<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 7, 1996)
$400,000,000 LOGO
Texas Instruments Incorporated
$200,000,000 6 3/4% NOTES DUE 1999
$200,000,000 6 7/8% NOTES DUE 2000
------------------------
Interest payable January 15 and July 15
------------------------
THE 6 3/4% NOTES DUE 1999 WILL MATURE ON JULY 15, 1999 AND THE 6 7/8% NOTES DUE
2000 (TOGETHER WITH THE 6 3/4% NOTES DUE 1999, THE "NOTES") WILL MATURE ON
JULY 15, 2000. THE NOTES WILL NOT BE REDEEMABLE PRIOR TO THEIR RESPECTIVE
MATURITIES AND WILL NOT BE SUBJECT TO ANY SINKING FUND. THE NOTES WILL
BE REPRESENTED BY REGISTERED GLOBAL SECURITIES REGISTERED IN THE NAME
OF THE DEPOSITORY TRUST COMPANY ("DTC") OR ITS NOMINEE. BENEFICIAL
INTERESTS IN THE REGISTERED GLOBAL SECURITIES WILL BE SHOWN ON,
AND TRANSFERS THEREOF WILL BE EFFECTED THROUGH, RECORDS
MAINTAINED BY DTC OR ITS PARTICIPANTS. EXCEPT AS DESCRIBED
HEREIN, NOTES IN DEFINITIVE FORM WILL NOT BE ISSUED. SEE
"DESCRIPTION OF THE NOTES."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
6 3/4% NOTES DUE 1999 -- PRICE 99.851% AND ACCRUED INTEREST
6 7/8% NOTES DUE 2000 -- PRICE 99.798% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------- --------------- -------------
<S> <C> <C> <C>
Per 6 3/4% Note Due 1999................. 99.851% .350% 99.501%
Total.......................... $199,702,000 $700,000 $199,002,000
Per 6 7/8% Note Due 2000................. 99.798% .450% 99.348%
Total.......................... $199,596,000 $900,000 $198,696,000
</TABLE>
- ------------
(1) Plus accrued interest from July 15, 1996.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933.
(3) Before deducting expenses of the Company estimated to be $450,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein, and subject to approval of certain legal matters
by Davis Polk & Wardwell, counsel for the Underwriters. It is expected that
delivery of the Notes will be made on or about July 26, 1996, through the
book-entry facilities of The Depository Trust Company against payment therefor
in immediately available funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
CITICORP SECURITIES, INC.
GOLDMAN, SACHS & CO.
July 24, 1996
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Notes offered
hereby will be added to the Company's general funds and used for general
corporate purposes, including repayment of interim indebtedness of $340 million
incurred in connection with the acquisition on July 9, 1996 of Silicon Systems,
Inc., a supplier of components to the mass storage industry.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges for each
of the years ended December 31, 1991 through 1995 and for the six months ended
June 30, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS
-------------------------------------- ENDED
1991 1992 1993 1994 1995 JUNE 30, 1996
---- ---- ---- ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1).......................... (2) 4.8x 8.5x 11.6x 15.6x 6.1x
</TABLE>
- ---------------
(1) For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income (loss) before provision for income taxes,
interest expense, amortization of capitalized interest and that portion of
rental and lease expense which is representative of interest; and "fixed
charges" consist of interest incurred (expensed and capitalized) and that
portion of rental and lease expense which is representative of interest.
(2) Not meaningful because of losses for 1991. The coverage deficiency (amount
by which "fixed charges" exceed "earnings") for 1991 was $309 million.
DESCRIPTION OF THE NOTES
GENERAL
The 6 3/4% Notes Due 1999 and the 6 7/8% Notes Due 2000 each constitute a
series ("Series") of Debt Securities described in the accompanying Prospectus.
Each Series of Notes will bear interest from July 15, 1996 at the related
rate of interest stated on the cover page of this Prospectus Supplement. Each
Series of Notes will be limited to $200,000,000 aggregate principal amount. The
6 3/4% Notes Due 1999 will mature on July 15, 1999 and the 6 7/8% Notes Due 2000
will mature on July 15, 2000.
Interest will be payable semiannually on January 15 and July 15 to the
persons in whose names the Notes are registered at the close of business on the
January 1 or July 1 preceding such January 15 or July 15, as the case may be,
and unless other arrangements are made, will be paid by checks mailed to such
persons at their registered addresses. All payments of principal and interest
will be payable in U.S. dollars.
The Notes are not redeemable prior to maturity and are not subject to any
sinking fund provisions.
DEFEASANCE AND DISCHARGE
The defeasance provision summarized in the accompanying Prospectus will not
apply to the Notes.
S-2
<PAGE> 3
BOOK-ENTRY SYSTEM
Each Series of Notes initially will be represented by one or more
registered global securities (the "Registered Global Securities") deposited with
DTC and registered in the name of the nominee of DTC. Except as set forth below,
each Series of Notes will be available for purchase in denominations of $1,000
and integral multiples thereof in book-entry form only. The term "Depositary"
refers to DTC or any successor depositary.
DTC has advised the Company and the Underwriters named herein as follows:
DTC is a limited-purpose trust company organized under the laws of the State of
New York, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities of its participating
organizations ("DTC Participants") and to facilitate the clearance and
settlement of securities transactions between DTC Participants through
electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of certificates. DTC Participants
include securities brokers and dealers (including the Underwriters), brokers,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly ("Indirect DTC Participants").
Unless and until the Registered Global Securities are exchanged in whole or
in part for individual certificates evidencing the Notes represented thereby,
such Registered Global Securities may not be transferred except as a whole by
the Depositary for such Registered Global Securities to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee of such
Depositary to a successor Depositary or any nominee of such successor
Depositary.
