<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-12701
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 8, 1996
[LOGO OF SONOCO]
$150,000,000
Sonoco Products Company
7% Notes Due November 15, 2004
------------
We will pay interest on the Notes each May 15 and November 15. The first
interest payment will be made on May 15, 2000. We may not redeem the Notes
prior to their maturity.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Sonoco (1)
------------ ------------- ------------
<S> <C> <C> <C>
Per Note................................... 99.742% .600% 99.142%
Total...................................... $149,613,000 $900,000 $148,713,000
</TABLE>
(1) Plus accrued interest, if any, from November 22, 1999.
Delivery of the Notes, in book-entry form only, will be made on or about
November 22, 1999.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the attached prospectus to which it relates is
truthful or complete. Any representation to the contrary is a criminal offense.
Joint Bookrunners
Banc of America Securities LLC Credit Suisse First Boston
The date of this prospectus supplement is November 17, 1999.
<PAGE>
------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where to Find More Information.................................. S-2
Forward-Looking Statements...................................... S-3
The Company..................................................... S-3
Ratio of Earnings to Fixed
Charges......................................................... S-4
Use of Proceeds................................................. S-4
Description of the Notes........................................ S-4
Underwriting.................................................... S-5
Validity of the Notes........................................... S-6
Experts......................................................... S-7
<CAPTION>
Prospectus
Page
----
<S> <C>
Available Information........................................... 2
Incorporation of Certain Documents by Reference................. 2
The Company..................................................... 3
Use of Proceeds................................................. 3
Ratio of Earnings to Fixed Charges.............................. 3
Description of the Debt Securities.............................. 4
Plan of Distribution............................................ 12
Experts......................................................... 13
Validity of the Debt Securities................................. 13
</TABLE>
You should rely only on the information contained in, or incorporated by
reference into, this prospectus supplement and the attached prospectus. We
have not authorized anyone to provide you with information that is different.
This prospectus supplement and the attached prospectus may only be used where
it is legal to sell these securities. The information in, or incorporated by
reference into, this prospectus supplement may only be accurate on the date of
this prospectus supplement.
------------
WHERE TO FIND MORE INFORMATION
The Securities and Exchange Commission, or SEC, allows us to "incorporate by
reference" the information in documents that we file with the SEC. This means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part
of this prospectus supplement and the attached prospectus and should be read
with the same care. Later information that we file with the SEC will
automatically update and supersede that information.
The following documents are currently incorporated in and made a part of
this prospectus supplement and the attached prospectus by reference in
connection with the offering of the Notes:
. Our Annual Report on Form 10-K, and our Annual Report on Form 10-K/A, for
our fiscal year ended December 31, 1998.
. Our Quarterly Reports on Form 10-Q for the quarters ended March 28, 1999,
June 27, 1999 and September 26, 1999.
. Our Current Report on Form 8-K dated November 12, 1999.
Any future documents that we file with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the completion of the offering of the Notes will also be
incorporated by reference into this prospectus supplement and the attached
prospectus.
S-2
<PAGE>
We will provide without charge to each person (including any beneficial
owner) to whom this prospectus supplement and the attached prospectus is
delivered, upon written or oral request, a copy of any documents incorporated
by reference in this prospectus supplement and the attached prospectus (other
than the exhibits to such documents unless those exhibits are specifically
incorporated by reference). You should direct your request to Charles J.
Hupfer, Vice President, Treasurer and Secretary, Sonoco Products Company, North
Second Street, Hartsville, South Carolina 29550, telephone (843) 383-7000, or
e-mail [email protected].
FORWARD-LOOKING STATEMENTS
Statements included in, or incorporated by reference into, this prospectus
supplement and the attached prospectus that are not historical in nature are
intended to be, and are hereby identified as, "forward-looking statements" for
purposes of the safe harbor provided by Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act.
Forward-looking statements include statements regarding offsetting high raw
materials costs, adequacy of income tax provisions, refinancing of debt,
adequacy of cash flows and the cost and effectiveness of Year 2000 measures.
Such forward-looking statements are based on current expectations, estimates
and projections about our industry, management's beliefs and certain
assumptions made by management. Such information includes, without limitation,
discussions as to estimates, expectations, beliefs, plans, strategies and
objectives concerning our future financial and operating performance. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict. Therefore,
actual results may differ materially from those expressed or forecasted in such
forward-looking statements. Such risks and uncertainties include, without
limitation: availability and pricing of raw materials; success of new product
development and introduction; ability to maintain or increase productivity
levels; international, national and local economic and market conditions;
ability to maintain market share; pricing pressures and demand for products;
continued strength of our paperboard-based tube, core and composite can
operations; currency stability and the rate of growth in foreign markets; and
actions of government agencies, including the Internal Revenue Service.
Information concerning some of the factors that could cause materially
different results is also included in our reports on Forms 10-K and 10-Q to
which we have referred you and which we have filed with the SEC. Such reports
are available from the SEC's public reference facilities and its Internet
website or from our investor relations department.
THE COMPANY
The following summary of our business is qualified entirely by, and should be
read together with, the more detailed information and financial statements
incorporated by reference in this prospectus supplement and the attached
prospectus.
We are one of the world's largest manufacturers of packaging materials for
industrial and consumer markets. We operate in two primary segments, our
industrial packaging segment and our consumer packaging segment. Our industrial
segment includes engineered carriers and paper (paper and plastic tubes and
cores, paper manufacturing and recovered paper operations) and protective
packaging (designed interior packaging and protective reels). Our consumer
segment includes composite cans, flexible packaging (printed flexibles, bag and
film products and container seals) and specialty packaging and services
(folding cartons, covers and coasters, graphics management and packaging
centers). We operate in more than 270 locations in 32 countries on five
continents, and employ more than 16,500 people. Our headquarters are located at
North Second Street, Hartsville, South Carolina 29550, telephone (843) 383-
7000.
