As filed with the Securities and Exchange Commission on March 9, 1998
Registration No. 333-38367
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Amendment No. 1
To
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
INGERSOLL-RAND COMPANY
(Exact name of Registrant as specified in its charter)
New Jersey 13-5156640
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
INGERSOLL-RAND FINANCING I
A Delaware Statutory Business Trust
(I.R.S. Employer Identification Number Pending)
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
(201) 573-0123
(Address, including zip code, and telephone number, including area code,
of principal executive offices)
-------------------------
Patricia Nachtigal, Esq.
Vice President and General Counsel
Ingersoll-Rand Company
P.O. Box 8738
Woodcliff Lake, New Jersey 07675
(201) 573-0123
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
-------------------------
Copies to:
John B. Tehan, Esq. John W. Osborn, Esq.
Simpson Thacher & Bartlett Skadden, Arps, Slate, Meagher & Flom LLP
425 Lexington Avenue 919 Third Avenue
New York, New York 10017 New York, New York 10022
(212) 455-2000 (212) 735-3000
-------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement.
-------------------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box: /_/
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box: /x/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering: /_/
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: /_/
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: /_/
-------------------------
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the accompanying prospectus shall
not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
- -------------------------------------------------------------------------------
Subject to Completion, Dated March 9, 1998
PROSPECTUS SUPPLEMENT
- ---------------------
(To Prospectus dated March , 1998)
14,000,000 FELINE PRIDES/SM/
(Consisting of Income PRIDES/SM/ and Growth PRIDES/SM/)
INGERSOLL-RAND COMPANY
1,400,000 Capital Securities
Ingersoll-Rand Financing I
(Liquidation Amount $25 per Capital Security)
fully and unconditionally guaranteed to
the extent set forth herein by
Ingersoll-Rand Company
-------------------------
The securities offered hereby are 14,000,000 FELINE PRIDES/SM/
("FELINE PRIDES") of Ingersoll-Rand Company, a New Jersey corporation
("Ingersoll-Rand Company" or the "Company"), and 1,400,000 ____% Capital
Securities (the "Capital Securities" and, together with the FELINE
PRIDES, the "Securities") of Ingersoll-Rand Financing I, a statutory
business trust created under the laws of the State of Delaware (the
"Trust"), having a stated liquidation amount per Capital Security equal
to $25. Initially, 12,600,000 of the
(continued on next page)
-------------------------
See "Risk Factors" beginning on page S-23 of this Prospectus
Supplement for certain information relevant to an investment in the
Securities.
Prior to the offering made hereby, there has been no public
market for the Securities. Application will be made to list the Income
PRIDES and the Growth PRIDES on the New York Stock Exchange ("NYSE"),
subject to official notice of issuance. On March 6, 1998, the last
reported sale price of the Common Stock on the NYSE was $47 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.
Price to Public<F1>
$ per Income PRIDES
$ per Growth PRIDES
$ per Capital Security
Underwriting Proceeds to
Commission<F2> Company<F3>
Total(4) . . . . . . . . . . . $ $
<FN>
<F1> Plus, as applicable, accrued distributions, interest and Contract
Adjustment Payments, if any, from March __, 1998.
<F2> The Company and the Trust have agreed to indemnify the Underwriter
against certain liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
<F3> Before deducting expenses payable by the Company estimated at
$____________; such amount does not include $_____ used to purchase
the Treasury Securities Component of the 1,400,000 Growth PRIDES.
<F4> The Company and the Trust have granted to the Underwriter 30-day
options to purchase up to an additional 1,890,000 Income PRIDES,
210,000 Growth PRIDES and 210,000 Capital Securities, to cover
over-allotments, if any; provided, however, that the Underwriter
must purchase, proportionately, at least as many Capital Securities
as Growth PRIDES and must purchase, proportionately, at least as
many Growth PRIDES as Income PRIDES. If such options are exercised
in full, the total Underwriting Commission and Proceeds to Company
will be $ and $ (such amount does not include
$ used to purchase the Treasury Securities component of
the Growth PRIDES), respectively. See "Underwriting."
The Securities are offered by the Underwriter, subject to
prior sale, when, as and if issued to and accepted by it, and subject to
approval of certain legal matters by counsel for the Underwriter and
certain other conditions. The Underwriter reserves the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It
is expected that delivery of the Securities offered hereby will be made
in New York, New York on or about March , 1998.
-------------------------
Merrill Lynch & Co.
-------------------------
The date of this Prospectus Supplement is March , 1998.
- -----------------------------------
/SM/Service Mark of Merrill Lynch & Co., Inc.
(cover continued from previous page)
Capital Securities will be issued and held as a component of the FELINE
PRIDES. The FELINE PRIDES offered hereby will initially consist of (A)
12,600,000 units (referred to as "Income PRIDES ") with a Stated Amount,
per Income PRIDES, of $25 (the "Stated Amount") and (B) at least
1,400,000 units (referred to as "Growth PRIDES" ) with a face amount, per
Growth PRIDES, equal to the Stated Amount; to the extent the number of
Growth PRIDES offered hereby is increased, the number of separate Capital
Securities offered hereby will be increased by at least that number. Each
Income PRIDES will initially consist of a unit comprised of (a) a stock
purchase contract (a "Purchase Contract") under which (i) the holder will
purchase from the Company not later than , 2001 (the "Purchase
Contract Settlement Date"), for $25, a number of newly issued shares of
common stock, $2 par value per share (the "Common Stock"), of the Company equal
to the Settlement Rate described herein, and (ii) the Company will pay
the holder unsecured contract adjustment payments ("Contract Adjustment
Payments") at the rate of % of the Stated Amount per annum and (b)
either beneficial ownership of a Capital Security or upon the occurrence
of a Tax Event Redemption (as defined herein) prior to the Purchase
Contract Settlement Date, the Applicable Ownership Interest (as defined
herein). Each Growth PRIDES will initially consist of a unit comprised of
(a) a Purchase Contract under which (i) the holder will purchase from the
Company on the Purchase Contract Settlement Date, for $25, a number of
newly issued shares of Common Stock of the Company, equal to the
Settlement Rate, and (ii) the Company will pay the holder Contract
Adjustment Payments, at the rate of % of the Stated Amount per
annum, and (b) a 1/40 undivided beneficial interest in a %
zero-coupon U.S. Treasury Security having a principal amount equal to $1,000
and maturing on , 2001 (the "Treasury
Securities"). The Company will, directly or indirectly, own all the
common securities (the "Common Securities" and, together with the Capital
Securities, the "Trust Securities") representing undivided beneficial
ownership interests in the assets of the Trust. The Trust exists for the
sole purpose of issuing the Trust Securities and investing the proceeds
thereof in an equivalent amount of Debentures of the Company, due
, 2003 and initially bearing interest at % (the
"Debentures"). As long as the FELINE PRIDES are in the form of Income
PRIDES or Growth PRIDES, the related Capital Securities or the Treasury
Portfolio or a Treasury Security, as applicable, will be pledged to the
Collateral Agent (as defined herein), to secure the holder's obligation
to purchase Common Stock under the related Purchase Contracts.
The number of shares of Common Stock issuable upon settlement of
each Purchase Contract on the Purchase Contract Settlement Date (the
"Settlement Rate") will be calculated as follows: (a) if the Applicable
Market Value (as defined herein) is equal to or greater than $
(the "Threshold Appreciation Price," which is approximately above
the last reported sale price of the Common Stock set forth on the cover
page of the final Prospectus Supplement (the "Reference Price")), the
Settlement Rate will be ; (b) if the Applicable Market Value is
less than the Threshold Appreciation Price but greater than the Reference
Price, the Settlement Rate will be equal to the Stated Amount divided by
the Applicable Market Value; and (c) if the Applicable Market Value is
less than or equal to the Reference Price, the Settlement Rate will
be .
Aggregate payments of % of the Stated Amount per annum will be
made or accrue on each Income PRIDES quarterly in arrears on February 16,
May 16, August 16 and November 16 of each year, commencing
1998, until the Purchase Contract Settlement Date. These
payments will consist of cumulative cash distributions on the related
Capital Securities or Treasury Portfolio, as applicable, payable at the
rate of % of the stated liquidation amount per annum, and Contract
Adjustment Payments payable by the Company at the rate of % of the
Stated Amount per annum, subject in the case of Capital Securities and
Contract Adjustment Payments, to the Company's right to defer payment of
such amounts. Contract Adjustment Payments, payable by the Company at the
rate of % of the Stated Amount per annum, will be made or accrued on
each Growth PRIDES quarterly in arrears on February 16, May 16, August 16
and November 16 of each year, commencing 1998, until the
Purchase Contract Settlement Date, subject to the Company's right to defer
such payments. In addition, original issue discount ("OID") will
accrue on the related Treasury Security subject to the Company's right to
defer such payments. Holders of each Capital Security will receive
cumulative cash distributions, payable quarterly in arrears, on February
16, May 16, August 16 and November 16 of each year, commencing
1998 at the rate of % of the stated liquidation
amount per annum. Such quarterly distributions on the Capital Securities
will constitute a portion of the quarterly distribution on the related
Income PRIDES. The ability of the Trust to make the quarterly
distributions on the Capital Securities will be solely dependent upon the
receipt of corresponding interest payments from the Company on the
Debentures. The Company will have the right at any time, and from time to
time, limited to a period not extending beyond the maturity date of the
Debentures, to defer the interest payments due on the Debentures. As a
consequence of such deferral, quarterly distributions on the Capital
Securities and the Income PRIDES (to the extent that a portion of the
quarterly distribution on the Income PRIDES is comprised of the quarterly
distributions on the Capital Securities) would be deferred, but would
continue to accrue with interest compounded quarterly. The Company will
have the right at any time, and from time to time, limited to a period
not extending beyond the Purchase Contract Settlement Date, to defer
Contract Adjustment Payments. As a consequence of such deferral, such
portion of the cumulative quarterly distributions on the Income PRIDES
that is comprised of the Contract Adjustment Payments and the quarterly
cash distributions on the Growth PRIDES would be deferred; however, such
deferred Contract Adjustment Payments, if any, would continue to accrue
at the rate of % per annum, compounded quarterly at the higher of
(i) the rate which would accrue on Income PRIDES for such payments and
(ii) the rate which would accrue on Growth PRIDES for such payments.
The distribution rate on the Capital Securities and the interest
rate on the related Debentures outstanding on and after the Purchase
Contract Settlement Date will be reset on the third Business Day (as
defined herein) immediately preceding the Purchase Contract Settlement
Date to a rate per annum (the "Reset Rate") to be determined by the Reset
Agent (as defined herein) equal to the sum of (x) a spread amount (the
"Reset Spread") and (y) the rate of interest on the Two-Year Benchmark
Treasury (as defined herein).
The payment of distributions and certain redemptions out of monies
held by the Trust and payments on liquidation of the Trust will be
guaranteed by the Company (the "Guarantee") to the extent described herein
and under "Description of the Guarantee."
The Company's obligations in respect of the Debentures and the
Guarantee generally will be senior unsecured obligations of the Company.
The Contract Adjustment Payments will be subordinated and junior in right
of payment only to the Company's obligations under the Senior
Indebtedness (as defined herein). "Senior Indebtedness" means
indebtedness of any kind of the Company unless the instrument under which
such indebtedness is incurred expressly provides that it is in parity or
subordinate in right of payments to the Contract Adjustment Payments.
If the holder of an Income PRIDES has not notified the Purchase
Contract Agent (as defined herein), of its intention to settle the
related Purchase Contract with separate cash, the Remarketing Agent (as
defined herein), pursuant to the terms of the Remarketing Agreement (as
defined herein), will use its reasonable efforts to remarket the related
Capital Security (bearing the Reset Rate) on the third Business Day
immediately preceding the Purchase Contract Settlement Date for
settlement on the Purchase Contract Settlement Date at a price of
approximately 100.5% of such Capital Security's stated liquidation amount
plus accrued and unpaid distributions (including deferred distributions,
if any) thereon. The proceeds from such remarketing, in an amount equal
to the aggregate stated liquidation amount of such Capital Securities, will
automatically be applied to satisfy in full such holder's obligation
to purchase Common Stock under the related Purchase Contract. In
addition, after deducting as a remarketing fee (the "Remarketing Fee") an
amount not exceeding 25 basis points (.25%) of the aggregate stated
liquidation amount of the remarketed securities, from any amount received
in connection with such remarketing in excess of the aggregate stated
liquidation amount of such Capital Securities plus any accrued and unpaid
distributions (including deferred distributions, if any), the Remarketing
Agent will remit the remaining portion of the proceeds, if any, to the
Purchase Contract Agent for the benefit of such holder. If, despite using
its reasonable efforts the Remarketing Agent fails to remarket the
Capital Securities (other than to the Company) at a price not less than 100%
of their aggregate stated liquidation amount plus accrued and unpaid
distributions (including deferred distributions, if any), the remarketing
will be deemed to have failed (a "Failed Remarketing") and the Company will
exercise its rights as a secured party to dispose of the Capital
Securities in accordance with applicable law and satisfy in full, from
the proceeds of such disposition, such holder's obligation to purchase
Common Stock under the related Purchase Contracts; provided, that if the
Company exercises such rights as a secured Party with respect to such
Capital Securities, any accrued and unpaid distributions (including any
deferred distributions, if any) on such Capital Securities will be paid
in cash by the Company to the holder of record of such Capital
Securities. Holders of Capital Securities which are not components of
Income PRIDES may elect, in the manner described herein, to have their
Capital Securities remarketed by the Remarketing Agent.
On or prior to the fifth Business Day immediately preceding the
Purchase Contract Settlement Date, each holder (including an Underwriter)
of an Income PRIDES may substitute for the related Capital Securities
zero-coupon U.S. Treasury Securities, which are principal strips of the
% U.S. Treasury Securities that mature on the Business Day
immediately preceding the Purchase Contract Settlement Date (the
"Treasury Securities"), thereby creating Growth PRIDES. Such Treasury
Securities will be pledged with the Collateral Agent to secure the
holder's obligation to purchase Common Stock under the related Purchase
Contracts. In the event that Contract Adjustment Payments are at a higher
rate for Growth PRIDES than for Income PRIDES, holders of Income PRIDES
wishing to recreate Growth PRIDES will also be required to deliver cash
in an amount equal to the excess of the Contract Adjustment Payments that
would have accrued since the last Payment Date through the date of
substitution on the Growth PRIDES being created by such holders, over the
Contract Adjustment Payments that have accrued over the same time period
on the related Incoming PRIDES.
If a Failed Remarketing has occurred, each holder of Trust
Securities (or, following the distribution of the Debentures upon a
dissolution of the Trust as described herein, the holders of such
Debentures) holding such Trust Securities (or Debentures, as the case may
be) following the Purchase Contract Settlement Date will have the right,
in the case of the Trust Securities, to require the Trust to distribute
their pro rata share of the Debentures to The Bank of New York, as
exchange agent (the "Exchange Agent") and the Exchange Agent will put
such Debentures to the Company on behalf of such holders, (or, in the
case of the persons who hold the Debentures directly, such persons will
have the right to put their Debentures directly to the Company)
on , 2001, upon at least three Business Days' prior notice,
at a price equal to the principal amount thereof, plus accrued and unpaid
interest (including deferred interest), if any, thereon.
On the Business Day immediately preceding the Purchase Contract
Settlement Date, unless a holder of Income PRIDES or Growth PRIDES (i)
has settled the related Purchase Contracts through the early delivery of
cash to the Purchase Contract Agent in the manner described herein, (ii)
in the case of Income PRIDES, has settled the related Purchase Contracts
with separate cash on the Business Day immediately preceding the Purchase
Contract Settlement Date pursuant to prior notification to the Purchase
Contract Agent, (iii) has had the Capital Securities related to such
holder's Purchase Contract remarketed in the manner described herein in
connection with settling such Purchase Contracts, or (iv) an event
described under "Description of the Purchase Contracts--Termination" has
occurred, then (A) in the case of Income PRIDES (unless a Tax Event
Redemption has occurred) the Company will exercise its rights as a
secured party to dispose of the Capital Securities in accordance with
applicable law and (B) in the case of Growth PRIDES or Income PRIDES (in
the event that a Tax Event Redemption has occurred), the principal amount
of the related Treasury Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as applicable, when paid at
maturity, will automatically be applied, pursuant to the exercise of such
rights by the Company to satisfy in full such holder's obligation to
purchase Common Stock under the related Purchase Contracts.
In the event that a holder of either Income PRIDES or Growth PRIDES
effects the early settlement of the related Purchase Contracts through
the delivery of cash or settles (in the case of Income PRIDES) such Purchase
Contracts with cash on the Business Day immediately preceding
the Purchase Contract Settlement Date, the related Capital Securities,
the appropriate Applicable Ownership Interest of the Treasury Portfolio
or Treasury Securities, as the case may be, will be released to the
holder as described herein.
The Company will have the right at any time to dissolve the Trust
and, after satisfaction of liabilities to creditors, cause the Debentures
to be distributed to the holders of the Trust Securities. If the
Debentures are distributed to the holders of the Capital Securities, the
Company will use its best efforts to cause the Debentures to be listed on
such exchange on which the Capital Securities are then listed, including,
if applicable, the New York Stock Exchange.
The Debentures (and, thus, the Trust Securities) are redeemable at
the option of the Company, in whole but not in part, upon the occurrence
and continuation of a Tax Event (as defined herein) under the
circumstances described herein (a "Tax Event Redemption"). If the Company
so redeems all of the Debentures, the Trust must redeem all of the Trust
Securities at a redemption price (the "Redemption Price") per Trust
Security equal to the Redemption Amount (as defined herein) plus accrued
and unpaid distributions including deferred distributions, if any,
thereon to the date fixed for redemptions and pay in cash such Redemption
Price to the holders of such Trust Securities. If such Tax Event
Redemption occurs prior to the Purchase Contract Settlement Date, the
Redemption Price payable in liquidation of the Income PRIDES holders'
interests in the Trust or in the Debentures will be distributed to the
Collateral Agent, who in turn will apply an amount equal to the
Redemption Amount of such Redemption Price to purchase, on behalf of the
holders of Income PRIDES, the Treasury Portfolio and remit the remaining
portion, if any, of such Redemption Price to the Purchase Contract Agent
for payment to the holder of such Income PRIDES. See "Description of the
Debentures--Tax Event Redemption." Such Treasury Portfolio will be
substituted for the Capital Securities and will be pledged to the
Collateral Agent to secure such Income PRIDES holders' obligations to
purchase the Common Stock under their Purchase Contracts.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF
THE SECURITIES AND THE COMMON STOCK OF THE COMPANY. SUCH TRANSACTIONS MAY
INCLUDE STABILIZING TRANSACTIONS, THE PURCHASE OF SECURITIES TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
PROSPECTUS SUPPLEMENT SUMMARY
-----------------------------
The following summary information is qualified in its entirety by
the more detailed information and consolidated financial statements of
the Company appearing elsewhere in the accompanying Prospectus, this
Prospectus Supplement or in the documents incorporated herein or in the
accompanying Prospectus by reference. A listing of the pages on which
certain definitions of capitalized terms used in this Prospectus
Supplement Summary and elsewhere in this Prospectus Supplement are
defined is set forth in the "Index of Terms for Prospectus Supplement"
herein. Except as otherwise noted, all information in this Prospectus
Supplement assumes no exercise of the Underwriter's over-allotment
options.
The Company
-----------
Ingersoll-Rand was organized in 1905 under the laws of the State of
New Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the
Rand Drill Company, whose businesses were established in the early 1870s.
Over the years, the Company has supplemented its original business, which
consisted primarily of the manufacture and sale of rock drilling
equipment, with additional products which have been developed internally
or obtained through acquisition.
Ingersoll-Rand manufactures and sells primarily nonelectrical
machinery and equipment. Principal products include the following:
Agricultural sprayers
Air balancers
Air compressors & accessories
Air dryers
Air logic controls
Air motors
Air and electric tool
Architectural hardware trim
Asphalt compactors
Asphalt pavers
Automated production systems
Automotive components
Ball bearings
Blasthole drills
Blowers
Centrifugal pumps
Compact hydraulic excavators
Construction equipment
Diaphragm pumps
Directional drills
Door closers
Door control hardware
Door locks, latches & locksets
Doors and door frames (steel)
Drilling equipment and accessories
Electrical security systems
Engineered pumps
Engine-starting systems
Exit devices
Extrusion pump systems
Fastener-tightening systems
Fluid-handling equipment
Foundation drills
Golf cars
Hoists
Hydraulic breakers
Lubrication equipment
Material handling equipment
Mining equipment
Multistage pumps
Needle roller bearings
Parts-washing systems
Paving equipment
Pneumatic breakers
Pneumatic cylinders
Pneumatic valves
Portable compressors
Portable generators
Portable light towers
Reciprocating pumps
Road-building machinery
Rock drills
Rock stabilizers
Roller bearings
Rotary drills
Rotary pumps
Rough-terrain forklifts
Skid-steer loaders
Soil compactors
Spray-coating systems
Submersible pumps
Transport temperature control systems
Utility vehicles
Vacuum pumps
Vertical turbine pumps
Waterjet-cutting systems
Water-well drills
Winches
These products are sold primarily under the Company's name and also
under other names including ABG, Aro, Beebe, Blaw-Knox, Bobcat, Carryall,
Centac, Charles Maire, Club Car, Crawlair, Cyclone, Ecoair, Elite, Dixie-
Pacific Fafnir, Falcon, Glynn-Johnson, Ingersoll-Dresser Pumps, Jeumont-
Schneider Pumps, Kilian, Klemm, LCN, McCartney, Melroe, Montabert, NREC,
Newman Tonks, Normbau, Pacific, Phoenix, Pleuger, Promaxx, Samiia,
Schlage, Sensor I, Sierra, Spra-Coupe, Steelcraft, Tensor I, Thermo King,
Torrington, Von Duprin, Worthington and Zimmerman.
The Company employs approximately 47,000 people. It has over 100
manufacturing plants throughout the world.
During the last three years, the Company has been involved in an
aggressive acquisition and divestment program. The larger acquisitions
included the following:
-- the May 1995 acquisition of Clark Equipment Company for
approximately $1.5 billion.
-- the April 1997 acquisition of Newman Tonks Group PLC ("Newman
Tonks") for approximately $370 million. Newman Tonks is based
in the United Kingdom and is a leading manufacturer, specifier
and supplier of a wide range of branded architectural products
in the building industry.
-- the October 1997 acquisition of Thermo King Corporation
("Thermo King") for approximately $2.56 billion. Thermo King
designs, manufactures and distributes transport temperature
control systems and service parts for a variety of mobile
applications, including trailers, truck bodies, sea-going
containers, buses and light rail cars.
The larger divestitures included:
-- the February 1997 sale of the Company's Clark-Hurth Group to
Dana Corporation for approximately $260 million.
-- the March 1996 sale of the Company's Pulp Machinery Division
for approximately $122 million to Beloit Corporation, a
subsidiary of Harnischfeger Industries, Inc.
-- the December 1996 sale of the remainder of the Process Systems
Group for approximately $58 million to Gencor Industries, Inc.
The Company's principal executive offices are at 200 Chestnut Ridge
Road, Woodcliff Lake, New Jersey 07675 (telephone 201-573-0123).
The Trust
---------
The Trust is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement, executed by the Company, as depositor
(the "Sponsor"), and certain of the trustees of the Trust (the
"Ingersoll-Rand Trustees") and (ii) the filing of a certificate of trust
with the Secretary of State of the State of Delaware on August 18, 1997.
Such trust agreement will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus
Supplement forms a part. The Declaration will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The Trust exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial ownership
interests in the assets of the Trust, (ii) investing the gross proceeds
of the Trust Securities in the Debentures and (iii) engaging in only
those other activities necessary or incidental thereto. See "The Trust."
The Offering
------------
Securities Offered . . . . . . . . . . . . . . . 14,000,000 FELINE
PRIDES,
consisting of
12,600,000 Income
PRIDES and at
least 1,400,000
Growth PRIDES,
and at least
1,400,000
separate Capital
Securities.
12,600,000
Capital
Securities will
be initially
issued and held
as a component of
the Income
PRIDES.
Issuers . . . . . . . . . . . . . . . . . . . . . Ingersoll-Rand
Company and
Ingersoll-Rand
Financing I.
Stated Amount . . . . . . . . . . . . . . . . . . $25 per FELINE
PRIDES.
Listing of the Income
PRIDES and Growth PRIDES . . . . . . . . . . . Application will
be made to list
the Income PRIDES
and the Growth
PRIDES on the
NYSE, subject to
official notice
of issuance. If
Capital
Securities are
separately traded
to a sufficient
extent that the
applicable
exchange listing
requirements are met,
the Company
will endeavor to
cause such
securities to be
listed on such
exchange on which
the Income PRIDES
and the Growth
PRIDES are then
listed,
including, if
applicable, the
NYSE. See
"Underwriting."
NYSE Symbol of Common Stock . . . . . . . . . . . "IR"
Use of Proceeds . . . . . . . . . . . . . . . . . All of the proceeds
from the sale of
the Income
PRIDES, the
Capital
Securities which
are not
components of the
Income PRIDES and
the Common
Securities will
be invested by
the Trust in
Debentures of the
Company. The
Company currently
anticipates using
substantially all of
the net proceeds
from the
sale of the
Debentures,
estimated to be
approximately $
million
(after deducting
the underwriting
commission and
expenses), to
repay commercial
paper
indebtedness
having an average
interest rate of
approximately
5.7% incurred in
connection with
the acquisition of
Thermo King.
All of the proceeds
from the sale of
the Growth PRIDES
will be used to
purchase the
underlying
Treasury
Securities to be
transferred to
holders of the
Growth PRIDES
pursuant to the
terms thereof,
and the Company
will receive no
proceeds from the
sale of the
Growth PRIDES.
Components of FELINE PRIDES . . . . . . . . . . . The 14,000,000
FELINE PRIDES
offered hereby
will initially
consist of (A)
12,600,000 units
referred to as
Income PRIDES and
(B) at least
1,400,000 units
referred to as
Growth PRIDES; to
the extent the
number of Growth
PRIDES offered hereby
is increased, the
number of separate
Capital Securities
offered hereby will
be increased by
at least that
number. Each
Income PRIDES
will initially
consist of a unit
comprised of (a)
a Purchase
Contract under
which (i) the
holder will
purchase from the
Company on the
Purchase Contract
Settlement Date,
for an amount of
cash equal to the
Stated Amount, a
number of newly
issued shares of
Common Stock of
the Company equal to
the Settlement
Rate, and (ii)
the Company will
pay Contract
Adjustment
Payments at the
rate of % of
the Stated Amount
per annum to the
holder, and (b)
either a
beneficial
interest in
a % Capital
Security, having
a stated
liquidation
amount equal to
$25 representing
an undivided
beneficial
ownership
interest in the
assets of the
Trust or, upon
the occurrence of
a Tax Event
Redemption prior
to the Purchase
Contract
Settlement Date,
the appropriate
Applicable
Ownership
Interest in the
Treasury
Portfolio.
The Company may
at any time
dissolve the
Trust and, after
satisfaction of
liabilities to
creditors of the
Trust, if any,
cause the
Debentures to be
distributed to
the holders of
the Capital
Securities.
References herein
to Capital
Securities,
unless the
context otherwise
requires, mean
(i) the Capital
Securities or
(ii) the
Debentures which
have been
delivered to the
holders of the
Capital
Securities upon
dissolution of
the Trust.
In addition, as
described below,
upon the
occurrence of a
Tax Event (as
defined herein)
prior to the
Purchase Contract
Settlement Date,
the Company may
at its option
cause the
Debentures (and,
thus, the Capital
Securities) to be
redeemed at the
Redemption Price
and the Treasury
Portfolio will be
substituted for
the redeemed
Capital
Securities in the
manner described
herein to secure
the Income PRIDES
holders'
obligations under
their related
Purchase
Contracts. The
distribution rate
and the payment
dates for the
Capital Securit-
ies will be the
same as the
interest rate and
the payment dates
for the
Debentures, which
will be the sole
assets of the
Trust.
As long as a
FELINE PRIDES is
in the form of an
Income PRIDES,
the related
Capital
Securities, or
the Treasury
Portfolio, as
applicable, will
be pledged
pursuant to a
pledge agreement,
to be dated as of
March , 1998
(the "Pledge
Agreement"),
between the
Company and The
Chase Manhattan
Bank, as
collateral agent
for the Company
(together with
any successor
thereto in such
capacity, the
"Collateral
Agent"), to
secure the
holder's
obligation to
purchase Common
Stock under the
related Purchase
Contract.
Each Growth
PRIDES will
consist of a unit
with a face
amount of $25
comprised of (a)
a Purchase
Contract under
which (i) the
holder will
purchase from the
Company not later
than the Purchase
Contract
Settlement Date
for an amount of
cash equal to the
Stated Amount of
such Growth
PRIDES a number
of newly issued
shares of Common
Stock equal to
the Settlement
Rate and (ii) the
Company will pay
the holder
Contract
Adjustment
Payments at the
rate of % of
the Stated Amount
per annum to the
holder; and (b) a
1/40 undivided
beneficial
ownership
interest in a
Treasury Security
having a
principal amount
at maturity equal
to $1,000 and
maturing on the
Business Day
immediately
preceding the
Purchase Contract
Settlement Date.
The FELINE PRIDES
will be issued
under a Purchase
Contract
Agreement, to be
dated as of March
, 1998 (the
"Purchase
Contract
Agreement"),
between the
Company and The
Bank of New York,
as agent for the
holders of the
FELINE PRIDES
(together with
any successor
thereto in such
capacity, the
"Purchase
Contract Agent").
Creating Growth PRIDES . . . . . . . . . . . . . Each holder of an
Income PRIDES may
substitute for
the related
Capital
Securities or the
Applicable
Ownership
Interest of the
Treasury
Portfolio held by
the Collateral
Agent zero-coupon
U.S. Treasury
Securities in an
amount per Income
PRIDES equal to
the Stated Amount
per Capital
Security. Such
substitution may
be made on or
prior to the
fifth Business
Day immediately
preceding the
Purchase Contract
Settlement Date
but only in
integral
multiples of 40
Income PRIDES;
provided,
however, if the
Treasury
Portfolio has
become a
component of the
Income PRIDES,
holders of Income
PRIDES may make
such
substitutions
only in integral
multiples of
320,000 Income
PRIDES at any
time on or prior
to the second
Business Day
immediately
preceding the
Purchase Contract
Settlement Date.
In the event that
Contract
Adjustment
Payments are at a
higher rate for
Growth PRIDES
than for Income
PRIDES, holders
of Income PRIDES
wishing to create
Growth PRIDES
also will be
required to
deliver cash in
an amount equal
to the excess of
the Contract
Adjustment
Payments that
would have
accrued since the
last Payment Date
through the date
of substitution
on the Growth
PRIDES being
created by such
holders, over the
Contract
Adjustment Payments
that have
accrued over the
same time period
on the related
Income PRIDES.
Creating Income PRIDES . . . . . . . . . . . . . On or prior to
the fifth
Business Day
immediately
preceding the
Purchase Contract
Settlement Date,
a holder of
Growth PRIDES
will have the
right to create
Income PRIDES by
delivering 40
Growth PRIDES to
the Purchase
Contract Agent
plus 40 Capital
Securities to the
Collateral Agent
in exchange for
40 Income PRIDES
and the release
of the related
Treasury Security
to such holder;
provided,
however, if a Tax
Event Redemption
has occurred
prior to the
Purchase Contract
Settlement Date
and the Treasury
Portfolio has
become a
component of the
Income PRIDES,
holders of Growth
PRIDES may make
such substitution
(but using the
Applicable Owner-
ship Interest of
the Treasury
Portfolio rather
than Capital
Securities) only
in integral
multiples of
320,000 Growth
PRIDES at any
time on or prior
to the second
Business Day
immediately
preceding the
Purchase Contract
Settlement Date.
Such Capital
Securities or the
appropriate
Applicable Owner-
ship Interest of
the Treasury
Portfolio, as the
case may be, will
be pledged with
the Collateral
Agent to secure
the holder's
obligation to
purchase Common
Stock under the
related Purchase
Contracts.
Current Payments . . . . . . . . . . . . . . . . Holders of Income
PRIDES will be
entitled to
receive aggregate
cash
distributions at
a rate of %
of the Stated
Amount, payable
quarterly in
arrears,
consisting of
cumulative cash
distributions on
the related
Capital Securi-
ties payable at
the rate of %
of the Stated
Amount per annum,
or on the
Treasury
Portfolio,
payable at the
rate of % of
the Stated Amount
per annum, as
applicable, and
Contract
Adjustment
Payments, payable
by the Company at
the rate of
% of the
Stated Amount per
annum, subject
(in the case of
both the
distributions on
the Capital
Securities and of
the Contract
Adjustment
Payments), to the
Company's right
to defer the
payment of such
amounts. The
ability of the
Trust to make the
quarterly
distributions on
the related
Capital
Securities will
be solely
dependent upon
the receipt of
corresponding
interest payments
from the Company
on the
Debentures. The
Company's
obligations with
respect to the
Debentures will
be senior and
unsecured and
will rank on a
parity in right
of payment with
all other senior
unsecured
obligations of
the Company. If a
Tax Event
Redemption has
occurred,
quarterly
distributions on
the appropriate
quarterly
distribution to
the holders of
Income PRIDES
will not be
deferred.
Holders of Growth
PRIDES will be
entitled to
receive quarterly
cash
distributions of
Contract
Adjustment
Payments, payable
by the Company at
the rate of
% of the
Stated Amount per
annum, subject to
the Company's
rights of
deferral
described herein.
In addition, OID
would continue to
accrue on the
related Treasury
Securities. See
"Risk Factors--
Right to Defer
Current
Payments."
Contract Adjustment Payments . . . . . . . . . . Contract
Adjustment
Payments will be
fixed at a rate
per annum of
% of the
Stated Amount per
Purchase Contract
in the case of
Income PRIDES,
and % of the
Stated Amount per
Purchase
Contract, in the
case of Growth
PRIDES. The
Contract
Adjustment
Payments, will be
subordinated and
junior in right
of payment to the
Senior
Indebtedness. See
"Description of
the Purchase
Contracts--
Contract
Adjustment
Payments."
Option to Defer Current Payments . . . . . . . . The Company has
the right at any
time, and from
time to time,
limited to a
period not
extending beyond
the maturity date
of the
Debentures, to
defer the
interest payments
due on the
Debentures. As a
consequence of
such deferral,
the corresponding
quarterly
distributions to
holders of
Capital
Securities and
Income PRIDES
would be deferred
(but despite such
deferral, would
continue to
accumulate
quarterly and
would accrue
interest thereon
compounded
quarterly at the
rate of %
per annum through
and including
,
2001, and at the
Reset Rate
thereafter). The
Company also has
the right to
defer the payment
of Contract
Adjustment
Payments on the
related Purchase
Contracts until
no later than the
Purchase Contract
Settlement Date;
however, such
deferred Contract
Adjustment
Payments will
bear additional
Contract
Adjustment
Payments at the
rate of %
per annum (the
higher of (i) the
rate which would
accrue on Income
PRIDES for such
payments and (ii)
the rate which
would accrue on
Growth PRIDES for
such payments)
(such deferred
Contract
Adjustment
Payments together
with such
additional
Contract
Adjustment
Payments shall be
referred to as
the "Deferred
Contract
Adjustment
Payments"). See
"Description of
the Purchase
Contracts --
Contract
Adjustment
Payments." If
interest payments
on the Debentures
or the Contract
Adjustment
Payments are
deferred, the
Company has
agreed, among
other things, not
to declare or pay
any dividend on
or repurchase its
capital stock
(subject to
certain
exceptions)
during the period
of such deferral.
If a Tax Event
Redemption has
occurred prior to
the Purchase
Contract
Settlement Date
and the Treasury
Portfolio has
become a
component of the
Income PRIDES,
quarterly
distributions on
the appropriate
Applicable
Ownership
Interest of the
Treasury
Portfolio as a
portion of the
cumulative
quarterly
distributions to
the holders of
Income PRIDES
will not be
deferred.
In the event that
the Company
elects to defer
the payment of
Contract
Adjustment
Payments on the
related Purchase
Contracts until
the Purchase
Contract
Settlement Date,
each holder of
the related
Income PRIDES or
Growth PRIDES
will receive on
the Purchase
Contract
Settlement Date
in respect of
such Deferred
Contract
Adjustment
Payments, in lieu
of a cash
payment, a number
of shares of
Common Stock
equal to (x) the
aggregate amount
of Deferred
Contract
Adjustment
Payments payable
to such holder
divided by (y)
the Applicable
Market Value (as
defined herein).
See "Description
of the Purchase
Contracts--Option
to Defer Contract
Adjustment
Payments."
Payment Dates . . . . . . . . . . . . . . . . . . Subject to the
deferral
provisions
described herein,
the current
payments
described above
in respect of the
Income PRIDES and
Growth PRIDES
will be payable
quarterly in
arrears on
February 16, May
16, August 16 and
November 16 of
each year,
commencing
,
1998, through and
including (i) in
the case of the
Contract
Adjustment
Payments, the
earlier of the
Purchase Contract
Settlement Date
or the most
recent such
quarterly date on
or prior to any
early settlement
of the related
Purchase
Contracts and
(ii) in the case
of Capital
Securities that
are components of
Income PRIDES,
the most recent
such quarterly
date on or prior
to the earlier of
the Purchase
Contract
Settlement Date
and the date the
liquidation
amount of such
Capital Security,
together with all
accumulated and
unpaid
distributions
thereon (each, a
"Payment Date")
is paid in full.
Remarketing . . . . . . . . . . . . . . . . . . . Unless a Tax
Event Redemption
has occurred,
pursuant to a
remarketing
agreement (the
"Remarketing
Agreement") dated
as of March ,
1998, among the
Company, the
Trust, the
Purchase Contract
Agent and a
nationally
recognized in-
vestment banking
firm chosen by
the Company (the
"Remarketing
Agent"), and
subject to the
terms of a
Remarketing
Underwriting
Agreement to be
dated as of the
third Business
Day immediately
preceding the
Purchase Contract
Settlement Date
among such
parties (the
"Remarketing
Underwriting
Agreement"), the
Capital
Securities of
such Income
PRIDES holders
who have failed
to notify the
Purchase Contract
Agent on or prior
to the fifth
Business Day
immediately
preceding the
Purchase Contract
Settlement Date
of their
intention to
settle the
related Purchase
Contracts with
separate cash
will be
remarketed on the
third Business
Day immediately
preceding the
Purchase Contract
Settlement Date.
The Remarketing
Agent will use
its reasonable
efforts to
remarket such
Capital
Securities
(bearing the
Reset Rate) on
such date for
settlement on the
Purchase Contract
Settlement Date
at a price of ap-
proximately
100.5% of the
aggregate stated
liquidation
amount of such
Capital Security,
plus accrued and
unpaid
distributions
(including any
deferred
distributions),
if any, thereon.
The portion of
the proceeds from
such remarketing
equal to the
aggregate stated
liquidation
amount of such
Capital
Securities will
be automatically
applied to
satisfy in full
such Income
PRIDES holders'
obligations to
purchase Common
Stock under the
related Purchase
Contracts. In
addition, after
deducting as the
Remarketing Fee
an amount not
exceeding 25
basis points
(.25%) of the
aggregate stated
liquidation
amount of the
remarketed
securities from
any amount of
such proceeds in
excess of the
aggregate stated
liquidation
amount of the
remarketed
Capital
Securities plus
any accrued and
unpaid
distributions
(including any
deferred
distributions),
the Remarketing
Agent will remit
the remaining
portion of the
proceeds, if any,
for the benefit
of such holder.
Income PRIDES
holders, whose
Capital
Securities are so
remarketed will
not otherwise be
responsible for
any Remarketing
Fee in connection
therewith. If,
despite using its
reasonable
efforts, the
Remarketing Agent
cannot remarket
the related Capital
Securities (other than
to the Company) of
such holders of
Income PRIDES at
a price not less
than 100% of the
aggregate stated
liquidation
amount of such
Capital
Securities plus
accrued and
unpaid
distributions,
including
deferred
distributions, if
any, resulting in
a Failed
Remarketing, the
Company will
exercise its
rights as a
secured party to
dispose of the
Capital
Securities in
accordance with
applicable law
and to satisfy in
full, from the
proceeds of such
disposition, such
holder's
obligation to
purchase Common
Stock under the
related Purchase
Contracts;
provided, that if
the Company
exercises such
rights as a
secured party
with respect to
such Capital
Securities, any
accrued and
unpaid
distributions
(including any
deferred
distributions) on
such Capital
Securities will
be paid in cash
by the Company to
the holder of
record of such
Capital
Securities. The
Company will
cause a notice of
such Failed
Remarketing to be
published on the
second Business
Day immediately
preceding the
Purchase Contract
Settlement Date.
It is currently
anticipated that
Merrill Lynch,
Pierce, Fenner &
Smith
Incorporated will
be the
Remarketing
Agent. See
"Description of
the Purchase
Contracts--
Remarketing."
Settlement of Purchase Contracts . . . . . . . . The Purchase
Contract
Settlement Date
is ,
2001. On the
Business Day
immediately
preceding the
Purchase Contract
Settlement Date,
unless a holder
of Income PRIDES
or Growth PRIDES
(i) has settled
the related
Purchase
Contracts through
the early
delivery of cash
to the Purchase
Contract Agent in
the manner
described herein,
(ii) in the case
of Income PRIDES,
has settled the
related Purchase
Contracts with
separate cash on
the Business Day
prior to the
Purchase Contract
Settlement Date
pursuant to prior
notification to
the Purchase
Contract Agent,
(iii) in the case
of Income Prides,
has had the
Capital
Securities
related to such
holder's Purchase
Contracts
remarketed in the
manner described
herein in
connection with
settling such
Purchase
Contracts (and
such remarketing
has not "failed"
(as described
herein)), or (iv)
an event
described under
"Description of
the Purchase
Contracts--
Termination" has
occurred, (A) in
the case of
Income PRIDES
(unless a Tax
Event Redemption
has occurred),
the Company will
exercise its
rights as a
secured party to
dispose of the
related Capital
Securities in
accordance with
the applicable
law, and (B) in
the case of
Growth PRIDES or
Income PRIDES (if
a Tax Event
Redemption has
occurred) the
principal amount
of the related
Treasury
Securities or the
appropriate
Applicable
Ownership
Interest of the
Treasury
Portfolio, as
applicable, when
paid at maturity,
will
automatically be
applied pursuant
to the exercise
of such rights by
the Company to
satisfy in full
such holder's
obligation to
purchase Common
Stock under the
related Purchase
Contracts.
In the event that
a holder of
either Income
PRIDES or Growth
PRIDES effects
the early
settlement of the
related Purchase
Contracts through
the delivery of
cash or, in the
case of an Income
PRIDES, settles
such Purchase
Contracts with
cash on the
Business Day
immediately
preceding the
Purchase Contract
Settlement Date,
the related
Capital
Securities, the
appropriate
Applicable
Ownership
Interest of the
Treasury
Portfolio or the
Treasury
Securities, as
the case may be,
will be released
to such holder as
described herein.
Settlement Rate . . . . . . . . . . . . . . . . . The number of
newly issued
shares of Common
Stock issuable
upon settlement
of each Purchase
Contract on the
Purchase Contract
Settlement Date
(the "Settlement
Rate") will be
calculated as
follows (subject
to adjustment
under certain
circumstances):
(a) if the
Applicable Market
Value is equal to
or greater than
the Threshold
Appreciation
Price of $
which is
approximately
% above the
Reference Price,
the Settlement
Rate will be
; (b)
if the Applicable
Market Value is
less than the
Threshold
Appreciation
Price but greater
than the
Reference Price,
the Settlement
Rate will be
equal to the
Stated Amount
divided by the
Applicable Market
Value; and (c) if
the Applicable
Market Value is
less than or
equal to the
Reference Price,
the Settlement
Rate (which will
be equal to the
Stated Amount
divided by the
Reference Price)
will be .
"Applicable
Market Value"
means the average
of the Closing
Price (as defined
herein) per share
of Common Stock
on each of the
twenty
consecutive
Trading Days (as
defined herein)
ending on the
third Trading Day
immediately
preceding the
Purchase Contract
Settlement Date.
See "Description
of the Purchase
Contracts--
General."
Early Settlement . . . . . . . . . . . . . . . . A holder of
Income PRIDES may
settle the
related Purchase
Contracts on or
prior to the
fifth Business
Day immediately
preceding the
Purchase Contract
Settlement Date
in the manner
described herein,
but only in
integral
multiples of 40
Income PRIDES;
provided,
however, if a Tax
Event Redemption
has occurred
prior to the
Purchase Contract
Settlement Date
and the Treasury
Portfolio has
become a
component of the
Income PRIDES,
holders of Income
PRIDES may settle
early only in
integral
multiples of
320,000 Income
PRIDES, at any
time on or prior
to the second
Business Day
immediately
preceding the
Purchase Contract
Settlement Date.
A holder of
Growth PRIDES may
settle the
related Purchase
Contracts on or
prior to the
second Business
Day immediately
preceding the
Purchase Contract
Settlement Date
in the manner
described herein
(in either case,
an "Early
Settlement").
Upon Early
Settlement, (i)
the holder's
rights to receive
Deferred Contract
Adjustment
Payments, if any,
on the Purchase
Contracts being
settled will be
forfeited, (ii)
the holder's
right to receive
additional
Contract
Adjustment
Payments, if any,
in respect of
such Purchase
Contracts will
terminate and
(iii) no
adjustment will
be made to or for
the holder on
account of
Deferred Contract
Adjustment
Payments, or any
amount accrued in
respect of
Contract
Adjustment
Payments. See
"Description of
the Purchase
Contracts--Early
Settlement."
