such Debt Security; (iii)
change any obligation of the Company to pay Additional Amounts in respect of any
such Debt Security; (iv) reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof or provable in bankruptcy; (v) adversely
affect any right of repayment at the option of the holder of any such Debt
Security; (vi) change the place or Currency of payment of principal of, or any
premium or interest on, any such Debt Security; (vii) impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof or on or after any Redemption Date or Repayment Date therefor;
(viii) reduce the above-stated percentage in principal amount of such
Outstanding Debt Securities, the consent of whose holders is necessary to modify
or amend the Indenture or to consent to any waiver thereunder; or (ix) modify
any of the foregoing requirements or reduce the percentage of such Outstanding
Debt Securities necessary to waive any past default or compliance with certain
restrictive provisions. (Section 9.2)
The holders of a majority in aggregate principal amount of Outstanding Debt
Securities issued under the Indenture have the right to waive compliance by the
Company with certain covenants contained in the Indenture. (Section 10.10)
Modification and amendment of the Indenture may be made by the Company and
the Trustee, without the consent of any holder, for any of the following
purposes: (i) to evidence the succession of another Person to the Company as
obligor under the Indenture pursuant to the terms of the Indenture; (ii) to add
to the covenants of the Company for the benefit of the holders of all or any
series of Debt Securities issued under the Indenture or to surrender any right
or power conferred upon the Company by the Indenture; (iii) to add Events of
Default for the benefit of the holders of all or any series of such Debt
Securities; (iv) to add to or change any of the provisions of the Indenture to
facilitate the issuance of, or to liberalize the terms of, Bearer Securities or
to permit or facilitate the issuance of Debt Securities in uncertificated form,
PROVIDED that any such actions shall not adversely affect the holders of such
Debt Securities; (v) to change or eliminate any provision of the Indenture,
PROVIDED that any such change or elimination shall become effective only when
there are no such Debt Securities Outstanding of any series created prior
thereto which are entitled to the benefit of such provision; (vi) to secure such
Debt Securities pursuant to the requirements of Section 8.1 or Article X of the
Indenture, or otherwise; (vii) to establish the form or terms of such Debt
Securities of any series; (viii) to provide for the acceptance of appointment by
a successor Trustee or facilitate the administration of the trusts under the
Indenture by more than one Trustee; (ix) to cure any ambiguity, defect or
inconsistency in the Indenture, PROVIDED such action does not adversely affect
the interests of holders of such Debt Securities of any series; or (x) to
supplement any of the provisions of
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the Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of such Debt Securities, PROVIDED that such action shall
not adversely affect the interests of the holders of any such Debt Securities.
(Section 9.1)
The Indenture provides that in determining whether the holders of the
requisite principal amount of Debt Securities of a series then Outstanding have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof, (ii) the principal amount of a Debt
Security denominated in a foreign Currency or Currencies shall be the U.S.
dollar equivalent, determined on the trade date for such Debt Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the trade date of such Debt Security of the amount
determined as provided in (i) above), (iii) the principal amount of any Indexed
Security that may be counted in making such determination or calculation and
that shall be deemed Outstanding for such purpose shall be equal to the
principal face amount of such Indexed Security at original issuance, unless
otherwise provided with respect to such Indexed Security pursuant to Section 3.1
of the Indenture, and (iv) Debt Securities owned by the Company or any other
obligor upon the Debt Securities or any Affiliate of the Company or of such
other obligor shall be disregarded. (Section 1.1)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
Debt Securities which have not already been delivered to the Trustee for
cancellation and which either have become due and payable or are by their terms
due and payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee in trust funds in an amount sufficient
to pay the entire indebtedness on such Debt Securities for principal (and
premium, if any) and interest, and any Additional Amounts with respect thereto,
to the date of such deposit (if such Debt Securities have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be.