S-3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to fixed charges for
the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended December 31,
September 26, -----------------------------
1999 1998 1997 1996 1995 1994
----------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges...................... 5.47x 4.51x 5.18x 5.05x 5.97x 5.64x
</TABLE>
For purposes of calculating the ratio, earnings consist of the sum of (i)
pretax income from continuing consolidated operations and (ii) fixed charges.
Fixed charges consist of interest costs on all indebtedness and that portion of
rental expense considered to be representative of the interest factor.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $148.5 million
from the sale of the Notes, after we deduct the underwriting discounts and
commissions and expenses of the offering. We plan to use the net proceeds from
the sale of the Notes for general corporate purposes and to repay a portion of
our short-term commercial paper debt, which had a weighted average interest
rate of 5.79% and a weighted average maturity of 81 days as of November 10,
1999.
DESCRIPTION OF THE NOTES
Particular terms of the Notes offered by this prospectus supplement are
summarized below. The summary supplements the description of the general terms
of the debt securities, of which the Notes offered by this prospectus
supplement are a part, set forth under "Description of the Debt Securities" in
the attached prospectus. If anything summarized below is inconsistent with the
general terms described in the attached prospectus, you should consider the
particular terms summarized below to be the ones that prevail. You should read
the attached prospectus in conjunction with this prospectus supplement. The
following summary of certain provisions of the Indenture and the Notes does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the Indenture, including the definitions
of certain terms in the Indenture and those terms made a part of the Indenture
by the Trust Indenture Act of 1939.
General
The Notes will be issued initially in the principal amount of $150,000,000.
The Notes will be issued in denominations of $1,000 and integral multiples of
$1,000. Additional Notes may be issued in the future under the same terms and
conditions with the same CUSIP number as the Notes being offered hereby. The
Notes will be unsecured obligations issued under the Indenture, dated as of
June 15, 1991, between us, as issuer, and The Bank of New York, as trustee, and
will rank equally with all of our other unsecured and unsubordinated
indebtedness.
The Notes will bear interest at 7% per year and will mature on November 15,
2004. Interest on each Note will be payable semiannually on May 15 and November
15 of each year, commencing May 15, 2000, to the person in whose name the Notes
are registered at the close of business on May 1 and November 1, as the case
may be, immediately preceding such interest payment dates. Interest on the
Notes will accrue from the date of issue and will be paid on the basis of a
360-day year consisting of twelve 30-day months.
Redemption
The Notes may not be redeemed prior to their maturity.
S-4
<PAGE>
Book-Entry System
The Notes will be issued in book-entry form as one or more permanent global
securities, and may only be withdrawn from the The Depository Trust Company,
as depositary, and exchanged for physical securities in the limited situations
described under "Description of the Debt Securities--Book-Entry Securities" in
the attached prospectus.
Sinking Fund
There is no provision for a sinking fund for the Notes.
Defeasance
Under certain circumstances, we will be deemed to have discharged the entire
indebtedness on all of the outstanding Notes, or certain restrictive covenants
under the Indenture, by defeasance. See "Description of the Debt Securities--
Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances" in the attached prospectus for a description of the terms of
any such defeasance that will be applicable to the Notes.
Covenants
The Indenture governing the Notes contains covenants that will, among other
things, limit our ability to:
.Incur certain liens securing indebtedness.
.Engage in certain sale-leaseback transactions.
For a description of these covenants, see "Description of the Debt
Securities--Certain Covenants of the Company" in the attached prospectus.
Consolidation, Merger and Sale of Assets
We are not permitted under the Indenture to consolidate with or merge into
another person or transfer or lease substantially all of our assets to another
person unless such person is a U.S. entity that assumes our obligations under
the Indenture and certain other conditions are met. For a description of these
conditions, see "Description of the Debt Securities--Consolidation, Merger and
Sale of Assets" in the attached prospectus.
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated November 17, 1999, we have agreed to sell to the underwriters
named below the following respective principal amounts of the Notes:
<TABLE>
<CAPTION>
Principal
Underwriters Amount
------------ ------------
Banc of America Securities LLC................................. $ 75,000,000
<S> <C>
Credit Suisse First Boston Corporation......................... 75,000,000
------------
Total........................................................ $150,000,000
============
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all of the Notes if any are purchased. The underwriting agreement
provides that if an underwriter defaults, the purchase commitments of non-
defaulting underwriters may be increased or the offering of Notes may be
terminated.
The underwriters propose to offer the Notes initially at the public offering
price on the cover page of this prospectus supplement and to selling group
members at that price less a concession of .350% of the principal
S-5
<PAGE>
amount per Note. The underwriters and selling group members may allow a
discount of .250% of such principal amount per Note on sales to other
broker/dealers. After the initial public offering, the public offering price
and concession and discount to broker/dealers may be changed by the
underwriters.
We estimate that our out of pocket expenses for this offering will be
approximately $200,000.
The Notes are a new issue of securities with no established trading market.
One or more of the underwriters intend to make a secondary market for the
Notes. However, they are not obligated to do so and may discontinue making a
secondary market for the Notes at any time without notice. No assurance can be
given as to how liquid the trading market for the Notes will be.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or contribute to payments
which the underwriters may be required to make in respect thereof.
In the ordinary course of their respective businesses, Banc of America
Securities LLC and Credit Suisse First Boston Corporation have provided, and
in the future may provide, investment banking services to us. Additionally, in
the ordinary course of their respective businesses, affiliates of Banc of
America Securities LLC and Credit Suisse First Boston Corporation have
provided, and in the future may provide, commercial banking services and
credit facilities to us. Hugh L. McColl, Chairman and Chief Executive Officer
of Bank of America Corporation, Charles W. Coker, our Chairman, and A.T.
Dickson, one of our directors, serve both on our Board of Directors as well as
on the Board of Directors of Bank of America Corporation, the parent company
of Banc of America Securities LLC.
The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the Notes in the
open market after the distribution has been completed in order to cover
syndicate short positions.
