AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 1997
REGISTRATION NO. 333-20183
REGISTRATION NO. 333-20183-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
USI AMERICAN HOLDINGS, INC.
(Exact Name of Co-Registrant Issuer as Specified in its Charter)
U.S. INDUSTRIES, INC.
(Exact Name of Co-Registrant Guarantor as Specified in its Charter)
---------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3998 22-3363062
DELAWARE 3998 22-3369326
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
---------------------------
101 Wood Avenue South
Iselin, New Jersey 08830
(908) 767-0700
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Co-Registrants' Principal Executive Offices)
---------------------------
George H. MacLean, Esq.
Senior Vice President, General
Counsel & Secretary
USI American Holdings, Inc.
101 Wood Avenue South
Iselin, New Jersey 08830
(908) 767-0700
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
---------------------------
COPY TO:
Ellen J. Odoner, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
---------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
USI AMERICAN HOLDINGS, INC.
U.S. INDUSTRIES, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 404(a) and Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-4 Item Number Location in Prospectus
- -------------------- ----------------------
<S> <C>
A. Information About the Transaction
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus...........................................Facing Page; Cross-Reference Sheet;
Outside Front Cover of Prospectus.
2. Inside Front and Outside Back
Cover Pages of Prospectus............................Inside Front Cover Page of
Prospectus; Available Information;
Outside Back Cover Page of
Prospectus.
3. Risk Factors, Ratio of Earnings to
Fixed Charges, and Other
Information..........................................Summary; Risk Factors; Ratio of
Earnings to Fixed Charges;
Capitalization; Selected Financial
Data
4. Terms of the Transaction.............................Summary; The Exchange Offer;
Description of the New Notes;
Certain Federal Income Tax
Considerations; Plan of Distribution
5. Pro Forma Financial
Information..........................................Not applicable.
6. Material Contracts With the
Company Being Acquired...............................Not applicable.
7. Additional Information Required
For Reoffering by Persons and
Parties Deemed to be
Underwriters.........................................Not applicable.
i
<PAGE>
8. Interests of Named Experts and
Counsel..............................................Not applicable.
9. Disclosure of Commission Position
on Indemnification For Securities
Act Liabilities......................................Not applicable.
B. Information About the Registrants
10. Information With Respect to S-3
Registrants..........................................Available Information; Incorporation
of Certain Documents by Reference;
Summary; Recent Developments
11. Incorporation of Certain
Information by Reference.............................Available Information; Incorporation
of Certain Documents by Reference;
Summary
12. Information With Respect to S-2
or S-3 Registrants...................................Not applicable.
13. Incorporation of Certain
Information by Reference.............................Not applicable.
14. Information With Respect to
Registrants Other Than S-3 or S-2
Registrants..........................................Not applicable.
ii
<PAGE>
C. Information About the Company Being
Acquired
15. Information With Respect to S-3
Companies............................................Not applicable.
16. Information With Respect to S-2
or S-3 Companies.....................................Not applicable.
17. Information With Respect to
Companies Other Than S-2 or S-3
Companies............................................Not applicable.
D. Voting and Management Information
18. Information if Proxies, Consents
or Authorizations Are to be
Solicited............................................Not applicable.
19. Information if Proxies, Consents
or Authorizations Are Not to be
Solicited, or in an Exchange
Offer................................................Incorporation of Certain Documents
by Reference
</TABLE>
iii
<PAGE>
INFORMATION CONTINUED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 24, 1997
PROSPECTUS
OFFER TO EXCHANGE ANY AND ALL OUTSTANDING
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES A,
WHICH HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006,
SERIES B, WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT,
OF
USI AMERICAN HOLDINGS, INC.
EACH SERIES UNCONDITIONALLY GUARANTEED BY
U.S. INDUSTRIES, INC.
THIS EXCHANGE WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED
USI American Holdings, Inc., a Delaware corporation (the "Issuer"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (as defined herein; which
together with this Prospectus constitute the "Exchange Offer"), to exchange
$1,000 principal amount of its 7 1/4% Senior Notes due December 1, 2006, Series
B (the "New Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), for each outstanding $1,000 principal
amount of its 7 1/4% Senior Notes due December 1, 2006, Series A (the "Existing
Notes"), which have not been registered under the Securities Act. The aggregate
principal amount of the Existing Notes currently outstanding is $125,000,000.
The terms of the New Notes are identical in all material respects to the terms
of the Existing Notes except that the New Notes will not contain certain terms
with respect to transfer restrictions, registration rights or interest rate
increases as described herein. The New Notes will evidence the same debt as the
Existing Notes and will be issued pursuant to, and entitled to the benefits of,
the Indenture, dated as of December 12, 1996 (the "Indenture"), among the
Issuer, the Company (as defined below) and PNC Bank, National Association, as
trustee (the "Trustee"), pursuant to which the Existing Notes were issued. As
used herein, the term "Notes" means the Existing Notes and the New Notes,
treated as a single class. See "The Exchange Offer" and "Description of the New
Notes."
The New Notes will be fully and unconditionally guaranteed by the
Issuer's parent, U.S. Industries, Inc. (the "Company"). The guaranties to be
endorsed on the New Notes are referred to as the "Guaranties." The New Notes and
the Guaranties will be unsecured senior obligations of, and will rank pari passu
with all other existing and future unsecured and unsubordinated indebtedness and
senior in right of payment to all subordinated indebtedness of, the Issuer and
the Company, respectively. As of December 31, 1996, the Issuer and the Company
had $500 million aggregate principal amount of indebtedness ranking pari passu
with the New Notes and the Guaranties and no outstanding secured indebtedness or
indebtedness ranking senior or subordinated to the New Notes and the Guaranties.
The New Notes and the Guaranties will be effectively subordinated to all
existing and future indebtedness of subsidiaries of the Issuer and the Company
(other than the Issuer) and secured indebtedness of the Issuer and the Company
to the extent of the value of the assets securing such indebtedness. As of
December 31, 1996, subsidiaries of the Issuer (other than USI Funding, Inc., a
special purpose subsidiary with no operating assets) had approximately $42
million aggregate principal amount of indebtedness outstanding. See "Risk
Factors--Holding Company Structure."
The New Notes will bear interest from and including their respective
dates of issuance. Holders whose Existing Notes are accepted for exchange will
receive accrued interest thereon to, but not including, the Exchange Date (as
defined herein), such interest to be payable with the first interest payment on
the New Notes, but will not receive any payment in respect of interest on the
Existing Notes accrued after the issuance of the New Notes.
The Issuer will accept for exchange any and all Existing Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
Expiration Date (as defined herein). See "The Exchange Offer--Expiration Date;
Extensions; Amendments." Tenders of Existing Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. See "Procedures
for Tendering Existing
<PAGE>
Notes--Withdrawal Rights." The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions to the Exchange Offer."
The Existing Notes were issued and sold on December 12, 1996 in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws and may not be offered or sold in the United
States unless so registered or pursuant to an applicable exemption under the
Securities Act and applicable state securities laws. The New Notes are being
offered hereunder in order to satisfy certain obligations of the Issuer and the
Company contained in the Registration Rights Agreement (as defined herein).
Based on no-action letters issued by the Staff of the Securities and Exchange
Commission (the "Commission") to third parties with respect to similar
transactions, including Exxon Capital Holding Corp. (available May 13, 1988)
("Exxon Capital"), Morgan Stanley & Co. Inc. (available June 5, 1991) ("Morgan
Stanley") and similar no-action letters, the Issuer believes that New Notes
issued pursuant to the Exchange Offer in exchange for Existing Notes may be
offered for resale, resold and otherwise transferred by holders thereof (other
than any such holder that is an "Affiliate" of the Issuer within the meaning of
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders are not engaged in, have no arrangement or understanding with any person
to participate in, and do not intend to engage in, any distribution of the New
Notes. However, the Issuer has not sought a no-action letter with respect to the
Exchange Offer and there can be no assurance that the Staff of the Commission
would make a similar determination with respect to the Exchange Offer. Each
holder of Existing Notes, other than a broker-dealer, must acknowledge that it
is not engaged in, has no arrangement or understanding with any person to
participate in and does not intend to engage in a distribution of New Notes. Any
holder who tenders in the Exchange Offer for the purpose of participating in a
distribution of New Notes (i) cannot rely on such an interpretation by the Staff
of the Commission, (ii) will not be able to validly tender Existing Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transactions. In addition, each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. The Letter
of Transmittal accompanying this Prospectus states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Existing Notes where such Existing Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities. Pursuant to
the Registration Rights Agreement, the Issuer has agreed that it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
FOR A DISCUSSION OF CERTAIN FACTORS THAT HOLDERS (AS DEFINED HEREIN)
AND BENEFICIAL OWNERS (AS DEFINED HEREIN) OF EXISTING NOTES SHOULD CONSIDER IN
CONNECTION WITH THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 18.
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 date of this Prospectus is __________ __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Issuer and the Company filed with the Commission an exchange offer
registration statement on Form S-4 (together with all amendments, exhibits,
schedules and supplements thereto, the "Registration Statement") under the
Securities Act with respect to the New Notes, and the Guaranties thereof, being
offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement. For further information with respect to the Issuer and/or the Company
and the New Notes, reference is made to the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and, where such contract or other
document is an exhibit to the Registration Statement, each such statement is
qualified in all respects by all of the provisions in such exhibit, to which
reference is hereby made.
The Company is currently 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 documents and
information with the Commission. The reports, proxy statements and documents and
other information filed by the Company with the Commission, including the
Registration Statement, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, Seven World Trade Center, 13th Floor, New York, New
York 10048 and Chicago Regional Office, Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60601-2511 and at the Commission Website
located at (http://www.sec.gov). Copies of such material or any part thereof may
also be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20546 at prescribed rates. In addition, material filed by the
Company can be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005, on which the Company's Common Stock, par
value $0.01 per share, is listed. In the event the Company is not required to be
subject to the reporting requirements of the Exchange Act in the future, the
Company will be required under the Indenture to file with the Commission the
reports, proxy statements and other documents and information specified in
Sections 13 and 15(d) of the Exchange Act.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in
this Prospectus, including without limitation the documents and information
incorporated herein by reference, are, or may be deemed to be, forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Various economic and competitive factors could cause
actual results to differ materially from those discussed in such forward-looking
statements, including factors which are outside the control of the Company, such
as consumer spending patterns, availability of and rates for consumer credit,
levels of residential and commercial construction, levels of automotive
production and changes in raw material costs, along with the other factors noted
in this Prospectus, including without limitation the documents and information
incorporated herein by reference, with respect to the Company's businesses
("Cautionary Statements"). All subsequent written and oral forward-looking
statements attributable to the Issuer, the Company or persons acting on behalf
of one or both of them are expressly qualified in their entirety by such
Cautionary Statements.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THE ISSUER WILL PROVIDE WITHOUT CHARGE
TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, INCLUDING
ANY BENEFICIAL OWNER, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF
ANY AND ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE
INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM USI AMERICAN HOLDINGS,
INC., 101 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY 08830 (ATTENTION: VICE
PRESIDENT-INVESTOR RELATIONS). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE NO LATER THAN FIVE DAYS PRIOR TO THE
EXPIRATION DATE.
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by this
reference: (a) the Company's Annual Report on Form 10-K for the fiscal year
ended September 28, 1996 (the "1996 Annual Report"); (b) the Company's Current
Reports on Form 8-K dated December 16, 1996 and March 19, 1997; and (c) the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December
28, 1996 (the "Quarterly Report").
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
Exchange Date (as defined herein) shall be deemed to be incorporated by
reference herein and to be a part hereof from the date any such document is
filed. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so modified
or superseded. All information appearing in this Prospectus is qualified in its
entirety by the information and financial statements (including notes thereto)
appearing in the documents incorporated herein by reference, except to the
extent set forth in the immediately preceding statement.
4
<PAGE>
IMPORTANT
To properly tender Existing Notes, the following procedures must be
followed:
o Each beneficial owner owning interests in the Existing Notes
("Beneficial Owner") through a DTC Participant (as defined below)
must instruct such DTC Participant to cause Existing Notes to be
tendered in accordance with the procedures set forth in this
Prospectus.
o Each participant (a "DTC Participant") in the Depository Trust
Company ("DTC") holding Existing Notes through DTC must (i)
electronically transmit its acceptance to DTC through the DTC
Automated Tender Offer Program ("ATOP"), for which the
transaction will be eligible, and DTC will then edit and verify
the acceptance, execute a book-entry delivery to the Exchange
Agent's account at DTC and send an Agent's Message (as defined
herein) to the Exchange Agent for its acceptance, or (ii) comply
with the guaranteed delivery procedures set forth under
"Procedures for Tendering Existing Notes--Guaranteed Delivery
Procedures--Notes held through DTC." By tendering through ATOP,
DTC Participants will expressly acknowledge receipt of the
accompanying Letter of Transmittal and agree to be bound by its
terms and the Issuer will be able to enforce such agreement
against such DTC Participants.
o Each registered owner of a registered certificated Existing Note
(a "Holder") must (i) complete and sign the accompanying Letter
of Transmittal, and mail or deliver such Letter of Transmittal,
and all other documents required by the Letter of Transmittal,
together with certificate(s) representing all tendered Existing
Notes, to the Exchange Agent at its address set forth under
"Procedures for Tendering Existing Notes--Exchange Agent," or
(ii) comply with the guaranteed delivery procedures set forth
under "Procedures for Tendering Existing Notes--Guaranteed
Delivery Procedures--Notes held by Holders."
For purposes of this Prospectus, "Tendering Holder" shall mean (i) each
DTC Participant that has properly transmitted (and not properly withdrawn) its
acceptance through ATOP and in respect of which DTC has sent an Agent's Message,
(ii) each Holder that has timely delivered to the Exchange Agent (and not
properly withdrawn) a properly completed and duly executed Letter of
Transmittal, and any other documents required by the Letter of Transmittal,
together with certificate(s) representing all tendered Existing Notes, or (iii)
each DTC Participant or Holder that has complied with the guaranteed delivery
procedures set forth herein.
The information in this Prospectus concerning DTC and their book-entry
systems has been obtained from sources that the Issuer and the Company believe
to be reliable, but the Issuer and the Company take no responsibility for the
accuracy thereof.
5
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and is subject
to, the more detailed information and financial statements, including the notes
thereto, contained elsewhere in this Prospectus and in the documents and
information incorporated herein by reference. In this Prospectus, (i) references
to "fiscal" are to the applicable fiscal year ended on the Saturday nearest
September 30 and reflects either a 52-week or 53-week period; (ii) unless
otherwise indicated, the term "the Company" refers collectively to U.S.
Industries, Inc. and its consolidated subsidiaries and the term "the Issuer"
refers collectively to USI American Holdings, Inc. and its consolidated
subsidiaries; and (iii) references to the activities of, and financial
information with respect to, the Company prior to May 31, 1995 are to the
historical activities and combined historical financial information of the
individual businesses, real estate assets and equity investments that were
transferred to the Company by Hanson PLC ("Hanson") or its subsidiaries in
connection with the demerger (i.e., spin-off) of the Company by Hanson on that
date (the "Demerger").
U.S. INDUSTRIES, INC.
The Company is a diversified manufacturer of a broad range of consumer,
building and industrial products. Many of its businesses have long operating
histories and enjoy well-established brand names and market positions. In fiscal
1996, the Company had sales of approximately $2.2 billion and operating income
of $228 million; at September 30, 1996, it had total assets of approximately
$1.8 billion. The Company's operations are organized into three business
segments: Consumer, Building Products and Industrial. The following table shows
the fiscal 1996 sales, operating income and principal products of each business
segment:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996
-----------------------------
SEGMENT SALES OPERATING INCOME PRINCIPAL PRODUCTS
------- ----- ---------------- ------------------
<S> <C> <C> <C>
Consumer $935 million (41.9%) $120 million (47.0%) AMES non-powered garden tools and
KELLER ladders; RAINBOW premium
vacuum cleaners; ERTL COLLECTIBLES
die-cast toys and replicas; AMT model
kits; DURANGO western boots, LEHIGH
protective safety shoes and TRIMFOOT
infant and children's footwear;
TOMMY ARMOUR and ODYSSEY golf clubs
and accessories.
Building $840 million (37.6%) $ 91 million (35.7%) JACUZZI whirlpool baths and spas; KIM,
Products PRESCOLITE, COLUMBIA and PROGRESS
commercial and residential lighting
fixtures.
Industrial $458 million (20.5%) $ 44 million (17.3%) Automotive products including GARDEN
STATE TANNING automotive leather
interiors; see "Recent Developments" for
a description of the fiscal 1997
dispositions of the Company's specialty
metals and polypropylene films
businesses.
</TABLE>
6
<PAGE>
The Company has been an independent, publicly owned company since May
31, 1995, when Hanson, to effect the Demerger, paid a dividend to its
shareholders consisting of all of the then outstanding shares of the Company's
common stock. In connection with the Demerger, the Company was capitalized with
bank debt totaling $1.4 billion. One of the Company's principal objectives since
the Demerger has been to deleverage its balance sheet by disposing of certain
non-core businesses and assets.
During the period from June 5, 1995 through November 30, 1995, the
Company prepaid approximately $500 million of its then outstanding $900 million
term loan using the proceeds of dispositions and internally generated funds. In
December 1995, the original bank credit facility was refinanced and the Company
entered into a new bank credit facility (the "Previous Credit Facility") with
substantially lower borrowing spreads and a longer maturity. Upon consummation
of the offering of the Existing Notes (the "Initial Offering") on December 12,
1996 (the "Initial Issue Date") and the application of the net proceeds
therefrom to prepay a portion of the term loan under the Previous Credit
Facility, the Issuer entered into a new $750 million reducing revolving credit
facility guaranteed by the Company (the "New Credit Facility"). The Company's
initial borrowings under the New Credit Facility were used to prepay the
remainder of the indebtedness outstanding under the Previous Credit Facility.
The New Credit Facility lowered the Company's borrowing spreads, eliminated
security interests and guaranties by subsidiaries of the Issuer and modified
certain restrictive covenants. See "Recent Developments--The New Credit
Facility." At December 31, 1996, the Company had approximately $760 million of
total debt outstanding (including $500 million under the New Credit Facility)
and stockholders' equity of $526 million.
The Company is led by an experienced management team whose long-term
objectives include maximization of cash flow, continued debt reduction and
expansion of the Company's businesses. In order to meet these objectives,
management is employing an operating philosophy that includes the following
elements:
o GROWTH AND STABILITY THROUGH DIVERSIFICATION: Management seeks
to maintain growth and earnings stability throughout an
economic cycle by operating a balanced group of diverse
businesses. A significant amount of the Company's sales and
operating income is generated by businesses that have leading
positions in their respective markets. Moreover, many of its
businesses have operating histories that significantly
pre-date the inception of the Company.
o STRATEGIC ACQUISITIONS AND DISPOSITIONS: Management seeks to
enhance the Company's core operations through "bolt-on"
acquisitions of complementary businesses. In the second
quarter of fiscal 1997, the Company acquired certain assets of
Woodings-Verona Tool Works, Inc. ("Woodings-Verona") and of
the Furniture Division of Sunbeam Products, Inc. ("Sunbeam
Furniture"), for a total cost of approximately $85 million
(including transaction costs, the funding of initial
operations and the assumption of certain liabilities). These
operations will complement Ames and Jacuzzi, respectively. In
fiscal 1996, the Company acquired the assets of Keller
Ladders, Inc., a leading manufacturer of ladders in the United
States, for $37 million, to complement the Company's Ames
operations, and the assets of Haugh's Products Limited, a
leading Canadian manufacturer of above-
7
<PAGE>
ground swimming pools and equipment, for $24 million
(including the assumption of debt), to complement the
Company's Jacuzzi operations. In fiscal 1995, the Company
acquired Odyssey Sports, Inc., a maker of golf putters, for
$16 million, to complement the Company's Tommy Armour
operations, and the assets of Southeastern Plastics, Inc., a
plastic injection molder, for $11 million, to complement the
Company's Ames operations. The Company may also consider more
significant "bolt-on" acquisitions as well as acquisitions in
new business areas that meet management's financial and
operating criteria. These criteria include, but are not
limited to, a focus on basic manufacturing, leading market
positions, consistent earnings and potential for long-term
growth in sales, operating income and cash flow. As
opportunities arise, the Company may also make further
dispositions of businesses and assets that it does not
consider important for long-term growth and use the net
proceeds thereof for further debt reduction or acquisitions.
For a description of the dispositions made by the Company
since completion of the Demerger, see "Management's Discussion
and Analysis of Financial Condition and Results of
Operations--Balance Sheet Deleverage" in the Company's 1996
Annual Report, which is incorporated herein by reference and
"Recent Developments--Dispositions."
o DECENTRALIZATION AND MANAGEMENT INCENTIVES: The Company has a
decentralized management structure that enables management of
its operating companies to concentrate on day-to-day
operations. A small centralized senior management team is
responsible for financing and treasury matters, divestitures
and acquisitions, and legal, tax and human resource matters.
Management's compensation under the Company's annual bonus and
long-term deferred compensation plans is dependent upon the
attainment of performance criteria such as debt reduction,
pre-tax profit and operational cash flow. In addition, senior
management of the Company and its major operating subsidiaries
have significant investments in the Company in the form of
restricted stock and stock options.
The Company is a Delaware corporation organized in 1995. Its principal
executive offices are located at 101 Wood Avenue South, Iselin, New Jersey
08830; its telephone number at that address is (908) 767-0700. The Company also
has executive offices located at 17 Mount Street, Mayfair W1Y 5RA, London,
England; its telephone number at that address is (011)(44- 171) 499-8766.
USI AMERICAN HOLDINGS, INC.
The Issuer is a Delaware corporation organized in 1995. It is a direct
wholly-owned subsidiary of the Company that serves as a direct or indirect
holding company for all of the Company's operating subsidiaries and serves as a
borrower under the New Credit Facility.
The Issuer's principal executive offices are located at 101 Wood Avenue
South, Iselin, New Jersey 08830; its telephone number at that address is (908)
767-0700.
8
<PAGE>
THE EXCHANGE OFFER
The Existing Notes were issued and sold on December 12, 1996 in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws and may not be offered or sold in the United
States unless so registered or pursuant to an applicable exemption under the
Securities Act and applicable state securities laws. The Exchange Offer is being
made with respect to all outstanding Existing Notes. See "The Exchange Offer."
The New Notes will be entitled to the benefits of the same Indenture under which
the Existing Notes were issued. See "Description of the New Notes."
The Exchange Offer....................... The Issuer is offering to exchange
pursuant to the Exchange Offer
$1,000 principal amount of New Notes
in exchange for each outstanding
$1,000 principal amount of Existing
Notes. As of the date hereof,
$125,000,000 aggregate principal
amount of the Existing Notes are
outstanding. The terms of the New
Notes are identical in all material
respects to the terms of the
Existing Notes except that the New
Notes will not contain certain terms
with respect to transfer
restrictions, registration rights or
interest rate increases as described
in the Registration Rights Agreement
(as defined below). See "The
Exchange Offer--Terms of the
Exchange Offer."
Based on no-action letters issued by
the Staff of the Commission to third
parties with respect to similar
transactions, including Exxon
Capital, Morgan Stanley and similar
no-action letters, the Issuer
believes that the New Notes issued
pursuant to the Exchange Offer in
exchange for Existing Notes may be
offered for resale, resold and
otherwise transferred by holders
thereof (other than any such holder
that is an Affiliate of the Issuer)
without compliance with the
registration and prospectus delivery
requirements of the Securities Act,
provided that such New Notes are
acquired in the ordinary course of
such holders' business and such
holders are not engaged in, have no
arrangement or understanding with
any person to participate in, and do
not intend to engage in, any
distribution of the New Notes.
However, the Issuer has not sought a
no-action letter with respect to the
Exchange Offer and there can be no
assurance that the Staff of the
Commission would make a similar
determination with respect to the
Exchange Offer. Each holder of
Existing Notes, other than a
broker-dealer, must acknowledge that
it is not engaged in, has no
arrangement or understanding with
any person to participate in and
does not intend to engage in a
distribution of New Notes. Any
holder who tenders in the Exchange
Offer for the purpose of
participating in a distribution of
New Notes (i) will not be able to
rely on the interpretations of the
Staff of the Commission set forth in
the above-referenced no-action
letters, (ii) will not be able to
validly tender Existing Notes in
9
<PAGE>
the Exchange Offer, and (iii) must
comply with the registration and
prospectus delivery requirements of
the Securities Act in connection with
any secondary resale transactions. In
addition, each broker-dealer that
receives New Notes for its own
account pursuant to the Exchange
Offer must acknowledge that it will
deliver a prospectus in connection
with any resale of such New Notes.
The Letter of Transmittal
accompanying this Prospectus states
that by so acknowledging and by
delivering a prospectus, a
broker-dealer will not be deemed to
admit that it is an "underwriter"
within the meaning of the Securities
Act. This Prospectus, as it may be
amended or supplemented from time to
time, may be used by a broker-dealer
in connection with resales of New
Notes received in exchange for
Existing Notes where such Existing
Notes were acquired by such
broker-dealer as a result of
market-making activities or other
trading activities. Pursuant to the
Registration Rights Agreement, the
Issuer has agreed that it will make
this Prospectus available to any
broker-dealer for use in connection
with any such resale. See "The
Exchange Offer--Purpose and Effect of
the Exchange Offer--Transferability"
and "Plan of Distribution."
Purpose and Effect of the
Exchange Offer........................... In connection with the Initial
Offering, the Issuer and the Company
entered into the Registration Rights
Agreement dated December 12, 1996
(the "Registration Rights
Agreement") with BA Securities, Inc.
("BA Securities") providing for the
Exchange Offer. Pursuant to the
Registration Rights Agreement, the
Issuer and the Company agreed to
file with the Commission and use
their best efforts to cause to
become effective the Registration
Statement with respect to the
Exchange Offer for the New Notes
registered under the Securities Act,
with terms identical in all material
respects to the terms of the
Existing Notes except that the New
Notes will not contain certain terms
with respect to transfer
restrictions (which related to the
status of the Existing Notes as
unregistered securities),
registration rights or interest rate
increases relating to the Company's
failure to meet specified milestones
with respect to such registration
rights, all as described therein.