Neither the Company, the Trustee, any paying agent nor the registrar for
the Notes will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Notes represented by such Registered Global Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Settlement for the Notes will be made by the Underwriters in immediately
available or same-day funds. Secondary trading on long-term notes of corporate
issuers is generally settled in clearinghouse or next-day funds. In contrast,
the Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Notes will therefore be
required by the Depositary to settle in same-day funds. No assurance can be
given as to the effect, if any, of settlement in same-day funds on trading
activity in the Notes.
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the Underwriters named below have severally
agreed to purchase, and the Company has agreed to sell to them, severally, the
respective principal amounts of Notes set forth opposite their respective names
below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
---------------------------------------
6 3/4% NOTES DUE 6 7/8% NOTES DUE
NAME 1999 2000
------------------ ------------------
<S> <C> <C>
Morgan Stanley & Co. Incorporated................. $ 68,000,000 $ 68,000,000
Citicorp Securities, Inc.......................... 66,000,000 66,000,000
Goldman, Sachs & Co............................... 66,000,000 66,000,000
------------ ------------
Total................................... $200,000,000 $200,000,000
============ ============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of each
Series of Notes if any are taken.
S-3
<PAGE> 4
The Company has been advised by the Underwriters that they propose to offer
part of the 6 3/4% Notes Due 1999 directly to the public at the public offering
price set forth on the cover page of this Prospectus Supplement and part to
certain dealers at a price that represents a concession not in excess of .20% of
the principal amount under the public offering price. Any Underwriter may allow,
and such dealers may reallow, a concession not in excess of .075% of the
principal amount to certain other dealers. After the initial offering of the
6 3/4% Notes Due 1999, the offering price and other selling terms may from time
to time be varied by the Underwriters.
The Company has been advised by the Underwriters that they propose to offer
part of the 6 7/8% Notes Due 2000 directly to the public at the public offering
price set forth on the cover page of this Prospectus Supplement and part to
certain dealers at a price that represents a concession not in excess of .25% of
the principal amount under the public offering price. Any Underwriter may allow,
and such dealers may reallow, a concession not in excess of .075% of the
principal amount to certain other dealers. After the initial offering of the
6 7/8% Notes Due 2000, the offering price and other selling terms may from time
to time be varied by the Underwriters.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
Certain of the Underwriters or their affiliates have provided from time to time,
and expect to provide in the future, investment or commercial banking services
to the Company and its affiliates, for which such Underwriters or their
affiliates have received and will receive customary fees and commissions. The
Underwriters have agreed to pay or reimburse certain expenses of the Company
relating to the offering of the Notes.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
S-4
<PAGE> 5
PROSPECTUS [TEXAS INSTRUMENTS LOGO]
TEXAS INSTRUMENTS INCORPORATED
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
---------------------
Texas Instruments Incorporated (the "Company") may from time to time offer,
together or separately, its (i) debt securities (the "Debt Securities"), (ii)
shares of preferred stock, par value $25.00 per share (the "Preferred Stock"),
which may be issued in the form of Depositary Shares (as defined below)
evidenced by Depositary Receipts (as defined below), and (iii) shares of common
stock, par value $1.00 per share (the "Common Stock"). The Debt Securities and
Preferred Stock may be convertible into Common Stock of the Company.
The Debt Securities, Preferred Stock and Common Stock are collectively
called the "Securities." The Securities offered pursuant to this Prospectus may
be issued in one or more series or issuances and will be limited to the initial
public offering price of $500,000,000 (or its equivalent in one or more foreign
currencies, currency units or composite currencies). Specific terms of the
securities in respect of which this Prospectus is being delivered ("Offered
Securities") will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Offered Securities, the initial price thereof and the net proceeds from the sale
thereof. The Prospectus Supplement will set forth with regard to the particular
Offered Securities, without limitation, the following: (i) in the case of the
Debt Securities, the specific designation, aggregate principal amount,
authorized denomination, maturity, rate (which may be fixed or variable) or
method of calculation of interest and dates for payment thereof, and any
exchangeability, conversion, redemption, prepayment or sinking fund provisions
and any listing on a securities exchange, (ii) in the case of Preferred Stock,
the designation, number of shares or fractional interests therein, liquidation
preference per security, initial public offering price, dividend rate (or method
of calculation thereof), dates on which dividends shall be payable and dates
from which dividends shall accrue, any voting rights, any redemption, conversion
or exchange provisions, any other rights, preferences, privileges, limitations,
and restrictions relating to the Preferred Stock, and any listing on a
securities exchange, and (iii) in the case of Common Stock, the number of shares
offered, the initial offering price, market price and dividend information.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers, through underwriters or through remarketing
firms. Such agents or underwriters may act alone or with other agents or
underwriters. See "Plan of Distribution." Any such agents, dealers, underwriters
or remarketing firms will be set forth in a Prospectus Supplement. If an agent
of the Company or a dealer, underwriter or remarketing firm is involved in the
offering of the Offered Securities, the agent's commission, dealer's purchase
price, underwriter's discount, remarketing firm's compensation and net proceeds
to the Company will be set forth in, or may be calculated from, the Prospectus
Supplement. Any underwriters, dealers, agents or remarketing firms participating
in the offering may be deemed "underwriters" within the meaning of the
Securities Act of 1933.
The Debt Securities, when issued, will be unsecured and will rank on a
parity with any other unsecured and unsubordinated indebtedness of the Company.
As of March 31, 1996, the total amount of such unsecured and unsubordinated
indebtedness of the Company was $896,000,000. The Prospectus Supplement will set
forth the amount of any indebtedness that is senior to the Debt Securities.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
---------------------
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 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 June 7, 1996.
<PAGE> 6
IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS FOR SUCH OFFERING MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE OFFERED SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, AGENT, DEALER OR REMARKETING
FIRM. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE THEREOF.