(Section 4.1)
The Indenture provides that, if the provisions relating to defeasance are
made applicable to the Debt Securities of or within any series pursuant to
Section 3.1 of the Indenture, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 14.2) or (b) to be released from its obligations with
respect to such Debt Securities under certain covenants described under "Certain
Covenants -- Limitations on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries," "-- Limitation on Secured Debt," "-- Limitation on
Sale and Leaseback Transactions" and "-- Limitation on Transfer of Principal
Property" and, if provided pursuant to Section 3.1 of the Indenture, its
obligations with respect to any other covenant (except for certain obligations),
and payment of the Debt Securities of such series may not be accelerated because
of a default or an Event of Default under clause (vi), (vii) or (viii) under
"Events of Default" above or because of the failure of the Company to comply
with the provisions of the second paragraph under "Merger or Consolidation"
above ("covenant defeasance") (Section 14.3), in either case upon the
irrevocable deposit by the Company with the Trustee (or other qualifying
trustee) in trust of (i) an amount, in the Currency or Currencies in which such
Debt Securities are then specified as payable at Stated Maturity, (ii)
Government Obligations (as defined below) applicable to such Debt Securities
(with such applicability being determined on the basis of the Currency in which
such Debt Securities are then specified as payable at Stated Maturity) which
through the payment of principal and interest in accordance with their terms
will provide money in an amount or (iii) a combination thereof in an
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amount, sufficient to pay the principal of (and premium, if any) and interest,
if any, on such Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel (as specified in the Indenture)
to the effect that the holders of such Debt Securities will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance under clause
(a) above, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law occurring
after the date of the Indenture. (Section 14.4)
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt; PROVIDED that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt. (Section 1.1)
Unless otherwise provided in the Prospectus Supplement, if, after the
Company has deposited funds and/or Government Obligations to effect defeasance
or covenant defeasance with respect to Debt Securities of any series, (a) the
holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the terms of the Indenture or of such Debt Security to receive
payment in a Currency other than that in which such deposit has been made in
respect of such Debt Security, or (b) the Currency in which such deposit has
been made in respect of any Debt Security of such series (i) is a foreign
Currency, and it ceases to be used both by the government of the country that
issued the Currency and by a central bank or other public institutions of such
country or within the international banking community for the settlement of
transactions, (ii) is the ECU, and it ceases to be used both within the European
Monetary System and for the settlement of transactions by public institutions of
or within the European Communities or (iii) is any currency unit (or composite
currency) other than the ECU, and it ceases to be used for the purposes for
which it was established (each of the events described in clauses (i) through
(iii), a "Conversion Event"), then the indebtedness represented by such Debt
Security shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest, if any, on such Debt Security as they become due out of the proceeds
yielded by converting the amount so deposited in respect of such Debt Security
into the Currency in which such Debt Security becomes payable as a result of
such election or such Conversion Event based on the applicable Market Exchange
Rate. (Section 14.5) Unless otherwise provided for in the Prospectus Supplement,
all payments of principal of (and premium, if any) and interest, if any, and
Additional Amounts, if any, on any Debt Security that are payable in a foreign
Currency with respect to which a Conversion Event occurs shall be made in U.S.
dollars. (Section 3.12)
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Events of Default
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other than the Event of Default described in clause (iv) or (ix) under "Events
of Default" with respect to any covenant with respect to which there has been
defeasance, the amount in such Currency in which such Debt Securities are
payable and Government Obligations that are on deposit with the Trustee will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
If the Trustee or any applicable Paying Agent is unable to apply any money
in accordance with the Indenture by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under the Indenture and such Debt
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to the Indenture, until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with the Indenture; PROVIDED,
HOWEVER, that if the Company makes any payment of principal of (or premium, if
any) or interest on any such Debt Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Debt Securities to receive such payment from the money held by the Trustee
or Paying Agent.
The Prospectus Supplement may further describe the provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Debt Securities of or
within a particular series.
PAYMENT AND PAYING AGENT
Unless otherwise provided in the Prospectus Supplement, principal of and any
premium, interest and Additional Amounts on Registered Securities will be
payable at any office or agency to be maintained by the Company in New York, New
York, except that at the option of the Company interest (including Additional
Amounts, if any) may be paid (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer to an account maintained by the Person entitled thereto as
specified in the Security Register. (Sections 3.1, 10.1 and 10.2) Unless
otherwise provided in the Prospectus Supplement, payment of any installment of
interest on Registered Securities will be made to the Person in whose name such
Registered Security is registered at the close of business on the Regular Record
Date for such interest. (Section 3.7)
Unless otherwise provided in the Prospectus Supplement, principal of and any
premium, interest and Additional Amounts on Bearer Securities will be payable,
subject to any applicable laws and regulations, at the offices of such Paying
Agents outside the United States as the Company may designate from time to time.
(Section 10.2) Such payment on Bearer Securities also may be made by transfer to
an account maintained by the payee with a bank located outside the United
States. (Section 3.7) Unless otherwise provided in the Prospectus Supplement,
payment of interest and certain Additional Amounts on Bearer Securities on any
Interest Payment Date will be made only against surrender of the coupon relating
to such Interest Payment Date. (Section 10.1) Unless otherwise provided in the
Prospectus Supplement, no payment with respect to any Bearer Security will be
made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States. Notwithstanding the
foregoing, payments of principal of and any interest and Additional Amounts in
respect of Bearer Securities payable in U.S. dollars will be made at the office
of the Company's Paying Agent in New York, New York, if (but only if) payment of
the full amount thereof in U.S. dollars at all offices or agencies outside the
United States is illegal or effectively precluded by exchange controls or other
similar restrictions. (Section 10.2)
Any Paying Agents in the United States in addition to or in place of the
Trustee at its Corporate Trust Office and any Paying Agents outside the United
States initially designated by the Company for the Offered Debt Securities will
be named in the Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a
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change in the office through which any Paying Agent acts, except that, if Debt
Securities of a series are issuable only as Registered Securities, the Company
will be required to maintain a Paying Agent in each Place of Payment for such
series and, if Debt Securities of a series are also issuable as Bearer
Securities, the Company will be required to maintain (i) a Paying Agent in New
York, New York for payments with respect to any Registered Securities of the
series (and for payments with respect to Bearer Securities of the series in the
circumstances described above, but not otherwise), and (ii) a Paying Agent in a
Place of Payment located outside the United States where Debt Securities of such
series and any coupons appertaining thereto may be presented and surrendered for
payment; PROVIDED that, if the Debt Securities of such series are listed on the
Luxembourg Stock Exchange or any other stock exchange located outside the United
States and such stock exchange shall so require, the Company will maintain a
Paying Agent in Luxembourg or any other required city located outside the United
States, as the case may be, for the Debt Securities of such series. (Section
10.2)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with or on behalf
of a depository ("Depository") identified in the applicable Prospectus
Supplement. In such a case, one or more Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of the Outstanding Debt Securities of the series to be
represented by such Global Security or Global Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in registered form, a Global
Security may not, subject to certain exceptions, be registered for transfer or
exchange except to the Depository for such Global Security or a nominee of such
Depository.
