Filed pursuant to 424(b)(2) under the Securities Act of 1933, as amended,
relating to Registration Statement No. 333-46303
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 24, 1998)
4,000,000 Shares
Omnicom Group Inc.
COMMON STOCK
----------
This Prospectus Supplement and the accompanying Prospectus relate to
4,000,000 shares (the "Shares") of common stock, par value $0.50 per share (the
"Common Stock"), of Omnicom Group Inc., a New York corporation ("Omnicom" or the
"Company"), offered hereby (the "Offering") by the Company, and sold by the
Underwriter named below. See "The Underwriter" herein. The Common Stock is
listed on the New York Stock Exchange under the symbol "OMC." On March 3, 1998,
the reported last sales price of the Common Stock on the New York Stock Exchange
was $44 15/16 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The Shares will be purchased from the Company by Morgan Stanley & Co.
Incorporated (the "Underwriter") at a price of $42.85 per share (resulting in
$171,400,000 aggregate net proceeds (before expenses) to the Company). The
Company will pay certain expenses of the Offering estimated at $100,000.
The Shares may be offered by the Underwriter from time to time in one or
more transactions (which may involve block transactions) on the New York Stock
Exchange, in the over-the-counter market, through negotiated transactions or
otherwise at market prices prevailing at the time of the sale or at prices
otherwise negotiated, subject to prior sale, when, as and if delivered to and
accepted by the Underwriter. See "The Underwriter."
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
----------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriter named herein and subject to approval of certain legal matters by
Davis Polk & Wardwell, counsel for the Underwriter. It is expected that delivery
of the Shares will be made on or about March 9, 1998 at the office of Morgan
Stanley & Co. Incorporated, New York, New York, against payment therefor in
immediately available funds.
----------
MORGAN STANLEY DEAN WITTER
March 4, 1998
TABLE OF CONTENTS
Prospectus Supplement Page
----
Use of Proceeds .......................................................... S-3
Common Stock Price Ranges and
Dividends ............................................................. S-3
The Underwriter .......................................................... S-3
Legal Matters ............................................................ S-4
Prospectus
Available Information .................................................... 3
Incorporation Of Certain Documents
by Reference .......................................................... 3
The Company .............................................................. 4
Use of Proceeds .......................................................... 5
Ratio of Earnings To Fixed Charges ....................................... 5
General Description Of Offered Securities
And Risk Factors ...................................................... 5
Description of Debt Securities ........................................... 5
Description of Preferred Stock ........................................... 14
Description Of Depositary Shares ......................................... 15
Description Of Warrants .................................................. 18
Description of Common Stock .............................................. 19
Plan Of Distribution ..................................................... 20
Experts .................................................................. 21
Legal Matters ............................................................ 22
------------
No dealer, salesperson or any other person has been authorized in
connection with any offering made hereby to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement or the accompanying Prospectus, and if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Underwriter. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell or a solicitation of
an offer to buy any security other than the Shares offered hereby, nor do they
constitute an offer to sell or a solicitation of an offer to buy any of the
Shares offered hereby by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus
supplement or the accompanying Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Company since the date hereof.
------------
In connection with this Offering, the underwriter may engage in
transactions which stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriter may overallot in connection with the
Offering, and may bid for, and purchase, the shares in the open market. For a
description of these activities, see "the underwriter."
S-2
USE OF PROCEEDS
The Company currently intends to use the net proceeds from the sale of the
Shares for general corporate purposes, which may include the reduction of
short-term indebtedness, the repurchase of Common Stock, investments in, or
extensions of credit to, the Company's subsidiaries and possible acquisitions,
including in connection with the Company's pending acquisition of the
outstanding stock of the GGT Group plc for approximately $235,000,000 in cash.
Pending any such use, the net proceeds may be temporarily invested.
COMMON STOCK PRICE RANGES AND DIVIDENDS
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "OMC." The table below shows the range of reported last sale prices
on the New York Stock Exchange for the Common Stock for the periods indicated
and the dividends paid per share on the Common Stock for such periods (the price
and dividends are adjusted and restated to reflect a two-for-one stock split
paid on December 29, 1997). The reported last sale price on March 3, 1998 was
$44 15/16.
Dividends Paid
Per Share of
High Low Common Stock
--------- --------- ----------------
1996
First Quarter ............. $22 1/4 $17 13/16 $.0875
Second Quarter ............ 23 1/4 20 1/8 .0875
Third Quarter ............. 23 7/8 19 9/16 .1000
Fourth Quarter ............ 25 3/4 22 .1000
1997
First Quarter ............. $26 7/16 $22 5/16 $.1000
Second Quarter ............ 32 1/8 23 15/16 .1000
Third Quarter ............. 37 1/8 31 1/32 .1250
Fourth Quarter ............ 42 3/8 33 .125
1998
First Quarter (through
March 3, 1998) ........... $45 15/16 $37 7/8 --
The Company is not aware of any restrictions on its present or future
ability to pay dividends. However, in connection with certain borrowing
facilities entered into by the Company and its subsidiaries, the Company is
subject to restrictions on the ratio of debt to cash flow, the ratio of total
consolidated indebtedness to total consolidated capitalization and its ability
to make investments in and loans to affiliates and unconsolidated subsidiaries.
THE UNDERWRITER
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated March 4, 1998 (the "Underwriting Agreement"), Morgan Stanley &
Co. Incorporated (the "Underwriter") has agreed to purchase from the Company,
and the Company has agreed to sell to the Underwriter, the Shares.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Shares is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is obligated to purchase all of the Shares if any are purchased.
The Company has agreed that it will not, without the prior written consent
of the Underwriter, directly or indirectly, for a period of 90 days after the
date of this Prospectus Supplement, offer, sell, contract to sell, or otherwise
dispose of any shares of its preferred stock, par value $1.00 per share (the
"Preferred Stock"), or Common Stock or any securities of the Company convertible
into or exchangeable or exercisable for Preferred
S-3
Stock or Common Stock or any rights to acquire Preferred Stock or Common Stock;
provided, however, that such restrictions shall not affect the ability of the
Company to take any such action (i) in connection with the offering of the
Shares made hereby, (ii) in connection with any shares of Common Stock issued
upon the conversion of any debentures outstanding prior to the date of this
Prospectus Supplement, (iii) in connection with shares of Common Stock issued
upon exercise of an option granted under the Company's existing stock option
plans or issued under the Company's restricted stock purchase plans, (iv) in
connection with any shares of Common Stock issued as a consequence of
acquisitions announced publicly prior to the date hereof or any earn-out
payments made in connection with such acquisitions, or (v) in connection with
shares of Common Stock issued but not freely tradable prior to the end of the
90-day period.
It is expected that all or a substantial portion of the Shares may be sold
by the Underwriter to purchasers in one or more transactions (which may involve
block transactions) on the New York Stock Exchange or otherwise. The
distribution of the Shares may also be effected from time to time in special
offerings, exchange distributions and/or secondary distributions pursuant to and
in accordance with the rules of the New York Stock Exchange, in the
over-the-counter market, in negotiated transactions through the writing of
options on the Shares (whether such options are listed on an options exchange or
otherwise), or in a combination of such methods at prevailing market prices or
at negotiated prices. The Underwriter may effect such transactions by selling
Shares to or through dealers, and such dealers may receive compensation in the
form of discounts, concessions or commissions from the Underwriter and/or the
purchasers of such Shares for whom they may act as agents or to whom they may
sell as principal.
In order to facilitate the Offering of the Shares, the Underwriter may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Shares. Specifically, the Underwriter may overallot in connection with the
Offering, creating a short position in the Shares for its own account. In
addition, to cover overallotments or to stabilize the price of the Shares, the
Underwriter may bid for, and purchase, shares of Common Stock in the open
market. Finally, the Underwriter may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the Shares in the Offering, if the
Underwriter repurchases previously distributed Shares in transactions to cover
short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Shares above
independent market levels. The Underwriter is not required to engage in these
activities and may end any of these activities at any time.
In connection with the sale of the Shares, the Underwriter may receive
compensation from purchasers of the Shares for whom it may act as agent or to
whom it may sell as principal in the form of commissions or discounts, in each
case in amounts which will not exceed those customary in the types of
transactions involved. The Underwriter and any dealers that participate in the
distribution of the Shares may be deemed to be underwriters, and any discounts
received by them from the Company and any compensation received by them on
resale of the Shares by them may be deemed to be discounts and commissions under
the Securities Act.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments which the Underwriter may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Donovan Leisure Newton & Irvine LLP, New York, New York. Certain
legal matters in connection with the Offering will be passed upon for the
Underwriter by Davis Polk & Wardwell, New York, New York.