Termination . . . . . . . . . . . . . . . . . . . The Purchase
Contracts and the
rights and
obligations of
The Company and
the holders of
the FELINE PRIDES
thereunder
(including the
right thereunder
to receive
accrued or
Deferred Contract
Adjustment
Payments, if any,
and the
obligation to
purchase Common
Stock) will
automatically
terminate upon
the occurrence of
certain events of
bankruptcy,
insolvency or
reorganization
with respect to
the Company. Upon
such termination,
the Collateral
Agent will
release the
related Capital
Securities, the
appropriate
Applicable
Ownership
Interest of the
Treasury
Portfolio or
Treasury
Securities, as
the case may be,
held by it to the
Purchase Contract
Agent for
distribution to
the holders,
subject in the
case of the
Treasury
Portfolio to the
Purchase Contract
Agent's
disposition of
the subject
securities for
cash, and the
payment of such
cash to the
holders, to the
extent that the
holder would
otherwise have
been entitled to
receive less than
$1,000 of any
such security.
Upon such
termination,
there may be a
delay before such
release and
distribution. In
the event that
the Company
becomes the
subject of a case
under the United
States Bankruptcy
Code of 1978, as
amended (the
"Bankruptcy
Code"), such
delay may occur
as a result of
the automatic
stay under the
Bankruptcy Code
and continue
until such
automatic stay
has been lifted.
The Company
expects any such
delay to be
limited. See
"Description of
the Purchase
Contracts--
Termination."
Voting and Certain Other Rights . . . . . . . . . Holders of
Capital
Securities will
not be entitled
to vote to
appoint, remove
or replace, or to
increase or
decrease the
number of Regular
Trustees (as
defined herein)
and will
generally have no
voting rights
except in the
limited cir-
cumstances
described under
"Description of
Capital
Securities--
Voting Rights."
Holders of
Purchase
Contracts forming
part of the
Income PRIDES or
Growth PRIDES in
their capacities
as such holders
will have no
voting or other
rights in respect
of the Common
Stock.
Capital Securities
Amount and Designation . . . . . . . . . . . % Capital
Securities
(liquidation
amount $25 per
Capital
Security),
representing
undivided
beneficial
ownership
interests in the
assets of the
Trust.
Distributions . . . . . . . . . . . . . . . Distributions on
the Capital
Securities that
are components of
Income PRIDES
will constitute a
portion of the
distributions on
the Income
PRIDES, will be
cumulative, will
accrue from the
first date of
issuance of the
Capital
Securities and
will be payable
initially at the
annual rate of
% of the
liquidation
amount of $25 per
Capital Security
to but excluding
the Purchase
Contract
Settlement Date,
and in the case
of Capital
Securities that
remain outstan-
ding on and after
the Purchase
Contract
Settlement Date,
from the Purchase
Contract
Settlement Date
to but excluding
,
2003, at the
Reset Rate, in
each case, when,
as and if funds
are available for
payment. Subject
to the distribut-
ion deferral
provisions,
distributions
will be payable
quarterly in
arrears on each
February 16, May
16, August 16 and
November 16,
commencing
, 1998.
Market Rate Reset . . . . . . . . . . . . . The applicable
quarterly
distribution rate
on the Capital
Securities and
the interest rate
on the Debentures
on and after the
Purchase Contract
Settlement Date,
will be reset on
the third
Business Day
immediately
preceding the
Purchase Contract
Settlement Date
to the Reset Rate
determined by the
Reset Agent as
the rate the
Capital
Securities should
bear in order for
a Capital
Security to have
an approximate
market value of
100.5% of the
Stated Amount on
the third
Business Day
immediately
preceding the
Purchase Contract
Settlement Date,
provided, that
the Company may
limit such Reset
Rate to be no
higher than the
rate on the Two-
Year Benchmark
Treasury plus 200
basis points
(2%). Such market
value may be less
than 100.5% including
where the Reset Spread
is limited to the
maximum of 2%.
The Reset Rate
will be
determined by
Merrill Lynch,
Pierce, Fenner &
Smith
Incorporated as
the Reset Agent.
See "Description
of the Trust
Preferred
Securities--
Market Rate
Reset."
Optional Remarketing . . . . . . . . . . . . Pursuant to the
Remarketing
Agreement and
subject to the
terms of
Remarketing
Underwriting
Agreement, on or
prior to the
fifth Business
Day immediately
preceding the
Purchase Contract
Settlement Date,
but no earlier
than the Payment
Date immediately
preceding the
Purchase Contract
Settlement Date,
holders of
separate Capital
Securities that
are not
components of
Income PRIDES may
elect to have
their Capital
Securities
remarketed, by
delivering their
Capital
Securities along
with a notice of
such election to
The Chase
Manhattan Bank,
as custodial
agent (the
"Custodial
Agent"). Holders
of Capital
Securities
electing to have
their Capital
Securities
remarketed will
also have the
right to withdraw
such election on
or prior to the
fifth Business
Day immediately
preceding the
Purchase Contract
Settlement Date.
Distribution Deferral Provisions . . . . . . The ability of
the Trust to pay
distributions on
the Capital
Securities will
be solely
dependent on the
receipt of
interest payments
from the Company
on the
Debentures. The
Company will have
the right at any
time, and from
time to time, to
defer the
interest payments
due on the
Debentures for
successive
extension periods
(the "Extension
Periods")
limited, in the
aggregate, to a
period not
extending beyond
the maturity date
of the
Debentures. The
corresponding
quarterly
distributions on
the Capital
Securities would
be deferred by
the Trust (but
would continue to
accumulate
quarterly and
would accrue
interest,
compounded
quarterly, at the
rate of %
per annum through
and including
, 2001, and at
the Reset Rate
thereafter) until
the end of any
such Extension
Period. If a
deferral of an
interest payment
occurs, the
holders of the
Capital
Securities will
be required to
accrue interest
income for United
States federal
income tax
purposes in
advance of the
receipt of any
corresponding
cash distribution
with respect to
such deferred
interest payment.
See "Risk
Factors--Right to
Defer Current
Payments,"
"Description of
the Capital
Securities--
Distributions"
and "Certain
Federal Income
Tax Consequence--Income
PRIDES--Capital
Securities--
Interest Income
and Original
Issue Discount."
Rights Upon Deferral of
Distribution . . . . . . . . . . . . . . . During any period
in which interest
payments on the
Debentures are
deferred,
interest will
accrue on the
Debentures
(compounded
quarterly) and
the corresponding
quarterly
distributions on
the Capital
Securities will
continue to ac-
cumulate at the
rate of %
per annum through
and including
, 2001, and at
the Reset Rate
thereafter, com-
pounded
quarterly.
Liquidation Amount . . . . . . . . . . . . . In the event of
any liquidation
of the Trust, and
after satisfac-
tion of
liabilities to
creditors of the
Trust, if any,
holders will be
entitled to
receive
Debentures in an
aggregate
principal amount
equal to the
aggregate stated
liquidation
amount of the
Capital
Securities.
Put Option Upon a Failed Remarketing . . . . If a Failed
Remarketing has
occurred, each
holder of Trust
Securities (or,
following the
distribution of
the Debentures
upon a
dissolution of
the Trust as
described herein,
the holders of
such Debentures),
holding such
Trust Securities
(or Debentures,
as the case may
be), following
the Purchase
Contract
Settlement Date
will have the
right, in the
case of Trust
Securities, to
require the Trust
to distribute
their pro rata
share of the
Debentures to the
Exchange Agent
who will put such
Debentures to the
Company on behalf
of such holders
(or, in the case
of persons who
hold the
Debentures
directly, such
persons shall
have the right to
put such
Debentures
directly to the
Company) on
2001, upon at
least three
Business Days'
prior notice, at
a price equal to
the principal
amount, plus
accrued and
unpaid interest
(including
deferred
interest), if
any, thereon.
Distribution of Debentures . . . . . . . . . In certain
circumstances
involving an
Investment
Company Event,
the Trust would
be dissolved,
with the result
that, after
satisfaction of
liabilities to
creditors of the
Trust, if any,
Debentures with
an aggregate
principal amount
equal to the
aggregate stated
liquidation
amount of the
Capital
Securities would
be distributed to
the holders of
the Capital
Securities on a
pro rata basis
including the
Collateral Agent.
In such event an
Income PRIDES
would thereafter
consist of
beneficial
ownership of a
Debenture with a
principal amount
equal to $25 and
the related
Purchase
Contract, and
such Debenture
would be
otherwise treated
as if it were a
Capital Security.
See "Description
of the Capital
Securities--
Distribution of
Debentures."
Tax Event Redemption . . . . . . . . . . . . The Debentures
(and, thus, the
Trust Securities)
are redeemable,
at the option of
the Company, on
not less than 30
days or more than
60 days prior
written notice in
whole but not in
part upon the
occurrence and
continuation of a
Tax Event under
the circumstances
described herein
at a Redemption
Price equal to,
for each
Debenture, the
Redemption Amount
together with
accrued and
unpaid
distributions
(including
deferred
distributions).
See "Description
of the
Debentures--Tax
Event Redem-
ption." If the
Company so
redeems all of
the Debentures,
the Trust must
redeem all of the
Trust Securities
and pay in cash
such Redemption
Price to the
holders of such
Trust Securities.
If such Tax Event
Redemption occurs
prior to the
Purchase Contract
Settlement Date,
the Redemption
Price payable in
liquidation of
any Income PRIDES
holders' interest
in the Trust will
be distributed to
the Collateral
Agent, who in
turn will apply
an amount equal
to the Redemption
Amount of such
Redemption Price
to purchase the
Treasury
Portfolio on
behalf of the
holders of Income
PRIDES and remit
the remaining
portion, if any,
of such
Redemption Price
to the Purchase
Contract Agent
for payment to
holders of such
Income PRIDES.
The Treasury
Portfolio will be
substituted for
the Capital
Security and will
be pledged with
the Collateral
Agent to secure
such Income
PRIDES holders'
obligations to
purchase the
Common Stock
under their
Purchase
Contracts.
Other than in the
event of a Tax
Event Redemption,
the Company will
not have the
ability to redeem
the Debentures
prior to their
stated maturity
date. See
"Description of
the Debentures--
Tax Event
Redemption of
Capital
Securities."
Guarantee . . . . . . . . . . . . . . . . . The Company will
irrevocably and
unconditionally
guarantee
pursuant to the
Guarantee,
generally on a
senior unsecured
basis, the
payment in full
of (i)
distributions on
the Trust
Securities to the
extent the Trust
has funds
available
therefor, (ii)
the redemption
price of Trust
Securities in
respect of which
the related
Debentures have
been repurchased
by the Company on
the Purchase
Contract
Settlement Date,
to the extent the
Trust has funds
available
therefor, and
(iii) generally,
the liquidation
amount of the
Trust Securities
or the Redemption
Price upon a Tax
Event Redemption,
to the extent the
Trust has assets
available for
distribution to
holders of Trust
Securities in the
event of a
dissolution of
the Trust. The
Company's
obligations under
the Guarantee
will be a senior
unsecured
obligation of the
Company and will
rank on a parity
with all of the
Company's other
senior unsecured
obligations. See
"Description of
the Guarantee."
Debentures . . . . . . . . . . . . . . . . . . . Unless a Tax
Event Redemption
has occurred, the
Debentures will
mature on
,
2003, and will
bear interest
initially at the
rate of %
per annum,
payable quarterly
in arrears on
each February 16,
May 16, August 16
and November 16
commencing
, 1998. The
interest rate on
the Debentures,
and the
distribution rate
on the Capital
Securities that
remain
outstanding after
the Purchase
Contract
Settlement Date
will be reset on
the third
Business Day
immediately
preceding the
Purchase Contract
Settlement Date
to the Reset Rate
determined by the
Reset Agent. See
"Description of
Debentures--
Interest."
Interest payments
on the Debentures
may be deferred
from time to time
by the Company
for successive
Extension Periods
not extending, in
the aggregate,
beyond the stated
maturity date of
the Debentures.
During any
Extension Period,
interest at the
rate of %
per annum through
and including
, 2001, and at
the Reset Rate
thereafter would
continue to
accrue and
compound
quarterly. Upon
the termination
of any Extension
Period and the
payment of all
amounts then due,
the Company may
commence a new
Extension Period,
provided such new
Extension Period
does not extend
beyond the stated
maturity date of
the Debentures.
No interest shall
be due during an
Extension Period
until the end of
such period.
During an
Extension Period,
the Company will
be prohibited
(subject to
certain
exceptions) from
paying dividends
on or purchasing
any of its
capital stock and
making certain
other restricted
payments until
quarterly
interest payments
are resumed and
all amounts then
due on the
Debentures are
paid. The
Debentures will
be senior
unsecured
obligations of
the Company and
will rank on a
parity with all
of the Company's
other senior
unsecured
obligations. See
"Description of
the Debentures."
Federal Income Tax Consequences
Related to the Income PRIDES,
Growth PRIDES and Capital Securities . . . . . Provided the
Company does not
exercise its
right to defer
interest on the
Debentures, a
beneficial owner
of Income PRIDES
and Capital
Securities will
include in gross
income its pro
rata share of the
stated interest
on the Debentures
when such
interest income
is paid or
accrued in
accordance with
its regular
method of tax
accounting. The
Company intends
to report the
Contract
Adjustment
Payments as
income to holders
of Income PRIDES
and Growth
PRIDES, but
holders should
consult their tax
advisors
concerning the
possibility that
the Contract
Adjustment
Payments may be
treated as loans,
purchase price
adjustments,
rebates or option
premiums rather
than being
includible in
income on a
current basis. A
beneficial owner
of Growth PRIDES
will be required
to include in
gross income its
allocable share
of any OID with
respect to the
Treasury
Securities as it
accrues on a
constant yield to
maturity basis.
If a Tax Event
Redemption has
occurred, a
beneficial owner
of Income PRIDES
will be required
to include in
gross income its
allocable share
of OID on the
Treasury
Portfolio as it
accrues on a
constant yield to
maturity basis.
See "Certain
Federal Income
Tax Consequen-
ces."
Explanatory Diagrams
For illustrative purposes only, the following diagrams demonstrate
some of the key features of Purchase Contracts, Income PRIDES and Growth
PRIDES and the transformation of Income PRIDES into Growth PRIDES and
Capital Securities. The hypothetical percentages, coupon rates and time
periods below are for illustration only. There can be no assurance that
the actual percentage of shares delivered will be limited by the range of
hypothetical percentages shown. In addition, there can be no assurance
that payment rates on the FELINE PRIDES will be at the levels set forth
below.
The following diagrams and the related text are not complete, are
general in nature and are qualified in their entirety by more detailed
information appearing elsewhere in the accompanying Prospectus, this
Prospectus Supplement and in documents which are on file with the
Commission.
FELINE PRIDES Purchase Contract
- Income PRIDES and Growth PRIDES both include a Purchase
Contract under which the investor agrees to purchase shares of
Common Stock of the Company at the end of three years. In
addition, such Purchase Contracts include specified Contract
Adjustment Payments shown in the diagrams on the following
pages.
Two graphs illustrating amount and value of shares delivered at maturity.
Income PRIDES
- Income PRIDES consist of two components as described below:
Illustrations of components of Income PRIDES
- The investor owns the Capital Security but will pledge it
to the Company to secure its obligations under the Purchase
Contract.
Growth PRIDES
- Growth PRIDES consist of two components as described below:
Illustrations of components of Growth PRIDES.
- The investor owns the Zero-Coupon Treasury Security but will
pledge it to the Company to secure its obligations under the
Purchase Contract.
Capital Securities
- Capital Securities have the terms described below:
Illustrations of Capital Security.
- The holder of Capital Securities that are a component of
Income PRIDES has an option at the end of year 3 to either:
Cash settle each Purchase Contract for $25 and receive
Capital Securities whose rate has been reset at the end
of year 3, or
Cash settle each Purchase Contract by allowing the
Capital Securities to be included in the remarketing
process.
- The holder of Capital Securities that are separate and not a
component of Income PRIDES has the option at the end of year 3
to either:
Continue to hold the Capital Securities whose rate has
been reset at the end of year 3, or
Deliver the Capital Securities to the Custodial Agent to
be included in the remarketing process.
Transforming Income PRIDES into Growth PRIDES and Capital Securities
- To create a Growth PRIDES, the investor separates an Income
PRIDES into its components--the Purchase Contract and the
Capital Security--and then combines the Purchase Contract with
a specific Zero-Coupon Treasury Security which matures
concurrently with the maturity of the Purchase Contract.
- The investor owns the Zero-Coupon Treasury Security but will
pledge it to the Company to secure its obligations under the
Purchase Contract.
- The Zero-Coupon Treasury Security together with the Purchase
Contract constitute a Growth PRIDES. The Capital Securities
which are no longer a component of the Income PRIDES are
tradeable as separate securities.
Illustrations of transformation of Income PRIDES into Growth PRIDES
and Capital Securities.
- The investor can also transform Growth PRIDES and Capital
Securities into Income PRIDES.
- The transformation of Income PRIDES into Growth PRIDES and
Capital Securities, and the transformation of Growth PRIDES
and Capital Securities into Income PRIDES, require certain
minimum amounts of securities, as more fully provided herein.
RISK FACTORS
Potential purchasers of the FELINE PRIDES offered hereby should
carefully consider the risk factors set forth herein under "Risk Factors"
as well as other information contained in this Prospectus Supplement, the
accompanying Prospectus and the documents incorporated by reference
therein.
Investment in FELINE PRIDES Requires Holders to Purchase Common Stock;
Risk of Decline in Equity Value
Although holders of the FELINE PRIDES will be the beneficial owners
of the related Capital Securities, Treasury Portfolio or Treasury
Securities, as the case may be, prior to the Purchase Contract Settlement
Date, unless a holder of FELINE PRIDES settles the related Purchase
Contracts through the delivery of cash to the Purchase Contract Agent in
the manner described below or the Purchase Contracts are terminated (upon
the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), the proceeds derived from
the remarketing of the Capital Securities or the principal of the related
Treasury Securities, or the applicable Appropriate Ownership Interest of
the Treasury Portfolio, when paid at maturity, as the case may be, will
automatically be applied to the purchase of a specified number of shares
of Common Stock on behalf of such holder. Thus, unless a holder of Income
PRIDES has cash settled, following the Purchase Contract Settlement Date,
the holder will own shares of Common Stock rather than a beneficial
interest in Capital Securities, Treasury Securities or the Treasury
Portfolio, as the case may be. See "Description of the Purchase
Contracts--General." There can be no assurance that the market value of
the Common Stock receivable by the holder on the Purchase Contract
Settlement Date will be equal to or greater than the Stated Amount of the
FELINE PRIDES held by such holder. If the Applicable Market Value of the
Common Stock is less than the Reference Price, then the aggregate market
value of the Common Stock issued to the holder in settlement of each
Purchase Contract on the Purchase Contract Settlement Date (assuming that
such market value is the same as the Applicable Market Value of such
Common Stock) will be less than the Stated Amount paid for the FELINE
PRIDES and the market value per share of such Common Stock will be less
than the effective price per share paid by each holder for such Common
Stock on the date hereof, in which case an investment in the Securities
will result in a loss. Accordingly, a holder of the FELINE PRIDES assumes
the risk that the market value of the Common Stock may decline, and that
such decline could be substantial.
Limitations on Opportunity for Equity Appreciation
The opportunity for equity appreciation afforded by an investment
in the FELINE PRIDES is less than the opportunity for equity appreciation
afforded by a direct investment in the Common Stock because the market
value of the Common Stock to be received by a holder of Purchase
Contracts on the Purchase Contract Settlement Date (assuming that such
market value is the same as the Applicable Market Value of such Common
Stock) will only exceed the Stated Amount if the Applicable Market Value
of the Common Stock exceeds the Threshold Appreciation Price (which
represents an appreciation of % over the Reference Price).
Moreover, in such event, holders of FELINE PRIDES would receive on the
Purchase Contract Settlement Date only % (the percentage equal to
the Reference Price divided by the Threshold Appreciation Price) of the
shares of Common Stock that such holders would have received if they had
made a direct investment in the Common Stock on the date hereof, and
therefore would receive on the Purchase Contract Settlement Date only
% of the appreciation in the value of the Common Stock in excess of
the Threshold Appreciation Price.
Factors Affecting Trading Prices
The trading prices of Income PRIDES and Growth PRIDES in the
secondary market will be directly affected by the trading prices of the
Common Stock in the secondary market, the general level of interest rates
and the credit quality of the Company. It is impossible to predict
whether the price of the Common Stock or interest rates will rise or
fall. Trading prices of the Common Stock will be influenced by the
Company's operating results and prospects and by economic, financial and
other factors and market conditions that can affect the capital markets
generally, including the level of, and fluctuations in, the trading
prices of stocks generally and sales of substantial amounts of Common
Stock in the market subsequent to the offering of the Securities or the
perception that such sales could occur. Fluctuations in interest rates
may give rise to opportunities of arbitrage based upon changes in the
relative value of the Common Stock underlying the Purchase Contracts and
of the other components of the FELINE PRIDES. Any such arbitrage could,
in turn, affect the trading prices of the Income PRIDES, Growth PRIDES,
Capital Securities and Common Stock.
Voting and Certain Other Rights
Holders of Capital Securities will not be entitled to vote to
appoint, remove or replace or to increase or decrease the number of
Ingersoll-Rand Trustees, and generally will have no voting rights except
in the limited circumstances described under "Description of the Capital
Securities--Voting Rights." Holders of FELINE PRIDES will not be
entitled to any rights with respect to the Common Stock (including,
without limitation, voting rights and rights to receive any dividends or
other distributions in respect thereof) unless and until such time as the
Company shall have delivered shares of Common Stock for FELINE PRIDES on
the Purchase Contract Settlement date or as a result of Early Settlement,
as the case may be, and unless the applicable record date, if any, for
the exercise of such rights occurs after such date. For example, in the
event that an amendment is proposed to the Articles of Incorporation or
By-Laws of the Company and the record date for determining the
stockholders of record entitled to vote on such amendment occurs prior to
such delivery, holders of FELINE PRIDES will not be entitled to vote on
such amendment.
Dilution of Common Stock
The number of shares of Common Stock that holders of the FELINE
PRIDES are entitled to receive on the Purchase Contract Settlement Date
or as a result of Early Settlement is subject to adjustment for certain
events arising from stock splits and combinations, stock dividends and
certain other actions of the Company that modify its capital structure.
See "Description of the Purchase Contracts--Anti-Dilution Adjustments."
Such number of shares of Common Stock to be received by such holders on
the Purchase Contract Settlement Date or as a result of Early Settlement
will not be adjusted for other events, such as offerings of Common Stock
for cash or in connection with acquisitions. The Company is not
restricted from issuing additional Common Stock during the term of either
the Purchase Contracts or the Capital Securities and has no obligation to
consider the interests of the holders of FELINE PRIDES for any reason.
Additional issuances may materially and adversely affect the price of the
Common Stock and, because of the relationship of the number of shares to
be received on the Purchase Contract Settlement Date to the price of the
Common Stock, such other events may adversely affect the trading price of
Income PRIDES or Growth PRIDES.
Possible Illiquidity of the Secondary Market
It is not possible to predict how Income PRIDES, Growth PRIDES or
Capital Securities will trade in the secondary market or whether such
market will be liquid or illiquid. Income PRIDES and Growth PRIDES are
novel securities and there is currently no secondary market for either
Income PRIDES or Growth PRIDES. Application will be made to list the
Income PRIDES and Growth PRIDES on the NYSE. If Capital Securities are
separately traded to a sufficient extent that applicable exchange listing
requirements are met, the Company will endeavor to cause such securities
to be listed on such exchange on which the Income PRIDES and Growth
PRIDES are then listed, including, if applicable, the NYSE. There can be
no assurance as to the liquidity of any market that may develop for the
Income PRIDES, the Growth PRIDES or the Capital Securities, the ability
of holders to sell such securities or whether a trading market, if it
develops, will continue. In addition, in the event that holders of Income
PRIDES or Growth PRIDES were to substitute Treasury Securities for
Capital Securities or Capital Securities for Treasury Securities, thereby
converting their Income PRIDES to Growth PRIDES or their Growth PRIDES to
Income PRIDES, as the case may be, the liquidity of Income PRIDES or
Growth PRIDES could be adversely affected. There can be no assurance that
the Income PRIDES or Growth PRIDES will not be delisted from the NYSE or
that trading in the Income PRIDES or Growth PRIDES and Capital Securities
will not be suspended as a result of the election by holders to create
Income PRIDES or Growth PRIDES through the substitution of collateral,
which could cause the number of Income PRIDES or Growth PRIDES to fall
below the requirement for listing securities on the NYSE that at least
1,000,000 Income PRIDES or Growth PRIDES be outstanding at any time.
Pledged Securities Encumbered
Although the beneficial owners of FELINE PRIDES will be the beneficial
owners of the related Capital Securities, Treasury Portfolio
or Treasury Securities (together, the "Pledged Securities"), as
applicable, those Pledged Securities will be pledged with the Collateral
Agent to secure the obligations of the holders under the related Purchase
Contracts. Thus, rights of the holders to their Pledged Securities will
be subject to the Company's security interest. Additionally,
notwithstanding the automatic termination of the Purchase Contracts, in
the event that the Company becomes the subject of a case under the
Bankruptcy Code, the delivery of the Pledged Securities to holders of the
FELINE PRIDES may be delayed by the imposition of the automatic stay of
Section 362 of the Bankruptcy Code.
Investment Company Event Distribution
Upon the occurrence of an Investment Company Event, the Trust will
be dissolved (except in the limited circumstances described in the
following sentence) with the result that Debentures with an aggregate
principal amount equal to the aggregate stated liquidation amount of the
Capital Securities would be distributed to the holders of the Capital
Securities on a pro rata basis. Such dissolution and distribution shall
be conditioned on the Company being unable to avoid such Investment
Company Event within a 90-day period by taking some ministerial action or
pursuing some other reasonable measure that will have no adverse effect
on the Trust, the Company or the holders of the Capital Securities, and
will involve no material cost. In addition, the Company will have the
right at any time to dissolve the Trust. See "Description of the Capital
Securities--Distribution of the Debentures."
There can be no assurance as to the impact on the market prices for
Income PRIDES of a distribution of the Debentures in exchange for Capital
Securities upon a dissolution of the Trust. Because Income PRIDES will
consist of Debentures and related Purchase Contracts upon the occurrence
of the dissolution of the Trust as a result of an Investment Company
Event or otherwise, prospective purchasers of Income PRIDES are also
making an investment decision with regard to the Debentures and should
carefully review all the information regarding the Debentures contained
herein. See "Description of the Capital Securities--Distribution of the
Debentures" and "Description of the Debentures--General."
Tax Event Redemption
The Debentures (and, thus, the Trust Securities) are redeemable, at
the option of the Company, on not less than 30 days or more than 60 days
prior written notice, in whole but not in part, at any time prior to the
Purchase Contract Settlement Date upon the occurrence and continuation of
a Tax Event under the circumstances described herein at a Redemption
Price equal to, for each Debenture, the Redemption Amount plus accrued
and unpaid distributions (including deferred distributions). See
"Description of the Debentures--Tax Event Redemption." If the Company so
redeems all of the Debentures, the Trust must redeem all of the Trust
Securities and pay in cash such Redemption Price to the holder of such
Trust Securities. If the Tax Event Redemption has occurred prior the
Purchase Contract Settlement Date, the Redemption Price payable in
liquidation of the Income PRIDES holders' interest in the Trust will be
distributed to the Collateral Agent, who in turn will apply an amount
equal to the Redemption Amount of such Redemption Price to purchase the
Treasury Portfolio on behalf of the holders of Income PRIDES. Holders of
Capital Securities not held in the form of Income PRIDES will receive
redemption payments directly. The Treasury Portfolio will be substituted
for the Capital Securities and will be pledged with the Collateral Agent
to secure such Income PRIDES holders' obligations to purchase the
Company's Common Stock under their Purchase Contracts. There can be no
assurance as to the impact on the market prices for the Income PRIDES of
the substitution of the Treasury Portfolio as collateral in replacement
of any Capital Securities so redeemed. See "Description of the Capital
Securities--Optional Redemption." A Tax Event Redemption will be a
taxable event to the beneficial owners of the Capital Securities. See
"Certain Federal Income Tax Consequences--Tax Event Redemption of Capital
Securities."
Right to Defer Current Payments
The Company may, at its option, defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date. However, deferred installments of Contract Adjustment
Payments will bear Deferred Contract Adjustment Payments at the rate of
% per annum (compounding on each succeeding Payment Date) until
paid (the higher of (i) the rate which would accrue on Income PRIDES for
such Payments and (ii) the rate which would accrue on Growth PRIDES for
such payments). If the Purchase Contracts are settled early or terminated
(upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), the right to receive
Contract Adjustment Payments and Deferred Contract Adjustment Payments,
if any, will also terminate.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the Purchase
Contract Settlement Date, each holder of Purchase Contracts will receive
on the Purchase Contract Settlement Date in respect of the Deferred
Contract Adjustment Payments, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of Deferred
Contract Adjustment Payments payable to such holder divided by (y) the
Applicable Market Value. See "Description of the Purchase Contracts--
Contract Adjustment Payments."
The Company also will have the right under the Indenture to defer
payments of interest on the Debentures by extending the interest payment
period at any time, and from time to time, on the Debentures. As a
consequence of such an extension, quarterly distributions on the Capital
Securities, held either as a component of the Income PRIDES or held
separately, would be deferred (but despite such deferrals would
accumulate at a rate of % per annum through and including
15, 2001, and at the Reset Rate thereafter, compounded on a
quarterly basis) by the Trust during any such Extension Period. Such
right to extend the interest payment period for the Debentures will be
limited such that an Extension Period may not extend beyond the stated
maturity of the Debentures. During any such Extension Period, (a) the
Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock (other than (i) purchases or
acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit
plans or the satisfaction by the Company of its obligations pursuant to
any contract or security outstanding on the date of such event requiring
the Company to purchase capital stock of the Company, (ii) as a result of
a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, (iv) dividends or
distributions in capital stock of the Company (or rights to acquire
capital stock) or repurchases or redemptions of capital stock solely from
the issuance or exchange of capital stock or (v) redemptions or
repurchases of any rights outstanding under a shareholder rights plan or
the declaration thereunder of a dividend of rights in the future), (b)
the Company shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank junior to the Debentures and (c) the Company shall
not make any guarantee payments with respect to the foregoing (other than
payments pursuant to the Guarantee). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment
period; provided, that such Extension Period may not extend beyond the
stated maturity of the Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, the Company may commence
a new Extension Period, subject to the above requirements. See
"Description of the Capital Securities--Distributions" and "Description
of the Debentures--Option to Extend Interest Payment Period."
The Company believes, and intends to take the position, that as of
the issue date of the Debentures, the likelihood that it will exercise
its right to defer payments of stated interest on the Debentures is
remote and that, therefore, the Debentures should not be considered to
have been issued with original issue discount ("OID") as a result of the
Company's right to defer payments of stated interest on the Debentures
until such time that the Company actually exercises such deferral right.
There is no assurance that the Internal Revenue Service will agree with
such position. See "Certain Federal Income Tax Consequences--Capital
Securities--Interest Income and Original Issue Discount."
Should the Company exercise its right to defer payments of interest
by extending the interest payment period, each beneficial owner of
Capital Securities held either as a component of the Income PRIDES or
held separately would be required to include such beneficial owner's
share of the stated interest on the Capital Securities in gross income,
as OID, on daily economic accrual basis, regardless of such owner's
method of tax accounting and in advance of receipt of the cash
attributable to such income. As a result, each such beneficial owner of
Capital Securities would recognize income for United States federal
income tax purposes in advance of the receipt of cash attributable to
such income, and would not receive the cash from the Trust related to
such income if such holder disposes of its Capital Securities prior to
the record date for the date on which distributions of such amounts are
made. See "Certain Federal Income Tax Consequences--Capital Securities--
Interest Income and Original Issue Discount." The Company has no current
intention of exercising its right to defer payments of interest by
extending the interest payment period on the Debentures. However, should
the Company exercise such right in the future, the market price of the
Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to
hold its Capital Securities. In addition, as a result of the existence of
the Company's right to defer interest payments, the market price of the
Capital Securities (which represent an undivided beneficial ownership
interest in the assets of the Trust) may be more volatile than the market
price of other securities that are not subject to such deferral. See
"Certain Federal Income Tax Consequences--Capital Securities--Interest
Income and Original Issue Discount."
United States Federal Income Tax Consequences
No statutory, judicial or administrative authority directly
addresses the treatment of the FELINE PRIDES or instruments similar to
the FELINE PRIDES for United States federal income tax purposes. As a
result, certain United States federal income tax consequences of the
purchase, ownership and disposition of FELINE PRIDES are not entirely
clear. See "Certain Federal Income Tax Consequences."
Purchase Contract Agreement not Qualified Under Trust Indenture Act;
Limited Obligations of Purchase Contract Agent
Although the Capital Securities constituting a part of the Income
PRIDES will be issued pursuant to the Declaration, which will be
qualified under the Trust Indenture Act, the Purchase Contract Agreement
will not be qualified as an indenture under the Trust Indenture Act and
the Purchase Contract Agent will not be required to qualify as a trustee
thereunder. Accordingly, holders of FELINE PRIDES will not have the
benefit of the protections of the Trust Indenture Act. The protections
generally afforded the holder of the security issued under an indenture
that has been qualified under the Trust Indenture Act include
disqualification of the indenture trustee for "conflicting interests" as
defined under the Trust Indenture Act, provisions preventing a trustee
that is also a creditor of the issuer from improving its own credit
position at the expense of the security holders immediately prior to or
after a default under such indenture and the requirement that the
indenture trustee deliver reports at least annually with respect to
certain matters concerning the indenture trustee and the securities.
Under the terms of the Purchase Contract Agreement, the Purchase Contract
Agent will have only limited obligations to the holders of FELINE PRIDES.
See "Certain Provisions of the Purchase Contract Agreement and the Pledge
Agreement--Information Concerning the Purchase Contract Agent."
Rights Under the Guarantee
The Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Guarantee Trustee will act as indenture trustee under
the Guarantee for the purposes of compliance with the provisions of the
Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for
the benefit of the holders of the Trust Securities. The Guarantee
guarantees to the holders of the Trust Securities, generally on a
senior unsecured basis, the payment of (i) any accrued and unpaid distributions
that are required to be paid on the Trust Securities, to the extent the
Trust has funds available therefor, (ii) the redemption price, including
all accumulated and unpaid distributions to the date of redemption, of
Trust Securities in respect of which the related Debentures have been
repurchased by the Company on the Purchase Contract Settlement Date, to
the extent the Trust has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution of the Trust (other than in
connection with the distribution of Debentures to the holders of Capital
Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Trust Securities to the
date of payment to the extent the Trust has funds available therefor or
(b) the amount of assets of the Trust remaining available for
distribution to holders of the Trust Securities in liquidation of the
Trust. The majority in liquidation amount of the Trust Securities will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or to direct
the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee. Notwithstanding the foregoing, any holder of the
Trust Securities may institute a legal proceeding directly against the
Company to enforce such holder's rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee
or any other person or entity. If the Company were to default on its
obligation to pay amounts payable on the Debentures or otherwise, the
Trust would lack funds for the payment of distributions or amounts
payable on redemption of the Trust Securities or otherwise, and, in such
event, holders of the Trust Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, holders of the Trust
Securities would rely on the enforcement (1) by the Institutional Trustee
of its rights as registered holder of the Debentures against the Company
pursuant to the terms of the Indenture and the Debentures or (2) by such
holder of the Institutional Trustee's or such holder's own rights against
the Company to enforce payments on the Debentures. See "--Enforcement of
Certain Rights by Holders of Capital Securities," "Description of the
Debentures" and "Description of the Guarantee." The Declaration provides
that each holder of Trust Securities, by acceptance thereof, agrees to
the provisions of the Guarantee and the Indenture.
Enforcement of Certain Rights by Holders of Capital Securities
If a Declaration Event of Default (as defined herein) occurs and is
continuing, the holders of Capital Securities would rely on the
enforcement by the Institutional Trustee of its rights as registered
holder of the Debentures against the Company. In addition, the holders of
a majority in liquidation amount of the Capital Securities will have the
right to direct the time, method, and place of conducting any proceeding
for any remedy available to the Institutional Trustee or to direct the
exercise of any trust or power conferred upon the Institutional Trustee
under the Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as the holder of the
Debentures. The Indenture provides that the Debt Trustee (as defined
herein) shall give holders of Debentures notice of all defaults or events
of default within 30 days after occurrence. However, except in the cases
of a default or an event of default in payment on the Debentures, the
Debt Trustee will be protected in withholding such notice if its officers
or directors in good faith determine that withholding of such notice is
in the interest of such holders.
If the Institutional Trustee fails to enforce its rights under the
Debentures in respect of an Indenture Event of Default (as defined
herein) after a holder of record of Capital Securities has made a written
request, such holder of record of Capital Securities may, to the extent
permitted by applicable law, institute a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the
Debentures. In addition, if the Company fails to pay interest or
principal on the Debentures on the date such interest or principal is
otherwise payable, and such failure to pay is continuing, a holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate stated liquidation
amount of the Capital Securities of such holder (a "Direct Action") after
the respective due date specified in the Debentures. In connection with
such a Direct Action, the Company shall have the right under the Indenture
to set off any payment made to such holder by the Company. The
holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the Debentures. See "Description
of the Capital Securities--Declaration Events of Default."
Limited Rights of Acceleration
The Institutional Trustee, as holder of the Debentures, may
accelerate payment of the principal and accrued and unpaid interest on
the Debentures only upon the occurrence and continuation of a Declaration
Event of Default or Indenture Event of Default, which generally are
limited to payment defaults, breach of certain covenants, certain events
of bankruptcy, insolvency and reorganization of the Company and certain
events of dissolution of the Trust. See "Description of the Capital
Securities--Declaration Events of Default." Accordingly, there is no
right to acceleration upon default by the Company of its payment
obligations under the Guarantee.
Trading Price of the Capital Securities
The Capital Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Debentures. A holder who disposes of his Capital Securities
between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Debentures through
the date of disposition in income as ordinary income (i.e., interest or,
possibly, OID), and to add such amount to his adjusted tax basis in his
pro rata share of the underlying Debentures deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis, a
holder will recognize a loss. See "Certain Federal Income Consequences--
Capital Securities--Interest Income and Original Issue Discount" and "--
Sales, Exchanges or Other Dispositions of Capital Securities."
THE COMPANY
Ingersoll-Rand was organized in 1905 under the laws of the State of
New Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the
Rand Drill Company, whose businesses were established in the early 1870s.
Over the years, the Company has supplemented its original business, which
consisted primarily of the manufacture and sale of rock drilling
equipment, with additional products which have been developed internally
or obtained through acquisition.
Ingersoll-Rand manufactures and sells primarily nonelectrical
machinery and equipment. Principal products include the following:
Agricultural sprayers
Air balancers
Air compressors & accessories
Air dryers
Air logic controls
Air motors
Air and electric tools
Architectural hardware trim
Asphalt compactors
Asphalt pavers
Automated production systems
Automotive components
Ball bearings
Blasthole drills
Blowers
Centrifugal pumps
Compact hydraulic excavators
Construction equipment
Diaphragm pumps
Directional drills
Door closers
Door control hardware
Door locks latches & locksets
Doors and door frames (steel)
Drilling equipment and accessories
Electric security systems
Engineered pumps
Engine-starting systems
Exit devices
Extrusion pump systems
Fastener-tightening systems
Fluid-handling equipment
Foundation drills
Golf cars
Hoists
Hydraulic breakers
Lubrication equipment
Material handling equipment
Mining equipment
Multistage pumps
Needle roller bearings
Parts-washing systems
Paving equipment
Pneumatic breakers
Pneumatic cylinders
Pneumatic valves
Portable compressors
Portable generators
Portable light towers
Reciprocating pumps
Road-building machinery
Rock drills
Rock stabilizers
Roller bearings
Rotary drills
Rotary pumps
Rough-terrain forklifts
Skid-steer loaders
Soil compactors
Spray-coating systems
Submersible pumps
Transport temperature control systems
Utility vehicles
Vacuum pumps
Vertical turbine pumps
Waterjet-cutting systems
Water-well drills
Winches
These products are sold primarily under the Company's name and also
under other names including ABG, Aro, Beebe, Blaw-Knox, Bobcat, Carryall,
Centac, Charles Maire, Club Car, Crawlair, Cyclone, Ecoair, Elite, Dixie-
Pacific Fafnir, Falcon, Glynn-Johnson, Ingersoll-Dresser Pumps, Jeumont-
Schneider Pumps, Kilian, Klemm, LCN, McCartney, Melroe, Montabert, NREC,
Newman Tonks, Normbau, Pacific, Phoenix, Pleuger, Promaxx, Samiia,
Schlage, Sensor I, Sierra, Spra-Coupe, Steelcraft, Tensor I, Thermo King,
Torrington, Von Duprin, Worthington and Zimmerman.
The Company employs approximately 47,000 people. It has over 100
manufacturing plants throughout the world.
During the last three years, the Company has been involved in an
aggressive acquisition and divestment program. The larger acquisitions
included the following:
-- the May 1995 acquisition of Clark Equipment Company for
approximately $1.5 billion.
-- the April 1997 acquisition of Newman Tonks for approximately
$370 million. Newman Tonks is based in the United Kingdom and
is a leading manufacturer, specifier and supplier of a wide
range of branded architectural products in the building
industry.
-- the October 1997 acquisition of Thermo King for approximately
$2.56 billion. Thermo King designs, manufactures and
distributes transport temperature control systems and service
parts for a variety of mobile applications, including
trailers, truck bodies, sea-going containers, buses and light
rail cars.
The larger divestitures included:
-- the February 1997 sale of the Company's Clark-Hurth Group to
Dana Corporation for approximately $260 million.
-- the March 1996 sale of the Company's Pulp Machinery Division
for approximately $122 million to Beloit Corporation, a
subsidiary of Harnischfeger Industries, Inc.
-- the December 1996 sale of the remainder of the Process Systems
Group for approximately $58 million to Gencor Industries, Inc.
The Company's principal executive offices are at 200 Chestnut Ridge
Road, Woodcliff Lake, New Jersey 07675 (telephone 201-573-0123).
SUMMARY HISTORICAL AND PRO FORMA
FINANCIAL INFORMATION OF THE COMPANY
The following summary historical and pro forma consolidated
financial data of the Company should be read in conjunction with (i) the
Company's historical financial statements and notes thereto and (ii) the
pro forma financial information of the Company. Such information is
contained in the Company's Annual Report on Form 10-K and the Company's
Current Report on Form 8-K, dated March 9, 1998, and incorporated herein
by reference. See "Incorporation of Certain Documents by Reference" in
the Prospectus.
At and For the Years Ended December 31,
_______________________________________
Pro Forma
1995 1996 1997 1997<F1>
---- ---- ---- ---------
(In millions except per share amounts)
Income Statement Data:
Net sales . . . . . . . . . . . . . . . . . . . . $ 5,729.0 $6,702.9 $7,103.3 $ 7,965.4
Cost of goods sold . . . . . . . . . . . . . . . . 4,310.2 5,029.9 5,263.7 5,928.0
Administrative, selling and service engineering
expenses . . . . . . . . . . . . . . . . . . . . 921.8 989.5 1,079.3 1,169.1
--------- -------- -------- ---------
Operating income . . . . . . . . . . . . . . . . . 497.0 683.5 760.3 868.3
Interest expense . . . . . . . . . . . . . . . . . (86.6) (119.9) (136.6) (256.2)
Other income (expense), net . . . . . . . . . . . 11.2 0.6 (2.1) (16.8)
Dresser-Rand income . . . . . . . . . . . . . . . 22.0 23.0 9.4 9.4
Minority interests . . . . . . . . . . . . . . . . (14.5) (18.9) (17.3 (18.7)
--------- -------- -------- --------
Earnings before income taxes . . . . . . . . . . . 429.1 568.3 613.7 586.0
Provision for income taxes . . . . . . . . . . . . 158.8 210.3 233.2 195.9
--------- -------- -------- --------
Net earnings . . . . . . . . . . . . . . . . . . . $ 270.3 $ 358.0 $ 380.5 $ 390.1
--------- -------- -------- --------
Basic earnings per share<F2> . . . . . . . . . . . $ 1.70 $ 2.22 $ 2.33 $ 2.39
Diluted earnings per share<F2> . . . . . . . . . . $ 1.69 $ 2.21 $ 2.31 $ 2.37
Average number of common shares outstanding for
basic earnings per share<F2> . . . . . . . . . . 159.104 161.239 163.207 163.207
Average number of common shares outstanding for
diluted earnings per share<F2> . . . . . . . . . 159.599 162.270 164.825 164.825
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . $ 5,563.3 $5,621.6 $8,415.6
--------- -------- --------
Current liabilities . . . . . . . . . . . . . . . $ 1,329.2 $1,290.2 $2,327.8
Long-term debt . . . . . . . . . . . . . . . . . . $ 1,304.4 $1,163.8 $2,528.0
Minority interest . . . . . . . . . . . . . . . . $ 182.3 $ 127.9 $ 127.9
Shareholders' equity . . . . . . . . . . . . . . . $ 1,795.5 $2,090.8 $2,341.4
____________________
<FN>
<F1> Pro forma income statement data reflects the pro forma income
statement adjustments required to present the estimated combined
results of the Company and Thermo King as if the acquisition of
Thermo King took place on January 1, 1997.
<F2> Earnings per share and outstanding share amounts have been
adjusted for the 3-for-2 stock split paid on September 2, 1997, in
the form of a 50% stock dividend.