. Penalty bids permit the underwriters to reclaim a selling concession from
a syndicate member when the Notes originally sold by the syndicate member
are purchased in a stabilizing transaction or a syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the Notes to be higher than it would otherwise be
in the absence of these transactions, and, if commenced, may be terminated at
any time.
VALIDITY OF THE NOTES
The validity of the Notes offered hereby will be passed upon for the Company
by Sinkler & Boyd, P.A., Columbia, South Carolina, general counsel to the
Company, and Sullivan & Cromwell, Washington, D.C., special counsel to the
Company, and for the underwriters by King & Spalding, Atlanta, Georgia.
Sullivan & Cromwell and King & Spalding will rely as to matters governed by
South Carolina law on the opinion of Sinkler & Boyd, P.A., and Sinkler & Boyd,
P.A. will rely as to matters governed by New York law on the opinion of
Sullivan & Cromwell. Various attorneys in the firms of Sinkler & Boyd, P.A.,
Sullivan & Cromwell and King & Spalding and members of their immediate
families own or have beneficial interests in shares of the Company's common
stock.
S-6
<PAGE>
EXPERTS
PricewaterhouseCoopers LLP, independent auditors, have audited our
consolidated financial statements included in our Annual Report on Form 10-K
for the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus supplement and elsewhere in the
registration statement. Our financial statements are incorporated by reference
in reliance on PricewaterhouseCoopers LLP's report, given on their authority as
experts in accounting and auditing.
S-7
<PAGE>
Sonoco Products Company
[LOGO OF SONOCO] Debt Securities
Sonoco Products Company (the "Company") may offer from time to time, in one
or more series, non-convertible debt securities consisting of debentures,
notes and/or other unsecured evidences of indebtedness (the "Debt Securities")
with an aggregate initial public offering price of up to U.S. $250,000,000, or
the equivalent thereof in any other currency or composite currency, on terms
to be determined at the time of sale. The specific terms of the Debt
Securities, including, where applicable, the designation, aggregate principal
amount, denominations, purchase price, maturity, interest rate (which may be
fixed or variable), and time of payment of interest, if any, currency of
payment, any terms for mandatory or optional redemption, any terms for sinking
fund payments, any listing on a securities exchange and any other specific
terms in connection with the sale of the Debt Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement (the "Prospectus Supplement"). Debt Securities may be
issued in fully registered form or as book-entry securities in permanent
global form.
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 Debt Securities may be offered directly, through agents designated from
time to time, through dealers or through underwriters also to be designated.
See "Plan of Distribution." The names of any such agents, dealers or
underwriters will be set forth in the accompanying Prospectus Supplement. This
Prospectus may not be used to consummate a sale of Debt Securities unless
accompanied by a Prospectus Supplement.
----------------
The date of this Prospectus is November 8, 1996
<PAGE>
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus
or any Prospectus Supplement and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale made hereunder or
thereunder shall, under any circumstances, create an implication that the
information contained herein or in any Prospectus Supplement is correct as of
any date subsequent to the date hereof or thereof or that there has been no
change in the affairs of the Company since the date hereof or thereof. Neither
this Prospectus nor any Prospectus Supplement constitutes an offer to sell or
a solicitation of an offer to buy Debt Securities 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 any person to whom
it is unlawful to make such offer or solicitation.
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"), all of which 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: Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Such materials can also be obtained electronically through a web
site maintained by the Commission, at the following address:
http://www.sec.gov. Such material can also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3, of which this Prospectus is a part, and
exhibits thereto (together with all amendments thereto, the "Registration
Statement"), which the Company has filed with the Commission under the
Securities Act of 1933 (the "Securities Act"), certain portions of which have
been omitted pursuant to the rules and regulations of the Commission, and to
which reference is hereby made for further information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the following documents, which
also have been filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1995 and the Company's Annual Report on Form 10-K/A for the year
ended December 31, 1995;
(b) the Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1996 and June 30, 1996;
(c) the Company's Current Report on Form 8-K filed on August 5, 1996; and
(d) all documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to
the termination of the offering of the Debt Securities.
Any statement contained herein, in the Prospectus Supplement or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein,
in the Prospectus Supplement or in any subsequently filed document which also
is or is 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 the
Registration Statement or this Prospectus.
2
<PAGE>
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
of any and all of the documents that have been or may be incorporated herein
by reference (not including exhibits to such documents, unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to: Charles J. Hupfer, Vice President, Treasurer and
Secretary, Sonoco Products Company, P.O. Box 160, Hartsville, South Carolina
29551-0160 (Telephone: (803) 383-7000).
THE COMPANY
The Company, a South Carolina corporation founded in Hartsville, South
Carolina in 1899, is a major global manufacturer of paperboard-based and
plastic-based industrial and consumer packaging products. The Company is also
vertically integrated into paperboard production and recovered paper
collection. The paperboard utilized in the Company's packaging products is
produced substantially from recovered paper. The Company operates an extensive
network of plants in the United States and has subsidiaries in Europe, Canada,
Mexico, South America, Australasia, and affiliates in Canada, Japan, France
and Italy. The Company has made a number of acquisitions, would expect to
acquire additional companies that provide meaningful opportunities in
industrial and consumer markets, and may also dispose of operations when
consistent with its overall goals and strategies. The Company's principal
executive offices are located at One North Second Street, P.O. Box 160,
Hartsville, South Carolina 29551-0160 (Telephone No. (803) 383-7000).
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement, the Company intends
to use the net proceeds from the sale of the Debt Securities for general
corporate purposes, including working capital, capital expenditures and the
repayment or reduction of bank indebtedness and commercial paper obligations.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for the periods indicated.
<TABLE>
<CAPTION>
Six Months Years ended December 31,
Ended ----------------------------
June 30, 1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges.......................... 5.89x 5.97x 5.64x 5.79x 4.40x 5.35x
</TABLE>
For purposes of these calculations, "earnings" consist of income from
operations before income taxes and fixed charges (excluding capitalized
interest, if any). Fixed charges consist of interest on all indebtedness and
that portion of rental expense considered to be representative of the interest
factor.