S-4
PROSPECTUS
$500,000,000
OMNICOM GROUP INC.
COMMON STOCK, PREFERRED STOCK, DEPOSITARY SHARES,
DEBT SECURITIES AND WARRANTS
----------
Omnicom Group Inc. (the "Company") may offer and issue from time to time
(i) common stock, par value $.50 per share ("Common Stock"), (ii) one or more
series of preferred stock, par value $1.00 per share ("Preferred Stock"),
interests in which may be represented by depositary shares ("Depositary
Shares"), (iii) one or more series of debt securities ("Debt Securities"),
consisting of debentures, notes and/or other unsecured evidences of
indebtedness, which may be unsubordinated ("Senior Debt Securities") or
subordinated ("Subordinated Debt Securities") to certain other obligations of
the Company, and (iv) warrants to purchase Debt Securities, Preferred Stock or
Common Stock ("Warrants", and together with the Common Stock, Preferred Stock,
Depositary Shares and Debt Securities, "Securities"), at an aggregate initial
offering price not to exceed $500,000,000, at prices and on terms to be
determined at the time of sale. Securities may be offered, separately or
together, in separate series, in amounts, at prices and on terms to be set forth
in the applicable supplement or supplements to this Prospectus (each a
"Prospectus Supplement").
The applicable Prospectus Supplement will set forth with regard to the
particular Securities in respect of which this Prospectus is being delivered,
the initial public offering price and the terms of the offering thereof, and (i)
in the case of Common Stock, the number of shares; (ii) in the case of Preferred
Stock, the serial designation and the number of shares, any dividend,
liquidation, redemption, conversion, voting or other rights of such Preferred
Stock and whether interests in such Preferred Stock will be evidenced by
Depositary Shares and, if so, the identity of the Depositary (as defined herein)
and the fraction of a share of Preferred Stock represented by each Depositary
Share; (iii) in the case of Debt Securities, the title, aggregate principal
amount, denominations, maturity, rate of interest, if any (which may be fixed or
variable), or method of calculation thereof, time of payment of any interest,
terms for redemption at the option of the Company or the holder, if any, terms
for sinking fund payments, if any, subordination terms, if any, conversion or
exchange rights, if any, and any other terms and conditions of such Debt
Securities; and (iv) in the case of Warrants, the duration, offering price,
exercise price and detachability of such Warrants, and any other terms and
conditions of such Warrants, as well as a description of the Debt Securities,
Preferred Stock or Common Stock issuable upon the exercise thereof. The
Prospectus Supplement will contain information concerning certain U.S. federal
income tax considerations, if applicable to the Securities offered.
The Common Stock is listed on the New York Stock Exchange under the symbol
"OMC." The applicable Prospectus Supplement will contain information, where
applicable, as to any other listing on a securities exchange of the Securities
covered by such Prospectus Supplement.
Other than as described in the applicable Prospectus Supplement, all Debt
Securities will be unsecured obligations of the Company. Senior Debt Securities,
when issued, will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. Subordinated Debt Securities, when issued, will be
subordinated as described herein under "DESCRIPTION OF DEBT
SECURITIES--SUBORDINATION OF SUBORDINATED DEBT SECURITIES."
----------
This Prospectus may not be used to consummate the sale of any 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 SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
The Company may sell Securities to or through underwriters acting as
principals for their own account or as agents, and also may sell such Securities
directly to other purchasers or through agents designated from time to time. The
applicable Prospectus Supplement will set forth the initial public offering
price, the names of any underwriters or agents, the numbers or principal
amounts, if any, to be purchased by underwriters, the compensation of such
underwriters and agents, if any, and the net proceeds to the Company. If the
Company, directly or through agents, solicits offers to purchase the Securities,
the Company reserves the sole right to accept and, together with its agents, to
reject in whole or in part any proposed purchase of Securities. See "PLAN OF
DISTRIBUTION."
February 24, 1998
TABLE OF CONTENTS
Page
----
Available Information ................................................... 3
Incorporation Of Certain Documents By Reference ......................... 3
The Company ............................................................. 4
Use Of Proceeds ......................................................... 5
Ratio Of Earnings To Fixed Charges ...................................... 5
General Description Of Offered Securities And Risk Factors .............. 5
Description Of Debt Securities .......................................... 5
Description Of Preferred Stock .......................................... 14
Description Of The Depositary Shares .................................... 15
Description Of Warrants ................................................. 18
Description Of Common Stock ............................................. 19
Plan Of Distribution .................................................... 20
Experts ................................................................. 21
Legal Matters ........................................................... 22
2
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING CONTEMPLATED HEREBY, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES 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 NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), which relates to the Securities offered
hereby (the "Registration Statement"). This Prospectus does not contain all of
the information contained in the Registration Statement and the exhibits and
schedules thereto, and reference is hereby made to the Registration Statement
and to Exhibits thereto for further information with respect to the Company and
the Securities offered hereby. Any statements contained in this Prospectus
concerning the contents of any contract or other document are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
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
Commission. Copies of such reports, proxy statements, the Registration Statement
and exhibits thereto and other information may be inspected without charge at
the offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices located at 7
World Trade Center, 13th floor, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of such
material may be obtained from the Pubic Reference Section of the Commission at
its Washington, D.C. or regional offices upon the payment of the fees prescribed
by the Commission. The Commission maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports, proxy and other
information regarding registrants that file electronically with the Commission,
including the Company. In addition, reports, proxy statements and other
information concerning the Company may be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission and are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(b) The Company's unaudited Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997;
(c) The Company's Report on Form 8-K dated January 17, 1997 relating
to the issuance of its 4 1/4% Convertible Subordinated Debentures due
2007; and the Company's Report on Form 8-K dated January 20, 1998 and
relating to the issuance of its 2 1/4% Convertible Subordinated Debentures
due 2013; and
(d) The description of the Company's Common Stock contained in the
Registration Statement filed pursuant to Section 12 of the Exchange Act
and any amendment or report filed for the purposes of updating that
description.
3
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date hereof and prior to the termination
of the offering of the Securities shall be deemed to be incorporated by
reference into this Prospectus from the date of filing of such documents.
Any statement contained herein, in any Prospectus Supplement or in a
document incorporated or deemed incorporated by reference herein or therein
shall be deemed modified or superseded for purposes of the Registration
Statement, this Prospectus and such Prospectus Supplement to the extent that a
statement contained herein, in any Prospectus Supplement, or in any subsequently
filed document that also is or is deemed incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement, this Prospectus or any
Prospectus Supplement.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents which have been or may be
incorporated into this Prospectus by reference (other than exhibits to such
documents). Written or telephone requests for such copies should be directed to
Barry J. Wagner, Secretary and General Counsel, Omnicom Group Inc., 437 Madison
Avenue, New York 10022; telephone number (212) 415-3600.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING OF THE SECURITIES MAY ENGAGE
IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO DETERMINE
PAYMENTS ON THE SECURITIES. SPECIFICALLY, THE AGENTS SPECIFIED IN THE RELEVANT
PROSPECTUS SUPPLEMENT OR PRICING SUPPLEMENT MAY OVERALLOT IN CONNECTION WITH THE
OFFERING, AND MAY BID FOR, AND PURCHASE, THE SECURITIES OR ANY SECURITIES THE
PRICES OF WHICH MAY BE USED TO DETERMINE PAYMENTS ON THE SECURITIES IN THE OPEN
MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION" IN
THIS PROSPECTUS AND "PLAN OF DISTRIBUTION" OR "UNDERWRITING" IN THE RELEVANT
PROSPECTUS SUPPLEMENT AND PRICING SUPPLEMENT.
THE COMPANY
The Company through its wholly and partially owned companies (hereinafter
sometimes collectively referred to as the "Omnicom Group"), operates advertising
agencies which plan, create, produce and place advertising in various media such
as television, radio, newspapers and magazines. The Omnicom Group offers its
clients such additional services as marketing consultation, consumer market
research, design and production of merchandising and sales promotion programs
and materials, direct mail advertising, corporate identification, public
relations and interactive marketing. The Omnicom Group offers these services to
clients worldwide on a local, national, pan-regional or global basis. Operations
cover the major regions of North America, the United Kingdom, Continental
Europe, the Middle East, Latin America, the Far East and Australia. In 1996 and
1995, 51% and 53%, respectively, of the Omnicom Group's billings came from its
non-U.S. operations. According to the unaudited industry wide figures published
in 1997 in the trade journal, Advertising Age, the Omnicom Group was ranked as
the second largest advertising agency group worldwide.