THE TRUST
The Trust is a statutory business trust created under Delaware law
pursuant to (i) the trust agreement dated as of August 18, 1997, executed
by the Sponsor and certain of the Ingersoll-Rand Trustees and (ii) the
filing of a certificate of trust with the Secretary of State of the State
of Delaware on August 18, 1997. Such trust agreement will be amended and
restated in its entirety substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement forms a
part. The Declaration will be qualified as an indenture under the Trust
Indenture Act. Although upon issuance of the Capital Securities, the
holders of Income PRIDES will be the beneficial owners of the related
Capital Securities, such Capital Securities will be pledged with the
Collateral Agent to secure the obligations of the holders under the
related Purchase Contracts. See "Description of the Purchase Contracts--
Pledged Securities and Pledge Agreement" and "Description of the Capital
Securities--Book-Entry Only Issuance--The Depository Trust Company." The
Company will directly or indirectly acquire Common Securities in an
aggregate liquidation amount equal to 3% of the total capital of the
Trust. The Trust exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial ownership interests in
the assets of the Trust, (ii) investing the proceeds of the Trust
Securities in the Debentures and (iii) engaging in only those other
activities necessary or incidental thereto. The Trust has a term of
approximately seven years, but may dissolve earlier as provided in the
Declaration.
The number of Ingersoll-Rand Trustees initially is five. Three of
the Ingersoll-Rand Trustees (the "Regular Trustees") are persons who are
employees or officers of or who are affiliated with the Company. Pursuant
to the Declaration, the fourth trustee is The First National Bank of
Chicago, a financial institution that is unaffiliated with the Company,
which trustee serves as institutional trustee under the Declaration and
as indenture trustee for the purposes of compliance with the provisions
of the Trust Indenture Act (the "Institutional Trustee"). The fifth
trustee, First Chicago Delaware Inc., a corporation that is unaffiliated
with the Company, will serve as the Delaware Trustee, until removed or
replaced by the holder of the Common Securities. For purposes of
compliance with the provisions of the Trust Indenture Act, The First
National Bank of Chicago will also act as the indenture trustee (the
"Guarantee Trustee") under the Guarantee. See "Description of the
Guarantee" and "Description of the Capital Securities--Voting Rights."
The Institutional Trustee will hold title to the Debentures for the
benefit of the holders of the Trust Securities and the Institutional
Trustee will have the power to exercise all rights, powers and privileges
under the Indenture as the holder of the Debentures. In addition, the
Institutional Trustee will maintain exclusive control of a segregated
noninterest bearing bank account (the "Property Account") to hold all
payments made in respect of the Debentures for the benefit of the holders
of the Trust Securities. The Institutional Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property
Account. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Capital Securities. The Company, as the direct or
indirect holder of all the Common Securities, will have the right to
appoint, remove or replace any Ingersoll-Rand Trustee and to increase or
decrease the number of Ingersoll-Rand Trustees; provided, however, that
the number of Ingersoll-Rand Trustees shall be at least two, at least one
of which shall be a Regular Trustee. The Company will pay all fees and
expenses related to the Trust and the offering of the Trust Securities.
See "Description of the Debentures--Miscellaneous."
The rights of the holders of the Capital Securities, including
economic rights, rights to information and voting rights, are set forth
in the Declaration, the Trust Act and the Trust Indenture Act. See
"Description of the Capital Securities."
The principal place of business of the Trust is c/o Ingersoll-Rand
Company, 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07675 and
its telephone number shall be (201) 573-0123.
USE OF PROCEEDS
All of the proceeds from the sale of the
Income PRIDES, the Capital Securities which are not components of the
Income PRIDES and the Common Securities will be invested by the Trust in
Debentures of the Company. The Company currently anticipates using
substantially all of the net proceeds from the sale of the Debentures,
estimated to be approximately $_________ million (after deducting the
underwriting commission and expenses), to repay commercial paper
indebtedness having an average interest rate of approximately 5.7%
incurred in connection with the acquisition of Thermo King.
All of the proceeds from the sale of the Growth PRIDES will be used to
purchase the underlying Treasury Securities to be transferred to holders
of the Growth PRIDES pursuant to the terms thereof, and the Company will
receive no proceeds from the sale of the Growth PRIDES.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed and traded on the NYSE, the London Stock
Exchange and the Amsterdam Stock Exchange under the symbol "IR". The
following table sets forth, for the periods indicated, the high and low
sales prices in dollars per share of the Common Stock, as adjusted for
the 3-for-2 stock split paid on September 2, 1997, as reported in the
NYSE Composite Transactions Tape and the cash dividend per share paid on
the Common Stock.
Market Price
------------------
Cash Dividend
High Low Per Share
-------- -------- ----------------
1996
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . $28-9/16 $ 23-3/8 $ 0.123
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . 29-9/16 24-13/16 0.123
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . 31-5/8 25-1/4 0.137
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . 31-3/4 27-1/16 0.137
1997
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . $ 32-7/8 $ 28-9/16 $ 0.137
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . 41-3/4 27-13/16 0.137
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . 45-9/16 37-1/2 0.150
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . 46-1/4 34-11/16 0.150
1998
First Quarter (through March 6, 1998) . . . . . . . . . . . . $ 48 $ 36-1/2 $ 0.150
A recent closing sale price for the Common Stock as reported on the
NYSE Composite Transactions Tape is set forth on the cover page of this
Prospectus Supplement.
Subject to the rights of holders of the Company's preference stock,
without par value (the "Preference Stock"), the Board of Directors may,
in its discretion, out of funds legally available for the payment of
dividends and at such times and in such manner as determined by the Board
of Directors, declare and pay dividends on the Common Stock.
CONDENSED CONSOLIDATED CAPITALIZATION
The following table summarizes (i) the actual capitalization of the
Company and its consolidated subsidiaries at December 31, 1997, and (ii)
such capitalization as adjusted to reflect (a) the sale of the FELINE
PRIDES and Capital Securities offered hereby (based on an assumed
aggregate public offering price of $25 per Security), (b) the concurrent
purchase by the Trust from the Company of the Debentures and (c) an
assumed application of the proceeds from the foregoing, after estimated
underwriting commissions and estimated expenses of this offering, to
repay short-term acquisition debt.
As of December 31, 1997
-----------------------
Pro Forma
Adjustments
Historical for
Amounts at Issuance of Pro Forma as
December 31, 1997 Feline Prides Adjusted
----------------- ------------- ------------
(In Millions)
Loans payable . . . . . . . . . . . . . . . . . . . . . . . . $ 925.1 $ (390.4)<F1> $ 534.7
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . 2,528.0 -- 2,528.0
-------- -------- -------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . 3,453.1 (390.4) 3,062.7
------- -------- -------
Minority interest . . . . . . . . . . . . . . . . . . . . . . 127.9 -- 127.9
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures
of the Company . . . . . . . . . . . . . . . . . . . . . . -- 402.5<F2> 402.5
-------- ------- ------
Shareholders' Equity:
Common Stock, $2 par value . . . . . . . . . . . . . . . . . 334.8 -- 334.8
Capital in excess of par value . . . . . . . . . . . . . . . 92.4 (16.9)<F3> 75.5
Earnings retained for use in the business . . . . . . . . . . 2,156.5 2,156.5
------- ----- -------
2,583.7 (16.9) 2,566.8
Less-Unallocated LESOP shares, at cost . . . . . . . . . . . (41.4) -- (41.4)
-Treasury stock, at cost . . . . . . . . . . . . . . . . . (44.5) -- (44.5)
-Foreign currency equity adjustment . . . . . . . . . . . (156.4) -- (156.4)
------- ----- -------
Total shareholders' equity . . . . . . . . . . . . . . . . 2,341.4 (16.9) 2,324.5
-------- ----- -------
Total capitalization . . . . . . . . . . . . . . . . . . $5,922.4 $ (4.8) $5,917.6
======== ======== =======
____________________
<FN>
<F1> Reflects the use of the anticipated net proceeds from the issuance of the FELINE PRIDES to reduce short-term
acquisition debt.
<F2> Assumes Underwriter's over-allotment options are exercised in full. If such options are not exercised, the following line
items under the "Pro Forma As Adjusted" column will change to equal the amounts indicated: Loans payable -$585.6; Total
debt - $3,113.6; Company obligated mandatorily redeemable preferred securities of subsidiary trust -$350.0; Capital in
excess of par value -$77.7; Total shareholders' equity -$2,326.7 and Total capitalization -$5,918.2
<F3> Reflects certain issuance costs of the FELINE PRIDES and the present value of the Contract Adjustment Payments.
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the
Company's consolidated financial statements, with the Capital Securities
shown on the Company's balance sheet under the caption "Company obligated
mandatorily redeemable preferred securities of subsidiary trust holding
solely debentures of the Company." The financial statement footnotes to
the Company's consolidated financial statements will reflect that the
sole asset of the Trust will be the Debentures. Distributions on the
Capital Securities will be reflected as a charge to the Company's
consolidated income, identified as Minority Interest in Net Income of
Consolidated Subsidiaries, whether paid or accrued.
The Purchase Contracts are forward transactions in the Common
Stock. Upon settlement of a Purchase Contract, the Company will receive
the Stated Amount on such Purchase Contract and will issue the requisite
number of shares of Common Stock. The Stated Amount thus received will be
credited to shareholders' equity, allocated between the Common Stock and
paid-in capital accounts. The present value of the Contract Adjustment
Payments will initially be charged to equity, with an offsetting credit
to liabilities. Subsequent Contract Adjustment Payments will be allocated
between this liability account and interest expense based on a constant
rate calculation over the life of the transaction.
Prior to the issuance of shares of Common Stock upon settlement of
the Purchase Contracts, it is anticipated that the FELINE PRIDES will be
reflected in the Company's earnings per share calculations using the
treasury stock method. Under this method, the number of shares of Common
Stock used in calculating earnings per share is deemed to be increased by
the excess, if any, of the number of shares issuable upon settlement of
the Purchase Contracts over the number of shares that could be purchased
by the Company in the market (at the average market price during the
period) using the proceeds receivable upon settlement. Consequently, it
is anticipated there will be no dilutive effect on the Company's earnings
per share except during periods when the average market price of Common
Stock is above the Threshold Appreciation Price.
DESCRIPTION OF THE FELINE PRIDES
The following descriptions of certain terms of the FELINE PRIDES
offered hereby supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the
Securities set forth in the accompanying Prospectus, to which reference
is hereby made. The summaries of certain provisions of documents
described below are not necessarily complete, and in each instance
reference is hereby made to the copies of such documents (including the
definitions therein of certain terms) which are on file with the
Commission. Wherever particular sections of, or terms defined in, such
documents are referred to herein, such sections or defined terms are
incorporated by reference herein. Capitalized terms not defined herein
have the meanings assigned to such terms in the accompanying Prospectus.
Each FELINE PRIDES will be issued under the Purchase Contract
Agreement between the Company and the Purchase Contract Agent. The FELINE
PRIDES offered hereby initially will consist of (A) 12,600,000 units
referred to as Income PRIDES and (B) at least 1,400,000 units referred to
as Growth PRIDES. Each Income PRIDES will initially consist of a unit
comprised of (a) a Purchase Contract under which (i) the holder
(including, initially, an Underwriter) will purchase from the Company on
the Purchase Contract Settlement Date, for an amount of cash equal to the
Stated Amount a number of newly issued shares of Common Stock equal to
the Settlement Rate described below under "Description of the Purchase
Contracts--General," and (ii) the Company will pay Contract Adjustment
Payments to the holder at the rate of % of the Stated Amount per
amount, and (b) (i) a beneficial ownership in a related % Capital
Security, having a stated liquidation amount per Capital Security equal
to the Stated Amount, representing an undivided beneficial ownership
interest in the assets of the Trust, which will consist solely of the
Debentures, (ii) in the case of a distribution of the Debentures upon the
dissolution of the Trust as a result of an Investment Company Event, as
described below, or otherwise, Debentures having a principal amount equal
to the stated liquidation amount or (iii) upon the occurrence of a Tax
Event Redemption prior to the Purchase Contract Settlement Date, the
appropriate Applicable Ownership Interest in the Treasury Portfolio.
"Applicable Ownership Interest" means, with respect to an Income PRIDES
and the U.S. Treasury Securities in the Treasury Portfolio, a 1/40, or
2.5%, undivided beneficial ownership interest in a $1,000 principal or
interest amount of a principal or interest strip in a U.S. Treasury
Security included in such Treasury Portfolio which matures on or prior to
, 2001 and (B) for each scheduled interest payment date on the
Debentures that occurs after the Tax Event Redemption Date, a %
undivided beneficial ownership interest in a $1,000 face amount of such
U.S. Treasury Security which is a principal or interest strip maturing on
such date.
Each Growth PRIDES will initially consist of a unit comprised of
(a) a Purchase Contract under which (i) the holder will purchase from the
Company on the Purchase Contract Settlement Date, for an amount in cash
equal to the Stated Amount, a number of newly issued shares of Common
Stock of the Company, equal to the Settlement Rate, and (ii) the Company
will pay the holder Contract Adjustment Payments at the rate of %
of the Stated Amount, and (b) a 1/40 undivided beneficial ownership
interest in a % Treasury Security.
The purchase price of each FELINE PRIDES will be allocated between
the related Purchase Contract and the related Capital Security or
interest in a Treasury Security in proportion to their respective fair
market values at the time of purchase. The Company expects that the
entire purchase price of a FELINE PRIDES will be allocated to the related
Capital Security or interest in a Treasury Security and that no amount
will be allocated to the related Purchase Contract. Such position
generally will be binding on each beneficial owner of each Income PRIDES
(but not on the IRS (as defined herein)). See "Certain Federal Income Tax
Consequences--FELINE PRIDES--Allocation of Purchase Price." As long as a
FELINE PRIDES is in the form of an Income PRIDES or Growth PRIDES, the
related Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio or the Treasury Securities, as
applicable, will be pledged to the Collateral Agent, to secure the
holder's obligation to purchase Common Stock under the related Purchase
Contracts.
Creating Growth PRIDES
Each holder of an Income PRIDES (unless a Tax Event Redemption has
occurred) will have the right, at any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date,
to substitute for the related Capital Securities held by the Collateral
Agent Treasury Securities in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Capital Securities. Because
Treasury Securities are issued in integral multiples of $1,000, holders
of Income PRIDES may make such substitution only in integral multiples of
40 Income PRIDES; provided, however, if a Tax Event Redemption has
occurred prior to the Purchase Contract Settlement Date and the Treasury
Portfolio has become a component of the Income PRIDES, holders of such
Income PRIDES may make such substitutions only in integral multiples of
320,000 Income PRIDES (but obtaining the release of the Treasury
Portfolio rather than the Capital Securities), at any time on or prior to
the second Business Day immediately preceding the Purchase Contract
Settlement Date. FELINE PRIDES with respect to which Treasury Securities
have been substituted for the related Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, as collateral to secure such holder's obligation under
the related Purchase Contracts will be referred to as Growth PRIDES. To
create 40 Growth PRIDES, (unless a Tax Event Redemption has occurred),
the Income PRIDES holder will (a) deposit with the Collateral Agent a
Treasury Security having a principal amount at maturity of $1,000 and (b)
transfer 40 Income PRIDES to the Purchase Contract Agent accompanied by a
notice stating that the Income PRIDES holder has deposited a Treasury
Security with the Collateral Agent and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release to such holder
the 40 Capital Securities relating to such 40 Income PRIDES. In the event
that Contract Adjustment Payments are at a higher rate for Growth PRIDES
than for Income PRIDES, holders of Income PRIDES wishing to create Growth
PRIDES will also be required to deliver cash in an amount equal to the
excess of the Contract Adjustment Payments that would have accrued since
the last Payment Date through the date of substitution on the Growth
PRIDES being created by such holders, over the Contract Adjustment
Payments that have accrued over the same period on the related Income
PRIDES. Upon such deposit and receipt of an instruction from the Purchase
Contract Agent, the Collateral Agent will effect the release of the
related Capital Security from the pledge under the Pledge Agreement free
and clear of the Company's security interest therein to the Purchase
Contract Agent, which will (i) cancel the 40 Income PRIDES, (ii) transfer
the 40 related Capital Securities to such holder and (iii) deliver 40
Growth PRIDES to the holder. The Treasury Security will be substituted
for the Capital Securities and will be pledged with the Collateral Agent
to secure the holder's obligation to purchase Common Stock under the
related Purchase Contracts. The related Capital Securities released to
the holder thereafter will trade separately from the resulting Growth
PRIDES. Contract Adjustment Payments will be payable by the Company on
such Growth PRIDES on each Payment Date from the later of
, 1998 and the last Payment Date on which Contract
Adjustment Payments were paid. In addition, OID will accrue on the
related Treasury Securities.
Creating Income PRIDES
Each holder of a Growth PRIDES (unless a Tax Event Redemption has
occurred) will have the right, at any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date,
to substitute for the related Treasury Securities held by the Collateral
Agent Capital Securities in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Capital Securities, thereby
creating Income PRIDES. Because Treasury Securities are issued in
integral multiples of $1,000, holders of Growth PRIDES may make such
substitutions only in integral multiples of 40 Growth PRIDES; provided,
however, if a Tax Event Redemption has occurred and the Treasury
Portfolio has become a component of the Income PRIDES, holders of the
Growth PRIDES, may make such substitution only in integral multiples of
320,000 Growth PRIDES, at any time, on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date. To
create 40 Income PRIDES (unless a Tax Event Redemption has occurred), the
Growth PRIDES holder will (a) deposit with the Collateral Agent 40
Capital Securities and (b) transfer 40 Growth PRIDES certificates to the
Purchase Contract Agent accompanied by a notice stating that the Growth
PRIDES holder has deposited 40 Capital Securities with the Collateral
Agent and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release to such Growth PRIDES holder the Treasury
Security relating to such Growth PRIDES. Upon such deposit and receipt of
an instruction from the Purchase Contract Agent, the Collateral Agent will
effect the release of the related Treasury Security from the pledge under
the Pledge Agreement free and clear of the Company's security interest
therein to the Purchase Contract Agent, which will (i) cancel the 40
Growth PRIDES, (ii) transfer the related Treasury Security to such holder
of Growth PRIDES and (iii) deliver 40 Income PRIDES to such holder of
Growth PRIDES. The substituted Capital Securities will be pledged with the
Collateral Agent to secure such Income PRIDES holder's obligation to purchase
Common Stock under the related Purchase Contracts. Cumulative cash
distributions, payable quarterly at a rate of % of the Stated Amount
per annum (subject to the Company's deferral rights) on such Income PRIDES,
will be payable on such Income PRIDES by the Company on each Payment Date
from the later of , 1998 and the last Payment Date on which
such cumulative cash distributions, if any, were paid.
Holders who elect to substitute Pledged Securities, thereby
creating Growth PRIDES or Income PRIDES or recreating Income PRIDES or
Growth PRIDES (as discussed below), shall be responsible for any fees or
expenses payable in connection with such substitution. See "Certain
Provisions of the Purchase Contract Agreement and the Pledge Agreement--
Miscellaneous."
Current Payments
Holders of Income PRIDES are entitled to receive aggregate cash
distributions at a rate of % of the Stated Amount per annum from
and after , 1998, payable quarterly in arrears. The
quarterly payments on the Income PRIDES will consist of (i) cumulative
cash distributions on the related Capital Securities or the Treasury
Portfolio, as applicable, payable at the rate of % of the Stated
Amount per annum and (ii) Contract Adjustment Payments payable by the
Company at the rate of % of the Stated Amount per annum, subject
(in the case of distributions on the Capital Securities and the Contract
Adjustment Payments) to the Company's right of deferral as described
herein.
Each holder of Growth PRIDES will be entitled to receive quarterly
Contract Adjustment Payments payable by the Company at the rate of
% of the Stated Amount per annum, subject to the Company's rights
of deferral. In addition, OID will accrue on the related Treasury
Securities.
The ability of the Trust to make the quarterly distributions on the
Capital Securities is solely dependent upon the receipt of corresponding
interest payments from the Company on the Debentures. The Company has the
right at any time, and from time to time, limited to a period not
extending beyond the maturity of the Debentures, to defer the interest
payments on the Debentures. As a consequence of such deferral, quarterly
distributions (unless a Tax Event Redemption has occurred) to holders of
Income PRIDES (or any Capital Securities outstanding after the Purchase
Contract Settlement Date or after a substitution of collateral resulting
in the creation of Growth PRIDES) would be deferred (but despite such
deferral, would continue to accumulate quarterly and would accrue
interest thereon compounded quarterly at the rate of % per annum
through and including 15, 2001, and at the Reset Rate
thereafter). The Company also has the right to defer the payment of
Contract Adjustment Payments on the related Purchase Contracts until the
Purchase Contract Settlement Date; however, deferred Contract Adjustment
Payments will bear additional Contract Adjustment Payments at the rate of
% per annum (the higher of (i) the rate which would accrue on
Income PRIDES for such payments and (ii) the rate which would accrue on
Growth PRIDES for such payments) (such deferred installments of Contract
Adjustment Payments, together with the additional Contract Adjustment
Payments, shall be referred to as the "Deferred Contract Adjustment
Payments"). See "Description of the Purchase Contracts--Contract
Adjustment Payments" and "Description of the Capital Securities--
Distributions." If a Tax Event Redemption has occurred and the Treasury
Portfolio has become a component of the Income PRIDES, quarterly
distributions on the Treasury Portfolio, as a portion of the cumulative
quarterly distributions to the holders of Income PRIDES, will not be
deferred.
The Company's obligations with respect to the Debentures will be
senior and unsecured and will rank on a parity in right of payment with
all other senior unsecured obligations of the Company. The Company's
obligations with respect to the Contract Adjustment Payments will be
subordinated and junior in right of payment to the Company's Senior
Indebtedness.
Voting and Certain Other Rights
Holders of Capital Securities, in their capacities as such holders,
will not be entitled to vote to appoint, remove or replace, or to
increase or decrease the number of Regular Trustees and will generally
have no voting rights except in the limited circumstances described under
"Description of the Capital Securities--Voting Rights." Holders of
Purchase Contracts relating to the Income PRIDES or Growth PRIDES, in
their capacities as such holders, will have no voting or other rights in
respect of the Common Stock.
Listing of the Securities
Application will be made to list the Income PRIDES and the Growth
PRIDES on the NYSE, subject to official notice of issuance. If Capital
Securities are separately traded to a sufficient extent that the
applicable exchange listing requirements are met, the Company will
endeavor to cause such securities to be listed on such exchange on which
the Income PRIDES and the Growth PRIDES are then listed, including, if
applicable, the NYSE. See "Underwriting."
NYSE Symbol of Common Stock
The Common Stock is listed on the NYSE under the symbol "IR."
Miscellaneous
The Company or its affiliates may from time to time purchase any of
the Securities offered hereby which are then outstanding by tender, in
the open market or by private agreement.
DESCRIPTION OF THE PURCHASE CONTRACTS
General
Each Purchase Contract underlying a FELINE PRIDES (unless earlier
terminated, or earlier settled at the holder's option) will obligate the
holder of such Purchase Contract to purchase, and the Company to sell, on
the Purchase Contract Settlement Date, for an amount in cash equal to the
Stated Amount of such FELINE PRIDES, a number of newly issued shares of
Common Stock equal to the Settlement Rate. The Settlement Rate will be
calculated as follows (subject to adjustment under certain
circumstances): (a) if the Applicable Market Value is equal to or
greater than the Threshold Appreciation Price of $ , which is
approximately % above the Reference Price, the Settlement Rate will
be ; accordingly, if, between the date of the final Prospectus
Supplement and the period during which the Applicable Market Value is
measured, the market price for the Common Stock increases to an amount
that is higher than the Threshold Appreciation Price, the aggregate
market value of the shares of Common Stock issued upon settlement of each
Purchase Contract (assuming that such market value is the same as the
Applicable Market Value of such Common Stock) will be higher than the
Stated Amount, and if such market price is the same as the Threshold
Appreciation Price, the aggregate market value of such shares (assuming
that such market value is the same as the Applicable Market Value of such
Common Stock) will be equal to the Stated Amount; (b) if the Applicable
Market Value is less than the Threshold Appreciation price but greater
than the Reference Price, the Settlement Rate will be equal to the Stated
Amount divided by the Applicable Market Value; accordingly, if the market
price for the Common Stock increases between the date of the final Prospectus
Supplement and the period during which the Applicable Market
Value is measured but such market price is less than the Threshold
Appreciation Price, the aggregate market value of the shares of Common
Stock issued upon settlement of each Purchase Contract (assuming that
such market value is the same as the Applicable Market Value of such
Common Stock) will be equal to the Stated Amount; and (c) if the
Applicable Market Value is less than or equal to the Reference Price, the
Settlement Rate (which is equal to the Stated Amount divided by the
Reference Price) will be ; accordingly, if the market
price for the Common Stock decreases between the date of the final
Prospectus Supplement and the period during which the Applicable Market
Value is measured, the aggregate market value of the shares of Common
Stock issued upon settlement of each Purchase Contract (assuming that
such market value is the same as the Applicable Market Value of such
Common Stock) will be less than the Stated Amount, and if such market
price stays the same, the aggregate market value of such shares (assuming
that such market value is the same as the Applicable Market Value of such
Common Stock) will be equal to the Stated Amount. "Closing Price" of the
Common Stock on any date of determination means the closing sale price
(or, if no closing price is reported, the last reported sale price) of
the Common Stock on the NYSE on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities
exchange on which the Common Stock is so listed, or if the Common Stock
is not so listed on a United States national or regional securities
exchange, as reported by the Nasdaq Stock Market, or, if the Common Stock
is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose
by the Company. A "Trading Day" means a day on which the Common Stock (A)
is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of
business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the Common Stock.
No fractional shares of Common Stock will be issued by the Company
pursuant to the Purchase Contracts. In lieu of fractional shares
otherwise issuable (calculated on an aggregate basis) in respect of
Purchase Contracts being settled by a holder of Income PRIDES or Growth
PRIDES, the holder will be entitled to receive an amount of cash equal to
such fraction of a share times the Applicable Market Value.
On the Business Day immediately preceding the Purchase Contract
Settlement Date, unless a holder of Income PRIDES or Growth PRIDES (i)
has settled the related Purchase Contracts prior to the Purchase Contract
Settlement Date through the early delivery of cash to the Purchase
Contract Agent in the manner described under "--Early Settlement," (ii)
in the case of Income PRIDES, has settled the related Purchase Contracts
with separate cash on the Business Day immediately preceding the Purchase
Contract Settlement Date pursuant to prior notice in the manner described
under "--Notice to Settle with Cash", (iii) has had the Capital
Securities related to such holder's Purchase Contracts remarketed in the
manner described herein in connection with settling such Purchase
Contracts, or (iv) an event described under "--Termination" below has
occurred, then (A) in the case of Income PRIDES (unless a Tax Event
Redemption has occurred) the Company will exercise its rights as a
secured party to dispose of the Capital Securities in accordance with
applicable law and (B) in the case of Growth PRIDES or Income PRIDES (in
the event that a Tax Event Redemption has occurred), the principal amount
of the related Treasury Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as applicable, when paid at
maturity, will automatically be applied to satisfy in full the holder's
obligation to purchase Common Stock under the related Purchase Contracts.
Such Common Stock will then be issued and delivered to such holder or
such holder's designee, upon presentation and surrender of the
certificate evidencing such FELINE PRIDES (a "FELINE PRIDES Certificate")
and payment by the holder of any transfer or similar taxes payable in
connection with the issuance of the Common Stock to any person other than
such holder.
Each holder of Income PRIDES or Growth PRIDES, by acceptance
thereof, will under the terms of the Purchase Contract Agreement and the
related Purchase Contracts be deemed to have (a) irrevocably agreed to be
bound by the terms of the related Purchase Contracts and the Pledge
Agreement for so long as such holder remains a holder of such FELINE
PRIDES, and (b) duly appointed the Purchase Contract Agent as such
holder's attorney-in-fact to enter into and perform the related Purchase
Contracts on behalf of and in the name of such holder. In addition, each
beneficial owner of Income PRIDES or Growth PRIDES, by acceptance of such
interest, will be deemed to have agreed to treat (i) itself as the owner
of the related Capital Securities, the appropriate Applicable Ownership
Interest of the Treasury Portfolio or Treasury Securities, as the case
may be, and (ii) the Debentures as indebtedness of the Company for all
United States federal tax purposes.
Remarketing
Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement between the Remarketing Agent, the
Purchase Contract Agent, the Company and the Trust, the Capital
Securities of Income PRIDES holders' who have failed to notify the Purchase
Contract Agent on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date in the manner described
under "--Notice to Settle with Cash" of their intention to settle the
related Purchase Contracts with separate cash on the Business Day
immediately preceding the Purchase Contract Settlement Date will be
remarketed on the third Business Day immediately preceding the Purchase
Contract Settlement Date. The Remarketing Agent will use its reasonable
efforts to remarket such Capital Securities on such date at a price of
approximately 100.5% of the aggregate stated liquidation amount of such
Capital Securities, plus accrued and unpaid distributions (including
deferred distributions), if any, thereon. The portion of the proceeds
from such remarketing equal to the aggregate stated liquidation amount of
such Capital Securities will be applied automatically to satisfy in full
such Income PRIDES holders' obligations to purchase Common Stock under
the related Purchase Contracts. In addition, after deducting as the
Remarketing Fee an amount not exceeding 25 basis points (.25%) of the
aggregate stated liquidation amount of the remarketed securities, from
any amount of such proceeds in excess of the aggregate stated liquidation
amount of the remarketed Capital Securities plus any accrued and unpaid
distributions (including deferred distributions, if any), the Remarketing
Agent will remit the remaining portion of the proceeds, if any, for the
benefit of such holder. Income PRIDES holders whose Capital Securities
are so remarketed will not otherwise be responsible for the payment of
any Remarketing Fee in connection therewith. If, in spite of using its
reasonable efforts, the Remarketing Agent cannot remarket the related
Capital Securities (other than to the Company) of such holders of Income
PRIDES at a price not less than 100% of the aggregate stated liquidation
amount of such Capital Securities plus accrued and unpaid distributions
(including deferred distributions) and thus resulting in a Failed Remarketing,
the Company will exercise its rights as a secured party to dispose of the
Capital Securities in accordance with the applicable law and satisfy in full,
from the proceeds of such disposition, such holder's obligation to
purchase Common Stock under the related Purchase Contracts; provided,
that if the Company exercises such rights as a secured creditor, any
accrued and unpaid distributions (including any deferred distributions)
on such Capital Securities will be paid in cash by the Company to the
holders of record of such Capital Securities. The Company will cause a
notice of such Failed Remarketing to be published on the second Business
Day immediately preceding the Purchase Contract Settlement Date by
publication in a daily newspaper in the English language of general
circulation in The City of New York, which is expected to be The Wall
Street Journal. In addition, the Company will request, not later than
seven nor more than 15 calendar days prior to the remarketing date, that
the Depository notify its participants holding Capital Securities, Income
PRIDES and Growth PRIDES of such remarketing, including, in the case of a
Failed Remarketing, the procedures that must be followed if a Capital
Security holder wishes to exercise its right to put its Capital Security
to the Company as described herein. If required, the Company will
endeavor to ensure that a registration statement with regard to the full
amount of the Capital Securities to be remarketed shall be effective in
such form as will enable the Remarketing Agent to rely on it in
connection with the remarketing process. It is currently anticipated that
Merrill Lynch, Pierce, Fenner & Smith Incorporated will be the
Remarketing Agent.
Early Settlement
A holder of Income PRIDES may settle the related Purchase Contracts
on or prior to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date by presenting and surrendering the FELINE PRIDES
Certificate evidencing such Income PRIDES at the offices of the Purchase
Contract Agent with the form of "Election to Settle Early" on the reverse
side of such certificate completed and executed as indicated, accompanied
by payment (payable to the Company in immediately available funds) of an
amount equal to the Stated Amount times the number of Purchase Contracts
being settled; provided, however, if a Tax Event Redemption has occurred
prior to the Purchase Contract Settlement Date and the Treasury portfolio
has become a component of the Income PRIDES, holders of such Income
PRIDES may settle early only in integral multiples of 320,000 Income
PRIDES (and the related appropriate Applicable Ownership Interest of the
Treasury Portfolio) at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date. A holder of
Growth PRIDES may settle the related Purchase Contracts on or prior to
the second Business Day immediately preceding the Purchase Contract
Settlement Date by presenting and surrendering the FELINE PRIDES
Certificate evidencing such Growth PRIDES at the offices of the Purchase
Contract Agent with the form of "Election to Settle Early" on the reverse
side of such certificate completed and executed as indicated, accompanied
by payment in immediately available funds of an amount equal to the
Stated Amount times the number of Purchase Contracts being settled. So
long as the FELINE PRIDES are evidenced by one or more global security
certificates deposited with the Depositary (as defined herein),
procedures for early settlement will also be governed by standing
arrangements between the Depositary and the Purchase Contract Agent.
Upon Early Settlement of the Purchase Contracts related to any
Income PRIDES or Growth PRIDES, (a) the holder will receive
newly issued shares of Common Stock per Income
PRIDES or Growth PRIDES having a Stated Amount of $25 (regardless of the
market price of the Common Stock on the date of such Early Settlement),
subject to adjustment under the circumstances described in "--
Anti-Dilution Adjustments" below, (b) the Capital Securities, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or
Treasury Securities, as the case may be, related to such Income PRIDES or
Growth PRIDES will thereupon be transferred to the holder free and clear
of the Company's security interest therein, (c) the holder's right to
receive Deferred Contract Adjustment Payments, if any, on the Purchase
Contracts being settled will be forfeited, (d) the holder's right to
receive future Contract Adjustment Payments will terminate and (e) no
adjustment will be made to or for the holder on account of Deferred
Contract Adjustment Payments, if any, or any amounts accrued in respect
of Contract Adjustment Payments.
If the Purchase Contract Agent receives a FELINE PRIDES
Certificate, accompanied by the completed "Election to Settle Early" and
requisite immediately available funds, from a holder of FELINE PRIDES by
5:00 p.m., New York City time, on a Business Day, that day will be
considered the settlement date. If the Purchase Contract Agent receives
the foregoing after 5:00 p.m., New York City time, on a Business Day or
at any time on a day that is not a Business Day (other than from Income
PRIDES holders after the occurrence of a Tax Event Redemption), the next
Business Day will be considered the settlement date.
Upon Early Settlement of Purchase Contracts in the manner described
above, presentation and surrender of the FELINE PRIDES Certificate
evidencing the related Income PRIDES or Growth PRIDES and payment of any
transfer or similar taxes payable by the holder in connection with the
issuance of the related Common Stock to any person other than the holder
of such Income PRIDES or Growth PRIDES, the Company will cause the shares
of Common Stock being purchased to be issued, and the related Capital
Securities, the appropriate Applicable Ownership Interest of the Treasury
Portfolio or Treasury Securities, as the case may be, securing such
Purchase Contracts to be released from the pledge under the Pledge
Agreement (described in "--Pledged Securities and Pledge Agreement") and
transferred, within three Business Days following the settlement date, to
the purchasing holder or such holder's designee.
Notice to Settle with Cash
A holder of an Income PRIDES or Growth PRIDES wishing to settle the
related Purchase Contract with separate cash on the Business Day
immediately preceding the Purchase Contract Settlement Date must notify
the Purchase Contract Agent by presenting and surrendering the FELINE
PRIDES Certificate evidencing such Income PRIDES or Growth PRIDES at the
offices of the Purchase Contract Agent with the form of "Notice to Settle
by Separate Cash" on the reverse side of the certificate completed and
executed as indicated on or prior to 5:00 p.m., New York City time, on
the second Business Day immediately preceding the Purchase Contract
Settlement Date in the case of a Growth PRIDES holder or an Income PRIDES
holder (if a Tax Event Redemption has occurred) and on the fifth Business
Day immediately preceding the Purchase Contract Settlement Date in the
case of an Income PRIDES holder (if a Tax Event has not occurred). If a
holder that has given notice of such holder's intention to settle the
related Purchase Contract with separate cash fails to deliver such cash
to the Collateral Agent on the Business Day immediately preceding the
Purchase Contract Settlement Date, then the Company will exercise its
right as a secured party to dispose of, in accordance with applicable
law, the related Capital Security or Treasury Security, as the case may
be, to satisfy in full, from the disposition of such Capital Security or
the appropriate Applicable Ownership Interest of the Treasury Portfolio,
such holder's obligation to purchase Common Stock under the related
Purchase Contracts.
Contract Adjustment Payments
Contract Adjustment Payments will be fixed at a rate per annum of
% of the Stated Amount per Purchase Contract in the case of Income
PRIDES, and at a rate per annum of % of the Stated Amount per
Purchase Contract in the case of Growth Prides. Contract Adjustment
Payments that are not paid when due (after giving effect to any permitted
deferral thereof) will bear interest thereon at the rate per annum of
% thereof (the higher of (i) the rate which would accrue on Income
PRIDES for such payments and (ii) the rate which would accrue on Growth
PRIDES for such payments), compounded quarterly, until paid. Contract
Adjustment Payments payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. Contract Adjustment Payments
will accrue from , 1998 and will be payable quarterly in
arrears on February 16, May 16, August 16 and November 16 of each year,
commencing 16, 1998.
Contract Adjustment Payments will be payable to the holders of
Purchase Contracts as they appear on the books and records of the Purchase
Contract Agent on the relevant record dates, which, as long as
the Income PRIDES or Growth PRIDES remain in book-entry only form, will
be one Business Day prior to the relevant payment dates. Such
distributions will be paid through the Purchase Contract Agent who will
hold amounts received in respect of the Contract Adjustment Payments for
the benefit of the holders of the Purchase Contracts relating to such
Income PRIDES or Growth PRIDES. Subject to any applicable laws and
regulations, each such payment will be made as described under "--
Book-Entry System." In the event that the Income PRIDES or Growth PRIDES
do not continue to remain in book-entry only form, the Company shall have
the right to select relevant record dates, which shall be more than one
Business Day but less than 60 Business Days prior to the relevant payment
dates. In the event that any date on which Contract Adjustment Payments
are to be made on the Purchase Contracts related to the Income PRIDES or
Growth PRIDES is not a Business Day, then payment of the Contract
Adjustment Payments payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with the same force
and effect as if made on such payment date. A "Business Day" shall mean
any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) are permitted or
required by any applicable law to close.
The Company's obligations with respect to Contract Adjustment
Payments will be subordinated and junior in right of payment to the
Company's obligations under any Senior Indebtedness.
Option to Defer Contract Adjustment Payments
The Company may, at its option and upon prior written notice to the
holders of the FELINE PRIDES and the Purchase Contract Agent, defer the
payment of Contract Adjustment Payments on the Purchase Contracts until
no later than the Purchase Contract Settlement Date. However, Deferred
Contract Adjustment Payments, if any, will bear additional Contract
Adjustment Payments at the rate of % per annum (the higher of (i)
the rate which would accrue on Income PRIDES for such payments and (ii)
the rate which would accrue on Growth PRIDES for such payments) (compounding
on each succeeding Payment Date) until paid. If the Purchase
Contracts are terminated (upon the occurrence of certain events of
bankruptcy, insolvency or reorganization with respect to the Company),
the right to receive Contract Adjustment Payments and Deferred Contract
Adjustment Payments, if any, will also terminate.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the Purchase
Contract Settlement Date, each holder of FELINE PRIDES will receive on
the Purchase Contract Settlement Date in respect of the Deferred Contract
Adjustment Payments, in lieu of a cash payment, a number of shares of
Common Stock equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to such holder divided by (y) the Applicable
Market Value.
In the event the Company exercises its option to defer the payment
of Contract Adjustment Payments, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends
on, make distributions with respect to, or redeem, purchase or acquire,
or make a liquidation payment with respect to, any of its capital stock
or make guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any
employee or agent benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date
of such event requiring the Company to purchase capital stock of the
Company, (ii) as a result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company
capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange
provisions of the Company capital stock or the security being converted
or exchanged, (iv) dividends or distributions in capital stock of the
Company (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of
capital stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan).
Anti-Dilution Adjustments
The formula for determining the Settlement Rate will be subject to
adjustment (without duplication) upon the occurrence of certain events,
including: (a) the payment of dividends (and other distributions) of
Common Stock on Common Stock; (b) the issuance to all holders of Common
Stock of rights, warrants or options entitling them, for a period of up
to 45 days, to subscribe for or purchase Common Stock at less than the
Current Market Price (as defined herein) thereof; (c) subdivisions,
splits and combinations of Common Stock; (d) distributions to all holders
of Common Stock of evidences of indebtedness of the Company, shares of
capital stock, securities, cash or property (excluding any dividend or
distribution covered by clause (a) or (b) above and any dividend or
distribution paid exclusively in cash); (e) distributions consisting
exclusively of cash to all holders of Common Stock in an aggregate amount
that, together with (i) other all-cash distributions made within the
preceding 12 months and (ii) any cash and the fair market value, as of
the expiration of the tender or exchange offer referred to below, of
consideration payable in respect of any tender or exchange offer by the
Company or a subsidiary thereof for the Common Stock concluded within the
preceding 12 months, exceeds 15% of the Company's aggregate market
capitalization (such aggregate market capitalization being the product of
the Current Market Price of the Common Stock multiplied by the number of
shares of Common Stock then outstanding) on the date of such
distribution; and (f) the successful completion of a tender or exchange
offer made by the Company or any subsidiary thereof for the Common Stock
which involves an aggregate consideration that, together with (i) any
cash and the fair market value of other consideration payable in respect
of any tender or exchange offer by the Company or a subsidiary thereof
for the Common Stock concluded within the preceding 12 months and (ii)
the aggregate amount of any all-cash distributions to all holders of the
Company's Common Stock made within the preceding 12 months, exceeds 15%
of the Company's aggregate market capitalization on the expiration of
such tender or exchange offer. The "Current Market Price" per share of
Common Stock on any day means the average of the daily Closing Prices for
the five consecutive Trading Days selected by the Company commencing not
more than 30 Trading Days before, and ending not later than, the earlier
of the day in question and the day before the "ex date" with respect to
the issuance or distribution requiring such computation. For purposes of
this paragraph, the term "ex date," when used with respect to any
issuance or distribution, shall mean the first date on which the Common
Stock trades regular way on such exchange or in such market without the
right to receive such issuance or distribution.
In the case of certain reclassifications, consolidations, mergers,
sales or transfers of assets or other transactions pursuant to which the
Common Stock is converted into the right to receive other securities,
cash or property, each Purchase Contract then outstanding would, without
the consent of the holders of the related Income PRIDES or Growth PRIDES,
as the case may be, become a contract to purchase only the kind and
amount of securities, cash and other property receivable upon consummation
of the transaction by a holder of the number of shares of
Common Stock which would have been received by the holder of the related
Income PRIDES or Growth PRIDES immediately prior to the date of
consummation of such transaction if such holder had then settled such
Purchase Contract.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend
for United States federal income tax purposes (i.e., distributions of
evidences of indebtedness or assets of the Company, but generally not
stock dividends or rights to subscribe to capital stock) and, pursuant to
the Settlement Rate adjustment provisions of the Purchase Contract
Agreement, the Settlement Rate is increased, such increase may give rise
to a taxable dividend to holders of FELINE PRIDES. See "Certain Federal
Income Tax Consequences--Purchase Contracts--Adjustment to Settlement Rate."
In addition, the Company may make such increases in the Settlement
Rate as the Board of Directors of the Company deems advisable to avoid or
diminish any income tax to holders of its capital stock resulting from
any dividend or distribution of capital stock (or rights to acquire
capital stock) or from any event treated as such for income tax purposes
or for any other reasons.
Adjustments to the Settlement Rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the Settlement Rate shall
be required unless such adjustment would require an increase or decrease
of at least one percent in the Settlement Rate; provided, however, that
any adjustments which by reason of the foregoing are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
The Company will be required, within ten Business Days following
the adjustment of the Settlement Rate, to provide written notice to the
Purchase Contract Agent of the occurrence of such event and a statement
in reasonable detail setting forth the method by which the adjustment to
the Settlement Rate was determined and setting forth the revised
Settlement Rate.
Each adjustment to the Settlement Rate will result in a
corresponding adjustment to the number of shares of Common Stock issuable
upon early settlement of a Purchase Contract.
Termination
The Purchase Contracts, and the rights and obligations of the
Company and of the holders of the FELINE PRIDES thereunder (including the
right thereunder to receive accrued Contract Adjustment Payments or
Deferred Contract Adjustment Payments and the right and obligation to
purchase Common Stock), will automatically terminate upon the occurrence
of certain events of bankruptcy, insolvency or reorganization with respect
to the Company. Upon such termination, the Collateral Agent will
release the related Capital Securities, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or Treasury Securities, as
the case may be, held by it to the Purchase Contract Agent for
distribution to the holders, subject in the case of the Treasury
Portfolio to the Purchase Contract Agent's disposition of the subject
securities for cash and the payment of such cash to the holders to the
extent that the holders would otherwise have been entitled to receive
less than $1,000 of any such security. Upon such termination, however,
such release and distribution may be subject to a delay. In the event
that the Company becomes the subject of a case under the Bankruptcy Code,
such delay may occur as a result of the automatic stay under the
Bankruptcy Code and continue until such automatic stay has been lifted.
The Company expects any such delay to be limited.
Pledged Securities and Pledge Agreement
Pledged Securities will be pledged to the Collateral Agent, for the
benefit of the Company, pursuant to the Pledge Agreement to secure the
obligations of holders of FELINE PRIDES to purchase Common Stock under
the related Purchase Contracts. The rights of holders of FELINE PRIDES to
the related Pledged Securities will be subject to the Company's security
interest therein created by the Pledge Agreement. No holder of Income
PRIDES or Growth PRIDES will be permitted to withdraw the Pledged Securities
related to such Income PRIDES or Growth PRIDES from the pledge
arrangement except (i) to substitute Treasury Securities for the related
Capital Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, (ii) to substitute Capital
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, for the related Treasury
Securities (for both (i) and (ii), as provided for under "Description of
the FELINE PRIDES--Substitution of Pledged Securities" and "--Recreating
Income PRIDES or Growth PRIDES") or (iii) upon the termination or Early
Settlement of the related Purchase Contracts. Subject to such security
interest and the terms of the Purchase Contract Agreement and the Pledge
Agreement, each holder of Income PRIDES (unless a Tax Event Redemption
has occurred) will be entitled through the Purchase Contract Agent and
the Collateral Agent to all of the proportional rights and preferences of
the related Capital Securities (including distribution, voting,
redemption, repayment and liquidation rights), and each holder of Growth
PRIDES or Income PRIDES (if a Tax Event Redemption has occurred) will
retain beneficial ownership of the related Treasury Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as
applicable, pledged in respect of the related Purchase Contracts. The
Company will have no interest in the Pledged Securities other than its
security interest.