See "The Exchange Offer--Purpose and
Effect of the Exchange Offer." In
addition, if the Exchange Offer
cannot be consummated within 165
days after the Initial Issue Date
for any reason, or if BA Securities
so requests with respect to (i)
Existing Notes not eligible or
permitted to be exchanged or (ii)
New Notes received that are not
fully tradeable, the Issuer and the
Company will be required to file a
Shelf Registration Statement (the
"Shelf
10
<PAGE>
Registration Statement") for an
offering to be made on a continuous
basis pursuant to Rule 415 under the
Securities Act. See "The Exchange
Offer--Purpose and Effect of the
Exchange Offer--Shelf Registration
Statement."
Expiration Date.......................... The Exchange Offer will expire at
5:00 p.m., New York City time, on
the Expiration Date (as defined
herein). See "The Exchange
Offer--Expiration Date." Any
Existing Notes not accepted for
exchange for any reason will be
returned without expense to the
Tendering Holder thereof as promptly
as practicable after the expiration
or termination of the Exchange
Offer. See "--Terms of the Exchange
Offer."
Exchange Date............................ As soon as practicable after the
close of the Exchange Offer, the
Issuer will accept for exchange all
Existing Notes properly tendered and
not validly withdrawn prior to 5:00
p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer--Exchange Date."
Conditions to the
Exchange Offer........................... The Exchange Offer is subject to
customary conditions, certain of
which may be waived by the Issuer.
The Issuer reserves the right to
terminate or amend the Exchange
Offer at any time prior to the
Expiration Date upon the occurrence
of any such condition. The Exchange
Offer is not conditioned on any
minimum aggregate principal amount
of Existing Notes being tendered for
exchange. See "The Exchange
Offer--Conditions."
Consequences of Failure
to Exchange.............................. Any Existing Notes not tendered
pursuant to the Exchange Offer will
remain outstanding and continue to
accrue interest. Such Existing Notes
will remain "restricted securities"
under the Securities Act, subject to
the transfer restrictions described
herein. As a result, the liquidity
of the market for such Existing
Notes could be adversely affected
upon com- pletion of the Exchange
Offer. See "Risk Factors--
Consequences of Failure to Exchange"
and "The Exchange
Offer--Consequences of Failure to
Exchange."
Certain Federal Income
Tax Considerations....................... The exchange pursuant to the
Exchange Offer should not be a
taxable event for federal income tax
purposes. See "Certain Federal
Income Tax Considerations."
Use of Proceeds.......................... There will be no cash proceeds to
the Company from the Exchange Offer.
See "Use of Proceeds."
11
<PAGE>
PROCEDURES FOR TENDERING EXISTING NOTES
Tendering
Existing Notes........................... Each Beneficial Owner of Existing
Notes held through a DTC Participant
must instruct such DTC Participant
to cause its Existing Notes to be
tendered in accordance with the
procedures set forth under
"Procedures for Tendering Existing
Notes--Tendering Existing
Notes--Notes held through a
Custodian."
Each DTC Participant holding
Existing Notes through DTC must (i)
electronically transmit its
acceptance through ATOP, and DTC
will then edit and verify the
acceptance, execute a book-entry
delivery to the Exchange Agent's
account at DTC and send an Agent's
Message to the Exchange Agent for
its acceptance, or (ii) comply with
the guaranteed delivery procedures
set forth in this Prospectus and in
the Notice of Guaranteed Delivery.
See "Procedures for Tendering
Existing Notes--Tendering Existing
Notes--Notes held through DTC" and
"--Guaranteed Delivery
Procedures--Notes held through DTC."
Each Holder must (i) complete and
sign a Letter of Trans- mittal, and
mail or deliver such Letter of
Transmittal, and all other documents
required by the Letter of
Transmittal, together with
certificate(s) representing all
tendered Existing Notes, to the
Exchange Agent at its address set
forth under "Procedures for
Tendering Existing Notes--Exchange
Agent," or (ii) comply with the
guaranteed delivery procedures set
forth in this Prospectus. See
"Procedures for Tendering Existing
Notes--Tendering Existing
Notes--Notes held by Holders" and
"--Guaranteed Delivery
Procedures--Notes held by Holders."
By tendering, each Holder and each
DTC Participant will represent to
the Issuer that, among other things,
(i) it is not an Affiliate of the
Issuer, (ii) it is not a
broker-dealer tendering Existing
Notes acquired directly from the
Issuer for its own account, (iii)
the New Notes acquired pursuant to
the Exchange Offer are being
obtained in the ordinary course of
business of such Holder and (iv) it
has no arrangements or
understandings with any person to
participate in the Exchange Offer
for the purpose of distributing the
New Notes. See "Procedures for
Tendering Existing Notes--Tendering
Existing Notes."
12
<PAGE>
Guaranteed Delivery
Procedures............................... DTC Participants holding Existing
Notes through DTC who wish to cause
their Existing Notes to be tendered,
but who cannot transmit their
acceptances through ATOP prior to
the Expiration Date, may effect a
tender in accordance with the
procedures set forth in this
Prospectus. See "Procedures for
Tendering Existing Notes--Guaranteed
Delivery Procedures-- Notes held
through DTC."
Holders who wish to tender their
Existing Notes but (i) whose
Existing Notes are not immediately
available and will not be available
for tendering prior to the
Expiration Date, or (ii) who cannot
deliver their Existing Notes, the
Letter of Transmittal, or any other
required documents to the Exchange
Agent prior to the Expiration Date,
may effect a tender in accordance
with the procedures set forth in
this Prospectus. See "Procedures for
Tendering Existing Notes--Guaranteed
Delivery Procedures--Notes held by
Holders."
Withdrawal Rights........................ The tender of Existing Notes
pursuant to the Exchange Offer may
be withdrawn at any time prior to
5:00 p.m., New York City time, on
the Expiration Date, in accordance
with the procedures set forth in
this Prospectus. See "The Exchange
Offer--Withdrawal Rights."
Exchange Agent........................... PNC Bank, National Association is
serving as Exchange Agent in
connection with the Exchange Offer.
See "Procedures for Tendering
Existing Notes--Exchange Agent."
THE NEW NOTES
Issuer................................... USI American Holdings, Inc.
Securities Offered....................... $125,000,000 aggregate principal
amount of 7 1/4% Senior Notes Due
December 1, 2006, Series B.
Maturity Date............................ December 1, 2006.
Interest................................. The New Notes will accrue interest
from the Exchange Date at the rate
of 7 1/4% per annum, and will be
payable in cash semiannually in
arrears on June 1 and December 1 of
each year, commencing June 1, 1997
(the "Interest Payment Dates") to
the holders of record on the next
preceding May 15 or November 15,
respectively.
13
<PAGE>
Guaranties............................... The New Notes will be
unconditionally guaranteed by U.S.
Industries, Inc. See "Risk
Factors--Holding Company Structure"
and "Description of the New
Notes--Guaranties."
Ranking.................................. The New Notes and the Guaranties
will be unsecured senior obligations
of, and will rank pari passu with
all other existing and future
unsecured and unsubordinated
indebtedness and senior in right of
payment to all subordinated
indebtedness of, the Issuer and the
Company, respectively. The New Notes
and the Guaranties will be
effectively subordinated to (i) all
existing and future secured
indebtedness of the Issuer and the
Company, to the extent of the value
of the assets securing such
indebtedness, (ii) all existing and
future indebtedness of any
subsidiaries of the Issuer and of
the Company (other than the Issuer)
and (iii) all existing and future
guaranties by subsidiaries of the
Issuer and of the Company (other
than the Issuer) of the Issuer's and
the Company's indebtedness. At
December 31, 1996, on a pro forma
basis after giving effect to two
dispositions and two acquisitions
completed in the second quarter of
fiscal 1997, the Company had
consolidated indebtedness of
approximately $680 million ($443
million of which consisted of
indebtedness of the Issuer under the
New Credit Facility), none of which
represented secured indebtedness or
subordinated indebtedness, and a
ratio of total debt to total
capitalization of 52.9%. At December
31, 1996, subsidiaries of the Issuer
other than USI Funding, Inc.
("Funding"), a special-purpose
funding subsidiary of the Issuer
that has no operating assets or
subsidiaries, had approximately $42
million of indebtedness outstanding
(other than intercompany
indebtedness), all of which had been
guaranteed by the Issuer. See "Risk
Factors--Leverage," "Risk
Factors--Holding Company Structure"
and "Description of the New
Notes--Ranking" herein and
"Management's Discussion and
Analysis of Financial Condition and
Results of Operations--Liquidity and
Capital Resources" in the Company's
1996 Annual Report, which is
incorporated herein by reference."
Redemption............................... The New Notes will be subject to
redemption, in whole or in part, at
the option of the Issuer at any
time, at a redemption price equal to
the greater of (i) 100% principal
amount of the New Notes to be
redeemed, or (ii) the sum of the
present values of the remaining
scheduled payments of principal and
interest on the New Notes to be
redeemed, discounted to the date of
redemption on a semiannual basis at
the Treasury Rate (as defined
herein), plus 10 basis points, plus,
in each case, accrued but unpaid
interest to the date of redemption.
In
14
<PAGE>
addition, the New Notes will be
subject to redemption at the option
of the Issuer in certain
circumstances involving taxation.
See "Description of the New
Notes--Redemption."
Restrictive Covenants.................... The Indenture contains certain
covenants that limit, among other
things, the ability of (i) the
Issuer and Restricted Subsidiaries
(as defined) to grant liens or enter
into sale and lease-back
transactions, (ii) Restricted
Subsidiaries to incur indebtedness,
(iii) the Issuer and Restricted
Subsidiaries to pay dividends,
redeem capital stock or prepay
certain subordinated indebtedness
and (iv) the Issuer and the Company
to merge, consolidate or transfer
substantially all of their
respective assets. The limitations
described above are subject to
certain qualifications and
exceptions. See "Description of the
New Notes--Restrictive Covenants"
and "--Consolidation, Merger or
Certain Sales of Assets of the
Issuer or the Company.
RECENT DEVELOPMENTS
The New Credit
Facility................................. The Company entered into the New
Credit Facility effective upon
consummation of the Initial Offering
and the application of the net
proceeds therefrom to prepay a
portion of the term loan under the
Previous Credit Facility. The
Company's initial borrowings under
the New Credit Facility were used to
refinance the remainder of the
indebtedness outstanding under the
Previous Credit Facility. The New
Credit Facility lowered the
Company's borrowing spreads,
eliminated security interests and
guaranties by subsidiaries of the
Issuer and modified certain
restrictive covenants. The revolving
credit commitment under the New
Credit Facility is subject to
permanent reductions on the third
and fourth anniversaries of the
initial borrowings thereunder. See
"Recent Developments--The New Credit
Facility."
Dispositions............................. In January 1997, the Company
completed the sale of certain assets
of QPF, Inc. ("QPF"), a manufacturer
of polypropy- lene films, for $43.2
million and the sale of the capital
stock of SCM Metal Products Inc.
("SCM Metals"), a manufacturer of
specialty metal products, for $122
million. See "Recent
Developments--Dispositions."
15
<PAGE>
Acquisitions............................. In the second quarter of fiscal
1997, the Company purchased certain
assets of Woodings-Verona and
Sunbeam Furniture. The Company
expects the total cost of these
acquisitions to approximate $85
million including transaction costs,
the funding of initial operations
and the assumption of certain
liabilities. See "Recent
Developments--Acquisitions."
First Quarter Fiscal
1997 Earnings............................ For the three months ended December
31, 1996, the first quarter of the
Company's 1997 fiscal year, the
Company had sales of $527 million,
compared to sales of $464 million in
the first quarter of fiscal 1996.
The Company had income from
continuing operations of $20 million
($0.39 per share) and net income of
$21 million ($0.42 per share),
compared to $12 million ($0.23 per
share) and $56 million ($1.05 per
share) in the first quarter of
fiscal 1996.
RISK FACTORS
Potential investors in the New Notes should carefully consider the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under the caption "Risk Factors" prior to tendering
Existing Notes in exchange for New Notes, including (i) the consequences of a
failure to participate in the Exchange Offer, (ii) the degree of leverage of the
Issuer and the Company, (iii) the status of the Issuer and the Company as
holding companies and (iv) the lack of a public market for the New Notes. See
"Risk Factors" beginning on page 18.
16
<PAGE>
SUMMARY CONSOLIDATED (COMBINED) FINANCIAL DATA
The following table summarizes certain historical financial data with
respect to the Company and is qualified in its entirety by reference to, and
should be read in conjunction with, the Company's Consolidated (Combined)
Financial Statements and notes thereto. See "Index to Financial Statements" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 1996 Annual Report, which is incorporated herein by
reference, and "Ratio of Earnings to Fixed Charges." The Company has filed a
Quarterly Report with respect to the first quarter of fiscal 1997, which is
incorporated herein by reference. See "Recent Developments -- First Quarter
Fiscal 1997 Earnings."
<TABLE>
<CAPTION>
Year ended September 30,
------------------------
1996 1995(1) 1994
---- ------- ----
(in millions, except ratios and percentages)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................................... $2,233 $2,094 $2,015
Operating income............................................ 228 80 193
Interest expense............................................ 60 101 94
Interest income............................................. 8 8 11
Net income (loss)........................................... 133 (89) 78
BALANCE SHEET DATA (AT PERIOD END):
Total assets................................................ $1,821 $1,867 $2,226
Cash and cash equivalents................................... 45 51 28
Total debt.................................................. 734 993 1,009
Stockholders' equity/invested capital....................... 527 412 803
OTHER DATA:
Depreciation and amortization............................... 62 59 55
Capital expenditures........................................ 50 64 51
Total debt to total capitalization (2)...................... 58.2% 70.7% -
- --------------------------
<FN>
(1) In fiscal 1995, the Company adopted the fair value method of evaluating the
recoverability of goodwill and measuring for permanent impairment. This
change resulted in non-recurring charges of $98 million to the Building
Products Group's Lighting Products and Systems Operations and $13 million
to the Consumer Group's Recreation and Leisure Products Operations. In
addition, fiscal 1995 operating income includes non-recurring charges of $2
million associated with the closing of underutilized facilities of the
Lighting Products and Systems Operations.
(2) The debt to total capitalization has not been included for September 30,
1994, as such information is not indicative of the Company's continuing
capital structure following the Demerger.
</FN>
</TABLE>
17
<PAGE>
RISK FACTORS
THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION
TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION THE DOCUMENTS AND INFORMATION INCORPORATED HEREIN BY REFERENCE,
BEFORE TENDERING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER. IN CONNECTION
WITH THE FORWARD-LOOKING STATEMENTS WHICH APPEAR IN THIS PROSPECTUS, INCLUDING
WITHOUT LIMITATION THE DOCUMENTS AND INFORMATION INCORPORATED HEREIN BY
REFERENCE, PROSPECTIVE INVESTORS IN THE NEW NOTES SHOULD CAREFULLY REVIEW THE
FACTORS DISCUSSED BELOW AND THE CAUTIONARY STATEMENTS REFERRED TO IN "DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS." SUCH FACTORS AND SUCH CAUTIONARY
STATEMENTS ARE GENERALLY APPLICABLE TO THE EXISTING NOTES AS WELL AS THE NEW
NOTES.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any Existing Notes not tendered pursuant to the Exchange Offer will
remain outstanding and continue to accrue interest. Such Existing Notes will
remain "restricted securities" (within the meaning of the Securities Act).
Accordingly, prior to the date that is three years after the later of the
Initial Issue Date thereof and the last date on which the Issuer or any
Affiliate of the Issuer was the owner of such Existing Notes (the "Resale
Restriction Termination Date"), such Existing Notes may be resold only (i) to
the Issuer, (ii) to a person whom the seller reasonably believes is a "qualified
institutional buyer" purchasing for its own account or for the account of
another "qualified institutional buyer" in compliance with the resale
limitations of Rule 144A, (iii) to an Institutional Accredited Investor that,
prior to such transfer, furnishes to the Trustee a written certification
containing certain representations and agreements relating to the restrictions
on transfer of the Notes (the form of which letter can be obtained from the
Trustee), (iv) pursuant to the limitations on resale provided by Rule 144 under
the Securities Act (if available), (v) pursuant to the resale provisions of Rule
904 of Regulation S under the Securities Act, (vi) pursuant to an effective
registration statement under the Securities Act, or (vii) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to compliance with applicable state
securities laws. As a result, the liquidity of the market for such non-tendered
Existing Notes could be adversely affected upon completion of the Exchange
Offer. The foregoing restrictions on resale will not apply subsequent to the
Resale Restriction Termination Date.
LEVERAGE
At December 31, 1996, on a pro forma basis after giving effect to two
dispositions and two acquisitions completed in the second fiscal quarter of
1997, the Company had consolidated indebtedness of approximately $680 million
($443 million of which consisted of indebtedness of the Issuer under the New
Credit Facility) and the Company's ratio of total debt to total capitalization
at such date was 52.9%. See "Capitalization" and "Selected Financial Data."
18
<PAGE>
The degree to which the Issuer is leveraged could have important
consequences to the holders of the Notes, including the following: (i) the
Issuer's ability to obtain additional financing in the future for working
capital, capital expenditures, product development, acquisitions or other
purposes may be limited or impaired; (ii) the Company's operating flexibility
with respect to certain matters is limited by covenants contained in the
Indenture and the New Credit Facility which limit the ability of the Issuer and
certain of its subsidiaries to incur additional indebtedness, grant liens, pay
dividends, redeem capital stock or prepay certain subordinated indebtedness and
enter into sale and lease-back transactions and (iii) the Issuer's degree of
leverage may make it more vulnerable to economic downturns, may limit its
ability to pursue other business opportunities and may reduce its flexibility in
responding to changing business and economic conditions.
The Issuer expects to generate sufficient cash flow from operations to
meet its debt service obligations for the foreseeable future. However, the
Issuer's ability to generate cash for the repayment of debt will be dependent
upon the future performance of the Issuer's businesses, which will in turn be
subject to financial, business and other factors affecting the business and
operations of the Issuer, including factors beyond its control, such as
prevailing economic conditions. The Company's interest expense was $60 million
in fiscal 1996 and $12 million in the first quarter of fiscal 1997. Interest
expense may vary in future fiscal periods, depending on future borrowings of the
Company. If the Company borrowed the maximum amount currently available under
the New Credit Facility, interest expense would be approximately $65 million on
an annual basis (assuming currently applicable interest rates and no other
changes in currently outstanding indebtedness). The Company's annual debt
amortization requirements on a consolidated basis, as of December 31, 1996, are
as follows: $3 million in fiscal 1997 (in addition, $165 million was voluntarily
prepaid in the second quarter of fiscal 1997 utilizing the proceeds from the
sales of QPF and SCM Metals), $4 million in fiscal 2000, $465 million in fiscal
2002 (when the New Credit Facility is scheduled to terminate) and $125 million
in fiscal 2007 (when the Notes mature).
The Company may seek growth through selective acquisitions, including
significant acquisitions. The Company could incur substantial indebtedness in
connection with a significant acquisition, in which event the Company's leverage
would be increased. The provisions of the Indenture would not necessarily afford
holders of the Notes protection in the event of a highly leveraged transaction
involving the Company or the Issuer adversely affecting the holders of the
Notes. In particular, the Indenture does not restrict (i) the incurrence of
secured or unsecured indebtedness by the Company or by any subsidiary of the
Company that is not a subsidiary of the Issuer; (ii) the incurrence of unsecured
indebtedness by the Issuer; (iii) the incurrence of secured or unsecured
indebtedness by Unrestricted Subsidiaries (as defined) of the Issuer; (iv) a
consolidation, merger, sale of assets, or other similar transaction that may
adversely affect the creditworthiness of the Company or the Issuer or the
successor or combined entity of either
19
<PAGE>
thereof; (v) a change in control of the Company or the Issuer; or (vi) a highly
leveraged transaction involving the Company or the Issuer.
HOLDING COMPANY STRUCTURE
The Issuer is a holding company with no business operations other than
(i) holding the capital stock of its intermediate holding companies and
subsidiaries and (ii) advancing funds to, and receiving funds from, its
subsidiaries. In repaying its indebtedness, including the Notes, the Issuer must
rely on dividends and other payments made to it by its subsidiaries.
The holders of the Notes have no direct claims against the Issuer's
subsidiaries. The ability of the Issuer's subsidiaries to make payments to the
Issuer will be affected by the obligations of such subsidiaries to their
creditors. Claims of holders of indebtedness of the Issuer, including the Notes,
against the cash flow and assets of the Issuer's subsidiaries will be
effectively subordinated to claims of such creditors. In addition, the rights of
holders of the Notes to participate in the assets of any subsidiary of the
Issuer or the Company (other than the Issuer) upon such subsidiary's liquidation
or recapitalization will be subject to the prior claims of such subsidiary's
creditors. At December 31, 1996, subsidiaries of the Issuer (other than Funding)
had approximately $42 million of indebtedness outstanding (other than
intercompany indebtedness), all of which had been guaranteed by the Issuer. The
ability of the Issuer's subsidiaries to make payments to the Issuer will also be
subject to, among other things, applicable state corporate laws and other laws
and regulations. State corporate law applicable to the Issuer's subsidiaries
generally prohibits the payment of dividends by any given subsidiary unless such
subsidiary has capital surplus or net profits in the current or immediately
preceding year. In order to pay the principal amount at maturity of the Notes,
the Issuer may be required to adopt one or more alternatives, such as a
refinancing of the Notes.
The Notes are fully and unconditionally guaranteed on an unsecured
basis by the Company. The Company is a holding company whose principal asset is
100% of the outstanding capital stock of the Issuer. If ever required to honor
its guaranty of the Notes, the Company has no current or expected future ability
to do so.
LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the Holders of the Existing Notes.
The Existing Notes were issued on December 12, 1996 to a limited number of
institutional investors and are eligible for trading in the Private Offerings,
Resale and Trading through Automated Linkages (PORTAL) Market, the National
Association of Securities Dealers' screenbased, automated market for trading of
securities eligible for resale under Rule 144A, under the Securities Act. To the
extent that Existing Notes are tendered and accepted in the Exchange Offer, the
trading market for the remaining untendered Existing Notes could be adversely
affected. There is no
20
<PAGE>
existing trading market for the New Notes, and there can be no assurance
regarding the future development of a market for the New Notes, or the ability
of holders of the New Notes to sell their New Notes, or the price at which such
holders may be able to sell their New Notes. If such a market were to develop,
the New Notes could trade at prices that may be higher or lower than their
principal amount or purchase price, depending on many factors, including
prevailing interest rates, the market for similar notes and the financial
performance of the Company and its subsidiaries. BA Securities has advised the
Company that it currently intends to make a market in the New Notes. BA
Securities is not obligated to do so, however, and any market-making with
respect to the New Notes may be discontinued at any time without notice.
Therefore, there can be no assurance as to the liquidity of any trading market
for the New Notes or that an active public market for the New Notes will
develop. The Company does not intend to apply for listing or quotation of the
New Notes on any securities exchange or stock market.
RECENT DEVELOPMENTS
THE NEW CREDIT FACILITY
Upon consummation of the Initial Offering on December 12, 1996 and the
application of the net proceeds therefrom to prepay a portion of the term loan
under the Previous Credit Facility, the Company, the Issuer and Funding entered
into the New Credit Facility agreement (the "New Credit Agreement") with Bank of
America National Trust and Savings Association, which syndicated a substantial
portion of such facility to a group of financial institutions for whom it acts
as agent (the "Agent"). The Issuer and Funding may serve as borrowers under the
New Credit Facility. The Issuer's borrowings are guaranteed by the Company and
Funding's borrowings are guaranteed by the Issuer.
The summary herein of certain provisions of the New Credit Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the New Credit Agreement, a copy
of which has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part.
The New Credit Facility consists of an unsecured revolving line of
credit of up to an aggregate principal amount of $750 million that includes: (i)
short-term committed advances ("Committed Advances"), (ii) uncommitted bid
option advances, (iii) a sub-limit for letters of credit and (iv) a sub-limit
for swingline loans. The Issuer's initial borrowings under the New Credit
Facility were used to refinance the remainder of the indebtedness outstanding
under the Previous Credit Facility. Future borrowings will be used to fund
working capital and general corporate requirements, including but not limited to
acquisitions. The revolving credit commitment will be permanently reduced by
$100 million on the third anniversary and by an
21
<PAGE>
additional $150 million on the fourth anniversary of the initial borrowings
under the New Credit Facility.
The Committed Advances, at the Issuer's option, may be either Base Rate
Loans or Eurodollar Loans. Base Rate Loans bear interest at the higher of (i)
the rate of interest publicly announced from time to time by the Agent as its
Reference Rate (as defined), or (ii) 0.50% per annum above the Federal Funds
Rate then in effect. Eurodollar Loans bear interest at LIBOR for 1-, 2-, 3-, or
6-month dollar deposits as offered by the Agent to prime international banks in
the offshore dollar market, adjusted for reserve requirements. The spread over
LIBOR is determined based upon the Issuer's senior unsecured debt ratings for
the relevant period. The initial spread over LIBOR is 0.25%. In addition, the
Issuer, at certain times, is permitted to request the Agent to solicit
competitive bids from the lenders under the New Credit Facility through an
auction for short-term advances.
A facility fee accrues on the full amount of the New Credit Facility,
regardless of the amount of utilization, and is determined based upon the
Issuer's senior unsecured debt ratings for the relevant period. The initial
facility fee is 0.125% per annum.
The New Credit Facility contains certain financial covenants pursuant
to which the Issuer agrees to maintain (i) a maximum ratio of Total Funded Debt
(as defined) to capitalization of 65% initially, with a reduction to 60% after
December 31, 1997 and (ii) a maximum ratio of Total Funded Debt to Adjusted
EBITDA (as defined) of 3.5x. At December 31, 1996, on a pro forma basis after
giving effect to two dispositions and two acquisitions completed in the second
quarter of fiscal 1997, the Issuer had a ratio of Total Funded Debt to
capitalization of 52.9% and a ratio of Total Funded Debt to Adjusted EBITDA of
1.8x. The New Credit Facility, subject to certain exceptions, (i) limits
additional unsecured indebtedness of the Issuer (excluding the Notes) to $200
million; (ii) limits subsidiary indebtedness and secured indebtedness in the
aggregate to 10% of Consolidated Net Tangible Assets (as defined); (iii)
restricts consolidations and mergers; and (iv) limits sale-leaseback
transactions.