The Omnicom Group operates as three separate, independent agency networks:
the BBDO Worldwide Network, the DDB Needham Worldwide Network and the TBWA
International Network. The Omnicom Group also operates several independent
agencies, including Cline Davis & Mann and Goodby, Silverstein & Partners,
certain marketing service and specialty advertising companies through its
Diversified Agency Services division and certain interactive marketing companies
through Communicade.
A two-for-one stock split in the form of a one hundred percent stock
dividend on the Company's outstanding Common Stock was paid on December 29, 1997
to the shareholders of record on December 16, 1997.
The principal executive offices of the Company are located at 437 Madison
Avenue, New York New York 10022. Its telephone number is (212) 415-3600.
4
USE OF PROCEEDS
The Company currently intends to use the net proceeds from the sale of any
Securities for general corporate purposes, which may include the reduction of
short-term indebtedness, the repurchase of Common Stock, investments in, or
extensions of credit to, the Company's subsidiaries, possible acquisitions, and
such other purposes as may be stated in the applicable Prospectus Supplement.
Pending such use, the net proceeds may be temporarily invested. The precise
amounts and timing of the application of proceeds will depend upon the funding
requirements of the Company and its subsidiaries at the time of issuance and the
availability of other funds. Except as may be described in the applicable
Prospectus Supplement, specific allocations of the proceeds to such purposes
will not have been made at the date of such Prospectus Supplement.
Based upon the financial needs of the Company and its subsidiaries, the
Company may also engage in other financings of a character and amount to be
determined as the need arises.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for the periods indicated.
Nine months Nine Months
Year Ended December 31, Ended Ended
--------------------------------------------- September 30, September 30,
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ------------ -------------
Ratio of earnings
to fixed charges ........... 2.28 2.32 3.15 3.59 4.17 3.80 4.01
The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense and that portion of net rental expense deemed
representative of the interest factor.
GENERAL DESCRIPTION OF OFFERED SECURITIES AND RISK FACTORS
The Company may offer shares of Common Stock, Preferred Stock, Depositary
Shares, Debt Securities or Warrants or any combination of the foregoing either
individually or as units consisting of one or more securities under this
Prospectus.
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY MAY INVOLVE A HIGH DEGREE
OF RISK. SUCH RISKS WILL BE SET FORTH IN THE PROSPECTUS SUPPLEMENT RELATING TO
SUCH OFFERED SECURITIES.
DESCRIPTION OF DEBT SECURITIES
The Company may offer under this Prospectus up to $500,000,000 aggregate
principal amount of Debt Securities, or if Debt Securities are issued at a
discount, such principal amount as may be sold for an initial public offering
price of up to $500,000,000. Unless otherwise specified in the applicable
Prospectus Supplement, the Debt Securities will represent direct, unsecured
obligations of the Company.
Subordinated Debt Securities are to be issued under an Indenture (the
"Subordinated Indenture"), between the Company and the trustee named in the
applicable Prospective Supplement as the trustee therefor (the "Subordinated
Trustee"). Senior Debt Securities are to be issued under an Indenture (the
"Senior Indenture"), between the Company and the trustee named in the applicable
Prospectus Supplement as the trustee therefor (the "Senior Trustee"). The form
of Subordinated Indenture and the form of Senior Indenture are exhibits to the
Registration Statement of which this Prospectus is a part. The Senior Indenture
and the Subordinated Indenture are sometimes referred to collectively as the
"Indentures" and the Senior Trustee and the Subordinated Trustee are sometimes
referred to collectively as the "Trustees".
5
The terms of the Debt Securities will include those stated in the
Indentures and those made part of the respective Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "TIA"), as in effect on the date of
such Indenture. The Debt Securities will be subject to all such terms, and
potential purchasers of the Debt Securities are referred to the Indenture and
the TIA for a statement thereof.
The following statements relating to the Debt Securities and the
Indentures are summaries and do not purport to be complete. Such summaries may
make use of certain terms defined in the Indentures and are qualified in their
entirety by express reference to the Indentures. Certain other specific terms of
any series of Debt Securities will be described in the applicable Prospectus
Supplement. To the extent that any particular terms of the Debt Securities
described in a Prospectus Supplement differ from any of the terms described
herein, then such terms described herein shall be deemed to have been superseded
by such Prospectus Supplement. As used in this "Description of Debt Securities,"
all references to the "Company" shall mean Omnicom Group Inc., excluding, unless
the context otherwise required or as expressly stated, its subsidiaries.
The Company currently has outstanding (i) $218,500,000 principal amount of
4 1/4% Convertible Subordinated Debentures with a scheduled maturity in 2007,
which are convertible into Common Stock at a conversion price of $31.50, subject
to adjustment in certain events (the "4 1/4% Debentures") and (ii) $230,000,000
principal amount of 2 1/4% Convertible Subordinated Debentures with a scheduled
maturity in 2013, which are convertible into Common Stock at a conversion price
of $49.83, subject to adjustment in certain events (the "2 1/4% Debentures",
and, together with the 4 1/4% Debentures, the "Existing Subordinated
Indebtedness"). The 4 1/4% Debentures were issued in accordance with the terms
of an Indenture dated as of January 3, 1997 between the Company and The Chase
Manhattan Bank, as Trustee. The 2 1/4% Debentures were issued in accordance with
the terms of an Indenture dated as of January 6, 1998 between the Company and
The Chase Manhattan Bank, as Trustee. In connection with certain other borrowing
facilities entered into by the Company and its subsidiaries, the Company is
subject to certain restrictions on the ratio of net cash flow to consolidated
indebtedness, the ratio of total consolidated indebtedness to total consolidated
capitalization and on its ability to make investments in and loans to affiliates
and unconsolidated subsidiaries.
GENERAL
The terms of each series of Debt Securities will be established by or
pursuant to a resolution of the Board of Directors of the Company and set forth
or determined in the manner provided in an Officers' Certificate or by a
supplemental indenture. The particular terms of each series of Debt Securities
will be described in a Prospectus Supplement relating to such series (including
any pricing supplement thereto).
The Debt Securities that may be offered under the Indentures are not
limited in aggregate principal amount. The Debt Securities may be issued in one
or more series with the same or various maturities, at par, at a premium, or at
a discount. The Prospectus Supplement (including any pricing supplement
thereto), will set forth the initial offering price, the aggregate principal
amount and the following terms of the Debt Securities in respect of which this
Prospectus is delivered:
(1) the title of such Debt Securities;
(2) whether such Debt Securities are Senior Debt Securities or
Subordinated Debt Securities or any combination thereof;
(3) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which the Debt Securities will be issued;
(4) any limit on the aggregate principal amount of such Debt
Securities;
(5) the date or dates on which principal on such Debt Securities
will be payable;
(6) the rate or rates (which may be fixed or variable) per annum or,
if applicable, the method used to determine such rate or rates (including
any commodity, commodity index, stock exchange index or financial index)
at which such Debt Securities will bear interest, if any, the date or
dates from which such interest, if any, will commence and be payable and
any regular record date for the interest payable on the interest payment
date;
6
(7) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable;
(8) the period or periods within which, the price or prices at which
and the terms and conditions, if any, upon which the Debt Securities may
be redeemed, in whole or in part, at the option of the Company;
(9) the obligation, if any, of the Company to redeem or purchase the
Debt Securities in whole or in part pursuant to any sinking fund or
analogous provisions;
(10) the dates, if any, on which and the price or prices at which
the Debt Securities will be repurchased by the Company at the option of
the holders thereof and other detailed terms and provisions of such
repurchase obligations;
(11) the denominations in which such Debt Securities may be
issuable, if other than denominations of $1,000 and any integral multiple
thereof;
(12) whether the Debt Securities are to be issuable in the form of
Certificated Debt Securities (as defined below) or Global Debt Securities
(as defined below);
(13) the portion of principal amount of such Debt Securities that
shall be payable upon declaration of acceleration of the maturity date
thereof, if other than the principal amount thereof;
(14) the provisions, if any, relating to any security provided for
such Debt Securities;
(15) any addition to or change in the covenants described herein or
in the Indentures with respect to such Debt Securities and any change in
the acceleration provisions described herein or in the Indentures with
respect to such Debt Securities;
(16) any Events of Default with respect to the Debt Securities, if
not otherwise set forth under " Events of Default";
(17) the terms and conditions, if any, upon which the Debt
Securities shall be exchanged for or converted into Common Stock or
Preferred Stock;
(18) the terms and conditions, if any, upon which the Debt
Securities and any guarantees thereof shall be subordinated in right of
payment to other indebtedness of the Company or any guarantor;
(19) the form and terms of any Guarantee of the Debt Securities;
(20) any other terms of such Debt Securities, which may modify or
delete any provision of the Indentures insofar as it applies to such
series;
(21) any depositaries, interest rate calculation agents, or other
agents with respect to the Debt Securities.