Except as described in "Description of the Purchase Contracts--
General," the Collateral Agent will, upon receipt of distributions on the
Pledged Securities, distribute such payments to the Purchase Contract
Agent, which will in turn distribute those payments, together with
Contract Adjustment Payments received from the Company, to the persons in
whose names the related Income PRIDES or Growth PRIDES are registered at
the close of business on the Record Date immediately preceding the date
of such distribution.
Book Entry-System
The Depository Trust Company (the "Depositary") will act as
securities depositary for the FELINE PRIDES. The FELINE PRIDES will be
issued only as fully-registered securities registered in the name of
Cede& Co. (the Depositary's nominee). One or more fully-registered global
security certificates ("Global Security Certificates"), representing the
total aggregate number of FELINE PRIDES, will be issued and will be
deposited with the Depositary and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred
to below.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in the
FELINE PRIDES so long as such FELINE PRIDES are represented by Global
Security Certificates.
The Depositary is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). The Depositary is owned by a
number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the Depositary system is also available to others, such as securities
brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial
relationship with a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to the Depositary and its
Participants are on file with the Commission.
No FELINE PRIDES represented by Global Security Certificates may be
exchanged in whole or in part for FELINE PRIDES registered, and no
transfer of Global Security Certificates in whole or in part may be
registered, in the name of any person other than the Depositary or any
nominee of the Depositary unless the Depositary has notified the Company
that it is unwilling or unable to continue as depositary for such Global
Security Certificates or has ceased to be qualified to act as such as
required by the Purchase Contract Agreement or there shall have occurred
and be continuing a default by the Company in respect of its obligations
under one or more Purchase Contracts. All FELINE PRIDES represented by
one or more Global Security Certificates or any portion thereof will be
registered in such names as the Depositary may direct.
As long as the Depositary or its nominee is the registered owner of
the Global Security Certificates, such Depositary or such nominee, as the
case may be, will be considered the sole owner and holder of the Global
Security Certificates and all FELINE PRIDES represented thereby for all
purposes under the FELINE PRIDES and the Purchase Contract Agreement.
Except in the limited circumstances referred to above, owners of
beneficial interests in Global Security Certificates will not be entitled
to have such Global Security Certificates or the FELINE PRIDES represented
thereby registered in their names, will not receive or be
entitled to receive physical delivery of FELINE PRIDES Certificates in
exchange therefor and will not be considered to be owners or holders of
such Global Security Certificates or any FELINE PRIDES represented
thereby for any purpose under the FELINE PRIDES or the Purchase Contract
Agreement. All payments on the FELINE PRIDES represented by the Global
Security Certificates and all transfers and deliveries of Capital
Securities, Treasury Portfolio, Treasury Securities and Common Stock with
respect thereto will be made to the Depositary or its nominee, as the
case may be, as the holder thereof.
Ownership of beneficial interests in the Global Security
Certificates will be limited to Participants or persons that may hold
beneficial interests through institutions that have accounts with the
Depositary or its nominee. Ownership of beneficial interests in Global
Security Certificates will be shown only on, and the transfer of those
ownership interests will be effected only through, records maintained by
the Depositary or its nominee (with respect to Participants' interests)
or any such Participant (with respect to interests of persons held by
such Participants on their behalf). Procedures for settlement of Purchase
Contracts on the Purchase Contract Settlement Date or upon Early
Settlement will be governed by arrangements among the Depositary,
Participants and persons that may hold beneficial interests through
Participants designed to permit such settlement without the physical
movement of certificates. Payments, transfers, deliveries, exchanges and
other matters relating to beneficial interests in Global Security
Certificates may be subject to various policies and procedures adopted by
the Depositary from time to time. None of the Company, the Purchase
Contract Agent or any agent of the Company or the Purchase Contract Agent
will have any responsibility or liability for any aspect of the
Depositary's or any Participant's records relating to, or for payments
made on account of, beneficial interests in Global Security Certificates,
or for maintaining, supervising or reviewing any of the Depositary's
records or any Participant's records relating to such beneficial
ownership interests.
The information in this section concerning the Depositary and its
book-entry system has been obtained from sources that the Company and the
Trust believe to be reliable, but neither the Company nor the Trust takes
responsibility for the accuracy thereof.
CERTAIN PROVISIONS OF THE PURCHASE CONTRACT
AGREEMENT AND THE PLEDGE AGREEMENT
General
Distributions on the FELINE PRIDES will be payable, Purchase
Contracts (and documents related thereto) will be settled and transfers
of the FELINE PRIDES will be registrable at the office of the Purchase
Contract Agent in the Borough of Manhattan, The City of New York. In
addition, in the event that the FELINE PRIDES do not remain in book-entry
form, payment of distributions on the FELINE PRIDES may be made, at the
option of the Company, by check mailed to the address of the person
entitled thereto as shown on the Security Register.
Shares of Common Stock will be delivered on the Purchase Contract
Settlement Date (or earlier upon Early Settlement), or, if the Purchase
Contracts have terminated, the related Pledged Securities will be
delivered potentially after a delay as a result of the imposition of the
automatic stay under the Bankruptcy Code (see "Description of the
Purchase Contracts--Termination"), in each case upon presentation and
surrender of the FELINE PRIDES Certificate at the office of the Purchase
Contract Agent. The Company expects any such delay to be limited.
If a holder of outstanding Income PRIDES or Growth PRIDES fails to
present and surrender the FELINE PRIDES Certificate evidencing such
Income PRIDES or Growth PRIDES to the Purchase Contract Agent on the
Purchase Contract Settlement Date, the shares of Common Stock issuable in
settlement of the related Purchase Contract and in payment of any
Deferred Contract Adjustment Payments will be registered in the name of
the Purchase Contract Agent and, together with any distributions thereon,
shall be held by the Purchase Contract Agent as agent for the benefit of
such holder, until such FELINE PRIDES Certificate is presented and
surrendered or the holder provides satisfactory evidence that such
certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Purchase Contract Agent and the
Company.
If the Purchase Contracts have terminated prior to the Purchase
Contract Settlement Date, the related Pledged Securities have been
transferred to the Purchase Contract Agent for distribution to the
holders entitled thereto and a holder fails to present and surrender the
FELINE PRIDES Certificate evidencing such holder's Income PRIDES or
Growth PRIDES to the Purchase Contract Agent, the related Pledged
Securities delivered to the Purchase Contract Agent and payments thereon
shall be held by the Purchase Contract Agent as agent for the benefit of
such holder, until such FELINE PRIDES Certificate is presented or the
holder provides the evidence and indemnity described above.
The Purchase Contract Agent will have no obligation to invest or to
pay interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.
No service charge will be made for any registration of transfer or
exchange of the FELINE PRIDES, except for any tax or other governmental
charge that may be imposed in connection therewith.
Modification
The Purchase Contract Agreement and the Pledge Agreement will
contain provisions permitting the Company and the Purchase Contract Agent
or Collateral Agent, as the case may be, with the consent of the holders
of not less than a majority of the Purchase Contracts at the time
outstanding, to modify the terms of the Purchase Contracts, the Purchase
Contract Agreement and the Pledge Agreement, except that no such
modification may, without the consent of the holder of each outstanding
Purchase Contract affected thereby, (a) change any Payment Date, (b)
change the amount or type of Pledged Securities related to such Purchase
Contract, impair the right of the holder of any Pledged Securities to
receive distributions on such Pledged Securities (except for the rights
of holders of Income PRIDES to substitute Treasury Securities for the
related Capital Securities or Treasury Portfolio, as the case may be, or
the rights of holders of Growth PRIDES to substitute Capital Securities
or Treasury Portfolio, as the case may be, for the related Treasury
Securities) or otherwise adversely affect the holder's rights in or to
such Pledged Securities, (c) change the place or currency of payment or
reduce any Contract Adjustment Payments or any Deferred Contract
Adjustment Payments, (d) impair the right to institute suit for the
enforcement of such Purchase Contract, (e) reduce the amount of Common
Stock purchasable under such Purchase Contract, increase the price to
purchase Common Stock on settlement of such Purchase Contract, change the
Purchase Contract Settlement Date or otherwise adversely affect the
holder's rights under such Purchase Contract or (f) reduce the
above-stated percentage of outstanding Purchase Contracts the consent of
whose holders is required for the modification or amendment of the
provisions of the Purchase Contracts, the Purchase Contract Agreement or
the Pledge Agreement; provided, that if any amendment or proposal
referred to above would adversely affect only the Income PRIDES or the
Growth PRIDES, then only the affected class of holder will be entitled to
vote on such amendment or proposal and such amendment or proposal shall
not be effective except with the consent of the holders of not less than
a majority of such class.
No Consent to Assumption
Each holder of Income PRIDES or Growth PRIDES, by acceptance
thereof, will under the terms of the Purchase Contract Agreement and the
Income PRIDES or Growth PRIDES, as applicable, be deemed expressly to
have withheld any consent to the assumption (i.e., affirmance) of the
related Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code.
Consolidation, Merger, Sale or Conveyance
The Company will covenant in the Purchase Contract Agreement that
it will not merge or consolidate with any other entity or sell, assign,
transfer, lease or convey all or substantially all of its properties and
assets to any person, firm or corporation unless the Company is the
continuing corporation or the successor corporation is a corporation
organized under the laws of the United States of America or a state
hereof and such corporation expressly assumes the obligations of the
Company under the Purchase Contracts, the Debentures, the Purchase
Contract Agreement and the Pledge Agreement, and the Company or such
successor corporation is not, immediately after such merger,
consolidation, sale, assignment, transfer, lease or conveyance, in
default in the performance of any of its obligations thereunder.
Title
The Company, the Purchase Contract Agent and the Collateral Agent
may treat the registered owner of any FELINE PRIDES as the absolute owner
thereof for the purpose of making payment and settling the related
Purchase Contracts and for all other purposes.
Replacement of FELINE PRIDES Certificates
In the event that physical certificates have been issued, any
mutilated FELINE PRIDES Certificate will be replaced by the Company at
the expense of the holder upon surrender of such certificate to the
Purchase Contract Agent. FELINE PRIDES Certificates that become
destroyed, lost or stolen will be replaced by the Company at the expense
of the holder upon delivery to the Company and the Purchase Contract
Agent of evidence of the destruction, loss or theft thereof satisfactory
to the Company and the Purchase Contract Agent. In the case of a
destroyed, lost or stolen FELINE PRIDES Certificate, an indemnity
satisfactory to the Purchase Contract Agent and the Company may be
required at the expense of the holder of the FELINE PRIDES evidenced by
such certificate before a replacement will be issued.
Notwithstanding the foregoing, the Company will not be obligated to
issue any Income PRIDES or Growth PRIDES on or after the Purchase
Contract Settlement Date (or after Early Settlement) or after the
Purchase Contracts have terminated. The Purchase Contract Agreement will
provide that in lieu of the delivery of a replacement FELINE PRIDES
Certificate following the Purchase Contract Settlement Date, the Purchase
Contract Agent, upon delivery of the evidence and indemnity described
above, will deliver the Common Stock issuable pursuant to the Purchase
Contracts included in the Income PRIDES or Growth PRIDES evidenced by
such certificate, or, if the Purchase Contracts have terminated prior to
the Purchase Contract Settlement Date, transfer the principal amount of
the Pledged Securities included in the Income PRIDES or Growth PRIDES
evidenced by such certificate.
Governing Law
The Purchase Contract Agreement, the Pledge Agreement and the
Purchase Contracts will be governed by, and construed in accordance with,
the laws of the State of New York.
Information Concerning the Purchase Contract Agent
The Bank of New York will be the Purchase Contract Agent. The
Purchase Contract Agent will act as the agent for the holders of Income
PRIDES and Growth PRIDES from time to time. The Purchase Contract
Agreement will not obligate the Purchase Contract Agent to exercise any
discretionary actions in connection with a default under the terms of the
Income PRIDES and Growth PRIDES or the Purchase Contract Agreement.
The Purchase Contract will contain provisions limiting the
liability of the Purchase Contract Agent. The Purchase Contract Agreement
will contain provisions under which the Purchase Contract Agent may
resign or be replaced. Such resignation or replacement would be effective
upon the appointment of a successor.
The Purchase Contract Agent maintains commercial banking
relationships with the Company.
Information Concerning the Collateral Agent
The Chase Manhattan Bank will be the Collateral Agent. The
Collateral Agent will act solely as the agent of the Company and will
not assume any obligation or relationship of agency or trust for or with any
of the holders of the Income PRIDES and Growth PRIDES except for the
obligations owed by a pledgee of property to the owner thereof under the
Pledge Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability
of the Collateral Agent. The Pledge Agreement will contain provisions
under which the Collateral Agent may resign or be replaced. Such
resignation or replacement would be effective upon the appointment of a
successor.
The Chase Manhattan Bank maintains commercial banking relationships
with the Company.
Miscellaneous
The Purchase Contract Agreement will provide that the Company will
pay all fees and expenses related to (i) the offering of the FELINE PRIDES,
(ii) the retention of the Collateral Agent and (iii) the
enforcement by the Purchase Contract Agent of the rights of the holders
of the FELINE PRIDES; provided, however, that holders who elect to
substitute the related Pledged Securities, thereby creating Growth PRIDES
or Income PRIDES or recreating Income PRIDES or Growth PRIDES, shall be
responsible for any fees or expenses payable in connection with such
substitution, as well as any commissions, fees or other expenses incurred
in acquiring the Pledged Securities to be substituted, and the Company
shall not be responsible for any such fees or expenses.
DESCRIPTION OF THE CAPITAL SECURITIES
The Capital Securities, a certain portion of which form a component
of the Income PRIDES, and a certain portion of which will trade
separately, will be issued pursuant to the terms of the Declaration. See
"Description of the FELINE PRIDES--Substitution of Pledged Securities."
The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The First National Bank of
Chicago, an independent trustee, will act as indenture trustee for the
Capital Securities under the Declaration for purposes of compliance with
the provisions of the Trust Indenture Act. The terms of the Capital
Securities will include those stated in the Declaration and those made
part of the Declaration by the Trust Indenture Act. The following summary
of certain provisions of the Capital Securities and the Declaration is
not necessarily complete, and reference is hereby made to the copy of the
Declaration (including the definitions therein of certain terms) which is
filed as an exhibit to the Registration Statement relating to this
Prospectus Supplement, the Trust Act and the Trust Indenture Act.
Whenever particular defined terms are referred to in this Prospectus
Supplement, such defined terms are incorporated herein by reference. The
following descriptions of certain terms of the Capital Securities offered
hereby supplements and, to the extent inconsistent with, replaces the
description of the general terms and provisions of the Capital Securities
set forth in the accompanying Prospectus, to which reference is hereby
made.
General
The Declaration authorizes the Regular Trustees to issue on behalf
of the Trust the Trust Securities, which represent undivided beneficial
ownership interests in the assets of the Trust. All of the Common
Securities will be owned, directly or indirectly, by the Company. The
Common Securities rank on a parity, and payments will be made thereon on
a pro rata basis, with the Capital Securities, except that upon the
occurrence and during the continuance of an Indenture Event of Default,
the rights of the holders of the Common Securities to receive payment of
periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the
Capital Securities. The Declaration does not permit the issuance by the
Trust of any securities other than the Trust Securities or the incurrence
of any indebtedness by the Trust. Pursuant to the Declaration, the
Institutional Trustee will own the Debentures purchased by the Trust for
the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon
redemption of the Capital Securities or liquidation of the Trust, are
guaranteed by the Company to the extent described under "Description of
the Guarantee." The Guarantee, when taken together with the Company's
obligations under the Debentures and the Indenture and its obligations
under the Declaration, including the obligations to pay costs, expenses,
debts and liabilities of the Trust (other than with respect to the
Capital Securities), provides a full and unconditional guarantee of
amounts due on the Capital Securities. The Guarantee will be held by The
First National Bank of Chicago, the Guarantee Trustee, for the benefit of
the holders of the Capital Securities. The Guarantee does not cover
payment of distributions when the Trust does not have sufficient available
funds to pay such distributions. In such event, the remedy of a
holder of Capital Securities is to vote to direct the Institutional
Trustee to enforce the Institutional Trustee's rights under the
Debentures (except in the limited circumstances in which the holder may
take direct action). See "--Declaration Events of Default" and "--Voting
Rights."
Distributions
Distributions on the Capital Securities will be fixed initially at
a rate per annum of % of the stated liquidation amount of $25 per
Capital Security. Distributions applicable on the Capital Securities that
remain outstanding on and after the Purchase Contract Settlement Date
will be reset on the third Business Day immediately preceding the
Purchase Contract Settlement Date. See "--Market Rate Reset."
Distributions in arrears for more than one quarter will accumulate at the
rate of % per annum through and including , 2001 and
at the Reset Rate thereafter, compounded quarterly. The term
"distribution" as used herein includes any such accumulated distributions
unless otherwise stated. The amount of distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day
months.
Distributions on the Capital Securities will be cumulative and will
accrue from March , 1998 and will be payable quarterly in arrears on
February 16, May 16, August 16, and November 16 of each year, commencing
, 1998, when, as and if funds are available for payment.
Distributions will be made by the Institutional Trustee, except as
otherwise described below.
The Company has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period from
time to time on the Debentures, which right, if exercised, would defer
quarterly distributions on the Capital Securities (though such
distributions would continue to accrue with interest at the rate of %
per annum through and including , 2001, and at the Reset
Rate thereafter) during any such extended interest payment period. Such
right to extend the interest payment period for the Debentures is limited
to a period, in the aggregate, not extending beyond the maturity date of
the Debentures. In the event that the Company exercises this right, then
(a) the Company shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a liquidation
payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date
of such event requiring the Company to purchase capital stock of the
Company, (ii) as a result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's
capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the
Company (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of
capital stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan or the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company that rank
junior to such Debentures, and (c) the Company shall not make any
guarantee payments with respect to the foregoing other than pursuant to
the Guarantee. Prior to the termination of any such Extension Period,
the Company may further extend the interest payment period; provided,
that such Extension Period, together with all such previous and further
extensions thereof, may not extend beyond the maturity date of the
Debentures. Upon the termination of any Extension Period and the payment
of all amounts then due, the Company may select a new Extension Period,
subject to the above requirements. See "Description of the Debentures--
Interest" and "--Option to Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Capital
Securities as they appear on the books and records of the Trust on the
record date next following the termination of such Extension Period.
Distributions on the Capital Securities must be paid on the dates
payable to the extent that the Trust has funds available in the Property
Account for the payment of such distributions. The Trust's funds
available for distribution to the holders of the Capital Securities will
be limited to payments received from the Company on the Debentures. See
"Description of the Debentures." The payment of distributions out of
moneys held by the Trust is guaranteed by the Company to the extent set
forth under "Description of the Guarantee." Distributions on the Capital
Securities will be payable to the holders thereof, including the
Collateral Agent, as they appear on the books and records of the Trust on
the relevant record dates, which, as long as the Capital Securities
remain in book-entry only form, will be one Business Day prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the
Debentures in the Property Account for the benefit of the holders of the
Capital Securities. Subject to any applicable laws and regulations and
the provisions of the Declaration, each such payment will be made as
described under "--Book-Entry Only Issuance--The Depository Trust
Company" below. With respect to Capital Securities not in book-entry
form, the Regular Trustees shall have the right to select relevant record
dates, which shall be more than one Business Day but less than 60 Business
Days prior to the relevant payment dates. In the event that any
date on which distributions are to be made on the Capital Securities is
not a Business Day, then payment of the distributions payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
record date.
Market Rate Reset
The applicable quarterly distribution rate on the Capital
Securities and the interest rate on the related Debentures that remain
outstanding on and after the Purchase Contract Settlement Date will be
reset on the third Business Day immediately preceding the Purchase
Contract Settlement Date to the Reset Rate, which will be equal to the
sum of the Reset Spread and the rate on the Two-Year Benchmark Treasury
in effect on the third Business Day immediately preceding the Purchase
Contract Settlement Date and will be determined by the Reset Agent as the
rate the Capital Securities should bear in order for a Capital Security
to have an approximate market value on the third Business Day immediately
preceding the Purchase Contract Settlement Date of 100.5% of the Stated
Amount; provided that the Company may limit such Reset Rate to be no
higher than the rate on the Two-Year Benchmark Treasury on the Purchase
Contract Settlement Date plus 200 basis points (2%). Such market value
may be less than 100.5%, including where the Reset Spread is limited to the
maximum of 2%. The "Two-Year Benchmark Treasury" shall mean direct
obligations of the United States (which may be obligations traded on a
when-issued basis only) having a maturity comparable to the remaining term to
maturity of the Capital Securities, as agreed upon by the Company and the Reset
Agent. The rate for the Two-Year Benchmark Treasury will be the bid side
rate displayed at 10:00 A.M., New York City time, on the third Business
Day immediately preceding the Purchase Contract Settlement Date in the
Telerate system (or if the Telerate system is (a) no longer available on
the third Business Day immediately preceding the Purchase Contract
Settlement Date or (b) in the opinion of the Reset Agent (after
consultation with the Company) no longer an appropriate system from which
to obtain such rate, such other nationally recognized quotation system
as, in the opinion of the Reset Agent (after consultation with the
Company) is appropriate). If such rate is not so displayed, the rate for
the Two-Year Benchmark Treasury shall be, as calculated by the Reset
Agent, the yield to maturity for the Two-Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis, and computed by taking the
arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New
York City time, on the third Business Day immediately preceding the
Purchase Contract Settlement Date of three leading United States
government securities dealers selected by the Reset Agent (after
consultation with the Company) (which may include the Reset Agent or an
affiliate thereof). The Company may limit the Reset Rate to be no higher
than the rate on the Two-Year Benchmark Treasury on the third Business
Day immediately preceding the Purchase Contract Settlement Date plus 200
basis points (2%). It is currently anticipated that Merrill Lynch,
Pierce, Fenner & Smith Incorporated will be the investment banking firm
acting as the Reset Agent.
On the tenth Business Day immediately preceding the Purchase
Contract Settlement Date, the Two-Year Benchmark Treasury to be used to
determine the Reset Rate on the Purchase Contract Settlement Date will be
selected and the Reset Spread to be added to the rate on the Two-Year
Benchmark Treasury in effect on the third Business Day immediately
preceding the Purchase Contract Settlement Date will be established by
the Reset Agent, and the Reset Spread and the Two-Year Benchmark Treasury
will be announced by the Company (the "Reset Announcement Date"). The
Company will cause a notice of the Reset Spread and such Two-Year
Benchmark Treasury to be published on the Business Day following the
Reset Announcement Date by publication in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal. The Company will request, not
later than 7 nor more than 15 calendar days prior to the Reset
Announcement Date, that the Depositary notify its participants holding
Capital Securities, Income PRIDES or Growth PRIDES of such Reset
Announcement Date and of the procedures that must be followed if any
owner of FELINE PRIDES wishes to settle the related Purchase Contract
with cash on the Business Day immediately preceding the Purchase Contract
Settlement Date.
Optional Remarketing
Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement, on or prior to the fifth Business
Day immediately preceding the Purchase Contract Settlement Date, but no
earlier than the Payment Day immediately preceding the Purchase Contract
Settlement Date, holders of separate Capital Securities which are not
components of Income PRIDES may elect to have their Capital Securities
remarketed in the same manner as the Capital Securities which are
component of Income PRIDES, by delivering their Capital Securities along
with a notice of such election to the Custodial Agent. The Custodial
Agent will hold such Capital Securities in an account separate from the
collateral account in which the Pledged Securities will be held. Holders
of Capital Securities electing to have their Capital Securities
remarketed will also have the right to withdraw such election on or prior
to the fifth Business Day immediately preceding the Purchase Contract
Settlement Date.
Optional Redemption
The Debentures are redeemable at the option of the Company, in
whole but not in part, on not less than 30 days nor more than 60 days
notice, upon the occurrence and continuation of a Tax Event under the
circumstances described under "Description of the Debentures--Tax Event
Redemption". If the Company redeems the Debentures upon the occurrence
and continuation of a Tax Event, the proceeds from such repayment shall
simultaneously be applied on a pro rata basis to redeem Capital Securities
having an aggregate stated liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed at a Redemption
Price, per Capital Security, equal to the Redemption Amount plus accrued
and unpaid interest thereon to the date of such redemption. Such proceeds
will be payable in cash to the holders of such Capital Securities. If the
Tax Event Redemption occurs prior to the Purchase Contract Settlement
Date, the Redemption Price payable to the Collateral Agent, in
liquidation of the Income PRIDES holders' interests in the Trust, will be
simultaneously applied by the Collateral Agent to purchase on behalf of
the holders' of the Income PRIDES the Treasury Portfolio. The Treasury
Portfolio will be pledged with the Collateral Agent to secure the
obligation of Income PRIDES holders' to purchase Common Stock under the
related Purchase Contracts.
Put Option Upon a Failed Remarketing
If a Failed Remarketing has occurred, holders of Trust Securities
(including, following the distribution of the Debentures upon a
dissolution of the Trust as described herein, such Debenture holders),
holding such Trust Securities (or Debentures, as the case may be),
following the Purchase Contract Settlement Date will have the right, in
the case of Trust Securities, to require the Trust to distribute their
pro rata share of the Debentures to the Exchange Agent, who will put such
Debentures to the Company on behalf of such holders (or in the case of
Debentures held directly, the holders of such Debentures shall have the
right to put such Debentures directly to the Company) on ,
2001, upon at least three Business Days' prior notice, at a price equal
to the principal amount, plus accrued and unpaid interest (including
deferred interest), if any, thereon.
Redemption Procedures
If the Trust gives a notice of redemption (which notice will be
irrevocable) in respect of all of the Capital Securities, then, by
12:00 noon, New York City time, on the redemption date, provided that the
Company has paid to the Institutional Trustee sufficient amount of cash
in connection with the related redemption or maturity of the Debentures,
the Trust will irrevocably deposit with the Depositary, the Purchase
Contract Agent or the Collateral Agent, as applicable, funds sufficient
to pay the applicable Redemption Price and will give the Depositary, the
Purchase Contract Agent or the Collateral Agent, as applicable,
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Capital Securities so called for redemption. If notice of
redemption shall have been given and funds deposited as required, then,
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such
Capital Securities so called for redemption will cease, except the right
of the holders of such Capital Securities to receive the Redemption Price
but without interest on such Redemption Price. In the event that any date
fixed for redemption of Capital Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day.
Distribution of the Debentures
"Investment Company Event" means that the Regular Trustees shall
have received an opinion from independent counsel experienced in practice
under the 1940 Act (as defined below) to the effect that, as a result of
the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a "Change in
1940 Act Law"), which Change in 1940 Act Law becomes effective on or
after the date of this Prospectus Supplement, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company
Act of 1940, as amended (the "1940 Act").
If, at any time, an Investment Company Event shall occur and be
continuing, the Trust shall be dissolved, with the result that Debentures
with an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Trust Securities, would be distributed to the holders of the Trust Securities
in liquidation of such holders' interests in the Trust on a pro rata basis
within 90 days following the occurrence of such Investment Company Event;
provided, however, that such dissolution and distribution shall be conditioned
on the Company being unable to avoid such Investment Company Event within such
90-day period by taking some ministerial action or pursuing some other similar
reasonable measure that will have no adverse effect on the Trust, the
Company or the holders of the Trust Securities and will involve no
material cost. If an Investment Company Event occurs, Debentures
distributed to the Collateral Agent in liquidation of such holder's
interest in the Trust would be pledged (in lieu of the Capital
Securities) to secure Income PRIDES holders' obligations to purchase
Common Stock under the Purchase Contracts.
The Company will have the right at any time to dissolve the Trust
and, after satisfaction of liabilities of creditors of the Trust as
provided by applicable law, cause the Debentures to be distributed to the
holders of the Trust Securities. As of the date of any distribution of
Debentures upon dissolution of the Trust, (i) the Capital Securities will
no longer be deemed to be outstanding, (ii) the Depositary or its
nominee, as the record holder of the Capital Securities, will receive a
registered global certificate or certificates representing the Debentures
to be delivered upon such distribution, and (iii) any certificates
representing Capital Securities not held by the Depositary or its nominee
will be deemed to represent Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, such
Capital Securities until such certificates are presented to the Company
or its agent for transfer or reissuance. Debentures distributed to the
Collateral Agent in liquidation of the interest of the holders of the
Capital Securities in the Trust would be substituted for the Capital
Securities and pledged to secure Income PRIDES holders' obligations to
purchase Common Stock under the Purchase Contracts.
There can be no assurance as to the market prices for either the
Capital Securities or the Debentures that may be distributed in exchange
for the Capital Securities if a dissolution of the Trust were to occur.
Accordingly, the Capital Securities or such Debentures that an investor
may receive if a dissolution of the Trust were to occur may trade at a
discount to the price that the investor paid to purchase the Capital
Securities forming a part of the Income PRIDES offered hereby.
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary dissolution of the
Trust (unless a Tax Event Redemption has occurred), the then holders of
the Capital Securities will be entitled to receive out of the assets of
the Trust, after satisfaction of liabilities to creditors, Debentures in
an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of,
and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Capital Securities on a pro rata basis in exchange for such
Capital Securities.
The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Capital Securities, except that if a Declaration Event of Default has
occurred and is continuing, the Capital Securities shall have a preference
over the Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall dissolve (i) on
, 2004, the expiration of the term of the Trust, (ii) upon the bankruptcy
of the Company or the holder of the Common Securities, (iii) upon the
filing of a certificate of dissolution or its equivalent with respect to
the Company or the revocation of the charter of the Company and the
expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) after the receipt by the Institutional
Trustee of written direction from the Company to dissolve the Trust, (v)
upon the distribution of Debentures, (vi) upon the occurrence and
continuation of a Tax Event Redemption or (vii) upon the entry of a
decree of a judicial dissolution of the holder of the Common Securities,
the Company or the Trust.
Declaration Events of Default
An event of default under the Indenture (an "Indenture Event of
Default") constitutes an event of default under the Declaration with
respect to the Trust Securities (a "Declaration Event of Default");
provided, that pursuant to the Declaration, the holder of the Common
Securities will be deemed to have waived any Declaration Event of Default
with respect to the Common Securities until all Declaration Events of
Default with respect to the Capital Securities have been cured, waived or
otherwise eliminated. Until such Declaration Events of Default with
respect to the Capital Securities have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely
on behalf of the holders of the Capital Securities and only the holders
of the Capital Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration and,
therefore, the Indenture. If a Declaration Event of Default with respect
to the Capital Securities is waived by holders of Capital Securities,
such waiver will also constitute the waiver of such Declaration Event of
Default with respect to the Common Securities without any further act,
vote or consent of the holders of the Common Securities. If the
Institutional Trustee fails to enforce its rights under the Debentures in
respect of an Indenture Event of Default after a holder of record of
Capital Securities has made a written request, such holder of record of
Capital Securities may, to the fullest extent permitted by applicable
law, institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Debentures without first
proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default
has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Debentures on
the date such interest or principal is otherwise payable (after giving
effect to any right of deferral), then a holder of Capital Securities may
institute a Direct Action to such holder directly of the principal of or
interest on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder. In
connection with such Direct Action, the Company shall have the right
under the Indenture to set off any payment made to such holder of the
Company. The holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures. See
"Effect of Obligations under the Debentures and the Guarantee."
Upon the occurrence of a Declaration Event of Default, the
Institutional Trustee as the sole holder of the Debentures will have the
right under the Indenture to declare the principal of and interest on the
Debentures to be immediately due and payable. The Company and the Trust
are each required to file annually with the Institutional Trustee an
officers' certificate as to its compliance with all conditions and
covenants under the Declaration.
Voting Rights
Except as described herein, under the Trust Act and the Trust
Indenture Act and under "Description of the Guarantee--Modification of
the Guarantee; Assignment," and as otherwise required by law and the
Declaration, the holders of the Capital Securities will have no voting
rights.
Subject to the requirement of the Institutional Trustee obtaining a
tax opinion in certain circumstances set forth in the last sentence of
this paragraph, the holders of a majority in aggregate stated liquidation
amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to
the Institutional Trustee, or direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including
the right to direct the Institutional Trustee, as holder of the
Debentures, to (i) exercise the remedies available under the Indenture
with respect to the Debentures, (ii) waive any past Indenture Event of
Default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures
shall be due and payable or (iv) consent to any amendment, modification
or termination of the Indenture or the Debentures where such consent
shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of holders of more
than a majority in principal amount of the Debentures (a
"Super-Majority") affected thereby, only the holders of at least such
Super-Majority in aggregate stated liquidation amount of the Capital
Securities may direct the Institutional Trustee to give such consent or
take such action. The Institutional Trustee shall notify all holders of
the Capital Securities of any notice of default received from the Debt
Trustee (as defined herein) with respect to the Debentures. Such notice
shall state that such Indenture Event of Default also constitutes a
Declaration Event of Default. Except with respect to directing the time,
method and place of conducting a proceeding for a remedy, the
Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has
obtained an opinion of tax counsel experienced in such matters to the
effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for federal income tax purposes.
In the event the consent of the Institutional Trustee, as the
holder of the Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or the
Debentures, the Institutional Trustee shall request the direction of the
holders of the Capital Securities and the Common Securities with respect
to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a
majority in stated liquidation amount of the Capital Securities and the
Common Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at
the direction of the holders of at least the proportion in stated
liquidation amount of the Capital Securities and the Common Securities
which the relevant Super-Majority represents of the aggregate principal
amount of the Debentures outstanding. The Institutional Trustee shall not
take any such action in accordance with the directions of the holders of
the Capital Securities and the Common Securities unless the Institutional
Trustee has obtained an opinion of tax counsel experienced in such
matters to the effect that, as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal
income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities
may be given at a separate meeting of holders of Capital Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which holders of Capital Securities are
entitled to vote, or of any matter upon which action by written consent
of such holders is to be taken, to be mailed to each holder of record of
Capital Securities. Each such notice will include a statement setting
forth the following information: (i) the date of such meeting or the
date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is
sought; and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of Capital Securities will be required
for the Trust to cancel Capital Securities or distribute Debentures in
accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of
the Capital Securities that are owned at such time by the Company or any
entity directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Company, shall not be
entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if such Capital Securities were not outstanding.
The procedures by which holders of Capital Securities may exercise
their voting rights are described below. See "--Book-Entry Only
Issuance--The Depository Trust Company."
Holders of the Capital Securities will have no rights to appoint or
remove the Ingersoll-Rand Trustees, who may be appointed, removed or
replaced solely by the Company as the indirect or direct holder of all of
the Common Securities.
Modification of the Declaration
The Declaration may be modified and amended if approved by the
Regular Trustees (and in certain circumstances the Institutional Trustee
or the Delaware Trustee), provided, that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special
rights of the Trust Securities, whether by way of amendment to the
Declaration or otherwise or (ii) the dissolution of the Trust other than
pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a majority in such stated
liquidation amount of the Trust Securities affected thereby; provided
further, that if any amendment or proposal referred to in clause (i)
above would adversely affect only the Capital Securities or the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a majority in stated liquidation
amount of such class of securities. In addition, the Declaration may be
amended without the consent of the holders of the Trust Securities to,
among other things, cause the Trust to continue to be classified for
United States federal income tax purposes as a grantor trust.
Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause
the Trust to be classified as other than a grantor trust for purposes of
United States federal income taxation, (ii) reduce or otherwise adversely
affect the powers of the Institutional Trustee or (iii) cause the Trust to
be deemed an "investment company" which is required to be registered
under the 1940 Act.
Mergers, Consolidations or Amalgamations
The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below or as described in "Liquidation Distribution Upon
Dissolution." The Trust may, with the consent of the Regular Trustees
and without the consent of the holders of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided, that (i) if the
Trust is not the surviving entity, such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust
Securities or (y) substitutes for the Trust Securities other securities
having substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the
same as the Trust Securities with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) the Company expressly
acknowledges a trustee of such successor entity possessing the same
powers and duties as the Institutional Trustee as the holder of the
Debentures, (iii) if the Capital Securities are listed, any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital
Securities are then listed or quoted, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than
with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose substantially identical to that
of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, the Company has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such matters
to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to
any dilution of the holders' interest in the new entity), (B) following
such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an
investment company under the 1940 Act and (C) following such merger,
consolidation, amalgamation or replacement, the Trust (or the successor
entity) will continue to be classified as a grantor trust for federal
income tax purposes, and (viii) the Company guarantees the obligations of
such successor entity under the Successor Securities at least to the
extent provided by the Guarantee and the Common Securities Guarantee (as
defined herein). Notwithstanding the foregoing the Trust shall not,
except with the consent of holders of 100% in stated liquidation amount
of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust
or the successor entity to be classified as other than a grantor trust
for federal income tax purposes.
Book-Entry Only Issuance--The Depository Trust Company
In the event that the Capital Securities are issued as one or more
fully-registered global Capital Securities certificates representing the
total aggregate number of Capital Securities, the Depositary will act as
securities depositary for any Capital Securities that are held separately
from the Income PRIDES. In such event, the Capital Securities will be
issued only as fully-registered securities registered in the name of Cede
& Co. (the Depositary's nominee). However, under certain circumstances,
the Regular Trustees with the consent of the Company may decide not to
use the system of book-entry transfers through the DTC with respect to
the Capital Securities. In that event, certificates of the Capital
Securities will be printed and delivered to the holders.
The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in the
global Capital Securities as represented by a global certificate.
Purchases of Capital Securities within the Depositary's system must
be made by or through Direct Participants, which will receive a credit
for the Capital Securities on the Depositary's records. The ownership
interest of each actual purchaser of each Capital Security (a "Beneficial
Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from
the Direct or Indirect Participants through which the Beneficial Owners
purchased Capital Securities. Transfers of ownership interests in the
Capital Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in
the Capital Securities, except in the event that use of the book-entry
system for the Capital Securities is discontinued.
To facilitate subsequent transfers, all the Capital Securities
deposited by Participants with the Depositary will be registered in the
name of the Depositary's nominee, Cede & Co. The deposit of Capital
Securities with the Depositary and their registration in the name of Cede
& Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners of the Capital Securities. The
Depositary's records reflect only the identity of the Direct Participants
to whose accounts such Capital Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
So long as the Depositary or its nominee is the registered owner or
holder of a global certificate, the Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the Capital
Securities represented thereby for all purposes under the Declaration and
the Capital Securities. No Beneficial Owner of an interest in a global
certificate will be able to transfer that interest except in accordance
with the Depositary applicable procedures, in addition to those provided
for under the Declaration.
The Depositary has advised the Company that it will take any action
permitted to be taken by a holder of Capital Securities (including the
presentation of Capital Securities for exchange as described below) only
at the direction of one or more Participants to whose account the
Depositary's interests in the global certificates are credited and only
in respect of such portion of the stated liquidation amount of Capital
Securities as to which such Participant or Participants has or have given
such directions. However, if there is a Declaration Event of Default
under the Capital Securities, the Depositary will exchange the global
certificates for certificated securities, which it will distribute to its
Participants.
Conveyance of notices and other communications by the Depositary to
Direct Participants and Indirect Participants and by Direct Participants
and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements that may be in effect from time to time.
Although voting with respect to the Capital Securities is limited,
in those cases where a vote is required, neither the Depositary nor Cede
& Co. will itself consent or vote with respect to Capital Securities.
Under its usual procedures, the Depositary would mail an omnibus proxy to
the Trust as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Capital Securities are credited on the
record date (identified in a listing attached to the omnibus proxy). The
Company and the Trust believe that the arrangements among the Depositary,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the
rights that can be directly exercised by a record holder of a beneficial
interest in the Trust.
Distribution payments on the Capital Securities issued in the form
of one or more global certificates will be made to the Depositary in
immediately available funds. The Depositary's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on the Depositary's records unless
the Depositary has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the account of customers in bearer form or
registered in "street name," and such payments will be the responsibility
of such Participant and not of the Depositary, the Trust or the Company,
subject to any statutory or regulatory requirements to the contrary that
may be in effect from time to time. Payment of distributions to the
Depositary is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of the Depositary,
and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Capital
Security certificate will not be entitled to receive physical delivery of
Capital Securities. Accordingly, each Beneficial Owner must rely on the
procedures of the Depositary to exercise any rights under the Capital
Securities.
Although the Depositary has agreed to the foregoing procedure in
order to facilitate transfer of interests in the global certificates
among Participants, the Depositary is under no obligation to perform or
continue to perform such procedures and such procedures may be
discontinued at any time. None of the Company, the Trust or any
Ingersoll-Rand Trustee will have any responsibility for the performance
by the Depositary or its Direct Participants or Indirect Participants
under the rules and procedures governing the Depositary. The Depositary
may discontinue providing its services as securities depositary with
respect to the Capital Securities at any time by giving reasonable notice
to the Trust. Under such circumstances, in the event that a successor
securities depositary is not obtained, Capital Securities certificates
are required to be printed and delivered to holders. Additionally, the
Regular Trustees (with the consent of the Company) may decide to
discontinue use of the system of book-entry transfers through the
Depositary (or any successor depositary) with respect to the Capital
Securities. In that event, certificates for the Capital Securities will
be printed and delivered to holders. In each of the above circumstances,
the Company will appoint a paying agent with respect to the Capital
Securities.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the
Company and the Trust believe to be reliable, but neither the Company nor
the Trust takes responsibility for the accuracy hereof.
Registrar, Transfer Agent and Paying Agent
Payments in respect of the Capital Securities represented by the
global certificates shall be made to the Depositary, which shall credit
the relevant accounts at the Depositary on the applicable distribution
dates, or, in the case of certificated securities, such payments shall be
made by check mailed to the address of the holder entitled thereto as
such address shall appear on the Register. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Ingersoll-Rand Trustees. In the event that The Bank of New York shall no
longer be the Paying Agent, the Regular Trustees shall appoint a
successor to act as Paying Agent (which shall be a bank or trust
company).
The Bank of New York will act as registrar, transfer agent and
paying agent for the Capital Securities. Registration of transfers of
Capital Securities will be effected without charge by or on behalf of the
Trust, but upon payment (and the giving of such indemnity as the Trust or
the Company may require) in respect of any tax or other government charge
which may be imposed in relation to it.
Information Concerning the Institutional Trustee
The Institutional Trustee prior to the occurrence of a default with
respect to the Trust Securities and after the curing and or waiver of any
defaults that may have occurred, undertakes to perform only such duties
as are specifically set forth in the Declaration and, after default,
shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such
provisions, the Institutional Trustee is under no obligation to exercise
any of the powers vested in it by the Declaration at the request of any
holder of Capital Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be
incurred thereby. The holders of Capital Securities will not be required
to offer such indemnity in the event such holders, by exercising their
voting rights, direct the Institutional Trustee to take any action it is
empowered to take under the Declaration following a Declaration Event of
Default. The Institutional Trustee also serves as trustee under the
Guarantee.
The Institutional Trustee maintains commercial banking
relationships with the Company.
Governing Law
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to operate the Trust
in such a way so that the Trust will not be required to register as
an "investment company" under the 1940 Act or be characterized as other
than a grantor trust for federal income tax purposes. The Company is
authorized and directed to conduct its affairs so that the Debentures
will be treated as indebtedness of the Company for federal income tax
purposes. In this connection, the Company and the Regular Trustees are
authorized to take any action not inconsistent with applicable law, the
Declaration, the certificate of trust of the Trust or the certificate of
incorporation of the Company, that each of the Company and the Regular
Trustees determines in its discretion to be necessary or desirable to
achieve such end, as long as such action does not adversely affect the
interests of the holders of the Capital Securities or vary the terms
thereof.
Holders of the Capital Securities have no preemptive or similar
rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the
Guarantee which will be executed and delivered by the Company for the
benefit of the holders from time to time of Trust Securities. The
Guarantee will be qualified as an indenture under the Trust Indenture
Act. The First National Bank of Chicago will act as the Guarantee Trustee
for the purposes of compliance with the provisions of the Trust Indenture
Act. The terms of the Guarantee will be those set forth in the Guarantee
and those made part of the Guarantee by the Trust Indenture Act. The
following summary is not necessarily complete, and reference is hereby
made to the copy of the form of Guarantee (including the definitions
therein of certain terms) which is filed as an exhibit to the
Registration Statement relating to this Prospectus Supplement, and to the
Trust Indenture Act. Whenever particular defined terms of the Guarantee
are referred to in this Prospectus Supplement, such defined terms are
incorporated herein by reference. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Capital
Securities. The following descriptions of certain terms of the Guarantee
supplements and, to the extent inconsistent with, replaces the description
of the general terms and provisions of the Guarantee set
forth in the accompanying Prospectus, to which reference is hereby made.
General
Pursuant to the Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full on
a senior unsecured basis, to the holders of the Trust Securities issued
by the Trust, the Guarantee Payments (as defined herein) (except to the
extent paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim which the Trust may have or assert. The
following payments or distributions with respect to Trust Securities
issued by the Trust to the extent not paid by or on behalf of the Trust
(the "Guarantee Payments"), will be subject to the Guarantee thereon
(without duplication): (i) any accrued and unpaid distributions which
are required to be paid on the Trust Securities, to the extent the Trust
shall have funds available therefor; (ii) the redemption price, including
all accumulated and unpaid distributions to the date of redemption, of
Trust Securities in respect of which the related Debentures have been
redeemed by the Company upon the occurrence of a Tax Event Redemption, to
the extent the Trust shall have funds available therefor; and (iii) upon
a voluntary or involuntary dissolution of the Trust (other than in
connection with the distribution of Debentures to the holders of Trust
Securities), the lesser of (a) the aggregate of the stated liquidation
amount and all accrued and unpaid distributions on such Trust Securities
to the date of payment, to the extent the Trust has funds available
therefor, and (b) the amount of assets of the Trust remaining available
for distribution to holders of the Trust Securities in liquidation of the
Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Trust Securities or by causing the Trust to pay such amounts
to such holders.