---------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The registration
statement of which this Prospectus forms a part, as well as reports, proxy
statements and other information filed by the Company, may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Company's Common Stock is listed on the New
York Stock Exchange and reports and other information herein and therein
concerning the Company can also be inspected at the office of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. Such material may also be
accessed electronically by means of the Commission's homepage on the Internet at
http://www.sec.gov.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Offered Securities. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
or incorporated by reference herein are not necessarily complete, and in each
instance reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
2
<PAGE> 7
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act and are hereby incorporated herein by reference and
made a part of this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
(c) The Company's Current Reports on Form 8-K dated January 2, 1996,
January 18, 1996, January 24, 1996, January 25, 1996, February 5, 1996,
March 6, 1996 and May 30, 1996.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities shall
be deemed to be incorporated herein by reference and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statements so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this Prospectus
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
documents should be directed to Texas Instruments Incorporated, 13500 North
Central Expressway, Post Office Box 655474, Dallas, Texas 75265-5474, Attention:
Manager of Investor Relations, telephone (214) 995-3773.
TEXAS INSTRUMENTS INCORPORATED
Texas Instruments Incorporated (the "Company") was incorporated in the
State of Delaware in 1938, and has its principal executive offices in Dallas,
Texas. The Company is engaged in the development, manufacture and sale of a
variety of products in the electrical and electronics industry for industrial,
government and consumer markets. These products consist of components, defense
electronics and digital products. The Company also produces metallurgical
materials. The Company's business is based principally on its broad
semiconductor technology and application of this technology to selected
electronic end-equipment markets.
The mailing address of the Company's principal executive offices is Post
Office Box 655474, Dallas, Texas 75265-5474, and its telephone number is (214)
995-2551.
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Offered
Securities will be added to the Company's general funds and used for general
corporate purposes, including possible redemption or purchase of existing debt
securities of the Company.
3
<PAGE> 8
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table shows the ratio of earnings to fixed charges and the
ratio of earnings to combined fixed charges and preferred stock dividends for
each of the years ended December 31, 1991 through 1995 and for the three months
ended March 31, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS
------------------------------------------ ENDED
1991 1992 1993 1994 1995 MARCH 31, 1996
---- ---- ---- ----- ----- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1).................... (2) 4.8x 8.5x 11.6x 15.6x 9.4x
Ratio of earnings to combined
fixed charges and preferred
stock dividends(1)............ (3) 3.1x 6.5x 11.6x 15.6x 9.4x
</TABLE>
- ---------------
(1) For the purpose of computing the above ratios, "earnings" consist of income
(loss) before provision for income taxes, interest expense, amortization of
capitalized interest and that portion of rental and lease expense which is
representative of interest; "fixed charges" consist of interest incurred
(expensed and capitalized) and that portion of rental and lease expense
which is representative of interest; and "preferred stock dividends" are
calculated by increasing preferred stock dividends to an amount representing
the pre-tax earnings which would be required to cover such dividend
requirements. No shares of Preferred Stock have been issued or outstanding
since the end of 1993.
(2) Not meaningful because of losses for 1991. The coverage deficiency (amount
by which "fixed charges" exceed "earnings") for 1991 was $309 million.
(3) Not meaningful because of losses for 1991. The coverage deficiency (amount
by which "combined fixed charges and preferred stock dividends" exceed
"earnings") for 1991 was $343 million.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued in one or more series under an
Indenture dated as of July 15, 1996 (the "Indenture") between the Company and
Citibank, N.A., as Trustee (the "Trustee"). The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture. The numerical references below are
to provisions of the Indenture. Whenever a defined term is indicated, the
definition thereof is contained in the Indenture.
GENERAL
The Indenture does not limit the amount of debentures, notes or other
evidences of indebtedness which may be issued thereunder (such securities issued
under the Indenture being herein referred to as "Debt Securities"). The
Indenture provides that Debt Securities may be issued from time to time in one
or more series and may be denominated and payable in United States dollars or,
at the option of the Company, in foreign currencies or units based on or
relating to foreign currencies, including European Currency Units ("ECUs"). The
Debt Securities will be unsecured and will rank on a parity with any other
unsecured and unsubordinated obligations of the Company. Thus, the Company will
not issue any unsecured indebtedness which is senior to the Debt Securities. As
of March 31, 1996, the Company had no long-term indebtedness outstanding that is
secured by any of its assets. If the Company, however, issues indebtedness
secured by any of its assets, such secured indebtedness generally will be
senior, with respect to such assets, to the Offered Debt Securities. Except as
may be described in the Prospectus Supplement relating to a specific series of
Debt Securities, the Indenture does not contain any covenants or provisions that
may afford holders of Debt Securities protection in the event of a highly
leveraged transaction.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities (to the extent such terms are applicable to such
Debt Securities): (i) designation, aggregate principal amount,
4
<PAGE> 9
purchase price and denomination; (ii) any rights of the holders of the Offered
Debt Securities to convert or exchange such Debt Securities and, if so, the
securities or rights of the Company into which such Debt Securities are
convertible or exchangeable, the terms and conditions upon which such conversion
or exchange will be effected, including the initial conversion or exchange price
or rate, the conversion or exchange period and any other related provisions;
(iii) currency or units based on or relating to currencies in which such Debt
Securities are denominated and/or in which principal (and premium, if any)
and/or any interest will or may be payable; (iv) any index used to determine the
amount of payments of principal of and premium, if any, and interest on the
Offered Debt Securities; (v) any date of maturity; (vi) interest rate or rates
(or method by which such rate will be determined), if any; (vii) the dates on
which any such interest will be payable; (viii) the place or places where the
principal of and interest, if any, on the Offered Debt Securities will be
payable; (ix) any redemption or sinking fund provisions; (x) whether the Offered
Debt Securities will be issuable in registered form or bearer form or both and,
if Offered Debt Securities in bearer form are issuable, restrictions applicable
to the exchange of one form for another and to the offer, sale and delivery of
Offered Debt Securities in bearer form; (xi) whether the Offered Debt Securities
will be represented by a single permanent global security or a temporary global
security; (xii) whether and under what circumstances the Company will pay
additional amounts on Offered Debt Securities held by a person who is not a U.S.
person (as defined in the Prospectus Supplement) in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether the
Company will have the option to redeem such Debt Securities rather than pay such
additional amounts; and (xiii) any other specific terms of the Offered Debt
Securities, including any terms which may be required by or advisable under
applicable laws or regulations.
