AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KELSEY-HAYES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 38-3084488
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
11878 HUBBARD ROAD
LIVONIA, MICHIGAN 48150
(313) 513-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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VARITY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3091314
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
672 DELAWARE AVENUE
BUFFALO, NEW YORK 14209
(716) 888-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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KENNETH L. WALKER, ESQ.
VARITY CORPORATION
672 DELAWARE AVENUE
BUFFALO, NEW YORK 14209
(716) 888-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
ROBERT USADI, ESQ. EMANUEL S. CHERNEY, ESQ.
CAHILL GORDON & REINDEL ANDREWS & KURTH L.L.P.
80 PINE STREET 425 LEXINGTON AVENUE
NEW YORK, NY 10005 NEW YORK, NY 11007
(212) 701-3000 (212) 850-2800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
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, check the following box. [X]
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CALCULATION OF REGISTRATION FEE
========================================================================================
TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES BEING TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
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Debt Securities......... $100,000,000 100% $100,000,000 $34,482.76
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Guarantees of Debt Secu-
rities(3).............. N/A N/A N/A N/A
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(1) Or, if any securities are issued with original issue discount, such greater
amount as shall result in an initial aggregate offering price of
$100,000,000.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) No additional registration fee is payable in respect of the registration of
the Guarantees.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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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 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 JANUARY 23, 1995
PROSPECTUS
KELSEY-HAYES COMPANY
DEBT SECURITIES
Guaranteed as to Payment of Principal and Interest by
VARITY CORPORATION
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VARITY CORPORATION
DEBT SECURITIES
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Kelsey-Hayes Company ("Kelsey-Hayes" or the "Issuer") and/or Varity
Corporation ("Varity" or the "Company" or the "Issuer" and together with
Kelsey-Hayes, the "Issuers") may offer from time to time pursuant to this
Prospectus, in one or more series, up to $100,000,000 aggregate principal
amount of their respective unsecured debt securities which may be either senior
debentures, notes, bonds and/or other evidences of indebtedness ("Senior
Securities") or subordinated debentures, notes, bonds and/or other evidences of
indebtedness ("Subordinated Securities") in amounts, at prices and upon terms
to be determined in light of market conditions at the time of sale. The Senior
Securities and the Subordinated Securities are collectively referred to herein
as the "Securities". The Issuer of each issue of Securities will be identified
in a supplement hereto.
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the applicable Issuer and the Subordinated Securities
will be subordinated to all existing and future senior indebtedness of the
applicable Issuer in the manner and to the extent described herein.
Varity (sometimes referred to herein as the "Guarantor"), Kelsey-Hayes'
indirect parent, will unconditionally guarantee payment of the principal of and
interest on the Kelsey-Hayes Securities. The guarantee of the Kelsey-Hayes
Securities will rank equally with all other unsubordinated and unsecured
indebtedness of Varity, but will be effectively subordinated to all
liabilities, including trade payables, of subsidiaries of Varity.
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in one or more supplements to this Prospectus
(each, a "Prospectus Supplement"), that, among other things, will set forth the
aggregate principal amount, maturity or maturities, rate (or method for
determining the rate) and time of payment of interest, any redemption
provisions, initial public offering price, proceeds to the Issuer and any other
specific terms in connection with the offering and sale of a series of
Securities.
The Prospectus Supplement will also contain information, where applicable,
about certain U.S. federal income tax, accounting and other considerations
relating to, and any listing on a securities exchange of, the Securities
covered by such Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 Securities may be sold directly by the Issuer, or through agents
designated from time to time, or through underwriters or dealers. If any agents
of the Issuer or any underwriters are involved in the sale of the Securities,
the names of such agents or underwriters and any applicable fees, commissions
or discounts and the net proceeds to the Issuer (if other than as described
herein) from such sale will be set forth in a Prospectus Supplement. See "Plan
of Distribution."
THE DATE OF THIS PROSPECTUS IS , 1995
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY KELSEY-
HAYES, VARITY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF KELSEY-HAYES OR VARITY SINCE SUCH DATE.
AVAILABLE INFORMATION
Varity is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities of the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its regional offices, 7 World Trade
Center, New York, New York 10048, and Suite 140, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60661. Such material is also
available for inspection at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005.
Kelsey-Hayes and Varity have filed a Registration Statement on Form S-3 with
the SEC under the Securities Act of 1933, as amended, with respect to the Debt
Securities offered hereby. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain portions of which have been omitted
pursuant to the rules and regulations of the SEC. For further information,
reference is made to the Registration Statement and the exhibits thereto, which
may be inspected without charge at the office of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 and copies of which may be obtained from the SEC
at prescribed rates.
2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Varity with the SEC are hereby
incorporated by reference herein:
1. Varity's Annual Report on Form 10-K for the fiscal year ended January
31, 1994 ("fiscal 1993").
2. Varity's Quarterly Report on Form 10-Q for the fiscal quarter ended
April 30, 1994 (the "April 1994 10-Q").
3. Varity's Quarterly Report on Form 10-Q for the fiscal quarter ended
July 31, 1994 (the "July 1994 10-Q").
4. Varity's Quarterly Report on Form 10-Q for the fiscal quarter ended
October 31, 1994 (the "October 1994 10-Q").
5. Varity's Current Report on Form 8-K dated July 13, 1994.
6. All documents filed by Varity with the SEC pursuant to Section 13(a),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of this offering of Debt Securities shall be deemed to
be incorporated by reference herein and to be part hereof from the date of
filing of such documents.
Any statement contained herein or contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
or in any subsequently filed document which is also deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof, except
as so modified or superseded.
Varity hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, on the written or oral request of
such person, a copy of any or all of the documents referred to above which have
been incorporated in this Prospectus by reference (other than exhibits to such
documents). Requests should be made to the Secretary, Varity Corporation, 672
Delaware Avenue, Buffalo, New York 14209, telephone number (716) 888-8000.
3
THE COMPANY
General. Varity, founded in 1847, together with its subsidiaries, is a major
international industrial company with core manufacturing and distribution
businesses in automotive components and diesel engines. Varity conducts and
manages its businesses principally under two separate operating groups: the
Automotive Products Group and the Engines Group. Varity's products are marketed
in more than 160 countries. Through a series of transactions completed between
January, 1992 and June, 1994, Varity sold its worldwide Massey Ferguson farm
machinery business to AGCO Corporation.