3
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which the
Prospectus Supplement will relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may not apply thereto will be
described in the Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities are to be issued under an Indenture, dated as of June
15, 1991 (the "Indenture"), between the Company and The Bank of New York, as
Successor Trustee (the "Trustee"), a form of which is incorporated by
reference into the Registration Statement. The following summary 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 of the provisions of the Indenture, including the definitions therein
of certain terms. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section references used herein are
references to the Indenture.
General
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other currently outstanding unsecured and
unsubordinated indebtedness of the Company.
The Debt Securities of any series may be issued in definitive form or, if
provided in the Prospectus Supplement relating thereto, may be represented in
whole or in part by a permanent global Security or Securities, which will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depositary"), and registered in the name of the Depositary's
nominee. Each Debt Security represented by a permanent global Security is
referred to herein as a "Book-Entry Security."
The Indenture does not limit the amount of Debt Securities or of any
particular series of Offered Debt Securities that may be issued thereunder or
otherwise and provides that Debt Securities may be issued thereunder from time
to time in one or more series.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms or
additional provisions of the Offered Debt Securities: (i) the title of the
Offered Debt Securities; (ii) any limit on the aggregate principal amount of
the Offered Debt Securities; (iii) the price (expressed as a percentage of the
aggregate principal amount thereof) at which the Offered Debt Securities will
be issued; (iv) the date or dates on which the principal of the Offered Debt
Securities will be payable; (v) the rate or rates (which may be fixed or
variable) per annum at which the Offered Debt Securities will bear interest,
if any, or the method of determination of such rate or rates; (vi) the date or
dates from which such interest, if any, on the Offered Debt Securities will
accrue or the method of determination of such date or dates, the dates on
which such interest, if any, will be payable, the date on which payment of
such interest, if any, will commence, and the regular record dates for such
interest payment dates, if any; (vii) the period or periods within which, the
price or prices at which and the terms and conditions upon which the Offered
Debt Securities may be redeemed, in whole or in part, at the option of the
Company; (viii) the obligation, if any, of the Company to redeem or purchase
Offered Debt Securities pursuant to any sinking fund or analogous provisions
or at the option of a Holder, and the periods within, the prices at, and the
terms and conditions upon which such Offered Debt Securities shall be redeemed
or purchased; (ix) if other than the principal amount thereof, the amount of
Offered Debt Securities which shall be payable upon declaration of
acceleration of the maturity thereof; (x) if other than U.S. dollars, the
currency (including composite currencies) in which payment of principal of
(and premium, if any) and/or interest on the Offered Debt Securities shall be
payable; (xi) any currency (including composite currencies) other than the
stated currency of the Offered Debt Securities in which the principal of (and
premium, if any) and/or interest on the Offered Debt Securities may, at the
election of the Company or the Holders, be payable, and the periods within
which, and terms and conditions upon which, such election may be made; (xii)
if
4
<PAGE>
the amount of payments of principal of (and premium, if any) and/or interest
on the Offered Debt Securities may be determined with reference to an index
based on a currency (including composite currencies) other than the stated
currency of the Debt Securities, the manner in which such amounts shall be
determined; (xiii) the right of the Company, if any, to defease the Offered
Debt Securities or certain covenants under the Indenture; (xiv) whether any of
the Offered Debt Securities shall be Book-Entry Securities and, in such case,
the Depositary for such Book-Entry Securities; and (xv) any other terms
relating to the Offered Debt Securities (which are not inconsistent with the
Indenture). (Section 301)
Unless otherwise provided and except with respect to Book-Entry Securities,
principal of and premium, if any, and interest, if any, on the Debt Securities
will be payable, and the transfer of the Debt Securities will be registrable,
at the Corporate Trust Office of the Trustee, except that, at the option of
the Company, interest may be paid by mailing a check to, or by wire transfer
to, the Holders of record entitled thereto. (Sections 301 and 305)
For a description of payments of principal of, premium, if any, and interest
on, and transfer of, Book-Entry Securities, and exchanges of permanent global
Securities representing Book-Entry Securities, see "Book-Entry Securities."
Unless otherwise indicated in the Prospectus Supplement relating thereto and
except with respect to Book-Entry Securities, the Debt Securities will be
issued only in fully registered form without coupons and in denominations of
$1,000 or any multiple thereof. No service charge will be made for any
registration of transfer or exchange of the Offered Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Sections 301, 302 and
305)
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount below their stated
principal amount. 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. "Original Issue
Discount Security" means any security which provides for the declaration of
acceleration of the maturity of an amount less than the principal amount
thereof upon the occurrence of an Event of Default and the continuation
thereof. (Section 101)
In the case of a Debt Security denominated in a foreign currency, a state
court in the State of New York rendering a judgment on such Security would be
required under Section 27 of the New York Judiciary Law to render such
judgment in the foreign currency in which the Debt Security is denominated,
and such judgment would be converted into United States dollars at the
exchange rate prevailing on the date of entry of the judgment.