Debt Securities may be presented for conversion or exchange, and registered
Debt Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Debt Securities and the Prospectus
Supplement. Such services will be provided without charge, other than any tax or
other governmental charge payable in connection therewith, but subject to the
limitations provided in the Indenture. Debt Securities in bearer form and the
coupons, if any, appertaining thereto will be transferable by delivery.
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities (bearing either no interest or bearing interest at a rate
which at the time of issuance is below the prevailing market rate) to be sold at
a substantial discount below their stated principal amount. Any special federal
income tax and other considerations applicable to such Original Issue Discount
Securities are described in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security") that
will be deposited with a depositary (a "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series. In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole for Debt Securities in definitive registered form, a
Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
The Company anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Registered Global Security to the accounts of persons that
have accounts with such Depositary ("Participants"). The accounts to be credited
shall be designated by any underwriters or
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agents participating in the distribution of such Debt Securities. Ownership of
beneficial interests in a Registered Global Security will be limited to
Participants or persons that may hold interests through Participants. Ownership
of beneficial interests in such Registered Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Registered Global Security (with respect to interests
of Participants) or by Participants or persons that hold through Participants
(with respect to interests of persons other than Participants).
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the Debt
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such Debt
Securities in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
the Company, the Trustee or any paying agent for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Registered
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by Participants to
owners of beneficial interests in such Registered Global Security held through
such Participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names" and will be the responsibility of such
Participants.
If the Depositary for any Debt Security represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary and a
successor Depositary is not appointed by the Company within 90 days, the Company
will issue such Debt Securities in definitive form in exchange for such
Registered Global Security. In addition, the Company may at any time and in its
sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Registered Global Security or Securities representing such Debt Securities.
CERTAIN COVENANTS OF THE COMPANY
The following covenants apply to the Offered Debt Securities unless the
Prospectus Supplement indicates otherwise.
Certain Definitions. The term "Attributable Debt" in respect of a sale and
leaseback transaction means, at the time of determination, the present value
(discounted at the interest rate implicit in the lease or, if it is not
practicable to determine such rate, then at the Company's incremental borrowing
rate determined in accordance with generally accepted accounting principles) of
the obligation of the lessee for net rental payments during the remaining term
of any lease. (Section 3.7)
The term "Consolidated Net Tangible Assets" means, at any date, the total
assets appearing on the audited annual consolidated balance sheet of the Company
and its subsidiaries for the Company's most recently completed fiscal year,
prepared in accordance with generally accepted accounting principles, less (a)
all current liabilities as shown on such balance sheet, and (b) intangible
assets. (Section 1.1)
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The term "Funded Debt" means all Debt whether incurred, assumed or
guaranteed, including purchase money indebtedness, maturing by its terms more
than one year from the date of creation thereof or which is renewable or
extendable at the sole option of the obligor in such manner that it may become
payable more than one year from the date of creation thereof. (Section 1.1)
The term "Principal Manufacturing Property" means each manufacturing or
processing plant or facility of the Company or a subsidiary located in the
United States of America (other than its territories and possessions) or Puerto
Rico, except any such manufacturing or processing plant or facility which the
Board of Directors by resolution reasonably determines not to be of material
importance to the total business conducted by the Company and its consolidated
subsidiaries. (Section 1.1)
The term "Restricted Subsidiary" means (a) any subsidiary of the Company
which owns or is the lessee of any Principal Manufacturing Property; provided,
however, that the term "Restricted Subsidiary" shall not include (i) any
subsidiary primarily engaged in financing the operations of the Company or its
subsidiaries or both or (ii) any subsidiary acquired or organized for the
purpose of business acquisitions, or (b) any other subsidiary which is hereafter
designated by the Board of Directors as a Restricted Subsidiary. (Section 1.1)
Restrictions on Liens. The Company will not nor will it permit any
Restricted Subsidiary to issue or assume any debt for money borrowed
(hereinafter, including guarantees thereof, referred to as "Debt"), if such Debt
is secured by a mortgage, pledge, lien or other encumbrance (hereinafter
referred to as a "Mortgage") upon any Principal Manufacturing Property or on any
shares of stock or Debt of any Restricted Subsidiary (whether such Principal
Manufacturing Property, shares of stock or Debt is now owned or hereafter
acquired) without in any such case effectively providing that the Debt
Securities shall be secured equally and ratably with such Debt. The foregoing
restrictions shall not apply to (i) Mortgages on property existing at the time
of or within 120 days after acquisition thereof and certain purchase money
Mortgages, (ii) Mortgages on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Restricted
Subsidiary, (iii) Mortgages in favor of the United States or any political
subdivision or any instrumentality thereof, to secure certain payments pursuant
to any contract or statute or to secure any indebtedness incurred for the
purpose of financing all or any part of the purchase price or the cost of
construction of the property subject to such Mortgages, (iv) any extension,
renewal or replacement (or successive extensions, renewals or replacements), in
whole or in part, of any Mortgage referred to in the foregoing clauses (i)
through (iii), and (v) Mortgages securing the indebtedness of a Restricted
Subsidiary to the Company or to another Restricted Subsidiary. (Section 3.6)
Restrictions on Sale and Leaseback Transactions. The Company will not, and