(22) whether the subordination provisions summarized below or
different subordination provisions, including a different definition of
"Senior Indebtedness" will apply to any Debt Securities that are
Subordinated Debt Securities; and
(23) any other terms of such Debt Securities.
Debt Securities may be issued at a substantial discount below the stated
principal amount and that provide for an amount less than the stated principal
amount thereof to be due and payable upon declaration of acceleration of the
maturity thereof pursuant to the terms of the Indentures ("Discount
Securities"). Federal income tax considerations and other special considerations
applicable to any such Discount Securities will be described in the applicable
Prospectus Supplement.
7
EXCHANGE AND/OR CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged
for or converted into shares of Common Stock or Preferred Stock will be set
forth in the Prospectus Supplement relating thereto.
TRANSFER AND EXCHANGE
Each Debt Security will be represented by either one or more global
securities (each, a "Global Debt Security") registered in the name of The
Depository Trust Company, as Depository (the "Depository"), or a nominee of the
Depository (each such Debt Security represented by a Global Debt Security being
herein referred to as a "Book-Entry Debt Security"), or a certificate issued in
definitive registered form (a "Certificated Debt Security"), as set forth in the
applicable Prospectus Supplement. Except as set forth under "-- Global Debt
Securities and Book Entry System" below, Book-Entry Debt Securities will not be
issuable in certificated form.
Certificated Debt Securities. Certificated Debt Securities may be
transferred or exchanged at the Trustee's office or paying agencies in
accordance with the terms of the respective Indenture. No service charge will be
made for any transfer or exchange of Certificated Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
The transfer of Certificated Debt Securities and the right to receive the
principal of and premium, if any, and interest, on such Certificated Debt
Securities may be effected only by surrender of the certificate representing
such Certificated Debt Securities and either reissuance by the Company or the
respective Trustee of such certificate to the new holder or the issuance by the
Company or the Trustee of a new certificate to the new holder.
Global Debt Securities and Book Entry System. The procedures that the
Depository has indicated it intends to follow with respect to Book-Entry Debt
Securities are set forth below.
Ownership of beneficial interests in Book-Entry Debt Securities will be
limited to persons that have accounts with the Depository for the related Global
Debt Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Global Debt Security, the Depository will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the Book-Entry Debt Securities
represented by such Global Debt Security beneficially owned by such
participants. The accounts to be credited shall be designated by any dealers,
underwriters or agents participating in the distribution of such Book-Entry Debt
Securities. Ownership of Book-Entry Debt Securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depository for the related Global Debt Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to own, transfer
or pledge beneficial interests in Book-Entry Debt Securities.
So long as the Depository for a Global Debt Security, or its nominee, is
the registered owner of such Global Debt Security, the Depository or such
nominee, as the case may be, will be considered the sole owner or holder of the
Book-Entry Debt Securities represented by such Global Debt Security for all
purposes under the Indentures. Except as set forth below, beneficial owners of
Book-Entry Debt Securities will not be entitled to have such securities
registered in their names, will not receive or be entitled to receive physical
delivery of a certificate in definitive form representing such securities and
will not be considered the owners or holders thereof under the Indentures.
Accordingly, each person beneficially owning Book-Entry Debt Securities must
rely on the procedures of the Depository for the related Global Debt Security
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a Holder
under the Indentures.
The Company understands, however, that under existing industry practice,
the Depository will authorize the persons on whose behalf it holds a Global Debt
Security to exercise certain rights of holders of Debt Securities, and the
Indentures provide that the Company, the Guarantors, if any, the Trustees and
their respective agents will treat as the holder of a Debt Security the persons
specified in a written statement of the Depository with respect to such Global
Debt Security for purposes of obtaining any consents or directions required to
be given by holders of the Debt Securities pursuant to the Indentures.
8
Payments of principal of and premium, if any, and interest on Book-Entry
Debt Securities will be made to the Depository or its nominee, as the case may
be, as the registered holder of the related Global Debt Security. None of the
Company, the Guarantors, if any, the Trustees or any other agent of the Company
or agent of the Trustees 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 Global Debt Security or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depository, upon receipt of any payment of
principal of, premium, if any, or interest, if any, on a Global Debt Security,
will immediately credit participants' accounts with payments in amounts
proportionate to the respective amounts of Book-Entry Debt Securities held by
each such participant as shown on the records of such Depository. The Company
also expects that payments by participants to owners of beneficial interests in
Book-Entry Debt Securities held through such participants will be governed by
standing customer instructions and customary practices, as is now the case with
the securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
Depository or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depository registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, the Company will issue
Certificated Debt Securities in exchange for each Global Debt Security. In
addition, the Company may at any time and in its sole discretion determine not
to have the Book-Entry Debt Securities of any series represented by one or more
Global Debt Securities and, in such event, will issue Certificated Debt
Securities in exchange for the Global Debt Securities of such series. Global
Debt Securities will also be exchangeable by the holders for Certificated Debt
Securities if an Event of Default with respect to the Book-Entry Debt Securities
represented by such Global Debt Securities has occurred and is continuing. Any
Certificated Debt Securities issued in exchange for a Global Debt Security will
be registered in such name or names as the Depository shall instruct the
respective Trustee. It is expected that such instructions will be based upon
directions received by the Depository from participants with respect to
ownership of Book-Entry Debt Securities relating to such Global Debt Security.
The foregoing information in this section concerning the Depository and
the Depository's book-entry system has been obtained from sources the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The obligations of the Company to make any payment on account of the
principal of or premium, if any, or interest on any Subordinated Debt Securities
will, to the extent set forth in the Subordinated Indenture, be subordinate and
junior in right of payment to all Senior Indebtedness (as defined below) of the
Company. During the continuance beyond any applicable grace period of any
default in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness, no payment of principal of, or premium, if any, or
interest on the Subordinated Debt Securities shall be made by the Company. In
addition, upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of, or
premium, if any, and interest on the Subordinated Debt Securities is to be
subordinated to the extent provided in the Subordinated Indenture in right of
payment to the prior payment in full of all Senior Indebtedness. By reason of
such subordination provisions, in the event of the Company's dissolution,
holders of Senior Indebtedness may receive more, ratably, and holders of the
Debentures may receive less, ratably, than the other creditors of the Company.
Such subordination will not prevent the occurrence of any Event of Default under
the Indenture.
Unless otherwise specified in the applicable Prospectus Supplement,
"Senior Indebtedness" of the Company means the principal of and premium, if any,
and interest on, and any other payment due pursuant to any of the following,
whether outstanding on the date of the Indentures or thereafter incurred or
created:
(a) all indebtedness of the Company for money borrowed (including
any indebtedness secured by a mortgage or other lien which is (i) given to
secure all or part of the purchase price of property subject thereto,
whether given to the vendor of such property or to another, or (ii)
existing on property at the time of acquisition thereof);
9
(b) all indebtedness of the Company evidenced by notes, debentures,
bonds or other securities sold by the Company for money;
(c) all lease obligations of the Company which are capitalized on
the books of the Company in accordance with generally accepted accounting
principles;
(d) all indebtedness of others of the kinds described in either of
the preceding clauses (a) or (b) or all lease obligations of others of the
kind described in the preceding clause (c) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the Company through an
agreement to purchase, contingent or otherwise; and
(e) all renewals, extensions or refundings of indebtedness of the
kinds described in any of the preceding clauses (a), (b) or (d) and all
renewals or extensions of leases of the kinds described in either of the
preceding clauses (c) or (d);
unless, in the case of any particular indebtedness, lease, renewal, extension or
refunding, the instrument or lease creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such indebtedness,
lease, renewal, extension or refunding is not superior in right of payment to,
or is pari passu with, the Debt Securities. Notwithstanding the foregoing,
Senior Indebtedness shall not include (i) any indebtedness or lease obligation
of any kind of the Company to any subsidiary of the Company, a majority of the
voting stock of which is owned by the Company, (ii) the Company's 4 1/4%
Convertible Subordinated Debentures due 2007 and (iii) the Company's 2 1/4%
Convertible Subordinated Debentures due 2013.