The specific terms of the Depository arrangement with respect to any Debt
Securities of a series will be described in the applicable Prospectus
Supplement. The Company anticipates that the following provisions will be
applicable to Depository arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depository will be represented by a Global Security registered
in the name of such Depository or its nominee. Upon the issuance of such Global
Security and the deposit of such Global Security with or on behalf of the
Depository for such Global Security, the Depository will credit on its
book-entry registration and transfer system the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depository or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in such Global Security will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial interests
by participants in such Global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depository for such Global Security. Ownership of beneficial interests in such
Global Security by persons that hold through participants will be shown on, and
the transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations and
such laws may impair the ability to transfer beneficial interests in such Global
Securities.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in
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such Global Security must rely on the procedures of the Depository 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 an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a holder
is entitled to give or take under the Indenture, the Depository would authorize
the participants to give such notice or take such action, and participants would
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
RESIGNATION OF TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed to act with respect to
such series. (Section 6.8) In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities issued under the
Indenture, each such Trustee shall be a trustee of a trust under the Indenture
separate and apart from the trust administered by any other such Trustee
(Section 6.9), and any action described herein to be taken by the 'Trustee" may
then be taken by each such Trustee with respect to, and only with respect to,
the one or more series of Debt Securities for which it is Trustee.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) assumed in
connection with the acquisition of assets from another Person or secured by the
assets so acquired from such other Person or (ii) existing at the time such
other Person becomes a Restricted Subsidiary (other than any Indebtedness
incurred in connection with, or in contemplation of, such asset acquisition or
such other Person becoming a Restricted Subsidiary). Acquired Indebtedness shall
be deemed to be incurred on the date of the related acquisition of assets from
any other Person or the date the acquired Person becomes a Restricted
Subsidiary.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into capital stock.
"Capitalized Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with generally accepted accounting principles, and the
amount of Indebtedness represented by such obligation shall be the capitalized
amount of such obligation determined in accordance with such principles; and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Common Stock" means the Company's common stock, par value $1.00 per share.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
after deducting therefrom (a) all current liabilities (excluding any such
liability that by its term is extendable or renewable at the option of the
obligor thereon to a time more than 12 months after the time as of
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which the amount thereof is being computed) and (b) all goodwill, excess of cost
over assets acquired, patents, copyrights, trademarks, tradenames, unamortized
debt discount and expense and other like intangibles, all as shown in the most
recent consolidated financial statements of the Company and its consolidated
Subsidiaries prepared in accordance with generally accepted accounting
principles.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar arrangement designed to protect the Company or any
Restricted Subsidiary against fluctuations in currency values.