The Automotive Products Group. The Automotive Products Group is a leading
producer of brake components for passenger cars and light trucks through
Kelsey-Hayes Company ("Kelsey-Hayes") and engineered brake and wheel products
for medium and heavy trucks and trailers through Dayton Walther Corporation.
The most significant automotive products manufactured and marketed by Kelsey-
Hayes are anti-lock braking systems ("ABS"), disc and drum brakes, disc brake
rotors, hubs and drums for passenger cars and light trucks. Kelsey-Hayes is one
of the leaders in the production of ABS, supplying both two-wheel and four-
wheel systems. Kelsey-Hayes is the leading manufacturer of two-wheel ABS in
North America for light trucks. Kelsey-Hayes has been successful in developing
new ABS products for both light trucks and passenger cars and has introduced a
new generation of four-wheel ABS that is compatible with virtually any size
passenger car or light truck and any brake configuration. In order to meet
increased ABS demand, Varity recently completed construction of new plants in
Fowlerville, Michigan and Heerlen, The Netherlands. Production at the
Fowlerville, Michigan plant has commenced and production at the Heerlen, The
Netherlands plant is scheduled to commence in the first quarter of 1995. In
addition, Varity believes that Kelsey-Hayes is a leader in the production of
foundation (conventional) brakes, and benefits from its strategic position as a
major supplier of both ABS and foundation brakes for light trucks, vans and
sport utility vehicles. North American production of these vehicles increased
15% in fiscal 1993.
Varity owns, through a subsidiary, 46.3% of the outstanding common stock of
Hayes Wheels International, Inc. ("Hayes Wheels"), which Varity believes is the
largest supplier of cast aluminum wheels in Europe, the second largest supplier
of cast aluminum wheels in North America and the largest independent supplier
of fabricated steel wheels in North America. Varity believes that its ownership
interest in Hayes Wheels is an important and continuing element of the
Automotive Products Group. Prior to December 1992, Varity owned 100% of the
outstanding common stock of Hayes-Wheels and references to Kelsey-Hayes prior
to December 1992 include all of the operations of Hayes Wheels' business. In
fiscal 1993, the Automotive Products Group accounted for approximately 63% of
Varity's consolidated total sales and revenues.
The Engines Group. The Engines Group, together with its associate companies
and licensees, is one of the leading producers of diesel engines other than
those used as original equipment in passenger cars. Based in the United
Kingdom, the Engines Group designs, produces and markets a comprehensive array
of multi-cylinder water-cooled diesel engines and adapts its basic engine
designs to meet the specific requirements of its diverse customer base. As a
result, the Engines Group's engines are used as original equipment in virtually
every application for which diesel engines are suitable, including agricultural
tractors, industrial and construction machinery, material handling equipment,
generators, passenger cars, trucks, vans, buses and other commercial vehicles,
pleasure and commercial boats, armored personnel carriers and battle tanks. In
fiscal 1993, 10% of the Engines Group's sales were to the Massey Ferguson
group. Perkins Group Limited and the Engines Group will continue to supply AGCO
Corporation, the company that acquired the Massey Ferguson group, pursuant to a
long term supply contract expiring in 2003. In fiscal 1993, the Engines Group
accounted for approximately 35% of consolidated total sales and revenues.
Varity's principal executive office is located at 672 Delaware Avenue,
Buffalo, New York 14209, telephone number (716) 888-8000. Kelsey-Hayes'
principal executive office is located at 11878 Hubbard Road, Livonia, Michigan
48150, telephone number (313) 513-5000.
4
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
applicable Issuer intends to use the net proceeds from the sale of the
Securities for its general corporate purposes which may include the declaration
of a dividend by Kelsey-Hayes to Varity or the repayment of intercompany debt,
including repayments to Varity. Any proceeds paid to Varity will be used by
Varity for its general corporate purposes. Pending ultimate application, the
net proceeds may be used to make short-term investments or reduce short-term
borrowings.
5
SELECTED CONSOLIDATED FINANCIAL DATA
The following unaudited selected consolidated financial data should be read
in conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1994 (the "1994 10-K") and the Company's quarterly reports on Form
10-Q for the quarters ended April 30, 1994, July 31, 1994 and October 31, 1994.
As a result of the June 1994 sale of the Company's worldwide Massey Ferguson
farm machinery business to AGCO Corporation, financial data for all periods
prior to October 31, 1994, have been restated to present the farm equipment
segment as a discontinued operation. The net assets of the discontinued
operation have been classified as current assets for all periods subsequent to
January 31, 1993. The unaudited selected consolidated financial data for the
nine months ended October 31, 1993 and 1994, contain, in the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary to present fairly the consolidated financial position and
consolidated results of operations of the Company for those periods. Results of
operations for the nine months ended October 31, 1994, are not necessarily
indicative of results anticipated for the entire year.