Certain Covenants of the Company
Restriction on Liens
The Indenture provides that, so long as any Debt Securities are Outstanding,
the Company will not issue, assume or guarantee, and will not permit any
Domestic Subsidiary to issue, assume or guarantee, any Indebtedness which is
secured by a mortgage, pledge, security interest, lien or encumbrance (any
mortgage, pledge, security interest, lien or encumbrance being hereinafter
referred to as a "lien" or "liens") of or upon any assets, whether now owned
or hereafter acquired, of the Company or any such Domestic Subsidiary without
effectively providing that the Debt Securities (together with, if the Company
shall so determine, any other Indebtedness of the Company ranking equally with
the Debt Securities) shall be equally and ratably secured by a lien ranking
ratably with and equal to (or at the Company's option, prior to) such secured
Indebtedness; provided, however, that the foregoing restriction shall not
apply to (a) liens on any assets of any corporation existing at the time such
corporation becomes a Domestic Subsidiary; (b) liens on any assets existing at
the time of acquisition of such assets by the Company or a Domestic
Subsidiary, or liens to secure the payment of all or any part of the purchase
price of such assets upon the acquisition of such assets by the Company or a
Domestic Subsidiary or to
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secure any Indebtedness incurred, assumed or guaranteed by the Company or a
Domestic Subsidiary prior to, at the time of, or within 180 days after such
acquisition (or in the case of real property, the completion of construction
(including any improvements on an existing asset) or commencement of full
operation of such asset, whichever is later) which Indebtedness is incurred,
assumed or guaranteed for the purpose of financing all or any part of the
purchase price thereof or, in the case of real property, construction or
improvements thereon; provided, however, that in the case of any such
acquisition, construction or improvement, the lien shall not apply to any
assets theretofore owned by the Company or a Domestic Subsidiary, other than,
in the case of any such construction or improvement, any real property on
which the property so constructed, or the improvement, is located; (c) liens
on any assets to secure Indebtedness of a Domestic Subsidiary to the Company
or to any wholly owned Domestic Subsidiary; (d) liens on any assets of a
corporation existing at the time such corporation is merged into or
consolidated with the Company or a Domestic Subsidiary or at the time of a
purchase, lease or other acquisition of the assets of a corporation or firm as
an entirety or substantially as an entirety by the Company or a Domestic
Subsidiary; (e) liens on any assets of the Company or a Domestic Subsidiary in
favor of the United States or any State thereof, or any department, agency or
instrumentality or political subdivision of the United States or any State
thereof, or in favor of any other country, or any political subdivision
thereof, to secure partial, progress, advance or other payments pursuant to
any contract or statute or to secure any Indebtedness incurred or guaranteed
for the purpose of financing all or any part of the purchase price (or, in the
case of real property, the cost of construction) of the assets subject to such
liens (including, but not limited to, liens incurred in connection with
pollution control, industrial revenue or similar financings); (f) any
extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part of any lien referred to in the foregoing
clauses (a) to (e), inclusive; provided, however, that the principal amount of
Indebtedness secured thereby shall not exceed the principal amount of
Indebtedness so secured at the time of such extension, renewal or replacement,
and that such extension, renewal or replacement shall be limited to all or a
part of the assets which secured the lien so extended, renewed or replaced
(plus improvements and construction on real property); (g) liens not permitted
by clauses (a) through (f) above if at the time of, and after giving effect
to, the creation or assumption of any such lien, the aggregate amount of all
Indebtedness of the Company and its Domestic Subsidiaries secured by all such
liens not so permitted by clauses (a) through (f) above together with the
Attributable Debt in respect of Sale and Lease-Back Transactions permitted by
the Indenture do not exceed 10% of Consolidated Net Tangible Assets. (Section
1008)
Restriction on Sale and Lease-Back Transactions
The Indenture further provides that the Company will not, and will not
permit any Domestic Subsidiary to, enter into any arrangement with any person
providing for the leasing by the Company or a Domestic Subsidiary of any
property or assets, other than any such arrangement involving a lease for a
term, including renewal rights for not more than 3 years, whereby such
property or asset has been or is to be sold or transferred by the Company or
any Domestic Subsidiary to such person (herein referred to as a "Sale and
Lease-Back Transaction"), unless (a) the Company or such Domestic Subsidiary
would, at the time of entering into a Sale and Lease-Back Transaction, be
entitled to incur Indebtedness secured by a lien on the property or asset to
be leased in an amount at least equal to the Attributable Debt in respect of
such Sale and Lease-Back Transaction without equally and ratably securing the
Debt Securities pursuant to the Indenture; or (b) the proceeds of the sale of
the property or assets to be leased are at least equal to the fair value of
such property or assets (as determined by the Board of Directors of the
Company) and an amount equal to the net proceeds from the sale of the property
or assets so leased is applied, within 180 days of the effective date of any
such Sale and Lease-Back Transaction, to the purchase or acquisition (or, in
the case of property, the construction) of property or assets or to the
retirement (other than at maturity or pursuant to a mandatory sinking fund or
redemption provision) of Debt Securities or of Funded Indebtedness of the
Company or a consolidated Domestic Subsidiary ranking on a parity with or
senior to the Debt Securities. (Section 1009)
Applicability of Covenants
Any series of Debt Securities may provide that any one or more of the
covenants described above shall not be applicable to the Securities of such
series. (Section 1010)
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Certain Definitions (Section 101)
"Attributable Debt", when used in connection with a Sale and Lease-Back
transaction referred to above, shall mean, as of any particular time, the
aggregate of present values (discounted at a rate per annum equal to the
average interest borne by all Outstanding Debt Securities determined on a
weighted average basis and compounded semi-annually) of the obligations of the
Company or any Subsidiary for net rental payments during the remaining term of
all leases (including any period for which such lease has been extended or
may, at the option of the lessor, be extended). The term "net rental payments"
under any lease of any period shall mean the sum of the rental and other
payments required to be paid in such period by the lessee thereunder, not
including, however, any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, reconstruction, insurance, taxes, assessments, water rates or similar
charges required to be paid by such lessee thereunder or any amounts required
to be paid by such lessee thereunder contingent upon the amount of sales,
maintenance and repairs, reconstruction, insurance, taxes, assessments, water
rates or similar charges.
"Consolidated Net Tangible Assets" means at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the
Company and the Subsidiaries as of the end of a fiscal quarter of the Company,
prepared in accordance with generally accepted accounting principles at the
time of calculation, less (a) all current liabilities as shown on such balance
sheet and (b) intangible assets. "Intangible assets" means the value (net of
any applicable reserves), as shown on or reflected in such balance sheet of:
(i) all trade names, trademarks, licenses, patents, copyrights and goodwill;
(ii) organizational costs; and (iii) deferred charges (other than prepaid
items such as insurance, taxes, interest, commissions, rents and similar items
and tangible assets being amortized); but in no event shall the term
"intangible assets" include product development costs.