"Indebtedness" means, with respect to any Person, at any date, any of the
following, without duplication, (i) any liability, contingent or otherwise, of
such Person (A) for borrowed money (whether or not the recourse of the lender is
to the whole of the assets of such Person or only to a portion thereof), (B)
evidenced by a note, bond, debenture, settlement agreement or similar instrument
or (C) for the payment of money relating to a Capitalized Lease Obligation or
other obligation (whether issued or assumed) relating to the deferred purchase
price of property; (ii) all conditional sale obligations and all obligations
under any title retention agreement (even if the rights and remedies of the
seller under such agreement in the event of default are limited to repossession
or sale of such property), but excluding trade accounts payable arising in the
ordinary course of business; (iii) all obligations for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction other than entered into in the ordinary course of business; (iv) all
indebtedness of others secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
any asset or property (including, without limitation, leasehold interests and
any other tangible or intangible property) of such Person, whether or not such
indebtedness is assumed by such Person or is not otherwise such Person's legal
liability; provided, that if the obligations so secured have not been assumed in
full by such Person or are otherwise not such Person's legal liability in full,
the amount of such indebtedness for the purposes of this definition shall be
limited to the lesser of the amount of such indebtedness secured by such Lien or
the fair market value of the assets of the property securing such Lien; (v) all
indebtedness of others (including all interest and dividends on any Indebtedness
or preferred stock of any other Person for the payment of which is) guaranteed,
directly or indirectly, by such Person or that is otherwise its legal liability
or which such Person has agreed to purchase or repurchase or in respect of which
such Person has agreed contingently to supply or advance funds; and (vi)
obligations in respect of Currency Agreements and Interest Swap Obligations.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Issue Date" means the first date on which a Debt Security is authenticated
by the Trustee pursuant to the Indenture.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien,
charge or adverse claim affecting title or resulting in an encumbrance against
real or personal property or a security interest of any kind (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof or any filing or agreement to file a financing statement as
debtor under the Uniform Commercial Code or any similar statute other than to
reflect ownership by a third party or property leased to the Company or any of
its Subsidiaries under a lease that is not in the nature of a conditional sale
or title retention agreement).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal Property" means any manufacturing plant or other facility having
a gross book value in excess of 1% of Consolidated Net Tangible Assets at the
time of determination thereof and owned or leased by the Company or any
Restricted Subsidiary and located in the United States of America,
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Canada or the Commonwealth of Puerto Rico, other than any such manufacturing
plant or other facility or portion thereof which, in the opinion of the Board of
Directors, is not of material importance to the business conducted by the
Company and its Subsidiaries as a whole.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Secured Debt" means indebtedness for money borrowed which is secured by a
mortgage, pledge, lien, security interest or encumbrance on (a) any Principal
Property of the Company or any Restricted Subsidiary or (b) any shares of stock
or Indebtedness of any Restricted Subsidiary.
"Stated Maturity," when used with respect to any Debt Security or any
installment of principal thereof or interest thereon, means the date specified
in such Debt Security or a coupon representing such installment of interest as
the fixed date on which the principal of such Debt Security or such installment
of principal or interest is due and payable.
"Subsidiary" means a corporation, a majority of the Voting Stock of which at
the time is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (b) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly-acquired or newly-formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any lien on any property of, the Company or any other Subsidiary
of the Company that is not a Subsidiary of the Subsidiary so designated;
provided, however, that the Subsidiary to be so designated has total assets of
$5 million or less.
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any Person (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
DESCRIPTION OF DEBT WARRANTS
The Company may issue (together with Debt Securities or separately) Debt
Warrants for the purchase of Debt Securities ("Offered Debt Warrants"). The Debt
Warrants are to be issued under warrant agreements (each a "Debt Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as warrant agent (the "Debt Warrant Agent"), all as shall be set forth in the
Prospectus Supplement relating to Debt Warrants being offered thereby. A copy of
the form of Debt Warrant Agreement, including the form of warrant certificates
representing the Debt Warrants (the "Debt Warrant Certificates"), reflecting the
alternative provisions to be included in the Debt Warrant Agreements that will
be entered into with respect to particular offerings of Debt Warrants, is filed
as an exhibit to the Registration Statement. The following summaries of certain
provisions of the Debt Warrant Agreement and the Debt Warrant Certificates do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Debt Warrant Agreement and
the Debt Warrant Certificates, respectively, including the definitions therein
of certain terms.
GENERAL
The Prospectus Supplement will describe the terms of the Offered Debt
Warrants, the Debt Warrant Agreement relating to such Debt Warrants and the Debt
Warrant Certificates representing such Debt Warrants, including the following:
(1) The title and aggregate number of such Debt Warrants.
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(2) The offering price of such Debt Warrants.
(3) The designation, aggregate principal amount and terms of the
Underlying Debt Securities purchasable upon exercise of such Debt Warrants.
(4) The designation, aggregate principal amount 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 Debt Security.
(5) The date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable.
(6) The principal amount of Underlying Debt Securities purchasable upon
exercise of each such Debt Warrant and the price at which such principal
amount of Debt Securities may be purchased upon such exercise.
(7) The date on which the right to exercise such Debt Warrants shall
commence and the date on which such right shall expire (the "Expiration
Date").
(8) A discussion of federal income tax considerations applicable to the
Underlying Debt Securities and the exercise of such Debt Warrants.
(9) Whether the Debt Warrant Certificates evidencing such Debt Warrants
will be issued in registered or bearer form, and, if registered, where they
may be transferred and registered.
(10) Any other terms of such Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not be entitled to payments of principal
(or premium, if any) or interest, if any, on or Additional Amounts, if any, in
respect of the Underlying Debt Securities purchasable upon such exercise.
EXERCISE OF DEBT WARRANTS
Each Debt Warrant will entitle the holder of such Debt Warrant to purchase
for cash such principal amount of Underlying Debt Securities at such exercise
price as shall be set forth in, or be determinable as set forth in, the
Prospectus Supplement relating to the Offered Debt Warrants. Offered Debt
Warrants may be exercised at any time up to the close of business on the
Expiration Date set forth in the Prospectus Supplement relating thereto. After
the close of business on the Expiration Date, unexercised Debt Warrants will
become void.