The Guarantee will be a full and unconditional guarantee on a
senior unsecured basis with respect to the Trust Securities issued by the
Trust, but will not apply to any payment of distributions except to the
extent the Trust shall have funds available therefor. If the Company does
not make interest payments on the Debentures purchased by the Trust, the
Trust will not pay distributions on the Trust Securities and will not
have funds available therefor. See "Effect of Obligations under the
Debentures and the Guarantee."
The Guarantee, when taken together with the Company's obligations
under the Debentures, the Indenture, and the Declaration, will have the
effect of providing a full and unconditional guarantee on a senior
unsecured basis by the Company of payments due on the Trust Securities.
The Guarantee is for the benefit of all the holders of the Trust
Securities (including the holders of the Common Securities), provided,
however, that upon an Indenture Event of Default, holders of Capital
Securities shall have priority over holders of Common Securities with
respect to distributions and payments on liquidation, redemption or
otherwise.
Certain Covenants of the Company
In the Guarantee, the Company will covenant that, so long as any
Capital Securities issued by the Trust remain outstanding, if there shall
have occurred any event that would constitute an event of default under
the Guarantee or the Declaration, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of
capital stock of the Company in connection with the satisfaction by the
Company of its obligations under any employee or agent benefit plans or
the satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event requiring the
Company to purchase capital stock of the Company, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, (iv) dividends or
distributions in capital stock of the Company (or rights to acquire
capital stock) or repurchases or redemptions of capital stock solely from
the issuance or exchange of capital stock or (v) redemptions or
repurchases of any rights outstanding under a shareholder rights plan or
the declaration thereunder of a dividend of rights in the future), (b)
the Company shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by
the Company which rank junior to the Debentures and (c) the Company shall
not make any guarantee payments with respect to the foregoing (other than
payments pursuant to the Guarantee or the Common Securities Guarantee).
Modification of the Guarantee; Assignment
Except with respect to any changes which do not adversely affect
the rights of holders of Trust Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of
the holders of not less than a majority in stated liquidation amount of
the outstanding Trust Securities issued by the Trust. All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to
the benefit of the holders of the Trust Securities then outstanding.
Termination
The Guarantee will terminate (a) upon distribution of the
Debentures held by the Trust to the holders of the Trust Securities, (b)
upon full payment of the redemption price of all the Trust Securities in
the event that all of the Debentures are repurchased by the Company upon
the occurrence of a Tax Event Redemption or (c) upon full payment of the
amounts payable in accordance with the Declaration upon liquidation of the
Trust. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust
Securities must return payment of any sums paid under the Trust
Securities or the Guarantee.
Events of Default
An event of default under the Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in stated liquidation amount of the Trust
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce such Guarantee, any holder of
Trust Securities may institute a legal proceeding directly against the
Company to enforce such holder's rights under the Guarantee, without
first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. The Company waives any right or
remedy to require that any action be brought first against the Trust or
any other person or entity before proceeding directly against the
Company.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the
Company and will rank on a parity with all of the Company's other senior
unsecured obligations.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of a default with
respect to the Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after default, shall
exercise the same degree of care as a prudent individual would exercise
in the conduct of his or her own affairs. Subject to such provisions, the
Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Guarantee at the request of any holder of Capital
Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the
foregoing shall not relieve the Guarantee Trustee, upon the occurrence of
an event of default under the Guarantee, from exercising the rights and
powers vested in it by the Guarantee.
The Guarantee Trustee maintains commercial banking relationships
with the Company.
Governing Law
The Guarantee will be governed by and construed in accordance with
the internal laws of the State of New York.
DESCRIPTION OF THE DEBENTURES
Set forth below is a description of the specific terms of the
Debentures in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. The following description is not
necessarily complete, and reference is hereby made to the copy of the
form of the Indenture to be entered into between the Company and The Bank
of New York, as trustee (the "Debt Trustee"), as supplemented or amended
from time to time (as so supplemented and amended, the "Indenture") which
is filed as an exhibit to the Registration Statement relating to this
Prospectus Supplement, and to the Trust Indenture Act. Certain
capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust,
Debentures may be distributed to the holders of the Trust Securities in
liquidation of the Trust. See "Description of the Capital Securities--
Distribution of the Debentures." The following descriptions of certain
terms of the Debentures supplement and, to the extent inconsistent with,
replaces the description of the general terms and provisions of the Debt
Securities set forth in the accompanying Prospectus, to which reference
is hereby made.
General
The Debentures will be issued as senior unsecured debt under the
Indenture and will rank on a parity in right of payment with all of the
Company's other senior unsecured debt obligations. The Debentures will be
limited in aggregate principal amount to $ million.
The Debentures will not be subject to a sinking fund provision.
Unless a Tax Event Redemption has occurred prior to the Purchase Contract
Settlement Date, the entire principal amount of the Debentures will
mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and
expenses and taxes of the Trust, if any, on , 2003.
The Company will have the right at any time to dissolve the Trust
and cause the Debentures to be distributed to the holders of the Trust
Securities. If Debentures are distributed to holders of Trust Securities
in liquidation of such holders' interests in the Trust, such Debentures
will initially be issued as a Global Security (as defined herein). As
described herein, under certain limited circumstances, Debentures may be
issued in certificated form in exchange for a Global Security. See "--
Book-Entry and Settlement" below. In the event that Debentures are issued
in certificated form, such Debentures will be in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Debentures issued as a Global
Security will be made to the Depositary, a successor depositary or, in
the event that no depositary is used, to a Paying Agent for the
Debentures. In the event Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Debentures
will be registrable and Debentures will be exchangeable for Debentures of
other denominations of a like aggregate principal amount, at the
corporate trust office or agency of the Debt Trustee, New York, New York;
provided, that at the option of the Company, payment of interest may be
made by check mailed to the address of the holder entitled thereto or by
wire transfer to an account appropriately designated by the holder
entitled thereto. Notwithstanding the foregoing, so long as the holder of
any Debentures is the Institutional Trustee, the payment of principal and
interest on the Debentures held by the Institutional Trustee will be made
at such place and to such account as may be designated by the
Institutional Trustee.
The Indenture does not contain provisions that afford
holders of the Debentures protection in the event of a highly
leveraged transaction or other similar transaction involving
the Company that may adversely affect such holders.
Interest
Each Debenture shall bear interest initially at the rate of %
per annum from the original date of issuance, payable quarterly in
arrears on February 16, May 16, August 16 and November 16 of each year
(each an "Interest Payment Date"), commencing , 1998, to
the person in whose name such Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding
such Interest Payment Date. The applicable interest rate on the
Debentures and the distribution rate on the related Capital Securities
outstanding on and after the Purchase Contract Settlement Date will be
reset on the third Business Day immediately preceding the Purchase
Contract Settlement Date to the Reset Rate. In the event the Debentures
shall not continue to remain in book-entry only form, the Company shall
have the right to select record dates, which shall be more than fifteen
Business Days but less than 60 Business Days prior to the Interest
Payment Date. The amount of interest payable for any period will be
computed on the basis of a 360-day year consisting of twelve 30-day
months. The amount of interest payable for any period shorter than a
full quarterly period for which interest is computed will be computed on the
basis of the actual number of days elapsed in such 90-day period. In the
event that any date on which interest is payable on the Debentures is not
a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, then such
payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
Tax Event Redemption
If a Tax Event shall occur and be continuing, the Company may, at
its option, redeem Debentures in whole (but not in part) at any time at a
Redemption Price equal to, for each Debenture, the Redemption Amount plus
accrued and unpaid interest thereon, including Compound Interest and
expenses and taxes of the Trust, if any, to the date of redemption (the
"Tax Event Redemption Date"). If, following the occurrence of a Tax
Event, the Company exercises its option to redeem the Debentures, then
the proceeds of such redemption will be applied to redeem Trust
Securities having a liquidation amount equal to the principal amount of
Debentures to be paid in accordance with their terms, at the Redemption
Price. Such Redemption Price will be payable in cash to the holders of
such Trust Securities. If such Tax Event Redemption occurs prior to the
Purchase Contract Settlement Date, the Redemption Price payable in
liquidation of the Income PRIDES holders' interest in the Trust will be
distributed to the Collateral Agent, who in turn will apply an amount
equal to the Redemption Amount of such Redemption Price to purchase the
Treasury Portfolio on behalf of the holders of Income PRIDES and remit
the remaining portion, if any, of such Redemption Price to the Purchase
Contract Agent for payment to the holders of such Income PRIDES. Such
Treasury Portfolio will be substituted for the Capital Securities and
will be pledged with the Collateral Agent to secure such Income PRIDES
holders' obligation to purchase the Company's Common Stock under the
Purchase Contracts; provided, that if the Tax Event Redemption occurs
after the Purchase Contract Settlement Date, such Treasury Portfolio will
not be purchased.
"Tax Event" means the receipt by the Trust of an opinion of a
nationally recognized independent tax counsel experienced in such matters
to the effect that, as a result of (a) any amendment to, change in, or
announced proposed change in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority
thereof or therein affecting taxation, (b) any amendment to or change in
an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority or
(c) any interpretation or pronouncement that provides for a position with
respect to such laws or regulations that differs from the generally
accepted position on the date the Trust Securities are issued, which
amendment, change or proposed change is effective or which
interpretation or pronouncement is announced on or after the date of
issuance of the Trust Securities under the Declaration, there is more
than an insubstantial risk that (i) interest payable by the Company on
the Debentures would not be deductible, in whole or in part, by the
Company for United States federal income tax purposes or (ii) the income
of the Trust would be subject to United States federal income tax or the
Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Treasury Portfolio" means, with respect to the Applicable
Principal Amount of Debentures (a) if the Tax Event Redemption Date
occurs prior to the Purchase Contract Settlement Date, a portfolio of
zero-coupon U.S. Treasury Securities consisting of (i) interest or
principal strips of U.S. Treasury Securities which mature on or prior to
, 2001 in an aggregate amount equal to the Applicable Principal
Amount and (ii) with respect to each scheduled interest payment date on
the Debentures that occurs after the Tax Event Redemption Date interest
or principal strips of U.S. Treasury Securities which mature on or prior
to such date in an aggregate amount equal to the aggregate interest
payment that would be due on the Applicable Principal Amount of the
Debentures on such date, and (b) if the Tax Event Redemption Date occurs
after the Purchase Contract Settlement Date, a portfolio of zero-coupon
U.S. Treasury Securities consisting of (i) principal or interest strips
of U.S. Treasury Securities which mature on or prior to , 2003 in an
aggregate amount equal to the Applicable Principal Amount and (ii) with
respect to each scheduled interest payment date on the Debentures that
occurs after the Tax Event Redemption Date interest or principal strips
of such U.S. Treasury Securities which mature on or prior to such date in
an aggregate amount equal to the aggregate interest payment that would be
due on the Applicable Principal Amount of the Debentures on such date.
"Applicable Principal Amount" means either (i) if the Tax Event
Redemption Date occurs prior to the Purchase Contract Settlement Date,
the aggregate principal amount of the Debentures corresponding to the
aggregate stated liquidation amount of the Capital Securities which are
components of Income PRIDES on the Tax Event Redemption Date or (ii) if
the Tax Event Redemption occurs on or after the Purchase Contract
Settlement Date, the aggregate principal amount of the Debentures
corresponding to the aggregate stated liquidation amount of the Capital
Securities outstanding on such Tax Event Redemption Date.
"Redemption Amount" means for each Debenture, the product of (i)
the principal amount of such Debenture and (ii) a fraction whose
numerator is the Treasury Portfolio Purchase Price and whose denominator
is the Applicable Principal Amount.
"Treasury Portfolio Purchase Price" means the lowest aggregate
price quoted by a primary U.S. government securities dealer in New York
City (a "Primary Treasury Dealer") to the Quotation Agent on the third
Business Day immediately preceding the Tax Event Redemption Date for the
purchase of the Treasury Portfolio for settlement on the Tax Event
Redemption Date.
"Quotation Agent" means (i) Merrill Lynch Government Securities,
Inc. and its respective successors, provided, however, that if the
foregoing shall cease to be a Primary Treasury Dealer, the Company shall
substitute therefor another Primary Treasury Dealer, and (ii) any other
Primary Treasury Dealer selected by the Company.
Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each registered holder of
Debentures to be prepaid at its registered address. Unless the Company
defaults in payment of the Redemption Price, on and after the redemption
date interest shall cease to accrue on such Debentures.
Option to Extend Interest Payment Period
The Company shall have the right at any time, and from time to
time, during the term of the Debentures, to defer payments of interest by
extending the interest payment period for a period not extending beyond
the maturity date of the Debentures, at the end of which Extension
Period, the Company shall pay all interest then accrued and unpaid
(including any expenses and taxes of the Trust, as herein defined)
together with interest thereon compounded quarterly at the rate of %
per annum through and including , 2001, and at the Reset Rate
thereafter, to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, (a) the
Company shall not declare or pay dividends or make any distribution with
respect to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock (other than (i) purchases or
acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee or
agent benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase capital stock of the Company,
(ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company capital stock,
(iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or rights to
acquire capital stock) or repurchases or redemptions of capital stock
solely from the issuance or exchange of capital stock or (v) redemptions
or repurchases of any rights outstanding under a shareholder rights plan
or the declaration thereunder of a dividend of rights in the future), (b)
the Company shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank junior to the Debentures, and (c) the Company shall
not make any guarantee payments with respect to the foregoing (other than
payments pursuant to the Guarantee). Prior to the termination of any such
Extension Period, the Company may further defer payments of interest by
extending the interest payment period; provided, however, that such
Extension Period, including all such previous and further extensions, may
not extend beyond the maturity of the Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company
may commence a new Extension Period, subject to the terms set forth in
this section. No interest during an Extension Period, except at the end
thereof, shall be due and payable, but the Company, at its option, may
prepay on any Interest Payment Date all of the interest accrued during
the then elapsed portion of an Extension Period. The Company has no
present intention of exercising its right to defer payments of interest
by extending the interest payment period on the Debentures. If the
Institutional Trustee shall be the sole holder of the Debentures, the
Company shall give the Regular Trustees and the Institutional Trustee
notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Capital Securities
are payable or (ii) the date the Regular Trustees are required to give
notice, if applicable, to the NYSE (or other applicable self-regulatory
organization) or to holders of the Capital Securities of the record or
payment date of such distribution. The Regular Trustees shall give notice
of the Company's selection of such Extension Period to the holders of the
Capital Securities. If the Institutional Trustee shall not be the sole
holder of the Debentures, the Company shall give the holders of the
Debentures notice of its selection of such Extension Period ten Business
Days prior to the earlier of (i) the Interest Payment Date or (ii) the
date upon which the Company is required to give notice, if applicable, to
the NYSE (or other applicable self-regulatory organization) or to holders
of the Debentures of the record or payment date of such related interest
payment.
Expenses and Taxes of the Trust
In the Indenture, the Company, as borrower, has agreed to pay all
debts and other obligations (other than with respect to the Trust
Securities) and all costs and expenses of the Trust (including the costs
and expenses relating to the organization of the Trust, the fees and
expenses of the Trustees and the costs and expenses relating to the
operation of the Trust) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes)
to which the Trust might become subject. The Company also has
agreed in the Indenture to execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
Indenture Events of Default
If any Indenture Event of Default shall occur and be continuing,
the Institutional Trustee, as the holder of the Debentures, will have the
right to declare the principal of and the interest on the Debentures
(including any Compound Interest and expenses and taxes of the Trust, if
any) and any other amounts payable under the Indenture to be forthwith
due and payable and to enforce its other rights as a creditor with
respect to the Debentures.
The following are Events of Default under the Indenture with
respect to the Debentures: (1) failure to pay interest on the Debentures
when due, continued for 30 days; provided, however, that if the Company
is permitted by the terms of the Debentures to defer the payment in
question, then the date on which such payment is due and payable shall be
the date on which the Company is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Debentures; (2) failure to pay the principal of (or premium, if any, on)
the Debentures when due and payable at the stated maturity date, upon
redemption or otherwise; provided, however, if the Company is permitted
by the terms of the Debentures to defer the payment in question, the date
on which such payment is due and payable shall be the date on which the
Company is required to make payment following such deferral, if such
deferral has been elected pursuant to the terms of the Debentures; (3)
failure to observe or perform in any material respect certain other
covenants contained in the Indenture, continued for a period of 90 days
after written notice has been given to the Company by the Debt Trustee or
holders of at least 25% in aggregate principal amount of the outstanding
Debentures; and (4) certain events of bankruptcy, insolvency or
reorganization relating to the Company.
The Indenture provides that the Debt Trustee shall, within 90 days
after the occurrence of any Default or Event of Default with respect to
the Debentures, give the holders of the Debentures notice of all uncured
Defaults or Events of Default known to it (the term "Default" includes
any event which after notice or passage of time or both would be an Event
of Default); provided, however, that, except in the case of a Default in
the payment of the principal of (or premium, if any, on) or interest on
the Debentures, the Debt Trustee shall be protected in withholding such
notice so long as the board of directors, the executive committee or
directors or responsible officers of the Debt Trustee in good faith
determine that the withholding of such notice is in the interest of the
holders of the Debentures.
If an Event of Default with respect to the Debentures occurs and is
continuing, the Debt Trustee or the holders of at least 25% in aggregate
principal amount of the outstanding Debentures, by notice in writing to
the Company (and to the Debt Trustee if given by the holders of at least
25% in aggregate principal amount of the Debentures), may declare the
unpaid principal of and accrued interest to the date of acceleration on
all the outstanding Debentures to be due and payable immediately and,
upon any such declaration, the Debentures shall become immediately due
and payable.
In addition, in the case of the Debentures held by the Trust, if an
Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal,
then a holder of Capital Securities may directly institute a proceeding
against the Company for payment.
Any such declaration with respect to the Debentures may be annulled
and past Events of Default and Defaults (except, unless theretofore
cured, an Event of Default or a Default in payment of principal of or
interest on the Debentures) may be waived by the holders of a majority of
the principal amount of the outstanding Debentures, upon the conditions
provided in the Indenture.
An Indenture Event of Default also constitutes a Declaration Event
of Default. The holders of Capital Securities in certain circumstances
have the right to direct the Institutional Trustee to exercise its rights
as the holder of the Debentures. See "Description of the Capital
Securities--Declaration Events of Default" and "--Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company
to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable, the Company acknowledges that a holder
of Capital Securities may directly institute a proceeding for enforcement
of payment to such holder directly of the principal of and interest on
the Debentures having a principal amount equal to the aggregate stated
liquidation amount of the Capital Securities of such holder after the
respective due date specified in the Debentures. In connection with such
action, the Company shall have the right under the Indenture to set-off
any payment made to such holder by the Company. The holders of Capital
Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Book-Entry and Settlement
If distributed to holders of Capital Securities in connection with
the involuntary or voluntary dissolution of the Trust, the Debentures
will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the Depositary or its
nominee. Except under the limited circumstances described below,
Debentures represented by the Global Security will not be exchangeable
for, and will not otherwise be issuable as, Debentures in certificated
form. The Global Securities described above may not be transferred except
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or to a
successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated
form. Such laws may impair the ability to transfer beneficial interests
in such a Global Security.
Except as provided below, owners of beneficial interests in such a
Global Security will not be entitled to receive physical delivery of
Debentures in certificated form and will not be considered the holders
(as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Debentures shall be
exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the Depositary or its nominee or to
a successor Depositary or its nominee. Accordingly, each Beneficial Owner
must rely on the procedures of the Depositary or if such person is not a
Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the
Indenture.
The Depositary
If Debentures are distributed to holders of Capital Securities in
liquidation of such holders' interests in the Trust, the Depositary will
act as securities depositary for the Debentures. For a description of the
Depositary and the specific terms of the depositary arrangements, see
"Description of the Capital Securities--Book-Entry Only Issuance--The
Depository Trust Company." As of the date of this Prospectus Supplement,
the description therein of the Depositary's book-entry system and the
Depositary's practices as they relate to purchases, transfers, notices
and payments with respect to the Capital Securities apply in all material
respects to any debt obligations represented by one or more Global
Securities held by the Depositary. The Company may appoint a successor to
the Depositary or any successor depositary in the event the Depositary or
such successor depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of the Company, the Trust, the Institutional Trustee, any
paying agent and any other agent of the Company or the Debt Trustee will
have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests
in a Global Security for such Debentures or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Debentures registered
in the names of persons other than the Depositary or its nominee only if
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the Depositary at any time,
ceases to be a clearing agency registered under the Exchange Act at which
time the depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, (iii)
the Company, in its sole discretion, determines that such Global Security
shall be so exchangeable or (iv) there shall have occurred an Indenture
Event of Default with respect to such Debentures. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Debentures registered in such names as the Depositary
shall direct. It is expected that such instructions will be based upon
directions received by the Depositary from its Participants with respect
to ownership of beneficial interests in such Global Security.
Governing Law
The Indenture and the Debentures will be governed by, and construed
in accordance with, the internal laws of the State of New York.
Miscellaneous
The Company will pay all fees and expenses related to (i) the
offering of the Trust Securities and the Debentures, (ii) the
organization, maintenance and dissolution of the Trust, (iii) the
retention of the Ingersoll-Rand Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the Capital
Securities.
EFFECT OF OBLIGATIONS UNDER THE
DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is
to issue the Trust Securities evidencing undivided beneficial interests
in the assets of the Trust, and to invest the proceeds from such issuance
and sale in the Debentures and engage in only those other activities
necessary or incidental thereto.
As long as payments of interest and other payments are made when
due on the Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the
following factors: (i) the aggregate principal amount of Debentures will
be equal to the sum of the aggregate stated liquidation amount of the
Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Debentures will match the distribution rate and
distribution and other payment dates for the Trust Securities; (iii) the
Company shall pay, and the Trust shall not be obligated to pay, directly
or indirectly, all costs, expenses, debts, and obligations of the Trust
(other than with respect to the Trust Securities); and (iv) the
Declaration further provides that the Ingersoll-Rand Trustees shall not
take or cause or permit the Trust to, among other things, engage in any
activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are
available) and other payments due on the Capital Securities (to the
extent funds therefor are available) are guaranteed by the Company as and
to the extent set forth under "Description of the Guarantee." If the
Company does not make interest payments on the Debentures purchased by
the Trust, the Trust will not have sufficient funds to pay distributions
on the Capital Securities. The Guarantee does not apply to any payment of
distributions unless and until the Trust has sufficient funds for the
payment of such distributions.
If the Company fails to make interest or other payments on the
Debentures when due (taking account of any Extension Period), the
Declaration provides a mechanism whereby the holders of the Capital
Securities, using the procedures described in "Description of the Capital
Securities--Book-Entry Only Issuance--The Depository Trust Company" and
"--Voting Rights," may direct the Institutional Trustee to enforce its
rights under the Indenture. If the Institutional Trustee fails to enforce
its rights under the Indenture in respect of an Indenture Event of
Default, such holder of record of Capital Securities may, to the fullest
extent permitted by applicable law, institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the
Indenture without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company
to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable, then a holder of Capital Securities
may directly institute a proceeding against the Company for payment. The
Company, under the Guarantee, acknowledges that the Guarantee Trustee
shall enforce the Guarantee on behalf of the holders of the Capital
Securities. If the Company fails to make payments under the Guarantee,
the Guarantee provides a mechanism whereby the holders of the Capital
Securities may direct the Guarantee Trustee to enforce its rights
thereunder. Notwithstanding the foregoing, if the Company has failed to
make a payment under the Guarantee, any holder of Capital Securities may
institute a legal proceeding directly against the Company to enforce its
rights under the Guarantee without first instituting a legal proceeding
against the Trust, the Guarantee Trustee, or any other person or entity.
The Guarantee, when taken together with the Company's obligations
under the Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust
Securities), has the effect of providing a full and unconditional
guarantee of amounts due on the Capital Securities. See "Description of
the Guarantee."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and
disposition of FELINE PRIDES, Capital Securities and Common Stock
acquired under a Purchase Contract. Unless otherwise stated, this summary
applies only to "U.S. Holders" who purchase Income PRIDES, Growth PRIDES
or Capital Securities upon original issuance for an amount equal to the
initial offering price thereof. The term "U.S. Holder" means the
beneficial owner of an Income PRIDES, Growth PRIDES or Capital Security
who is (i) a person who is a citizen or resident of the United States,
(ii) a corporation or partnership created or organized in or under the
laws of the United States or any state thereof or the District of
Columbia, (iii) an estate the income of which is subject to United States
federal income taxation, regardless of its source, or (iv) a trust if a
court within the United States is able to exercise primary supervision
over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such
trust. The tax treatment of a U.S. Holder may vary depending on such U.S.
Holder's particular situation. This summary does not deal with special
classes of U.S. Holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, certain U.S. expatriates,
or U.S. Holders that will hold FELINE PRIDES, Capital Securities or
Common Stock acquired under a Purchase Contract as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than
a capital asset. This summary does not address the tax consequences to
U.S. Holders that have a functional currency other than the U.S. dollar
or the tax consequences to shareholders, partners or beneficiaries of a
U.S. Holder of FELINE PRIDES, Capital Securities or Common Stock acquired
pursuant to a Purchase Contract. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws
of any state, local or foreign government that may be applicable.
PROSPECTIVE INVESTORS THAT ARE NOT UNITED STATES PERSONS (WITHIN THE
MEANING OF SECTION 7701(a)(30) OF THE CODE) ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS REGARDING THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN FELINE PRIDES OR CAPITAL SECURITIES,
INCLUDING THE POTENTIAL APPLICATION OF UNITED STATES WITHHOLDING TAXES.
This summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations (including proposed Treasury
regulations) issued thereunder, Internal Revenue Service ("IRS") rulings
and pronouncements and judicial decisions now in effect, all of which are
subject to change. Any such changes may be applied retroactively in a
manner that could cause the tax consequences to vary substantially from
the consequences described below, possibly adversely affecting a U.S.
Holder.
No statutory, administrative or judicial authority directly
addresses the treatment of FELINE PRIDES or instruments similar to FELINE
PRIDES for United States federal income tax purposes. As a result, no
assurance can be given that the IRS will agree with the tax consequences
described herein. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE FELINE PRIDES OR CAPITAL
SECURITIES IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE
TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
FELINE PRIDES
Allocation of Purchase Price. A U.S. Holder's acquisition of FELINE
PRIDES will be treated as an acquisition of a unit consisting of two
components--in the case of an Income PRIDES, the Capital Security and the
Purchase Contract constituting such Income PRIDES and, in the case of a
Growth PRIDES, the Treasury Security interest and the Purchase Contract
constituting such Growth PRIDES. The purchase price of each FELINE PRIDES
will be allocated between the two components in proportion to their
respective fair market values at the time of purchase. Such allocation
will establish the U.S. Holder's initial tax basis in the Capital
Security or Treasury Security interest and the Purchase Contract. The
Company will report the fair market value of each Capital Security and
Treasury Security interest so that the entire purchase price of a FELINE
PRIDES will be allocable to the Capital Security or Treasury Security
interest, as the case may be, and no amount will be allocable to the
Purchase Contract. This position will be binding upon each U.S. Holder
(but not on the IRS) unless such U.S. Holder explicitly discloses a
different position on a statement attached to such U.S. Holder's timely
filed United States federal income tax return for the taxable year in
which a FELINE PRIDES is acquired. Thus, absent such disclosure, a U.S.
Holder should allocate the purchase price for a FELINE PRIDES in
accordance with the foregoing. The remainder of this discussion assumes
that this allocation of purchase price will be respected for United
States federal income tax purposes. A different allocation could affect
the timing and character of income to a U.S. Holder.
Ownership of Capital Securities or Treasury Securities. A U.S.
Holder will be treated as owning the Capital Securities or Treasury
Securities constituting a part of the Income PRIDES or Growth PRIDES,
respectively. The Company and, by acquiring FELINE PRIDES, each U.S.
Holder agree to treat such U.S. Holder as the owner, for United States
federal, state and local income and franchise tax purposes, of the
Capital Securities or Treasury Securities constituting a part of the
FELINE PRIDES beneficially owned by such U.S. Holder. Based upon such
agreement, the Company intends to take the position, and the remainder of
this summary assumes, that U.S. Holders of FELINE PRIDES will be treated
as the owners of the Capital Securities or Treasury Securities
constituting a part of such FELINE PRIDES for United States federal, state
and local income and franchise tax purposes. The United States federal
income tax consequences of owning the Capital Securities or Treasury
Securities are discussed below (see "--Capital Securities," "--Treasury
Securities" and "--Tax Event Redemption of Capital Securities.").
Sale or Disposition of FELINE PRIDES. Upon a disposition of FELINE
PRIDES, a U.S. Holder will be treated as having sold, exchanged or
disposed of the Purchase Contract and the Capital Securities, Treasury
Portfolio or, in the case of Growth PRIDES, the Treasury Securities, that
constitute such FELINE PRIDES and generally will have gain or loss equal
to the difference between the portion of the proceeds to such U.S. Holder
allocable to the Purchase Contract and the Capital Securities, Treasury
Portfolio or Treasury Securities, as the case may be, and such U.S.
Holder's respective adjusted tax bases in the Purchase Contract and the
Capital Securities, Treasury Portfolio or Treasury Securities. Such gain
or loss generally will be capital gain or loss, except to the extent that
such U.S. Holder is treated as having received an amount with respect to
accrued but unpaid interest on the Capital Securities or the Treasury
Portfolio that such U.S. Holder has not included in gross income
previously, which amount will be treated as ordinary interest income, or
to the extent such U.S. Holder is treated as having received an amount
with respect to accrued Contract Adjustment Payments or Deferred Contract
Adjustment Payments, which may be treated as ordinary income, in each
case to the extent not previously included in income. Such gain or loss
generally will be capital gain or loss and generally will be long-term
capital gain or loss if the U.S. Holder held such Capital Securities for
more than one year immediately prior to such disposition. Long-term capital
gains of individuals are eligible for reduced rates of taxation depending
upon the holding period of such capital assets. The deductibility of capital
losses is subject to limitations. If the disposition of FELINE PRIDES occurs
when the Purchase Contract has negative value, the U.S. Holder should be
considered to have received additional consideration for the Capital Securities,
Treasury Portfolio or Treasury Securities in an amount equal to such negative
value and to have paid such amount to be released from the U.S. Holder's
obligation under the Purchase Contract. U.S. Holders should consult their
tax advisors regarding a disposition of the FELINE PRIDES at a time when
the Purchase Contract has negative value.
In determining gain or loss, payments to a U.S. Holder of Contract
Adjustment Payments or Deferred Contract Adjustment Payments that have
not previously been included in the income of such U.S. Holder should
either reduce such U.S. Holder's tax basis in the Purchase Contract or
result in an increase in the amount realized on the disposition of the
Purchase Contract. Any Contract Adjustment Payments or Deferred Contract
Adjustment Payments included in a U.S. Holder's income but not paid
should increase such U.S. Holder's tax basis in the Purchase Contract.
Payments in cash that have been made by a U.S. Holder to create Growth
PRIDES but not offset against payments of Contract Adjustment Payments or
Deferred Contract Adjustment Payments may increase such U.S. Holder's tax
basis in the Purchase Contract or result in a decrease in the amount
realized on the disposition of the Purchase Contract (see "--Income from
Contract Adjustment Payments and Deferred Contract Adjustment Payments;
Delivery of Cash" above).
Capital Securities
Classification of the Trust. In connection with the issuance of the
FELINE PRIDES, Simpson Thacher & Bartlett ("Tax Counsel"), will deliver
an opinion that, under current law and assuming compliance with the terms
of the Declaration, and based on certain facts and assumptions contained
in such opinion, the Trust will be classified as a grantor trust and not
as an association taxable as a corporation for United States federal
income tax purposes. As a result, each U.S. Holder of Capital Securities
will be treated as owning an undivided beneficial ownership interest in
the Debentures. Accordingly, each U.S. Holder of Capital Securities will
be required to include in its gross income its pro rata share of the
interest income or OID that is paid or accrued on the Debentures. See "--
Interest Income and Original Issue Discount."
Classification of the Debentures. The Company, the Trust and, by
acquiring Income PRIDES or Capital Securities, each U.S. Holder agree to
treat the Debentures as indebtedness of the Company for all United States
tax purposes. In connection with the issuance of the Debentures, Tax
Counsel will deliver an opinion that, under current law, and based on
certain representations, facts and assumptions set forth in such opinion,
the Debentures will be classified as indebtedness for United States
federal income tax purposes.
Interest Income and Original Issue Discount. Under the applicable
Treasury regulations, the Debentures will not be considered to have been
issued with OID within the meaning of Section 1273(a) of the Code.
Accordingly, except as set forth below, stated interest on the Debentures
generally will be included in income by a U.S. Holder at the time such
interest income is paid or accrued in accordance with such U.S. Holder's
regular method of tax accounting. If, however, the Company exercises its
right to defer payments of interest on the Debentures, U.S. Holders will
be required to accrue the stated interest on the Debentures (as OID) on a
daily economic accrual basis (using the constant-yield-to-maturity method
of accrual set forth in Section 1272 of the Code) even though the Company
will not pay such interest during the deferral period, and even though
some U.S. Holders may use the cash method of tax accounting. Moreover,
thereafter the Debentures will be taxed as OID instruments for as long as
they remain outstanding. Thus, all U.S. Holders would be required to
continue to include the stated interest on the Debentures in income on a
daily economic accrual basis, regardless of their method of tax
accounting and in advance of the receipt of cash attributable to such
interest income. Under the OID economic accrual rules, a U.S. Holder
would accrue an amount of interest income each year that approximates the
stated interest payments called for under the terms of the Debentures,
and actual cash payments of interest on the Debentures would not be
reported separately as taxable income. Any amount of OID included in a
U.S. Holder's gross income will increase such U.S. Holder's tax basis in
its Capital Securities, and the amount of a distribution received by a
U.S. Holder with respect to such Capital Securities will reduce the tax
basis of such Capital Securities.
The Treasury regulations described above have not yet been
addressed in any rulings or other interpretations by the IRS, and it is
possible that the IRS could take a contrary position. If the IRS were to
assert successfully that the stated interest on the Debentures was OID
regardless of whether the Company exercises its right to defer payments
of interest on such Debentures, all U.S. Holders would be required to
include such stated interest in income on a daily economic accrual basis
as described above.
U.S. Holders that are corporations will not be entitled to a
dividends received deduction with respect to any income recognized with
respect to the Capital Securities.
Distribution of Debentures to U.S. Holders of Capital Securities. A
distribution by the Trust of the Debentures as described under the
caption "Description of the Capital Securities--Liquidation Distribution
Upon Dissolution" would be non-taxable to U.S. Holders. In such event, a
U.S. Holder would have an aggregate tax basis in the Debentures received
in the liquidation equal to the aggregate tax basis such U.S. Holder had
in its Capital Securities surrendered therefor, and the holding period of
such Debentures would include the period during which such U.S. Holder
had held such Capital Securities. Also, a U.S. Holder would continue to
include interest (or OID) in respect of Debentures received from the
Trust in the manner described under "--Interest Income and Original Issue
Discount."
Sales, Exchanges or Other Dispositions of Capital Securities. Gain
or loss will be recognized by a U.S. Holder on a sale, exchange,
redemption or other taxable disposition (collectively, a "disposition")
of a Capital Security (including a redemption for cash or the remarketing
thereof) in an amount equal to the difference between the amount realized
by the U.S. Holder on the disposition of the Capital Security (except to
the extent that such amount realized is characterized as a payment in
respect of accrued but unpaid interest on such U.S. Holder's allocable
share of the Debentures that such U.S. Holder has not included in gross
income previously, which amount will be taxable as ordinary interest
income) and the U.S. Holder's adjusted tax basis in such Capital
Security. Selling expenses incurred by a U.S. Holder, including the
remarketing fee, will reduce the amount of gain or increase the amount of
loss recognized by such U.S. Holder upon a disposition of a Capital
Security. Gain or loss realized by a U.S. Holder on a disposition of a
Capital Security generally will be capital gain or loss and generally
will be long-term capital gain or loss if the U.S. Holder held such
Capital Security for more than one year immediately prior to such
disposition. Long-term capital gains of individuals are eligible for
reduced rates of taxation depending upon the holding period of such
capital assets. The deductibility of capital losses is subject to
limitations.
Treasury Securities
Original Issue Discount. A U.S. Holder of Growth PRIDES will be
required to treat its ownership interest in the Treasury Securities
comprising a Growth PRIDES as an interest in a bond originally issued on
the date such Growth PRIDES is purchased and having OID equal to the
excess of the Stated Amount of the Growth PRIDES over the purchase price
of the Growth PRIDES. A U.S. Holder will be required to include such OID
in income on a daily economic accrual basis over the period between the
issue date of the Growth PRIDES and the day immediately preceding the
Purchase Contract Settlement Date, regardless of such U.S. Holder's
method of tax accounting. Amounts of OID included in a U.S. Holder's
gross income will increase such U.S. Holder's tax basis in its Treasury
Security interest.
Sales, Exchanges or Other Dispositions of Treasury Securities. In
the event that a U.S. Holder obtains the release of Treasury Securities
by delivering Capital Securities to the Collateral Agent, gain or loss
will be recognized by the U.S. Holder on a subsequent disposition of the
Treasury Securities in an amount equal to the difference between the amount
realized by the U.S. Holder on such disposition and the U.S. Holder's
adjusted tax basis in the Treasury Securities. Such gain or loss generally
will be capital gain or loss and generally will be long-term capital gain or
loss if the U.S. Holder held such Treasury Securities for more than one year
immediately prior to such disposition. Long-term capital gains of individuals
are eligible for reduced rates of taxation depending upon the holding period
of such capital assets. The deductibility of capital losses is subject to
limitations.
Purchase Contracts
Income From Contract Adjustment Payments and Deferred Contract
Adjustment Payments; Delivery of Cash. There is no direct authority
addressing the treatment, under current law, of the Contract Adjustment
Payments and Deferred Contract Adjustment Payments (if any), or the
delivery of cash in respect of excess accrued Contract Adjustment
Payments (if any) by a U.S. Holder of Income PRIDES upon the creation of
Growth PRIDES and such treatment is unclear. Contract Adjustment Payments
and Deferred Contract Adjustment Payments, if any, may constitute taxable
income to a U.S. Holder of FELINE PRIDES when received or accrued, in
accordance with the U.S. Holder's regular method of tax accounting. To
the extent the Company is required to file information returns with
respect to Contract Adjustment Payments or Deferred Contract Adjustment
Payments, it intends to report such payments as taxable income to each
U.S. Holder. If Contract Adjustment Payments are properly treated as taxable
income, the delivery of cash by a U.S. Holder in respect of excess accrued
Contract Adjustment Payments upon the creation of Growth PRIDES, should offset
the amount of income that such U.S. Holder would otherwise recognize for United
States federal income tax purposes with respect to such Contract Adjustment
Payments for the relevant taxable year. U.S. Holders should consult their own
tax advisors concerning the treatment of Contract Adjustment Payments and
Deferred Contract Adjustment Payments and the delivery of cash upon creation of
Growth PRIDES, including the possibility that any Contract Adjustment
Payment or Deferred Contract Adjustment Payment may be treated as a loan,
purchase price adjustment, rebate or payment analogous to an option
premium, rather than being includible in income on a current basis, and
that the delivery of cash upon creation of Growth PRIDES may be treated
as an offset to Contract Adjustment Payments or Deferred Contract
Adjustment Payments or as a purchase price adjustment. The treatment of
Contract Adjustment Payments, Deferred Contract Adjustment Payments and
the delivery of cash upon creation of Growth PRIDES could affect a U.S.
Holder's tax basis in a Purchase Contract or Common Stock received under
a Purchase Contract or the amount realized by a U.S. Holder upon the sale
or disposition of a FELINE PRIDES or the termination of a Purchase
Contract. See "--Acquisition of Common Stock under a Purchase Contract,"
"--Sale or Disposition of FELINE PRIDES" and "--Termination of Purchase
Contract."
Acquisition of Common Stock Under a Purchase Contract. A U.S.
Holder of FELINE PRIDES generally will not recognize gain or loss on the
purchase of Common Stock under a Purchase Contract, except with respect
to any cash paid in lieu of a fractional share of Common Stock. Subject
to the following discussion, a U.S. Holder's aggregate initial tax basis
in the Common Stock received under a Purchase Contract generally should
equal the purchase price paid for such Common Stock plus such U.S.
Holder's tax basis in the Purchase Contract (if any), less the portion of
such purchase price and tax basis allocable to the fractional share.
Payments of Contract Adjustment Payments or Deferred Contract Adjustment
Payments that have been received in cash by a U.S. Holder but not
included in income by such U.S. Holder should reduce such U.S. Holder's
tax basis in the Purchase Contract or the Common Stock to be received
thereunder; payments in cash that have been made by a U.S. Holder to
create Growth PRIDES but not offset against payments of Contract
Adjustment Payments or Deferred Contract Adjustment Payments may increase
such U.S. Holder's tax basis in the Purchase Contract or the Common Stock
to be received thereunder (see "--Income from Contract Adjustment
Payments and Deferred Contract Adjustment Payments" above). The holding
period for Common Stock received under a Purchase Contract will commence
on the day of the acquisition of such Common Stock.
Ownership of Common Stock Acquired Under the Purchase Contract. Any
dividend on Common Stock paid by the Company out of its current or
accumulated earnings and profits (as determined for United States federal
income tax purposes) will be includible in income by a U.S. Holder when
received. Any such dividend will be eligible for the dividends received
deduction if received by an otherwise qualifying corporate U.S. Holder
that meets the holding period and other requirements for the dividends
received deduction.
Upon a disposition of Common Stock, a U.S. Holder generally will
recognize capital gain or loss equal to the difference between the amount
realized and such U.S. Holder's adjusted tax basis in the Common Stock.
Such gain or loss generally will be capital gain or loss and generally will
be long-term capital gain or loss if the U.S. Holder held such Common Stock
for more than one year immediately prior to such disposition. Long-term
capital gains of individuals are eligible for reduced rates of taxation
depending upon the holding period of such capital assets. The
deductibility of capital losses is subject to limitations.
Early Settlement of Purchase Contract. A U.S. Holder of FELINE
PRIDES will not recognize gain or loss on the receipt of such U.S.
Holder's proportionate share of Capital Securities, Treasury Securities
or the Treasury Portfolio upon Early Settlement of a Purchase Contract and will
have the same tax basis in such Capital Securities, Treasury Securities or the
Treasury Portfolio as before such Early Settlement.
Termination of Purchase Contract. If a Purchase Contract
terminates, a U.S. Holder of FELINE PRIDES will recognize gain or loss
equal to the difference between the amount realized (if any) upon such
termination and such U.S. Holder's adjusted tax basis (if any) in the
Purchase Contract at the time of such termination. Payments of Contract
Adjustment Payments or Deferred Contract Adjustment Payments, if any,
received by a U.S. Holder but not included in income by such U.S. Holder
should either reduce such U.S. Holder's tax basis in the Purchase
Contract or result in an amount realized on the termination of the
Purchase Contract. Any Contract Adjustment Payments or Deferred Contract
Adjustment Payments included in a U.S. Holder's income but not paid
should increase such U.S. Holder's tax basis in the Purchase Contract;
payments in cash that have been made by a U.S. Holder to create Growth
PRIDES but not offset against payments of Contract Adjustment Payments or
Deferred Contract Adjustment Payments may increase such U.S. Holder's tax
basis in the Purchase Contract or result in a deduction on the
termination of the Purchase Contract (see "--Income from Contract
Adjustment Payments and Deferred Contract Adjustment Payments" above).
Such gain or loss generally will be capital gain or loss and generally will be
long-term capital gain or loss if the U.S. Holder held such Purchase
Contract for more than one year immediately prior to such disposition.
Long-term capital gains of individuals are eligible for reduced rates of
taxation depending upon the holding period of such capital assets. The
deductibility of capital losses is subject to limitations. A U.S. Holder
will not recognize gain or loss on the receipt of such U.S. Holder's
proportionate share of the Capital Securities, Treasury Securities or
Treasury Portfolio upon termination of the Purchase Contract and will
have the same tax basis in such Capital Securities, Treasury Securities
or Treasury Portfolio as before such distribution.
Adjustment to Settlement Rate. U.S. Holders of FELINE PRIDES might
be treated as receiving a constructive distribution from the Company if
(i) the Settlement Rate is adjusted and as a result of such adjustment
the proportionate interest of U.S. Holders of FELINE PRIDES in the assets
or earnings and profits of the Company is increased and (ii) the
adjustment is not made pursuant to a bona fide, reasonable anti-dilution
formula. An adjustment in the Settlement Rate would not be considered
made pursuant to such a formula if the adjustment were made to compensate
a U.S. Holder for certain taxable distributions with respect to the
Common Stock. Thus, under certain circumstances, an increase in the
Settlement Rate might give rise to a taxable dividend to U.S. Holders of
FELINE PRIDES even though such U.S. Holders would not receive any cash
related thereto.
Substitution of Treasury Securities to Create or Recreate Growth PRIDES
A U.S. Holder of an Income PRIDES that delivers Treasury Securities
to the Collateral Agent in substitution for Capital Securities generally
will not recognize gain or loss upon the delivery of such Treasury
Securities or the release of the Capital Securities to such U.S. Holder.
Such U.S. Holder will continue to take into account items of income or
deduction otherwise includible or deductible, respectively, by such U.S.