will not permit any Restricted Subsidiary to, enter into any lease longer than
three years covering any Principal Manufacturing Property that is sold to any
other person in connection with such lease unless the proceeds from such sale or
transfer shall be at least equal to the fair value of such property as
determined by resolution of the Company's Board of Directors and either: (i) the
Company or such Restricted Subsidiary would be entitled, pursuant to
"Restrictions on Liens" described above, to incur Debt secured by a mortgage on
the Principal Manufacturing Property involved in an amount at least equal to the
Attributable Debt in respect thereof without equally and ratably securing the
Debt Securities, provided, that such Attributable Debt shall thereupon be deemed
to be Debt subject to the provisions of such restrictions on liens, or (ii)
within a period commencing twelve months prior to the consummation of the sale
and leaseback transaction and ending twelve months after consummation of such
transaction, the Company or such Restricted Subsidiary has expended or will
expend for Principal Manufacturing Property an amount equal to (a) the proceeds
of such sale and leaseback transaction and the Company elects to designate such
amount as a credit against such transaction or (b) a part of the proceeds of
such sale and leaseback transaction and the Company elects to designate such
amount as a credit against such transaction and treats an amount equal to the
remainder of the proceeds as provided in clause (iii) hereof, or (iii) an amount
equal to such Attributable Debt (less any amount elected under clause (ii)
hereof) (a) is applied within 120 days after the transaction to the retirement
of Funded Debt or (b) is considered Attributable Debt for purposes of the
calculation of Exempted Debt (as hereinafter referred to) and, after giving
effect thereto, Exempted Debt does not exceed 5% of Consolidated Net Tangible
Assets. (Section 3.7)
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Exempted Debt. Notwithstanding the restrictions on Mortgages and sale and
leaseback transactions described above, the Company or its Restricted
Subsidiaries may, in addition to amounts permitted under such restrictions,
create Debt secured by Mortgages, or enter into sale and leaseback transactions,
which would otherwise be subject to the foregoing restrictions, without equally
and ratably securing the Debt Securities and without any obligation to make
expenditures for Principal Manufacturing Property or to retire any Debt,
provided, that after giving effect thereto, the aggregate additional outstanding
amount of such Debt secured by Mortgages plus Attributable Debt resulting from
such sale and leaseback transactions does not exceed 5% of Consolidated Net
Tangible Assets. (Sections 3.6 and 3.7)
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture with respect to Debt
Securities of any series if (a) the Company shall fail to pay when due any
installment of interest on any of the Debt Securities of such series and such
default shall continue for 30 days, (b) the Company shall fail to pay when due
all or any part of the principal of (and premium, if any, on) any of the Debt
Securities of such series (whether at maturity, upon redemption, upon
acceleration or otherwise), (c) the Company shall fail to perform or observe any
other term, covenant or agreement contained in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series of Debt
Securities other than such series) for a period of 90 days after written notice
thereof, as provided in the Indenture, (d) certain events of bankruptcy,
insolvency or reorganization shall have occurred, (e) the Company shall fail to
convert any of the Debt Securities of such series in accordance with the
Indenture and such default shall continue for 45 days, or (f) the Company has
not complied with any other covenant the noncompliance with which would
specifically constitute an Event of Default with respect to Debt Securities of
such series. (Section 5.1)
The Indenture provides that, (a) if an Event of Default due to the default
in payment of principal of, or interest on, any series of Debt Securities, or
due to the default in performance or breach of any other covenant or warranty of
the Company applicable to the Debt Securities of such series but not applicable
to all outstanding Debt Securities, or due to the default in the conversion of
any series of Debt Securities, shall have occurred and be continuing, either the
Trustee or the holders of 25% in principal amount of the Debt Securities of such
series then outstanding may declare the principal of all Debt Securities of such
series and interest accrued thereon to be due and payable immediately and (b) if
an Event of Default due to default in the performance of any other of the
covenants or agreements in the Indenture applicable to all outstanding Debt
Securities or due to certain events of bankruptcy, insolvency and reorganization
of the Company, shall have occurred and be continuing, either the Trustee or the
holders of 25% in principal amount of all Debt Securities then outstanding
(treated as one class) may declare the principal of all Debt Securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal of (or premium, if any) or
interest on the Debt Securities or in the conversion of any Debt Security in
accordance with the Indenture) by the holders of a majority in principal amount
of the Debt Securities of such series (or of all series, as the case may be)
then outstanding. (Sections 5.1 and 5.10)
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that such direction shall not be in
conflict with any rule of law or the Indenture. (Section 5.9) Before proceeding
to exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with any such direction. (Section 5.6)
The Company will be required to furnish to the Trustee annually a
certificate of certain officers of the Company to the effect that, to the best
of their knowledge, the Company is not in default in the performance or
fulfillment of, or compliance with, the terms of the Indenture or, if they have
knowledge that the Company is in default, specifying such default. (Section 3.5)
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The Indenture requires the Trustee to give to all holders of outstanding
Debt Securities of any series notice of any default by the Company with respect
to that series, unless such default shall have been cured or waived; however,
except in the case of a default in the payment of principal of (and premium, if
any) or interest on any outstanding Debt Securities of that series or in the
payment of any sinking fund installment, the Trustee is entitled to withhold
such notice in the event that the board of directors, the executive committee or
a trust committee of directors or certain officers of the Trustee in good faith
determine that withholding such notice is in the interest of the holders of the
outstanding Debt Securities of that series. (Section 5.11)
DEFEASANCE AND DISCHARGE
The following defeasance provision will apply to the Offered Debt
Securities unless the Prospectus Supplement indicates otherwise.