"Domestic Subsidiary" means any Subsidiary (a) incorporated under the laws
of the United States or any state, territory or possession thereof, or the
Commonwealth of Puerto Rico, (b) the operations of which are substantially
conducted in the United States or its territories or possessions, or in the
Commonwealth of Puerto Rico, or (c) a substantial portion of the assets of
which are located in the United States or its territories or possessions or in
the Commonwealth of Puerto Rico. A "wholly owned Domestic Subsidiary" is any
Domestic Subsidiary of which all Outstanding securities having the voting
power to elect the Board of Directors of such Domestic Subsidiary
(irrespective of whether or not at the time securities of any other class or
classes of such Domestic Subsidiary shall have or might have voting power by
reason of the happening of any contingency) are at the time directly or
indirectly owned or controlled by the Company, or by one or more wholly owned
Domestic Subsidiaries, or by the Company and one or more wholly owned Domestic
Subsidiaries.
"Funded Indebtedness" means any Indebtedness maturing by its terms more than
one year from the date of the determination thereof, including any
Indebtedness renewable or extendible at the option of the obligor to a date
later than one year from the date of the determination thereof.
"Indebtedness" means (i) all obligations for borrowed money, (ii) all
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations in respect of letters of credit or bankers
acceptances or similar instruments (or reimbursement obligations with respect
thereto), (iv) all obligations to pay the deferred purchase price of property
or services, except trade accounts payable arising in the ordinary course of
business, (v) all obligations as lessee which are capitalized in accordance
with generally accepted accounting principles at the time of calculation, and
(vi) all Indebtedness of others guaranteed by the Company or any of its
subsidiaries or for which the Company or any of its subsidiaries is otherwise
responsible or liable (whether by agreement to purchase indebtedness of, or to
supply funds or to invest in, others).
"Subsidiary" means any corporation of which at least a majority of
Outstanding securities having the voting power to elect a majority of the
Board of Directors of such corporation (irrespective of whether or not at the
time securities of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is
at the time directly or indirectly owned or controlled by the Company, or by
one or more of the Subsidiaries, or by the Company and one or more
Subsidiaries.
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Events of Default
An Event of Default with respect to the Debt Securities of any series is
defined in the Indenture as: (a) default in payment of principal of or
premium, if any, on any Debt Security of that series at maturity; (b) default
for 30 days in payment of interest on any Debt Security of that series; (c)
default in the deposit of any sinking fund payment when due in respect of that
series; (d) failure by the Company in the performance of any other of the
covenants or warranties in the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit of a series of Debt
Securities other than that series) continued for 60 days after due notice by
the Trustee or by Holders of at least 10% in principal amount of the
Outstanding Debt Securities of that series; (e) a default under any bond,
debenture, note or other evidence of the Indebtedness of the Company
(including a default with respect to Debt Securities of any series other than
that series) or under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness
of the Company (including this Indenture), whether such Indebtedness now
exists or shall hereafter be created, which default shall constitute a failure
to pay such Indebtedness in a principal amount in excess of $10 million when
due and payable at final maturity after the expiration of any applicable grace
period with respect thereto or shall have resulted in such Indebtedness in a
principal amount in excess of $10 million becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable, without such Indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 15 days
after there shall have been given, by overnight mail or other same day or
overnight delivery service which can provide evidence of delivery, to the
Company by the Trustee, or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that series, a
written notice specifying such default and requiring the Company to cause such
Indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a Notice of Default under the
Indenture; (f) certain events of bankruptcy, insolvency or reorganization of
the Company; and (g) any other Event of Default provided with respect to Debt
Securities of that series. (Section 501)
The Indenture provides that, if any Event of Default with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing,
either the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal
amount (or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Debt Securities as
may be specified in the terms thereof) of all Debt Securities of that series
to be due and payable immediately, but upon certain conditions such
declaration may be annulled and past defaults (except, unless theretofore
cured, a default in payment of principal of or premium, if any, or interest,
if any, on the Debt Securities of that series and certain other specified
defaults) may be waived by the Holders of a majority in principal amount of
the Outstanding Debt Securities of that series on behalf of the Holders of all
Debt Securities of that series. (Sections 502 and 513)
Reference is made to the Prospectus Supplement relating to each series of
Outstanding Debt Securities which are Original Issue Discount Securities for
the particular provisions relating to acceleration of the Maturity of a
portion of the principal amount of such Original Issue Discount Securities
upon the occurrence of an Event of Default and the continuation thereof.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to Debt Securities of any series at the
time Outstanding, give to the Holders of the Outstanding Debt Securities of
that series notice of such default known to it if uncured or not waived,
provided that, except in the case of default in the payment of principal of or
premium, if any, or interest on any Debt Security of that series, or in the
deposit of any sinking fund payment which is provided, the Trustee will be
protected in withholding such notice if the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders of the
Outstanding Debt Securities of such series; and, provided further, that such
notice shall not be given until 30 days after the occurrence of a default with
respect to Outstanding Debt Securities of any series in the performance of a
covenant in the Indenture other than for the payment of the principal of or
premium, if any, or interest on any Debt Security of such series or the
deposit of any sinking fund payment with respect to the Debt Securities of
such series. The term default with respect to any series of Outstanding Debt
Securities for the purpose only of
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this provision means the happening of any of the Events of Default specified
in the Indenture and relating to such series of Outstanding Debt Securities,
excluding any grace periods and irrespective of any notice requirements.