NINE MONTHS ENDED
YEAR ENDED JANUARY 31, OCTOBER 31,
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1990(1) 1991 1992 1993(2) 1994(2) 1993 1994
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(NOT COVERED BY INDEPENDENT AUDITORS' REPORTS)
INCOME STATEMENT DATA:
Total sales and reve-
nues.................. $1,098.1 $2,232.2 $2,037.1 $2,233.9 $1,827.4 $1,341.2 $1,628.2
Cost of goods sold..... 884.0 1,811.6 1,713.8 1,836.6 1,514.9 1,111.8 1,339.1
Marketing, general and
administration........ 116.5 183.7 171.2 192.5 150.3 109.7 125.2
Engineering and product
development........... 20.6 63.9 60.6 64.0 65.5 49.3 63.0
Interest, net.......... 40.3 93.5 100.9 99.1 32.0 23.6 16.1
Exchange (gains) loss-
es.................... 6.7 0.7 9.6 5.6 (1.6) (.4) (1.0)
Other (income) expense,
net................... (12.2) (4.2) 2.2 (5.4) (2.9) (.2) .2
Losses on sales of
businesses and other
restructuring
charges(3)............ -- 7.8 63.8 -- -- -- --
Non-recurring (gain)
charge(4)............. -- 15.5 -- (17.3) -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes, earnings
of associated compa-
nies, discontinued op-
eration, extraordinary
loss and cumulative
effect of changes in
accounting principles. 42.2 59.7 (85.0) 58.8 69.2 47.4 85.6
Income tax provision... (18.7) (18.4) (10.5) (9.9) (11.6) (8.1) (15.3)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
earnings of associated
companies, discontin-
ued operation, ex-
traordinary loss and
cumulative effect of
changes in accounting
principles............ 23.5 41.3 (95.5) 48.9 57.6 39.3 70.3
Equity in earnings of
associated companies.. -- -- -- 0.6 11.5 7.8 10.2
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
discontinued opera-
tion, extraordinary
loss and cumulative
effect of changes in
accounting principles. 23.5 41.3 (95.5) 49.5 69.1 47.1 80.5
Earnings (loss) from
discontinued opera-
tion.................. 70.8 53.1 (82.5) (16.1) 7.2 2.2 4.4
Gain on sale of discon- -- -- -- -- -- -- 23.2
tinued operation...... -------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary loss and
cumulative effect of
changes in accounting
principles............ 94.3 94.4 (178.0) 33.4 76.3 49.3 108.1
Extraordinary loss(5).. -- -- -- (6.4) (1.7) (1.7) --
Cumulative effect of
changes in accounting
principles............ -- -- -- -- (146.1) (146.1) --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $ 94.3 $ 94.4 $ (178.0) $ 27.0 $ (71.5) $ (98.5) $ 108.1
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA:
Income (loss) before
discontinued opera-
tion, extraordinary
loss and cumulative
effect of changes in
accounting principles:
Primary............... $ 0.25 $ 0.93 $(4.57) $ 1.18 $ 1.60 $ 1.09 $ 1.78
Fully diluted......... $ 0.25* $ 0.93* $(4.57)* $ 1.17 $ 1.56 $ 1.08 $ 1.78
Net income (loss):
Primary............... $ 3.57 $ 3.06 $(7.87) $ 0.32 $(2.23) $(3.17) $ 2.40
Fully diluted......... $ 3.11 $ 2.77 $(7.87)* $ 0.32 $(2.23)* $(3.17)* $ 2.40
OTHER DATA:
Capital expenditures... $ 43.7 $ 98.1 $ 97.5 $ 88.9 $ 135.8 $ 86.9 $ 121.3
Depreciation and amor-
tization.............. $ 52.7 $ 85.3 $ 92.2 $ 99.4 $ 65.4 $ 49.0 $ 56.3
Ratio of earnings to
fixed charges(6)...... 1.77x 1.48x -- 1.53x 2.60x 2.43x 4.52x
BALANCE SHEET DATA (AT
PERIOD END):
Current assets......... $1,003.5 $ 903.9 $ 815.2 $ 617.5 $ 807.3 $ 740.2 $ 814.4
Fixed assets........... $ 765.1 $ 809.2 $ 810.0 $ 515.6 $ 522.2 $ 493.6 $ 612.4
Total assets........... $2,731.3 $2,756.4 $2,521.4 $1,804.8 $1,759.6 $1,666.4 $1,887.2
Current liabilities.... $ 835.1 $ 998.5 $ 933.6 $ 663.4 $ 563.7 $ 510.5 $ 570.9
Long-term debt......... $ 805.3 $ 609.3 $ 717.2 $ 305.2 $ 185.5 $ 228.8 $ 163.7
Stockholders' equi-
ty(7)................. $ 618.0 $ 720.0 $ 495.1 $ 548.5 $ 630.7 $ 577.8 $ 811.2
- -------
*Anti-dilutive.
(footnotes on following page)
6
(1) Financial data reported for the fiscal year ended January 31, 1990 (fiscal
1989), and thereafter reflect the acquisition of K-H Corporation effective
November 30, 1989.
(2) Financial data as of January 31, 1993, and for the fiscal year ended
January 31, 1994 (fiscal 1993), are not readily comparable to the financial
data for the same periods of the prior year as a result of the Company's
disposition in the fourth quarter of the fiscal year ended January 31, 1993
(fiscal 1992), of Hayes Wheels, which is no longer included in the
Company's consolidated results, as is described in Note 15 of the Notes to
Consolidated Financial Statements for fiscal 1993.
(3) Losses on sales of businesses and other restructuring charges of $7.8
million and $63.8 million in the fiscal years ended January 31, 1991
(fiscal 1990), and January 31, 1992, respectively, relate primarily to
provisions for employment reductions and anticipated losses on the
divestment of certain non-core businesses.
(4) The non-recurring charge for fiscal 1990 and gain for fiscal 1992 are
described in Note 4 of the Notes to Consolidated Financial Statements for
fiscal 1992.
(5) The extraordinary losses in fiscal 1992, fiscal 1993 and for the nine
months ended October 31, 1993, relate to the early extinguishment of debt
as described in Note 10(d) and 10(h) of the Notes to Consolidated Financial
Statements for fiscal 1993.
(6) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" are computed by adding the net earnings from continuing
operations, the provision for income taxes and fixed charges. "Fixed
charges" consist of interest expense and a portion of operating lease rent
expense deemed to be representative of interest. Earnings for the fiscal
year ended January 31, 1992 were insufficient to cover fixed charges by
$85,000,000; however, adjusted to eliminate depreciation and amortization,
such earnings would have exceeded fixed charges by $7,000,000.
(7) No dividends on the Common Stock were paid during the periods presented.
7
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Securities sets forth certain
general terms and provisions of the Securities to which any Prospectus
Supplement may relate. The particular terms and provisions of any series of
Securities offered by any Prospectus Supplement (the "Offered Securities") and
the extent to which such general provisions may apply to the Offered Securities
will be described in a Prospectus Supplement relating to such Offered
Securities.
The Senior Securities, consisting of notes, debentures, bonds or other
evidences of indebtedness (the "Senior Securities"), will constitute unsecured
senior obligations of the applicable Issuer and the Subordinated Securities,
consisting of notes, debentures, bonds or other evidences of indebtedness (the
"Subordinated Securities" and, together with the Senior Securities, the
"Securities"), will constitute unsecured subordinated obligations of the
applicable Issuer. The Senior Securities to be issued by Kelsey-Hayes will be
issued under an Indenture (the "K-H Senior Indenture") executed by Kelsey-
Hayes, Varity and Manufacturers and Traders Trust Company (the "Senior
Trustee") and the Subordinated Securities to be issued by Kelsey-Hayes will be
issued under an Indenture (the "K-H Subordinated Indenture" and, together with
the K-H Senior Indenture, the "K-H Indentures") executed by Kelsey-Hayes,
Varity and Manufacturers and Traders Trust Company (the "Subordinated Trustee"
and, together with the Senior Trustee, the "Trustees"). The Senior Securities
to be issued by Varity will be issued under an Indenture (the "Varity Senior
Indenture") executed by Varity and the Senior Trustee and the Subordinated
Securities to be issued by Varity will be issued under an Indenture (the
"Varity Subordinated Indenture" and, together with the Varity Senior Indenture,
the "Varity Indentures") executed by Varity and the Subordinated Trustee. The
K-H Indentures and the Varity Indentures are collectively referred to herein as
the "Indentures." The Securities to be issued by Kelsey-Hayes are sometimes
referred to herein as the "Kelsey-Hayes Securities" and the Securities to be
issued by Varity are sometimes referred to herein as the "Varity Securities."