Offered Debt Warrants may be exercised as set forth in the Prospectus
Supplement relating thereto. Upon receipt of payment and the Debt Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Debt Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Underlying
Debt Securities purchasable upon such exercise. If less than all of the Debt
Warrants represented by such Debt Warrant Certificate are exercised, a new Debt
Warrant Certificate will be issued for the remaining amount of Debt Warrants.
DESCRIPTION OF PREFERRED STOCK
Under its Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), the Company is authorized to adopt resolutions
providing for the issuance, in one or more series, of up to 15,000,000 shares of
its preferred stock, $1.00 par value, with such powers, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof as shall be adopted by the Board of
Directors or a duly authorized committee thereof. The Company has no outstanding
shares of preferred stock. However, 450,000 shares of a series of
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preferred stock have been designated as Series A Junior Preferred Stock (the
"Series A Junior Preferred Stock") and are reserved for issuance upon exercise
of certain preferred stock purchase rights associated with each share of the
Company's common stock (the "Common Stock") pursuant to the Company's Rights
Agreement.
The description below sets forth certain general terms and provisions of the
shares of preferred stock covered by this Prospectus, which are referred to
herein as the "Preferred Stock." The specific terms of the Preferred Stock to be
offered (the "Offered Preferred Stock") will be described in the Prospectus
Supplement relating to such Offered Preferred Stock. The following summaries of
certain provisions of the Preferred Stock do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the Certificate
of Incorporation and the Certificate of Designation relating to the particular
series of Preferred Stock.
If so indicated in the Prospectus Supplement, the terms of the Offered
Preferred Stock may differ from the terms set forth below.
GENERAL
Unless otherwise specified in the Prospectus Supplement relating to the
Offered Preferred Stock, each series of Preferred Stock will rank on a parity as
to dividends, upon liquidation and in all other respects with all other
preferred stock of the Company, except the Series A Junior Preferred Stock,
which will, if issued, rank junior to all series of Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable. The
Preferred Stock will not be convertible into shares of Common Stock or other
shares of the Company and holders thereof will have no preemptive rights. The
Preferred Stock will have the dividend, liquidation, redemption and voting
rights set forth below unless otherwise provided in the Prospectus Supplement
relating to the Offered Preferred Stock.
Reference is made to the Prospectus Supplement relating to the Offered
Preferred Stock offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Stock.
(2) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such Preferred
Stock.
(3) The dividend rate(s), period(s) and/or payment date(s) or methods of
calculation thereof applicable to such Preferred Stock.
(4) The date from which dividends on such Preferred Stock shall
accumulate, if applicable.
(5) The procedures for any auction and remarketing, if any, of such
Preferred Stock.
(6) The provision for a sinking fund, if any, for such Preferred Stock.
(7) The provision for redemption, if applicable, of such Preferred
Stock.
(8) Any listing of such Preferred Stock on any securities exchange.
(9) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Subject to the terms of the Offered Preferred Stock, the remaining
authorized shares of undesignated preferred stock may be issued by the Company
in one or more series, at any time or from time to time, with such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as the Board of Directors
or any duly authorized committee thereof shall determine, all without further
action of the stockholders, including holders of the preferred stock of the
Company.
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As used herein, the term "Pari Passu Preferred" means the Preferred Stock
and any shares of stock issued by the Company ranking on a parity with the
Preferred Stock as to payment of dividends and upon distribution of assets, and
the term "Junior Stock" means the Common Stock, the Series A Junior Preferred
Stock and any other stock issued by the Company ranking junior to the Pari Passu
Preferred.
DIVIDENDS
Holders of the Offered Preferred Stock will be entitled to receive cash
dividends, when, as and if declared by the Board of Directors out of assets of
the Company legally available for payment, at such rate and on such dates as
will be set forth in the applicable Prospectus Supplement. Each dividend will be
payable to holders of record as they appear on the stock books of the Company on
the record dates fixed by the Board of Directors. Dividends, if cumulative, will
be cumulative from and after the date set forth in the applicable Prospectus
Supplement. If, for any dividend period or periods, dividends on any Pari Passu
Preferred have not been paid or declared and set apart for payment, the Company
may not declare any dividends (except a dividend payable in Junior Stock or in
options, rights or warrants to purchase or acquire Junior Stock) on, or make any
distribution (except as aforesaid) on the Junior Stock, or make any payment on
account of the purchase, redemption or other retirement of Junior Stock (except
out of the proceeds of the sale of Junior Stock). Dividends in full may not be
declared or paid or set apart for payment on any series of Pari Passu Preferred
unless (i) there shall be no arrearages in dividends for any past dividend
periods on any series of Pari Passu Preferred and (ii) to the extent that such
dividends are cumulative, dividends in full for the current dividend period have
been declared or paid on all Pari Passu Preferred. Any dividends declared or
paid when dividends are not so declared, paid or set apart in full shall be
shared ratably by the holders of all series of Pari Passu Preferred in
proportion to such respective arrearages and undeclared and unpaid current
cumulative dividends. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments which may be in arrears.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Offered Preferred Stock will be
entitled to receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of any Junior
Stock, liquidating distributions in the amount set forth in the applicable
Prospectus Supplement plus all accrued and unpaid dividends. If, upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the amounts payable with respect to the Pari Passu Preferred are not paid in
full, the holders of Pari Passu Preferred will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of the Pari Passu Preferred will not be entitled to any further participation in
any distribution of assets by the Company. A consolidation or merger of the
Company with or into any corporation or corporations or a sale of all or
substantially all of the assets of the Company shall not be deemed to be a
liquidation, dissolution or winding up of the Company.