Holder with respect to such Treasury Securities and Capital Securities,
and such U.S. Holder's tax basis in the Treasury Securities, the Capital
Securities and the Purchase Contract will not be affected by such
delivery and release. Cash payments, if any, made by a U.S. Holder of
Income PRIDES which is creating Growth PRIDES in respect of any rate
differential on the Contract Adjustment Payment due on an Income PRIDES
and a Growth PRIDES should offset the amount of income that such U.S. Holder
may be required to recognize for United States federal income tax purposes
with respect to such Contract Adjustment Payments. See "Purchase Contracts--
Income From Contract Adjustment Payments and Deferred Contract Adjustment
Payments; Delivery of Cash".
Substitution of Capital Securities to Create or Recreate Income PRIDES
A U.S. Holder of a Growth PRIDES that delivers Capital Securities
to the Collateral Agent in substitution for Treasury Securities generally
will not recognize gain or loss upon the delivery of such Capital
Securities or the release of the Treasury Securities to the U.S. Holder.
Such U.S. Holder will continue to take into account items of income or
deduction otherwise includible or deductible, respectively, by such U.S.
Holder with respect to such Treasury Securities and Capital Securities,
and such U.S. Holder's tax bases in the Treasury Securities, the Capital
Securities and the Purchase Contract will not be affected by such
delivery and release. Cash payments, if any, made by a U.S. Holder of
Income PRIDES which is creating Growth PRIDES in respect of any rate
differential on the Contract Adjustment Payments due on an Income PRIDES
and a Growth PRIDES should offset the amount of income that such U.S.
Holder may be required to recognize for United States federal income tax
purposes with respect to such Contract Adjustment Payments.
Tax Event Redemption of Capital Securities
A Tax Event Redemption will be a taxable event for U.S. Holders of
Capital Securities. Gain or loss will be recognized by a U.S. Holder in
an amount equal to the difference between the Redemption Price (whether
paid directly to such U.S. Holder or applied by the Collateral Agent to
the purchase of the Treasury Portfolio on behalf of holders of Income
PRIDES), except to the extent of amounts paid in respect of accrued but
unpaid interest not previously included in income, which will be taxable
as ordinary interest income, and the U.S. Holder's adjusted tax basis in
the Capital Securities. Gain or loss realized by a U.S. Holder upon a Tax
Event Redemption generally will be capital gain or loss and generally
will be long-term capital gain or loss if the U.S. Holder held such
Capital Securities for more than one year immediately prior to such Tax
Event Redemption. Long-term capital gains of individuals are eligible
for reduced rates of taxation depending upon the holding period of such
capital assets. The deductibility of capital losses is subject to
limitations.
Ownership of Treasury Portfolio. The Company, the Trust and,
by acquiring Income PRIDES, each U.S. Holder agree to treat such U.S. Holder
as the owner, for United States federal, state and local income and
franchise tax purposes, of the Applicable Ownership Interest of the
Treasury Portfolio constituting a part of the Income PRIDES beneficially
owned by such U.S. Holder in the event of a Tax Event Redemption prior to the
Purchase Contract Settlement Date. Based on such agreement, each U.S.
Holder will include in income any amount earned on such pro rata portion
of the Treasury Portfolio for all United States federal, state and local
income and franchise tax purposes. The remainder of this summary assumes
that U.S. Holders of Income PRIDES will be treated as the owners of the
Applicable Ownership Interest of the Treasury Portfolio constituting a
part of such Income PRIDES for United States federal, state and local
income and franchise tax purposes.
Interest Income and Original Issue Discount. The Treasury Portfolio
will consist of stripped U.S. Treasury Securities. Following a Tax Event
Redemption prior to the Purchase Contract Settlement Date, a U.S. Holder
of Income PRIDES will be required to treat its pro rata portion of each
U.S. Treasury Security in the Treasury Portfolio as a bond that was
originally issued on the date the Collateral Agent acquired the relevant
U.S. Treasury Securities and will include OID in income over the life of
the U.S. Treasury Securities in an amount equal to the U.S. Holder's pro
rata portion of the excess of the amounts payable on such U.S. Treasury
Securities over the value of the U.S. Treasury Securities at the time the
Collateral Agent acquires them on behalf of holders of Income PRIDES. The
amount of such excess will constitute only a portion of the total amounts
payable in respect of the Treasury Portfolio. Consequently, a portion of
each scheduled interest payment to U.S. Holders will be treated as a
tax-free return of the U.S. Holder's investment in the Treasury Portfolio
and will not be considered current income for United States federal
income tax purposes.
A U.S. Holder, whether on the cash or accrual method of tax
accounting, will be required to include OID (other than OID on short-term
U.S. Treasury Securities as defined below) in income for United States
federal income tax purposes as it accrues on a constant yield to maturity
basis. See "--Interest Income and Original Issue Discount" above. In the
case of any U.S. Treasury Security with a maturity of one year or less
from the date it is purchased (a "short-term U.S. Treasury Security"), in
general only accrual basis taxpayers will be required to include OID in
income as it is accrued. Unless such an accrual basis U.S. Holder elects
to accrue the OID on a short-term U.S. Treasury Security according to the
constant-yield-to-maturity method, such OID will be accrued on a
straight-line basis.
Tax Basis of the Treasury Portfolio. A U.S. Holder's initial tax
basis in such U.S. Holder's Applicable Ownership Interest of the Treasury
Portfolio will equal such U.S. Holder's pro rata portion of the amount
paid by the Collateral Agent for the Treasury Portfolio. A U.S. Holder's
tax basis in the Treasury Portfolio will be increased by the amount of
OID included in income with respect thereto and decreased by the amount
of cash received in respect of the Treasury Portfolio.
Backup Withholding Tax and Information Reporting
Payments under the FELINE PRIDES, Capital Securities or Common
Stock acquired under a Purchase Contract, the proceeds received with
respect to a fractional share of Common Stock upon the settlement of a
Purchase Contract, and the sale of FELINE PRIDES, Capital Securities or
Common Stock acquired under a Purchase Contract, may be subject to
information reporting and United States federal backup withholding tax at
the rate of 31% if the U.S. Holder thereof fails to supply an accurate
taxpayer identification number or otherwise fails to comply with
applicable United States information reporting or certification
requirements. Any amounts so withheld will be allowed as a credit against
such U.S. Holder's United States federal income tax liability.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Underwriting Agreement") among the Company, the Trust and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, (the "Underwriter"),
the Company and the Trust have agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase from the Company and the Trust,
12,600,000 Income PRIDES, 1,400,000 Growth PRIDES and 1,400,000 Capital
Securities. In the Underwriting Agreement, the Underwriter has agreed,
subject to the terms and conditions set forth therein, to purchase all of
the Income PRIDES, Growth PRIDES and Capital Securities offered hereby if
any of the Income PRIDES, Growth PRIDES or Capital Securities are
purchased.
The Underwriter has advised the Company and the Trust that it
proposes initially to offer the Income PRIDES, Growth PRIDES and Capital
Securities to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such
price less a concession not in excess of $ per Income PRIDES,
$ per Growth PRIDES and $ per Capital Security. The
Underwriter may allow, and such dealers may reallow, a discount not in
excess of $ per Income PRIDES, $ per Growth PRIDES and
$ per Capital Security on sales to certain other dealers. After
the initial public offering, the public offering prices, concessions and
discounts may be changed.
Until the distribution of the Securities is completed, rules of the
Commission may limit the ability of the Underwriter and any selling group
members to bid for and purchase the Securities or shares of Common Stock.
As an exception to these rules, the Underwriter is permitted to engage in
certain transactions that stabilize the price of the Securities or the
Common Stock. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Securities or
the Common Stock.
If the Underwriter creates a short position in the Securities in
connection with the Offering, i.e., if it sells more Securities than are
set forth on the cover page of this Prospectus Supplement, the
Underwriter may reduce that short position by purchasing Securities in
the open market. The Underwriter may also elect to reduce any short
position by exercising all or part of the over-allotment options
described below.
The Underwriter may also impose a penalty bid on certain selling
group members. This means that if the Underwriter purchases Securities in
the open market to reduce the Underwriter's short position or to
stabilize the price of the Securities, it may reclaim the amount of the
selling concession from any selling group members who sold those
Securities as part of the Offering.
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security and the Common Stock of the Company to be higher than it might
be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that
it were to discourage resales of the security.
Neither the Company, the Trust nor the Underwriter makes any
representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
Securities or the Common Stock. In addition, neither the Company nor the
Underwriter makes any representation that the Underwriter will engage in
such transaction or that such transactions, once commenced, will not be
discontinued without notice.
The Company and the Trust have granted to the Underwriter options,
exercisable for 90 days following the date of this Prospectus Supplement,
to purchase up to an additional 1,890,000 Income PRIDES, 210,000 Growth
PRIDES and 210,000 Capital Securities from the Company and the Trust at
the Price to Public set forth on the cover page of this Prospectus
Supplement less the underwriting discount; provided, however, that the
Underwriter must purchase, proportionally, at least as many Capital
Securities as Growth PRIDES and must purchase, proportionately, at least
as many Growth PRIDES as Income PRIDES. The Underwriter may exercise
these options only to cover over-allotments, if any, made on the sale of
the Income PRIDES, Growth PRIDES and Capital Securities offered hereby.
The Company and the Trust have agreed, for a period of 90 days
after the date of this Prospectus Supplement, to not, without the prior
written consent of the Underwriter, directly or indirectly, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, or
enter into any agreement to sell, any Income PRIDES, Growth PRIDES,
Purchase Contracts, Capital Securities or Common Stock, as the case may
be, or any securities of the Company similar to the Income PRIDES, Growth
PRIDES, Purchase Contracts, Capital Securities or Common Stock or any
security convertible into or exchangeable or exercisable for Income
PRIDES, Growth PRIDES, Purchase Contracts, Capital Securities or Common
Stock other than shares of Common Stock or options for shares of Common
Stock issued pursuant to or sold in connection with any employee benefit,
dividend reinvestment and stock option and stock purchase plans of the
Company and its subsidiaries and other than the Growth PRIDES or Income
PRIDES to be created or recreated upon substitution of Pledged
Securities, or shares of Common Stock issuable upon early settlement of
the Income PRIDES or Growth PRIDES or upon exercise of stock options.
Prior to this offering, there has been no public market for the
Income PRIDES, Growth PRIDES and the Capital Securities. The public
offering price for the Income PRIDES, Growth PRIDES and the Capital
Securities was determined in negotiations between the Company, the Trust
and the Underwriter. In determining the terms of the Income PRIDES,
Growth PRIDES and the Capital Securities including the public offering
price, the Company, the Trust and the Underwriter considered the market
price of the Common Stock and also considered the Company's recent
results of operations, the future prospects of the Company and the
industry in general, market prices and terms of, and yields on,
securities of other companies considered to be comparable to the Company
and prevailing conditions in the securities markets. Application will be
made to list the Income PRIDES and Growth PRIDES on the NYSE. If Capital
Securities are separately traded to a sufficient extent that the
applicable exchange listing requirements are met, the Company will
endeavor to cause such securities to be listed on such exchange on which
the Income PRIDES and the Growth PRIDES are then listed, including, if
applicable, the NYSE. There can be no assurance that an active trading
market will develop for the Income PRIDES, the Growth PRIDES or the
Capital Securities or that the Income PRIDES, Growth PRIDES or Capital
Securities will trade in the public market subsequent to the offering at
or above the initial public offering price.
The Company and the Trust have agreed to indemnify the Underwriter
against, or to contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
This Prospectus Supplement, as amended or stickered, may be used by
the Remarketing Agent for remarketing the Capital Securities at such time
as is necessary.
In the ordinary course of their respective businesses, the
Underwriter and its affiliates have performed, and may in the future
perform, investment banking and/or commercial banking services for the
Company.
LEGAL OPINIONS
The validity of the Purchase Contracts, the Debentures and
Guarantee will be passed upon for the Company and the Trust by Simpson,
Thacher & Bartlett, New York, New York. Certain matters of Delaware law
with respect to the validity of the Capital Securities offered hereby
will be passed upon for the Company and the Trust by Richards, Layton &
Finger P.A., special Delaware counsel to the Company and the Trust. The
validity of the Common Stock will be passed upon by Patricia Nachtigal,
Vice President and General Counsel of the Company. As of February 27,
1998, Ms. Nachtigal owned 26,735 shares of Common Stock and had options
to purchase an additional 162,000 shares. The validity of the Purchase
Contracts, the Common Stock issuable upon settlement thereof, the
Debentures and the Capital Securities, will be passed upon for the
Underwriter by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
1940 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Applicable Market Value . . . . . . . . . . . . . . . . . . . . . . S-13
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
Beneficial Owner . . . . . . . . . . . . . . . . . . . . . . . . . S-55
Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Change in 1940 Act Law . . . . . . . . . . . . . . . . . . . . . . S-51
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-66
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Compound Interest . . . . . . . . . . . . . . . . . . . . . . . . . S-62
Contract Adjustment Payments . . . . . . . . . . . . . . . . . . . . S-2
Custodial Agent . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Debt Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-60
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Declaration Events of Default . . . . . . . . . . . . . . . . . . . S-52
Deferred Contract Adjustment Payments . . . . . . . . . . . . . . . S-10
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Direct Action . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Direct Participants . . . . . . . . . . . . . . . . . . . . . . . . S-44
Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-68
Early Settlement . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Extension Periods . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Failed Remarketing . . . . . . . . . . . . . . . . . . . . . . . . . S-3
FELINE PRIDES . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
FELINE PRIDES Certificate . . . . . . . . . . . . . . . . . . . . . S-39
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . S-64
Global Security Certificates. . . . . . . . . . . . . . . . . . . . S-44
Growth PRIDES . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Guarantee Payments . . . . . . . . . . . . . . . . . . . . . . . . S-58
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-60
Indenture Event of Default . . . . . . . . . . . . . . . . . . . . S-52
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . S-44
Ingersoll-Rand Company . . . . . . . . . . . . . . . . . . . . . . . S-1
Ingersoll-Rand Trustees . . . . . . . . . . . . . . . . . . . . . . . S-6
Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . S-31
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . S-60
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-66
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Pledged Securities . . . . . . . . . . . . . . . . . . . . . . . . S-24
Preference Stock . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Primary Treasury Dealer . . . . . . . . . . . . . . . . . . . . . . S-62
Property Account . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Purchase Contract . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Contract Agent . . . . . . . . . . . . . . . . . . . . . . . S-8
Purchase Contract Agreement . . . . . . . . . . . . . . . . . . . . . S-8
Purchase Contract Settlement Date . . . . . . . . . . . . . . . . . . S-2
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Reference Price . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Remarketing Agent . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Remarketing Agreement . . . . . . . . . . . . . . . . . . . . . . . S-11
Remarketing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Remarketing Underwriting Agreement . . . . . . . . . . . . . . . . S-11
Reset Announcement Date . . . . . . . . . . . . . . . . . . . . . . S-50
Reset Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Reset Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Settlement Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Short-term U.S. Treasury Security . . . . . . . . . . . . . . . . . S-71
Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Stated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Successor Securities . . . . . . . . . . . . . . . . . . . . . . . S-54
Super-Majority . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-67
Tax Event Redemption . . . . . . . . . . . . . . . . . . . . . . . . S-4
Tax Event Redemption Date . . . . . . . . . . . . . . . . . . . . . S-61
Threshold Appreciation Price . . . . . . . . . . . . . . . . . . . . S-2
Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-72
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . S-72
[THIS PAGE LEFT INTENTIONALLY BLANK]
Subject to Completion, Dated March 9, 1998
PROSPECTUS
$600,000,000
INGERSOLL-RAND COMPANY
Stock Purchase Contracts,
Stock Purchase Units and Debentures
INGERSOLL-RAND
FINANCING I
Capital Securities
Guaranteed as Set Forth Herein By
INGERSOLL-RAND COMPANY
Ingersoll-Rand Company (the "Company") may from time to time offer
together or separately (i) Stock Purchase Contracts ("Stock Purchase
Contracts") to purchase shares of common stock, $2 par value per share
("Common Stock"), of the Company, (ii) Stock Purchase Units, each
representing ownership of a Stock Purchase Contract and Capital
Securities (as defined below) or debt obligations of third parties,
including U.S. Treasury securities, securing the holder's obligation to
purchase Common Stock under the Stock Purchase Contracts ("Stock Purchase
Units"), and (iii) its subordinated debentures (the "Debentures").
Ingersoll-Rand Financing I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), may offer capital securities
("Capital Securities"), representing undivided beneficial ownership
interests in the assets of the Trust. The Stock Purchase Contracts, Stock
Purchase Units, Debentures and Capital Securities are collectively called
the "Securities."
The Securities offered pursuant to this Prospectus may be issued in
one or more series or issuances and will be limited to U.S.$600,000,000
aggregate public offering price (or, in the case of Debentures, its
equivalent (based on the applicable exchange rate at the time of issue)
if issued with principal amounts denominated in one or more foreign
currencies, or such greater amount if issued at an original issue
discount, as shall result in aggregate proceeds of U.S.$600,000,000).
Certain specific terms of the particular Securities in respect of which
this Prospectus is being delivered are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement"), including, where
applicable, (i) in the case of Stock Purchase Contracts, the number of
shares of Common Stock issuable thereunder, the purchase price of the
Common Stock, the date or dates on which the Common Stock is required to
be purchased by the holders of the Stock Purchase Contracts, any periodic
payments required to be made by the Company to the holders of the Stock
Purchase Contracts or vice versa, and the terms of the offering and sale
thereof, (ii) in the case of Stock Purchase Units, the specific terms of
the Stock Purchase Contracts and any Capital Securities or debt
obligations of third parties securing the holder's obligation to purchase
the Common Stock under the Stock Purchase Contracts, and the terms of the
offering and sale thereof, (iii) in the case of Debentures, the specific
designation, aggregate principal amount, denominations, maturity,
interest payment dates, interest rate (which may be fixed or variable) or
method of calculating interest, if any, applicable Extension Period (as
defined below) or interest deferral terms, if any, place or places where
principal, premium, if any, and interest, if any, will be payable, any
terms of redemption, any sinking fund provisions, terms for any
conversion or exchange into other securities, initial offering or
purchase price, methods of distribution and any other special terms, and
(iv) in the case of Capital Securities, the specific title, aggregate
amount, stated liquidation preference, number of securities, the rate of
payment of periodic cash distributions ("Distributions") or method of
calculating such rate, applicable Extension Period or Distribution
deferral terms, if any, place or places where Distributions will be
payable, any terms of redemption, initial offering or purchase price,
methods of distribution and any other special terms. If so specified in
the applicable Prospectus Supplement, the Securities offered thereby may
be issued in whole or in part in the form of one or more temporary or
permanent global securities ("Global Securities").
The Debentures will be senior unsecured obligations of the Company
and will rank pari passu in right of payment with all of the Company's
other senior unsecured obligations. If provided in an accompanying
Prospectus Supplement, the Company will have the right to defer payments
of interest on any series of Debentures by extending the interest payment
period thereon at any time or from time to time for such number of
consecutive interest payment periods (which shall not extend beyond the
maturity of the Debentures) with respect to each deferral period as may
be specified in such Prospectus Supplement (each, an "Extension Period").
See "Description of Debentures--Option to Defer Interest Payments."
The Company will be the owner of the common securities (the "Common
Securities," and, together with the Capital Securities, the "Trust
Securities") of the Trust. The payment of Distributions with respect to
the Capital Securities and payments on liquidation or redemption with
respect to the Capital Securities, in each case out of funds held by the
Trust, will be irrevocably guaranteed by the Company to the extent
described herein (the "Guarantee"). Certain payments in respect of the
Common Securities may also be guaranteed by the Company. See "Description
of the Guarantee." The obligations of the Company under the Guarantee
will be senior unsecured obligations of the Company and will rank pari
passu with all of the Company's other senior unsecured obligations.
Concurrently with the issuance by the Trust of the Capital Securities,
the Trust will invest the proceeds thereof and any contributions made in
respect of the Common Securities in the Debentures, which will have terms
corresponding to the terms of the Capital Securities. The Debentures will
be the sole assets of the Trust, and payments under the Debentures and
those made by the Company in respect of fees and expenses incurred by the
Trust will be the only revenue of the Trust. Upon the occurrence of
certain events as are described herein and in the accompanying Prospectus
Supplement, the Company may redeem the Debentures and cause the
redemption of the Trust Securities. In addition, if provided in the
applicable Prospectus Supplement, the Company may dissolve the Trust at
any time and, after satisfaction of the liabilities to creditors of the
Trust as provided by applicable law, cause the Debentures to be
distributed to the holders of the Capital Securities in liquidation of
their interest in the Trust. See "Description of Capital Securities--
Redemption--Distribution of Debentures" and "--Liquidation Distribution
Upon Dissolution."
Holders of the Capital Securities will be entitled to receive
cumulative cash Distributions accruing from the date of original issuance
and payable periodically as specified in an accompanying Prospectus
Supplement. If provided in an accompanying Prospectus Supplement, the
Company will have the right to defer payments of interest on the
Debentures by extending the interest payment period thereon at any time
or from time to time for one or more Extension Periods (which shall not
extend beyond the maturity of the Debentures). If interest payments are
so deferred, Distributions on the Capital Securities will also be
deferred and the Company will not be permitted, subject to certain
exceptions set forth herein, to declare or pay any cash distributions
with respect to the Company's capital stock or debt securities that rank
pari passu with or junior to the Debentures. During an Extension Period,
Distributions will continue to accumulate (and the Capital Securities
will accumulate additional Distributions thereon at the rate per annum if
and as specified in the related Prospectus Supplement). See "Description
of Capital Securities--Distributions."
Taken together, the Company's obligations under the Debentures, the
Indenture (as defined herein), the Declaration (as defined herein) and
the Guarantee, in the aggregate, have the effect of providing a full,
irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Capital Securities. See "Relationship Among the
Capital Securities, the Debentures and the Guarantee."
The Common Stock is listed on the New York Stock Exchange, the
London Stock Exchange and the Amsterdam Stock Exchange under the trading
symbol "IR." The Prospectus Supplement will state whether any Securities
offered thereby will be listed on any national securities exchange. If
such Securities are not listed on any national securities exchange, there
can be no assurance that there will be a secondary market for any such
Securities.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Company may sell the Securities to or through underwriters,
through dealers or agents, directly to purchasers or through a
combination of such methods. See "Plan of Distribution." The accompanying
Prospectus Supplement sets forth the names of any underwriters, dealers
or agents, if any, involved in the sale of the Securities in respect of
which this Prospectus is being delivered and any applicable fee,
commission or discount arrangements with them.
_________________________
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
_________________________
THE DATE OF THIS PROSPECTUS IS MARCH , 1998.
No dealer, salesperson or other person has been authorized to give any
information or make any representations, other than those contained or
incorporated by reference in this Prospectus and the applicable
Prospectus Supplement, and if given or made such information or
representations must not be relied upon as having been authorized by the
Company or the Trust or any agent, underwriter or dealer. This Prospectus
and the applicable Prospectus Supplement do not constitute an offer of
any securities other than those to which they relate, or an offer to sell
or a solicitation of an offer to buy those to which they relate in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus and/or
the applicable Prospectus Supplement at any time does not imply that the
information herein or therein is correct as of any time subsequent to its
date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed
by the Company with the Commission can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can
also be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a site on the world wide web at
http:www.sec.gov that contains reports, proxy and information statements
and other information filed electronically by the Company. In addition,
such reports, proxy statements and other information may be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York,
New York 10005, upon which the Common Stock is traded.
This Prospectus constitutes a part of a registration statement on
Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by the Company and the Trust with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus and any accompanying Prospectus Supplement do not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to
the Company, the Trust and the Securities offered hereby, reference is
made to the Registration Statement and the exhibits and the financial
statements, notes and schedules filed as a part thereof or incorporated
by reference therein, which may be inspected at the public reference
facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus and any Prospectus Supplement
concerning the contents of any documents referred to herein are not
necessarily complete, and in each instance reference is hereby made to
the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission.
No separate financial statements of the Trust have been included
herein. The Company and the Trust do not consider that such financial
statements would be material to holders of the Capital Securities because
the Trust is a newly formed special purpose entity, has no operating
history or independent operations and is not engaged in and does not
propose to engage in any activity other than its holding as trust assets
the Debentures and the issuance of the Trust Securities. See "The Trust,"
"Description of Debentures," "Description of Capital Securities" and
"Description of the Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, the Company's Current Reports on Form 8-K dated
October 31, 1997 and March 9, 1998 are incorporated herein by reference
and made a part of this Prospectus, and all documents filed by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus but prior
to the termination of the offering of the Securities shall be deemed to
be incorporated herein by reference and made a part of this Prospectus
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus and any amendment or supplement hereto to the extent that a
statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any such amendment or supplement.
The Company will provide without charge to each person, including
any beneficial owner, to whom this Prospectus is delivered, on the
written or oral request of any such person, a copy of any or all of the
foregoing documents incorporated herein by reference (other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to
Ingersoll-Rand Company, P.O. Box 8738, Woodcliff Lake, New Jersey 07675,
Attention: R.G. Heller, Secretary (telephone 201-573-0123).
THE COMPANY
Ingersoll-Rand was organized in 1905 under the laws of the State of
New Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the
Rand Drill Company, whose businesses were established in the early 1870s.
Over the years, the Company has supplemented its original business, which
consisted primarily of the manufacture and sale of rock drilling
equipment, with additional products which have been developed internally
or obtained through acquisition.
Ingersoll-Rand manufactures and sells primarily nonelectrical
machinery and equipment. Principal products include the following:
Agricultural sprayers Architectural hardware trim
Air balancers Asphalt compactors
Air compressors & accessories Asphalt pavers
Air dryers Automated production systems
Air logic controls Automotive components
Air motors Ball bearings
Air and electric tools Blasthole drills
Blowers Paving equipment
Centrifugal pumps Pneumatic breakers
Compact hydraulic excavators Pneumatic cylinders
Construction equipment Pneumatic valves
Diaphragm pumps Portable compressors
Directional drills Portable generators
Door closers Portable light towers
Door control hardware Reciprocating pumps
Door locks, latches & locksets Road-building machinery
Doors and door frames (steel) Rock drills
Drilling equipment and accessories Rock stabilizers
Electrical security systems Roller bearings
Engineered pumps Rotary drills
Engine-starting systems Rotary pumps
Exit devices Rough-terrain forklifts
Extrusion pump systems Skid-steer loaders
Fastener-tightening systems Soil compactors
Fluid-handling equipment Spray-coating systems
Foundation drills Submersible pumps
Golf cars Transport temperature control systems
Hoists Utility vehicles
Hydraulic breakers Vacuum pumps
Lubrication equipment Vertical turbine pumps
Material handling equipment Waterjet-cutting systems
Mining equipment Water-well drills
Multistage pumps Winches
Needle roller bearings
These products are sold primarily under the Company's name and also
under other names including ABG, Aro, Beebe, Blaw-Knox, Bobcat, Carryall,
Centac, Charles Maire, Club Car, Crawlair, Cyclone, Ecoair, Elite, Dixie-
Pacific Fafnir, Falcon, Glynn-Johnson, Ingersoll-Dresser Pumps, Jeumont-
Schneider Pumps, Kilian, Klemm, LCN, McCartney, Melroe, Montabert, NREC,
Newman Tonks, Normbau, Pacific, Phoenix, Pleuger, Promaxx, Samiia,
Schlage, Sensor I, Sierra, Spra-Coupe, Steelcraft, Tensor I, Thermo King,
Torrington, Von Duprin, Worthington and Zimmerman.
The Company employs approximately 47,000 people. It has over 100
manufacturing plants throughout the world.
During the last three years, the Company has been involved in an
aggressive acquisition and divestment program. The larger acquisitions
included the following:
-- the May 1995 acquisition of Clark Equipment Company for
approximately $1.5 billion.
-- the April 1997 acquisition of Newman Tonks Group PLC ("Newman
Tonks") for approximately $370 million. Newman Tonks is based
in the United Kingdom and is a leading manufacturer, specifier
and supplier of a wide range of branded architectural products
in the building industry.
-- the October 1997 acquisition of Thermo King for approximately
$2.56 billion. Thermo King designs, manufactures and
distributes transport temperature control systems and service
parts for a variety of mobile applications, including
trailers, truck bodies, sea-going containers, buses and light
rail cars.
The larger divestitures included:
-- the February 1997 sale of the Company's Clark-Hurth Group to
Dana Corporation for approximately $260 million.
-- the March 1996 sale of the Company's Pulp Machinery Division
for approximately $122 million to Beloit Corporation, a
subsidiary of Harnischfeger Industries, Inc.
-- the December 1996 sale of the remainder of the Process Systems
Group for approximately $58 million to Gencor Industries, Inc.
The Company's principal executive offices are at 200 Chestnut Ridge
Road, Woodcliff Lake, New Jersey 07675 (telephone 201-573-0123).
THE TRUST
The Trust is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement, dated as of August 18, 1997, executed
by the Company, as depositor (the "Sponsor"), and certain of the trustees
of the Trust (the "Ingersoll-Rand Trustees") and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware
on August 18, 1997. Such trust agreement will be amended and restated in
its entirety (as so amended and restated, the "Declaration")
substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Declaration will be
qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Company will directly or
indirectly acquire Common Securities in an aggregate liquidation amount
equal to 3% of the total of the Trust. The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in its assets, (ii) investing the proceeds of the
Trust Securities in the Debentures and (iii) engaging in only those other
activities necessary or incidental thereto. Unless otherwise specified in
the applicable Prospectus Supplement, the Trust has a term of
approximately seven years, but may dissolve earlier as provided in the
Declaration.
Pursuant to the Declaration, the number of Ingersoll-Rand Trustees
initially is five. Three of the Ingersoll-Rand Trustees (the "Regular
Trustees") are persons who are employees or officers of or who are
affiliated with the Company. Pursuant to the Declaration, the fourth
trustee will be a financial institution that is unaffiliated with the
Company, which trustee serves as institutional trustee under the
Declaration and as indenture trustee for the purposes of compliance with
the provisions of the Trust Indenture Act (the "Institutional Trustee").
For the purpose of compliance with the provisions of the Trust Indenture
Act, the Institutional Trustee will also act as trustee (the "Guarantee
Trustee") under the Guarantee and an affiliate of the Guarantee Trustee
will act as the trustee in the State of Delaware (the "Delaware Trustee")
for the purposes of the Trust Act (as defined herein), until removed or
replaced by the holder of the Common Securities. See "Description of the
Guarantee" and "Description of Capital Securities--Voting Rights;
Amendment of Declaration."
The Institutional Trustee will hold title to the Debentures for the
benefit of the holders of the Trust Securities and the Institutional
Trustee will have the power to exercise all rights, powers and privileges
under the Indenture (as defined herein) as the holder of the Debentures.
In addition, the Institutional Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account")
to hold all payments made in respect of the Debentures for the benefit of
the holders of the Trust Securities. The Institutional Trustee will make
payments of distributions and payments on liquidation, redemption and
otherwise to the holders of the Trust Securities out of funds from the
Property Account. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities. The Company, as the
direct or indirect holder of all the Common Securities, will have the
right to appoint, remove or replace any Ingersoll-Rand Trustee and to
increase or decrease the number of Ingersoll-Rand Trustees; provided,
that the number of Ingersoll-Rand Trustees shall be at least three, a
majority of which shall be Regular Trustees. The Company will pay all
fees and expenses related to the Trust and the offering of the Trust
Securities. See "Description of the Guarantee--Expenses of the Trust."
The rights of the holders of the Capital Securities, including
economic rights, rights to information and voting rights, are set forth
in the Declaration, the Delaware Business Trust Act, as amended (the
"Trust Act"), and the Trust Indenture Act. See "Description of Capital
Securities."
The principal place of business of the Trust is c/o Ingersoll-Rand
Company, 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07675 and
its telephone number is (201) 573-0123.
USE OF PROCEEDS
The Company intends to apply the net proceeds from the sale of the
Securities (including Debentures issued to the Trust in connection with
the investment by the Trust of all of the proceeds from the sale of the
Capital Securities) to which this Prospectus relates to its general funds
to be used for capital expenditures, acquisitions and other general
corporate purposes. Funds not required immediately for such purposes may
be invested in short-term obligations or used to reduce the future level
of the Company's commercial paper obligations.
DESCRIPTION OF DEBENTURES
The Debentures are to be issued in one or more series under an
Indenture, as supplemented or amended from time to time (as so
supplemented or amended, the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Debt Trustee"). This summary of
certain terms and provisions of the Debentures and the Indenture is not
necessarily complete, and reference is hereby made to the copy of the
form of the Indenture which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. Whenever particular defined terms of the Indenture are
referred to in this Section or in a Prospectus Supplement, such defined
terms are incorporated herein or therein by reference.
General
Unless otherwise specified in the applicable Prospectus Supplement,
each series of Debentures will be issued as senior unsecured debt under
the Indenture and will rank pari passu in right of payment with all of
the Company's other senior unsecured obligations. See "--Subordination."
Except as otherwise provided in the applicable Prospectus Supplement, the
Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, whether under the Indenture, any other
indenture that the Company may enter into in the future or otherwise. See
the Prospectus Supplement relating to any offering of Securities.
The Debentures will be issuable in one or more series pursuant to
an indenture supplemental to the Indenture or a resolution of the
Company's Board of Directors or a committee thereof.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Debentures: (i) the title of the
Debentures; (ii) any limit upon the aggregate principal amount of the
Debentures; (iii) the date or dates on which the principal of the
Debentures is payable or the method of determination thereof; (iv) the
rate or rates, if any, at which the Debentures shall bear interest
(including reset rates, if any, and the method by which any such rate
will be determined), the Interest Payment Dates on which any such
interest shall be payable, the right, if any, of the Company to defer or
extend an Interest Payment Date, and the Regular Record Date for any
interest payable on any Interest Payment Date or the method by which any
of the foregoing shall be determined; (v) the place or places where,
subject to the terms of the Indenture as described below under "--
Payment and Paying Agents," the principal of and premium, if any, and
interest, if any, on the Debentures will be payable and where, subject to
the terms of the Indenture as described below under "-- Denominations,
Registration and Transfer," the Debentures may be presented for
registration of transfer or exchange and the place or places where
notices and demands to or upon the Company in respect of the Debentures
and the Indenture may be made ("Place of Payment"); (vi) any period or
periods within, or date or dates on which, the price or prices at which
and the terms and conditions upon which Debentures may be redeemed, in
whole or in part, at the option of the Company or a holder thereof; (vii)
the obligation or the right, if any, of the Company or a holder thereof
to redeem, purchase or repay the Debentures and the period or periods
within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the other terms and
conditions upon which the Debentures shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation; (viii) the
denominations in which any Debentures shall be issuable if other than
denominations of $1,000 and any integral multiple thereof; (ix) if other
than in U.S. Dollars, the currency or currencies (including currency unit
or units) in which the principal of (and premium, if any) and interest,
if any, on the Debentures shall be payable, or in which the Debentures
shall be denominated; (x) any additions, modifications or deletions in
the Events of Default or covenants of the Company specified in the
Indenture with respect to the Debentures; (xi) if other than the
principal amount thereof, the portion of the principal amount of
Debentures that shall be payable upon declaration of acceleration of the
maturity thereof; (xii) any additions or changes to the Indenture with
respect to a series of Debentures as shall be necessary to permit or
facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (xiii)
any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Debentures and the manner in
which such amounts will be determined; (xiv) the terms and conditions
relating to the issuance of a temporary Global Security representing all
of the Debentures of such series and exchange of such temporary Global
Security for definitive Debentures of such series; (xv) subject to the
terms described under "-- Global Debentures," whether the Debentures of
the series shall be issued in whole or in part in the form of one or more
Global Securities and, in such case, the depositary for such Global
Securities, which depositary shall be a clearing agency registered under
the Exchange Act; (xvi) the appointment of any paying agent or agents;
(xvii) the terms and conditions of any obligation or right of the Company
or a holder to convert or exchange Debentures into Capital Securities or
other securities; (xviii) the relative degree, if any, to which such
Debentures of the series shall be senior to or be subordinated to other
series of such Debentures or other indebtedness of the Company in right
of payment, whether such other series of Debentures or other indebtedness
are outstanding or not; and (xix) any other terms of the Debentures not
inconsistent with the provisions of the Indenture.
Debentures may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. Certain material U.S. federal
income tax consequences and special considerations applicable to any such
Debentures will be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debentures is payable in one or
more foreign currencies or currency units or if any Debentures are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debentures is
payable in one or more foreign currencies or currency units, the
restrictions, elections, certain material U.S. federal income tax
considerations, specific terms and other information with respect to such
issue of Debentures and such foreign currency or currency units will be
set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of
principal of, premium, if any, or interest on any series of Debentures,
certain material U.S. federal income tax, accounting and other
considerations applicable thereto will be described in the applicable
Prospectus Supplement.
Denominations, Registration and Transfer
Unless otherwise specified in the applicable Prospectus Supplement,
the Debentures will be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. Debentures
of any series will be exchangeable for other Debentures of the same issue
and series, of any authorized denominations, of a like aggregate
principal amount, of the same Original Issue Date and Stated Maturity and
bearing the same interest rate.
Debentures may be presented for exchange as provided above, and may
be presented for registration of transfer (with the form of transfer
endorsed thereon, or a satisfactory written instrument of transfer, duly
executed), at the office of the appropriate Securities Registrar or at
the office of any transfer agent designated by the Company for such
purpose with respect to any series of Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment
of any taxes and other governmental charges as described in the
Indenture. The Company will appoint the Debt Trustee as Securities
Registrar under the Indenture. If the applicable Prospectus Supplement
refers to any transfer agents (in addition to the Securities Registrar)
initially designated by the Company with respect to any series of
Debentures, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any
such transfer agent acts, provided that the Company maintains a transfer
agent in each Place of Payment for such series. The Company may at any
time designate additional transfer agents with respect to any series of
Debentures.
In the event of any redemption, neither the Company nor the Debt
Trustee shall be required to (i) issue, register the transfer of or
exchange Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of
Debentures of that series and ending at the close of business on the day
of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Debentures so selected for redemption, except, in the case
of any Debentures being redeemed in part, any portion thereof not to be
redeemed.
Global Debentures
Unless otherwise specified in the applicable Prospectus Supplement,
the Debentures of a series may be issued in whole or in part in the form
of one or more Global Debentures that will be deposited with, or on
behalf of, a depositary identified in the Prospectus Supplement relating
to such series. Global Debentures may be issued only in fully registered
form and in either temporary or permanent form. Unless and until it is
exchanged in whole or in part for the individual Debentures represented
thereby, a Global Debenture may not be transferred except as a whole by
the depositary for such Global Debenture to a nominee of such depositary
or by a nominee of such depositary to such depositary or another nominee
of such depositary or by the depositary or any nominee to a successor
depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Debentures will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Debenture, and the deposit of such
Global Debenture with or on behalf of the applicable depositary, the
depositary for such Global Debenture or its nominee will credit on its
book-entry registration and transfer system, the respective principal
amounts of the individual Debentures represented by such Global Debenture
to the accounts of persons that have accounts with such depositary
("Participants"). Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debentures or by the Company
if such Debentures are offered and sold directly by the Company.
Ownership of beneficial interests in a Global Debenture will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Debenture will be shown
on, and the transfer of that ownership will be effected only through,
records maintained by the applicable depositary or its nominee (with
respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The
laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and
such laws may impair the ability to transfer beneficial interests in a
Global Debenture.
So long as the depositary for a Global Debenture, or its nominee,
is the registered owner of such Global Debenture, such depositary or such
nominee, as the case may be, will be considered the sole owner or holder
of the Debentures represented by such Global Debenture for all purposes
under the Indenture. Except as provided below, owners of beneficial
interests in a Global Debenture will not be entitled to have any of the
individual Debentures of the series represented by such Global Debenture
registered in their names, will not receive or be entitled to receive
physical delivery of any such Debentures of such series in definitive
form and will not be considered the owners or holders thereof under the
Indenture.
Payments of principal of (and premium, if any) and interest on
individual Debentures represented by a Global Debenture registered in the
name of a depositary or its nominee will be made to such depositary or
its nominee, as the case may be, as the registered owner of the Global
Debenture representing such Debentures. None of the Company, the Debt
Trustee, any paying agent, or the Securities Registrar for such
Debentures will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial
ownership interest of the Global Debenture for such Debentures or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that the depositary for a series of Debentures
or its nominee, upon receipt of any payment of principal, premium or
interest in respect of a permanent Global Debenture representing any of
such Debentures, immediately will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interest
in the principal amount of such Global Debenture for such Debentures as
shown on the records of such depositary or its nominee. The Company also
expects that payments by Participants to owners of beneficial interests
in such Global Debenture held through such Participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or
registered in "street name." Such payments will be the responsibility of
such Participants.
Unless otherwise specified in the applicable Prospectus Supplement,
if the depositary for a series of Debentures is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary
is not appointed by the Company within 90 days, the Company will issue
individual Debentures of such series in exchange for the Global Debenture
representing such series of Debentures. In addition, unless otherwise
specified in the applicable Prospectus Supplement, the Company may at any
time and in its sole discretion, subject to any limitations described in
the Prospectus Supplement relating to such Debentures, determine not to
have any Debentures of such series represented by one or more Global
Debentures and, in such event, will issue individual Debentures of such
series in exchange for such Global Debentures. Further, if the Company so
specifies with respect to the Debentures of a series, an owner of a
beneficial interest in a Global Debenture representing Debentures of such
series may, on terms acceptable to the Company, the Debt Trustee and the
depositary for such Global Debenture, receive individual Debentures of
such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such
Debentures. In any such instance, an owner of a beneficial interest in a
Global Debenture will be entitled to physical delivery of individual
Debentures of the series represented by such Global Debenture equal in
principal amount to such beneficial interest and to have such Debentures
registered in its name. Individual Debentures of such series so issued
will be issued in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof. The applicable
Prospectus Supplement may specify other circumstances under which
individual Debentures may be issued in exchange for the Global Debenture
representing any Debentures.
Payment and Paying Agents
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal of (and premium, if any) and any interest on
Debentures will be made at the office of the Debt Trustee or at the
office of such paying agent or paying agents as the Company may designate
from time to time in the applicable Prospectus Supplement, except that at
the option of the Company payment of any interest may be made (i) except
in the case of Global Debentures, by check mailed to the address of the
person or entity entitled thereto as such address shall appear in the
Securities Register or (ii) by transfer to an account maintained by the
person or entity entitled thereto as specified in the Securities
Register, provided that proper transfer instructions have been received
by the Regular Record Date. Unless otherwise indicated in the applicable
Prospectus Supplement, payment of any interest on Debentures will be made
to the person or entity in whose name such Debenture is registered at the
close of business on the Regular Record Date for such interest, except in
the case of Defaulted Interest. The Company may at any time designate
additional paying agents or rescind the designation of any paying agent;
however, the Company will at all times be required to maintain a paying
agent in each Place of Payment for each series of Debentures.
Any moneys deposited with the Debt Trustee or any paying agent, or
held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Debenture and remaining unclaimed for
two years after such principal (and premium, if any) or interest has
become due and payable shall, at the request of the Company, be repaid to
the Company or released from such trust, as applicable, and the holder of
such Debenture shall thereafter look, as a general unsecured creditor,
only to the Company for payment thereof.
Redemption
Unless otherwise indicated in the applicable Prospectus Supplement,
Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement,
the Company may, at its option, redeem the Debentures of any series in
whole at any time or in part from time to time, at the redemption price
set forth in the applicable Prospectus Supplement plus accrued and unpaid
interest to the date fixed for redemption, and Debentures in
denominations larger than $50 may be redeemed in part but only in
integral multiples of $50. If the Debentures of any series are so
redeemable only on or after a specified date or upon the satisfaction of
additional conditions, the applicable Prospectus Supplement will specify
such date or describe such conditions.
Except as otherwise specified in the applicable Prospectus
Supplement, if a Special Event (as defined in "Description of Capital
Securities--Redemption--Special Event Redemption" below or in the
applicable Prospectus Supplement) in respect of the Trust shall occur and
be continuing, the Company may, at its option, redeem such series of
Debentures, in whole (but not in part), at a redemption price equal to
the amount described in the applicable Prospectus Supplement. See
"Description of Capital Securities--Redemption--Special Event
Redemption."
Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of Debentures
to be redeemed at such holder's registered address. Unless the Company
defaults in the payment of the redemption price, on and after the
redemption date interest shall cease to accrue on such Debentures or
portions thereof called for redemption.
Option to Defer Interest Payments
If provided in the applicable Prospectus Supplement, the Company
shall have the right at any time and from time to time during the term of
any series of Debentures to defer the payment of interest for such number
of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject
to the terms, conditions and covenants, if any, specified in such
Prospectus Supplement, provided that such Extension Period may not extend
beyond the Stated Maturity of the Debentures. Certain material U.S.
federal income tax consequences and special considerations applicable to
any such Debentures will be described in the applicable Prospectus
Supplement.
At the end of such Extension Period, the Company shall pay all
interest then accrued and unpaid together with interest thereon
compounded semiannually at the rate specified for the Debentures to the
extent permitted by applicable law ("Compound Interest"); provided, that
during any such Extension Period, (a) the Company shall not declare or
pay dividends on, make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of
its capital stock (other than (i) purchases or acquisitions of capital
stock of the Company in connection with the satisfaction by the Company
of its obligations under any employee benefit plans or the satisfaction
by the Company of its obligations pursuant to any contract or security
outstanding on the date of such event requiring the Company to purchase
capital stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted
or exchanged, (iv) dividends or distributions in capital stock of the
Company (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of
capital stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan or the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company that rank
junior to the Debentures, and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than payments
pursuant to the Guarantee). Prior to the termination of any such
Extension Period, the Company may further defer payments of interest by
extending the interest payment period; provided, however, that, such
Extension Period, including all such previous and further extensions, may
not extend beyond the maturity of the Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company
may commence a new Extension Period, subject to the terms set forth in
this section. No interest during an Extension Period, except at the end
thereof, shall be due and payable, but the Company may prepay at any time
all or any portion of the interest accrued during an Extension Period.