The terms of the Securities include those stated in the relevant Indenture
and those made part of such Indenture by reference to the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and holders of the Securities
are referred to the relevant Indenture and the Trust Indenture Act for a
statement thereof. A copy of the form of each Indenture is filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Securities and the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Securities and the Indenture,
including the definitions therein of certain terms that are not otherwise
defined in this Prospectus. Wherever particular provisions or defined terms of
the Indentures are referred to, such provisions or defined terms are
incorporated herein by reference.
GENERAL
The Indentures provide that Securities may be issued thereunder from time to
time as a single series or in two or more separate series up to the aggregate
principal amount from time to time authorized by the applicable Issuer for each
series. The applicable Issuer and the particular terms of each series of
Securities offered by a Prospectus Supplement or Prospectus Supplements will be
described in such Prospectus Supplement or Prospectus Supplements.
The applicable Prospectus Supplement or Prospectus Supplements will describe,
among other things, the following terms of the Offered Securities, if
applicable to such Offered Securities; (i) the title of the Offered Securities;
(ii) the aggregate principal amount of the Offered Securities; (iii) the price
or prices (expressed as a percentage of the principal amount thereof) at which
the Offered Securities will be issued; (iv) the date or dates (which may be
fixed or extendible) on which the principal of the Offered Securities is
payable or the method of determination thereof; (v) the rate or rates (which
may be fixed or variable) at which the Offered Securities will bear interest,
if any, and the date or dates from which such interest, if any, will accrue;
(vi) the interest payment dates, if any, on which any interest on the Offered
Securities will be payable, and the regular record date for any interest
payable on any Offered Securities; (vii) the right or obligation, if any, of
the
8
applicable Issuer to redeem or purchase the Offered Securities pursuant to any
optional redemption, sinking fund or analogous provisions or at the option of
the holder thereof or otherwise, the conditions, if any, giving rise to such
right or obligation, and the period or periods within which, and the price or
prices at which and the terms and conditions upon which the Offered Securities
shall be redeemed or purchased, in whole or in part, and any provisions for the
remarketing of such Offered Securities; (viii) if the amount of payments of
principal of, premium, if any, and interest, if any, on the Offered Securities
is to be determined by reference to an index, formula or other method, the
manner in which such amounts are to be determined and the calculation agent, if
any, with respect thereto; (ix) if other than the principal amount thereof, the
portion of the principal amount of the Offered Securities that will be payable
upon declaration of acceleration of the maturity thereof pursuant to an Event
of Default; (x) any listing of the Offered Securities on a securities exchange;
(xi) any covenants of Kelsey-Hayes or Varity applicable to the Offered
Securities in addition to those described in this Prospectus; (xii) any Events
of Default applicable to the Offered Securities in addition to the Events of
Default described in this Prospectus; (xiii) any provision for defeasance, if
different from those described in this Prospectus; (xiv) whether such
Securities are to be represented in whole or in part by a Security in global
form and, if so, the identity of the depositary ("Depositary") for any global
Security; and (xv) any other material terms of the Offered Securities, which
terms may modify or delete any provision of the relevant Indenture as it
relates to the Offered Securities.
If so provided in the applicable Prospectus Supplement, Securities may be
issued as original issue discount securities, which are securities sold at a
discount below their principal amount. Certain United States federal income tax
considerations and other special considerations applicable to Securities, if
any, issued with original issue discount may be described in the applicable
Prospectus Supplement.
GLOBAL SECURITIES
The registered Securities of a series may be issued in the form of one or
more fully registered global Securities (a "Global Security") that will be
deposited with a depositary (a "Depositary") identified in the Prospectus
Supplement relating to such series or with a nominee for a Depositary and
registered in the name of the Depositary or a nominee thereof. In such case,
one or more Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding registered Securities of the series to be represented by such
Global Security or Global Securities. Unless and until it is exchanged in whole
or in part for Securities in definitive registered form, a Global Security may
not be transferred except as a whole by the Depositary for such Global Security
to a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
The specific terms of the depository arrangement with respect to any portion
of a series of Securities to be represented by a Global Security will be
described in the Prospectus Supplement relating to such series. The Issuers
anticipate that the following provisions will apply to all depository
arrangements.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the Depositary for such Global Security. The
Depositary for such Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Securities represented by such Global Security beneficially
owned by such participants. The accounts to be credited will be designated by
any dealers, underwriters or agents participating in the distribution of such
Securities.
Ownership of beneficial interests will be effected only through records
maintained by the Depositary for such Global Security (with respect to
interests of participants) and on the records of participants (with respect to
interests of persons holding through participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in Global Securities.
9
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Securities
represented by such Global Security for all purposes under the applicable
Indenture. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have the Securities represented by such
Global Security registered in their names, and will not receive or be entitled
to receive physical delivery of such Securities in definitive form and will not
be considered the owners or Holders thereof under the applicable Indenture.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of the Depositary for such Global Security and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a Holder under the
applicable Indenture. Each Issuer understands that under existing industry
practices, if such Issuer requests any action of Holders or if any Holder is
entitled to give any consent or take any action under the applicable Indenture,
the Depositary for such Global Security would authorize the participants
holding Securities of the relevant beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instruction of beneficial owners holding through them.
Payments of principal of, premium, if any, and any interest on Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made to such Depositary or its nominee, as the case may be, as
the registered owner of such Global Security. None of the Issuers, the
Guarantor, the Trustees or any other agent of the Issuers or agent of the
Trustee will have any responsibility or liability for any aspects of the
records relating to or payments made on account of beneficial ownership
interests in such Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Each Issuer expects that the Depositary for any Securities represented by a
Global Security, upon receipt of any payment of principal, premium on, if any,
or any interest in respect of such Global Security, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interest in such Global Security as shown on the records
of such Depositary. Each Issuer also expects that payments by participants to
owners of beneficial interests in such Global Security held through such
participants will be governed by standing customer 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," and will be the
responsibility of such participants.