DISPOSITIONS
On January 2, 1997, the Company sold certain assets of QPF, a
manufacturer of polypropylene films, to the Hood Companies for $43.2 million. On
January 21, 1997, the Company sold the capital stock of SCM Metals, a
manufacturer of specialty metal products, to OM Group, Inc. for $122 million.
The gross proceeds of these dispositions were used to prepay outstanding
indebtedness under the New Credit Facility. In fiscal 1996, 1995 and 1994 on a
combined basis, QPF and SCM Metals had sales of $144 million, $142 million and
$117 million, respectively, and operating income of $17 million, $18 million and
$12 million, respectively; at September 30, 1996, on a combined basis, they had
total assets of $97 million.
22
<PAGE>
ACQUISITIONS
In the second quarter of fiscal 1997, the Company purchased certain
assets of Woodings-Verona and Sunbeam Furniture. The Company expects the total
cost of these acquisitions to approximate $85 million including transaction
costs, the funding of initial operations and the assumption of certain
liabilities.
FIRST QUARTER FISCAL 1997 EARNINGS
On February 11, 1997, the Company filed a Quarterly Report with respect
to the first quarter of fiscal 1997, which is incorporated by reference herein.
For the three months ended December 31, 1996, the Company had sales of $527
million, compared to sales of $464 million in the first quarter of fiscal 1996.
The Company had income from continuing operations of $20 million ($0.39 per
share) and net income of $21 million ($0.42 per share), compared to $12 million
($0.23 per share) and $56 million ($1.05 per share) in the first quarter of
fiscal 1996. The Quarterly Report reflects QPF and SCM Metals, which were
disposed of in January 1997, as discontinued operations.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Issuer's and
the Company's obligations under the Registration Rights Agreement. The Issuer
will not receive any cash proceeds from the issuance of the New Notes offered
hereby. In consideration for issuing the New Notes contemplated by this
Prospectus, the Issuer will receive in exchange Existing Notes in like principal
amount, the terms of which are identical in all material respects to the terms
of the New Notes, except as otherwise described herein. The Existing Notes
surrendered in exchange for New Notes will be retired and cancelled and cannot
be reissued. Accordingly, issuance of the New Notes will not result in any
increase or decrease in the indebtedness of the Issuer or the Company.
The net proceeds of the Initial Offering, after deducting the
underwriting discounts and expenses, were approximately $122.4 million. The
Company used such proceeds, as well as its initial borrowings under the New
Credit Facility, to prepay the indebtedness outstanding under the Previous
Credit Facility. The New Credit Facility lowered the Company's borrowing
spreads, eliminated security interests and guaranties by subsidiaries of the
Issuer and modified certain restrictive covenants. See "Recent Developments--The
New Credit Facility" herein and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
in the Company's 1996 Annual Report and the Quarterly Report, which are
incorporated herein by reference.
23
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
Three Months
Ended
Year Ended September 30, December 31,
------------------------ ------------
1996 1995 1994 1993 1992 1996 1995
---- ---- ---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
The Company............... 3.5x - 1.8x 1.6x 1.6x 3.6x 2.0x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
"fixed charges" are defined as interest expense and a portion of rental expense
representing the interest factor, and "earnings" are defined as income from
continuing operations before income taxes and fixed charges. Earnings for fiscal
1995 were insufficient to cover fixed charges by $19 million. This deficiency
resulted from goodwill impairment and other non-recurring charges of $113
million. Before taking into account such items, the ratio of earnings to fixed
charges for fiscal 1995 would have been 1.9x.
24
<PAGE>
CAPITALIZATION
The following table, which is unaudited, sets forth the capitalization
of the Company as of December 31, 1996, and on a pro forma basis gives effect to
(i) gross cash proceeds of $165 million from the sale of the capital stock of
SCM Metals and the sale of certain assets of QPF in January 1997, in each case
as applied to prepay indebtedness under the Previous Credit Facility, (ii)
borrowings of approximately $85 million under the New Credit Facility to finance
the acquisitions in the second quarter of fiscal 1997 of certain assets of
Woodings-Verona and of Sunbeam Furniture and (iii) the prepayment of borrowings
of a foreign subsidiary of $23 million with borrowings under the New Credit
Facility. The debt repayment does not give effect to state and federal taxes
expected to be paid related to taxable gains on the dispositions noted above and
other transaction expenses, aggregating approximately $30 million. Such taxes
and other expenses are expected to be paid out of future cash flows from
operations or the proceeds of future borrowings. See "Recent Developments"
herein and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" and the Company's
Consolidated (Combined) Financial Statements and notes thereto in the Company's
1996 Annual Report and the Quarterly Report, which are incorporated herein by
reference.
<TABLE>
<CAPTION>
At December 31, 1996
--------------------
Pro Forma
Actual Adjustments Pro Forma
------ ----------- ---------
(In millions)
<S> <C> <C> <C>
Cash and cash equivalents.............................. $ 42 $ -- $ 42
=========== ============= =============
Short-term debt (A).................................... $ 168 (165)(B) 3
Long-term debt:
New Credit Facility................................. 335 108(C)(F) 443
Notes............................................... 123 -- 123
Other (D)........................................... 134 (23)(F) 111
----------- ---------- -------------
Total debt....................................... 760 (80) 680
----------- ---------- -------------
Stockholders' equity................................... 526 79(E) 605
----------- ---------- -------------
Total capitalization............................. $ 1,286 $ (1) $ 1,285
=========== ========== =============
- ----------------------
<FN>
(A) Includes current maturities of long-term debt and notes payable.
(B) Represents prepayments under the New Credit Facility.
(C) Represents the borrowings required to purchase certain assets
(including transaction costs, the funding of initial operations and the
assumption of certain liabilities) of Woodings-Verona and Sunbeam
Furniture totalling approximately $85 million.
(D) Primarily includes borrowings under uncommitted short-term lines of
credit and borrowings of foreign subsidiaries.
(E) Represents the estimated gain of $79 million related to dispositions
noted above.
(F) Represents the prepayment of borrowings of a foreign subsidiary of $23
million with borrowings under the New Credit Facility.
</FN>
</TABLE>
25
<PAGE>
SELECTED FINANCIAL DATA
The selected historical consolidated (combined) financial data
presented below are derived from, and should be read in conjunction with, the
Company's Consolidated (Combined) Financial Statements and notes thereto in the
Company's 1996 Annual Report, which is incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
1996 1995(1) 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................................... $2,233 $2,094 $2,015 $1,815 $1,726
Operating income........................................ 228 80 193 154 143
Interest expense........................................ 60 101 94 95 89
Interest income......................................... 8 8 11 15 14
Income (loss) from continuing operations................ 95 (67) 45 25 28
Net income (loss)....................................... 133 (89) 78 61 52
Per share: (2)
Income from continuing operations.................... 1.81 -- -- -- --
Net income........................................... 2.54 -- -- -- --
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents............................... $ 45 $ 51 $ 28 $ 27 $ 45
Working capital......................................... 511 478 952 1,097 981
Net assets held for disposition......................... 26 194 454 635 493
Total assets............................................ 1,821 1,867 2,226 2,288 2,134
Long-term debt (3)...................................... 717 832 985 985 999
Total debt (3).......................................... 734 993 1,009 1,013 1,030
Stockholders' equity/Invested capital................... 527 412 803 902 768
<FN>
- ------------------------------
(1) During fiscal 1995, subsequent to the Demerger, the Company's management
conducted a comprehensive review of its accounting policies in light of its
current financial position and separate public company status. As a result,
as discussed below, the Company changed the accounting policy relating to
evaluating goodwill impairment during the third quarter of fiscal 1995. The
change affects comparability between fiscal 1995 and previous fiscal years.
The Company adopted the fair value method of evaluating the recoverability
of goodwill and measuring for permanent impairment. This change resulted in
non-recurring charges of $98 million to the Building Products Group's
Lighting Products and Systems Operations and $13 million to the Consumer
Group's Recreation and Leisure Products Operations in fiscal 1995. These
permanent impairments to goodwill were associated with the original
acquisitions of the Company's commercial lighting products and golf club
businesses and result in reduced goodwill amortization expense
prospectively. Prior periods have not been restated to reflect this change
in accounting methodology. See Note 11 to the Consolidated (Combined)
26
<PAGE>
Financial Statements in the Company's 1996 Annual Report, which is
incorporated herein by reference. Additionally, fiscal 1995 operating
income includes non-recurring charges of $2 million associated with the
closing of underutilized facilities of the Lighting Products and Systems
Operations. See Note 12 to the Consolidated (Combined) Financial Statements
in the Company's 1996 Annual Report, which is incorporated herein by
reference.
(2) Prior to fiscal 1996, earnings per share information is not presented in
accordance with Accounting Principles Board Opinion No. 15, "Earnings Per
Share," as such information is not indicative of the Company's continuing
capital structure.
(3) Amounts in fiscal 1994, 1993 and 1992 primarily represent notes payable to
Hanson.
</FN>
</TABLE>
27
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Exchange Offer Registration Statement. Pursuant to the Initial
Offering, the Issuer sold the Existing Notes to BA Securities on December 12,
1996 (the "Initial Issue Date"). BA Securities has advised the Issuer that it
subsequently resold the Existing Notes to "qualified institutional buyers" in
reliance on Rule 144A under the Securities Act. As a condition to the Initial
Offering, the Issuer and the Company entered into the Registration Rights
Agreement, pursuant to which the Issuer and the Company agreed, for the benefit
of all Holders of the Existing Notes, at the Issuer's expense, (i) to file the
Registration Statement with the Commission within 45 days after the Initial
Issue Date with respect to the Exchange Offer of the Existing Notes for the New
Notes, (ii) to use their best efforts to cause the Registration Statement to be
declared effective under the Securities Act within 135 days after the Initial
Issue Date, (iii) to use their best efforts to keep the Registration Statement
effective until the closing of the Exchange Offer and (iv) to use their best
efforts to cause the Exchange Offer to be consummated within 165 days after the
Initial Issue Date. The Issuer and the Company also agreed that promptly upon
the Registration Statement being declared effective, the Issuer would offer to
all Holders of the Existing Notes an opportunity to exchange the Existing Notes
for the New Notes. Further, the Issuer and the Company agreed that the Issuer
would keep the Exchange Offer open for acceptance for not less than 20 Business
Days, as such term is defined in Section 14(d) under the Exchange Act (or longer
if required by applicable law), after the date notice of the Exchange Offer is
mailed to the Holders of Existing Notes. For each Existing Note validly tendered
to the Issuer pursuant to the Exchange Offer and not withdrawn by the Holder
thereof, the Holder of such Existing Note will receive a New Note having a
principal amount equal to that of the tendered Existing Note. Interest on each
New Note will accrue from the last Interest Payment Date on which interest was
paid on the tendered Existing Note in exchange therefor or, if no interest was
paid on such Existing Note, from the Initial Issue Date.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is intended to
satisfy certain of the Issuer's and the Company's obligations under the
Registration Rights Agreement.
Transferability. The Existing Notes were issued and sold on December
12, 1996 in a transaction exempt from the registration requirements of the
Securities Act and applicable state securities laws and may not be offered or
sold in the United States unless so registered or pursuant to an applicable
exemption under the Securities Act and applicable state securities laws. The New
Notes are being offered hereunder in order to satisfy certain obligations of the
Issuer and the Company contained in the Registration Rights Agreement. Based on
no-action letters issued by the Staff of the Commission to third parties with
respect to similar transactions, including Exxon Capital, Morgan Stanley and
similar letters, the Issuer believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Existing Notes may be offered for resale, resold
and otherwise transferred by holders thereof (other than any such holder that is
an
28
<PAGE>
Affiliate of the Issuer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders are not engaged in, have no arrangement or understanding with any person
to participate in, and do not intend to engage in, any distribution of the New
Notes. However, the Issuer has not sought a no-action letter with respect to the
Exchange Offer and there can be no assurance that the Staff of the Commission
would make a similar determination with respect to the Exchange Offer. Each
holder of Existing Notes, other than a broker-dealer, must acknowledge that it
is not engaged in, has no arrangement or understanding with any person to
participate in and does not intend to engage in a distribution of New Notes. Any
holder who tenders in the Exchange Offer for the purpose of participating in a
distribution of New Notes (i) cannot rely on such an interpretation by the Staff
of the Commission, (ii) will not be able to validly tender Existing Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transactions.
In addition, each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal accompanying this Prospectus states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
acting in the capacity of an "underwriter" within the meaning of Section 2(11)
of the Securities Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
New Notes received in exchange for Existing Notes where such Existing Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. Pursuant to the Registration Rights Agreement, the Issuer
has agreed that it will make this Prospectus available to any broker-dealer for
use in connection with any such resale.
Shelf Registration Statement. If any changes in law or the applicable
interpretations of the Staff of the Commission do not permit the Issuer to
effect the Exchange Offer, if for any other reason the Exchange Offer is not
consummated within 165 days after the Initial Issue Date, or if BA Securities so
requests with respect to Existing Notes not eligible to be exchanged for New
Notes in the Exchange Offer or upon the request of a Holder that is not
permitted by applicable law to participate in the Exchange Offer or elects to
participate in the Exchange Offer but does not receive fully tradeable New Notes
pursuant to the Exchange Offer, the Issuer and the Company will, at the Issuer's
cost, (a) as promptly as practicable, file with the Commission the Shelf
Registration Statement covering resales of the Notes, (b) use its best efforts
to cause the Shelf Registration Statement to be declared effective under the
Securities Act and (c) use its best efforts to keep the Shelf Registration
Statement effective for a period of three years after the Initial Issue Date
(or, for such shorter period, when all of the Notes covered by the Shelf
Registration Statement have been sold pursuant thereto). The Issuer will, in the
event of the filing of the Shelf Registration Statement, provide to each Holder
of the Notes copies of the prospectus which is a part of the Shelf Registration
Statement, notify each such Holder when the Shelf Registration Statement for the
Existing Notes has become effective and take certain other actions as are
required to permit unrestricted resales of the Existing Notes. A Holder of
Existing Notes who sells such Existing Notes pursuant to the Shelf Registration
Statement generally will be required to be named as a selling security-holder in
the related prospectus and to deliver the
29
<PAGE>
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such a Holder (including certain indemnification obligations). In
addition, each Holder of the Existing Notes will be required to deliver
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their Existing
Notes included in the Shelf Registration Statement and to benefit from the
provisions regarding the increase in interest rate set forth in the following
paragraph.
Interest Rate Increase. If (i) the Registration Statement is not filed
with the Commission on or prior to the 45th day following the Initial Issue
Date, (ii) the Registration Statement is not declared effective on or prior to
the 135th day following the Initial Issue Date, (iii) neither the Exchange Offer
is consummated nor the Shelf Registration Statement is declared effective on or
prior to the 165th day following the Initial Issue Date, or (iv) the Shelf
Registration Statement is required to be filed because of the request of BA
Securities or other specified Holder, 45 days following the request by BA
Securities that the Issuer file the Shelf Registration Statement (or 90 days if
the Shelf Registration Statement is reviewed by the Commission), then the
interest rate borne by the Existing Notes (except in the case of clause (iv), in
which case only the Existing Notes which have not been exchanged in the Exchange
Offer) shall be increased by 0.5% per annum. Upon (w) the filing of the
Registration Statement in the case of clause (i) above, (x) the effectiveness of
the Registration Statement in the case of clause (ii) above, (y) the date of the
consummation of the Exchange Offer or the effectiveness of the Shelf
Registration Statement in the case of clause (iii) above, or (z) the
effectiveness of the Shelf Registration Statement, in the case of clause (iv)
above, the interest rate stated on the Existing Notes from the date of such
filing, effectiveness or the date of such consummation or effectiveness, as the
case may be, will be reduced to the original interest rate set forth on the
cover of this Prospectus; provided, however, that, if after any such reduction
in interest rate, a different event specified in clause (i), (ii), (iii) or (iv)
above occurs, the interest rate shall again be increased pursuant to the
foregoing provisions.
TERMS OF THE EXCHANGE OFFER
Upon satisfaction or waiver of all of the conditions of the Exchange
Offer, the Issuer will accept, promptly after the Expiration Date, all Existing
Notes properly tendered and will issue the New Notes promptly after acceptance
of the Existing Notes. See "--Conditions to the Exchange Offer" and "Procedures
for Tendering Existing Notes." The Issuer will issue $1,000 principal amount of
New Notes in exchange for each $1,000 principal amount of outstanding Existing
Notes accepted in the Exchange Offer. As of the date of this Prospectus,
$125,000,000 aggregate principal amount of the Existing Notes are outstanding.
Holders may tender some or all of their Existing Notes pursuant to the Exchange
Offer. However, Existing Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the New Notes are the same as the form and terms
of the Existing Notes except that the New Notes will not contain certain terms
with respect to transfer restrictions (which related to the status of the
Existing Notes as unregistered securities), registration
30
<PAGE>
rights or interest rate increases relating to the Company's failure to meet
specified milestones with respect to such registration rights, all as described
in the Registration Rights Agreement. See "--Purpose and Effect of the Exchange
Offer." The New Notes will evidence the same debt as the Existing Notes and will
be issued pursuant to, and entitled to the benefits of, the Indenture pursuant
to which the Existing Notes were issued and will be deemed one issue of Notes,
together with the Existing Notes.
This Prospectus, together with the Letter of Transmittal, is being sent
to all Holders and to others believed to have beneficial interests in the
Existing Notes. Holders of Existing Notes do not have any appraisal or
dissenters' rights under the General Corporation Law of the State of Delaware in
connection with the Exchange Offer. The Issuer intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Existing Notes when, as and if the Issuer has given
oral or written notice thereof to the Exchange Agent. The Exchange Agent will
act as agent for the tendering Holders for the purpose of receiving the New
Notes from the Issuer. If any tendered Existing Notes are not accepted for
exchange because of an invalid tender, the occurrence of certain other events
set forth herein or otherwise, such unaccepted Existing Notes will be returned,
without expense, to the Tendering Holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Existing Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, except as set forth below
under "--Transfer Taxes," transfer taxes with respect to the exchange of
Existing Notes pursuant to the Exchange Offer. The Issuer will pay all charges
and expenses, other than certain applicable taxes, in connection with the
Exchange Offer. See "--Fees and Expenses" below.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Issuer, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Issuer will notify the Exchange Agent by oral or written
notice and each registered holder by means of press release or other public
announcement of any extension, in each case, prior to 9:00 a.m., New York City
time, on the next Business Day after the previously scheduled Expiration Date.
The Issuer reserves the right, in its sole discretion, (i) to delay accepting
any Existing Notes, to extend the Exchange Offer or, if any of the conditions
set forth below under "--Conditions" shall not have been satisfied, to terminate
the Exchange Offer, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner. The Issuer will notify the Exchange Agent and each
registered holder of any amendment by oral or written notice. The Issuer will
give to the Exchange Agent written confirmation of any oral notice.
31
<PAGE>
EXCHANGE DATE
As soon as practicable after the close of the Exchange Offer (the
"Exchange Date"), the Issuer will accept for exchange all Existing Notes
properly tendered and not validly withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date pursuant to the Exchange Offer in accordance with
the terms of the Registration Statement and the Letters of Transmittal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, and subject
to its obligations pursuant to the Registration Rights Agreement, the Issuer
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Existing Notes and may terminate or amend the Exchange Offer, if at any
time before the acceptance of such New Notes for exchange, any of the following
events shall occur:
(i) any injunction, order or decree shall have been issued by any court
or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Issuer to proceed with the
Exchange Offer; or
(ii) the Exchange Offer shall violate any applicable law or any
applicable interpretation of the staff of the Commission.
The foregoing conditions are for the sole benefit of the Issuer and may
be asserted by the Issuer regardless of the circumstances giving rise to any
such condition or may be waived by the Issuer in whole or in part at any time
and from time to time in its sole discretion. The failure by the Issuer at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Issuer will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened by the Commission or
be in effect with respect to the Registration Statement of which this Prospectus
is a part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
The Exchange Offer is not conditioned on any minimum aggregate
principal amount of Existing Notes being tendered for exchange.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any Existing Notes not tendered pursuant to the Exchange Offer will
remain outstanding and continue to accrue interest. Such Existing Notes will
remain "restricted securities" (within the meaning of the Securities Act).
Accordingly, prior to the date that is three years after the later of the
Initial Issue Date thereof and the last date on which the Issuer or any
Affiliate of the Issuer was the owner of such Existing Notes (the "Resale
Restriction Termination Date"), such Existing Notes may be resold only (i) to
the Issuer, (ii) to a person whom the seller reasonably
32
<PAGE>
believes is a "qualified institutional buyer" purchasing for its own account or
for the account of another "qualified institutional buyer" in compliance with
the resale limitations of Rule 144A, (iii) to an Institutional Accredited
Investor that, prior to such transfer, furnishes to the Trustee a written
certification containing certain representations and agreements relating to the
restrictions on transfer of the Notes (the form of which letter can be obtained
from the Trustee), (iv) pursuant to the limitations on resale provided by Rule
144 under the Securities Act (if available), (v) pursuant to the resale
provisions of Rule 904 of Regulation S under the Securities Act, (vi) pursuant
to an effective registration statement under the Securities Act, or (vii)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to compliance with
applicable state securities laws. As a result, the liquidity of the market for
such non-tendered Existing Notes could be adversely affected upon completion of
the Exchange Offer. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date.
FEES AND EXPENSES
The Issuer will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Issuer.
The expenses of the Issuer to be incurred in connection with the
Exchange Offer will be paid by the Issuer and are estimated in the aggregate to
be approximately $100,000 which includes the fees and expenses of the Trustee
and the Exchange Agent, accounting and legal fees and other miscellaneous fees
and expenses.
ACCOUNTING TREATMENT
The Issuer will not recognize any gain or loss for accounting purposes
upon the consummation of the Exchange Offer. The expenses of the Exchange Offer
will be amortized by the Issuer over the term of the New Notes.
PROCEDURES FOR TENDERING EXISTING NOTES
TENDERING EXISTING NOTES
The tender of Existing Notes pursuant to any of the procedures set
forth in this Prospectus and in the Letter of Transmittal will constitute a
binding agreement between the Tendering Holder and the Issuer in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal. The tender of Existing Notes will constitute an agreement to
deliver good and marketable title to all tendered Existing Notes prior to the
Expiration Date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
EXCEPT AS PROVIDED IN "--GUARANTEED DELIVERY PROCEDURES," UNLESS THE
EXISTING NOTES BEING TENDERED ARE DEPOSITED BY THE HOLDER WITH THE EXCHANGE
AGENT PRIOR TO THE EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL), THE
33
<PAGE>
ISSUER MAY, AT ITS OPTION, REJECT SUCH TENDER. ISSUANCE OF NEW NOTES WILL BE
MADE ONLY AGAINST DEPOSIT OF TENDERED EXISTING NOTES AND DELIVERY OF ALL OTHER
REQUIRED DOCUMENTS. NOTWITHSTANDING THE FOREGOING, DTC PARTICIPANTS TENDERING
THROUGH ATOP WILL BE DEEMED TO HAVE MADE VALID DELIVERY WHERE THE EXCHANGE AGENT
RECEIVES AN AGENT'S MESSAGE (DEFINED BELOW) PRIOR TO THE EXPIRATION DATE.
Accordingly, to properly tender Existing Notes, the following
procedures must be followed:
Notes held through a Custodian. Each Beneficial Owner holding Existing
Notes through a DTC Participant must instruct such DTC Participant to cause its
Existing Notes to be tendered in accordance with the procedures set forth in
this Prospectus.
Notes held through DTC. Pursuant to an authorization given by DTC to
the DTC Participants, each DTC Participant holding Existing Notes through DTC
must (i) electronically transmit its acceptance through ATOP, and DTC will then
edit and verify the acceptance, execute a book-entry delivery to the Exchange
Agent's account at DTC and send an Agent's Message to the Exchange Agent for its
acceptance, or (ii) comply with the guaranteed delivery procedures set forth
below and in the Notice of Guaranteed Delivery. See "--Guaranteed Delivery
Procedures--Notes held through DTC."
The Exchange Agent will (promptly after the date of this Prospectus)
establish accounts at DTC for purposes of the Exchange Offer with respect to
Existing Notes held through DTC, and any financial institution that is a DTC
Participant may make book-entry delivery of interests in Existing Notes into the
Exchange Agent's account through ATOP. However, although delivery of interests
in the Existing Notes may be effected through book-entry transfer into the
Exchange Agent's account through ATOP, an Agent's Message in connection with
such book-entry transfer, and any other required documents, must be, in any
case, transmitted to and received by the Exchange Agent at its address set forth
under "--Exchange Agent", or the guaranteed delivery procedures set forth below
must be complied with, in each case, prior to the Expiration Date. Delivery of
documents to DTC does not constitute delivery to the Exchange Agent. The
confirmation of a book-entry transfer into the Exchange Agent's account at DTC
as described above is referred to herein as a "Book-Entry Confirmation".
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each DTC Participant tendering through ATOP that such DTC Participants have
received a Letter of Transmittal and agree to be bound by the terms of the
Letter of Transmittal and that the Issuer may enforce such agreement against
such DTC Participants.
Cede & Co., as the Holder of the Rule 144A Global Note, will tender a
portion of the Rule 144A Global Note equal to the aggregate principal amount due
at the stated maturity for which instructions to tender are given by DTC
Participants.
34
<PAGE>
Notes held by Holders. Each Holder must (i) complete and sign the
accompanying Letter of Transmittal, and mail or deliver such Letter of
Transmittal, and any other documents required by the Letter of Transmittal,
together with certificate(s) representing all tendered Existing Notes, to the
Exchange Agent at its address set forth under "--Exchange Agent," or (ii) comply
with the guaranteed delivery procedures set forth below and in the Notice of
Guaranteed Delivery. See "--Guaranteed Delivery Procedures--Notes held by
Holders."
All signatures on a Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange ("NYSE") Medallion Signature Program or the Stock
Exchange Medallion Program; provided, however, that signatures on a Letter of
Transmittal need not be guaranteed if such Existing Notes are tendered for the
account of an Eligible Institution (as defined herein).
If a Letter of Transmittal or any Existing Note is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, agent, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must so indicate when signing, and proper evidence satisfactory to
the Issuer of the authority of such person so to act must be submitted.
Holders should indicate in the applicable box in the Letter of
Transmittal the name and address to which substitute certificates evidencing
Existing Notes for amounts not tendered are to be issued or sent, if different
from the name and address of the person signing the Letter of Transmittal. In
the case of issuance in a different name, the employer identification or social
security number of the person named must also be indicated. If no instructions
are given, such Existing Notes not tendered, as the case may be, will be
returned to the person signing the Letter of Transmittal.