The Company has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Debentures. If the Institutional Trustee shall be the sole holder of the
Debentures, the Company shall give the Regular Trustees and the
Institutional Trustee notice of its selection of such Extension Period
one Business Day prior to the earlier of (i) the date distributions on
the Capital Securities are payable or (ii) the date the Regular Trustees
are required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Capital
Securities of the record or payment date of such distribution. The
Regular Trustees shall give notice of the Company's selection of such
Extension Period to the holders of the Capital Securities. If the
Institutional Trustee shall not be the sole holder of the Debentures, the
Company shall give the holders of the Debentures notice of its selection
of such Extension Period ten Business Days prior to the earlier of (i)
the Interest Payment Date or (ii) the date upon which the Company is
required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Debentures
of the record or payment date of such related interest payment.
Modification of Indenture
From time to time, the Indenture may be modified by the Company and
the Debt Trustee without the consent of any holders of the Debentures
with respect to certain matters, including (i) to cure any ambiguity,
defect or inconsistency or to correct or supplement any provision which
may be inconsistent with any other provision of the Indenture, (ii) to
qualify, or maintain the qualification of, the Indenture under the Trust
Indenture Act and (iii) to make any change that does not materially
adversely affect the interests of any holder of Debentures. In addition,
under the Indenture, certain rights and obligations of the Company and
the rights of holders of the Debentures may be modified by the Company
and the Debt Trustee with the written consent of the holders of at least
a majority in aggregate principal amount of the outstanding Debentures;
but no extension of the maturity of Debentures, reduction in the interest
rate or extension of the time for payment of interest, change in the
optional redemption or repurchase provisions in a manner adverse to any
holder of Debentures, other modification in the terms of payment of the
principal of, or interest on, the Debentures, or reduction of the
percentage required for modification, will be effective against any
holder of any outstanding Debentures without the holder's consent.
In addition, the Company and the Debt Trustee may execute, without
the consent of any holder of Debentures, any supplemental Indenture for
the purpose of creating any new series of Debentures.
Indenture Events of Default
The Indenture provides that any one or more of the following
described events with respect to a series of Debentures that has occurred
and is continuing constitutes an "Indenture Event of Default" with
respect to such series of Debentures:
(i) failure for 30 days to pay any interest on such
series of the Debentures when due (subject to the deferral of any
due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on
such series of Debentures when due whether at maturity, upon
redemption, by declaration or otherwise; or
(iii) failure to observe or perform in any material
respect certain other covenants contained in the Indenture for 90
days after written notice has been given to the Company from the
Debt Trustee or the holders of at least 25% in principal amount of
such series of outstanding Debentures; or
(iv) certain events in bankruptcy, insolvency or
reorganization of the Company.
The holders of a majority in outstanding principal amount of such
series of Debentures have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debt
Trustee. The Debt Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of such series of Debentures may
declare the principal due and payable immediately upon an Indenture Event
of Default. The holders of a majority in aggregate outstanding principal
amount of such series of Debentures may annul such declaration and waive
the default if the default (other than the non-payment of the principal
of such series of Debentures which has become due solely by such
acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration
has been deposited with the Debt Trustee.
The holders of a majority in outstanding principal amount of the
Debentures affected thereby may, on behalf of the holders of all the
Debentures, waive any past default, except a default in the payment of
principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debt Trustee)
or a default in respect of a covenant or provision which under the
Indenture cannot be modified or amended without the consent of the holder
of each outstanding Debenture.
In case an Indenture Event of Default shall occur and be continuing
as to a series of Debentures, all of which are held by the Trust, the
Institutional Trustee will have the right to declare the principal of and
the interest on such Debentures, and any other amounts payable under the
Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Debentures.
Enforcement of Certain Rights by Holders of Capital Securities
If an Indenture Event of Default with respect to the Debentures has
occurred and is continuing and such event is attributable to the failure
of the Company to pay interest or principal on the Debentures on the date
such interest or principal is otherwise payable, a holder of the Capital
Securities may institute a legal proceeding directly against the Company
for enforcement of payment to such holder of the principal of or interest
on such Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder (a "Direct
Action"). The Company may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the
holders of all of the Capital Securities. If the right to bring a Direct
Action is removed, the Trust may become subject to the reporting
obligations under the Exchange Act. Unless otherwise specified in the
applicable Prospectus Supplement, the Company shall have the right under
the Indenture to set-off any payment made to such holder of Capital
Securities by the Company in connection with a Direct Action. The holders
of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures unless there shall have
been an Event of Default under the Declaration. See "Description of
Capital Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate with
or merge into any other person or entity or sell, assign, convey,
transfer or lease its properties and assets substantially as an entirety
to any person or entity unless (i) either the Company is the continuing
corporation, or any successor or purchaser is a corporation, partnership,
or trust or other entity organized under the laws of the United States of
America, any State thereof or the District of Columbia, and any such
successor or purchaser expressly assumes the Company's obligations on the
Debentures under a supplemental indenture; and (ii) immediately after
giving effect thereto, no Indenture Event of Default, and no event which,
after notice or lapse of time or both, would become an Indenture Event of
Default, shall have happened and be continuing.
The general provisions of the Indenture do not afford holders of
the Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of
the Debentures.
Satisfaction and Discharge; Defeasance
The Indenture provides that when, among other things, all
Debentures not previously delivered to the Debt Trustee for cancellation
(i) have become due and payable or (ii) will become due and payable at
their Stated Maturity within one year, and the Company deposits or causes
to be deposited with the Debt Trustee, as trust funds in trust for the
purpose, an amount in the currency or currencies in which the Debentures
are payable sufficient to pay and discharge the entire indebtedness on
the Debentures not previously delivered to the Debt Trustee for
cancellation, for the principal (and premium, if any) and interest to the
date of the deposit or to the Stated Maturity, as the case may be, then
the Indenture will cease to be of further effect (except as to the
Company's obligations to pay all other sums due pursuant to the Indenture
and to provide the officers' certificates and opinions of counsel
described therein), and the Company will be deemed to have satisfied and
discharged the Indenture. The Company will also have the right to decease
the Debentures if and to the extent indicated in the applicable
Prospectus Supplement.
Conversion or Exchange
If and to the extent indicated in the applicable Prospectus
Supplement, the Debentures of any series may be convertible or
exchangeable into Capital Securities or other securities. The specific
terms on which Debentures of any series may be so converted or exchanged
will be set forth in the applicable Prospectus Supplement. Such terms may
include provisions for conversion or exchange, either mandatory, at the
option of the holder, or at the option of the Company, in which case the
number of shares of Capital Securities or other securities to be received
by the holders of Debentures would be calculated as of a time and in the
manner stated in the applicable Prospectus Supplement.
Governing Law
The Indenture and the Debentures will be governed by and construed
in accordance with the laws of the State of New York.
Miscellaneous
The Company will pay all fees and expenses related to (i) the
offering of the Trust Securities and the Debentures, (ii) the
organization, maintenance and dissolution of the Trust, (iii) the
retention of the Ingersoll-Rand Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the Capital
Securities.
Information Concerning the Debt Trustee
The Debt Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debt Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Debt Trustee is not
required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the Debt Trustee
reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
The Company maintains trust and other business relationships in the
ordinary course of business with The Bank of New York.
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Ingersoll-Rand
Trustees on behalf of the Trust will issue the Capital Securities and the
Common Securities. The Capital Securities will represent undivided
beneficial ownership interests in the assets of the Trust. This summary
of certain provisions of the Capital Securities and the Declaration is
not necessarily complete, and reference is hereby made to the copy of the
Declaration, including the definitions therein of certain terms, which is
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and to the Trust Indenture Act. Wherever
particular defined terms of the Declaration are referred to in this
Section or in a Prospectus Supplement, such defined terms are
incorporated herein by reference. The form of Declaration has been filed
as an exhibit to the Registration Statement of which this Prospectus
forms a part.
General
The Capital Securities of the Trust will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities of the
Trust except as described under "--Subordination of Common Securities."
Legal title to the Debentures will be held by the Institutional Trustee
in trust for the benefit of the holders of the Capital Securities and
Common Securities. The Guarantee Agreement executed by the Company for
the benefit of the holders of the Trust's Capital Securities (the
"Guarantee") will not guarantee payment of Distributions or amounts
payable on redemption or liquidation of the Capital Securities when the
Trust does not have funds on hand available to make such payments. See
"Description of the Guarantee."
Distributions
The Trust's Capital Securities represent undivided beneficial
ownership interests in the assets of the Trust, and the Distributions on
each Capital Security will be payable at a rate specified in the
Prospectus Supplement for the Capital Securities. The amount of
Distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months unless otherwise specified in the
applicable Prospectus Supplement. Distributions that are in arrears will
accumulate additional Distributions thereon at the rate per annum if and
as specified in the applicable Prospectus Supplement ("Additional
Amounts"). The term "Distributions" as used herein includes any
Additional Amounts unless otherwise stated.
Distributions on the Capital Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such
dates as specified in the applicable Prospectus Supplement. In the event
that any date on which Distributions are payable on the Capital
Securities is not a Business Day (as defined below), payment of the
Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the
next succeeding calendar year, payment of such Distribution shall be made
on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date (each date on which
Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in The City
of New York are authorized or required by law or executive order to
remain closed or a day on which the corporate trust office of the
Institutional Trustee or the Debt Trustee is closed for business.
If provided in the applicable Prospectus Supplement, the Company
has the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period thereon from time to
time for a period or periods that will be specified in the applicable
Prospectus Supplement. Such extension right, if exercised, would result
in the deferral of Distributions on the Capital Securities (though such
Distributions would continue to accumulate additional Distribution
thereon at the rate per annum if and as specified in the applicable
Prospectus Supplement) during any such extended interest payment period.
Such right to extend the interest payment period for the Debentures is
limited to a period not extending beyond the stated Maturity of the
Debentures. In the event that the Company exercises this right, then (a)
the Company shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a liquidation
payment with respect to, any of its capital stock other than (i)
purchases or acquisitions of capital stock (of the Company in connection
with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date
of such event requiring the Company to purchase capital stock of the
Company, (ii) as a result or a reclassification of the Company's capital
stock or the exchange or conversion of one class or a series of the
Company's capital stock for another class or a series of the Company's
capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the
Company (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of
capital stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan or the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company that rank
junior to the Debentures, and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than payments
pursuant to the Guarantee). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment
period; provided, that such Extension Period, together with all such
previous and further extensions thereof, may not extend beyond the stated
Maturity of the Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, the Company may select a new
Extension Period, subject to the above requirements. See "Description of
the Debentures--Option to Defer Interest Payments." If Distributions are
deferred, the deferred Distributions and accumulated additional
Distributions thereon shall be paid to holders of record of the Capital
Securities as they appear on the books and records of the Trust on the
record date next following the termination of such deferral period.
It is anticipated that the revenue of the Trust available for
distribution to holders of its Capital Securities will be limited to
payments under the Debentures in which the Trust will invest the proceeds
from the issuance and sale of the Capital Securities and the Common
Securities. See "Description of Debentures--Debentures." If the Company
does not make interest payments on such Debentures, the Institutional
Trustee will not have funds available to pay Distributions on the Capital
Securities. The payment of Distributions (if and to the extent the Trust
has funds legally available for the payment of such Distributions and
cash sufficient to make such payments) is guaranteed by the Company on a
limited basis as set forth herein under "Description of the Guarantee."
Distributions on the Capital Securities will be payable to the
holders thereof as they appear on the register of the Trust on the
relevant record dates, which, as long as the Capital Securities remain in
book-entry form, will be one Business Day prior to the relevant
Distribution Date. Subject to any applicable laws and regulations and the
provisions of the Declaration, unless otherwise specified in the
applicable Prospectus Supplement, each such payment will be made as
described under "Book-Entry Issuance." In the event any Capital
Securities are not in book-entry form, the relevant record date for such
Capital Securities shall be the date, at least 15 days prior to the
relevant Distribution Date, that is specified in the applicable
Prospectus Supplement.
Redemption
Mandatory Redemption
Unless otherwise specified in the applicable Prospectus Supplement,
upon any repayment or redemption, in whole or in part, of any Debentures
that are held by the Trust unless otherwise specified in the applicable
Prospectus Supplement, whether at maturity or upon earlier redemption as
provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Institutional Trustee to redeem a Like Amount (as
defined below) of the related Trust Securities, upon not less than 30 nor
more than 60 days notice, at a redemption price (the "Redemption Price")
equal to the aggregate liquidation amount of such Trust Securities plus
accumulated and unpaid Distributions thereon to the date of redemption
(the "Redemption Date") and the related amount of the premium, if any,
paid by the Company upon the concurrent redemption of such Debentures.
See "Description of Debentures--Optional Redemption." If less than all of
any series of Debentures that are held by the Trust are to be repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Capital
Securities and the Common Securities. The amount of premium, if any, paid
by the Company upon the redemption of all or any part of any Debentures
held by the Trust shall be allocated pro rata to the Capital Securities
and the Common Securities.
Distribution of Debentures
Unless otherwise specified in the applicable Prospectus Supplement,
the Company will have the right at any time to dissolve the Trust and,
after satisfaction of the liabilities of creditors of the Trust as
provided by applicable law, to cause the Debentures in respect of the
Trust Securities issued by the Trust to be distributed to the holders of
the Trust Securities in liquidation of the Trust.
After the liquidation date fixed for any distribution of Debentures
held by the Trust, (i) the Capital Securities will no longer be deemed to
be outstanding, (ii) the depositary (if any) for the Capital Securities,
as the record holder of the Capital Securities, will receive a registered
global certificate or certificates representing the Debentures to be
delivered upon such distribution and (iii) any certificates representing
such Capital Securities not held by or on behalf of such depositary will
be deemed to represent the Debentures having a principal amount equal to
the liquidation amount of the Capital Securities, and bearing accrued and
unpaid interest in an amount equal to the accrued and unpaid
Distributions on the Capital Securities, until such certificates are
presented to the Regular Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Capital
Securities or the Debentures that may be distributed in exchange for
Capital Securities if a dissolution or liquidation of the Trust were to
occur. Accordingly, the Capital Securities that an investor may purchase,
or the Debentures that the investor may receive on dissolution or
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby.
Special Event Redemption
If a Tax Event or an Investment Company Event (each as defined in
the applicable Prospectus Supplement, a "Special Event") shall occur and
be continuing, unless otherwise specified in the applicable Prospectus
Supplement, the Company will have the right to redeem the Debentures in
whole (but not in part) and therefore cause a mandatory redemption of the
Trust Securities in whole (but not in part) at the Redemption Price
within 90 days following the occurrence of such Special Event.
If provided in the applicable Prospectus Supplement, the Company
shall have the right to extend or shorten the maturity of any series of
Debentures held by the Trust at the time that the Company exercises its
right to elect to dissolve the Trust and, after satisfaction of the
liability to creditors of the Trust as provided by applicable law, cause
such Debentures to be distributed to the holders of the Capital
Securities and Common Securities of the Trust in liquidation of the
Trust, provided that it can extend the maturity only if certain
conditions specified in the applicable Prospectus Supplement are met at
the time such election is made and at the time of such extension.
"Like Amount" means (i) with respect to a redemption of any
Trust Securities, Trust Securities having a liquidation amount equal to
that portion of the principal amount of Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to
the Common Securities and to the Capital Securities based upon the
relative liquidation amounts of such classes of Trust Securities, and the
proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (ii) with respect to a distribution of Debentures to
holders of any Trust Securities in connection with a dissolution or
liquidation of Trust, Debentures having a principal amount equal to the
liquidation amount of the Trust Securities of the holder to whom such
Debentures are distributed.
Redemption Procedures
Capital Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Debentures. Redemptions of Capital
Securities shall be made and the Redemption Price shall be payable on
each Redemption Date only to the extent that the Trust has funds on hand
available for the payment of such Redemption Price. See also "--
Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, on the Redemption Date, to the extent funds are
available, the Institutional Trustee will deposit irrevocably with the
Depositary for the Capital Securities (if such Capital Securities are
issued in the form of one or more Global Capital Securities) funds
sufficient to pay the applicable Redemption Price and will give such
Depositary irrevocable instructions and authority to pay the Redemption
Price to the beneficial owners of the Capital Securities. See "-- Global
Capital Securities" and "Book-Entry Issuance." If the Capital Securities
are not issued in the form of one or more Global Capital Securities, the
Trust, to the extent funds are available, will irrevocably deposit with
the paying agent for the Capital Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders
thereof upon surrender of their certificates evidencing the Capital
Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for the Capital Securities called for
redemption shall be payable to the holders of the Capital Securities on
the relevant record dates for the related Distribution Dates. If notice
of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of the holders of the Capital
Securities so called for redemption will cease, except the right of the
holders of the Capital Securities to receive the Redemption Price, but
without interest on such Redemption Price, and the Capital Securities
will cease to be outstanding. In the event that any date fixed for
redemption of Capital Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Capital Securities called for redemption
is improperly withheld or refused and not paid either by the Trust or by
the Company pursuant to the Guarantee as described under "Description of
the Guarantee", Distributions on such Capital Securities will continue to
accumulate at the then applicable rate, from the Redemption Date
originally established by the Trust for the Capital Securities to the
date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, U.S.
federal securities law), the Company or its subsidiaries may at any time
and from time to time purchase outstanding Capital Securities by tender,
in the open market or by private agreement.
If less than all of the Capital Securities and Common Securities
issued by the Trust are to be redeemed on a Redemption Date, then the
aggregate liquidation amount of such Capital Securities and Common
Securities to be redeemed shall be allocated pro rata among the Capital
Securities and Common Securities of such Trust based on the relative
liquidation amounts of such classes of Trust Securities. The particular
Capital Securities to be redeemed shall be selected on a pro rata basis
not more than 60 days prior to the Redemption Date by the Institutional
Trustee from the outstanding Capital Securities not previously called for
redemption, by such method as the Institutional Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to $25 or an integral multiple of $25 in excess thereof)
of the liquidation amount of Capital Securities of a denomination larger
than $25. The Institutional Trustee shall promptly notify the registrar
in writing of the Capital Securities selected for redemption and, in the
case of any Capital Securities selected for partial redemption, the
liquidation amount thereof to be redeemed. For all purposes of each
Declaration, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in case of
any Capital Securities redeemed or to be redeemed only in part, to the
portion of the aggregate liquidation amount of Capital Securities which
has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each holder of Capital
Securities to be redeemed at its registered address. Unless the Company
defaults in payment of the Redemption Price on the Debentures, on and
after the Redemption Date interest will cease to accrue on the Debentures
or portions thereof (and Distributions will cease to accumulate on the
Capital Securities or portions thereof) called for redemption.
Subordination of Common Securities
Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust's Capital
Securities and Common Securities, as applicable, shall be made pro rata
based on the liquidation amount of the Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or
Redemption Date an Indenture Event of Default shall have occurred and be
continuing, no payment of any Distribution (including Additional Amounts,
if applicable) on, or Redemption Price of, any of the Trust's Common
Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid
Distributions (including Additional Amounts, if applicable) on all of the
Trust's outstanding Capital Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all of the
Trust's outstanding Capital Securities then called for redemption, shall
have been made or provided for, and all funds available to the
Institutional Trustee shall first be applied to the payment in full in
cash of all Distributions (including Additional Amounts, if applicable)
on, or Redemption Price of, the Trust's Capital Securities then due and
payable.
In the case of any Event of Default under the Declaration resulting
from an Indenture Event of Default, the Company as holder of the Trust's
Common Securities will be deemed to have waived any right to act with
respect to any such Event of Default under the Declaration until the
effect of all such Events of Default with respect to the Capital
Securities have been cured, waived or otherwise eliminated. Until any
such Events of Default under the Declaration have been so cured, waived
or otherwise eliminated, the Institutional Trustee shall act solely on
behalf of the holders of the Capital Securities and not on behalf of the
Company as holder of the Trust's Common Securities, and only the holders
of the Capital Securities will have the right to direct the Institutional
Trustee to act on their behalf.
Liquidation Distribution Upon Dissolution
Unless otherwise specified in the applicable Prospectus Supplement,
pursuant to the Declaration, the Trust shall dissolve (i) on
, 2004, the expiration of the term of the Trust, (ii) upon the bankruptcy
of the Company, (iii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Company, after receipt by the
Institutional Trustee of written direction from the Company to dissolve
the Trust or after obtaining the consent of the holders of at least a
majority in liquidation amount of the Trust Securities affected thereby
voting together as a single class to dissolve the Trust, or the
revocation of the charter of the Company and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) upon
the distribution of Debentures, (v) upon the entry of a decree of a
judicial dissolution of the holder of the Common Securities, the Company
or the Trust, or (vi) upon the redemption of all the Trust Securities.
If an early dissolution occurs as described in clause (ii), (iii)
or (v) above, the Trust shall be liquidated by the Ingersoll-Rand
Trustees as expeditiously as the Ingersoll-Rand Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, to the holders of the
applicable Trust Securities a Like Amount of the Debentures that are then
held by the Trust, unless such distribution is determined by the
Institutional Trustee not to be practical, in which event such holders
will be entitled to receive out of the assets of the Trust available for
distribution to holders, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, an amount equal to, in the
case of holders of Capital Securities, the aggregate of the liquidation
amount plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the
Capital Securities shall be paid on a pro rata basis. The holder(s) of
the Trust's Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of the Capital
Securities, except that if an Indenture Event of Default has occurred and
is continuing, the Capital Securities shall have a priority over the
Common Securities. If specified in the applicable Prospectus Supplement,
a supplemental Indenture may provide that if an early dissolution occurs
as described in clause (v) above, the Debentures that are then held by
the Trust may be subject to optional redemption in whole (but not in
part).
Events of Default; Notice
Any one of the following events constitutes an "Event of Default"
under the Declaration (an "Event of Default") with respect to the Capital
Securities issued thereunder (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of an Indenture Event of Default
under the Indenture (see "Description of Debentures--Indenture
Events of Default"); or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and continuation of
such default for a period of 30 days; or
(iii) default by the Trust in the Payment of any
Redemption Price of any Trust Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any
material respect, of any covenant or warranty of the Ingersoll-Rand
Trustees in the Declaration (other than a covenant or warranty a
default in the performance of which or the breach of which is dealt
with in clause (ii) or (iii) above), and continuation of such
default or breach for a period of 90 days after written notice has
been given to the defaulting Ingersoll-Rand Trustee or Trustees by
the holders of at least 25% in aggregate liquidation amount of the
outstanding Capital Securities, which notice shall specify such
default or breach and require it to be remedied and shall state
that such notice is a "Notice of Default" under the Declaration; or
(v) the occurrence of certain events of bankruptcy or
insolvency with respect to the Institutional Trustee and the
failure by the Company to appoint a successor Institutional Trustee
within 60 days thereof.
Within five Business Days after the occurrence of any Event of
Default actually known to the Institutional Trustee, the Institutional
Trustee shall transmit notice of such Event of Default to the holders of
the Capital Securities, the Regular Trustees and the Company, as Sponsor,
unless such Event of Default shall have been cured or waived. The
Company, as Sponsor, and the Regular Trustees are required to file
annually with the Institutional Trustee a certificate as to whether or
not they are in compliance with all the conditions and covenants
applicable to them under the Declaration.
If an Indenture Event of Default has occurred and is continuing,
the Capital Securities of the Trust shall have a preference over the
Common Securities of the Trust upon dissolution of the Trust as described
above. See "-- Liquidation Distribution Upon Dissolution." The existence
of an Event of Default does not entitle the holders of Capital Securities
to accelerate the maturity thereof.
Removal of Ingersoll-Rand Trustees
Unless an Indenture Event of Default shall have occurred and
be continuing, any Ingersoll-Rand Trustee may be removed at any time by
the holder of the Common Securities. If an Indenture Event of Default
with respect to any series of Debentures has occurred and is continuing,
the Institutional Trustee and the Delaware Trustee may be removed at such
time by the holders of a majority in liquidation amount of the
outstanding Capital Securities of the Trust. In no event will the holders
of the Capital Securities of the Trust have the right to vote to appoint,
remove or replace the Administrative Trustees, which voting rights are
vested exclusively in the Company as the holder of the Common Securities
of the Trust. No resignation or removal of an Ingersoll-Rand Trustee and
no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
Co-Trustees and Separate Institutional Trustee
Unless an Event of Default with respect to the Capital Securities
of the Trust shall have occurred and be continuing, at any time or times,
for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust Property may at
the time be located, the Company, as the holder of the Common Securities
of the Trust, and the Regular Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the
Institutional Trustee, of all or any part of such Trust Property, or to
act as separate trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment, and to vest
in such person or persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of the
applicable Declaration. In case an Indenture Event of Default has
occurred and is continuing, the Institutional Trustee alone shall have
power to make such appointment.
Merger or Consolidation of Trust Trustees
Any entity into which the Institutional Trustee, the Delaware
Trustee or any Regular Trustee that is not a natural person may be merged
or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such
Trustee shall be a party, or any entity succeeding to all or
substantially all the corporate trust business of such Trustee, shall be
the successor of such Trustee under the Declaration, provided such entity
shall be otherwise qualified and eligible.
Mergers, Consolidations or Amalgamations
The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below or as described in "Liquidation Distribution Upon
Dissolution". The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the
Institutional Trustee or the Delaware Trustee, consolidate, amalgamate,
merge with or into, or be replaced by a trust organized as such under the
laws of any State; provided, that (i) if the Trust is not the survivor,
such successor entity either (x) assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust
Securities other securities having substantially the same terms as the
Trust Securities (the "Successor Securities"), so long as the Successor
Securities rank the same as the Trust Securities rank with respect to
distributions and payments upon liquidation, redemption and otherwise,
(ii) the Company expressly acknowledges a trustee of such successor
entity possessing the same powers and duties as the Institutional Trustee
as the holder of the Debentures, (iii) the Capital Securities or any
Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange
or with another organization on which the Capital Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Capital Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than
with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose substantially identical to that
of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, the Company has received an opinion of independent counsel
to the Trust experienced in such matters to the effect that, (A) such
merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect
(other than with respect to any dilution of the holders' interest in the
new entity), (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor such successor entity will be required
to register as an investment company under the 1940 Act and (C) following
such merger, consolidation, amalgamation or replacement, the Trust (or
the successor entity) will continue to be classified as a grantor trust
for United States federal income tax purposes and (viii) the Company
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee and the
Common Securities Guarantee. Notwithstanding the foregoing, the Trust
shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or
into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust
or the successor entity to be classified as other than a grantor trust
for United States federal income tax purposes.
Voting Rights; Amendment of Declaration
Except as provided below and under "Description of the Guarantee--
Modification of the Guarantee; Assignment" and as otherwise required by
law and the Declaration, the holders of the Capital Securities will have
no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a
tax opinion in certain circumstances set forth in the last sentence of
this paragraph, the holders of a majority in aggregate liquidation amount
of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration including
the right to direct the Institutional Trustee, as holder of the
Debentures, to (i) exercise the remedies available under the Indenture
with respect to the Debentures, (ii) waive any past Indenture Event of
Default that is waivable under Section 513 of the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Debentures
where such consent shall be required; provided, however, that, where a
consent or action under the Indenture would require the consent or act of
holders of more than a majority in principal amount of the Debentures (a
"Super-Majority") affected thereby, only the holders of at least such
Super-Majority in aggregate liquidation amount of the Capital Securities
may direct the Institutional Trustee to give such consent or take such
action. The Institutional Trustee shall notify all holders of the Capital
Securities of any notice of default received from the Debt Trustee with
respect to the Debentures. Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default. Except with
respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of
the actions described in clause (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel experienced
in such matters to the effect that, as a result of such action, the Trust
will not fail to be classified as a grantor trust for United States
federal income tax purposes.
In the event the consent of the Institutional Trustee, as a holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the direction of the holders of the
Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification
or termination as directed by a majority in liquidation amount of the
Trust Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at
the direction of the holders of at least the proportion in liquidation
amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Debentures
outstanding. The Institutional Trustee shall be under no obligation to
take any such action in accordance with the directions of the holders of
the Trust Securities unless the Institutional Trustee has obtained an
opinion of tax counsel experienced in such matters to the effect that for
the purposes of United States federal income tax, the Trust will not be
classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Event of Default.
Any required approval or direction of holders of Capital Securities
may be given at a separate meeting of holders of Capital Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which holders of Capital Securities are
entitled to vote, or of any matter upon which action by written consent
of such holders is to be taken, to be mailed to each holder of record of
Capital Securities. Each such notice will include a statement setting
forth the following information: (i) the date of such meeting or the date
by which such action is to be taken; (ii) a description of any resolution
proposed for adoption at such meeting on which such holders are entitled
to vote or of such matter upon which written consent is sought; and (iii)
instructions for the delivery of proxies or consents. No vote or consent
of the holders of Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or distribute Debentures in
accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of
the Capital Securities that are owned at such time by the Company or any
entity directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Company, shall not be
entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if such Capital Securities were not outstanding.
The procedures by which holders of Capital Securities may exercise
their voting rights are described below. See "Book-Entry Issuance" below.
Global Capital Securities
The Capital Securities of the Trust may be issued in whole or in
part in the form of one or more Global Capital Securities that will be
deposited with, or on behalf of, the depositary identified in the
Prospectus Supplement relating to the Capital Securities. Unless
otherwise indicated in the applicable Prospectus Supplement for the
Capital Securities, the depositary will be The Depository Trust Company
("DTC"). Global Capital Securities may be issued only in fully registered
form and in either temporary or permanent form. Unless and until it is
exchanged in whole or in part for the individual Capital Securities
represented thereby, a Global Capital Security may not be transferred
except as a whole by the depositary for such Global Capital Security to a
nominee of such depositary or by a nominee of such depositary to such
depositary or another nominee of such depositary or by such depositary or
any nominee to a successor depositary or any nominee of such successor.
While the specific terms of the depositary arrangement with respect
to the Capital Securities of the Trust (if other than as described under
"Book-Entry Issuance") will be described in the Prospectus Supplement
relating to the Capital Securities, the Company anticipates that the
following provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Capital Security, and the deposit of
such Global Capital Security with or on behalf of the applicable
depositary, the depositary for such Global Capital Security or its
nominee will credit, on its book-entry registration and transfer system,
the respective aggregate liquidation amounts of the individual Capital
Securities represented by such Global Capital Securities to the accounts
of Participants. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Capital Securities or by the
Company if such Capital Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Capital Security
will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global
Capital Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the applicable
depositary or its nominee (with respect to interests of Participants) and
the records of Participants (with respect to interests of persons who
hold through Participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to
transfer beneficial interests in a Global Capital Security.
So long as the depositary for a Global Capital Security, or its
nominee, is the registered owner of such Global Capital Security, such
depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the Capital Securities represented by such Global
Capital Security for all purposes under the Declaration. Except as
provided below, owners of beneficial interests in a Global Capital
Security will not be entitled to have any of the individual Capital
Securities represented by such Global Capital Security registered in
their names, will not receive or be entitled to receive physical delivery
of any such Capital Securities in definitive form and will not be
considered the owners or holders thereof under the Declaration.
Payments of liquidation amount, premium or Distributions in respect
of individual Capital Securities represented by a Global Capital Security
registered in the name of a depositary or its nominee will be made to
such depositary or its nominee, as the case may be, as the registered
owner of the Global Capital Security representing such Capital
Securities. None of the Company, the Institutional Trustee, any paying
agent or the registrar for such Capital Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global
Capital Security representing such Capital Securities or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the depositary for the Capital Securities
of the Trust, or its nominee, upon receipt of any payment of liquidation
amount, premium or Distributions in respect of a Global Capital Security
representing any of such Capital Securities, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate of such Global Capital
Security for such Capital Securities as shown on the records of such
depositary or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Capital
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities
held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such
Participants.
Unless otherwise specified in the applicable Prospectus Supplement,
if a Depositary for the Capital Securities of the Trust is at any time
unwilling, unable or ineligible to continue as a depositary and a
successor depositary is not appointed by the Company within 90 days, the
Trust will issue individual Capital Securities of the Trust in exchange
for the Global Capital Security representing such Capital Securities. In
addition, the Company may at any time and in its sole discretion, subject
to any limitations described in the Prospectus Supplement relating to the
Capital Securities, determine not to have any Capital Securities of the
Trust represented by one or more Global Capital Securities and, in such
event, the Trust will issue individual Capital Securities in exchange for
the Global Capital Security or Securities representing such Capital
Securities. Further, if the Company so specifies with respect to the
Capital Securities of the Trust, an owner of a beneficial interest in a
Global Capital Security representing such Capital Securities may, on
terms acceptable to the Company, the Institutional Trustee and the
Depositary for such Global Capital Security, receive individual Capital
Securities in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such
Capital Securities. In any such instance, an owner of a beneficial
interest in a Global Capital Security will be entitled to physical
delivery of individual Capital Securities represented by such Global
Capital Security equal in liquidation amount to such beneficial interest
and to have such Capital Securities registered in its name. Individual
Capital Securities so issued will be issued in denominations, unless
otherwise specified by the Company, of $25 and integral multiples
thereof.
Payment and Paying Agency
Payments in respect of the Capital Securities shall be made to the
applicable depositary, which shall credit the relevant accounts at such
depositary on the applicable Distribution Dates or, if the Capital
Securities are not held by a depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as such
address shall appear on the Register. Unless otherwise specified in the
applicable Prospectus Supplement, the paying agent for the Capital
Securities shall initially be the Institutional Trustee and any co-paying
agent chosen by the Institutional Trustee and acceptable to the Regular
Trustees and the Company. The paying agent shall be permitted to resign
as paying agent upon 30 days' written notice to the Institutional
Trustees and the Company. In the event that the Institutional Trustee
shall no longer be the paying agent, the Regular Trustees shall appoint a
successor to act as paying agent (which shall be a bank or trust company
acceptable to the Regular Trustees and the Company).
Registrar and Transfer Agent
Unless otherwise specified in the applicable Prospectus Supplement,
the Institutional Trustee will act as registrar and transfer agent for
the Capital Securities.
Registration of transfers of Capital Securities will be effected
without charge by or on behalf of each Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause
to be registered the transfer of the Capital Securities after the Capital
Securities have been called for redemption.
Information Concerning the Institutional Trustee
The Institutional Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such
duties as are specifically set forth in the Declaration and, after such
Event of Default, must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration
at the request of any holder of Capital Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is
continuing and the Institutional Trustee is required to decide between
alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the
Declaration, and the matter is not one on which holders of Capital
Securities are entitled under the Declaration to vote, then the
Institutional Trustee shall take such action as is directed by the
Company and if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Trust
Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
Miscellaneous
The Regular Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not
be deemed to be an "investment company" required to be registered under
the Investment Company Act or fail to be classified as a grantor trust
for U.S. federal income tax purposes and so that the Debentures will be
treated as indebtedness of the Company for U.S. federal income tax
purposes. In this connection, the Company and the Regular Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Declaration, that the Company
and the Regular Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Capital Securities.
Holders of the Capital Securities have no preemptive or similar
rights.
The Trust may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the
Guarantee which will be executed and delivered by the Company for the
benefit of the holders from time to time of Trust Securities. The
Guarantee will be qualified as an indenture under the Trust Indenture
Act. The First National Bank of Chicago, an independent trustee, will act
as indenture trustee under the Guarantee (the "Guarantee Trustee") for
the purposes of compliance with the provisions of the Trust Indenture
Act. The terms of the Guarantee will be those set forth in the Guarantee
and those made part of the Guarantee by the Trust Indenture Act. The
following summary is not necessarily complete, and reference is hereby
made to the copy of the form of the Guarantee (including the definitions
therein of certain terms) which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the
Trust Indenture Act. Whenever particular defined terms of the Guarantee
are referred to in this Prospectus, such defined terms are incorporated
herein by reference. The Guarantee will be held by the Trustee for the
benefit of the holders of the Trust Securities.
General
Pursuant to the Guarantee, unless otherwise specified in the
applicable Prospectus Supplement, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full to
the holders of the Trust Securities, the Guarantee Payments (as defined
herein) (except to the extent paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the
Trust may have or assert. The following payments or distributions with
respect to Trust Securities issued by the Trust, to the extent not paid
by or on behalf of the Trust (the "Guarantee Payments"), will be subject
to the Guarantee (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on the Trust Securities, to
the extent the Trust shall have funds available therefor; (ii) with
respect to any Trust Securities called for redemption by the Trust, the
redemption price (the "Redemption Price") and all accrued and unpaid
distributions to the date of redemption, to the extent the Trust has
funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Debentures to the holders of Trust
Securities or the redemption of all of the Trust Securities), the lesser
of (a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Trust Securities to the date of payment, to the
extent the Trust has funds available therefor, and (b) the amount of
assets of the Trust remaining available for distribution to holders of
the Trust Securities in liquidation of the Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment
of the required amounts by the Company to the holders of Trust Securities
or by causing the Trust to pay such amounts to such holders.
The Guarantee will be a full and unconditional guarantee of the
Guarantee Payments with respect to the Trust Securities, but will not
apply to any payment of distributions except to the extent the Trust
shall have funds available therefor. If the Company does not make
interest payments on the Debentures purchased by the Trust, the Trust
will not pay distributions on the Trust Securities issued by the Trust
and will not have funds available therefor. See "Relationship Among the
Capital Securities, the Debentures and the Guarantee." The Guarantee,
when taken together with the Company's obligations under the Indenture
and the Declaration, will have the effect of providing a full and
unconditional guarantee on a subordinated basis by the Company of
payments due on the Capital Securities.
The Company has also agreed to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common
Securities, except that upon an Indenture Event of Default, holders of
the Capital Securities shall have priority over holders of Common
Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
Certain Covenants of the Company
In the Guarantee, the Company will covenant that, so long as any
Trust Securities issued by the Trust remain outstanding, if there shall
have occurred any event that would constitute an event of default under
the Guarantee or the Declaration, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of
capital stock of the Company in connection with the satisfaction by the
Company of its obligations under any employee benefit plans or the
satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company
to purchase capital stock of the Company, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, (iv) dividends or
distributions in capital stock of the Company (or rights to acquire
capital stock) or repurchases or redemptions of capital stock solely from
the issuance or exchange of capital stock or (v) redemptions or
repurchases of any rights outstanding under a shareholder rights plan or
the declaration thereunder of a dividend of rights in the future), (b)
the Company shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by
the Company which rank junior to the Debentures and (c) the Company shall
not make any guarantee payments with respect to the foregoing (other than
payments pursuant to the Guarantee).
Modification of the Guarantee; Assignment
Except with respect to any changes which do not adversely affect
the rights of holders of Trust Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of
the holders of not less than a majority in liquidation amount of the
outstanding Trust Securities issued by the Trust. All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to
the benefit of the holders of the Trust Securities then outstanding.
Termination
The Guarantee will terminate as to the Trust Securities (a) upon
full payment of the Redemption Price of all Trust Securities then
outstanding, (b) upon distribution of the Debentures held by the Trust to
the holders of the Trust Securities of the Trust or (c) upon full payment
of the amounts payable in accordance with the Declaration upon
liquidation of the Trust. The Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of
Trust Securities must return payment of any sums paid under such Trust
Securities or the Guarantee.
Events of Default
An event of default under the Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Trust
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of
Trust Securities may institute a legal proceeding directly against the
Company to enforce such holder's rights under the Guarantee, without
first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. Notwithstanding the foregoing, if
the Company has failed to make a required guarantee payment, a holder of
Trust Securities may directly institute a proceeding against the Company
for enforcement of the Guarantee for such payment. The Company waives any
right or remedy to require that any action be brought first against the
Trust or any other person or entity before proceeding directly against
the Company.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the
Company and will rank on a parity with all of the Company's other senior
unsecured obligations.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of a default with
respect to the Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after default, shall
exercise the same degree of care as a prudent individual would exercise
in the conduct of his or her own affairs. Subject to such provisions, the
Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Guarantee at the request of any holder of Capital
Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the
foregoing shall not relieve the Guarantee Trustee, upon the occurrence of
an event of default under the Guarantee, from exercising the rights and
powers vested in it by the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with
the internal laws of the State of New York.
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE DEBENTURES AND THE GUARANTEE
As long as payments of interest and other payments are made when
due on the Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount of the Debentures will be
equal to the sum of the aggregate stated liquidation amount of the
Capital Securities and Common Securities; (ii) the interest rate and
interest and other payment dates on the Debentures will match the
Distribution rate and Distribution and other payment dates for the
Capital Securities; (iii) the Company shall be obligated to pay, directly
or indirectly, all costs, expenses, debts and obligations of the Trust
(other than with respect to the Trust Securities); and (iv) the
Declaration further provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
Payments of Distributions and other amounts due on the Capital
Securities (to the extent the Trust has funds available for the payment
of such Distributions) are irrevocably guaranteed by the Company as and
to the extent set forth under "Description of the Guarantee." Taken
together, the Company's obligations under a series of Debentures, the
Indenture, the Declaration and the Guarantee have the effect of providing
a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Capital Securities. No single
document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations
under the Capital Securities. If and to the extent that the Company does
not make payments on the Debentures, the Trust will not pay Distributions
or other amounts due on the Capital Securities. The Guarantee does not
cover payment of Distributions when the Trust does not have sufficient
funds to pay such Distributions. In such event, the remedy of a holder of
Capital Securities is to institute a legal proceeding directly against
the Company for enforcement of payment of such Distributions to such
holder.
Notwithstanding anything to the contrary in the Indenture, the
Company has the right to set-off any payment it is otherwise required to
make thereunder with and to the extent the Company has theretofore made,
or is concurrently on the date of such payment making, a payment under
the Guarantee.
A holder of any Capital Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee
Trustee, the Trust or any other person or entity.
The Trust's Capital Securities evidence preferred undivided
beneficial interests in the assets of the Trust, and each Trust exists
for the sole purpose of issuing the Capital Securities and Common
Securities and investing the proceeds thereof in Debentures. A principal
difference between the rights of a holder of a Capital Security and a
holder of a Debenture is that a holder of a Debenture will accrue, and
(subject to the permissible extension of the interest period) is entitled
to receive, interest on the principal amount of Debentures held, while a
holder of Capital Securities is only entitled to receive Distributions if
and to the extent the Trust has funds available for the payment of such
Distributions.
Upon any voluntary or involuntary dissolution of the Trust
involving the liquidation of the Debentures, the holders of Capital
Securities of the Trust will be entitled to receive, out of assets held
by the Trust, the Liquidation Distribution in cash. See "Description of
Capital Securities--Liquidation Distribution Upon Dissolution." Upon any
voluntary or involuntary liquidation or bankruptcy of the Company, the
Institutional Trustee as holder of the Debentures would be entitled to
receive payment in full of principal and interest, before any
stockholders of the Company receive payments or distributions.
DESCRIPTION OF CAPITAL STOCK
The following description of the Company's capital stock summarizes
certain provisions of the Company's Restated Certificate of Incorporation
(as it may be amended, the "Certificate of Incorporation"), the Rights
Agreement, as amended, between the Company and The Bank of New York, as
Rights Agent (the "Rights Agreement") and the New Jersey Business
Corporation Act (the "NJBCA") and is subject to and is qualified in its
entirety by reference to such documents and provisions.
General
The authorized capital stock of the Company consists of 600,000,000
shares of Common Stock and 10,000,000 shares of preference stock, of
which 563,000 shares of Series A Preference Stock (the "Series A
Preference Stock") have been reserved for issuance. At December 31, 1997,
no shares of the authorized Preference Stock were issued and outstanding
and 165,408,751 shares of the authorized Common Stock were issued and
outstanding. The Company also had outstanding, as of such date,
55,136,201 Series A Preference Stock Purchase Rights (the "Rights"). See
"--Rights Plan."
Common Stock
Dividends. Subject to the rights of holders of Preference Stock,
the Board of Directors may, in its discretion, out of funds legally
available for the payment of dividends and at such times and in such
manner as determined by the Board of Directors, declare and pay dividends
on the Common Stock.
Liquidation, Dissolution and Winding Up. In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary, after payment in full has been made to the holders of
Preference Stock of the amounts to which they are respectively entitled
or sufficient sums have been set apart for the payment thereof, the
holders of Common Stock shall be entitled to receive ratably any and all
assets remaining to be paid or distributed, and the holders of Preference
Stock shall not be entitled to share therein.
Voting. Except as otherwise expressly provided in the Certificate
of Incorporation or as may be required by law, the holders of Common
Stock of the Company shall be entitled at all meetings of stockholders to
one vote for each share of such stock held by them respectively and shall
vote together with the holders of Preference Stock as one class. At all
elections of directors, each holder of Common Stock shall be entitled to
as many votes as shall equal the number of votes which such holder would
be entitled to cast, multiplied by the number of directors to be elected,
and such holder may cast all such votes for a single director, or may
distribute them, among the number to be voted for or any two or more of
such directors.
Preemptive Rights. No holder of shares of Common Stock shall have
any preemptive or preferential rights to subscribe to or purchase any
shares of any class or series of stock of the Company, now or hereafter
authorized, or any series convertible into, or warrants or other
evidences of optional rights to purchase or subscribe to, shares of any
class or series of the Company, now or hereafter authorized.
All the outstanding shares of Common Stock are fully paid and non-
assessable.
The registrar and transfer agent for the Common Stock is The Bank
of New York.
Preference Stock
The Certificate of Incorporation provides for Preference Stock
which may be issued, from time to time, in one or more series with
certain rights and limitations as may be fixed by the Board of Directors
of the Company. The Company has no present plan to issue any Preference
Stock other than in accordance with the Rights Plan (as defined herein).
However, the Board of Directors of the Company, without stockholder
approval, may issue Preference Stock that could adversely affect the
voting power of holders of the Common Stock. Issuance of Preference Stock
could be utilized, under certain circumstances, in an attempt to prevent
a takeover of the Company.