If the Depositary for any Securities represented by a Global Security
notifies the applicable Issuer that it is at any time unwilling or unable to
continue as Depositary or ceases to be a clearing agency registered under the
Exchange Act, and a successor Depositary registered as a clearing agency under
the Exchange Act is not appointed by the applicable Issuer within 90 days, the
applicable Issuer will issue such Securities in definitive form in exchange for
such Global Security or Global Securities representing such Securities. Any
Securities issued in definitive form in exchange for a Global Security will be
registered in such name or names as the Depositary shall instruct the
applicable Trustee. It is expected that such instructions will be based upon
directions received by the Depositary from participants with respect to
ownership of beneficial interests in such Global Security.
RANKING
Senior Securities. The Senior Securities will be general unsecured
obligations of the applicable Issuer and will rank pari passu in right of
payment with other unsubordinated and unsecured indebtedness of the applicable
Issuer.
Subordinated Securities. The payment of the principal of, and premium, if
any, and interest on the Subordinated Securities will be expressly subordinated
to all Senior Indebtedness of the applicable Issuer.
Upon any distribution to creditors of the applicable Issuer in a liquidation
or dissolution of the applicable Issuer or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the
10
applicable Issuer or its property or in an assignment for the benefit of
creditors or any marshalling of the assets and liabilities of the applicable
Issuer: (1) holders of Senior Indebtedness shall be entitled to receive payment
in full of all Obligations with respect to the Senior Indebtedness (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Indebtedness, whether or not such interest is an
allowable claim in any such proceeding) before holders of Subordinated
Securities shall be entitled to receive any payment of any Obligations with
respect to the Subordinated Securities; and (2) until all Obligations with
respect to Senior Indebtedness (as provided in subsection (1) above) are paid
in full, any distribution to which holders of Subordinated Securities would be
entitled but for this subordination provision shall be made to holders of
Senior Indebtedness, as their interests may appear, except that holders of
Subordinated Securities may receive securities that are subordinate to at least
the same extent as the Subordinated Securities to Senior Indebtedness.
The applicable Issuer may not make any payment or distribution to the
applicable Subordinated Trustee or any holder of Subordinated Securities in
respect of Obligations with respect to the Subordinated Securities and may not
acquire from the applicable Subordinated Trustee or any holder of Subordinated
Securities any Subordinated Securities for cash or property (other than
indebtedness which is subordinated to at least the same extent as the
Subordinated Securities to Senior Indebtedness), until all Obligations with
respect to the Senior Indebtedness have been paid in full if: (i) there occurs
and is continuing a default in the payment of any Obligations with respect to
the Senior Indebtedness at the final scheduled maturity thereof or that permits
holders of such Senior Indebtedness to accelerate its maturity or the maturity
of which has been accelerated; or (ii) there occurs and is continuing an event
of default, other than a payment default, on any Senior Indebtedness that
permits holders of Senior Indebtedness to accelerate its maturity, and such
event of default is the subject of judicial proceedings or the applicable
Issuer receives a notice of the default pursuant to the applicable Indenture.
If the applicable Issuer receives any such notice, a subsequent notice received
within 360 days thereafter relating to Senior Indebtedness or which relates to
a default in existence at the date of such prior notice shall not be effective
for purposes of the restriction in this paragraph. The applicable Issuer may
resume payments on and distributions in respect of the Subordinated Securities
and may acquire them when (1) the default is cured or waived or has ceased to
exist or such notice has been rescinded or annulled, or (2) in the case of a
default referred to in (ii) above, 179 days pass after the applicable
Subordinated Trustee receives written notice of such default and the holders of
Senior Indebtedness as to which such default relates have not declared such
Senior Indebtedness to be immediately due and payable, if the applicable
Indenture otherwise permits the payment or acquisition at the time of such
payment or acquisition.
By reason of the subordination provisions described above, in the event of
insolvency, funds which would otherwise be payable to holders of Subordinated
Securities shall be paid to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full. The aggregate principal
amount of Senior Indebtedness outstanding for the applicable Issuer as of a
recent date will be set forth in the applicable Prospectus Supplement.
"Senior Indebtedness" means all Indebtedness of the applicable Issuer.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (i) any Indebtedness of the applicable Issuer to any of its
subsidiaries, or (ii) any Indebtedness created or evidenced pursuant to an
instrument that expressly provides that such Indebtedness is not superior in
right of payment to the Subordinated Securities.
GUARANTEE
Varity will unconditionally guarantee (the "Guarantee") to each holder of a
Kelsey-Hayes Security issued under either of the K-H Indentures the payment of
the principal of, premium, if any, and interest on such Kelsey-Hayes Security
when the same becomes due and payable, whether at the stated maturity or by
declaration of acceleration, call for redemption or otherwise, according to the
terms of such Kelsey-Hayes Security and of the applicable K-H Indenture. In
case of the default by Kelsey-Hayes in the payment of any such principal,
premium or interest, Varity will punctually make such payment. The obligations
of Varity thereunder will be absolute and unconditional. Varity's obligations
on the Guarantee will not be discharged
11
as to any such Kelsey-Hayes Security except by payment in full of the principal
of, premium, if any, and interest thereon.
The Guarantee of the Kelsey-Hayes Securities will be unsecured and will rank
on a parity with all other unsecured and unsubordinated debt of Varity. At
October 31, 1994, the amount of Varity indebtedness which would be pari passu
with the guarantee of the Kelsey-Hayes Securities was approximately $28.5
million and there was approximately $223.5 million available under various
credit facilities of Varity's subsidiaries which Varity has guaranteed.
However, since Varity is a holding company, all of the indebtedness, amounts
due trade creditors and other liabilities of Varity's subsidiaries, whether or
not guaranteed by Varity, are effectively senior to the guarantees of the
Kelsey-Hayes Securities as to assets of a particular subsidiary.
Although Varity has in the recent past obtained financing directly, through
the sale of 5.75 million shares and 4.6 million shares of its common stock in
public offerings in December 1992 and June 1993, respectively, as a holding
company with no significant manufacturing or sales operations of its own,
Varity has historically been dependent primarily on its subsidiaries to meet
its cash requirements. However, Varity's ability to obtain cash from its
operating subsidiaries is in certain instances restricted by the financial
condition, operating requirements and loan agreements of these subsidiaries.