REDEMPTION
If so determined by the Board of Directors, the Offered Preferred Stock will
be redeemable in whole or in part at the option of the Company, at the times and
at the redemption prices set forth in the applicable Prospectus Supplement.
If dividends on any series of Pari Passu Preferred have not been paid in
full or declared and set apart for payment, no series of Pari Passu Preferred
may be redeemed as a whole or in part, unless all series of Pari Passu Preferred
are simultaneously redeemed, and the Company may not purchase or acquire any
shares of Pari Passu Preferred otherwise than pursuant to an exchange offer made
on the same terms to all holders of Pari Passu Preferred, without in either case
the consent of the holders of at least two-thirds of all Pari Passu Preferred
voting together as a single class without regard to series.
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VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement, or except as
expressly required by applicable law, the holders of the Preferred Stock will
not be entitled to vote. If the equivalent of six quarterly dividends payable on
any series of Preferred Stock or any other series of Pari Passu Preferred that
has comparable voting rights are in default (whether or not declared or
consecutive), the number of directors of the Company shall be increased by two
and the holders of all outstanding series of Preferred Stock and such Pari Passu
Preferred (whether or not dividends thereon are in default), voting as a single
class without regard to series, will be entitled to elect the two additional
directors until all dividends in default have been paid or declared and set
apart for payment. The holders of Preferred Stock and such Pari Passu Preferred
may exercise such special class voting rights at meetings of the stockholders
for the election of directors or, under certain circumstances, at special
meetings for the purpose of electing such directors, in either case at which the
holders of not less than one-third of the aggregate number of shares of
Preferred Stock and such Pari Passu Preferred are present in person or by proxy.
The affirmative vote of the holders of at least two-thirds of the
outstanding Pari Passu Preferred, voting as a single class without regard to
series, will be required (i) for any amendment of the Certificate of
Incorporation that will adversely affect the preferences, rights or voting
powers of the Pari Passu Preferred, but, in any case in which one or more, but
not all, series of Pari Passu Preferred would be so affected as to their
preferences, rights or voting powers, only the consent of the holders of at
least two-thirds of the shares of each series that would be so affected, voting
separately as a class, shall be required or (ii) to issue any class of stock
that shall have preference as to dividends or distribution of assets over any
outstanding Pari Passu Preferred.
DESCRIPTION OF PREFERRED WARRANTS
The Company may issue, together with other securities or separately,
Preferred Warrants for the purchase of Preferred Stock. The Preferred Warrants
are to be issued under Preferred Warrant Agreements (each a "Preferred Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as preferred warrant agent (the "Preferred Warrant Agent"), all as set forth in
the Prospectus Supplement relating to Preferred Warrants in respect of which
this Prospectus is being delivered. A copy of the form of Preferred Warrant
Agreement, including the form of Warrant Certificates representing the Preferred
Warrants (the "Preferred Warrant Certificates") reflecting the provisions to be
included in the Preferred Warrant Agreements that will be entered into with
respect to particular offerings of Preferred Warrants, is filed as an exhibit to
the Registration Statement. The following summaries of certain provisions of the
Preferred Warrant Agreement and the Preferred Warrant Certificates do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Preferred Warrant Agreement and the
Preferred Warrant Certificates, respectively, including the definitions therein
of certain capitalized terms not defined herein.
GENERAL
Reference is made to the Prospectus Supplement for the terms of Preferred
Warrants in respect of which this Prospectus is being delivered, the Preferred
Warrant Agreement relating to such Preferred Warrants and the Preferred Warrant
Certificates representing such Preferred Warrants, including the following: (1)
the offering price of such Preferred Warrants, if any; (2) the designation and
terms of the Preferred Stock purchasable upon exercise of such Preferred
Warrants and the procedures and conditions relating to the exercise of such
Preferred Warrants; (3) the number of shares of Preferred Stock purchasable upon
exercise of each Preferred Warrant and the initial price at which such shares
may be purchased upon exercise; (4) the date on which the right to exercise such
Preferred Warrants shall commence and the date on which such right shall expire
(the "Preferred Warrant Expiration Date"); (5) a discussion of federal income
tax considerations applicable to the exercise of Preferred Warrants; (6) call
provisions of such Preferred Warrants, if any; and (7) any other terms of the
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Preferred Warrants. The shares of Preferred Stock issuable upon the exercise of
the Preferred Warrants will, when issued in accordance with the Preferred
Warrant Agreement, be fully paid and nonassessable.