The following description sets forth certain general terms and
provisions of the Preference Stock to which a Prospectus Supplement may
relate. Certain terms of a series of the Preference Stock offered by a
Prospectus Supplement will be described in such Prospectus Supplement. If
so indicated in the Prospectus Supplement and if permitted by the
Certificate of Incorporation and by law, the terms of any such series may
differ from the terms set forth below. The following description of the
Preference Stock summarizes certain provisions of the Certificate of
Incorporation and is subject to and qualified in its entirety by
reference to the Certificate of Incorporation and the Certificate of
Amendment thereto which will be filed with the Commission promptly after
any offering of such series of Preference Stock. The following
description, together with any description of the terms of a series of
Preference Stock set forth in the related Prospectus Supplement,
summarizes all of the material terms of such series of Preference Stock.
General. The Board of Directors may cause Preference Stock to be
issued from time to time in one or more series and is expressly
authorized to fix:
(i) the distinctive designation of such series and the
number of shares which shall constitute such series, which number
may be increased (except as otherwise provided by the Board of
Directors in creating such series) or decreased (but not below the
number of shares thereof then outstanding) from time to time by the
Board of Directors;
(ii) the rate of dividends payable on shares of such
series and the date or dates from which dividends shall accumulate;
(iii) the terms, if any, on which shares of such series
may be redeemed, including, without limitation, the redemption
price or prices for such series, which may consist of a redemption
price or scale of redemption prices applicable only to redemption
in connection with a sinking fund (which term as used herein shall
include any fund or requirement for the periodic purchase or
redemption of shares), and the same or a different redemption price
or scale of redemption prices applicable to any other redemption;
(iv) the terms and amount of any sinking fund provided
for the purchase or redemption of shares of such series;
(v) the amount or amounts which shall be paid to the
holders of shares of such series in case of liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary;
(vi) the terms, if any, upon which the holders of shares
of such series may convert shares thereof into stock of any other
class or classes or of any one or more series of the same class or
of another class or classes; and
(vii) such other rights, preferences and limitations as
may be permitted to be fixed by the Board of Directors of the
Company under the laws of the State of New Jersey as in effect at
the time of the creation of such series.
All shares of Preference Stock, irrespective of series, shall be of
equal rank, and shall be identical in all respects except to the terms
fixed by the Board of Directors as permitted in the Certificate of
Incorporation. The Board of Directors is authorized to change the
designation, rights, preferences and limitations of any series of
Preference Stock theretofore established, no shares of which have been
issued. The Board of Directors is authorized to amend the Certificate of
Incorporation to set forth the designation, number of shares, rights,
preferences and limitations of any series of Preference Stock fixed by
the Board of Directors, or to reflect any change therein made by the
Board of Directors, as permitted in the Certificate of Incorporation.
Dividends. The holders of Preference Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the payment of dividends, cumulative dividends in
cash at the annual rate for each particular series theretofore fixed by
the Board of Directors, payable in respect of each series on the date or
dates which shall be fixed by the Board of Directors with respect to each
particular series.
If at any time there are two or more series of Preference Stock
outstanding, any dividend paid upon shares of Preference Stock in an
amount less than all dividends accrued and unpaid on all outstanding
shares of Preference Stock shall be paid ratably among all series of
Preference Stock in proportion to the full amount of dividends accrued
and unpaid on each such series.
So long as any Preference Stock is outstanding, no dividend shall
be paid or declared, nor any distribution be made, on the Common Stock or
any other stock of the Company ranking junior to the Preference Stock in
the payment of dividends (other than a dividend payable in stock of
junior rank), nor shall any shares of Common Stock or any other stock of
junior rank be acquired for consideration by the Company or by any
subsidiary except in exchange for shares of stock of junior rank unless
(i) full dividends on the Preference Stock for all past dividend periods
shall have been paid or shall have been declared and a sufficient sum set
apart for the payment thereof and (ii) all obligations of the Company, if
any, with respect to the redemption or purchase of shares of Preference
Stock in accordance with the requirements of any sinking fund have been
met. Subject to the foregoing provisions, such dividends (payable in
cash, stock or otherwise) as may be determined from time to time by the
Board of Directors may be declared and paid on the Common Stock or any
other stock of junior rank out of the remaining funds of the Company
legally available for the payment of dividends; and the Preference Stock
shall not be entitled to participate in any such dividends, whether
payable in cash, stock or otherwise.
Redemption. If so provided by the Board of Directors, the Company,
at the option of the Board of Directors, or in accordance with the
requirements of any sinking fund for the Preference Stock or any series
thereof, may redeem the whole or any part of the Preference Stock at any
time outstanding, or the whole or any part of any series thereof, at such
time or times and from time to time and at such redemption price or
prices as may be fixed by the Board of Directors pursuant to the
Certificate of Incorporation, together in each case with an amount equal
to all unpaid dividends accrued thereon to the date fixed for such
redemption, and otherwise upon the terms and conditions fixed by the
Board of Directors for any such redemption; provided, however, that no
optional redemption of less than all of the Preference Stock shall take
place unless (i) full dividends on the Preference Stock for all past
dividend periods shall have been paid or declared and a sufficient sum
set apart for the payment thereof and (ii) all obligations of the
Company, if any, with respect to the redemption or purchase of shares of
Preference Stock in accordance with the requirements of any sinking fund
have been met. If at any time there are two or more series of Preference
Stock outstanding, any amount expended in purchasing or redeeming shares
of Preference Stock pursuant to the provisions of sinking funds therefor
which is less than the amount then required to be so expended under all
such funds shall be expended ratably among all series of Preference Stock
in proportion to the full amount of expenditures of such funds then
required in respect of each such series.
Liquidation, Dissolution and Winding Up. In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary, the holders of each series of Preference Stock then
outstanding shall be entitled to receive out of the assets of the
Company, before any distribution or payment shall be made to the holders
of the Common Stock or any other stock of Company ranking junior to the
Preference Stock with respect to the distribution of assets, the amount
determined by the Board of Directors in creating such series, plus in
each case an amount equal to all unpaid dividends accrued thereon to the
date fixed for such payment to the holders of the Preference Stock. If
upon any such liquidation, dissolution or winding up, two or more series
of Preference Stock are outstanding, any distribution to holders of
Preference Stock in an aggregate amount less than the total payable with
respect to all outstanding Preference Stock shall be made ratably among
all series of Preference Stock in proportion to the full amount payable
upon such liquidation, dissolution or winding up in respect of each such
series.
Voting. The holders of Preference Stock shall have the voting
rights set forth below:
(a) Except as otherwise expressly provided in the Certificate
of Incorporation or as may be required by law, the holders of Preference
Stock shall be entitled at all meetings of stockholders to three votes
for each five shares of such stock held by them respectively (a holder of
less than five shares being entitled to no vote) and the holders of all
series of Preference Stock shall vote together with the holders of Common
Stock as one class. At all elections of directors, each holder of
Preference Stock shall be entitled to as many votes as shall equal the
number of votes which such holder would be entitled to cast, multiplied
by the number of directors to be elected, and such holder may cast all
such votes for a single director, or may distribute them among the number
to be voted for or any two or more of them as such holder may see fit.
(b) If and whenever dividends on the Preference Stock shall
be in arrears in an amount equivalent to six quarterly dividends or
mandatory sinking fund payments shall be in arrears in an amount equal to
the aggregate of all such payments required during one year, then, at any
ensuing annual meeting of stockholders at which at least a majority of
the outstanding shares of Preference Stock are represented, the holders
of Preference Stock of all series thereof then outstanding, voting
separately as a class, shall be entitled to elect two directors. Such
right of the holders of Preference Stock shall continue to be exercisable
until all dividends in arrears on Preference Stock shall have been paid
in full or declared and a sum sufficient for the payment thereof set
apart and all mandatory sinking fund payments in arrears shall have been
paid in full, whereupon such right shall cease. During any time that the
holders of Preference Stock are entitled to elect two such directors,
they shall also be entitled to participate with the Common Stock in the
election of any other directors.
(c) Notwithstanding any other provision of the Certificate of
Incorporation:
(i) the affirmative approval of the holders of at
least two-thirds in interest of Preference Stock of all series thereof
then outstanding present and voting at a meeting, acting as a single
class without regard to series, shall be required for any amendment of
the Certificate of Incorporation altering materially and adversely any
existing provision of the Preference Stock or for the creation, or an
increase in the authorized amount, of any class of stock ranking, as to
dividends or assets, prior to the Preference Stock; and
(ii) the affirmative approval of the holders of at
least a majority in interest of Preference Stock of all series thereof
then outstanding present and voting at a meeting, acting as a single
class without regard to series, shall be required for an increase in the
authorized amount of Preference Stock, or for the creation, or an
increase in the authorized amount, of any class of stock ranking, as to
dividends or assets, on a parity with the Preference Stock;
provided, however, that if any amendment to the Certificate of
Incorporation shall affect adversely the rights or preferences of one or
more, but not all, of the series of Preference Stock at the time
outstanding, or shall unequally adversely affect the rights or
preferences of different series of Preference Stock at the time
outstanding, the affirmative approval of the holders of at least
two-thirds in interest of the shares of each such series so adversely or
unequally adversely affected present and voting at a meeting shall be
required in lieu of or (if such affirmative approval is required by law)
in addition to the affirmative approval of the holders of at least
two-thirds in interest of the shares of Preference Stock as a class
present and voting at such meeting.
Preemptive Rights. No holder of shares of any series of Preference
Stock shall have any preemptive or preferential rights to subscribe to or
purchase shares of any class or series of stock of the Company, now or
hereafter authorized, or any securities convertible into, or warrants or
other evidences of optional rights to purchase or subscribe to, shares of
any laws or series of the Company, now or hereafter authorized.
Other Provisions. Subject to the requirements of paragraph (c)
under "--Voting" above, but notwithstanding any other provisions of the
Certificate of Incorporation, the Board of Directors, in the resolution
or resolutions providing for the issue of any series of Preference Stock,
may determine, to the extent that the Board of Directors may be permitted
to do so under the laws of the State of New Jersey as in effect at the
time of the creation of such series:
(i) the voting rights, full or limited, if any, of the
shares of such series; and whether or not and under what conditions the
shares of such series (alone or together with the shares of one or more
other series having similar provisions) shall be entitled to vote
separately as a single class, for the election of one or more additional
directors of the Company in case of dividend arrearages or other
specified events, or upon other matters;
(ii) whether or not and upon what conditions dividends on
shares of such series shall be cumulative and, if cumulative, the date or
dates from which dividends shall accumulate;
(iii) whether or not the holders of shares of such series
shall have any preemptive or preferential rights to subscribe to or
purchase shares of any class or series of stock of the Company, now or
hereafter authorized, or any securities convertible into, or warrants or
other evidences of optional rights to purchase or subscribe to, shares of
any class or series of the Company, now or hereafter authorized; and
(iv) whether or not the issuance of additional shares of
such series, or of any shares of any other series, shall be subject to
restrictions as to issuance, or as to the preferences, rights and
qualifications of any such other series.
Voting Requirements
Majority Voting Requirements. Subject to the provisions described
below under "--Greater Voting Requirements" and except as otherwise
expressly provided in the Certificate of Incorporation or as may be
required by law, the majority voting requirements prescribed in
subsections 14A:10-3(2) and 14A:12-4(4) and in paragraphs 14A:9-2(4)(c)
and 14A:10-11(1)(c) of the NJBCA shall apply to the Company. As a result,
in the case of each of (i) a plan of merger or consolidation, (ii) a
dissolution of the Company, (iii) an amendment to the Certificate of
Incorporation and (iv) a sale, lease, exchange or other disposition of
all, or substantially all, of the assets of the Company, any such action
shall be approved upon receiving the affirmative vote of a majority of
the votes cast by the holders of shares of the Company entitled to vote
therein, and, in addition, if any class or series is entitled to vote
thereon as a class, the affirmative vote of a majority of the votes cast
in each class vote. Such voting requirements shall generally be subject
to such greater requirements as are provided in the NJBCA for specific
amendments or as may be provided in the Certificate of Incorporation.
Greater Voting Requirements. The affirmative vote of the holders of
four-fifths of the outstanding shares of all classes of stock of the
Company entitled to vote, considered for the purposes of this paragraph
as one class, shall be required to authorize (i) the merger or
consolidation of the Company or a subsidiary of the Company with or into
any other corporation, person or other entity, (ii) any sale, lease,
exchange or other disposition of all or any material part of the assets
of the Company or of any subsidiary of the Company to or with any other
corporation, person or other entity or (iii) any issuance or transfer of
securities of the Company upon conversion of or in exchange for the
securities or assets of any other corporation, person or entity if (as of
the date of any action taken by the Board of Directors with respect to
such transaction or as of any record date for the determination of
stockholders entitled to notice and to vote with respect thereto or
immediately prior to the consummation of such transaction) such other
corporation, person or other entity referred to in clause (i), clause
(ii) or clause (iii) above is the beneficial owner, directly or
indirectly, of more than 10% of any class of capital stock of the
Company. For the purposes hereof, any corporation, person or other entity
shall be deemed to be the beneficial owner of any shares of capital stock
of the Company, (x) which it has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise, or (y) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (x) above)
by any other corporation, person or other entity with which it has any
agreement, arrangement or understanding with respect to the acquisition,
holding, voting or disposition of stock or of any material part of the
assets of the Company or of it, or which is its "affiliate" or
"associate" as those terms are defined in Rule 12b-2 of the General Rules
and Regulations under the 1934 Act, as in effect on January 1, 1970. Any
determination made in good faith by the Board of Directors, on the basis
of information at the time available to it, as to whether any
corporation, person or other entity is the beneficial owner of more than
10% of any class of capital stock of the Company, or is an "affiliate" or
"associate", as above defined, shall be conclusive and binding for all
purposes of this paragraph. The provisions described in this paragraph
shall not apply to any agreement for the merger of any subsidiary of the
Company with the Company or with another subsidiary of the Company where
the Company or such other subsidiary shall be the surviving corporation
and where the provisions described in this paragraph shall not be changed
or otherwise affected by or by virtue of the merger.
Directors
The Board of Directors shall be divided as equally as may be into
three classes, each of which shall consist of such number as the by-laws
may from time to time provide, but no class shall consist of less than
two members. At each annual election, the successors of the directors of
the class whose terms expire in that year are elected to hold office for
the term of three years, so that the term of office of one class of
directors shall expire in each year. If the number of directors is
changed, any newly created directorships or decrease in directorships
shall be so apportioned among the classes as to make all classes as
nearly equal in number as possible. In case of any increase in the number
of directors of any class or classes, the additional directors may be
elected by the Board of Directors, but any such director so elected shall
hold office only until the next succeeding annual meeting of stockholders
and until his successor shall have been elected and qualified. No
decrease in the number of directors shall shorten the term of any
incumbent director. Directors may be removed without cause only upon the
affirmative vote of the holders of at least four-fifths of the shares of
capital stock entitled to vote for the election of directors. Directors
may be removed for cause upon the affirmative vote of two-thirds of the
entire Board. The affirmative vote of the holders of at least four-fifths
of the shares of capital stock entitled to vote for the election of the
directors shall be required for any amendment or deletion of this
provision, unless such amendment or deletion shall have been approved by
the unanimous vote of the directors then in office, in which case the
majority voting requirements of the NJBCA described above shall apply
thereto.
The provisions of the Certificate of Incorporation relating to
directors shall have no application to any directors who may be elected
by the holders of Preference Stock or any series thereof, voting as a
class or series, as the case may be, pursuant to a right to elect
directors conferred upon such holders by reason of default in the payment
of dividends, failure to discharge sinking fund obligations or otherwise.
Any such directors shall be in addition to the directors to be elected
pursuant to the paragraph immediately above and shall be elected in the
manner, and serve for such term, as may be provided in the Certificate of
Incorporation.
Rights Plan
On December 7, 1988, the Board of Directors of the Company declared
a dividend distribution of one Right for each outstanding share of Common
Stock of the Company. The dividend was payable on December 22, 1988 to
shareholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one-hundredth (1/100) of a share of a
series of preference stock of the Company, designated as Series A
Preference Stock, without par value (the "Series A Preference Stock"), at
a price of $130 (the "Purchase Price").
On May 6, 1992, the Board of Directors of the Company declared a
two-for-one stock split in the form of a dividend distribution of one
share of Common Stock for each outstanding share of Common Stock (the
"First Common Stock Dividend"). The First Common Stock Dividend was
payable on June 1, 1992 to shareholders of record on May 19, 1992. After
giving effect to receipt of the First Common Stock Dividend, each holder
of a Right was deemed to be the holder of (i) one-half of a Right in
respect of the share of Common Stock pursuant to which such Right
originally had been issued and (ii) one-half of a Right in respect of the
share of Common Stock received by such holder pursuant to the First
Common Stock Dividend.
On August 6, 1997, the Board of Directors of the Company declared a
three-for-two stock split in the form of a dividend distribution of one
share of Common Stock for every two outstanding shares of Common Stock
(the "Second Common Stock Dividend"). The Second Common Stock Dividend
was paid on September 2, 1997 to shareholders of record on August 19,
1997. After giving effect to receipt of the Second Common Stock Dividend,
each holder of a Right will be deemed to be the holder of (i) one-third
of a Right in respect of the share of Common Stock pursuant to which such
Right originally had been issued, (ii) one-third of a Right in respect of
the share of Common Stock received by such holder pursuant to the First
Common Stock Dividend and (iii) one-third of a Right in respect of the
share of Common Stock received by such holder pursuant to the Second
Common Stock Dividend.
Until the close of business on the Distribution Date, which will
occur on the earlier to occur of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") other than the Company, any subsidiary of the
Company or any employee benefit plan or employee stock plan of the
Company or of any subsidiary of the Company (an "Exempt Person"), has
acquired, or obtained the right to acquire, beneficial ownership of 15%
or more of the outstanding Common Stock (the "Stock Acquisition Date"),
(ii) the declaration by the Board of Directors that any Person is an
Adverse Person or (iii) the tenth day after the date of the commencement
of, or the first public announcement of the intent of any person (other
than an Exempt Person) to commence, a tender offer or exchange offer
(other than a tender or exchange offer by an Exempt Person) which would
result in the ownership of 15% or more of the outstanding Common Stock
(the earlier of such dates being called the "Distribution Date"), the
Rights will be represented by and transferred with, and only with, the
Common Stock. Until the Distribution Date, new certificates issued for
Common Stock after December 22, 1988 contain a legend incorporating the
Rights Agreement by reference, and the surrender for transfer of any of
the Company's Common Stock certificates constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
As soon as practicable following the Distribution Date, separate Right
Certificates will be mailed to holders of record of the Common Stock at
the close of business on the Distribution Date, and thereafter the
separate certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on December 22, 1998, unless
earlier redeemed by the Company as described below.
The Series A Preference Stock will be nonredeemable and, unless
otherwise provided in connection with the creation of a subsequent series
of Preference Stock, subordinate to any other series of Preference Stock.
The Series A Preference Stock will, however, rank prior to the Common
Stock. The Series A Preference Stock may not be issued except upon
exercise of Rights. Each share of Series A Preference Stock will be
entitled to receive when, as and if declared, a quarterly dividend in an
amount per share equal to 100 times the cash dividends declared on the
Company's Common Stock. In addition, the Series A Preference Stock is
entitled to 100 times any non-cash dividends (other than dividends
payable in equity securities) declared on the Common Stock, in like kind.
In the event of a default on such dividends, the holders of the Series A
Preference Stock (together with the holders of any other Preference Stock
similarly entitled) will be entitled to elect two directors. In the event
of liquidation, the holders of Series A Preference Stock will be entitled
to receive a liquidation payment in an amount equal to 100 times the
payment made per share of Common Stock. Each share of Series A Preference
Stock will have 100 votes, voting together with the Common Stock and not
as a separate class unless otherwise required by law or the Certificate
of Incorporation. In the event of any merger, consolidation or other
transaction in which common shares are exchanged, each share of Series A
Preference Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The rights of the Series A Preference
Stock as to dividends, liquidation and voting are protected by anti-
dilution provisions.
The Purchase Price payable, and the number of shares of Series A
Preference Stock or other securities or property issuable upon exercise
of the Rights, are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of the Series A Preference Stock, (ii)
upon the grant to holders of the Series A Preference Stock of certain
rights or warrants to subscribe for Series A Preference Stock or
convertible securities at less than the current market price of the
Series A Preference Stock or (iii) upon the distribution to holders of
the Series A Preference Stock of evidences of indebtedness or assets
(excluding regular cash dividends and dividends payable in Series A
Preference Stock) or of subscription rights or warrants (other than those
referred to above).
If (i) any Person (other than an Exempt Person) becomes the
beneficial owner of 15% or more of the then outstanding shares of Common
Stock, (ii) the Board of Directors of the Company, by majority vote,
shall declare any Person to be an Adverse Person, (iii) any Acquiring
Person, Adverse Person or any affiliates or associates thereof engages in
one or more "self-dealing" transactions as described in the Rights
Agreement, then each holder of a Right, other than the Acquiring Person
or Adverse Person, will have the right to receive in lieu of Series A
Preference Stock, upon payment of the Purchase Price, a number of shares
of Common Stock having a market value equal to twice the Purchase Price.
This same right will be available to each holder of record of a Right,
other than the Acquiring Person or Adverse Person, if, while there is an
Acquiring Person or Adverse Person, there occurs any reclassification of
securities, any recapitalization of the Company, or any merger or
consolidation or other transaction involving the Company or any of its
subsidiaries which has the effect of increasing by more than 1% the
proportionate ownership interest of the Company or any of its
subsidiaries which is owned or controlled by the Acquiring Person or
Adverse Person. Alternatively, at any time after any person or group
acquires 15% or more of the Common Stock or the Board of Directors
determines that a Person is an Adverse Person, the Board of Directors of
the Company may exchange one share of the Common Stock (or an equivalent
share of the Series A Preference Stock) for each outstanding Right other
than Rights held by an Acquiring Person or Adverse Person, which become
void. To the extent that insufficient shares of Common Stock are
available for the exercise in full of the Rights, holders of Rights will
receive upon exercise shares of Common Stock to the extent available and
then Series A Preference Stock, cash, property or other securities of the
Company (which may be accompanied by a reduction in the Purchase Price),
in proportions determined by the Company, so that the aggregate value
received is equal to twice the Purchase Price. Rights are not exercisable
following the occurrence of the events described in this paragraph until
the expiration of the period during which the Rights may be redeemed as
described below. Notwithstanding the foregoing, following the occurrence
of the events described in this paragraph, Rights that are (or, under
certain circumstances, Rights that were) beneficially owned by an
Acquiring Person or an Adverse Person will be void.
Unless the Rights are redeemed earlier, if, after the Stock
Acquisition Date or the declaration by the Board of Directors that a
person is an Adverse Person, the Company is acquired in a merger or other
business combination (in which any shares of the Common Stock are changed
into or exchanged for other securities or assets) or more than 50% of the
assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred in one or a series of related
transactions, the Rights Agreement provides that proper provision shall
be made so that each holder of record of a Right will from and after that
time have the right to receive, upon payment of the Purchase Price, that
number of shares of common stock of the acquiring company which has a
market value at the time of such transaction equal to two times the
Purchase Price.
Fractions of shares of Series A Preference Stock may, at the
election of the Company, be evidenced by depositary receipts. The Company
may also issue cash in lieu of fractional shares which are not integral
multiples of one one-hundredth of a share.
At any time until ten days following the Stock Acquisition Date or
the declaration by the Board of Directors that a person is an Adverse
Person (subject to extension by the Board of Directors), the Board of
Directors (with the concurrence of a majority of the Independent
Directors) may cause the Company to redeem the Rights in whole, but not
in part, at a price of $0.01 per Right. Under certain circumstances set
forth in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Independent Continuing Directors.
Immediately upon the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights
will terminate, and the only right of the holders of Rights will be to
receive the Redemption Price without any interest thereon. The term
"Independent Directors" means any member of the Board of Directors of the
Company who is not an officer of the Company. The term "Independent
Continuing Directors" means any Independent Director who was a member of
the Board of Directors immediately prior to the time that any Person
shall become an Acquiring Person or Adverse Person, and any Independent
Director who becomes a member of the Board of Directors subsequent to the
time that any Person shall become an Acquiring Person or Adverse Person
if such Independent Director is recommended or nominated to election on
the Board of Directors by a majority of the Independent Continuing
Directors, but shall not include an Acquiring Person or Adverse Person,
or any representative of such Acquiring Person or Adverse Person.
Until the close of business on the tenth day following the Stock
Acquisition Date or the declaration by the Board of Directors that a
person is an Adverse Person, and thereafter for as long as the Rights are
redeemable, the Board of Directors (with the concurrence of a majority of
the Independent Directors) may cause the Company to amend the Rights in
any manner, including an amendment to extend the time period in which the
Rights may be redeemed, but no such amendment shall alter the redemption
price, the date of expiration of the Rights, or the number of one one-
hundredths of a share of Series A Preference Stock for which a Right is
exercisable. At any time when the Rights are not then redeemable, the
Company (with the concurrence of a majority of the Independent Continuing
Directors) may amend the Rights in any manner that does not adversely
affect the interests of holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no
rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, including contracts
obligating holders to purchase from the Company, and the Company to sell
to the holders, a specified number of shares of Common Stock or
Preference Stock at a future date or dates. The consideration per share
of Preference Stock or Common Stock may be fixed at the time the Stock
Purchase Contracts are issued or may be determined by reference to a
specific formula set forth in the Stock Purchase Contracts. The Stock
Purchase Contracts may be issued separately or as a part of units ("Stock
Purchase Units") consisting of a Stock Purchase Contract and Debt
Securities, Capital Securities or debt obligations of third parties,
including U.S. Treasury securities, securing the holders' obligations to
purchase the Preference Stock or the Common Stock under the Stock
Purchase Contracts. The Stock Purchase Contracts may require the Company
to make periodic payments to the holders of the Stock Purchase Units or
vice versa, and such payments may be unsecured or prefunded on some
basis. The Stock Purchase Contracts may require holders to secure their
obligations thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any
Stock Purchase Contracts or Stock Purchase Units. The description in the
Prospectus Supplement will not necessarily be complete, and reference
will be made to the Stock Purchase Contracts, and, if applicable,
collateral arrangements and depositary arrangements, relating to such
Stock Purchase Contracts or Stock Purchase Units.
BOOK-ENTRY ISSUANCE
Unless otherwise specified in the applicable Prospectus Supplement,
DTC will act as depositary for Securities issued in the form of Global
Securities. Such Securities will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or
more fully-registered Global Securities will be issued for such
Securities representing in the aggregate the total number of such
Securities, and will be deposited with or on behalf of DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its Participants
deposit with DTC. DTC also facilitates the settlement among Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain custodial relationships
with Direct Participants, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on
file with the Commission.
Purchases of Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for such
Securities on DTC's records. The ownership interest of each actual
purchaser of each Security ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased Securities. Transfers of ownership interests
in Securities issued in the form of Global Securities are to be
accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in such Securities,
except in the event that use of the book-entry system for such Securities
is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the
Securities issued in the form of Global Securities; DTC's records reflect
only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered
holder of Securities issued in the form of Global Securities. If less
than all of a series of such Securities are being redeemed, DTC's current
practice is to determine by lot the amount of the interest of each Direct
Participant to be redeemed.
Although voting with respect to Securities issued in the form of
Global Securities is limited to the holders of record of such Securities,
in those instances in which a vote is required, neither DTC nor Cede &
Co. will itself consent or vote with respect to such Securities. Under
its usual procedures, DTC would mail an omnibus proxy (the "Omnibus
Proxy") to the issuer of such Securities as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts such Securities are
credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Payments in respect of Securities issued in the form of Global
Securities will be made by the issuer of such Securities to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive
payments on such payment date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices
and will be the responsibility of such Participant and not of DTC, the
Institutional Trustee, either Trust or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to
time. Payments to DTC are the responsibility of the issuer of the
applicable Securities, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as depositary with
respect to any Securities at any time by giving reasonable notice to the
issuer of such Securities. In the event that a successor depositary is
not obtained, individual Security certificates representing such
Securities are required to be printed and delivered. The Company, at its
option, may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary).
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Trust and the Company
believe to be accurate, but the Trust and the Company assume no
responsibility for the accuracy thereof. Neither the Trust nor the
Company has any responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under
the rules and procedures governing their respective operations.
PLAN OF DISTRIBUTION
Any of the Securities being offered hereby may be sold in any one
or more of the following ways from time to time: (i) through agents; (ii)
to or through underwriters; (iii) through dealers; and (iv) directly by
the Company or, in the case of Capital Securities, by the Trust to
purchasers.
The distribution of the Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
Offers to purchase Securities may be solicited by agents designated
by the Company from time to time. Any such agent involved in the offer or
sale of the Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company or the Trust to
such agent will be set forth, in the applicable Prospectus Supplement.
Unless otherwise indicated in such Prospectus Supplement, any such agent
will be acting on a reasonable best efforts basis for the period of its
appointment. Any such agent may be deemed to be an underwriter, as that
term is defined in the Securities Act, of the Securities so offered and
sold.
If Securities are sold by means of an underwritten offering, the
Company and, in the case of an offering of Capital Securities, the Trust
will execute an underwriting agreement with an underwriter or
underwriters at the time an agreement for such sale is reached, and the
names of the specific managing underwriter or underwriters, as well as
any other underwriters, the respective amounts underwritten and the terms
of the transaction, including commissions, discounts and any other
compensation of the underwriters and dealers, if any, will be set forth
in the applicable Prospectus Supplement which will be used by the
underwriters to make resales of the Securities in respect of which this
Prospectus is being delivered to the public. If underwriters are utilized
in the sale of any Securities in respect of which this Prospectus is
being delivered, such Securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at fixed public offering
prices or at varying prices determined by the underwriters at the time of
sale. Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or
more underwriters. If any underwriter or underwriters are utilized in the
sale of Securities, unless otherwise indicated in the applicable
Prospectus Supplement, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions
precedent and that the underwriters with respect to a sale of such
Securities will be obligated to purchase all such Securities if any are
purchased.
The Company or the Trust, as applicable, may grant to the
underwriters options to purchase additional Securities, to cover over-
allotments, if any, at the initial public offering price (with additional
underwriting commissions or discounts), as may be set forth in the
Prospectus Supplement relating thereto. If the Company or the Trust, as
applicable, grants any over-allotment option, the terms of such over-
allotment option will be set forth in the Prospectus Supplement for such
Securities.
If a dealer is utilized in the sale of the Securities in respect of
which this Prospectus is delivered, the Company or the Trust, as
applicable, will sell such Securities to the dealer as principal. The
dealer may then resell such Securities to the public at varying prices to
be determined by such dealer at the time of resale. Any such dealer may
be deemed to be an underwriter, as such term is defined in the Securities
Act, of the Securities so offered and sold. The name of the dealer and
the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the
Company or the Trust, as applicable, and the sale thereof may be made by
the Company or the Trust directly to institutional investors or others,
who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale thereof. The terms of any such sales will
be described in the Prospectus Supplement relating thereto.
Securities may also be offered and sold, if so indicated in the
applicable Prospectus Supplement, in connection with a remarketing upon
their purchase, in accordance with a redemption or repayment pursuant to
their terms, or otherwise, by one or more firms ("remarketing firms"),
acting as principals for their own accounts or as agents for the Company
or the Trust, as applicable. Any remarketing firm will be identified and
the terms of its agreement, if any, with the Company or the Trust and its
compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters, as that term is
defined in the Securities Act, in connection with the Securities
remarketed thereby.
If so indicated in the applicable Prospectus Supplement, the
Company or the Trust, as applicable, may authorize agents and
underwriters to solicit offers by certain institutions to purchase
Securities from the Company or the Trust at the public offering price set
forth in the applicable Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on the date or
dates stated in the applicable Prospectus Supplement. Such delayed
delivery contracts will be subject to only those conditions set forth in
the applicable Prospectus Supplement. A commission indicated in the
applicable Prospectus supplement will be paid to underwriters and agents
soliciting purchases of Securities pursuant to delayed delivery contracts
accepted by the Company or the Trust, as applicable.
Agents, underwriters, dealers and remarketing firms may be entitled
under relevant agreements with the Company or the Trust, as applicable,
to indemnification by the Company or the Trust against certain
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such agents, underwriters,
dealers and remarketing firms may be required to make in respect thereof.
Each series of Securities will be a new issue and, other than the
Common Stock, which is listed on the New York Stock Exchange, the London
Stock Exchange and the Amsterdam Stock Exchange, will have no established
trading market. The Company may elect to list any series of Securities on
an exchange, and in the case of the Common Stock, on any additional
exchange, but, unless otherwise specified in the applicable Prospectus
Supplement, the Company shall not be obligated to do so. No assurance can
be given as to the liquidity of the trading market for any of the
Securities.
Agents, underwriters, dealers and remarketing firms may be
customers of, engage in transactions with, or perform services for, the
Company and its subsidiaries in the ordinary course of business.
LEGAL OPINIONS
Unless otherwise specified in a Prospectus Supplement relating to
particular Securities, the validity of the Securities offered hereby,
other than Capital Securities, will be passed upon for the Company by
Simpson Thacher & Bartlett, New York, New York, and certain matters of
Delaware law with respect to the validity of the Capital Securities
offered hereby will be passed upon for the Company and the Trust by
Richards, Layton & Finger P.A., special Delaware counsel to the Company
and the Trust. The validity of the Securities offered hereby will be
passed upon for the underwriters, dealers or agents, if any, by counsel
to be named in the applicable Prospectus Supplement.
EXPERTS
The financial statements incorporated in this Registration
Statement by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, have been so incorporated in reliance
on the reports of Price Waterhouse LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting. The
financial statements of Thermo King incorporated in this Registration
Statement by reference to the Company's Form 8-K, dated October 31, 1997,
have been so incorporated in reliance on the reports of KPMG Peat Marwick
LLP.
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or the Prospectus
in connection with the offer made by this Prospectus Supplement or the
Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company, the Trust or
the Underwriter. Neither the delivery of this Prospectus Supplement and
the Prospectus, nor any sale made hereunder and thereunder, shall under
any circumstances, create an implication that there has been no change in
the affairs of the Company or the Trust since the date hereof. This
Prospectus Supplement and the Prospectus shall not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is
not authorized or in which the person making such offer of solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such
offer or solicitation.
_________________________
TABLE OF CONTENTS
Page
Prospectus Supplement
Prospectus Supplement Summary . . . . . . . . . . . . . . . . . . . . S-5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Summary Historical and Pro Forma
Financial Information of the Company . . . . . . . . . . . . . . . . S-30
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Price Range of Common Stock and Dividends . . . . . . . . . . . . . . S-32
Condensed Consolidated Capitalization . . . . . . . . . . . . . . . . S-33
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . S-34
Description of the Feline Prides . . . . . . . . . . . . . . . . . . S-35
Description of the Purchase Contracts . . . . . . . . . . . . . . . . S-38
Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement . . . . . . . . . . . . . . . . S-45
Description of the Capital Securities . . . . . . . . . . . . . . . . S-48
Description of the Guarantee . . . . . . . . . . . . . . . . . . . . S-57
Description of the Debentures . . . . . . . . . . . . . . . . . . . . S-60
Effect of Obligations Under the
Debentures and the Guarantee . . . . . . . . . . . . . . . . . . . S-65
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . S-66
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-72
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . S-73
Index of Terms for Prospectus Supplement . . . . . . . . . . . . . . S-74
Available Information . . . . . . . . . . . . . . . . . . . . . . . . S-3
Incorporation of Certain Documents by Reference . . . . . . . . . . . S-3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Description of Debentures . . . . . . . . . . . . . . . . . . . . . . S-6
Description of Capital Securities . . . . . . . . . . . . . . . . . . S-12
Description of the Guarantee . . . . . . . . . . . . . . . . . . . . S-21
Relationship Among the Capital Securities,
the Debentures and the Guarantee . . . . . . . . . . . . . . . . . S-23
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . S-24
Description of Stock Purchase Contracts
and Stock Purchase Units . . . . . . . . . . . . . . . . . . . . . S-31
Book-Entry Issuance . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . S-32
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
INGERSOLL-RAND FINANCING I
14,000,000 FELINE PRIDES/SM/
1,400,000
CAPITAL SECURITIES
_________________________
PROSPECTUS SUPPLEMENT
_________________________
Merrill Lynch & Co.
March , 1998
/SM/Service Mark of Merrill Lynch & Co., Inc.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the Registrant's expenses in connection
with the issuance of the securities being registered. Except for the
registration fee, the amounts listed below are estimates.
Registration Fee--Securities and Exchange Commission . . . . . . $363,636
Printing of Registration Statement, Prospectus, Indenture, etc. . 50,000
Blue Sky Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Accountants' Fees and Expenses . . . . . . . . . . . . . . . . . 50,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 175,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 41,364
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $700,000
Item 15. Indemnification of Directors and Officers.
Article Seventh of the Company's Restated Certificate of Incorporation,
as amended, provides that, to the fullest extent permitted by the laws of
the State of New Jersey, directors and officers of the Company shall not
be personally liable to the Company or its shareholders for damages for
breach of any duty owed to the Company or its shareholders, except that
no such director or officer shall be relieved from liability for any
breach of duty based upon an act or omission (i) in breach of such
person's duty of loyalty to the Company or its shareholders, (ii) not in
good faith or involving a knowing violation of law or (iii) resulting in
receipt by such person of an improper personal benefit.
Article Seventh also provides that each person who was or is made a party
or is threatened to be made a party to or is involved in any pending,
threatened or completed civil, criminal, administrative or arbitrative
action, suit or proceeding, by reason of his or her being or having been
a director or officer of the Company, or by reason of his or her being or
having been a director, officer, trustee, employee or agent of any other
corporation or of any partnership, joint venture, employee benefit plan
or other entity or enterprise, serving as such at the request of the
Company, shall be indemnified and held harmless by the Company to the
fullest extent permitted by the New Jersey Business Corporation Act (the
"Act"), from and against all reasonable costs, disbursements and
attorneys' fees, and all amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties, incurred or suffered in
connection with any such proceeding, and such indemnification shall
continue as to a person who has ceased to be a director, officer,
trustee, employee or agent and shall inure to the benefit of his or her
heirs, executors, administrators and assigns; provided, however, that
there shall be no indemnification with respect to any settlement of any
proceeding unless the Company has given its prior consent to such
settlement or disposition. This right to indemnification includes the
right to be paid by the Company the expenses incurred in connection with
any proceeding in advance of the final disposition of such proceeding as
authorized by the Board of Directors; provided, however, that, if the Act
so requires, the payment of such expenses shall be made only upon receipt
by the Company of an undertaking to repay all amounts so advanced unless
it shall ultimately be determined that such director or officer is
entitled to be indemnified.
Article Seventh also provides that the right to indemnification
thereunder is a contract right and gives claimants certain rights with
respect to claims for indemnification not paid by the Company after 30
days following a written request. Finally, Article Seventh provides that
the right to indemnification and advancement of expenses provided thereby
shall not exclude or be exclusive of any other rights to which any person
may be entitled under a certificate of incorporation, by-law, agreement,
vote of shareholders or otherwise. Sections 1 and 2 of Article IX of the
Company's By-Laws also provide directors and officers with certain rights
to indemnity that are substantially similar to the foregoing provisions
of Article Seventh.
Section 14A: 3-5 of the Act provides that no indemnification shall be
made if such person shall have been adjudged liable for negligence or
misconduct unless the court in which such proceeding was brought
determines upon application that the defendant, officers or directors are
fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability. In any case, a corporation must indemnify
an officer director against expenses (including attorney's fees) to the
extent that he has been successful on the merits or otherwise or in
defense of any claim or issue.
The Company has a liability insurance policy in effect which covers
certain claims against any officer or director of the Company by reason
of certain breaches of duty, neglect, errors or omissions committed by
such person in his capacity as an officer or director.
Under the Declaration, the Company will agree to indemnify each of the
Regular Trustees, the Institutional Trustee and the Delaware Trustee, and
to hold harmless the Regular Trustees, the Institutional Trustee and the
Delaware Trustee against any loss, damage, claims, liability or expense
incurred without negligence or bad faith on its part arising out of or in
connection with the acceptance or administration of such Declaration ,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties under such Declaration.
Item 16. Exhibits.
*1.1-Form of Underwriting Agreement for the FELINE PRIDES.
4.1-Restated Certificate of Incorporation of Ingersoll-Rand Company, as
amended through May 28, 1992 (Incorporated by reference from Form 10-K of
Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993).
4.2-Certificate of Amendment to Restated Certificate of Incorporation of
Ingersoll-Rand Company, filed August 20, 1997 (Incorporated by reference
from Exhibit 4.2 to the Company's Form S-3 Registration Statement No.
333-37019).
4.3-By-Laws of Ingersoll-Rand Company, as amended through September 1,
1997 (Incorporated by reference from Exhibit 4.3 to the Company's Form S-
3 Registration Statement No. 333-37019).
4.4-Rights Agreement, dated as of December 7, 1988, as amended by
Amendment No. 1 thereto dated as of December 7, 1994, between Ingersoll-
Rand Company and The Bank of New York, as Rights Agent (Incorporated by
reference from Form 8-A of Ingersoll-Rand Company filed on December 12,
1988 and Form 8-A/A of Ingersoll-Rand Company filed on December 15,
1994.)
4.5-Certificate of Trust of Ingersoll-Rand Financing I (Incorporated by
reference from Exhibit 4.10 to the Company's Form S-3 Registration
Statement No. 333-34029).
4.6-Trust Agreement of Ingersoll-Rand Financing I (Incorporated by
reference from Exhibit 4.12 to the Company's Form S-3 Registration
Statement No. 333-34029).
**4.7-Form of Amended and Restated Declaration of Trust for Ingersoll-
Rand Financing I, with respect to the Capital Securities.
**4.8-Form of Capital Security Certificate for Ingersoll-Rand Financing
I, with respect to the Capital Securities (included as Exhibit A-1 to the
Amended and Restated Declaration of Trust (Exhibit 4.7)).
**4.9-Form of Guarantee Agreement in respect of Ingersoll-Rand Financing
I, with respect to the Capital Securities.
**4.10-Form of Indenture.
**4.11-Form of Debentures (included in Section 7.1 of the First
Supplemental Indenture (Exhibit 4.12)).
**4.12-Form of First Supplemental Indenture.
**4.13-Form of Purchase Contract Agreement (including as Exhibit A the
form of Income PRIDES and as Exhibit B the form of Growth PRIDES).
**4.14-Form of Pledge Agreement.
**5.1-Opinion of Simpson Thacher & Bartlett as to the validity of the
Debentures, Guarantees and Stock Purchase Contracts being registered.
**5.2-Opinion of Richards, Layton & Finger P.A., special Delaware
counsel, relating to the validity of the Capital Securities of Ingersoll-
Rand Financing I.
**5.3-Opinion of Patricia Nachtigal, Esq., General Counsel to the
Company, as to the validity of the Common Stock and Stock Purchase Units.
**8.1-Opinion of Simpson Thacher & Bartlett, as to United States tax
matters.
**12-Computation of Ratio of Earnings to Fixed Charges (Incorporated by
reference from Exhibit 11 to the Company's Form 10-K for the year ended
December 31, 1997)
**23.1-Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).
**23.2-Consent of Richards, Layton & Finger P.A. (included in Exhibit
5.2).
**23.3-Consent of Patricia Nachtigal (included in Exhibit 5.3)
**23.4-Consent of Price Waterhouse LLP, Independent Accountants.
**23.5 - Consent of KPMG Peat Marwick LLP, Independent Accountants.
***24.1-Powers of Attorney (Ingersoll-Rand Company).
***24.2-Powers of Attorney (Ingersoll-Rand Financing I).
**25.1-Form T-1 Statement of Eligibility of The Bank of New York, as Debt
Trustee under the Indenture.
**25.2-Form T-1 Statement of Eligibility of The First National Bank of
Chicago, as Institutional Trustee under the Amended and Restated
Declaration of Trust of Ingersoll-Rand Financing I.
**25.3-Form T-1 Statement of Eligibility of The First National Bank of
Chicago, as Guarantee Trustee under the Guarantee for Ingersoll-Rand
Financing I.
__________________
*The Company will file any underwriting agreement that it may enter into
as an exhibit to a Current Report on Form 8-K which is incorporated by
reference into this Registration Statement.
**Filed herewith.
***Previously Filed.
Item 17. Undertakings
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15 (d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;
(5) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)
(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective;
and
(6) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Ingersoll-Rand Financing I hereby undertakes to provide to the
underwriter at the closing specified in the applicable underwriting
agreement, certificates in such denominations and registered in such
names as required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions specified in Item 15
of this Registration Statement or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in said Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act, and will be governed by the final
adjudication of such issue.
The undersigned registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Woodcliff Lake, New Jersey, on
the 9th day of March, 1998.
INGERSOLL-RAND COMPANY
By James E. Perrella *
(James E. Perrella)
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities indicated on the 9th day of March, 1998.
Signature Title
James E. Perrella* Chairman of the Board, President, Chief
(James E. Perrella) Executive Officer and Director (Principal
Executive Officer)
/s/ David W. Devonshire Senior Vice President and Chief Financial
(David W. Devonshire) Officer (Principal Financial and Accounting
Officer)
Joseph P. Flannery* Director
(Joseph P. Flannery)
Constance J. Horner* Director
(Constance J. Horner)
H. William Lichtenberger* Director
(H. William Lichtenberger)
Theodore E. Martin* Director
(Theodore E. Martin)
Orin R. Smith* Director
(Orin R. Smith)
Richard W. Swift* Director
(Richard W. Swift)
J. Frank Travis* Director
(J. Frank Travis)
Tony L. White* Director
(Tony L. White)
*By: /s/ Patricia Nachtigal
(Patricia Nachtigal),
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ingersoll-
Rand Financing I certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Woodcliff Lake, New Jersey, on
the 9th day of March, 1998.
INGERSOLL-RAND FINANCING I
By: INGERSOLL-RAND COMPANY, as Depositor
By: /s/ Patricia Nachtigal
Name: Patricia Nachtigal
Title: Vice President and General Counsel