These loan agreements do not directly restrict the transfer of funds to Varity;
however, such loan agreements contain net worth tests, interest coverage ratio
tests and other financial tests which may have the effect of restricting
subsidiary dividends.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Securities will be issuable in definitive form solely as registered
Securities. The Indenture provides that registered Securities of a series may
be issuable in global form. See "Global Securities." Unless otherwise indicated
in the Prospectus Supplement, registered Securities will be issued in
denominations of $1,000 and whole multiples thereof. Registered Securities of
any series will be exchangeable for other registered Securities of the same
series of authorized denominations and of a like aggregate principal amount,
tenor and terms.
Securities may be presented for exchange as provided above, and registered
Securities may be presented for registration of transfer (duly endorsed or
accompanied by a satisfactory written instrument of transfer), at the office of
the Registrar or at the office of any transfer agent designated by the
applicable Issuer for such purpose with respect to such series of Securities,
without service charge and upon payment of any taxes and other governmental
charges. If the applicable Prospectus Supplement refers to any transfer agent
(in addition to the Registrar) initially designated by the applicable Issuer
with respect to any series of Securities, the applicable Issuer 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 (or Registrar) acts, except
that, if Securities of a series are issuable solely as registered Securities,
the applicable Issuer will be required to maintain a transfer agent in each
place of payment for such series. Unless otherwise indicated in the Prospectus
Supplement, the Trustee under each Indenture will be designated as the
Registrar under such Indenture for registered Securities. The applicable Issuer
may at any time designate additional transfer agents with respect to any series
of Securities.
The applicable Issuer shall not be required (i) to issue, register the
transfer of or exchange Securities of any particular series to be redeemed for
a period of 15 days preceding the first publication of the relevant notice of
redemption or, if registered Securities are outstanding and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any registered Security so selected for
redemption or exchange in whole or in part, except the unredeemed or
unexchanged portion of any registered Security being redeemed or exchanged in
part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
principal of and premium, if any, and interest, if any, on registered
Securities will be made at the office of such Paying Agent
12
or Paying Agents as the applicable Issuer may designate from time to time,
except that at the option of the applicable Issuer payment of principal or
interest may be made by check to an account maintained by the payee. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
installment of interest on registered Securities will be made to the person in
whose name such Security is registered at the close of business on the regular
record date of such interest. Unless otherwise indicated in an applicable
Prospectus Supplement, the Trustee under each Indenture will be designated as
the applicable Issuer's sole Paying Agent for payment with respect to
registered Securities issued under such Indenture. Any other Paying Agent
initially designated by the applicable Issuer for the Offered Securities will
be named in an applicable Prospectus Supplement.
CERTAIN COVENANTS
Limitations on Liens. The applicable Issuer will covenant that it will not
issue, incur, create, assume or guarantee, and will not permit any Restricted
Subsidiary to issue, incur, create, assume or guarantee, any Indebtedness
secured by a Lien upon any Principal Property of the applicable Issuer or any
Restricted Subsidiary or upon any shares of stock or Indebtedness of any
Restricted Subsidiary held by the applicable Issuer (whether such Principal
Property, shares or Indebtedness are now existing or owed or hereafter created
or acquired) without in any such case effectively providing concurrently with
the issuance, incurrence, creation, assumption or guaranty of any such secured
Indebtedness, or the grant of a Lien with respect to any such Indebtedness of
such Restricted Subsidiary, that the Securities (together with, if the
applicable Issuer shall so determine, any other Indebtedness of or guarantee by
the applicable Issuer or such Restricted Subsidiary) shall be secured by a Lien
ranking equally and ratably with (or, at the option of the applicable Issuer,
prior to) such secured debt so long as such other Indebtedness is so secured.
The foregoing restriction, however, will not apply to: (a) Liens on property,
shares of stock or Indebtedness or other assets of any corporation existing at
the time such corporation becomes a Restricted Subsidiary; provided that such
Liens are not incurred in anticipation of such corporation becoming a
Restricted Subsidiary; (b) Liens on property, shares of stock or Indebtedness
existing at the time of acquisition thereof by the applicable Issuer or a
Restricted Subsidiary or Liens on property, shares of stock or Indebtedness to
secure any Indebtedness for borrowed money incurred prior to, at the time of,
or within 270 days after, the latest of the acquisition thereof, or, in the
case of property, the completion of construction, the completion of
improvements or the commencement of substantial commercial operation of such
property, for the purpose of financing all or any part of the purchase price
thereof, such construction or the making of such improvements; (c) Liens to
secure Indebtedness owing to the applicable Issuer or the Guarantor or to a
Restricted Subsidiary; (d) Liens existing at the date of the initial issuance
of the Securities of such series; (e) Liens on property of a corporation
existing at the time such corporation is merged into or consolidated with the
applicable Issuer or a Restricted Subsidiary or at the time of a sale, lease or
other disposition of the properties of a corporation as an entirety or
substantially as an entirety to the applicable Issuer or a Restricted
Subsidiary; provided that such Lien was not incurred in anticipation of such
merger or consolidation or sale, lease or other disposition; (f) Liens created
in connection with a project financed with, and created to secure, a
Nonrecourse Obligation; or (g) extensions, renewals or replacements of any
Liens permitted by any of the foregoing clauses (a) through (f); provided,
however, that any Liens permitted by any of the foregoing clauses (a) through
(f) shall not extend to or cover any property of the applicable Issuer or such
Restricted Subsidiary, as the case may be, other than the property specified in
such clauses and improvements thereto.
Limitations on Sale and Lease-Back Transactions. The applicable Issuer will
covenant that it will not, nor will it permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction with respect to any Principal
Property, other than any such transaction involving a lease for a term of not
more than three years or any such transaction between the applicable Issuer and
a Restricted Subsidiary or between Restricted Subsidiaries, unless: (a) the
applicable Issuer or such Restricted Subsidiary would be entitled to incur
Indebtedness secured by a mortgage on the Principal Property involved in such
transaction at least equal in amount to the Attributable Debt with respect to
such Sale and Lease-Back Transaction, without equally and ratably securing the
Securities, pursuant to the limitation in the applicable Indenture on Liens;
13
or (b) the applicable Issuer shall apply an amount equal to the greater of the
net proceeds of such sale or the Attributable Debt with respect to such Sale
and Lease-Back Transaction within 270 days of such sale to either (or a
combination of) the retirement (other than any mandatory retirement, mandatory
prepayment or sinking fund payment or by payment at maturity) of Indebtedness
of the applicable Issuer or a Restricted Subsidiary that matures more than
twelve months after the creation of such Indebtedness or the purchase,
construction or development of other comparable property.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used the
Indentures. Reference is made to the Indentures for the full definition of all
such terms.