Prior to the exercise of their Preferred Warrants, holders of Preferred
Warrants will not, solely by virtue of such holdings, have any of the rights of
holders of the Preferred Stock purchasable upon such exercise, and will not be
entitled to any dividend payments on the Preferred Stock purchasable upon such
exercise.
EXERCISE OF PREFERRED WARRANTS
Each Preferred Warrant will entitle the holder to purchase for cash such
number of shares of Preferred Stock at such exercise price as shall in each case
be set forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Preferred Warrants offered thereby. Unless otherwise specified
in the applicable Prospectus Supplement, Preferred Warrants may be exercised at
any time up to the close of business on the Preferred Warrant Expiration Date
set forth in the applicable Prospectus Supplement. After the close of business
on the Preferred Warrant Expiration Date, unexercised Preferred Warrants will
become void.
Preferred Warrants may be exercised as set forth in the Prospectus
Supplement relating to the Preferred Warrants in respect of which this
Prospectus is being delivered. Upon receipt of payment and the Preferred Warrant
Certificates properly completed and duly executed at the corporate trust office
of the Preferred Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward a certificate
representing the number of shares of Preferred Stock purchasable upon such
exercise. If less than all of the Preferred Warrants represented by such
Preferred Warrant Certificates are exercised, a new Warrant Certificate will be
issued for the remaining amount of Preferred Warrants.
DESCRIPTION OF CURRENCY WARRANTS
The Company may issue, together with Debt Securities or Debt Warrants or
separately, Currency Warrants either in the form of Currency Put Warrants
entitling the holders thereof to receive from the Company the Cash Settlement
Value in U.S. dollars of the right to sell a specified amount of a specified
foreign currency or currency units for a specified amount of U.S. dollars, or in
the form of Currency Call Warrants entitling the holders thereof to receive from
the Company the Cash Settlement Value in U.S. dollars of the right to purchase a
specified amount of a specified foreign currency or currency units for a
specified amount of U.S. dollars. The spot exchange rate of the applicable Base
Currency, upon exercise, as compared to the U.S. dollar, will determine whether
the Currency Warrants have a Cash Settlement Value on any given day prior to
their expiration.
The Currency Warrants are to be issued under a Currency Warrant Agreement to
be entered into between the Company and a bank or trust company, as currency
warrant agent (the "Currency Warrant Agent"), all as set forth in the applicable
Prospectus Supplement. A copy of the form of Currency Warrant Agreement,
including the forms of global Warrant Certificates representing the Currency Put
Warrants and Currency Call Warrants (the "Currency Warrant Certificates"),
reflecting the provisions to be included in the Currency Warrant Agreement that
will be entered into with respect to particular offerings of Currency Warrants,
is filed as an exhibit to the Registration Statement. The description of the
Currency Warrants contained herein and the following summaries of certain
provisions of the Currency Warrant Agreement and the Currency Warrant
Certificates do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Currency Warrant
Agreement and the Currency Warrant Certificates, respectively, including the
definitions therein of certain capitalized terms not defined herein.
GENERAL
Reference is made to the Prospectus Supplement for the terms of Currency
Warrants in respect of which this Prospectus is being delivered, the Currency
Warrant Agreement relating to such Currency
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Warrants and the Currency Warrant Certificates representing such Currency
Warrants, including the following: (1) whether such Currency Warrants will be
Currency Put Warrants, Currency Call Warrants, or both; (2) the formula for
determining the Cash Settlement Value, if any, of each Currency Warrant; (3) the
procedures and conditions relating to the exercise of such Currency Warrants;
(4) the circumstances which will cause the Currency Warrants to be deemed to be
automatically exercised; (5) any minimum number of Currency Warrants which must
be exercised at any one time, other than upon automatic exercise; and (6) the
date on which the right to exercise such Currency Warrants will commence and the
date on which such right will expire (the "Currency Warrant Expiration Date").
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Except as may otherwise be provided in the applicable Prospectus Supplement,
the Currency Warrants will be issued in the form of global Currency Warrant
Certificates, registered in the name of the depository or its nominee. Holders
will not be entitled to receive definitive certificates representing Currency
Warrants. A holder's ownership of a Currency Warrant will be recorded on or
through the records of the brokerage firm or other entity that maintains such
holder's account. In turn, the total number of Currency Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
the depository in the name of such brokerage firm or its agent. Transfer of
ownership of any Currency Warrant will be effected only through the selling
holder's brokerage firm.