(Section 602)
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care,
to be indemnified by the Holders of any series of Outstanding Debt Securities
before proceeding to exercise any right or power under the Indenture at the
request of the Holders of such series of Debt Securities. (Section 603) The
Indenture provides that the Holders of a majority in principal amount of
Outstanding Debt Securities of any series may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or other power conferred on the Trustee, with respect to
the Debt Securities of such series provided that the Trustee may decline to
act if such direction is contrary to law or the Indenture. In the case of
Book-Entry Securities, the Indenture requires the Trustee to establish a
record date for purposes of determining which Holders are entitled to join in
such direction. (Section 512)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate of no default. (Section 1004)
Modification of the Indenture and Waiver of Covenants
Modifications and amendments may be made by the Company and the Trustee to
the Indenture, without the consent of any Holder of any Debt Security of any
series, to add covenants and Events of Default, and to make provisions with
respect to other matters and issues arising under the Indenture, provided that
any such provision does not adversely affect the rights of the Holders of Debt
Securities of any series (Section 901).
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than 66 2/3% in principal amount
of Outstanding Debt Securities of each series affected thereby, to execute
supplemental indentures adding any provisions to or changing or eliminating
any of the provisions of the Indenture or modifying the rights of the Holders
of Outstanding Debt Securities of such series, except that no such
supplemental indenture may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity, or
reduce the principal amount, the premium, if any, thereon or the rate of
payment of interest thereon, of any Debt Security of any series, (b) reduce
the aforesaid percentage of Outstanding Debt Securities of any series, the
consent of the Holders of which is required for any supplemental indenture or
for waiver of compliance with certain provisions of the Indenture or certain
defaults thereunder or (c) effect certain other changes. (Section 902) The
Indenture also permits the Company to omit compliance with certain covenants
in the Indenture with respect to Debt Securities of any series upon waiver by
the Holders of not less than 66 2/3% in principal amount of Outstanding Debt
Securities of such series. (Section 1011)
Consolidation, Merger and Sale of Assets
The Indenture contains a provision permitting the Company, without the
consent of the Holders of any of the Outstanding Debt Securities under the
Indenture, to consolidate with or merge into any other corporation or transfer
or lease its assets substantially as an entirety to any person provided that:
(i) the successor is a corporation organized under the laws of any United
States domestic jurisdiction; (ii) the successor corporation assumes the
Company's obligations on the Debt Securities and under the Indenture; (iii)
after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have happened and be continuing; and (iv) certain other conditions are met.
(Sections 801 and 802)
Book-Entry Securities
The following description of Book-Entry Securities will apply to any series
of Debt Securities issued in whole or in part in the form of a permanent
global Security or Securities except as otherwise provided in the Prospectus
Supplement relating thereto.
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Upon issuance, all Book-Entry Securities of like tenor and having the same
date of original issue will be represented by one or more permanent global
Securities. Each permanent global Security representing Book-Entry Securities
will be deposited with, or on behalf of, the Depositary, which will be a
clearing agent registered under the Exchange Act. The permanent global
Security will be registered in the name of the Depositary or a nominee of the
Depositary.
Ownership of beneficial interests in a permanent global Security
representing Book-Entry Securities will be limited to institutions that have
accounts with the Depositary or its nominee ("participants") or persons that
may hold interests through participants. In addition, ownership of beneficial
interests by participants in such a permanent global Security only will be
evidenced by, and the transfer of that ownership interest only will be
effected through, records maintained by the Depositary or its nominee for such
permanent global Security. Ownership of beneficial interest in such a
permanent global Security by persons that hold through participants only will
be evidenced by, and the transfer of that ownership interest within such
participant only will be effected through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a
permanent global Security.
Payment of principal of and any premium and interest on Book-Entry
Securities represented by any permanent global Security registered in the name
of or held by the Depositary or its nominee will be made in the Depositary or
its nominee, as the case may be, as the registered owners and Holder of the
permanent global Security representing such Book-Entry Securities. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's records or any
participant's records relating to or payments made on account of beneficial
ownership interests in a permanent global Security representing such Book-
Entry Securities or for maintaining, supervising or reviewing any of the
Depositary's records or any participant's records relating to such beneficial
ownership interests. Payments by participants to owners of beneficial
interests in a permanent global Security held through such participants will
be governed by the Depositary's procedures, as is now the case with securities
held for the accounts of customers registered in "street name," and will be
the sole responsibility of such participants.
No permanent global Security described above may be transferred except as a
whole by the Depositary for such permanent global Security to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary.
A permanent global Security representing Book-Entry Securities is
exchangeable for definitive Debt Securities in registered form, of like tenor
and of an equal aggregate principal amount, only if (a) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such permanent global Security or if at any time the Depositary ceases to
be a clearing agency registered under the Exchange Act, (b) the Company in its
sole discretion determines that such permanent global Security shall be
exchangeable for definitive Debt Securities in registered form or (c) there
shall have occurred and be continuing an Event of Default with respect to the
Debt Securities. Any permanent global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable in whole for definitive Debt
Securities in registered form, of like tenor and of an equal aggregate
principal amount, and, unless otherwise specified in the Prospectus Supplement
relating thereto, in denominations of $1,000 and integral multiples thereof.
Such definitive Debt Securities shall be registered in the name or names of
such person or persons as the Depositary shall instruct the Trustee. It is
expected that such instructions may be based upon directions received by the
Depositary from its participants with respect to ownership of beneficial
interests in such permanent global Security.