As of September 30, 1997, the Company had $482,884,000 of Senior
Indebtedness outstanding. The amount of Senior Indebtedness may change in the
future. The Indentures contain no limitations on the incurrence of Senior
Indebtedness.
The applicable Prospectus Supplement may further describe the provisions,
if any, applicable to the subordination of Subordinated Debt Securities of a
particular series offered thereby.
COVENANTS
Unless otherwise indicated in this Prospectus or a Prospectus Supplement,
the Debt Securities will not have the benefit of any covenants that limit or
restrict the Company's business or operations or the incurrence of indebtedness
of the Company.
The applicable Prospectus Supplement will describe any material covenants
in respect of a series of Debt Securities. Other than the covenants of the
Company included in the Indentures as described above or as described in the
applicable Prospectus Supplement, there are no covenants or other provisions in
the Indentures providing for a put or increased interest or otherwise that would
afford holders of Debt Securities additional protection in the event of a
recapitalization transaction, a change of control of the Company or a highly
leveraged transaction.
Except as described in the applicable Prospectus Supplement, there are no
covenants or other provisions in the Indentures providing for a put or increased
interest or otherwise that would afford holders of Debt Securities additional
protection in the event of a recapitalization transaction, a change of control
of the Company or a highly leveraged transaction.
LIMITATION ON LIENS
As long as any of the Senior Debt Securities are outstanding (unless
provision has been made for the payment of all amounts due or to become due
thereon in accordance with the terms of the Senior Indenture), the Company
undertakes not to grant any security interest in any or all of its present or
future assets to secure any other indebtedness of the Company for borrowed money
represented by notes, bonds, debentures or other debt securities, ranking senior
to or on a parity with the Senior Debt Securities, issued pursuant to a
distribution (i) in an underwritten public offering registered under the
Securities Act or (ii) in an underwritten offering to institutional investors
pursuant to Rule 144A without at the same time securing all outstanding Senior
Debt Securities equally and ratably with such securities.
10
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its properties and assets to any
Person (a "Successor Person") unless (i) the Company is the surviving
corporation or the Successor Person (if other than the Company) is a
corporation, partnership, trust or other entity organized and validly existing
under the laws of the United States, any state thereof or the District of
Columbia and expressly assumes the Company's obligations under the Debt
Securities and under the Indentures, (ii) immediately prior to and after giving
effect to the transaction, no Event of Default, and no event which, after notice
or lapse of time, or both, would become an Event of Default, shall have occurred
and be continuing under the Indentures, and (iii) certain other conditions are
met.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will be Events of Default under each of the Indentures with respect to
Debt Securities of any series: (a) default in the payment of any interest upon
any Debt Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days (unless the entire amount of
such payment is deposited by the Company with the Trustee or with a paying agent
prior to the expiration of such period of 30 days); (b) default in the payment
of principal of or premium, if any, on any Debt Security of that series when
such payment becomes due and payable, at maturity, upon redemption or otherwise;
(c) default in the deposit of any sinking fund payment, when and as due in
respect of any Debt Security of that series; (d) default in the performance or
breach of any other covenant or warranty of the Company in the respective
Indenture (other than a covenant or warranty that has been included in the
Indenture solely for the benefit of a series of Debt Securities other than that
series), which default continues uncured for a period of 45 days after written
notice to the Company by the Trustee or to the Company and the Trustee by the
holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of that series as provided in the Indenture; (e) certain events of
bankruptcy, insolvency or reorganization with respect to the Company and the
Guarantors, if any; and (f) any other Event of Default provided with respect to
Debt Securities of that series that is described in the Prospectus Supplement
accompanying this Prospectus. No Event of Default with respect to a particular
series of Debt Securities (except as to certain events in bankruptcy, insolvency
or reorganization with respect to the Company) necessarily constitutes an Event
of Default with respect to any other series of Debt Securities. The occurrence
of an Event of Default may constitute an event of default under the Company's
bank credit agreements in existence from time to time. In addition, the
occurrence of certain Events of Default or an acceleration under the respective
Indenture may constitute an event of default under certain other indebtedness
and/or preferred stock of the Company outstanding from time to time.
If an Event of Default with respect to Debt Securities of any series at
the time outstanding occurs and is continuing, then in every such case the
Trustee or the holders of at least 25% in principal amount of the outstanding
Debt Securities of that series may, by a notice in writing to the Company (and
to the Trustee if given by the holders), declare to be due and payable
immediately the principal (or, if the Debt Securities of that series are
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of and accrued and unpaid interest, if any, on all
Debt Securities of that series. In the case of an Event of Default resulting
from certain events of bankruptcy, insolvency or reorganization, the principal
(or such specified amount) of and accrued and unpaid interest, if any, on all
outstanding Debt Securities shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
holder of outstanding Debt Securities. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the holders of a majority in principal amount of the outstanding
Debt Securities of that series may rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal and
interest, if any, with respect to Debt Securities of that series, have been
cured or waived as provided in the respective Indenture. For information as to
waiver of defaults, see the discussion set forth below under "-- Modification
and Waiver." Reference is made to the Prospectus Supplement relating to any
series of Debt Securities that are Discount Securities for the particular
provisions relating to acceleration of a portion of the principal amount of such
Discount Securities upon the occurrence of an Event of Default.
11
Each Indenture provides that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of outstanding Debt Securities, unless the Trustee receives indemnity
satisfactory to it against any loss, liability or expense. Subject to certain
rights of the Trustee, the holders of a majority in principal amount of the
outstanding Debt Securities of any series shall have the right to 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 with
respect to the Debt Securities of that series.
No holder of any Debt Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to the Indentures
or for the appointment of a receiver or trustee, or for any remedy under the
Indentures, unless such holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to Debt Securities
of that series and unless also the holders of at least a majority in principal
amount of the outstanding Debt Securities of that series shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the holders
of a majority in principal amount of the outstanding Debt Securities of that
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. Notwithstanding the foregoing, the
holder of any Debt Security will have an absolute and unconditional right to
receive payment of the principal of and premium, if any, and any interest on
such Debt Security on or after the due dates expressed in such Debt Security and
to institute suit for the enforcement of any such payment.
Each Indenture requires the Company to furnish to the Trustee a statement
as to compliance with the Indenture. Each Indenture provides that the Trustee
may withhold notice to the holders of Debt Securities of any series of any
Default or Event of Default (except in payment on any Debt Securities of such
series) with respect to Debt Securities of such series if it in good faith
determines that withholding such notice is in the interest of the holders of
such Debt Securities.
MODIFICATION AND WAIVER
Modifications to, and amendments of, the Indentures may be made by the
Company and the respective Trustee with the consent of the holders of at least a
majority in principal amount of the outstanding Debt Securities of each series
under the respective Indenture affected by such modifications or amendments;
provided, however, that no such modification or amendment may, without the
consent of the holder of each outstanding Debt Security affected thereby: (a)
reduce the amount of Debt Securities whose holders must consent to an amendment
or waiver; (b) reduce the rate of or change the time for payment of interest
(including default interest) on any Debt Security; (c) reduce the principal of
or premium, if any, on or change the fixed maturity of any Debt Security or
reduce the amount of, or postpone the date fixed for, the payment of any sinking
fund or analogous obligation with respect to any series of Debt Securities; (d)
reduce the principal amount of Discount Securities payable upon acceleration of
the maturity thereof; (e) waive a default in the payment of the principal of and
premium, if any, or any interest on any Debt Security (except a rescission of
acceleration of the Debt Securities of any series by the holders of at least a
majority in aggregate principal amount of the then outstanding Debt Securities
of such series and a waiver of the payment default that resulted from such
acceleration); (f) make the principal of or premium, if any, or any interest on
any Debt Security payable in currency other than that stated in the Debt
Security; (g) make any change to certain provisions of the respective Indenture
protecting the right of each holder of Debt Securities to receive payment of the
principal of and premium, if any, and any interest on such Debt Securities on or
after the due date thereof or to institute suit for the enforcement of any such
payment and to waivers or amendments; or (h) waive a redemption payment with
respect to any Debt Security. The Company and the respective Trustee may amend
each respective Indenture or the Debt Securities without notice to or consent of
any holder of a Debt Security: (i) to cure any ambiguity, defect or
inconsistency; (ii) to comply with the respective Indenture's provisions
regarding successor corporations; (iii) to comply with any requirements of the
Commission in connection with the qualification of the respective Indenture
under the TIA; (iv) to provide for Global Debt Securities in addition to or in
place of Certificated Debt Securities; (v) to add to, change or eliminate any of
the provisions of the respective Indenture in respect of one or more series of
Debt Securities, provided, however, that any such addition, change or
elimination (A) shall neither (1) apply to any Debt Security of any series
created prior to the execution of such amendment and entitled to the benefit of
such provision, nor (2) modify the rights of a holder of any such Debt Security
with respect to such provision, or (B) shall become effective only when there is
no outstanding Debt
12
Security of any series created prior to such amendment and entitled to the
benefit of such provision; (vi) to make any change that does not adversely
affect in any material respect the interest of any holder; (vii) to secure any
Debt Securities; or (viii) to provide for the issuance of and establish the form
and terms and conditions of additional series of Debt Securities as permitted by
the respective Indenture.