By tendering, each Holder and each DTC Participant will represent to
the Issuer that, among other things, (i) it is not an Affiliate of the Issuer,
(ii) it is not a broker-dealer tendering Existing Notes acquired directly from
the Issuer for its own account, (iii) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of such
Holder and (iv) it has no arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing the New Notes.
-------------------------------------------
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or transmitting
an acceptance through ATOP, as the case may be, each Tendering Holder waives any
right to receive any notice of the acceptance for purchase of its Existing
Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Existing Notes will be resolved by the
Issuer, whose determination will be final and binding. The Issuer reserves the
absolute right to reject any or all tenders that are not in proper form or the
acceptance of which may, in the opinion of counsel for the Issuer, be unlawful.
The Issuer also reserves the absolute right to waive any condition to the
Exchange Offer and any irregularities or conditions of tender as to particular
Existing Notes. The Issuer's interpretation
35
<PAGE>
of the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as the
Issuer shall determine. The Issuer and the Exchange Agent shall not be under any
duty to give notification of defects in such tenders and shall not incur
liabilities for failure to give such notification. Tenders of Existing Notes
will not be deemed to have been made until such irregularities have been cured
or waived. Any Existing Notes received by the Exchange Agent that are not
properly tendered and as to which the irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering Holder, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
LETTERS OF TRANSMITTAL AND EXISTING NOTES MUST BE SENT ONLY TO
THE EXCHANGE AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR EXISTING
NOTES TO THE ISSUER, THE COMPANY OR DTC.
The method of delivery of Existing Notes and Letters of Transmittal,
any required signature guaranties and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at the election and
risk of the persons tendering and delivering acceptances or Letters of
Transmittal and, except as otherwise provided in the applicable Letter of
Transmittal, delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, it is suggested that the Holder use
properly insured, registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Notes held through DTC. DTC Participants holding Existing Notes through
DTC who wish to cause their Existing Notes to be tendered, but who cannot
transmit their acceptances through ATOP prior to the Expiration Date, may cause
a tender to be effected if:
(a) guaranteed delivery is made by or through a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution"), including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities dealer, municipal
securities broker, government securities dealer or government
securities broker; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v)
a savings institution that is a participant in a Securities Transfer
Association recognized program;
(b) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by mail, hand delivery, facsimile
transmission or overnight courier) substantially in the form provided
by the Issuer herewith; and
(c) Book-Entry Confirmation and an Agent's Message in
connection therewith (as described above) are received by the Exchange
Agent within three NYSE trading days after the date of the execution of
the Notice of Guaranteed Delivery.
36
<PAGE>
Notes held by Holders. Holders who wish to tender their Existing Notes
but (i) whose Existing Notes are not immediately available and will not be
available for tendering prior to the Expiration Date, or (ii) who cannot deliver
their Existing Notes, the Letter of Transmittal, or any other required documents
to the Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) the tender is made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by mail, hand delivery, facsimile
transmission or overnight courier) substantially in the form provided
by the Issuer herewith; and
(c) a properly completed and executed Letter of Transmittal,
as well as the certificate(s) representing all tendered Existing Notes
in proper form for transfer, and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within three
NYSE trading days after the date of the execution of the Notice of
Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Existing Notes (or any portion of such Existing Notes in
integral multiples of $1,000 principal amount due at the stated maturity) may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. Any Existing Notes properly withdrawn will be deemed to be not validly
tendered for purposes of the Exchange Offer.
Notes held through DTC. DTC Participants holding Existing Notes who
have transmitted their acceptances through ATOP may, prior to 5:00 p.m., New
York City time, on the Expiration Date, withdraw the instruction given thereby
by delivering to the Exchange Agent, at its address set forth under "--Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal of such
instruction. Such notice of withdrawal must contain the name and number of the
DTC Participant, the principal amount due at the stated maturity of Existing
Notes to which such withdrawal related and the signature of the DTC Participant.
Withdrawal of such an instruction will be effective upon receipt of such written
notice of withdrawal by the Exchange Agent.
Notes held by Holders. Holders may withdraw their tender of Existing
Notes, prior to 5:00 p.m., New York City time, on the Expiration Date, by
delivering to the Exchange Agent, at its address set forth under "--Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal. Any such
notice of withdrawal must (i) specify the name of the person who tendered the
Existing Notes to be withdrawn, (ii) contain a description of the Existing Notes
to be withdrawn and identify the certificate number or numbers shown on the
particular certificates evidencing such Existing Notes and the aggregate
principal amount due at the stated maturity represented by such Existing Notes
and (iii) be signed by the Holder of such Existing Notes in the same manner as
the original signature on the Letter of Transmittal by which such Existing Notes
were tendered (including any required signature guaranties), or be accompanied
by (x)
37
<PAGE>
documents of transfer in a form acceptable to the Issuer, in its sole discretion
and (y) a properly completed irrevocable proxy that authorized such person to
effect such revocation on behalf of such Holder. If the Existing Notes to be
withdrawn have been delivered or otherwise identified to the Exchange Agent, a
signed notice of withdrawal is effective immediately upon written, telegraphic
or facsimile notice of withdrawal even if physical release is not yet effected.
---------------------------------------
All signatures on a notice of withdrawal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
NYSE Medallion Signature Program or the Stock Exchange Medallion Program;
provided, however, that signatures on the notice of withdrawal need not be
guaranteed if the Existing Notes being withdrawn are held for the account of an
Eligible Institution.
A withdrawal of an instruction or a withdrawal of a tender must be
executed by a DTC Participant or a Holder, as the case may be, in the same
manner as the person's name appears on its transmission through ATOP or Letter
of Transmittal, as the case may be, to which such withdrawal relates. If a
notice of withdrawal is signed by a trustee, partner, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, such person must so indicate
when signing and must submit with the revocation appropriate evidence of
authority to execute the notice of withdrawal. A DTC Participant or a Holder may
withdraw an instruction or a tender, as the case may be, only if such withdrawal
complies with the provisions of this Prospectus.
A withdrawal of a tender of Existing Notes by a DTC Participant or a
Holder, as the case may be, may be rescinded only by a new transmission of an
acceptance through ATOP or execution and delivery of a new Letter of
Transmittal, as the case may be, in accordance with the procedures described
herein.
EXCHANGE AGENT
PNC Bank, National Association has been appointed as Exchange Agent for
the Exchange Offer. Questions, requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Registered or Certified Mail By Hand
or By Overnight Courier:
PNC Bank, National Association
as Exchange Agent
One Oliver Plaza, 27th Floor
Pittsburgh, PA 15222-2602
Attention: F.J. Deramo, Vice President
Facsimile: (412) 762-8226 By Telephone: (412) 762-3666
The Exchange Agent also acts as trustee under the Indenture.
38
<PAGE>
TRANSFER TAXES
Holders of Existing Notes who tender their Existing Notes for exchange
will not be obligated to pay any transfer taxes in connection therewith, except
that Holders who instruct the Issuer to register New Notes in the name of, or
request that Existing Notes not tendered or not accepted in the Exchange Offer
be returned to, a person other than the registered tendering Holder will be
responsible for the payment of any applicable transfer tax thereon.
DESCRIPTION OF THE NEW NOTES
The New Notes and the Guaranties will be issued under the Indenture
dated as of December 12, 1996, among the Issuer, the Company and the Trustee,
pursuant to which the Existing Notes were issued. For purposes of the following
summary, the term "Notes" collectively refers to the Existing Notes and the New
Notes. The following summaries of certain provisions of 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, a copy of which can be
obtained from the Issuer upon request. Upon the issuance of the New Notes, the
Indenture will be subject to and governed by the provisions of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Wherever
particular Sections or defined terms of the Indenture not otherwise defined
herein are referred to, such Sections or defined terms shall be incorporated
herein by reference, and those terms made a part of the Indenture by the Trust
Indenture Act also are incorporated herein by reference.
Unless otherwise specifically indicated, all references in this section
to (i) the "Company" are solely to U.S. Industries, Inc. and not its
subsidiaries and (ii) the "Issuer" are solely to USI American Holdings, Inc. and
not its subsidiaries.
GENERAL
The Notes, which mature on December 1, 2006, will be limited to
$125,000,000 in aggregate principal amount. (ss. 301 of the Indenture) The Notes
will be fully, irrevocably and unconditionally guaranteed by the Company. The
Notes will not be entitled to the benefit of any sinking fund. The Notes will be
redeemable at the option of the Issuer as described below under "--Redemption."
The Notes will bear interest from the Exchange Date, at the rate per
annum set forth on the cover page hereof, payable semiannually on June 1 and
December 1 of each year commencing June 1, 1997 until the principal thereof is
paid or made available for payment to the holders of record at the close of
business on the immediately preceding May 15 or November 15, respectively. (ss.
301 of the Indenture) Interest will be computed on the basis of a 360-day year
of twelve 30-day months. (ss. 312 of the Indenture)
39
<PAGE>
GUARANTIES
Pursuant to the Guaranties, the Company will fully, irrevocably and
unconditionally guarantee the performance of the Issuer under the Notes and the
punctual payment of the principal of, premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether upon maturity,
acceleration, call for redemption or otherwise. (ss. 1101 of the Indenture) See
"Risk Factors--Holding Company Structure."
The Company will be released from the Guaranties, and the Guaranties
will terminate, if the obligations of the Issuer under the Indenture are assumed
by an acquiring or successor Person (other than a direct or indirect Subsidiary
of the Company) pursuant to the consolidation, merger and sale provisions of the
Indenture. See "--Consolidation, Merger or Certain Sales of Assets of the Issuer
or the Company." (ss. 1101 of the Indenture)
RANKING
The Notes will be senior unsecured obligations of the Issuer and will
rank pari passu with all other existing and future unsecured and unsubordinated
indebtedness of the Issuer and senior in right of payment to all subordinated
indebtedness of the Issuer. The Guaranties will be senior unsecured obligations
of the Company and will rank pari passu with all other existing and future
unsecured and unsubordinated indebtedness of the Company and senior in right of
payment to all subordinated indebtedness of the Company. The Notes and the
Guaranties will be effectively subordinated to (i) all existing and future
secured indebtedness of the Issuer and the Company, to the extent of the value
of the assets securing such indebtedness, (ii) all existing and future
indebtedness of any subsidiaries of the Issuer and of the Company (other than
the Issuer) and (iii) all existing and future guaranties by subsidiaries of the
Issuer and of the Company (other than the Issuer) of the Issuer's and the
Company's indebtedness.
Each of the Issuer and the Company are holding companies that operate
through subsidiaries. Accordingly, the ability of each of the Issuer and the
Company to service their indebtedness, including the Notes, is dependent upon
the cash flow and ability to pay dividends of their respective subsidiaries. The
Issuer's and the Company's rights and the rights of their respective creditors,
including Holders of the Notes, to participate in the assets of any Subsidiary
of the Issuer or the Company (other than the Issuer) upon such Subsidiary's
liquidation or recapitalization will be subject to the prior claims of such
Subsidiary's creditors. See "Risk Factors--Holding Company Structure."
At December 31, 1996, on a pro forma basis after giving effect to two
dispositions and two acquisitions completed in the second quarter of fiscal
1997, the Company had consolidated indebtedness of approximately $680 million
($443 million of which consisted of indebtedness of the Issuer under the New
Credit Facility), none of which represented secured indebtedness or subordinated
indebtedness, and a ratio of total debt to total capitalization of 52.9%. At
December 31, 1996, subsidiaries of the Issuer (other than Funding) had $42
million of indebtedness outstanding (other than intercompany indebtedness), all
of which had been guaranteed by the Issuer.
40
<PAGE>
The Indenture does not restrict (i) the incurrence of secured or
unsecured indebtedness by the Company or by any Subsidiary of the Company that
is not a Subsidiary of the Issuer; (ii) the incurrence of unsecured indebtedness
by the Issuer; (iii) the incurrence of secured or unsecured indebtedness by
Unrestricted Subsidiaries of the Issuer; (iv) a consolidation, merger, sale of
assets or other similar transaction that may adversely affect the
creditworthiness of the Company or the Issuer or the successor or combined
entity of either thereof; (v) a change in control of the Company or the Issuer;
or (vi) a highly leveraged transaction involving the Company or the Issuer. See
"Risk Factors--Leverage."
REDEMPTION
Optional Redemption.
The Notes will be subject to redemption, in whole or in part, at any
time or from time to time, at the option of the Issuer on at least 30 days'
prior notice by mail, at a redemption price (the "Redemption Price") equal to
the greater of (i) 100% of the principal amount of the Notes to be redeemed, or
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate plus 10 basis points, plus, in each case, accrued but unpaid
interest to the date of redemption. On and after the redemption date, interest
will cease to accrue on the Notes or portions of Notes called for redemption on
such date. Notes may be redeemed in part but only in integral multiples of
$1,000. (ss. 1404 and ss. 202 of the Indenture)
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker which would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with the
Issuer.
"Comparable Treasury Price" means, with respect to any redemption date
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities," or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer" means BA Securities and its successors
and/or such other primary U.S. Government securities dealers in New York City (a
"Primary Treasury Dealer") as shall be designated by the Issuer from time to
time, in each case provided that such entity continues to be a Primary Treasury
Dealer.
41
<PAGE>
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
Any notice to the Holders of such a redemption need not set forth the
redemption price but need only set forth the calculation thereof as described in
the first paragraph of this section entitled "Redemption." The redemption price,
calculated as aforesaid, shall be set forth in an officers' certificate to the
Trustee no later than two business days prior to the redemption date.
No sinking fund shall be established for the benefit of the Notes.
Redemption in Circumstances Involving Taxation
If, as the result of any change in or any amendment to the laws,
including any applicable double taxation treaty or convention, of the United
Kingdom (or any Other Jurisdiction, as defined below under "--Payment of
Additional Amounts"), or of any political subdivision or taxing authority
thereof, affecting taxation, or any change in the application or interpretation
of such laws, double taxation treaty or convention, which change or amendment
becomes effective on or after the Initial Issue Date of the Notes (or, in
certain circumstances, such later date on which any assignee of the Issuer, the
Company or a successor corporation to the Issuer or the Company becomes such as
permitted under the Indenture), it is determined, by the Issuer, the Company or
such assignee (which terms, for purposes of the remainder of this paragraph,
include any successor thereto) that (i) the Issuer, the Company or its assignee
would be required to make additional payments in respect of principal, premium,
if any, or interest on the next succeeding date for the payment thereof, or (ii)
based upon an opinion of independent counsel to the Issuer, the Company or its
assignee, as a result of any action taken by any taxing authority of, or any
action brought in a court of competent jurisdiction in, the United Kingdom (or
the Other Jurisdiction), or any political subdivision or taxing authority
thereof or therein (whether or not such action was taken or brought with respect
to the Issuer, the Company or its assignee), which action is taken or brought on
or after the Initial Issue Date of the Notes (or, in certain circumstances, such
later date on which a corporation becomes a successor or an assignee), the
circumstances described in clause (i) would exist, the Issuer may, at its
option, redeem the Notes in whole at any time at a redemption price equal to
100% of the principal amount thereof plus accrued but unpaid interest to the
date fixed for redemption (the "Tax Redemption Price").
(ss. 1301 of the Indenture)
42
<PAGE>
RESTRICTIVE COVENANTS
Limitation on Liens. The Issuer shall not, and shall not permit any
Restricted Subsidiary to, Incur any Lien upon any property or assets of the
Issuer or any Restricted Subsidiary, now owned or hereinafter acquired, to
secure any Debt without making, or causing such Restricted Subsidiary to make,
effective provision for securing the Notes (and, if the Issuer shall so
determine, any other Debt of the Issuer which is not subordinate in right of
payment to the Notes) (a) equally and ratably with (or prior to) such Debt as to
such property or assets for so long as such Debt shall be so secured, or (b) in
the event such Debt is subordinate in right of payment to the Notes, prior to
such Debt as to such property or assets for so long as such Debt shall be so
secured.
The foregoing restrictions will not apply to:
(1) Liens securing only the Notes or the Guaranties;
(2) Liens in favor of only the Company, the Issuer or a Restricted
Subsidiary;
(3) Liens existing on the date of the Indenture;
(4) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Issuer or a Restricted
Subsidiary or becomes a Restricted Subsidiary (and not in
anticipation of or in connection with such event), provided
that the Debt secured by such Lien is otherwise permitted to
be Incurred under the Indenture;
(5) Liens on property existing immediately prior to the time of
acquisition thereof from a non-Affiliate (and not Incurred in
anticipation of or in connection with the financing of such
acquisition), provided that the Debt secured by such Lien is
otherwise permitted to be Incurred under the Indenture;
(6) Liens to secure Debt 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 Liens
(including carrying charges) and, in the case of a Restricted
Subsidiary all or substantially all of whose assets consist of
such property, any Lien on ownership interests or investments
in such Restricted Subsidiary Incurred in connection with the
acquisition or construction of such property, provided that
the Incurrence of such Debt is otherwise permitted under the
Indenture and such Debt is Incurred prior to, at the time of,
or within 180 days after, the acquisition of such property,
the completion of such construction or the making of such
improvements;
(7) Liens on property of the Issuer or any of its Restricted
Subsidiaries in favor of the United States of America or any
state thereof, or any instrumentality of either, to secure
certain payments pursuant to any contract or statute;
43
<PAGE>
(8) Liens for taxes or assessments or other governmental charges
or levies which are being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted or for which a reserve or other appropriate
provision, if any, as shall be required in accordance with
GAAP shall have been made;
(9) Liens to secure obligations under workmen's compensation,
temporary disability, social security, retiree health or
similar laws or under unemployment insurance;
(10) Liens Incurred to secure the performance of statutory
obligations, bids, tenders, leases, contracts (other than
contracts for the repayment of Debt), surety or appeal bonds,
performance or return-of-money bonds or other obligations of a
like nature incurred in the ordinary course of business;
(11) Judgment and attachment Liens not giving rise to a Default or
Event of Default;
(12) Any Lien arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods in
the ordinary course of business in accordance with industry
practice;
(13) Liens securing documentary letters of credit; provided such
Liens attach only to the property or goods to which such
letter of credit relates;
(14) Liens arising from filing financing statements under the
Uniform Commercial Code for precautionary purposes in
connection with true leases of personal property that are
otherwise permitted under the Indenture and under which the
Company, the Issuer or any Restricted Subsidiary is a lessee;
or
(15) Liens to secure Debt Incurred to extend, renew, refinance or
refund (or successive extensions, renewals, refinancings or
refundings), in whole or in part, Debt secured by any Lien
referred to in the foregoing clauses (1) to (14) inclusive, so
long as such Lien does not extend to any additional property
(other than property attributable to improvements, alterations
and repairs) and the principal amount of the Debt secured
pursuant to this clause (15) shall not exceed the principal
amount of Debt so extended, renewed, refinanced or refunded
(assuming all available amounts were borrowed) plus the
aggregate amount of premiums, other payments, costs and
expenses required to be paid or Incurred in connection with
such extension, renewal, refinancing or refunding at the time
of such extension, renewal, refinancing or refunding.
In addition to the foregoing, the Issuer and its Restricted
Subsidiaries may Incur a Lien to secure any Debt, without securing the Notes,
if, after giving effect thereto, the sum, without duplication, of (i) the
aggregate principal amount of all outstanding Debt secured by Liens Incurred by
the Issuer and its Restricted Subsidiaries (with the exception of secured Debt
which is excluded pursuant to clauses (1) through (15) inclusive, described
above) and (ii) the aggregate amount of all Attributable Debt of all sale and
leaseback transactions involving Principal Properties (with the exception of
Attributable Debt excluded pursuant to clauses (1) to (5)
44
<PAGE>
inclusive described below under "--Restrictions Upon Sales with Leasebacks")
does not exceed 10% of Consolidated Net Tangible Assets (the "Lien Basket");
provided, however, that the Lien Basket shall be reduced, without duplication,
by the amount of outstanding Debt Incurred from time to time pursuant to the
Debt Basket (as defined below). (ss. 1007 of the Indenture)
Restrictions Upon Sales with Leasebacks. The Issuer shall not, nor
shall it permit any Restricted Subsidiary to, enter into any arrangement with
any Person providing for the leasing by the Issuer or any Restricted Subsidiary
of any Principal Property of the Issuer or any Restricted Subsidiary, which
Principal Property has been or is to be sold or transferred by the Issuer or
such Restricted Subsidiary to such Person (herein referred to as a "sale and
leaseback transaction"), unless, after giving effect thereto, the sum, without
duplication, of (i) the aggregate amount of all Attributable Debt in respect of
all such sale and leaseback transactions involving Principal Properties (with
the exception of Attributable Debt excluded pursuant to clauses (1) through (5)
inclusive, described below) and (ii) the aggregate principal amount of all
outstanding Debt secured by Liens Incurred by the Issuer and its Restricted
Subsidiaries (with the exception of secured Debt which is excluded pursuant to
clauses (1) through (15) inclusive, described above under "--Limitation on
Liens") does not exceed 10% of Consolidated Net Tangible Assets (the "Leaseback
Basket").
This covenant shall not apply to, and there shall be excluded from
Attributable Debt in any computation under this covenant or under "--Limitation
on Liens" above, Attributable Debt with respect to any sale and leaseback
transaction if:
(1) The lease in such sale and leaseback transaction is for a
period, including renewals, of not more than three years;
(2) Such sale and leaseback transaction is entered into in respect
of a Principal Property within 180 days of the acquisition
thereof or the completion of construction and commencement of
operation thereof, whichever is later;
(3) The proceeds of the sale or transfer of the Principal Property
in such sale and leaseback transaction are at least equal to the
fair market value of such Principal Property (as determined in
good faith by the Board of Directors of the Issuer) and the
Issuer or a Restricted Subsidiary within 180 days after such
sale or transfer applies to the retirement of Funded Debt that
is not subordinated to the Notes or the Guaranties an amount
equal to the greater of (a) the net proceeds of such sale and
(b) the Attributable Debt in respect of such sale and leaseback
transaction;
(4) The Issuer or a Restricted Subsidiary applies the net proceeds
of the sale or transfer of the Principal Property in such sale
and leaseback transaction to an investment in another Principal
Property within 180 days prior or subsequent to such sale or
transfer; provided, however, that this exception shall apply
only if such proceeds invested in such other Principal Property
shall not exceed the total acquisition, alteration, repair and
construction cost of the Issuer or any Restricted Subsidiary in
such other Principal Property less amounts secured by any
purchase money or construction mortgage on such other Principal
Property; or
45
<PAGE>
(5) Such sale and leaseback transaction is entered into between the
Issuer and a Restricted Subsidiary, between the Company and the
Issuer, between the Company and a Restricted Subsidiary, or
between Restricted Subsidiaries. (ss. 1008 of the Indenture)
Limitation on Restricted Subsidiary Funded Debt. The Issuer shall not
permit any Restricted Subsidiary of the Issuer to Incur any Funded Debt.
Notwithstanding the foregoing, any Restricted Subsidiary may Incur the following
Funded Debt:
(1) Funded Debt of any Restricted Subsidiary constituting Existing
Funded Debt;
(2) Funded Debt Incurred by a Special Purpose Funding Subsidiary,
provided that such Restricted Subsidiary remains at all times a
Special Purpose Funding Subsidiary;
(3) Funded Debt owed by a Restricted Subsidiary to the Company, the
Issuer or a Wholly-Owned Subsidiary of the Issuer (provided that
such Funded Debt is at all times held by the Company, the Issuer
or a Person which is a Wholly-Owned Subsidiary of the Issuer);
provided, however, that upon either (a) the transfer or other
disposition by the Company, the Issuer or such Wholly-Owned
Subsidiary of any Funded Debt so permitted to a Person other
than the Company, the Issuer or another Wholly-Owned Subsidiary
of the Issuer, or (b) the issuance (other than directors'
qualifying shares), sale, lease, transfer or other disposition
of shares of Capital Stock (including by consolidation or
merger) of such Wholly-Owned Subsidiary to a Person other than
the Company, the Issuer or another such Wholly-Owned Subsidiary,
the provisions of this clause (3) shall no longer be applicable
to such Funded Debt and such Funded Debt shall be deemed to have
been Incurred at the time of such transfer or other disposition;
(4) Funded Debt Incurred by a Person before such Person became a
Restricted Subsidiary in an acquisition by the Issuer from a
non-Affiliate (whether through a stock acquisition, merger,
consolidation or otherwise) after the date of the Indenture
(provided such Funded Debt was not Incurred in anticipation of
or in connection with and was outstanding prior to such
acquisition);
(5) Funded Debt Incurred in connection with the acquisition,
purchase, improvement or development of property or assets used
or held by any Subsidiary of the Issuer prior to, or within 180
days after, the time of such acquisition, purchase, improvement
or development; or
(6) Funded Debt Incurred to extend, renew, refinance or refund (or
successive extensions, renewals, refinancings or refundings) in
whole or in part, of any Funded Debt referred to in the
foregoing clauses (1), (4) and (5), provided that the principal
amount of the Funded Debt Incurred pursuant to this clause (6)
shall not exceed the principal amount of Funded Debt so
extended, renewed, refinanced or refunded plus the aggregate
amount of premiums, other payments, costs and expenses required
to
46
<PAGE>
be paid or incurred in connection with such extension, renewal,
refinancing or refunding at the time of such extension, renewal,
refinancing or refunding.