"Attributable Debt" when used in connection with a Sale and Lease-Back
Transaction involving a Principal Property shall mean, at the time of
determination, the lesser of: (a) the fair value of such property (as
determined in good faith by the Board of Directors of the applicable Issuer);
or (b) the present value of the total net amount of rent required to be paid
under such lease during the remaining term thereof (including any renewal term
or period for which such lease has been extended), discounted at the rate of
interest set forth or implicit in the terms of such lease or, if not
practicable to determine such rate, the weighted average interest rate per
annum borne by the Securities of each series outstanding pursuant to the
applicable Indenture compounded semi-annually. For purposes of the foregoing
definition, rent shall not include amounts required to be paid by the lessee,
whether or not designated as rent or additional rent, on account of or
contingent upon maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges. In the case of any lease which is terminable by the
lessee upon the payment of a penalty, such net amount shall be the lesser of
the net amount determined assuming termination upon the first date such lease
may be terminated (in which case the net amount shall also include the amount
of the penalty, but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated) or
the net amount determined assuming no such termination.
"Indebtedness" means, with respect to any person, without duplication, (i)
all obligations for borrowed money, (ii) all obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) all Capitalized Lease
Obligations, (iv) all obligations issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all obligations under
any title retention agreement (but excluding trade accounts payable and accrued
expenses arising in the ordinary course of business), (v) all fixed
unconditional obligations issued or contracted for as payment in consideration
of the purchase by such person of the stock or substantially all the assets of
another person or a merger or consolidation, (vi) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction which secure Indebtedness of a person other than the
issuer of the letter of credit or the accepting bank, (vii) all obligations of
the type referred to in clauses (i) through (vi) of other persons guaranteed by
such person to the extent of the guarantee; and (viii) all obligations of the
type referred to in clauses (i) through (vii) of other persons which are
secured by any Lien on any property or asset of such person, the amount of such
obligation being deemed to be the lesser of the value of such property or asset
at the time the Lien is created or the amount of the obligation so secured.
"Material Subsidiary" means, at any particular time, any Subsidiary of any
person that (a) accounted for more than 10% of the consolidated revenues of
such person and its Subsidiaries on a consolidated basis for the most recently
completed fiscal year of such person or (b) was the owner of more than 10% of
the consolidated assets of such person and its Subsidiaries on a consolidated
basis as at the end of such fiscal year, all as shown on the consolidated
financial statements of such person and its Subsidiaries for such fiscal year.
"Nonrecourse Obligation" means Indebtedness or other obligations
substantially related to (i) the acquisition of assets not previously owned by
the applicable Issuer or any Restricted Subsidiary or (ii) the financing of a
project involving the development or expansion of properties of the applicable
Issuer or any
14
Restricted Subsidiary, as to which the obligee with respect to such
Indebtedness or obligation has no recourse to the applicable Issuer or any
Restricted Subsidiary or any assets of the applicable Issuer or any Restricted
Subsidiary other than the assets which were acquired with the proceeds of such
transaction or the project financed with the proceeds of such transaction (and
the proceeds thereof).
"Principal Property" shall mean the land, land improvements, buildings and
fixtures (to the extent they constitute real property interests) (including any
leasehold interest therein) constituting the principal corporate office, any
manufacturing plant or any manufacturing facility (whether now owned or
hereafter acquired) which: (a) is owned by the applicable Issuer or any of its
Subsidiaries; (b) is located within any of the present 50 States of the United
States of America (or the District of Columbia); (c) has not been determined in
good faith by the Board of Directors of the applicable Issuer not to be
materially important to the total business conducted by the applicable Issuer
and its Subsidiaries taken as a whole; and (d) has a book value on the date as
of which the determination is being made in excess of 1%, in the case of
Kelsey-Hayes, or .5%, in the case of Varity, of consolidated total assets of
the applicable Issuer as most recently determined on or prior to such date.
"Restricted Subsidiary" shall mean any Subsidiary of the applicable Issuer
which owns any Principal Property.
"Sale and Lease-Back Transaction" shall mean any sale or transfer by the
applicable Issuer or one of its Restricted Subsidiaries of any Principal
Property that is being sold or transferred by such person more than 270 days
after the acquisition thereof or the completion of construction or commencement
of operation thereof, if such sale or transfer is made with the intent of
leasing, or as part of an arrangement involving the lease of, such Principal
Property to the applicable Issuer or one of its Restricted Subsidiaries.
"Subsidiary" means, with respect to any person, (i) a corporation a majority
of whose Voting Stock is at the time, directly or indirectly, owned by such
person, by one or more Subsidiaries of such person or by such person and one or
more Subsidiaries thereof and (ii) any other person (other than a corporation),
including, without limitation, a joint venture, in which such person, one or
more Subsidiaries thereof or such person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, have at least a
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other persons performing similar functions).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that neither Kelsey-Hayes or Varity, in the case
of the K-H Indentures, nor Varity, in the case of the Varity Indentures, will,
in any transaction or series of transactions, merge or consolidate with or
into, or sell, assign, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to, any person or
persons, unless at the time and after giving effect thereto (i) either (A)
Kelsey-Hayes or Varity, as the case may be, shall be the surviving person of
such merger or (B) the successor corporation shall be a corporation organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia, (ii) the successor corporation if other than
Kelsey-Hayes or Varity, as the case may be, shall expressly assume by a
supplemental indenture executed and delivered to the Trustee under the
applicable Indenture, in form satisfactory to such Trustee, all the obligations
of Kelsey-Hayes and Varity, in the case of the K-H Indentures, and Varity, in
the case of the Varity Indentures, as the case may be, under the applicable
Indenture and Securities and Guarantees, as the case may be, issued thereunder,
and in each case, such Indenture shall remain in full force and effect and
(iii) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing with respect to Securities of any
series under such Indenture.