The holders of at least a majority in principal amount of the outstanding
Debt Securities of any series may, on behalf of the holders of all Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with provisions of the respective Indenture other than
certain specified provisions. The holders of a majority in principal amount of
the outstanding Debt Securities of any series may on behalf of the holders of
all the Debt Securities of such series waive any past default under the
respective Indenture with respect to such series and its consequences, except a
default in the payment of the principal of and premium, if any, or any interest
on any Debt Security of that series or in respect of a covenant or provision
which cannot be modified or amended without the consent of the holder of each
outstanding Debt Security of such series affected; provided, however, that the
holders of a majority in aggregate principal amount of the then outstanding Debt
Securities of any series may rescind an acceleration of the Debt Securities of
any series, including a wavier of the payment default that resulted from such
acceleration.
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN
CERTAIN CIRCUMSTANCES
Legal Defeasance. Each Indenture provides that, unless otherwise provided
by the terms of the applicable series of Debt Securities, the Company may be
discharged from any and all obligations in respect of the Debt Securities of any
series (except for certain obligations to register the transfer or exchange of
Debt Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, and to maintain paying agencies and certain
provisions relating to the treatment of funds held by paying agents) upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
that, through the payment of interest and principal in respect thereof in
accordance with their terms, will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent public accountants to pay
and discharge each installment of principal (and premium, if any) and any
interest on and any mandatory sinking fund payments in respect of the Debt
Securities of such series on the stated maturity of such payments in accordance
with the terms of the Indenture and such Debt Securities. Such discharge may
occur only if, among other things, the Company shall have delivered to the
Trustee an opinion of counsel stating that the Company has received from, or
there has been published by, the United States Internal Revenue Service a ruling
or, since the date of execution of the respective Indenture, there has been a
change in the applicable United States federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the holders
of the Debt Securities of such series will not recognize income, gain or loss
for United States federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to United States federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants. Each Indenture provides that, unless
otherwise provided by the terms of the applicable series of Debt Securities,
upon compliance with certain conditions, the Company may omit to comply with the
restrictive covenants, if any, set forth in each respective Indenture, as well
as any additional covenants or other provisions which may be set forth in the
applicable Prospectus Supplement, and any omission to comply with such covenants
will not constitute a Default or an Event of Default with respect to the Debt
Securities of such series ("covenant defeasance"). The conditions include: the
deposit with the trustee of money and/or U.S. Government Obligations that,
through the payment of interest and principal in respect thereof in accordance
with their terms, will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants to pay and
discharge each installment of principal of and premium, if any, and any interest
on and any mandatory sinking fund payments in respect of the Debt Securities of
such series on the stated maturity of such payments in accordance with the terms
of the respective Indenture and such Debt Securities; and the delivery to the
Trustee of an opinion of counsel to the effect that the holders of the Debt
Securities of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of such deposit and related
covenant defeasance and will be subject to United States federal income tax on
the same amounts and in the same manner and at the same times as would have been
the case if such deposit and related covenant defeasance had not occurred.
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REGARDING THE TRUSTEE
The respective Trustee with respect to any series of Debt Securities will
be identified in the Prospectus Supplement relating to such Debt Securities.
Each Indenture and provisions of the TIA incorporated by reference therein
contain certain limitations on the rights of the respective Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases,
or to realize on certain property received in respect of any such claim, as
security or otherwise. Each Trustee and its affiliates may engage in, and will
be permitted to continue to engage in, other transactions with the Company and
its affiliates, provided, however, that if it acquires any conflicting interest
(as defined in the TIA), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
respective Trustee. The TIA and each Indenture provide that in case an Event of
Default shall occur (and be continuing), the respective Trustee will be
required, in the exercise of its rights and powers, to use the degree of care
and skill of a prudent man in the conduct of his own affairs. Subject to such
provision, each Trustee will be under no obligation to exercise any of its
rights or powers under the respective Indenture at the request of any of the
holders of the Debt Securities issued thereunder, unless they have offered to
the Trustee indemnity satisfactory to it.
DESCRIPTION OF PREFERRED STOCK
Under the Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), up to 7,500,000 shares of Preferred Stock, par value $1.00 per
share (the "Preferred Stock"), may be issued from time to time, in one or more
series, as authorized by the Board of Directors, without the approval of
shareholders, and having the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of the series. Prior
to issuance of shares of each series, the Board of Directors is required by the
Business Corporation Law of the State of New York (the "NYBCL") to cause to be
filed a Certificate of Amendment (the "Certificate of Amendment") with the
Secretary of State of the State of New York, fixing for each such series the
powers, preferences and rights, and the qualifications, limitations or
restrictions, of the shares of the series. The Board of Directors could
authorize the issuance of shares of Preferred Stock with terms and conditions
which could have the effect of discouraging a takeover or other transaction
which holders of some, or a majority, of such shares might believe to be in
their best interests or in which holders of some, or a majority, of such shares
might receive a premium for their shares over the then-market price of such
shares.
Subject to limitations prescribed by the NYBCL, the Certificate of
Incorporation and the Bylaws of the Company (the "Bylaws"), the resolution or
resolutions of the Board of Directors providing for the division of Preferred
Stock into series within a class may include the following provisions:
(1) The distinctive designation of each series and the maximum
number of shares of each series which may be issued, which number may be
increased (except where otherwise provided by the Board of Directors in
creating the series) or decreased (but not below the number of shares of
the series then outstanding) from time to time by action of the Board of
Directors;
(2) Whether the holders of shares of each series are entitled to
vote and if so the matters on which they are entitled to vote, the number
of votes to which the holder of each share is entitled, and whether the
shares of the series are to be voted separately or together with shares of
other series;
(3) The dividends to which holders of shares of each series will be
entitled; any restrictions, conditions or limitations upon the payment of
those dividends; whether the dividends will be cumulative and, if
cumulative, the date or dates from which the dividends will be cumulative;
(4) Whether the shares of one or more series will be subject to
redemption, and if so, whether redemption will be mandatory or optional,
and if optional, at whose option, the manner of selecting shares for
redemption, the redemption price and the manner of redemption;
(5) The amount payable on shares of each series if there is a
liquidation, dissolution or winding up of the Company, which amount may
vary at different dates and depending upon whether the liquidation,
dissolution or winding up is voluntary or involuntary;
14
(6) The obligation, if any, of the Company to maintain a purchase,
retirement or sinking fund for shares of each series;
(7) Whether the shares of one or more series will be convertible
into or exchangeable for, any other types of securities, either at the
option of the holder or of the Company, and if so, the terms of the
conversions or exchanges;
(8) whether Depositary Shares representing shares of one or more
series will be offered and, if so, the fraction or multiple of such series
represented by each Depositary Share; and
(9) Any other provisions regarding the powers, preferences and
rights, and the qualifications, limitations or restrictions, of each
series which are not inconsistent with applicable law.
All shares of a series of Preferred Stock will be identical with each other in
all respects, except that shares of any one series issued at different times may
differ as to the dates from which dividends on those shares shall be cumulative.