The Indenture provides that, unless the terms of any series of Debt
Securities provide otherwise, the Company will be discharged from obligations in
respect of the Indenture and the outstanding Debt Securities of such series
(including its obligation to comply with the provisions referred to under
"Certain Covenants of the Company," if applicable, but excluding certain other
obligations, such as the obligation to pay principal of, premium, if any, and
interest, if any, on the Debt Securities of such series then outstanding,
obligations of the Company in the event of acceleration following default
referred to in clause (a) above under "Events of Default" and obligations to
register the transfer of, convert or exchange such outstanding Debt Securities
and to replace stolen, lost or mutilated certificates), upon the irrevocable
deposit, in trust, of cash or U.S. Government obligations (as defined) which
through the payment of interest and principal thereof in accordance with their
terms will provide cash in an amount sufficient to pay any installment of
principal of (and premium, if any) and interest on and mandatory sinking fund
payments in respect of such outstanding Debt Securities on the stated maturity
of such payments in accordance with the terms of the Indenture and such
outstanding Debt Securities, provided that the Company has received an opinion
of counsel to the effect that such a discharge will not be deemed, or result in,
a taxable event with respect to holders of the outstanding Debt Securities of
such series and that certain other conditions are met. (Section 10.1)
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (a) secure any Debt Securities, (b) evidence the assumption by a successor
corporation of the obligations of the Company, (c) add covenants for the
protection of the holders of Debt Securities, (d) cure any ambiguity or correct
any inconsistency in the Indenture, (e) establish the form or terms of Debt
Securities of any series and provide for adjustment of conversion rights, and
(f) evidence the acceptance of appointment by a successor trustee. (Section 8.1)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of Debt Securities of each series then outstanding and
affected, to add any provisions to, or change in any manner or eliminate any of
the provisions of, the Indenture or modify in any manner the rights of the
holders of the Debt Securities of each series so affected, provided that the
Company and the Trustee may not, without the consent of the holder of each
outstanding Debt Security affected thereby, (a) extend the stated maturity of
the principal of any Debt Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
amount payable on redemption thereof, or impair the right to institute suit for
the enforcement of any such payment when due or of any conversion thereof, or
affect any right to convert any Debt Security, or change the currency in which
the principal thereof (including any amount in respect of original issue
discount) or interest thereon is payable, or reduce the amount of any original
issue discount security payable upon acceleration or provable in bankruptcy, or
alter certain provisions of the Indenture relating to Debt Securities not
denominated in U.S. dollars, or (b) reduce the aforesaid percentage in principal
amount of Debt Securities of any series the consent of the holders of which is
required for any such modification. (Section 8.2)
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CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Company may, without the consent of the Trustee or the holders of Debt
Securities, consolidate or merge with, or convey, transfer or lease its
properties and assets substantially as an entirety to, any other corporation,
provided that any successor corporation is a corporation organized under the
laws of the United States of America or any state thereof or it agrees to
indemnify and hold harmless the holders of the Debt Securities, or any interest
coupons appertaining thereto, against certain taxes and expenses and that such
successor corporation expressly assumes all obligations of the Company under the
Debt Securities and that certain other conditions are met, and, thereafter,
except in the case of a lease, the Company shall be relieved of all obligations
thereunder. (Article Nine)
REDEMPTION
The following provisions apply to the Offered Debt Securities unless the
Prospectus Supplement indicates otherwise.
Offered Debt Securities that are redeemable in whole or in part at the
option of the Company will be so redeemable (i) if such Offered Debt Securities
are issuable in registered form, on at least 30 but not more than 60 days'
notice to the holders of such registered Offered Debt Securities to be redeemed
and (ii) if such Offered Debt Securities are issuable in bearer form, by
publication in certain newspapers in New York, London and, in certain
circumstances, Luxembourg once in each of two successive calendar weeks, with
the first such publication at least 30 but not more than 60 days prior to the
date fixed for redemption. (Section 12.2)
Once notice of redemption has been given with respect to Offered Debt
Securities that are redeemable in whole or in part at the option of the Company,
such Offered Debt Securities will become due and payable on the date and at the
place stated in such notice at the applicable redemption price, together with
interest accrued to the date fixed for redemption. On and after such date fixed
for redemption, such Offered Debt Securities will, with certain limited
exceptions, cease to accrue interest and the unmatured coupons, if any,
appertaining thereto will be void. (Section 12.4)
With respect to Offered Debt Securities that are subject to a mandatory
sinking fund, the Indenture provides that the Company may deliver such Offered
Debt Securities to the Trustee or credit such Offered Debt Securities that have
been redeemed (otherwise than through operation of such mandatory sinking fund)
or previously delivered to the Trustee for cancellation, at the sinking fund
redemption price applicable thereto, in lieu of making all or any part of such
mandatory sinking fund payment in cash. Subject to a right of carryover if the
amount in the applicable sinking fund in any year is less than $50,000, the
Indenture provides that the Trustee will apply cash sinking fund payments to the
redemption of such Offered Debt Securities on the applicable sinking fund
payment date. (Section 12.6)
APPLICABLE LAW
The Debt Securities and the Indenture will be governed by and construed in
accordance with the laws of the State of New York. (Section 11.8)
DESCRIPTION OF THE CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 500,000,000 shares
of common stock, par value $1.00 per share (the "Common Stock"), and 10,000,000
shares of Preferred Stock, par value $25.00 per share (the "Preferred Stock").
As of March 31, 1996, there were issued 189,626,360 shares of Common Stock, of
which 140,725 were treasury shares and 189,485,635 were outstanding, and the
Company had no Preferred Stock issued or outstanding.
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The following summary of the terms of the Company's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
applicable provisions of Delaware law and the Company's Restated Certificate of
Incorporation, as amended (the "Charter").
COMMON STOCK
The holders of shares of Common Stock, subject to the preferential rights
of the holders of any shares of Preferred Stock of the Company, are entitled to
dividends when and as declared by the Board of Directors. The holders of the
Common Stock have one vote per share on all matters submitted to a vote of the
shareholders, and the right to the net assets of the Company in liquidation
after payment of any amounts due to creditors and in respect of any Preferred
Stock of the Company. Holders of shares of Common Stock are not entitled as a
matter of right to any preemptive or subscription rights and are not entitled to
cumulative voting for directors. All outstanding shares of Common Stock are, and
the shares of Common Stock issued hereunder upon any conversion or exchange of
Debt Securities or Preferred Stock will be, fully paid and nonassessable.
The By-Laws of the Company provide that the annual meeting of shareholders
shall be held on such day in the month of April of each year as is designated by
the Board of Directors and as stated in a written notice, which notice is mailed
or delivered to each shareholder at least 10 days prior to any shareholder
meeting.
The Company is authorized to issue additional shares of common stock
without further stockholder approval (except as may be required by applicable
law or stock exchange regulations).
The Transfer Agent and Registrar for the Company's Common Stock is Harris
Trust and Savings Bank, 311 West Monroe Street, Chicago, Illinois 60690.