In addition to the foregoing, any Restricted Subsidiary may Incur
Funded Debt if, immediately after the Incurrence thereof, the aggregate
principal amount of such Funded Debt plus all other Funded Debt (without
duplication) of all Restricted Subsidiaries of the Issuer then outstanding
(other than Funded Debt permitted by clauses (1) through (6) inclusive, above)
does not exceed 10% of Consolidated Net Tangible Assets (the "Debt Basket");
provided, however, that the Debt Basket shall be reduced, without duplication,
by the amount of Debt secured pursuant to the Lien Basket and by the amount of
Attributable Debt Incurred pursuant to the Leaseback Basket, in each case to the
extent such secured Debt and such Attributable Debt may from time to time be
outstanding. (ss. 1009 of the Indenture)
Limitation on Restricted Payments. Until such time as the Notes are
rated Baa2 by Moody's Investors Service, Inc. and its successors ("Moody's"), or
BBB by Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies,
Inc., and its successors ("S&P"), or higher, the Issuer will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(1) declare or pay any dividend on, or make any distribution in
respect of the Issuer's or any Restricted Subsidiary's Capital
Stock or other Equity Interests, except to the extent any such
dividend or distribution is actually received by the Issuer or a
Subsidiary of the Issuer;
(2) purchase, redeem or otherwise acquire or retire for
consideration any Capital Stock or other Equity Interests of the
Issuer or a Restricted Subsidiary, except to the extent such
consideration is actually received by the Issuer or a Subsidiary
of the Issuer; or
(3) voluntarily purchase, redeem or otherwise acquire or retire for
consideration, prior to a scheduled mandatory sinking fund
payment date, mandatory amortization or mandatory prepayment or
maturity date (including, but not limited to, by legal
defeasance), any Debt of the Issuer that is junior in right of
payment to the Notes, other than in connection with the
refinancing of such Debt to the extent permitted by the
Indenture (each such declaration, distribution, purchase,
redemption, acquisition or retirement being referred to as a
"Restricted Payment") if, at the time of such action, or after
giving effect to such Restricted Payment:
(a) an Event of Default shall have occurred and be
continuing;
(b) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments declared or
made after the Initial Issue Date, exceeds the sum
of: (i) 50% of the aggregate cumulative Consolidated
Net Income of the Issuer accrued on a cumulative
47
<PAGE>
basis during the period beginning on September 29,
1996 and ending on the last day of the Issuer's last
fiscal quarter ending prior to the date of the
Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, minus 100%
of such loss); (ii) the aggregate Net Cash Proceeds
and the fair market value (as determined in good
faith by the Board of Directors of the Issuer) of
marketable securities and other property, if any,
received by the Issuer or a Wholly-Owned Subsidiary
of the Issuer (other than from a Restricted
Subsidiary) from the issuance and sale of either
Capital Stock (other than Redeemable Capital Stock)
or Debt that is convertible into Capital Stock, to
the extent such Debt is converted into Capital Stock
after the Initial Issue Date; (iii) the fair market
value (as determined in good faith by the Board of
Directors of the Issuer) of any shares of Capital
Stock (other than Redeemable Capital Stock) or
options in respect thereof of the Issuer issued after
the Initial Issue Date, pursuant to a plan or other
arrangement approved by the Compensation Committee of
the Board of Directors of the Issuer, to or for the
benefit of any employee or director of the Issuer or
any Subsidiary of the Issuer or to or by any stock
ownership plan or similar trust for the benefit of
any such employee or director, in each case to the
extent such value is includible as compensation
expense in the computation of Consolidated Net
Income; (iv) 50% of the aggregate Net Cash Proceeds
received after September 29, 1996 by the Issuer, or a
Wholly-Owned Subsidiary of the Issuer, from an Asset
Sale; and (v) $50 million; or
(c) the Issuer could not incur $1.00 of additional Debt
pursuant to the Debt Basket under "--Limitation on
Restricted Subsidiary Funded Debt." (ss. 1010 of the
Indenture)
The foregoing will not prohibit, so long as no Event of Default shall
have occurred and be continuing, (i) the payment of any dividend within 60 days
after the date of the declaration, if at the date of declaration thereof such
payment would comply with such provisions or (ii) the declaration or payment of
any dividend on or purchase, redemption or retirement of shares of Capital Stock
payable solely in shares of Capital Stock (other than Redeemable Stock) of the
Issuer, or any Subsidiary which does not constitute a "significant subsidiary"
of the Issuer within
48
<PAGE>
the meaning of Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act
or any successor provision thereto. (ss. 1010 of the Indenture)
Provision of Financial Statements. Whether or not the Issuer is subject
to Section 13(a) or 15(d) of the Exchange Act (or any successor provision
thereto), the Issuer will, to the extent permitted under the Exchange Act, file
with the Commission the annual reports, quarterly reports and other documents
which the Issuer would have been required to file with the Commission pursuant
to such Section 13(a) or 15(d) (or any successor provision thereto) if the
Issuer were so subject, such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which the Issuer
would have been required so to file such documents if the Issuer were so
subject. The Issuer also will: (1) within 15 days of each Required Filing Date,
file with the Trustee copies of the annual reports, quarterly reports and other
documents (excluding exhibits) which the Issuer would have been required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if
the Issuer were subject to such Sections; and (2) if filing such documents by
the Issuer with the Commission is not permitted under the Exchange Act, promptly
upon written request supply copies of such documents to any Holder. The Issuer
will be deemed to have satisfied the requirements set forth above if (i) the
Company prepares, files, mails and supplies reports and other documents prepared
on a Consolidated basis of the types required above, in each case within the
applicable time periods and (ii) the Issuer is not required to file such reports
and other documents separately under the applicable rules and regulations of the
Commission (after giving effect to any exemptive relief) because of the filings
by the Company. (ss. 1011 of the Indenture)
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in
the Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (ss. 101 of the Indenture)
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of all or substantially
all of the properties and assets of any division or line of business of such
Person or any other properties or assets of such Person other than in the
ordinary course of business (including by way of a sale-and-leaseback and
including the sale or other transfer of any of the Capital Stock of any
Subsidiary of such Person), in a single transaction or through a series of
related transactions. For the purposes of this definition, the term "Asset Sale"
shall not include (x) any transfer of properties and assets (A) that is governed
by the first paragraph under "--Consolidation, Merger or Certain Sales of Assets
of the Issuer or the Company" or (B) that is from the Issuer to any Subsidiary
or from any Subsidiary to the Issuer or another Subsidiary of the Issuer or (y)
the transfer of properties and assets (other than in the ordinary course of
business) in any given fiscal year if the aggregate fair market value (as
determined in good faith by the Board of Directors of the Issuer) of all such
properties and assets transferred (other than in the ordinary course of
business) in such fiscal year is less than $1 million, it being understood that
if such aggregate fair market value exceeds $1 million, the entire aggregate
fair market value shall be included.
49
<PAGE>
"Attributable Debt" means, as to any particular lease under which
either the Issuer or any Restricted Subsidiary is at any time liable as lessee
and at any date as of which the amount thereof is to be determined, the total
net obligations of the lessee for rental payments during the remaining term of
the lease (including any period for which such lease has been extended or may,
at the option of the lessor, be extended) discounted from the respective due
dates thereof to such date at a rate per annum equivalent to the interest rate
inherent in such lease (as determined in good faith by the Board of Directors of
the Issuer), compounded semiannually.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with GAAP; for the
purposes hereof the amount of such obligations shall be the capitalized amount
reflected on such balance sheet.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period, before extraordinary items and the cumulative effect of a
change in accounting principles (as each such term is defined under GAAP) of
such Person and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP adjusted by excluding (i) any net gains or losses in
respect of Asset Sales; (ii) the net income or loss of any Person acquired by
such Person or any Subsidiary of such Person in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iii) any
gains or losses from currency exchange transactions; (iv) any gains or losses
realized upon the termination of any employee pension benefit plan; (v) any
gains or losses realized upon the refinancing of any of such Person's Debt; (vi)
any settlements or judgments with respect to any litigation not in the ordinary
course of business; (vii) any gains or losses arising from the destruction of
property due to fire or other casualty; (viii) any gains or losses arising from
the revaluation of property or assets; (ix) the net income (or loss) accounted
for by the equity method of accounting, except for dividends or other
distributions actually received by such Person or its Subsidiaries; and (x) the
net income of any Subsidiary of such Person to the extent that such net income
has any restrictions on making dividends or other distributions to such Person,
it being understood that the net income of any Subsidiary organized under the
laws of a jurisdiction other than a jurisdiction in the United States shall not
be excluded to the extent that annual dividends to such Person are permitted
pursuant to applicable law, but shall be net of any withholding requirements
pursuant to or reserves established in connection with the restrictions of such
applicable law.
"Consolidated Net Tangible Assets" means, at any date, the total amount
of assets appearing on the most recent Consolidated balance sheet of the Company
and its Subsidiaries, prepared in accordance with GAAP, less (i) all current
liabilities (due within one year) as shown on such balance sheet (excluding
current maturities of long-term indebtedness and intercompany items), (ii)
applicable depreciation, amortization and other valuation reserves not already
50
<PAGE>
reflected in such total amount of assets and (iii) Intangible Assets and
liabilities relating thereto.
"Intangible Assets" means the value (net of any applicable reserves),
as shown on or reflected in such balance sheet, of: (A) all trade names,
trademarks, licenses, patents, copyrights, service marks, goodwill and other
like intangibles; and (B) unamortized debt discount and expense, less
unamortized premium.
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of such Person and each of its Subsidiaries if and to the extent
the accounts of such Person and each of its Subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP. The term
"Consolidated" shall have a similar meaning.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) every obligation of such Person issued or assumed
as the deferred purchase price of property or services, if and to the extent
that such obligation would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business), (v) every
Capital Lease Obligation of such Person, (vi) the maximum fixed redemption or
repurchase price of Redeemable Stock of such Person at the time of determination
and (vii) every obligation of the type referred to in clauses (i) through (vi)
of another Person and all Debt of another Person the payment of which, in either
case, such Person has Guaranteed or for which such Person is responsible or
liable, directly or indirectly, as obligor, Guarantor or otherwise.
"Equity Interest" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"Existing Funded Debt" means all Funded Debt (other than Funded Debt
outstanding pursuant to the New Credit Facility) existing on the date of the
Indenture.
"Funded Debt" means Debt that by its terms (i) matures more than one
year from the date of original issuance or creation or (ii) matures within one
year from such date but is renewable or extendible at the option of any obligor
to a date more than one year from such date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession
in the United States, from time to time.
"Guaranty" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Debt of any other Person (the "primary obligor")
in any manner, whether
51
<PAGE>
directly or indirectly, and including, without limitation, any obligation of
such Person, (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.
"Incur" means, with respect to any Debt of any Person, to create,
issue, incur (by conversion, exchange or otherwise), assume, Guarantee or
otherwise become, directly or indirectly, liable in respect of such Debt or the
recording, as required pursuant to GAAP or otherwise, of any such Debt on the
balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in GAAP that results in an obligation of such Person that
exists at such time becoming Debt shall not be deemed an Incurrence of such
Debt.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement, encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including, without limitation,
any conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company, the Issuer or any Restricted Subsidiary) net of
(i) brokerage commissions and other actual fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire Debt where payment of such Debt is secured by the assets or
properties which are the subject of such Asset Sale, (iv) amounts required to be
paid to any Person (other than the Company, Issuer or any Subsidiary of the
Company or Issuer) owning a beneficial interest in the assets subject to the
Asset Sale and (v) appropriate amounts to be provided by the Issuer or a
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Issuer or Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an officers' certificate delivered to the Trustee and (b) with
respect to any issuance or sale of Capital Stock or options, warrants or rights
to purchase Capital Stock, or Debt or Capital Stock that have been converted
into or exchanged for Capital Stock, the proceeds of such issuance or sale in
the form of cash or Temporary Cash Investments,
52
<PAGE>
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company, the Issuer or any Restricted Subsidiary), net of
attorneys' fees, accountants' fees and brokerage, consultation, underwriting and
other fees and expenses actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal Property" means any real property (including related
fixtures), plant or equipment owned or leased by the Issuer or any Restricted
Subsidiary, other than real property, plant or equipment that, in the good faith
determination of the Board of Directors of the Issuer (whose determination shall
be conclusive and evidenced by a Board Resolution), is not of material
importance to the respective businesses conducted by the Issuer or any
Restricted Subsidiary as of the date of such determination; provided, however,
that, unless otherwise specified by the Board of Directors of the Issuer, any
real property (including related fixtures), plant or equipment with a fair
market value of less than $5 million (as determined in good faith by the Board
of Directors of the Issuer) shall not be a "Principal Property."
"Redeemable Capital Stock" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable before the stated maturity of the Notes), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the stated maturity of the Notes.
"Redeemable Stock" of any Person means any equity security of such
Person that by its terms or otherwise is required to be redeemed for cash prior
to the final stated maturity of the Notes or is redeemable for cash at the
option of the holder thereof at any time prior to the final stated maturity of
the Notes.
"Restricted Subsidiary" means each Subsidiary of the Issuer other than
Unrestricted Subsidiaries.
"Special Purpose Funding Subsidiary" means a direct Wholly-Owned
Subsidiary of the Issuer (i) that serves as the cash management company for the
Issuer and its Subsidiaries and has no other material operations or business,
(ii) that for every transfer of funds to it, records a corresponding liability
on its books and records to the transferor thereof and (iii) whose assets do not
materially exceed its liabilities.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof, (ii) a partnership of which such Person, or
one or more Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, is the general partner, has at
least a majority ownership and has the power to direct the policies, management
and affairs
53
<PAGE>
thereof or (iii) any other Person (other than a corporation or a partnership) in
which such Person, or one or more other Subsidiaries of such Person or such
Person and one or more other Subsidiaries thereof, directly or indirectly, has
at least a majority ownership and power to direct the policies, management and
affairs thereof.
"Temporary Cash Investments" means (i) any evidence of Debt issued by
the United States of America, or an instrumentality or agency thereof and
Guaranteed fully as to principal, premium, if any, and interest by the United
States of America, maturing not more than one year after the date of
acquisition, (ii) any certificate of deposit, maturing not more than one year
after the date of acquisition, issued by, or time deposit of, a commercial
banking institution that is a member of the Federal Reserve System and that has
combined capital and surplus and undivided profits of not less than $500
million, whose Debt has a rating, at the time as of which any investment therein
is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P, (iii) commercial paper, maturing not more than one year after
the date of acquisition, issued by a corporation (other than the Company, the
Issuer or a Subsidiary of the Issuer or the Company) organized and existing
under the laws of the United States of America with a rating, at the time as of
which any investment therein is made, of "P-1" (or higher) according to Moody's
or "A-1" (or higher) according to S&P or (iv) any money market deposit accounts
issued or offered by a domestic commercial bank having capital and surplus in
excess of $500 million.
"Unrestricted Subsidiary" means any Subsidiary of the Issuer that (i)
is organized under the laws of a jurisdiction other than a jurisdiction in the
United States of America or (ii) does not constitute a "significant subsidiary"
of the Company within the meaning of Rule 1-02(w) of Regulation S-X promulgated
under the Exchange Act or any successor provision thereto.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly-Owned Subsidiary" of any Person means a Subsidiary of such
Person all the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly-Owned Subsidiaries of such Person or by such
Person and one or more Wholly-Owned Subsidiaries of such Person.
CONSOLIDATION, MERGER OR CERTAIN SALES OF ASSETS OF THE ISSUER OR THE COMPANY
The Issuer will not, in a single transaction or through a series of
related transactions, consolidate with or merge with or into any other Person or
sell, assign, convey, transfer, lease or otherwise dispose of ("a sale") all or
substantially all of its properties and assets on a Consolidated basis to any
Person, or permit any of its Subsidiaries to enter into any such transaction or
series of related transactions if such transaction or series of related
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Issuer and its Subsidiaries on a Consolidated basis to any other
Person, unless at the time and after giving effect thereto (1)
54
<PAGE>
either the Issuer will be the continuing entity, or the successor entity, as a
result of such consolidation, merger or sale of the Issuer's assets, is
organized in the United States of America and expressly assumes the due and
punctual payment of the principal of, premium, if any, and interest on all the
Notes and the performance of every covenant of the Notes and the Indenture on
the part of the Issuer to be performed, and (2) immediately after giving effect
to such transaction, no Event of Default, and no event which, after notice or
lapse of time, or both, would become an Event of Default, shall have happened
and be continuing. If the acquiring or successor Person is not a direct or
indirect Subsidiary of the Company, all obligations of the Company under the
Indenture and the Guaranties will be released. (ss.ss. 801 and 802 of the
Indenture)
The Company will not, in a single transaction or through a series of
related transactions, consolidate with or merge with or into any other Person or
sell, assign, convey, transfer, lease or otherwise dispose of ("a sale") all or
substantially all of its properties and assets on a Consolidated basis to any
Person, or permit any of its Subsidiaries to enter into any such transaction or
series of related transactions if such transaction or series of related
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company and its Subsidiaries on a Consolidated basis to any other
Person, unless at the time and after giving effect thereto (1) either the
Company will be the continuing entity, or the successor entity, as a result of
such consolidation, merger or sale of the Company assets, is organized in the
United States of America and expressly assumes the due and punctual payment of
the Guaranties and the performance of every covenant of the Guaranties and the
Indenture on the part of the Company to be performed, and (2) immediately after
giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time, or both, would become an Event of Default, shall
have happened and be continuing. If the acquiring or successor Person is not a
direct or indirect Subsidiary of the Company, all obligations of the Company
under the Indenture and the Guaranties will be released. (ss.ss. 801 and 802 of
the Indenture)
If the Issuer or the Company consolidates, merges or sells all or
substantially all of its properties and assets as described above, and the
continuing or successor entity does not assume all obligations of the Issuer or
the Company, as applicable, under the Indenture and the Notes or the Guaranties,
as applicable, the Trustee or the Holders of the Notes may declare an Event of
Default after notice and a grace period. See "--Events of Default, Notice and
Waiver." However, although there is a developing body of case law interpreting
the phrase "substantially all," as used in Section 909 of the New York Business
Corporation Law, there is no precise established definition of the phrase as
used in indentures under applicable New York law. Accordingly, it is not
possible to quantify with certainty the point at which the Trustee or a Holder
of the Notes would be able to prove that "substantially all" of the assets of
the Company or the Issuer have been transferred to another Person, and thus
declare an Event of Default if a continuing or successor entity fails to assume
such obligations.
55
<PAGE>
PAYMENT OF ADDITIONAL AMOUNTS
The Indenture provides that any amounts paid, or caused to be paid, by
the Company or its assignee (or any successor to the Company or such assignee as
permitted under the Indenture) under the Guaranties, or paid by any successor to
the Issuer under the Indenture, will be paid without deduction or withholding
for any and all present and future taxes, levies, imposts or other governmental
charges whatsoever imposed, assessed, levied or collected by or for the account
of the United Kingdom, including any political subdivision or taxing authority
thereof ("U.K. Taxes"), or such other jurisdiction (the "Other Jurisdiction") as
is the jurisdiction of incorporation or residence (other than the United States
or any political subdivision or taxing authority thereof) of any assignee of the
Company or any successor to the Issuer or the Company, or any political
subdivision or taxing authority thereof ("Other Jurisdiction Taxes"). If there
is at any time a requirement to deduct or withhold U.K. Taxes or Other
Jurisdiction Taxes in respect of principal, premium, if any, or interest, the
Company, its assignee or any relevant successor will (subject to timely
compliance by the Holders or beneficial owners of the relevant Notes with any
relevant administrative requirements) pay or cause to be paid such Additional
Amounts as may be necessary in order that the net amounts paid to the Holders of
the Notes or the Trustee under the Indenture, as the case may be, pursuant to
the Indenture or the Guaranties, after such deduction or withholding, shall
equal the respective amounts of principal, premium, if any, or interest as
specified in the Notes to which such Holders or the Trustee are entitled. The
Indenture further provides that the obligation to pay Additional Amounts shall
not apply to:
(1) any present or future taxes, levies, imposts or other
governmental charges which would not have been so imposed,
assessed, levied or collected but for the fact that the Holder
or beneficial owner of the relevant Note is or has been a
domiciliary, national or resident of, engages or has been
engaged in business, maintains or has maintained a permanent
establishment, or is or has been physically present in, the
United Kingdom or the Other Jurisdiction, or otherwise has or
has had some connection with the United Kingdom or the Other
Jurisdiction (other than the holding or ownership of a Note, or
the collection of principal of, premium, if any, and interest
on, or the enforcement of, a Note or the Guaranty);
(2) any present or future taxes, levies, imposts or other
governmental charges which would not have been so imposed,
assessed, levied or collected but for the fact that, where
presentation is required, the relevant Note was presented more
than thirty days after the date such payment became due or was
provided for, whichever is later;
(3) any present or future taxes, levies, imposts or other
governmental charges which are payable otherwise than by
deduction or withholding on or in respect of the relevant Note
or Guaranty;
(4) any present or future taxes, levies, imposts or other
governmental charges which would not have been so imposed,
assessed, levied or collected but for the failure to comply, on
a sufficiently timely basis, with any certification,
identification or other
56
<PAGE>
reporting requirements concerning the nationality, residence,
identity or connection with the United Kingdom or the Other
Jurisdiction or any other relevant jurisdiction of the Holder or
beneficial owner of the relevant Note, if such compliance is
required by a statute or regulation of the United Kingdom or the
Other Jurisdiction, or by a relevant treaty, as a condition to
relief or exemption from such taxes, levies, imposts or other
governmental charges;
(5) any present or future taxes, levies, imposts or other government
charges (a) which would not have been so imposed, assessed,
levied or collected if the beneficial owner of the relevant Note
had been the Holder of such Note, or (b) which, if the
beneficial owner of such Note had held the Note as the Holder of
such Note, would have been excluded pursuant to clauses (1)
through (4) above; or
(6) any estate, inheritance, gift, sale, transfer, personal
property or similar tax, assessment or other governmental
charge. (ss. 301 of the Indenture)
The Indenture does not provide for the payment of Additional Amounts
with respect to the Indenture or the Guaranties due to any deduction or
withholding requirement imposed by any governmental unit other than the United
Kingdom, an Other Jurisdiction or a taxing authority or political subdivision
thereof.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that if an Event of Default (other than an Event
of Default of the type described in clause (4) below, with respect to the
Company or the Issuer) with respect to the Notes shall have happened and be
continuing, the Holders of not less than 25% in aggregate principal amount of
the Notes then outstanding under the Indenture may declare the principal of all
the Notes and any accrued interest thereon to be due and payable immediately,
and if an Event of Default of the type described in clause (4) (with respect to
the Company or the Issuer) below shall occur, the principal of all the Notes and
any accrued interest thereon shall automatically be due and payable immediately
(an "Acceleration"). (ss. 502 of the Indenture)
Events of Default in respect of the Notes are defined in the Indenture
as being: (1) default for 30 days in payment of any interest installment on the
Notes when due and payable; (2) default in payment of principal of (or premium,
if any, on), or the Redemption Price, the Tax Redemption Price or Additional
Amounts with respect to, any Note when due and payable; (3) default for 60 days,
after notice to the Issuer and the Company by the Trustee or to the Issuer, the
Company and the Trustee by Holders of not less than 25% in aggregate principal
amount of the Notes at the time outstanding, in the performance of any other
covenant or agreement in the Indenture; (4) certain events of bankruptcy,
insolvency and reorganization with respect to the Issuer, the Company or any
Restricted Subsidiary; (5) a default or defaults under any bond(s),
debenture(s), note(s) or other evidence(s) of Debt by the Issuer, the Company or
any Restricted Subsidiary or under any mortgage(s), indenture(s) or
instrument(s) under which there may be issued or by which there may be secured
or evidenced any Debt by the Issuer, the Company or any Restricted Subsidiary
with a principal amount then outstanding, individually or in the aggregate, in
excess of $25 million, whether such Debt now exists or shall hereafter be
57
<PAGE>
Incurred, which default or defaults shall constitute a failure to pay at final
maturity the principal of such Debt when due and payable after the expiration of
any applicable notice and grace period with respect thereto, or shall have
resulted in such Debt becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable and such
acceleration shall not have been rescinded or annulled, or such accelerated Debt
shall not have been discharged, within five Business Days (as defined) of such
acceleration; (6) the rendering of a final judgment or judgments (not subject to
appeal) against the Issuer, the Company or any Restricted Subsidiary in an
aggregate amount in excess of $25 million which remains unstayed, undischarged
or unbonded for a period of 60 days thereafter; and (7) a final, nonappealable
determination by the applicable governmental authority that the Company has
failed to maintain its dual tax residency in the United States and the United
Kingdom provided that such failure could reasonably be expected to have a
material adverse effect on (i) the operations, business or financial condition
of the Issuer and its Subsidiaries taken as a whole or (ii) the ability of the
Company or the Issuer to perform any of its payment obligations under the
Guaranties or the Notes, respectively. (ss. 501 of the Indenture)
The Indenture provides that the Trustee will, within 90 days after
receiving notice of the occurrence of a default with respect to the Notes, give
to the Holders of the Notes notice of all uncured and unwaived defaults known to
it; provided, however, that, except in the case of default in the payment of
principal of, premium, if any, or interest on any of the Notes, the Trustee will
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the Holders of the Notes. The
term "default" for the purpose of this provision only means the happening of any
of the Events of Default with respect to the Notes, except that any grace period
and/or notice requirement of such Event of Default is eliminated.
(ss. 602 of the Indenture)
Before proceeding to exercise any right or power under the Indenture at
the request, order or direction of any Holders of the Notes, the Trustee is
entitled to be indemnified by such Holders subject to the duty of the Trustee
during an Event of Default to act with the required standard of care. (ss. 603
of the Indenture)
The Indenture provides that the Holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding may direct the
time, method and place of conducting proceedings for remedies available to the
Trustee, or exercising any trust of power conferred on the Trustee in respect of
the Notes, subject to provisions for indemnification and certain other rights of
the Trustee. (ss. 512 of the Indenture)
The Indenture includes a covenant that the Issuer within 120 days after
the end of each fiscal year with the Trustee a certificate of no default, or
specifying any default that exists.
(ss. 1012 of the Indenture)
In certain cases, the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding may on behalf of the Holders of
all the Notes annul an Acceleration and its consequences. Prior to an
Acceleration, the Holders of not less than a majority in aggregate principal
amount of the Notes then outstanding may on behalf of the Holders of all the
Notes waive any past default with respect to the Notes and its consequences,
except, among other
58
<PAGE>
things, a default in the payment of the principal of, premium, if any, or
interest on the Notes. (ss.ss. 502 and 513 of the Indenture)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company, the Issuer
and the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding, (1) to execute
supplemental indentures adding any provisions to or amending, modifying or
changing or eliminating any of the provisions of the Indenture or modifying the
rights of the Holders of the Notes to be affected or (2) to waive compliance
with any provisions in the Indenture, except that no such supplemental indenture
may (a) among other things, change the stated maturity of any Notes, or reduce
the principal amount thereof (or premium, if any, thereon), reduce the
Redemption Price, Tax Redemption Price or Additional Amounts, or reduce the rate
or change the time of payment of interest thereon, or change the place or medium
of payment of the principal amount thereof, or interest thereon, or impair
certain rights of Holders of the Notes to institute suit for payment, without
the consent of all the Holders of the Notes so affected, (b) reduce the
percentage of the Notes, the consent of the Holders of which is required for any
such supplemental indenture, without the consent of all the Holders of the Notes
so affected, or (c) amend the Guaranties in a manner adverse to the Holders of
the Notes. (ss. 902 of the Indenture)
Modifications of and amendments to the Indenture, the Notes and the
Guaranties may be made by the Trustee without the consent of any Holder of Notes
or the Issuer or the Company, among other things, to cure any ambiguity, defect
or inconsistency, to provide for the assumption of the Issuer's or the Company's
obligations to the Holders of Notes as contemplated above under
"--Consolidation, Merger or Certain Sales of Assets of the Issuer or the
Company" or to make any change that does not materially adversely affect the
rights of any Holder of Notes.