EXERCISE OF CURRENCY WARRANTS
Each Currency Warrant will entitle the holder to receive the Cash Settlement
Value of such Currency Warrant on the applicable Exercise Date, in each case as
such terms will be defined in the applicable Prospectus Supplement. If not
exercised prior to 3:00 P.M., New York City time, on the fifth New York Business
Day preceding the Currency Warrant Expiration Date, Currency Warrants will be
deemed automatically exercised on the Currency Warrant Expiration Date.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities to or through underwriters or dealers,
and may also sell the Securities directly to one or more other purchasers or
through agents. It is anticipated that such underwriters or agents will consist
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
acting alone or as representative of a group of underwriters. The Prospectus
Supplement with respect to a particular series of Securities will set forth the
terms of the offering of such Securities, including the name or names of any
underwriters, dealers or agents, the purchase price of such Securities and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts, commissions or concessions allowed or reallowed or paid to
dealers, and any bidding or auction process. Any initial offering price and any
discounts, concessions or commissions allowed or reallowed or paid to dealers
may be changed from time to time.
If underwriters are used in an offering of a particular series of
Securities, such Securities will be acquired by the underwriters for their own
account. The Securities may be sold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Securities may be
offered to the public either through underwriting syndicates represented by one
or more managing underwriters or directly by one or more of such firms. The
specific managing underwriter or underwriters, if any, will be set forth in the
Prospectus Supplement relating to a particular series of Securities together
with the members of the underwriting syndicate, if any. Unless otherwise set
forth in the Prospectus Supplement relating to a particular series of
Securities, the obligations of the underwriters to purchase such series of
Securities will be subject to certain conditions precedent and each of the
underwriters with respect to such series of Securities will be obligated to
purchase all of the Securities of such series if any such Securities are
purchased.
26
<PAGE>
The Securities may be offered and sold directly by the Company or through
agents designated by the Company from time to time. The Prospectus Supplement
will set forth the name of any agent involved in the offer or sale of the
Securities in respect of which the Prospectus Supplement is delivered and any
commissions payable by the Company to such agent. Unless otherwise indicated in
the Prospectus Supplement, any such agent is acting on a best efforts basis for
the period of its appointment.
Any underwriters, dealers or agents participating in the distribution of the
Securities may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents, dealers
and underwriters may be entitled, under agreements entered into with the
Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, and to contribution with respect
to payments which the agents, dealers or underwriters may be required to make in
respect thereof. Agents, dealers and underwriters may engage in transactions
with or perform services for the Company in the ordinary course of business. It
is not anticipated that any of the Securities will be listed on a national
securities exchange. No assurance can be given that any broker-dealer will make
a market in any series or issuance of Securities, and, in any event, no
assurance can be given as to the liquidity of the trading market for any of the
Securities. The Prospectus Supplement will state, if known, whether or not any
broker-dealer intends to make a market in the Securities in respect of which
such Prospectus Supplement is delivered. If no such determination has been made,
the Prospectus Supplement will so state.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement relating to a particular series
of Securities, the Company will authorize underwriters, dealers or agents to
solicit offers by certain institutions to purchase Securities of such series
from the Company pursuant to delayed delivery contracts providing for payment
and delivery on a future date. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases will be subject to the approval of the Company. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of the Securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject. The
underwriters, dealers and agents will not have any responsibility in respect of
the validity or performance of such contracts.
EXPERTS
The consolidated financial statements and related schedules of the Company
incorporated by reference or included in the Company's Annual Report (Form 10-K)
for the year ended January 1, 1994 have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein by reference in reliance upon such report of
said firm and upon such authority of such firm as experts in accounting and
auditing.
LEGAL OPINIONS
The validity of the Securities will be passed upon for the Company by Grippo
& Elden, 227 West Monroe Street, Suite 3600, Chicago, IL 60606, and for the
agents or underwriters, if any, by Skadden, Arps, Slate, Meagher & Flom, 333
West Wacker Drive, Suite 2100, Chicago, IL 60606. Skadden, Arps, Slate, Meagher
& Flom has from time to time acted as counsel in certain matters to the Company.
27
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company.................................... S-2
Use of Proceeds................................ S-2
Selected Financial Information................. S-3
Description of the Notes....................... S-4
Underwriting................................... S-7
Experts........................................ S-7
Legal Opinions................................. S-7
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 3
Use of Proceeds................................ 4
Ratio of Earnings to Fixed Charges............. 4
Description of Debt Securities................. 5
Description of Debt Warrants................... 20
Description of Preferred Stock................. 21
Description of Preferred Warrants.............. 24
Description of Currency Warrants............... 25
Plan of Distribution........................... 26
Experts........................................ 27
Legal Opinions................................. 27
</TABLE>
$100,000,000
[LOGO]
6 5/8% NOTES
DUE OCTOBER 1, 2005
------------------------
PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SEPTEMBER 28, 1995
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