PREFERRED STOCK
Under the Charter, the Company is authorized to issue up to 10,000,000
shares of Preferred Stock, in one or more series, with such designations and
such relative voting, dividend, liquidation, conversion and other rights,
preferences and limitations as are stated in the Charter or any Certificate of
Designation establishing such series adopted by the Board of Directors of the
Company. The 10,000,000 authorized but unissued shares of Preferred Stock may be
issued pursuant to resolution of the Board of Directors without the vote of the
holders of any capital stock of the Company.
Shares of Preferred Stock of the Company may be issued in one or more
series and the shares of all series will rank pari passu and be identical in all
respects, except that with respect to each series the Board of Directors may
fix, among other things: the rate of dividends payable thereon; the time and
prices of redemption; the amount payable upon voluntary liquidation; the
retirement or sinking fund, if any; the conversion rights, if any; the voting
rights, if any, in addition to the voting right described below; the
restrictions, if any, upon creation of indebtedness of the Company, or any
subsidiary thereof, or the issuance of stock ranking on a parity with or senior
to the shares of Preferred Stock either as to dividends or upon liquidation; the
restrictions, if any, on the payment of dividends upon, or on the acquisition
of, the Common Stock or upon any other class or classes of stock of the Company
(other than Preferred Stock) ranking on a parity with or junior to the shares of
Preferred Stock either as to dividends or upon liquidation; and the number of
shares to comprise such series. Each series of Preferred Stock will be entitled
to receive an amount payable upon liquidation, dissolution or winding up, fixed
for each series, plus all dividends accumulated to the date of final
distribution, before any payment or distribution of assets of the Company is
made on Common Stock. Shares of Preferred Stock that have been issued and
reacquired in any manner by the Company (including shares redeemed, shares
purchased and retired and shares that have been converted into shares of another
series or class) may be reissued as part of the same or another series of
Preferred Stock.
PREFERRED STOCK DEPOSITARY SHARES
The Company may, at its option, elect to offer receipts for fractional
interests ("Depositary Shares") in Preferred Stock. In such event, receipts
("Depositary Receipts") for Depositary Shares, each of which will
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represent a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock, will be issued as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a deposit agreement (the "Deposit Agreement")
between the Company and the depositary named in the Prospectus Supplement
relating to such shares (the "Preferred Stock Depositary"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion,
exchange, subscription and liquidation rights). The following summary of certain
provisions of the Deposit 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 Deposit Agreement, including the definitions therein of certain terms.
Whenever particular sections of the Deposit Agreement are referred to, it is
intended that such section shall be incorporated herein by reference. Copies of
the forms of Deposit Agreement and Depositary Receipt are filed as exhibits to
the Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
The Preferred Stock Depositary will distribute to holders of Depositary
Receipts all cash dividends or other cash distributions received in respect of
the Preferred Stock to the record holders of Depositary Shares relating to such
Preferred Stock in proportion to the numbers of such Depositary Shares owned by
such holders. (Deposit Agreement sec. 4.01)
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares in an equitable manner, unless the Preferred Stock Depositary
determines that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may sell such property and distribute the net
proceeds from such sale to such holders. (Deposit Agreement sec. 4.02)
Upon surrender of a Depositary Receipt at the corporate trust office of the
Preferred Stock Depositary and upon payment of the taxes, charges and fees
provided for in the Deposit Agreement and subject to the terms thereof, the
holder of the Depositary Shares evidenced thereby is entitled to delivery at
such office, to or upon his or her order, of the number of whole shares of the
related series of Preferred Stock and any money or other property, if any,
represented by such Depositary Shares.
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds received
by the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever the Company redeems shares of Preferred Stock
held by the Preferred Stock Depositary, the Preferred Stock Depositary will
redeem as of the same redemption date the number of Depositary Shares
representing shares of Preferred Stock so redeemed. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot, pro rata or by any other equitable method as may be
determined by the Preferred Stock Depositary. (Deposit Agreement sec. 2.08)
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the Preferred Stock
Depositary as to the exercise of the voting rights pertaining to the amount of
the Preferred Stock represented by such holder's Depositary Shares. The
Preferred Stock Depositary will endeavor, insofar as practicable, to vote the
amount of the Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting shares of the Preferred
Stock to the extent it
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does not receive specific instructions from the holder of Depositary Shares
representing such Preferred Stock. (Deposit Agreement sec. 4.05)
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
which materially and adversely alters the rights of the holders of Depositary
Shares will not be effective unless such amendment has been approved by the
holders of at least a majority of the Depositary Shares then outstanding. The
Deposit Agreement will terminate only if (i) all outstanding Depositary Shares
have been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding-up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts. (Deposit Agreement sec.sec. 6.01, 6.02)
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Preferred Stock Depositary in connection with the
initial deposit of the Preferred Stock and issuance of Depositary Receipts, all
withdrawals of shares of Preferred Stock by owners of Depositary Shares and any
redemption of the Preferred Stock. Holders of Depositary Receipts will pay other
transfer and other taxes and governmental charges and such other charges as are
expressly provided in the Deposit Agreement to be for their accounts. (Deposit
Agreement sec. 5.07)
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000
(Deposit Agreement sec. 5.04)
The Preferred Stock Depositary will forward to holders of Depositary
Receipts all reports and communications from the Company which are delivered to
the Preferred Stock Depositary and which the Company is required or otherwise
determines to furnish to the holders of the Preferred Stock. (Deposit Agreement
sec. 4.07)
Neither the Preferred Stock Depositary nor the Company will be liable under
the Deposit Agreement to holders of Depositary Receipts other than for its
negligence, willful misconduct or bad faith. Neither the Company nor the
Preferred Stock Depositary will be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Preferred Stock
Depositary may rely upon written advice of its counsel or accountants, or upon
information provided by persons presenting Preferred Stock for deposit, holders
of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine. (Deposit Agreement sec. 5.03)
SHAREHOLDERS RIGHTS PLAN
In June 1988, the Board of Directors of the Company adopted a Shareholders
Rights Plan and declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of the Common Stock. As a result of
a two-for-one stock split announced June 15, 1995, half a Right is attached to
each outstanding share of Common Stock. When exercisable, each Right entitles
the registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Unit") of Participating Cumulative Preferred Stock,
par value $25.00 per share (the "Preferred Stock"), at a purchase price (the
"Purchase Price") of $200 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in the Rights Agreement between the Company
and Harris Trust and Savings Bank, as Rights Agent. The Rights Agreement
contains provisions that could have the effect of delaying, deferring or
preventing a merger, tender offer or other takeover attempt of the Company.