(ss. 901 of the Indenture)
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, the Security Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law. The Security Registrar
need not transfer or exchange any Note previously selected for redemption. A
registered Holder of a Note shall be treated as the owner thereof for all
purposes. No Note shall be valid until the Trustee or an authenticating agent
manually signs the certificate of authentication on the Note. Each Note shall
become effective on the date upon which it is so signed. (ss. 303 of the
Indenture)
59
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Notes will initially be represented by
one or more permanent global certificates in definitive, fully registered form
(each a "Global Note"). Each Global Note will be deposited on the Exchange Date
with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee
of DTC.
Holders of Notes who elect to take physical delivery of their
certificates instead of holding their interests through the Global Note
(collectively referred to herein as the "Non-Global Holders") will be issued in
registered form (a "Certificated Note"). Upon the transfer of any Certificated
Note initially issued to a Non-Global Holder, such Certificated Note will,
unless the transferee requests otherwise or a Global Note has previously been
exchanged in whole for Certificated Notes, be exchanged for an interest in such
Global Note.
DTC has advised the Company that it is (i) a limited purpose trust
company organized under the laws of the State of New York, (ii) a member of the
Federal Reserve System, (iii) a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended and (iv) a "clearing agency" registered
pursuant to Rule 17A of the Exchange Act. DTC was created to hold securities for
DTC Participants and facilitates the clearance and settlement of securities
transactions between DTC Participants through electronic book-entry changes to
the accounts of DTC Participants, thereby eliminating the need for physical
transfer and delivery of certificates. DTC Participants include securities
brokers and dealers (including the BA Securities), banks and trust companies,
clearing corporations and certain other organizations. Access to the DTC's
system is also available to other entities such as banks, brokers, dealers and
trust companies (collectively, the "Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Holders of Notes who are not participants may beneficially own
securities held by or on behalf of DTC only through DTC Participants or Indirect
Participants.
Global Note. The Issuer expects that pursuant to procedures established
by DTC (i) upon the issuance of the Global Note, DTC or its custodian will
credit the accounts of DTC Participants designated by BA Securities with an
interest in the Global Note and (ii) ownership of beneficial interests in the
Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC or its nominee (with respect to
the interests of DTC Participants) and the records of DTC Participants and the
Indirect Participants (with respect to interests of persons other than DTC
Participants).
So long as DTC or its nominee is the registered owner of the Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or Holder of the Notes represented by the Global Note for all purposes under the
Indenture. No beneficial owner of an interest in the Global Note will be able to
transfer that interest except in accordance with DTC's procedures, in addition
to those provided for under the Indenture with respect to the Notes.
Payments with respect to the principal of, premium, if any, and
interest on any Notes represented by the Global Note on the applicable record
date will be payable by the Trustee to or at the direction of DTC or its nominee
in its capacity as the registered Holder of the Global Note
60
<PAGE>
representing such Notes under the Indenture. None of the Issuer, the Trustee or
any paying agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of Notes by DTC, or for
maintaining, supervising or reviewing any records of DTC relating to such Notes.
The Issuer expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Note will
credit DTC Participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global Note
as shown on the records of DTC or its nominee. Payments by the DTC Participants
and the Indirect Participants to the beneficial owners of the Notes will be
governed by standing instructions and customary practice, as is now the case
with securities held for the account of customers registered in the names of
nominees for such customers, and will be the responsibility of the DTC
Participants or the Indirect Participants, as the case may be.
Transfers between DTC Participants will be effected in the ordinary way
through DTC's funds system in accordance with DTC's rules and will be settled in
federal funds. If a Holder requires physical delivery of a Certificated Note for
any reason, including to sell Notes to persons in states that require physical
delivery of the Notes, or to pledge such securities, such Holder must transfer
its interest in the Global Note in accordance with the normal procedures of DTC
and the procedures set forth in the Indenture.
DTC has advised the Issuer that it will take any action permitted to be
taken by a Holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more DTC Participants to whose
account DTC's interests in the Global Note are credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such DTC
Participant or DTC Participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Note for Certificated Notes, which it will distribute to DTC Participants.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Note among DTC Participants, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Issuer nor the Trustee nor any paying
agent will have any responsibility for the performance by DTC or DTC
Participants or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.
Certificated Notes. If (i) the Issuer notifies the Trustee in writing
that the DTC is no longer willing or able to act as a depository and the Issuer
is unable to locate a qualified successor depository within 90 days or (ii) the
Issuer, at is option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in definitive form under the Indenture, then, upon
surrender by DTC of the Global Note, Certificated Notes will be issued to each
person that DTC identifies as the beneficial owner of the Notes represented by
the Global Note.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds.
All payments of principal, premium, if any, and interest will be made by the
Issuer in immediately available
61
<PAGE>
funds. The Notes will trade in the Same-Day Settlement System of DTC until
maturity and, to the extent that secondary market trading activity in the Notes
is effected through the facilities of DTC, such trades will be settled in
immediately available funds.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Issuer or the Company, as such, shall have any liability for any obligations of
the Issuer or the Company under the Notes, the Guaranties or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes and the Guaranties. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such waiver is against public policy. (ss. 118 of the Indenture)
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Issuer may, at its option and at any time, elect to have the
obligations of the Issuer, the Company and any other obligor upon the Notes
discharged with respect to the outstanding Notes ("defeasance"). If defeasance
occurs the Issuer, the Company and any other obligor under the Indenture shall
be deemed to have paid and discharged the entire Debt represented by the
outstanding Notes, except for (i) the rights of Holders of such outstanding
Notes to receive, solely from the trust fund described below, payments in
respect of the principal of, premium, if any, and interest on such Notes, when
such payments are due from the trust referred to below, (ii) the Issuer's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes, and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and (iv) the defeasance provisions of the Indenture.
Alternatively, the Issuer may, at its option and at any time, elect to
have the obligations of the Issuer released with respect to certain covenants
that are described in the Indenture ("covenant defeasance"). If covenant
defeasance occurs any omission to comply with those obligations shall not
constitute a Default or an Event of Default with respect to the Notes.
(ss.ss. 1201, 1202 and 1203 of the Indenture)
In order to exercise either defeasance or covenant defeasance:
(1) the Issuer must irrevocably deposit or cause to be deposited
with the Trustee, as trust funds in trust, for the benefit of
the Holders of the Notes, cash in United States dollars, U.S.
Government Obligations (as defined in the Indenture), or a
combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent
public accountants or a nationally recognized investment banking
firm, to pay and discharge the principal of, premium, if any,
and interest on the outstanding Notes, on the Stated Maturity of
such principal, premium, if any, or interest;
62
<PAGE>
(2) in the case of defeasance, the Issuer shall have delivered to
the Trustee an opinion of independent counsel to the Issuer in
the United States stating that (a) the Issuer has received from,
or there has been published by, the Internal Revenue Service a
ruling, or (b) since the date of the Indenture, there has been a
change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of
independent counsel in the United States shall confirm that, the
Holders of the outstanding Notes, will not recognize income,
gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to 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 had not occurred;
(3) in the case of covenant defeasance, the Issuer shall have
delivered to the Trustee an opinion of independent counsel in
the United States to the effect that the Holders of the
outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as clause (4)
under the second paragraph under "--Events of Default, Notice
and Waiver" are concerned, at any time during the period ending
on the 91st day after the date of deposit (other than a Default
or Event of Default resulting from the borrowing of funds to be
applied to such deposit);
(5) such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default under, any
material agreement or instrument (other than the Indenture) to
which the Issuer, the Company or any Subsidiary is a party or by
which it is bound;
(6) the Issuer will have delivered to the Trustee an opinion of
independent counsel in the United States to the effect that
after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors'
rights generally;
(7) the Issuer shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by the Issuer
with the intent of preferring the Holders of the Notes or the
Guaranties over the other creditors of the Issuer or the Company
with the intent of defeating, hindering, delaying or defrauding
creditors of the Issuer, the Company or others;
(8) no event or condition shall exist that would prevent the Issuer
or the Company from making payments of the principal of,
premium, if any, and interest on the Notes on the date of such
deposit or at any time ending on the 91st day after the date of
such deposit; and
63
<PAGE>
(9) the Issuer will have delivered to the Trustee an officers'
certificate and an opinion of independent counsel, each stating
that all conditions precedent required for either defeasance or
the covenant defeasance, have been complied with. (ss. 1204 of
the Indenture)
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
and Guaranties, under the Indenture when:
(1) either (a) all such Notes, theretofore authenticated and
delivered (except lost, stolen or destroyed Notes which have
been replaced or paid or Notes whose payment has been deposited
in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust as
provided for in the Indenture), have been delivered to the
Trustee for cancellation or (b) all Notes, not theretofore
delivered to the Trustee for cancellation (x) have become due
and payable, or (y) will become due and payable at their Stated
Maturity within one year; and the Issuer or the Company has
irrevocably deposited or caused to be deposited with the Trustee
as trust funds in trust an amount in United States dollars
sufficient to pay and discharge the entire indebtedness on the
Notes, not theretofore delivered to the Trustee for
cancellation, including principal of, premium, if any, and
accrued interest on such Note at such Maturity or Stated
Maturity;
(2) the Issuer or the Company has paid or caused to be paid all
other sums payable under the Indenture by the Issuer and the
Company; and
(3) the Issuer has delivered to the Trustee an officers'
certificate and an opinion of independent counsel, each
stating that (a) all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture
have been complied with, and (b) such satisfaction and
discharge will not result in a breach or violation of, or
constitute a default under, the Indenture or any other
material agreement or instrument to which the Issuer, the
Company or any Subsidiary is a party or by which the Issuer,
the Company or any Subsidiary is bound. (ss. 401 of the
Indenture)
GOVERNING LAW
The Indenture, the Notes and the Guaranties will be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof. (ss. 113 of the Indenture)
64
<PAGE>
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. If an Event of Default has occurred and is continuing,
the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. (ss. 601 of the Indenture)
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company or the Issuer, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims as security or otherwise. The Trustee is permitted to engage in
other transactions; provided, however, that if it acquires any conflicting
interest, it must eliminate such conflict or resign. (ss.ss. 608 and 613 of the
Indenture)
The Issuer may from time to time maintain lines of credit, and have
other customary banking relationships, with PNC Bank, National Association, the
Trustee under the Indenture, or its Affiliates. PNC Bank, National Association
also is a lender under the New Credit Facility.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of taxation is intended only as a summary and
does not purport to be a complete analysis of all potential tax effects relevant
to the New Notes. The statements of United States and United Kingdom tax law set
forth below are based on the laws, regulations and administrative and judicial
decisions applicable as of the date of this Prospectus, and are subject to any
changes in relevant United Kingdom or United States authorities, or in the
income tax treaty between the United States and the United Kingdom occurring
after that date. Any such changes, which could be retroactive, could affect the
continuing validity of this discussion.
Prospective holders of New Notes should consult their own tax advisors
concerning the application of United States federal and United Kingdom income
tax laws, as well as the laws of any state, local, or other taxing jurisdiction
applicable to their particular situations.
UNITED STATES FEDERAL INCOME TAXATION
The following general discussion summarizes certain of the material
U.S. federal income tax aspects of the acquisition, ownership and disposition of
the New Notes. This discussion is a summary for general information only and
does not consider all aspects of U.S. federal income tax that may be relevant to
the purchase, ownership and disposition of the New Notes by a prospective
investor in light of such investor's personal circumstances. This discussion
also does not address the U.S. federal income tax consequences of ownership of
New Notes not held as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), or the U.S. federal
income tax consequences to investors subject to special treatment under the U.S.
federal income tax laws, such as dealers in securities or foreign
65
<PAGE>
currency, tax-exempt entities, banks, thrifts, insurance companies, persons that
hold the New Notes as part of a "straddle", a "hedge" against currency risk of a
"conversion transaction", persons that have a "functional currency" other than
the U.S. dollar, and investors in pass-through entities. In addition, this
discussion is generally limited to the U.S. federal income tax consequences to
initial holders. It does not address any consequences arising out of the tax
laws of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing and proposed
regulations thereunder, and current administrative rulings and court decisions.
All of the foregoing is subject to change, possibly on a retroactive basis, and
any such change could affect the continuing validity of this discussion.
U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a New Note that is (i) a citizen or
resident (as defined in Section 7701(b)(1) of the Code) of the United States,
(ii) a corporation organized under the laws of the United States or any
political subdivision thereof or therein or (iii) an estate or trust, the income
of which is subject to U.S. federal income tax regardless of the source (a "U.S.
Holder"). For taxable years beginning after December 31, 1996 (or for the
immediately preceding taxable year if the trustee of a trust so elects), a trust
is a U.S. Holder for U.S. federal income tax purposes, if, and only if a court
within the United States is able to exercise primary supervision over the
administration of the trust for U.S. federal income tax purposes and one or more
United States trustees have the authority to control all substantial decisions
of the trust. Certain U.S. federal income tax consequences relevant to a holder
other than a U.S. Holder are discussed separately below.
Exchange Offer. The exchange of the Existing Notes for New Notes
pursuant to the Exchange Offer should not be a taxable exchange for U.S. federal
income tax purposes. As a result, there should be no U.S. federal income tax
consequences to a U.S. Holder exchanging an Existing Note for a New Note
pursuant to the Exchange Offer. A U.S. Holder should have the same adjusted
basis and holding period in the New Note as it had in the Existing Note
immediately before the exchange.
Interest. Interest on a New Note will be taxable to a U.S. Holder as
ordinary interest income at the time it accrues or is received, in accordance
with such holder's method of accounting for tax purposes. The Company is
obligated to pay Additional Amounts to the holders of New Notes under certain
circumstances involving taxation described above. Such Additional Amounts should
be taxable to U.S. Holders at the time it accrues or is received in accordance
with each such holders' method of accounting.
Market Discount. If a New Note is acquired at a "market discount," some
or all of any gain realized upon a sale, other disposition or payment at
maturity (or earlier) of such New Note, or some or all of the proceeds of a
partial principal repayment before maturity of such New Note, may be treated as
ordinary income, as described below. For this purpose, "market discount" is the
excess, if any, of the stated redemption price at maturity over the purchase
price, subject to a statutory de minimis exception. Unless a U.S. Holder has
elected to include market
66
<PAGE>
discount in income as it accrues, any gain realized on a disposition of such a
New Note (other than in connection with certain nonrecognition transactions) or
payment at maturity (or earlier), or some or all of the proceeds of a partial
repayment before maturity, will generally be treated as ordinary income to the
extent of the market discount accrued during the period the New Note was held.
Such a U.S. Holder may also be required to defer deductions for any interest
paid on indebtedness allocable to that New Note until such income is realized.
Bond Premium. In general, if a New Note is purchased at a price
exceeding the principal amount of that New Note, the New Note has "bond
premium." A U.S. Holder may generally elect to amortize bond premium over the
remaining term of that New Note (or, in certain circumstances, until an earlier
call date).
An election to amortize premium will apply to amortizable bond premium
on all New Notes and other taxable debt securities held by the electing U.S.
Holder on or after the beginning of the U.S. Holder's first taxable year to
which the election applies, and may be revoked only with the consent of the
Internal Revenue Service.
Sale, Exchange or Redemption of New Notes. Upon the disposition of a
New Note by sale, exchange or redemption, a U.S. Holder will generally recognize
gain or loss equal to the difference between (i) the amount realized on the
disposition (other than amounts attributable to accrued interest) and (ii) the
U.S. Holder's tax basis in the New Note. A U.S. Holder's tax basis in a New Note
generally will equal the cost of the New Note (net of any accrued interest paid
at purchase) to the U.S. Holder, increased by any amounts includible in income
as market discount (if the holder elects to include market discount on a current
basis), and reduced by any amortized bond premium.
Provided the New Note is held as a capital asset, gain or loss on the
disposition of a New Note (except as otherwise provided by the market discount
rules) will generally constitute capital gain or loss and will be long-term
capital gain or loss if the U.S. Holder has held the New Note for more than one
year.
Backup Withholding and Information Reporting. Under the Code, a U.S.
Holder of a New Note may be subject, under certain circumstances, to information
reporting and/or backup withholding at a 31% rate with respect to cash payments
in respect of interest or the gross proceeds from dispositions thereof. This
withholding applies only if the holder (i) fails to furnish its social security
or other taxpayer identification number ("TIN") within a reasonable time after a
request therefor, (ii) furnishes an incorrect TIN, (iii) fails to report
interest properly, or (iv) fails, under certain circumstances, to provide a
certified statement, signed under penalty of perjury, that the TIN provided is
its correct number and that it is not subject to backup withholding. Any amount
withheld from a payment to a U.S. Holder under the backup withholding rules is
allowable as a credit (and may entitle such holer to a refund) against such
holder's U.S. federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service. Certain persons are
exempt from backup withholding, including corporations and financial
institutions. U.S. Holders of New Notes should consult their tax advisors as to
their qualification for exemption from withholding and the procedure for
obtaining such exemption.
67
<PAGE>
Non-U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a beneficial owner of a New Note that is not a U.S.
Holder (a "Non-U.S. Holder").
The discussion does not deal with all aspects of U.S. federal income
and estate taxation that may be relevant to the purchase, ownership or
disposition of a New Note by a particular Non-U.S. Holder in light of such
Non-U.S. Holder's particular circumstances, including, e.g., the holding of New
Notes through a partnership, trust or estate. For example, persons who are
partners in foreign partnerships or beneficiaries of foreign trusts or estates
and are subject to U.S. federal income tax because of their own status, such as
nonresidents engaged in a trade or business in the United States, may be subject
to U.S. federal income tax on income and gain from the New Notes, even though
the entity is not so taxable.
For purposes of the following discussion, interest and gain on the
sale, exchange or other disposition of the New Note will be considered "U.S.
trade or business income" if such income or gain is (i) effectively connected
with the conduct of a U.S. trade or business or (ii) in the case of a Non-U.S.
Holder entitled to the benefit of a U.S. income tax treaty, attributable to a
U.S.
permanent establishment (or to a fixed base) in the United States.
Interest. Generally, interest on a New Note paid to a Non-U.S. Holder
that is not U.S. trade or business income will not be subject to U.S. federal
income tax if the interest qualifies as "portfolio interest." Generally,
interest on the New Notes will qualify as portfolio interest if (i) the Non-U.S.
Holder does not actually or constructively own 10% or more of the total voting
power of all voting stock of the Company and is not a "controlled foreign
corporation" with respect to which the Company is a "related person" within the
meaning of the Code, and (ii) the beneficial owner, under penalty of perjury,
certifies that the beneficial owner is not a United States person and such
certificate provides the beneficial owner's name and address.
The gross amount of payments to a Non-U.S. Holder of interest that do
not qualify for the portfolio interest exception and that are not U.S. trade or
business income will be subject to U.S. federal income tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed at regular U.S. income tax rates rather
than the 30% withholding rate. To claim the benefit of a tax treaty or to claim
exemption from withholding because the income is U.S. trade or business income,
the Non-U.S. Holder must provide a properly executed Form 1001 or 4224 (or such
successor forms as the IRS designates), as applicable, prior to the payment of
interest. These forms must be periodically updated. Under proposed regulations,
the Forms 1001 and 4224 will be replaced by Form W-8. Also under proposed
regulations, a Non-U.S. Holder who is claiming the benefits of a treaty may be
required to obtain a U.S. taxpayer identification number and to provide certain
documentary evidence issued by foreign governmental authorities to prove
residence in the foreign country.
Sale, Exchange or Redemption of New Notes. Except as described below,
any gain realized by a Non-U.S. Holder on the sale, exchange or redemption of a
New Note generally will not be subject to U.S. federal income tax, unless (i)
that gain is U.S. trade or business
68
<PAGE>
income, (ii) subject to certain exceptions, the Non-U.S. Holder is an individual
who holds the New Note as a capital asset and is present in the United States
for 183 days or more in the taxable year of the disposition, or (iii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates.
Federal Estate Tax. New Notes held (or treated as held) by an
individual who is a Non-U.S. Holder at the time of his or death will not be
subject to U.S. federal estate tax, provided that (i) the individual does not
actually or constructively own 10% or more of the total voting power of all
voting stock of the Company and (ii) income on the New Notes was not U.S. trade
or business income.
Information Reporting and Backup Withholding. The Company must report
annually to the Internal Revenue Service and to each Non-U.S. Holder any
interest that is subject to withholding or that is exempt from U.S. withholding
tax pursuant to a tax treaty or the portfolio interest exception. Copies of
these information returns may also be made available, pursuant to the provisions
of certain tax treaties or agreements, to the tax authorities of the country in
which the Non-U.S. Holder resides (or is otherwise subject to tax).
The regulations provide that backup withholding and information
reporting will not apply to payments of principal on the New Notes by the
Company to a Non-U.S. Holder, if the Holder certifies as to its non-U.S. status
under penalties of perjury or otherwise establishes an exemption (provided that
neither the Company nor its paying agent has actual knowledge that the holder is
a United States person or that the conditions of any other exemption are not, in
fact, satisfied).
The payment of the proceeds from the disposition of New Notes to or
through the United States office of any broker, U.S. or foreign, will be subject
to information reporting and possible backup withholding unless the owner
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes an exemption, provided that the broker does not have actual
knowledge that the Holder is a U.S. person or that the conditions of any other
exemption are not, in fact, satisfied. The payment of the proceeds from the
disposition of a New Note to or through a non-U.S. office of a non-U.S. broker
that is not a U.S. related person will not be subject to information reporting
or backup withholding. For this purpose, a "U.S. related person" is (i) a
"controlled foreign corporation" for federal income tax purposes or (ii) a
foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
United States trade or business.
In the case of the payment of proceeds from the disposition of New
Notes to or through a non-U.S. office of a broker that is either a U.S. person
or a U.S. related person, the regulations require information reporting on the
payment unless the broker has documentary evidence in its files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person (absent actual knowledge that the
payee is a U.S. person).
69
<PAGE>
Any amounts withheld under the backup withholding rules from a payment
to a Non-U.S. Holder will be allowed as a refund or a credit against such
Non-U.S. Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
UNITED KINGDOM INCOME TAXATION
Payments of principal and interest on a New Note by the Company under
the Guaranties received by a beneficial owner not otherwise taxable in the
United Kingdom will generally be exempt from United Kingdom tax. However, the
Company's understanding of current Inland Revenue practice is that where a
United Kingdom company is obliged to make a payment of interest under a guaranty
which in default would be enforced in the United Kingdom, that payment will have
a United Kingdom source. Accordingly, the payment will be subject to United
Kingdom withholding tax in the absence of an available exemption under an
applicable double taxation treaty or convention.
Such an exemption should be available under the double taxation treaty
between the United States and the United Kingdom to beneficial owners of New
Notes who timely satisfy the conditions for exemption therein and who comply
with the relevant administrative arrangements. If, however, an exemption is not
available and a United Kingdom withholding tax is imposed on a payment in
respect of interest (or any additional interest) under the Company Guaranties,
subject to the exceptions set forth above under "Description of the New
Notes--Payment of Additional Amounts," the Company or its successors or assigns
will be obligated to pay or cause to be paid such Additional Amounts in respect
of the relevant interest as may be necessary in order that the net amount of
interest paid to a Holder of a New Note shall equal the amount of interest to
which such Holder is entitled. If the Company is required to pay Additional
Amounts by reason of current Inland Revenue practice, the Issuer could not
redeem the Notes (see "Description of the New Notes--Redemption").
Beneficial owners of New Notes should consult their own tax advisors as
to the conditions for exemption and the relevant administrative arrangements.
PLAN OF DISTRIBUTION
The Existing Notes were issued and sold on December 12, 1996 in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws and may not be offered or sold in the United
States unless so registered or pursuant to an applicable exemption under the
Securities Act and applicable state securities laws. The New Notes are being
offered hereunder in order to satisfy certain obligations of the Issuer and the
Company contained in the Registration Rights Agreement. Based on an
interpretation of the Securities Act by the staff of the Commission set forth in
several no-action letters to third parties, including Exxon Capital, Morgan
Stanley and similar letters, the Issuer believes that the New Notes issued
pursuant to the Exchange Offer in exchange for Existing Notes may be offered for
resale, resold and otherwise transferred by Holders thereof (other than any such
Holder that is an Affiliate of the Issuer), without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
70
<PAGE>
Holders' business and such Holders are not engaged in, have no arrangement or
understanding with any person to participate in, and do not intend to engage in
any distribution of, the New Notes. However, the Issuer has not sought a
no-action letter with respect to the Exchange Offer and there can be no
assurance that the Staff of the Commission would make a similar determination
with respect to the Exchange Offer. Each holder of Existing Notes, other than a
broker-dealer, must acknowledge that it is not engaged in, has no arrangement or
understanding with any person to participate in, and does not intend to engage
in a distribution of New Notes. Any holder who tenders in the Exchange Offer for
the purpose of participating in a distribution of New Notes (i) will not be able
to rely on the interpretations of the staff of the Commission set forth in the
above-referenced no-action letters, (ii) will not be able to validly tender
Existing Notes in the Exchange Offer and (iii) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or transfer of the New Notes, unless such sale or transfer is made
pursuant to an exemption from, or in a transaction not subject to, such
requirements.
In addition, each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal accompanying this Prospectus states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
acting in the capacity of an "underwriter" within the meaning of Section 2(11)
of the Securities Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
New Notes received in exchange for Existing Notes where such Existing Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. Pursuant to the Registration Rights Agreement, the Issuer
has agreed that it will make this Prospectus available to any broker-dealer for
use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
Participating Broker-Dealers. New Notes received by Participating Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
Participating Broker-Dealer and/or the purchasers of any such New Notes. Any
Participating Broker-Dealer that resells New Notes that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and
any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter
71
<PAGE>
of Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer other than commissions or concessions of any broker-dealers and
will indemnify holders of the Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Issuer and
the Company by Weil, Gotshal & Manges LLP, New York, New York.