Except as provided above, owners of beneficial interests in such permanent
global Security will not be entitled to receive physical delivery of Debt
Securities in definitive form and will not be considered the Holders thereof
for any purpose under the Indenture, and no permanent global Security
representing Book-Entry Securities shall be exchangeable, except for another
permanent global Security of like denomination and tenor to be registered in
the name of the Depositary or its nominee. Accordingly, each person owning a
beneficial interest in such permanent global Security must rely on the
procedures of the Depositary and, if such person is not a
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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, in the event that
the Company requests any action of Holders or an owner of a beneficial
interest in such permanent global Security desires to give or take any action
that a Holder is entitled to give or take under the Indenture, the Depositary
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize beneficial
owners owning through such participant to give or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances
Defeasance and Discharge. The Indenture provides that the terms of any
series of Debt Securities may provide that the Company will be discharged from
any and all obligations in respect of the Debt Securities of such series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, to maintain paying agencies and hold moneys for
payment in trust) upon the deposit with the Trustee, in trust, of money and/or
U.S. Government Obligations or, in the case of Debt Securities denominated in
foreign currencies, money and/or Foreign Government Securities, which, through
the payment of interest and principal thereof in accordance with their terms,
will provide money in an amount sufficient to pay any installment of principal
(and premium, if any) and interest on, and any mandatory sinking fund payments
in respect of, the Debt Securities of such series on the stated maturity of
such payments in accordance with the terms of the Indenture and such Debt
Securities. Such discharge may only occur if, among other things, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that the
Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or there has been a change in tax law, in
either case to the effect that such a discharge will not be deemed, or result
in, a taxable event with respect to Holders of the Debt Securities of such
series; and such discharge will not be applicable to any Debt Securities of
such series then listed on the New York Stock Exchange or any other securities
exchange if the provision would cause said Debt Securities to be de-listed as
a result thereof. (Section 403)
Defeasance of Certain Covenants. The Indenture provides that the terms of
any series of Debt Securities may provide the Company with the option to omit
to comply with certain restrictive covenants described in Sections 1008 and
1009 of the Indenture. The Company, in order to exercise such option, will be
required to deposit with the Trustee money and/or U.S. Government Obligations
or, in the case of Debt Securities denominated in foreign currencies, money
and/or Foreign Government Securities, which, through the payment of interest
and principal thereof in accordance with their terms, will provide money in an
amount sufficient to pay principal (and premium, if any) and interest on, and
any mandatory sinking fund payments in respect of, the Debt Securities of such
series on the stated maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities. The Company will also be required to
deliver to the Trustee an opinion of counsel to the effect that the deposit
and related covenant defeasance will not cause the Holders of the Debt
Securities of such series to recognize income, gain or loss for federal income
tax purposes. (Section 1010) In the event the Company exercises this option
and the Debt Securities of such series are declared due and payable because of
the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations or Foreign Government Securities, as the case may be,
on deposit with the Trustee will be sufficient to pay amounts due on the Debt
Securities of such series at the time of their Stated Maturity but may not be
sufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company shall remain liable for such payments.
The Prospectus Supplement will state if any defeasance provision will apply
to the Offered Debt Securities.
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 610) In the event that two or more persons are acting
as Trustee with respect to different series of Debt Securities, each such
Trustee shall be a Trustee of a
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trust under the Indenture separate and apart from the trust administered by
any other such Trustee (Section 611), 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 Securities for which it is
Trustee.
The Company maintains customary banking relationships with the Trustee.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby in four ways:
(i) directly to purchasers, (ii) through agents, (iii) through underwriters,
and (iv) through dealers.
Offers to purchase Debt Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, who
may be deemed to be an underwriter as that term is defined in the Securities
Act, involved in the offer or sale of the Debt Securities in respect of which
this Prospectus is delivered, will be named, and any commissions payable by
the Company to such agent will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agent will
be acting on a reasonable efforts basis for the period of its appointment. The
Company shall have the sole right to accept offers to purchase Debt Securities
and may reject any proposed offer in whole or in part. Agents shall have the
right, in their sole discretion, to reject any offer received by them to
purchase the Debt Securities in whole or in part. Agents may be entitled under
agreements which may be entered into with the Company to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with or
perform services for the Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale of the Debt
Securities in respect of which this Prospectus is delivered, the Company will
execute an underwriting agreement with such underwriters at the time of the
sale to them and the names of the underwriters and the terms of the
transaction will be set forth in the Prospectus Supplement, which will be used
by the underwriters to make resales of the Debt Securities in respect of which
this Prospectus is delivered to the public. The underwriters may be entitled,
under the relevant underwriting agreement, to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities
to the public at varying prices to be determined by such dealer at the time of
resale. Dealers may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act.
If the Company offers and sells Debt Securities directly to a purchaser or
purchasers in respect of which this Prospectus is delivered, purchasers
involved in the reoffer or resale of such Debt Securities, if such purchasers
in respect thereof may be deemed to be underwriters as that term is defined in
the Securities Act, will be named and the terms of such reoffers or resales
will be set forth in a Prospectus Supplement. Such purchasers may then reoffer
and resell such Debt Securities to the public or otherwise at varying prices
to be determined by such purchasers at the time of resale or as otherwise
described in the Prospectus Supplement. Purchasers of Debt Securities directly
from the Company may be entitled under agreements which they may enter into
with the Company to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may engage in
transactions with or perform services for the Company in the ordinary course
of their business or otherwise.
The place and time of delivery for the Debt Securities in respect of which
this Prospectus is delivered will be as set forth in the Prospectus
Supplement.
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EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995 and
1994, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, have been audited by Coopers & Lybrand
L.L.P., independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of Coopers & Lybrand L.L.P. as experts in accounting and auditing.
VALIDITY OF THE DEBT SECURITIES
The validity of the Debt Securities offered hereby will be passed upon for
the Company by Sinkler & Boyd, P.A., Columbia, South Carolina, general counsel
to the Company, and Sullivan & Cromwell, New York, New York, special counsel
to the Company, and for any underwriter, dealer or agent by counsel to such
underwriter, dealer or agent named in the Prospectus Supplement
("Underwriters' Counsel"). In rendering their opinions, Sullivan & Cromwell
and Underwriters' Counsel may rely on Sinkler & Boyd, P.A., as to certain
matters of South Carolina law, and Sinkler & Boyd, P.A. may rely on Sullivan &
Cromwell as to certain matters of New York law. Various attorneys in the firms
of Sinkler & Boyd, P.A., and of Sullivan & Cromwell and members of their
immediate families own or have beneficial interests in shares of the Company's
common stock.
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