Reference is made to the Prospectus Supplement relating to the class or
series of Preferred Stock being offered for the specific terms thereof. Unless
otherwise specified in the Prospectus Supplement, the Preferred Stock will, with
respect to dividend rights and rights upon liquidation, dissolution or winding
up of the Company rank: (i) senior to all classes or series of Common Stock of
the Company, and to all equity securities issued by the Company the terms of
which specifically provide that such equity securities rank junior to such
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company; (ii) on a parity with all equity
securities issued by the Company that do not rank senior or junior to the
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company; and (iii) junior to all equity
securities issued by the Company the terms of which do not specifically provide
that such equity securities rank on a parity with or junior to the Preferred
Stock with respect to dividend rights or rights upon liquidation, dissolution or
winding up of the Company (including any entity with which the Company may be
merged or consolidated or to which all or substantially all the assets of the
Company may be transferred or which transfers all or substantially all of the
assets of the Company). As used for these purposes, the term "equity securities"
does not include convertible debt securities.
See "DESCRIPTION OF COMMON STOCK" for certain considerations in connection
with the Company's present and future ability to pay dividends.
DESCRIPTION OF THE DEPOSITARY SHARES
The Company may, at its option, elect to offer Depositary Shares rather
than full shares of Preferred Stock. In the event such option is exercised, each
of the Depositary Shares will represent ownership of and entitlement to all
rights and preferences of a fraction of a share of Preferred Stock of a
specified series (including dividend, voting, redemption and liquidation
rights). The applicable fraction will be specified in the Prospectus Supplement.
The shares of Preferred Stock represented by the Depositary Shares will be
deposited with a Depositary (the "Depositary") named in the applicable
Prospectus Supplement, under a Deposit Agreement (the "Deposit Agreement"),
among the Company, the Depositary and the holders of certificates evidencing
Depositary Shares ("Depositary Receipts"). The Depositary Receipts will be
delivered to those persons purchasing Depositary Shares in the offering. The
Depositary will be the transfer agent, registrar and dividend disbursing agent
for the Depositary Shares. holders of Depositary Receipts agree to be bound by
the Deposit Agreement, which requires holders to take certain actions such as
filing proof of residence and paying certain charges.
The summary of terms of the Company's Depositary Shares contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Deposit Agreement, the Company's
Certificate of Incorporation and the Certificate of Amendment for the applicable
series of Preferred Stock.
15
DIVIDENDS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the series of Preferred Stock represented
by the Depositary Shares to the record holders of Depositary Receipts in
proportion to the number of Depositary Shares owned by such holders on the
relevant record date, which will be the same date as the record date fixed by
the Company for the applicable series of Preferred Stock. The Depositary,
however, will distribute only such amount as can be distributed without
attributing to any Depositary Share a fraction of one cent, and any balance not
so distributed will be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of Depositary Receipts then
outstanding.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Receipts
entitled thereto, in proportion, as nearly as may be practicable, to the number
of Depositary Shares owned by such holders on the relevant record date, unless
the Depositary determines (after consultation with the Company) that it is not
feasible to make such distribution, in which case the Depositary may (with the
approval of the Company) adopt any other method for such distribution as it
deems appropriate, including the sale of such property and distribution of the
net proceeds from such sale to such holders.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, each Depositary Share will
represent, and the owner thereof will be entitled to, the fraction of the
liquidation preference accorded each share of the applicable series of Preferred
Stock, as set forth in the Prospectus Supplement.
REDEMPTION
If the series of Preferred Stock represented by the applicable series of
Depositary Shares is redeemable, such Depositary Shares will be redeemed from
the proceeds received by the Depositary resulting from the redemption, in whole
or in part, of Preferred Stock held by the Depositary. Whenever the Company
redeems any Preferred Stock held by the Depositary, the Depositary will redeem
as of the same redemption date the number of Depositary Shares representing the
Preferred Stock so redeemed. The Depositary will mail the notice of redemption
promptly upon receipt of such notice from the Company and not less than 35 nor
more than 60 days prior to the date fixed for redemption of the Preferred Stock
and the Depositary Shares to the record holders of the Depositary Receipts.
VOTING
Promptly upon receipt of notice of any meeting at which the holders of the
series of Preferred Stock represented by the applicable series of Depositary
Shares are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Receipts as of
the record date for such meeting. Each such record holder of Depositary Receipts
will be entitled to instruct the Depositary as to the exercise of the voting
rights pertaining to the number of shares of Preferred Stock represented by such
record holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote such Preferred Stock represented by such Depositary Shares
in accordance with such instructions, and the Company will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting any of the
Preferred Stock to the extent that it does not receive specific instructions
from the holders of Depositary Receipts.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of Depositary Receipts at the principal office of the
Depositary, upon payment of any unpaid amount due the Depositary, and subject to
the terms of the Deposit Agreement, the owner of the Depositary Shares evidenced
thereby is entitled to delivery of the number of whole shares of Preferred Stock
and all money and other property, if any, represented by such Depositary Shares.
Partial shares of Preferred Stock will not be issued. If the Depositary Receipts
delivered by the holder evidence a number of Depositary
16
Shares in excess of the number of Depositary Shares representing the number of
whole shares of Preferred Stock to be withdrawn, the Depositary will deliver to
such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares. Holders of Preferred Stock thus withdrawn will not
thereafter be entitled to deposit such shares under the Deposit Agreement or to
receive Depositary Receipts evidencing Depositary Shares therefor.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary. However, any
amendment which materially and adversely alters the rights of the holders (other
than any change in fees) of Depositary Shares will not be effective unless such
amendment has been approved by at least a majority of the Depositary Shares then
outstanding. No such amendment may impair the right, subject to the terms of the
Deposit Agreement, of any owner of any Depositary Shares to surrender the
Depositary Receipt evidencing such Depositary Shares with instructions to the
Depositary to deliver to the holder the Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. The Deposit Agreement may be terminated by the
Company or the Depositary 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 dissolution of the Company and such
distribution has been made to all the owners of Depositary Shares.
CHARGES OF DEPOSITARY
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 Depositary in connection with the initial deposit of the
Preferred Stock and the initial issuance of the Depositary Shares, any
redemption of the Preferred Stock and all withdrawals of Preferred Stock by
owners of Depositary Shares. holders of Depositary Receipts will pay transfer,
income and other taxes and governmental charges and certain other charges as are
provided in the Deposit Agreement to be for their accounts. In certain
circumstances, the Depositary may refuse to transfer Depositary Shares, may
withhold dividends and distributions and sell the Depositary Shares evidenced by
such Depositary Receipt if such charges are not paid.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Receipts all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of the
Preferred Stock. In addition, the Depositary will make available for inspection
by holders of Depositary Receipts at the principal office of the Depositary, and
at such other places as it may from time to time deem advisable, any reports and
communications received from the Company which are received by the Depositary as
the holder of Preferred Stock.
Neither the Depositary nor the Company assumes any obligation or will be
subject to any liability under the Deposit Agreement to holders of Depositary
Receipts other than for its negligence or willful misconduct. Neither the
Depositary nor the Company will be liable if it is prevented or delayed by law
or any circumstance beyond its control in performing its obligations under the
Deposit Agreement. The obligations of the Company and the Depositary under the
Deposit Agreement will be limited to performance in good faith of their duties
thereunder, and they will not 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 Depositary may rely on
written advice of counsel or accountants, on information provided by holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information and on documents believed to be genuine and to have been
signed or presented by the proper party or parties.
RESIGNATION AND REMOVAL OF DEPOSITARY
The 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 Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary
17
must be appointed within 60 days after delivery of the notice for resignation or
removal and must be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$150,000,000.
DESCRIPTION OF WARRANTS
The Company may issue warrants to purchase Debt Securities (the "Debt
Warrants"), Preferred Stock (the "Preferred Stock Warrants") or Common Stock
(the "Common Stock Warrants" and, collectively with the Debt Warrants and the
Preferred Stock Warrants, the "Warrants"). Warrants may be issued independently
or together with any Securities and may be attached to or separate from such
Securities. The Warrants are to be issued under warrant agreements (each a
"Warrant Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent (the "Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to the Warrants being offered pursuant
thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the Debt Warrant certificates representing such Debt Warrants, including the
following:
(1) the title of such Debt Warrants;
(2) the aggregate number of such Debt Warrants;
(3) the price or prices at which such Debt Warrants will be issued;
(4) the designation, aggregate principal amount and terms of the
Debt Securities purchasable upon exercise of such Debt Warrants, and the
procedures and conditions relating to the exercise of such Debt Warrants;
(5) the designation and terms of any related Debt Securities with
which such Debt Warrants are issued, and the number of such Debt Warrants
issued with each such security;
(6) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable;
(7) the principal amount of Debt Securities purchasable upon
exercise of each Debt Warrant, and the price at which such principal
amount of Debt Securities may be purchased upon such exercise;
(8) the date on which the right to exercise such Warrants shall
commence, and the date on which such right shall expire;
(9) the maximum or minimum number of such Debt Warrants which may be
exercised at any time;
(10) a discussion of the material United States federal income tax
considerations applicable to the exercise of such Debt Warrants; and
(11) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
Debt Warrant certificates will be exchangeable for new Debt Warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders of
the securities purchasable upon such exercise and will not be entitled to
payments of principal of (or premium, if any) or any interest on the securities
purchasable upon such exercise.