EXPERTS
The consolidated financial statements and schedule of U.S. Industries,
Inc. in its Annual Report on Form 10-K for the year ended September 28, 1996,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Their report is based in part on the reports of Price Waterhouse LLP and
Deloitte & Touche LLP. Such consolidated financial statements and schedule are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
72
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE ISSUER OR THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE NEW
NOTES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE NEW NOTES BY ANYONE IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE ISSUER OR THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
Available Information............................................... 3
Disclosure Regarding Forward-Looking
Statements......................................................... 3
Incorporation of Certain Documents
by Reference...................................................... 4
Important..............................................................5
Summary.............................................................. 6
Risk Factors........................................................ 18
Recent Developments...................................................21
Use of Proceeds..................................................... 23
Ratio of Earnings to Fixed Changes.................................. 24
Capitalization ..................................................... 25
Selected Financial Data............................................. 26
The Exchange Offer ................................................. 28
Procedures for Tendering Existing Notes...............................33
Description of the New Notes........................................ 39
Certain Federal Income Tax
Considerations..................................................... 65
Plan of Distribution................................................. 70
Legal Matters........................................................ 72
Experts.............................................................. 72
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
PROSPECTUS
USI AMERICAN
HOLDINGS, INC.
U.S. INDUSTRIES, INC.
OFFER TO EXCHANGE
$125,000,000 OF THE ISSUER'S
7 1/4% SENIOR NOTES DUE 2006, SERIES B, WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, FOR
$125,000,000 OF ITS
OUTSTANDING 7 1/4% SENIOR NOTES
DUE 2006, SERIES A
UNCONDITIONALLY GUARANTEED
BY THE COMPANY
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Issuer and the Company are Delaware corporations. Section 145 of
the Delaware General Corporation Law (the "DGCL") provides that a Delaware
corporation has the power to indemnify its officers and directors in certain
circumstances.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of his service as director, officer, employee or agent of the
corporation, or his service, at the corporation's request, as a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding provided that such director or officer acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided that such director or officer had no reasonable cause to believe his
conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such director or officer shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such director or officer is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) or (b) or in the defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith; provided that indemnification provided for by Section 145 or granted
pursuant thereto shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled;
II-1
<PAGE>
and empowers the corporation to purchase and maintain insurance on behalf of a
director of officer of the corporation against any liability asserted against
him or incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
In addition, Section 102(b)(7) of the DGCL permits Delaware
corporations to include a provision in their certificates of incorporation
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provisions shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involved intentional misconduct or a knowing violation of law,
(iii) for unlawful payment of dividends or other unlawful distributions, or (iv)
for any transactions from which the director derived an improper personal
benefit.
Each of the Issuer's and the Company's Certificate of Incorporation
currently provides that each Director shall not be personally liable to each
respective corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director and require each respective corporation to
indemnify its directors and officers to the fullest extent permitted by the
DGCL.
The By-Laws of the Issuer provide that the Issuer may, and the By-Laws
of the Company provide that the Company must, provide to any director or officer
advances for expenses incurred in defending an action, suit or proceeding
brought against such person because of his or her status as an officer or
director upon receipt of an undertaking to repay such advances unless it is
ultimately determined that he or she is entitled to indemnification by the
respective corporation.
The directors and officers of each of the Issuer and the Company are
insured against certain civil liabilities, including liabilities under federal
securities laws, which might be incurred by them in such capacity.
ITEM 21. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ----------- -----------------------
3.1(a) Certificate of Incorporation of the Issuer.**
3.1(b) Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit 1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 1, 1995).*
3.2(a) Bylaws of the Issuer.**
3.2(b) Amended and Restated Bylaws of the Company (filed as Exhibit
3.2 to the Company's Registration Statement on Form 10, dated
April 21, 1995).*
II-2
<PAGE>
4.1 Indenture, dated as of December 12, 1996, among the Issuer,
the Company and PNC Bank, National Association, as Trustee.**
4.2 Specimen New Notes (included in Exhibit 4.1).**
5.1 Opinion of Weil, Gotshal & Manges LLP.***
10.1 Credit Agreement, dated December 12, 1996, among the Issuer,
the Company, Various Banks named therein, Bank of America
National Trust and Savings Association, as Issuing Bank,
Swingline Bank and Agent, and BA Securities, Inc., as
Arranger.**
12.1 Computation of Ratio of Earnings to Fixed Charges.***
23.1 Consent of Ernst & Young LLP.***
23.2 Consent of Price Waterhouse LLP.***
23.3 Consent of Deloitte & Touche LLP.***
23.4 Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1).***
24.1 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of the Trustee under the Indenture.**
99.1 Registration Rights Agreement, dated December 12, 1996, among
the Issuer, the Company and BA Securities.**
99.2 Form of Letter of Transmittal.***
99.3 Form of Notice of Guaranteed Delivery.**
99.4 Form of Letter to Brokers.***
99.5 Form of Letter to Clients.***
-------------
* Incorporated Herein By Reference
** Filed Previously
*** Filed Herewith
(b) Financial Statement Schedules.
II. Valuation and Qualifying Accounts (included in Item 8 of
the Company's 1996 Annual Report, which is incorporated herein
by reference.
(c) Not applicable.
ITEM 22. UNDERTAKINGS
(a)(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II-3
<PAGE>
(ii) To reflect in the prospectus any facts of events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(a)(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(a)(e) The undersigned Registrant hereby undertakes to deliver or
cause to be delivered with the Prospectus, to each person to
whom the Prospectus is sent or given, the latest annual
report, to security holders that is incorporated by reference
in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X is not
set forth in the Prospectus, to deliver, or cause to be
delivered to each person to whom the Prospectus is sent or
given, the latest quarterly report that is
II-4
<PAGE>
specifically incorporated by reference in the Prospectus to
provide such interim financial information.
(a)(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the Prospectus pursuant to Item 4, 10(b), 11, or 13 of
this form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the Registration Statement through the date of responding
to the request.
(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
Registration Statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrants named below have duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Iselin, State of New Jersey, on March 24, 1997.
USI AMERICAN HOLDINGS, INC.
U.S. INDUSTRIES, INC.
By: /s/ George H. MacLean
----------------------------------
Name: George H. MacLean
Title: Senior Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
USI AMERICAN HOLDINGS, INC.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and Chief
- ------------------------------------------ Executive Officer (Principal Executive
David H. Clarke Officer) March 24, 1997
* President, Chief Operating Officer and
- ------------------------------------------ Director March 24, 1997
John G. Raos
/s/ George H. MacLean Senior Vice President, General Counsel, March 24, 1997
- ------------------------------------------ Secretary and Director
George H. MacLean
Senior Vice President and Chief Financial March 24, 1997
/s/ Frank R. Reilly Officer (Principal Financial Officer)
- ------------------------------------------
Frank R. Reilly
/s/ James O'Leary Vice President -- Corporate Controller March 24, 1997
- ------------------------------------------ (Principal Accounting Officer)
James O'Leary
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
U.S. INDUSTRIES, INC.
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and Chief March 24, 1997
- ------------------------------------------ Executive Officer (Principal Executive Officer)
David H. Clarke
* President, Chief Operating Officer and March 24, 1997
- ------------------------------------------ Director
John G. Raos
/s/ Frank R. Reilly Senior Vice President, Chief Financial March 24, 1997
- ------------------------------------------ Officer and Director (Principal Financial
Frank R. Reilly Officer)
* Director
- ------------------------------------------
Sir Harry Solomon March 24, 1997
* Director
- ------------------------------------------
Mark Vorder Bruegge March 24, 1997
* Director
- ------------------------------------------
Brian C. Beazer March 24, 1997
* Director
- ------------------------------------------
John J. McAtee, Jr. March 24, 1997
* Director
- ------------------------------------------
The Hon. Charles H. Price II March 24, 1997
* Director
- ------------------------------------------
Royall Victor, III March 24, 1997
/s/ James O'Leary Vice President - Corporate Controller March 24, 1997
- ------------------------------------------ (Principal Accounting Officer)
James O'Leary
</TABLE>
- --------------------------------
* By: /s/ George H. MacLean
-------------------------------
George H. MacLean
Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENT
3.1(a) Certificate of Incorporation of the Issuer.**
3.1(b) Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit 1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 1, 1995).*
3.2(a) Bylaws of the Issuer.**
3.2(b) Amended and Restated Bylaws of the Company (filed as Exhibit
3.2 to the Company's Registration Statement on Form 10, dated
April 21, 1995).*
4.1 Indenture, dated as of December 12, 1996, among the Issuer,
the Company and PNC Bank, National Association, as Trustee.**
4.2 Specimen New Notes (included in Exhibit 4.1).**
5.1 Opinion of Weil, Gotshal & Manges LLP.***
10.1 Credit Agreement, dated December 12, 1996, among the Issuer,
the Company, Various Banks named therein, Bank of America
National Trust and Savings Association, as Issuing Bank,
Swingline Bank and Agent, and BA Securities, Inc., as
Arranger.**
12.1 Computation of Ratio of Earnings to Fixed Charges.***
23.1 Consent of Ernst & Young LLP.***
23.2 Consent of Price Waterhouse LLP.***
23.3 Consent of Deloitte & Touche LLP.***
23.4 Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1).***
24.1 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of the Trustee under the Indenture.**
99.1 Registration Rights Agreement, dated December 12, 1996, among
the Issuer, the Company and BA Securities.**
99.2 Form of Letter of Transmittal.***
99.3 Form of Notice of Guaranteed Delivery.**
99.4 Form of Letter to Brokers.***
99.5 Form of Letter to Clients.***
- -----------------------------
* Incorporated herein by reference
** Filed Previously
*** Filed Herewith
II-8
WEIL, GOTSHAL & MANGES LLP
A LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
767 FIFTH AVENUE * NEW YORK, NEW YORK 10153-0119
(212) 310-8000
(212) 310-8007
March 22, 1997
U.S. Industries, Inc.
USI American Holdings, Inc.
101 Wood Avenue South
Iselin, New Jersey 08830
Ladies and Gentlemen:
We have acted as counsel to U.S. Industries, Inc., a Delaware
corporation (the "Company"), and its wholly-owned subsidiary, USI American
Holdings, Inc., a Delaware corporation (the "Issuer"), in connection with the
preparation and filing with the Securities and Exchange Commission of the
Registration Statement on Form S-4 (the "Registration Statement") of the Issuer
and the Company for registration under the Securities Act of 1933, as amended
(the "Securities Act"), of $125 million aggregate principal amount of the
Issuer's 7 1/4% Senior Notes Due December 1, 2006, Series B (the "New Notes")
and the Company's guaranties in connection therewith (the "Guaranties"), each
issuable in connection with the exchange offer of New Notes for the Issuer's 7
1/4% Senior Notes Due December 1, 2006, Series A, which were not registered
under the Securities Act (the "Existing Notes").
In so acting, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of the Registration Statement, the
Indenture, dated as of December 12, 1996 (the "Indenture"), among the Issuer,
the Company and PNC Bank, National Association, as Trustee (the "Trustee"),
pursuant to which the New Notes will be issued, the form of the New Notes
included as Exhibit 4.2 to the Registration Statement and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
the Issuer and the Company, and have made such inquiries of such officers and
<PAGE>
U.S. Industries, Inc.
USI American Holdings, Inc.
March 22, 1997
Page 2
representatives, as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Issuer and the Company.
Based on the foregoing, and subject to the qualifications
stated herein, we are of the opinion that:
1. The New Notes have been duly authorized by the Issuer and,
when executed on behalf of the Issuer, authenticated by the Trustee and
delivered in accordance with the terms of the Indenture and as contemplated by
the Registration Statement, and upon the exchange by holders of Existing Notes
of Existing Notes for New Notes, will constitute valid and legally binding
obligations of the Issuer entitled to the benefits provided by the Indenture,
enforceable against the Issuer in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights and remedies
generally and, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether sought in a proceeding at law or in equity).
2. The Guaranties have been duly authorized by the Company and
when executed and delivered by the Company in accordance with the terms of the
Indenture and as contemplated by the Registration Statement, will constitute
valid and legally binding obligations of the Company, entitled to the benefits
provided by the Indenture, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
creditors' rights and remedies generally and, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether sought in a proceeding at law or
in equity).
<PAGE>
U.S. Industries, Inc.
USI American Holdings, Inc.
March 22, 1997
Page 3
The opinions expressed herein are limited to the laws of the
State of New York, the corporate laws of the State of Delaware and the federal
laws of the United States, and we express no opinion as to the effect on the
matters covered by this opinion of the laws of any other jurisdiction.
We consent to the reference to our name under the caption
"Legal Matters" in the prospectus which is a part of the Registration Statement.
Very truly yours,
WEIL, GOTSHAL & MANGES LLP
EXHIBIT 12.1
<TABLE>
<CAPTION>
U.S. INDUSTRIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions, except ratios)
Three Months Ended
Year Ended September 30, December 31,
----------------------------------------------------------- ------------------------
1996 1995 1994 1993 1992 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income (loss) from
continuing operations
before income taxes
and fixed charges................. $173 $ (19) $ 78 $ 57 $ 55 36 22
==== ===== ==== ==== ==== == ==
Fixed charges:
Interest expense.................. 60 101 94 95 89 12 20
Interest component
of rent.......................... 8 7 7 7 6 2 2
- - - - - - -
Fixed charges..................... 68 108 101 102 95 14 22
== === === === == == ==
Earnings, as defined............... 241 89 179 159 150 50 44
=== == === === === == ==
FIXED CHARGES........................ 68 108 101 102 95 14 22
== === === === == == ==
Ratio of earnings to
fixed charges...................... 3.5x ---(1) 1.8x 1.6x 1.6x 3.6x 2.0x
==== === ==== ==== ==== ==== ====
<FN>
- --------
1 Earnings for fiscal 1995 were insufficient to cover fixed charges by $19
million. This deficiency resulted from goodwill impairment and other
non-recurring charges of $113 million. Before taking into account such
items, the ratio of earnings to fixed charges for fiscal 1995 would have
been 1.9x.
</FN>
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to U.S. Industries, Inc. Registration Statement (No. 333-20183) on Form
S-4 and related Prospectus for the registration of its 7 1/4% Senior Notes and
to the incorporation by reference therein of our report dated November 11, 1996,
with respect to the consolidated financial statements and schedule of U.S.
Industries, Inc. included in its Annual Report on Form 10-K for the year ended
September 30, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst and Young LLP
New York, New York
March 21, 1997
EXHIBIT 23.2
CONSENT OF PRICE WATERHOUSE LLP
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of U.S. Industries,
Inc. of our report dated November 11, 1996, appearing on page 27 of the U.S.
Industries, Inc. Annual Report on Form 10-K for the year ended September 30,
1996. We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PRICE WATERHOUSE LLP
Morristown, New Jersey
March 19, 1997
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of our report dated February 21, 1995 with respect to the combined
financial statements and schedule of the U.S. Industries, Inc. Automotive Group
companies (not presented separately) appearing in U.S. Industries, Inc.'s Annual
Report on Form 10-K for the fiscal year ended September 28, 1996, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 21, 1997
LETTER OF TRANSMITTAL
TO TENDER IN RESPECT OF THE
OFFER TO EXCHANGE ANY AND ALL OUTSTANDING
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES
A, WHICH HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT,
FOR
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES
B, WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT,
OF
USI AMERICAN HOLDINGS, INC.
EACH SERIES UNCONDITIONALLY GUARANTEED BY
U.S. INDUSTRIES, INC.
PURSUANT TO THE PROSPECTUS, DATED , 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED AS PROVIDED IN THE PROSPECTUS (THE "EXPIRATION
DATE"). TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
PNC BANK, NATIONAL ASSOCIATION
(For Eligible Institutions and
Withdrawal Notices Only)
Facsimile Transmission Number
(412) 762-8226
Confirm by Telephone:
(412) 762-3666
By Registered or Certified Mail,
By Hand or By Overnight Courier:
One Oliver Plaza, 27th Floor
Pittsburgh, PA 15222-2602
Attention: F.J. Deramo, Vice President
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
All capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Prospectus, dated ,1997, of USI
American Holdings, Inc. (the "Issuer") and U.S. Industries, Inc. (the "Company")
(as it may be supplemented from time to time, the "Prospectus").
The undersigned acknowledges that he or she has received the Prospectus and
this Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange $1,000 principal amount of the Issuer's 7 1/4% Senior Notes due
December 1, 2006, Series B (the "New Notes"), which have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), for each $1000
principal amount of the Issuer's outstanding 7 1/4% Senior Notes due December 1,
2006, Series A (the "Existing Notes"), which have not been registered under the
<PAGE>
Securities Act, from the holders thereof. The New Notes and the Existing Notes
are unconditionally guaranteed by the Company.
This Letter of Transmittal is to be used by holders of Existing Notes to
accept the Exchange Offer if: (i) tender of Existing Notes is to be made
according to the Automated Tender Offer Program ("ATOP") of the Depository Trust
Company ("DTC"), for which the transaction is eligible, pursuant to the
procedures set forth in the Prospectus under the caption "Procedures for
Tendering Existing Notes--Tendering Existing Notes--Notes held through DTC";
(ii) certificates representing Existing Notes are to be physically delivered to
the Exchange Agent herewith by such holders, pursuant to the procedures set
forth in the Prospectus under the caption "Procedures for Tendering Existing
Notes--Tendering Existing Notes--Notes held by Holders"; or (iii) tender of
Existing Notes is to be made according to the guaranteed delivery procedures set
forth in the Prospectus under the caption "Procedures for Tendering Existing
Notes--Guaranteed Delivery Procedures." NOTWITHSTANDING THE FOREGOING, VALID
ACCEPTANCE OF THE TERMS OF THE EXCHANGE OFFER MAY BE EFFECTED BY A PARTICIPANT
IN DTC (A "DTC PARTICIPANT") TENDERING EXISTING NOTES THROUGH ATOP WHERE THE
EXCHANGE AGENT RECEIVES AN AGENT'S MESSAGE (AS DEFINED IN THE PROSPECTUS) PRIOR
TO THE EXPIRATION DATE. ACCORDINGLY, SUCH DTC PARTICIPANT MUST ELECTRONICALLY
TRANSMIT ITS ACCEPTANCE TO DTC THROUGH ATOP, AND THEN DTC WILL EDIT AND VERIFY
THE ACCEPTANCE, EXECUTE A BOOK-ENTRY DELIVERY TO THE EXCHANGE AGENT'S ACCOUNT AT
DTC AND SEND AN AGENT'S MESSAGE TO THE EXCHANGE AGENT FOR ITS ACCEPTANCE. BY
TENDERING THROUGH ATOP, DTC PARTICIPANTS WILL EXPRESSLY ACKNOWLEDGE RECEIPT OF
THIS LETTER OF TRANSMITTAL AND AGREE TO BE BOUND BY ITS TERMS AND THE ISSUER
WILL BE ABLE TO ENFORCE SUCH AGREEMENT AGAINST SUCH DTC PARTICIPANTS.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
DTC Participants who wish to cause their Existing Notes to be tendered, but
who cannot transmit their acceptances through ATOP prior to the Expiration Date,
may effect a tender in accordance with the guaranteed delivery procedures set
forth in the Prospectus under the caption "Procedures for Tendering Existing
Notes--Guaranteed Delivery Procedures--Notes held through DTC." Holders who wish
to tender their Existing Notes but (i) whose Existing Notes are not immediately
available and will not be available for tendering prior to the Expiration Date,
or (ii) who cannot deliver their Existing Notes, the Letter of Transmittal, or
any other required documents to the Exchange Agent prior to the Expiration Date,
may effect a tender in accordance with the guaranteed delivery procedures set
forth in the Prospectus under the caption "Procedures for Tendering Existing
Notes--Guaranteed Delivery Procedures--Notes held by Holders."
For each Existing Note accepted for exchange, the holder will receive a New
Note having a principal amount equal to that of the surrendered Existing Note.
The New Notes will bear interest from and including their respective dates of
issuance (the "Exchange Date"). Holders whose Existing Notes are accepted for
exchange will receive accrued interest thereon to, but not including, the
Exchange Date, such interest to be payable with the first interest payment on
the New Notes, but will not receive any payment in respect of interest on the
Existing Notes accrued after the Exchange Date.
If (i) the Exchange Offer Registration Statement is not filed with the
Commission on or prior to the 45th day following December 12, 1996, the issue
date of the Existing Notes (the "Initial Issue Date"), (ii) the Exchange Offer
Registration Statement is not declared effective on or prior to the 135th day
following the Initial Issue Date, (iii) neither the Exchange Offer is
consummated nor the Shelf Registration Statement is declared effective on or
prior to the 165th day following the Initial Issue Date, or (iv) the Shelf
Registration Statement is required to be filed because of the request of BA
Securities, Inc. or other specified holder, 45 days following the request by BA
Securities, Inc. that the Issuer file the Shelf Registration Statement (or 90
days if the Shelf Registration Statement is reviewed by the Commission), then
the interest rate borne by the Existing Notes (except in the case of clause
(iv), in which case only the Existing Notes which have not been exchanged in the
Exchange Offer) shall be increased by 0.5% per annum. Upon (w) the filing of the
Exchange Offer Registration Statement in the case of clause (i) above, (x) the
effectiveness of the Exchange Offer Registration Statement in the case of clause
(ii) above, (y) the date of the consummation of the Exchange Offer or the
effectiveness of the Shelf Registration Statement in the case of clause (iii)
above, or (z) the effectiveness of the Shelf Registration Statement, in the case
of clause (iv) above, the interest rate stated on the Existing Notes from the
date of such filing, effectiveness or the date of such consummation or
effectiveness, as the case may be, will be reduced to the original interest rate
on the Notes; provided, however, that, if after any such reduction in interest
rate, a different event specified in clause (i),
2
<PAGE>
(ii), (iii) or (iv) above occurs, the interest rate shall again be increased
pursuant to the foregoing provisions. Holders of Existing Notes accepted for
exchange will be deemed to have waived the right to receive any other payments
or accrued interest on the Existing Notes.
The Issuer reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date to which the Exchange Offer is extended. The
Issuer shall notify the holders of the Existing Notes of any extension by means
of a press release or other public announcement prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
List below the Existing Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the certificate numbers and principal
amount of Existing Notes should be listed on a separate signed schedule affixed
hereto. Tenders of Existing Notes will be accepted only in principal amounts
equal to $1,000 or integral multiples thereof.
3
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF EXISTING NOTES
- -------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank) 1 2 3
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate
Principal Principal
Certificate* Amount of Amount
Number(s) Old Note(s) Tendered**
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
<FN>
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed if Existing Notes are being tendered by book-entry
transfer or in accordance with DTC's ATOP procedures for transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the
Existing Notes represented by the Existing Notes indicated in column 2. See Instruction 2. Existing
Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral
multiple thereof. See Instruction 1.
- -------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>
The names and addresses of the registered holders of Existing Notes should
be printed, if not already printed above, exactly as they appear on the Existing
Notes tendered hereby. The Existing Notes and the principal amount of such
Existing Notes that the undersigned wishes to tender should be indicated in the
appropriate boxes.
4
<PAGE>
|_| CHECK HERE IF TENDERED EXISTING NOTES ARE ENCLOSED HEREWITH.
|_| CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)_______________________________
Window Ticket Number (if any)_________________________________
Date of Execution of Notice of Guaranteed Delivery____________
Name of Eligible Institution that Guaranteed Delivery_________
______________________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions set forth in the Prospectus,
receipt of which is hereby acknowledged, the undersigned hereby tenders to the
Issuer the aggregate principal amount of Existing Notes indicated above. Subject
to, and effective upon, the acceptance for exchange of the Existing Notes
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Issuer all right, title and interest in and to such Existing
Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Existing Notes
tendered hereby and that, when (and to the extent that) such tendered Existing
Notes are accepted for exchange by the Issuer, the Issuer will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim or right. The undersigned
will, upon request, execute and deliver any additional documents deemed by the
Exchange Agent or by the Issuer to be necessary or desirable to complete the
sale, assignment and transfer of the Existing Notes tendered hereby.
The undersigned hereby further represents that (i) any New Notes acquired
in exchange for Existing Notes tendered hereby will have been acquired in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is the undersigned, (ii) such holder or any such other person is
not engaging in, has no arrangement or understanding with any person to
participate in, and does not intend to engage in, any distribution of such New
Notes, (iii) it is not a broker-dealer tendering Existing Notes acquired
directly from the Issuer for its own account, and (iv) neither such holder nor
any such other person is an "affiliate" (an "Affiliate") as defined in Rule 405
under the Securities Act of the Issuer, or if it is such an Affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it.
The undersigned also acknowledges that the Exchange Offer is being made
based on no-action letters issued by the Staff of the Securities and Exchange
Commission (the "Commission") to third parties with respect to similar
transactions, including Exxon Capital Holding Corporation (available May 13,
1988), Morgan Stanley & Co. Incorporated (available June 5, 1991) and similar
letters, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Existing Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an Affiliate
of the Issuer) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders are not engaging
in, have no arrangement or understanding with any person to participate in, and
do not intend to engage in, any distribution of such New Notes. However, the
undersigned acknowledges that the Issuer has not sought a no-action letter with
respect to the Exchange Offer and that there can be no assurance that the Staff
of the Commission would make a similar determination with respect to the
Exchange Offer. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of New Notes (i) cannot rely on such an
interpretation by the Staff of the Commission, (ii) will not be able to validly
tender Existing Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, has no
arrangement or
5
<PAGE>
understanding with any person to participate in, and does not intend to engage
in, a distribution of New Notes. In addition, if the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Existing Notes that were acquired as a result of market-making activities or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales of
such New Notes; provided, however, that by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned may, if and only if, it would not receive freely tradeable
New Notes in the Exchange Offer or is not eligible to participate in the
Exchange Offer, elect to have its Existing Notes registered in the shelf
registration described in the Registration Rights Agreement, dated December 12,
1996, among the Issuer, the Company and BA Securities, Inc. in the form filed as
Exhibit 99.1 to the Registration Statement.
All authority conferred or agreed to be conferred by this Letter of
Transmittal and every obligation of the undersigned hereunder shall be binding
upon the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned. This
tender may be withdrawn only in accordance with the procedures set forth in the
Prospectus under the caption "Procedures for Tendering Existing
Notes--Withdrawal Rights." See Instruction 11.