The Rights are attached to all outstanding shares of Common Stock, and no
separate Rights certificates will be distributed. The Rights will separate from
the Common Stock and a Distribution Date will occur upon
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the earlier of: (i) 10 days following the date (the "Stock Acquisition Date") of
any public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial ownership of 20% or more
of the outstanding shares of Common Stock, or (ii) 10 business days following
the commencement of a tender offer or exchange offer that would result in a
person or group becoming an Acquiring Person. Until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after June 30, 1988 will contain a notation incorporating the Rights Agreement
by reference, and (iii) the surrender for transfer of any certificates for
Common Stock will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 17, 1998 unless previously redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Right certificates will
be mailed to holders of record of Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Right certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, with certain exceptions, only shares of Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that any person becomes an Acquiring Person, proper provision
will be made so that each holder of a Right, other than Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of shares of
Common Stock having a market value of two times the Purchase Price of the Right.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction or
(ii) 50% or more of the Company's assets or earning power is sold, each holder
of a Right shall thereafter have the right to receive, upon exercise, Common
Stock of the acquiring company having a value equal to two times the Purchase
Price of the Right. The events described in this paragraph are referred to as
"Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of $.01
per Right by the Board of Directors at any time until the tenth day after the
Stock Acquisition Date (or such later date as a majority of the Continuing
Directors (as defined below) then in office may determine). Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors. Immediately
upon the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and thereafter the only right of the holders of Rights
will be to receive the redemption price.
The term "Continuing Director" means (i) any member of the Board of
Directors who was a member of the Board prior to the time the Acquiring Person
becomes such, and (ii) any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Continuing
Directors. Continuing Directors do not include an Acquiring Person, or an
affiliate or associate of an Acquiring Person, or any representative of the
foregoing entities.
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Until a Right is exercised, the holder will have no rights as a shareholder
of the Company (beyond those as an existing shareholder), including the right to
vote or to receive dividends.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to correct or supplement any provision
contained therein which may be defective or inconsistent with any other
provisions, to make changes which do not adversely affect the interests of
holders of Rights or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that the Rights Agreement may not be amended to
lengthen (i) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (ii) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or benefits to, the holders of Rights.
PLAN OF DISTRIBUTION
Offered Securities may be sold (i) through agents, (ii) through
underwriters, (iii) through dealers, (iv) through remarketing firms or (v)
directly to purchasers (through a specific bidding or auction process or
otherwise).
Offers to purchase Offered Securities may be solicited by agents designated
by the Company from time to time. Any such agent involved in the offer or sale
of the Offered Securities will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment. Any such agent may be
deemed to be an underwriter, as that term is defined in the Securities Act, of
the Offered Securities so offered and sold.
If an underwriter or underwriters are utilized in the sale of Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement which will be used by the underwriters to make resales of
Offered Securities.
If a dealer is utilized in the sale of Offered Securities, the Company will
sell such Offered Securities to the dealer, as principal. The dealer may then
resell such Offered Securities to the public at varying prices to be determined
by such dealer at the time of resale. The name of the dealer and the terms of
the transactions will be set forth in the Prospectus Supplement relating
thereto.
Offers to purchase Offered Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales, including the terms of any
bidding or auction process, if utilized, will be described in the Prospectus
Supplement relating thereto.
Offered Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company. Any remarketing firm will be identified
and the terms of its agreement, if any, with the Company and its compensation
will be described in the Prospectus Supplement. Remarketing firms may be deemed
to be underwriters in connection with the Offered Securities remarketed thereby.
Agents, underwriters, dealers and remarketing firms may be entitled under
agreements which may be entered into with the Company to indemnification by the
Company against certain liabilities, including liabilities under the Securities
Act, and any such agents, underwriters, dealers or remarketing firms, or their
affiliates may be customers of, engage in transactions with, or perform services
for, the Company in the ordinary course of business.
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If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Debt Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Such Contracts will be subject only to those conditions set forth in
the Prospectus Supplement. The obligations of the parties to the Contracts will
be subject to the conditions that (i) the purchase of the Debt Securities shall
not at the time of delivery be prohibited under the laws of the jurisdiction to
which the purchaser is subject and (ii) the Company shall have sold, and
delivery shall have taken place to the underwriters named in the Prospectus
Supplement of, such part of the Debt Securities as is to be sold by them, and
notice to such effect shall be delivered to the purchaser accompanied by an
opinion of counsel to the Company delivered to the underwriters. A commission
indicated in the Prospectus Supplement will be paid to underwriters and agents
soliciting purchases of Debt Securities pursuant to Contracts accepted by the
Company.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by Richard J. Agnich, Senior Vice President, Secretary and General Counsel of
the Company. Mr. Agnich beneficially owns, and has rights to acquire under
various employee benefit plans of the Company, an aggregate of less than 1% of
the Common Stock of the Company.
Certain legal matters relating to the Offered Securities will be passed
upon for underwriters and certain other purchasers by Davis Polk & Wardwell, New
York, New York.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report incorporated therein by reference. Such financial
statements are, and audited financial statements to be included in subsequently
filed documents will be, incorporated herein in reliance upon the reports of
Ernst & Young LLP pertaining to such financial statements (to the extent covered
by consents filed with the Commission) and upon the authority of such firm as
experts in accounting and auditing.
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