18
PREFERRED STOCK WARRANTS AND COMMON STOCK WARRANTS
The applicable Prospectus Supplement will describe the following terms of
Preferred Stock Warrants or Common Stock Warrants in respect of which this
Prospectus is being delivered:
(1) the title of such Warrants;
(2) the securities for which such Warrants are exercisable;
(3) the price or prices at which such Warrants will be issued;
(4) the number of such Warrants issued with each share of Preferred
Stock or Common Stock;
(5) any provisions for adjustment of the number or amount of shares
of Preferred Stock or Common Stock receivable upon exercise of such
Warrants or the exercise price of such Warrants;
(6) if applicable, the date on and after which such Warrants and the
related Preferred Stock or Common Stock will be separately transferable;
(7) if applicable, a discussion of the material United States
federal income tax considerations applicable to the exercise of such
Warrants;
(8) any other terms of such Warrants, including terms, procedures
and limitations relating to the exchange and exercise of such Warrants;
(9) the date on which the right to exercise such Warrants shall
commence, and the date on which such right shall expire; and
(10) the maximum or minimum number of such Warrants which may be
exercised at any time.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder of Warrants to purchase for cash such
principal amount of Debt Securities or shares of Preferred Stock or Common Stock
at such exercise price as shall in each case be set forth in, or be determinable
as set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the Prospectus Supplement relating to the
Warrants offered thereby. After the close of business on the expiration date,
unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
Warrant certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Debt
Securities or shares of Preferred Stock or Common Stock purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
certificate are exercised, a new Warrant certificate will be issued for the
remaining Warrants.
DESCRIPTION OF COMMON STOCK
The Company's authorized capital consists of 300,000,000 shares of $0.50
par value Common Stock, of which 161,969,510 were outstanding on January 2,
1998, and 7,500,000 shares of $1.00 par value Preferred Stock, none of which is
outstanding. The foregoing reflects the two-for-one stock split in the form of a
one hundred percent stock dividend on the Company's outstanding Common Stock
payable to shareholders of record on December 16, 1997.
Each share of Common Stock entitles the holder thereof to one vote on all
matters submitted to a vote of shareholders. All shares of Common Stock have
equal rights and are entitled to such dividends as may be declared by the Board
of Directors out of funds legally available therefor and to share ratably upon
liquidation in the assets available for distribution to shareholders. The Common
Stock is not subject to call or assessment, has no preemptive conversion or
cumulative voting rights and is not subject to redemption. The Company's
Certificate of Incorporation provides that the Company's Board will be divided
into three classes of directors, with the classes to be as nearly equal in
number as possible. Such a classification of directors may have the effect
19
of making it more difficult for shareholders to change the composition of the
Company's Board since, for example, at least two annual meetings of
shareholders, instead of one, will generally be required to effect a change in a
majority of the Board of Directors. The classification provisions could also
have the effect of discouraging a third party from initiating a proxy contest,
making a tender offer or otherwise attempting to obtain control of the Company,
even though such an attempt might be beneficial to the Company and its
shareholders. The classification of the Board could thus increase the likelihood
that incumbent directors will retain their positions. Additionally, the
Company's shareholders may not remove a director except by an affirmative
two-thirds vote of all outstanding shares. A two-thirds vote is also required
for the Company's shareholders to amend the Company's By-Laws or certain
provisions of its Certificate of Incorporation, and to change the number of
directors comprising the full board.
The Company is not aware of any restrictions on its present or future
ability to pay dividends. However, as indicated in "DESCRIPTION OF DEBT
SECURITIES," in connection with certain borrowing facilities entered into by the
Company and its subsidiaries, the Company is subject to certain restrictions on
the ratio of net cash flow to consolidated indebtedness, the ratio of total
consolidated indebtedness to total consolidated capitalization and on its
ability to make investments in and loans to affiliates and unconsolidated
subsidiaries.
ChaseMellon Shareholder Services, 450 West 33rd Street, New York, New York
10001 is the transfer agent and the registrar of the Common Stock.
The Company mails to its shareholders annual reports containing audited
financial statements.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters to be
designated from time to time, and also may sell Securities directly to other
purchasers or through agents. The distribution of Securities may be effected
from time to time in one or more transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Sales of the
Common Stock may also be effected from time to time in one or more transactions
on the New York Stock Exchange.
The Securities will be new issues of securities with, other than the
Common Stock, no established trading market. It has not presently been
established whether the underwriters, if any, of such Securities will make a
market in such Securities. If a market in such Securities is made by any such
underwriters, such market making may be discontinued at any time without notice.
No assurance can be given as to the liquidity of the trading market for such
Securities.
In order to facilitate the offering of the Securities, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Securities or any other securities the prices of which may be used
to determine payments on such Securities. Specifically, the underwriters may
overallot in connection with the offering, creating a short position in the
Securities for their own accounts. In addition, to cover overallotments or to
stabilize the price of the Securities or of any such other securities, the
underwriters may bid for, and purchase, the Securities or any such other
securities in the open market. Finally, in any offering of the Securities
through a syndicate of underwriters, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Securities in the offering if the syndicate repurchases previously distributed
Securities in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of the Securities above independent market levels. The underwriters
are not required to engage in these activities, and may end any of these
activities at any time.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents in the form of discounts, concessions or commissions. Underwriters
may sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed underwriting discounts and
20
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the applicable Prospectus Supplement.
Unless otherwise indicated in the applicable Prospectus Supplement, the
obligations of any such underwriters to purchase Securities will be subject to
certain conditions precedent, and each of the underwriters with respect to a
sale of Securities will be obligated to purchase all of its Securities if any
are purchased. Unless otherwise indicated in the applicable Prospectus
Supplement, any such agent involved in the offer and sale of the Securities in
respect of which this Prospectus is being delivered will be acting on a "best
efforts" basis for the period of its appointment.
If any underwriters are utilized in the sale of the Securities in respect
of which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set forth
in the Prospectus Supplement, which will be used by the underwriters to make
resales of the Securities in respect of which this Prospectus is delivered to
the public. The underwriters may be entitled, under the relevant underwriting
agreement, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for the Company in the ordinary course
of business.
Under agreements that may be entered into by the Company, underwriters,
agents and their controlling persons who participate in the distribution of
Securities may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase any Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
any Securities will not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
If the Company offers and sells Securities directly to a purchaser or
purchasers in respect of which this Prospectus is delivered, purchasers involved
in the reoffer or resale of such Securities, if such purchasers in respect
thereof may be deemed to be underwriters as that term is defined in the
Securities Act, will be named and the terms of such reoffers or resales will be
set forth in the applicable Prospectus Supplement. Such purchasers may then
reoffer and resell such Securities to the public or otherwise at varying prices
to be determined by such purchasers at the time of resale or as otherwise
described in the applicable Prospectus Supplement. Purchasers of Securities
directly from the Company may be entitled under agreements that they may enter
into with the Company to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may engage in
transactions with or perform services for the Company in the ordinary course of
their business or otherwise.
Morgan Stanley & Co. Incorporated may act as underwriter, dealer or agent
in connection with the sale of Securities. Underwriters or agents and their
associates may be customers of (including borrowers from), engage in
transactions with, and/or perform services for, the Company and its
subsidiaries, or either Trustee, in the ordinary course of business.
EXPERTS
The consolidated financial statements and the financial statement schedule
of the Company and its subsidiaries incorporated by reference in this prospectus
and elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
21
LEGAL MATTERS
Certain legal matters in connection with the legality of the securities
offered hereby will be passed upon for the Company by Donovan Leisure Newton &
Irvine LLP, 30 Rockefeller Plaza, New York, New York 10112.
22