Unless otherwise indicated herein under "Special Issuance Instructions,"
the undersigned hereby requests that any Existing Notes representing principal
amounts not tendered or not accepted for exchange be issued in the name(s) of
the undersigned (and, in the case of Existing Notes tendered through ATOP, by
credit to the account of DTC). Similarly, unless otherwise indicated herein
under "Special Delivery Instructions," the undersigned hereby requests that any
Existing Notes representing principal amounts not tendered or not accepted for
payment and New Notes issued in exchange for tendered Existing Notes be
delivered to the undersigned at the address shown below the undersigned's
signature(s). In the event that the "Special Issuance Instructions" box or the
"Special Delivery Instructions" box is, or both are, completed, the undersigned
hereby requests that any Existing Notes representing principal amounts not
tendered or not accepted for exchange be issued in the name(s) of, certificates
for such Existing Notes be delivered to, and the New Notes be issued in
connection with the Exchange Offer, to the person(s) at the address(es) so
indicated, and credit for Existing Notes representing principal amounts not
tendered be made to the account of DTC, as applicable. The undersigned
recognizes that the Issuer has no obligation pursuant to the "Special Issuance
Instructions" box to transfer any Existing Notes from the name of the registered
holder(s) thereof if the Issuer does not accept for exchange any of the
principal amount of such Existing Notes so tendered.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict between
the terms of the Prospectus and this Letter of Transmittal, the Prospectus shall
prevail.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
EXISTING NOTES AS SET FORTH IN SUCH BOX ABOVE.
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------- ---------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certificates for Existing Notes To be completed ONLY if certificates for Existing Notes
not exchanged and/or New Notes are to be issued in the not exchanged and/or New Notes are to be sent to someone
name of someone other than the person or persons whose other than the person or persons whose signature(s) ap-
signature(s) appear(s) on this Letter below, or if Existing pear(s) on this Letter below or to such person or persons at
Notes delivered by book-entry transfer which are not an address other than shown in the box entitled "Descrip-
accepted for exchange are to be returned by credit to an tion of Existing Notes" on this Letter above.
account maintained at the Book-Entry Transfer Facility
other than the account indicated above. Mail: New Notes and/or Existing Notes to:
Issue: New Notes and/or Existing Notes to: Name(s)_________________________________________
(Please Type or Print)
Name(s)______________________________________
(Please Type or Print) ________________________________________________
(Please Type or Print)
_____________________________________________
(Please Type or Print) Address_________________________________________
Address______________________________________
________________________________________________
(Zip Code)
_____________________________________________
(Zip Code)
_____________________________________________
(Employer Identification or Social Security Number)
Credit unexchanged Existing Notes delivered by book-entry
transfer to the Book-Entry Transfer Facility account set
forth below.
_____________________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
- ------------------------------------------------------- ---------------------------------------------------------
</TABLE>
IMPORTANT: EITHER (1) (A) THIS LETTER OF TRANSMITTAL (OR A FACSIMILE
HEREOF) TOGETHER WITH CERTIFICATES REPRESENTING EXISTING NOTES OR (B) A
BOOK-ENTRY CONFIRMATION INCLUDING BY MEANS OF AN AGENT'S MESSAGE, MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS, OR (2) THE TENDERING
HOLDER MUST COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES SET FORTH HEREIN. BY
TENDERING THROUGH ATOP, DTC PARTICIPANTS WILL EXPRESSLY ACKNOWLEDGE RECEIPT OF
THIS LETTER OF TRANSMITTAL AND AGREE TO BE BOUND BY ITS TERMS AND THE ISSUER
WILL BE ABLE TO ENFORCE SUCH AGREEMENT AGAINST SUCH DTC PARTICIPANTS.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
7
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
<S> <C>
___________________________________________________ _____________________________________ 1997
___________________________________________________ _____________________________________ 1997
___________________________________________________ _____________________________________ 1997
Signature(s) of Owner Date
</TABLE>
Area Code and Telephone Number__________________________________
If a holder is tendering any Existing Notes, this Letter of Transmittal must
be signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Existing Notes or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s)_________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity________________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Employer Identification or Social Security No.__________________________________
(Please complete Substitute Form W-9)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTIONS 3)
Signature(s) Guaranteed by an Eligible Institution:
Authorized Signature____________________________________________________________
Title___________________________________________________________________________
Name and Firm___________________________________________________________________
- --------------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. SIGNATURE GUARANTIES.
All Signatures on this Letter of Transmittal must be guaranteed by a
financial institution that is a member of the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the New York Stock
Exchange, Inc. ("NYSE") Medallion Signature Program (each of the foregoing being
referred to as an "Eligible Institution"), unless the Existing Notes tendered
hereby are tendered (i) by a registered holder of Existing Notes (or by a DTC
Participant whose name appears on a security position listing as the owner of
such Existing Notes) who has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Issuance Instructions" on
this Letter of Transmittal, or (ii) for the account of an Eligible Institution.
If the Existing Notes are registered in the name of a person other than the
signer of this Letter of Transmittal or if Existing Notes not accepted for
exchange or not tendered are to be returned to a person other than the
registered holder, then the signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution as described above. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND EXISTING NOTES.
This Letter of Transmittal is to be completed by holders of Existing
Notes to accept the Exchange Offer if: (i) tender of Existing Notes is to be
made by DTC Participants through ATOP, for which the transaction is eligible,
pursuant to the procedures set forth in the Prospectus under the caption
"Procedures for Tendering Existing Notes--Tendering Existing Notes--Notes held
through DTC"; (ii) certificates representing Existing Notes are to be physically
delivered to the Exchange Agent herewith by such holders, pursuant to the
procedures set forth in the Prospectus under the caption "Procedures for
Tendering Existing Notes--Tendering Existing Notes--Notes held by Holders"; or
(iii) tender of Existing Notes is to be made according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "Procedures
for Tendering Existing Notes--Guaranteed Delivery Procedures." NOTWITHSTANDING
THE FOREGOING, VALID ACCEPTANCE OF THE TERMS OF THE EXCHANGE OFFER MAY BE
EFFECTED BY A DTC PARTICIPANT TENDERING EXISTING NOTES THROUGH ATOP WHERE THE
EXCHANGE AGENT RECEIVES AN AGENT'S MESSAGE PRIOR TO THE EXPIRATION DATE.
ACCORDINGLY, SUCH DTC PARTICIPANT MUST ELECTRONICALLY TRANSMIT ITS ACCEPTANCE TO
DTC THROUGH ATOP, AND THEN DTC WILL EDIT AND VERIFY THE ACCEPTANCE, EXECUTE A
BOOK-ENTRY DELIVERY TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND SEND AN AGENT'S
MESSAGE TO THE EXCHANGE AGENT FOR ITS ACCEPTANCE. BY TENDERING THROUGH ATOP, DTC
PARTICIPANTS WILL EXPRESSLY ACKNOWLEDGE RECEIPT OF THIS LETTER OF TRANSMITTAL
AND AGREE TO BE BOUND BY ITS TERMS AND THE ISSUER WILL BE ABLE TO ENFORCE SUCH
AGREEMENT AGAINST SUCH DTC PARTICIPANTS.
In order to validly tender Existing Notes pursuant to the Exchange
Offer, either (i) (A) this Letter of Transmittal, or a facsimile hereof,
together with certificates representing Existing Notes, or (B) a Book-Entry
Confirmation, including by means of an Agent's Message, of the transfer into the
Exchange Agent's account at DTC of all Existing Notes delivered electronically
must be received by the Exchange Agent at its address set forth herein prior to
5:00 p.m., New York City time, on the Expiration Date, together with all other
required documents, or (ii) the tendering holder must comply with the guaranteed
delivery procedures set forth below. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If a holder or DTC Participant desires to tender Existing Notes pursuant
to the Exchange Offer and time will not permit this Letter of Transmittal,
certificates representing such Existing Notes and all other required documents
to reach the Exchange Agent, or the procedures for book-entry transfer,
including those with respect to tenders through ATOP, cannot be completed, prior
to the Expiration Date, such holder or DTC Participant, as the case may be, must
tender such Existing Notes pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "Procedures for Tendering Existing
Notes--Guaranteed Delivery Procedures." Pursuant to such procedures (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form provided by the Issuer, must be received by the Exchange Agent either by
hand delivery, mail, facsimile transmission or overnight courier, prior to the
Expiration Date; and (iii) within three NYSE trading days after the date of the
execution of the Notice of Guaranteed Delivery, (A) holders must deliver to the
Exchange Agent a properly completed and
9
<PAGE>
duly executed Letter of Transmittal, as well as the certificate(s) representing
all tendered Existing Notes in proper form for transfer, and all other documents
required by the Letter of Transmittal, or (B) DTC Participants must effect a
Book-Entry Confirmation, including through ATOP by means of an Agent's Message,
of the transfer of such Existing Notes into the Exchange Agent's account at DTC
as set forth in the Prospectus.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE EXISTING NOTES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OR AGENT'S MESSAGE TRANSMITTED THROUGH ATOP, IS AT THE OPTION AND
RISK OF THE TENDERING HOLDER. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed for such documents to reach the Exchange Agent
prior to the Expiration Date. Except as otherwise provided in this Instruction
2, delivery will be deemed made only when actually received by the Exchange
Agent.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of this Letter of Transmittal (or a facsimile
hereof), waive any right to receive any notice of the acceptance of their
Existing Notes for exchange.
3. INADEQUATE SPACE.
If the space provided herein is inadequate, the certificate numbers
and/or the principal amount represented by Existing Notes should be listed on a
separate signed schedule attached hereto.
4. PARTIAL TENDERS.
Tenders of Existing Notes will be accepted only in principal amounts
equal to $1,000 or integral multiples thereof. In the case of a partial tender
of Existing Notes, as soon as practicable after the Expiration Date, new
certificates for the remainder of the Existing Notes that were evidenced by such
holder's old certificates will be issued in the name of and sent to such holder,
unless otherwise provided in the appropriate "special instruction" box or boxes
on this Letter of Transmittal. Unless otherwise indicated in the table entitled
"Description of Existing Notes" under the column heading "Principal Amount
Tendered," the entire principal amount that is represented by Existing Notes
delivered to the Exchange Agent will be deemed to have been tendered.
5. SIGNATURES ON LETTER OF TRANSMITTAL; INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder of the
Existing Notes tendered hereby, the signature must correspond exactly with the
name as written on the face of the certificates without alteration, enlargement
or any change whatsoever. If this Letter of Transmittal is signed by a DTC
Participant whose name is shown as the owner of the Existing Notes tendered
hereby, the signature must correspond with the name shown on the security
position listing as the owner of the Existing Notes.
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Existing Notes are registered in different names on several certificates, it
will be necessary to complete, sign and submit as many separate copies of the
Letter of Transmittal as there are different registrations or certificates.
When this Letter of Transmittal is signed by the registered holder or
holders of the Existing Notes specified herein and tendered hereby, no
endorsements of Existing Notes or separate instruments of transfer are required.
If, however, the New Notes are to be issued, or any tendered Existing Notes are
to be reissued, to a person other than the registered holder, then signatures on
such Existing Notes or instruments of transfer are required and must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of any certificate(s) specified herein, such
certificate(s) must be endorsed or accompanied by appropriate bond powers, in
either case signed exactly as the name or names of the registered holder or
holders appear(s) on the certificate(s) and signatures on such certificate(s)
must be guaranteed by an Eligible Institution.
10
<PAGE>
If this Letter of Transmittal or any certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
agents, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Issuer, proper evidence satisfactory to the Issuer of their
authority to so act must be submitted.
IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED
HOLDER(S) OF THE EXISTING NOTES LISTED, THE EXISTING NOTES MUST BE ENDORSED OR
ACCOMPANIED BY AN APPROPRIATE WRITTEN INSTRUMENT OR INSTRUMENTS OF TRANSFER, IN
EITHER CASE SIGNED EXACTLY AS THE NAME OR NAMES OF THE REGISTERED HOLDER(S)
APPEAR ON THE EXISTING NOTES AND SIGNATURE(S) ON SUCH EXISTING NOTES OR
INSTRUMENTS OF TRANSFER ARE REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, UNLESS THE SIGNATURE IS THAT OF AN ELIGIBLE INSTITUTION.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Existing Notes should indicate in the applicable
box the name and address to which New Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Existing Notes not exchanged are
to be issued or sent, if different from the name or address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification or social security number of the person named must
also be indicated. Holders tendering Existing Notes by book-entry transfer may
request that Existing Notes not exchanged be credited to such account maintained
at DTC as such holder may designate hereon. If no such instructions are given,
such Existing Notes exchanged will be returned to the name and address of the
person signing this Letter of Transmittal.
7. TRANSFER TAXES.
Holders who tender their Existing Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that holders
who instruct the Issuer to register New Notes in the name of, or request that
Existing Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes specified in this Letter
of Transmittal.
8. WAIVER OF CONDITIONS.
The Issuer reserves the absolute right to waive satisfaction of any or
all conditions enumerated herein or in the Prospectus.
9. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Existing Notes, by execution of this Letter
of Transmittal, shall waive the right to receive notice of the acceptance of
their Existing Notes for exchange.
Neither the Issuer, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Existing Notes nor shall any of them incur any liability for failure to give any
such notice.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES.
Any holder whose Existing Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
11
<PAGE>
11. WITHDRAWAL OF TENDERS.
Tenders of Existing Notes may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
For a withdrawal of a tender of Existing Notes to be effective, a
letter, telex, telegram or facsimile transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth above prior to 5:00
p.m., New York City time, on the Expiration Date. Any such notice of withdrawal
by a DTC Participant must contain the name and number of the DTC Participant,
the principal amount due at the stated maturity of Existing Notes to which such
withdrawal related and the signature of the DTC Participant. Any such notice of
withdrawal by a holder of Existing Notes must (i) specify the name of the person
who tendered the Existing Notes to be withdrawn, (ii) contain a description of
the Existing Notes to be withdrawn (including the certificate number or numbers
and principal amount due at the stated maturity of such Existing Notes) and
(iii) be signed by the holder of such Existing Notes in the same manner as the
original signature on this Letter of Transmittal (including any required
signature guaranties), or be accompanied by (x) documents of transfer in a form
acceptable to the Issuer, in its sole discretion and (y) a properly completed
irrevocable proxy that authorized such person to effect such revocation on
behalf of such holder. Any Existing Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer. Any
Existing Notes which have been tendered for exchange but which are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer. Properly withdrawn Existing Notes may be
retendered by following the procedures described above at any time on or prior
to 5:00 p.m., New York City time, on the Expiration Date.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
IMPORTANT: IN ORDER TO VALIDLY TENDER EXISTING NOTES PURSUANT TO THE
EXCHANGE OFFER, EITHER (I) (A) THIS LETTER OF TRANSMITTAL (OR A FACSIMILE
HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING EXISTING NOTES, OR (II) A
BOOK-ENTRY CONFIRMATION, INCLUDING BY MEANS OF AN AGENT'S MESSAGE, MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE, TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS, OR (II) THE
TENDERING HOLDER MUST COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES SET FORTH
HEREIN.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of New Notes is required
to provide the Issuer (as payor) with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise establish a
basis for exemption from backup withholding to prevent backup withholding on
each payment in respect of interest thereon or gross proceeds thereof. If a
holder of New Notes is an individual, the TIN is such holder's social security
number. If the Issuer is not provided with the correct TIN, the holder of
Existing Notes and the holder of New Notes may be subject to a $50 penalty
imposed by the Internal Revenue Service ("IRS"). Accordingly, each prospective
holder of New Notes to be issued pursuant to Special Issuance Instructions
should complete the attached Substitute Form W-9.
Certain holders of New Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt prospective holders of New Notes should indicate
their exempt status on Substitute Form W-9. A foreign individual may qualify as
an exempt recipient by submitting to the Issuer, through the Exchange Agent, a
properly completed IRS Form W-8 (which the Exchange Agent will provide upon
request) signed under penalty of perjury, attesting to the holder's exempt
status. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
12
<PAGE>
If backup withholding applies, the Issuer is required to withhold 31% of
any payment made to the holder of New Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are to be made with
respect to New Notes, each prospective holder of New Notes to be issued pursuant
to Special Issuance Instructions should provide the Issuer, through the Exchange
Agent, with either: (i) such prospective holder's correct TIN by completing the
form below certifying that the TIN provided on Substitute Form W-9 is correct
(or that such prospective holder is awaiting a TIN) and that (A) such
prospective holder has not been notified by the Internal Revenue Service that he
or she is subject to backup withholding as a result of a failure to report all
interest or dividends or (B) the Internal Revenue Service has notified such
prospective holder that he or she is no longer subject to backup withholding; or
(ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective holder of New Notes is required to give the Exchange
Agent the TIN (e.g., social security number or employer identification number)
of the prospective record owner of the New Notes. If the New Notes will be held
in more than one name or are not held in the name of the actual owner, consult
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidance regarding which number to report.
13
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: USI AMERICAN HOLDINGS, INC.
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Part 1 -- PLEASE PROVIDE YOUR TIN IN THE Social Security Number
BOX AT RIGHT | |
AND CERTIFY BY SIGNING AND | |
DATING BELOW
OR
Employer Identification Number
SUBSTITUTE |
|
--------------------------------------------------------------------------------------
Form W-9
--------------------------------------------------------------------------------------
Part 2 -- Certification -- Under Penalties of Perjury, I certify that (1) The number
shown on this form is my current taxpayer identification number (or I am waiting for a
number to be issued to me) and (2) I am not subject to backup withholding either because
I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or dividends,
or the IRS has notified me that I am no longer subject to backup withholding.
--------------------------------------------------------------------------------------
----------------------------------------------------
Part 3 --
Awaiting TIN -> |_|
----------------------------------------------------
Department of the Treasury, Certificate Instructions -- You must cross out item (2) in Part 2 above if you have been
Internal Revenue Service notified by the IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being notified by the IRS
that you are subject to backup withholding you receive another notification from the IRS
stating that you are no longer subject to backup withholding, do not cross out item (2).
Payer's Request for Taxpayer SIGNATURE -> DATE ->
------------------------------- -------------------------
Identification Number (TIN)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER
HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (B)
I INTEND TO MAIL OR DELIVER SUCH AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND
THAT, IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO THE PAYER WITHIN
SIXTY (60) DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE
WITHHELD UNTIL I PROVIDE SUCH A NUMBER.
________________________________________ ____________________________, 1997
SIGNATURE DATE
- --------------------------------------------------------------------------------
14
USI AMERICAN HOLDINGS, INC.
OFFER TO EXCHANGE ANY AND ALL OUTSTANDING
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES A,
WHICH ARE NOT REGISTERED UNDER THE SECURITIES ACT,
FOR
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES B,
WHICH ARE REGISTERED UNDER THE SECURITIES ACT
EACH SERIES UNCONDITIONALLY GUARANTEED BY
U.S. INDUSTRIES, INC.
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees;
USI American Holdings, Inc. (the "Issuer") is offering, upon and
subject to the terms and conditions set forth in the Prospectus, dated ,
1997 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") $1,000 principal amount of its
7 1/4% Senior Notes due December 1, 2006, Series B (the "New Notes"), which are
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for each $1,000 principal amount of its outstanding 7 1/4% Senior Notes due
December 1, 2006, Series A (the "Existing Notes"; and together with the New
Notes, the "Notes"), which are not registered under the Securities Act. The
Notes are unconditionally guaranteed by the Issuer's parent, U.S. Industries,
Inc. (the "Company"). The Exchange Offer is being made in order to satisfy
certain obligations of the Issuer and the Company contained in the Registration
Rights Agreement, dated December 12, 1996, among the Issuer, the Company and BA
Securities, Inc.
We are requesting that you contact your clients for whom you hold
Existing Notes regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Existing Notes registered in your
name or in the name of your nominee, or who hold Existing Notes registered in
their own names, we are enclosing the following documents:
1. Prospectus dated , 1997;
2. The Letter of Transmittal for your use and for the information
of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if certificates for Existing Notes are not
immediately available or time will not permit all required
documents to reach the Exchange Agent prior to the Expiration
Date (as defined below) or if the procedure for book-entry
transfer, including through the Automated Tender Offer Program
("ATOP") of the Depository Trust Company ("DTC"), cannot be
completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Existing Notes registered in your name or the
name or your nominee, with space provided for obtaining such
clients' instructions with regard to the Exchange Offer; and
5. Guidelines for Certification of Taxpayer Identification Number
of Substitute Form W-9.
<PAGE>
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City time, on , 1997, unless extended by the Issuer (the
"Expiration Date"). The Existing Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time before 5:00 pm., New York City time, on the
Expiration Date.
To participate in the Exchange Offer, a duly executed and property
completed Letter of Transmittal (or facsimile thereon), with any required
signature guaranties and any other required documents, should be sent to the
Exchange Agent and certificates representing the Existing Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus. NOTWITHSTANDING THE
FOREGOING, A PARTICIPANT IN DTC (A "DTC PARTICIPANT") MAY VALIDLY ACCEPT THE
TERMS OF THE EXCHANGE OFFER BY TENDERING EXISTING NOTES THROUGH ATOP PRIOR TO
THE EXPIRATION DATE. ACCORDINGLY, SUCH DTC PARTICIPANT MUST ELECTRONICALLY
TRANSMIT ITS ACCEPTANCE TO DTC THROUGH ATOP, AND THEN DTC WILL EDIT AND VERIFY
THE ACCEPTANCE, EXECUTE A BOOK-ENTRY DELIVERY TO THE EXCHANGE AGENT'S ACCOUNT AT
DTC AND SEND AN AGENT'S MESSAGE TO THE EXCHANGE AGENT FOR ITS ACCEPTANCE. BY
TENDERING THROUGH ATOP, SUCH DTC PARTICIPANT WILL EXPRESSLY ACKNOWLEDGE RECEIPT
OF THIS LETTER OF TRANSMITTAL AND AGREE TO BE BOUND BY ITS TERMS AND THE ISSUER
WILL BE ABLE TO ENFORCE SUCH AGREEMENT AGAINST SUCH DTC PARTICIPANT.
If holders of Existing Notes wish to tender, but it is impracticable
for them to forward their certificates for Existing Notes prior to the
expiration of the Exchange Offer or to comply with the book-entry transfer
procedures, including those with respect to tenders through ATOP, on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
described in the Prospectus under the caption "Procedures for Tendering Existing
Notes--Guaranteed Delivery Procedures."
Holders who tender their Existing Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, expect that holders
who instruct the Issuer to register New Notes in the name of, or request that
Existing Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
Any inquiries you may have with respect to the Exchange Offer, or
requests for additional copies of the enclosed materials, should be directed to
PNC Bank, National Association, the Exchange Agent for the Existing Notes, at
its address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
USI AMERICAN HOLDINGS, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE ISSUER OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
USI AMERICAN HOLDINGS, INC.
OFFER TO EXCHANGE ANY AND ALL OUTSTANDING
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES A,
WHICH ARE NOT REGISTERED UNDER THE SECURITIES ACT,
FOR
7 1/4% SENIOR NOTES DUE DECEMBER 1, 2006, SERIES B,
WHICH ARE REGISTERED UNDER THE SECURITIES ACT
EACH SERIES UNCONDITIONALLY GUARANTEED BY
U.S. INDUSTRIES, INC.
To Our Clients:
Enclosed for your consideration is a Prospectus, dated , 1997
(the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of USI American
Holdings, Inc. (the "Issuer") to exchange $1,000 principal amount of its 7 1/4%
Senior Notes due December 1, 2006, Series B (the "New Notes"), which are
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for each $1,000 principal amount of its 7 1/4% Senior Notes due December 1,
2006, Series A (the "Existing Notes"; and together with the New Notes, the
"Notes"), which are not registered under the Securities Act, upon the terms and
subject to the conditions described in the Prospectus. The Notes are
unconditionally guaranteed by the Issuer's parent, U.S. Industries, Inc. (the
"Company"). The Exchange Offer is being made in order to satisfy certain
obligations of the Issuer and the Company contained in the Registration Rights
Agreement, dated December 12, 1996, among the Issuer, the Company and BA
Securities Inc.
This material is being forwarded to you as the beneficial owner of the
Existing Notes carried by us in your account but not registered in your name. A
tender of such Existing Notes may only be made by us as the holder of record and
pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf the Existing Notes held by us for your account, pursuant
to the terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Existing Notes on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 p.m., New York City time, on , 1997, unless extended by the Issuer
(the "Expiration Date"). Any Existing Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time before 5:00 p.m., New York City time, on the
Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Existing Notes.
2. The Exchange Offer is subject to certain conditions set forth
in the Prospectus in the section captioned "The Exchange
Offer--Conditions."
3. Holders who tender their Existing Notes for exchange will not
be obligated to pay any transfer taxes in connection
therewith, except that holders who instruct the Issuer to
register New Notes in the name of, or request that Existing
Notes not be tendered or not accepted in the Exchange Offer be
returned to, a person other than the registered tendering
holder will be responsible for the payment of any applicable
transfer tax thereon.
1
<PAGE>
4. The Exchange Offer expires at 5:00 p.m., New York City time,
on , 1997, unless extended by the Issuer.
If you wish to have us tender your Existing Notes, please so instruct
us by completing, executing and returning to us the instruction form on the back
of this letter. The Letter of Transmittal is furnished to you for information
only and may not be used directly by you to tender Existing Notes.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by USI American
Holdings, Inc., with respect to its Existing Notes.
This will instruct you to tender the Existing Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
Please tender the Existing Notes held by you for my account as
indicated below:
<TABLE>
<S> <C>
AGGREGATE PRINCIPAL AMOUNT OF EXISTING NOTES
--------------------------------------------
7 1/4% Senior Notes due December 1, 2006,
Series A (the "Existing Notes") . . . ______________________________________________
|_| Please do not tender any Existing
Notes held by you for my account
Dated:____________________, 1997
______________________________________________
______________________________________________
SIGNATURE(S)
______________________________________________
______________________________________________
______________________________________________
PLEASE PRINT NAME(S) HERE
______________________________________________
ADDRESS(ES)
______________________________________________
AREA CODE AND TELEPHONE NUMBER
______________________________________________
TAX IDENTIFICATION OR SOCIAL SECURITY NO(S).
</TABLE>
None of the Existing Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Existing Notes held by
us for your account.
3