15
EVENTS OF DEFAULT
Under each Indenture, an Event of Default is defined as, with respect to each
series of Securities issued under such Indenture individually, any of the
following: (i) default in the payment of the principal of or premium, if any,
on any of the Securities of such series when due and payable, at maturity, upon
redemption or acceleration or otherwise; (ii) default in the payment of an
installment of interest on any of the Securities of such series when the same
becomes due and payable and any such default continues for a period of 30 days
or more; (iii) default in the performance or observance of any other term,
covenant or agreement contained in the Securities of such series or the
relevant Indenture for the benefit of the holders of Securities of such series
(other than a default specified in (i) or (ii) above) for a period of 60 days
after the applicable Issuer or the Guarantor, in the case of the Kelsey-Hayes
Securities, receives written notice of such failure from the Trustee under such
Indenture or the holders of at least 25% in aggregate principal amount of the
Securities of such series then outstanding; (iv) default under one or more
evidences of Indebtedness of the applicable Issuer, the Guarantor, in the case
of the Kelsey-Hayes Securities, or any Material Subsidiary of the Guarantor, in
the case of the Kelsey-Hayes Securities, or any Material Subsidiary of the
applicable Issuer in a principal amount of $10 million or more individually or
$20 million or more in the aggregate (or, in each case, the equivalent thereof
in any other currency), and either (a) such Indebtedness is already due and
payable in full or (b) such default or defaults have resulted in the
acceleration of the maturity of such Indebtedness and such acceleration is not
annulled within 30 days after due notice; (v) one or more judgments for the
payment of money of $10 million or more individually or $20 million or more in
the aggregate (or, in each case, the equivalent thereof in any other currency),
shall be entered against the applicable Issuer, the Guarantor, in the case of
the Kelsey-Hayes Securities, or any Material Subsidiary of the Guarantor, in
the case of the Kelsey-Hayes Securities, or any Material Subsidiary of the
applicable Issuer and shall not be discharged or fully bonded and there shall
have been a period of 60 days after the date on which any period for appeal has
expired and during which a stay of enforcement of such judgment, order or
decree shall not be in effect; and (vi) certain events of bankruptcy,
insolvency or reorganization relating to the applicable Issuer, the Guarantor,
in the case of the Kelsey-Hayes Securities, or any Material Subsidiary of the
Guarantor, in the case of the Kelsey-Hayes Securities, or any Material
Subsidiary of the applicable Issuer.
Each Indenture provides that if an Event of Default specified therein (other
than an Event of Default specified in clause (vi) of the preceding paragraph
with respect to the applicable Issuer or the Guarantor) shall have occurred and
be continuing with respect to any series of the Securities issued thereunder,
the Trustee under such Indenture or the holders of at least 25% in aggregate
principal amount of the outstanding Securities of such series may declare
immediately due and payable the unpaid principal amount of the Securities of
such series (or, if any of the Securities are original issue discount
Securities, such portion of the principal amount of the Securities of such
series as may be specified in the terms thereof) and accrued interest, if any,
to the date of payment of the Securities of such series. If an Event of Default
specified in clause (vi) of the preceding paragraph with respect to the
applicable Issuer or the Guarantor occurs with respect to any series of
Securities, the amount specified in the previous sentence of this paragraph
shall become immediately due and payable without any declaration or other act
on the part of the Trustee under the relevant Indenture or any holder of such
Securities.
After a declaration of acceleration under the Indenture in respect of a
series of Securities, but before a judgment or decree for payment of the money
due has been obtained by the Trustee under such Indenture, the holders of a
majority in aggregate outstanding principal amount of such series of
Securities, by written notice to the applicable Issuer and such Trustee, may
rescind such declaration if (a) the applicable Issuer has paid or deposited
with such Trustee a sum sufficient to pay (i) all sums paid or advanced by such
Trustee under such Indenture and the reasonable compensation, expenses,
disbursements and advances of such Trustee, its agent and counsel, (ii) all
overdue interest, if any, on such series of Securities (iii) the principal of
and premium, if any, on such series of Securities which have become due
otherwise than by such declaration of acceleration and interest thereon at the
rate borne by such series of Securities, and (iv) to the extent that payment of
such interest is lawful, interest upon overdue interest at the rate borne by
such series of Securities which has become due otherwise than by such
declaration of acceleration; (b) the rescission would not conflict
16
with any judgment or decree of a court of competent jurisdiction; and (c) all
Events of Default with respect to such series of Securities, other than the
non-payment of principal of, premium, if any, and interest on such series of
securities that have become due solely by such declaration of acceleration,
have been cured or waived.
The holders of not less than a majority in aggregate outstanding principal
amount of a series of Securities may on behalf of all holders of such series of
Securities waive any existing Defaults or Events of Default with respect to
such series under the relevant Indenture, except a default in the payment of
the principal of, premium, if any, or interest on any Security of such series,
or in respect of a covenant or provision which under the relevant Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Security of such series affected thereby.
Holders of Securities of any series may not enforce the provisions of the
Indenture or the Securities except as provided in the applicable Indenture.
Subject to certain provisions concerning the rights of the Trustee under the
relevant Indenture, the holders of a majority in aggregate outstanding
principal amount of any series of Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to such
Trustee, or exercising any trust or power conferred on such Trustee under such
Indenture, in respect of such series. Except in the case of a Default or an
Event of Default in payment of principal of, premium, if any, or interest, if
any, on any series of Securities, the Trustee under the relevant Indenture may
withhold the notice to the holders of such series if a committee of its trust
officers in good faith determines that withholding the notice is in the
interest of such holders.
Kelsey-Hayes and the Guarantor, in the case of the K-H Indentures, and
Varity, in the case of the Varity Indentures, are required to furnish to the
Trustee under each Indenture annual statements as to the performance by Kelsey-
Hayes and Varity of their respective obligations under such Indentures and as
to any default in such performance. Kelsey-Hayes and the Guarantor, in the case
of the K-H Indentures, and Varity, in the case of the Varity Indentures, are
also required to notify the Trustee under each Indenture within ten days of any
event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to any series of Securities issued under such
Indenture.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
Unless otherwise indicated in a Prospectus Supplement, the applicable Issuer
may, at its option and at any time after complying with the conditions
specified in the applicable Indenture, terminate its obligations with respect
to any series of outstanding Securities ("defeasance"). Such defeasance means
that the applicable Issuer shall be deemed to have paid and discharged the
entire indebtedness represented by the outstanding Securities of such series,
except for (i) the rights of holders of such series of outstanding Securities
to receive payment in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due, (ii) the applicable
Issuer's obligations to issue temporary Securities of such series, register the
transfer or exchange of any Securities of such series, replace mutilated,
destroyed, lost or stolen Securities of such series and maintain an office or
agency for payments in respect of the Securities of such series, (iii) the
rights, powers, trusts, duties and immunities of the Trustee under the relevant
Indenture and (iv) the defeasance provisions of such Indenture. In addition,
unless otherwise indicated in a Prospectus Supplement, the applicable Issuer
may, at its option and at any time after complying with the conditions
specified in the applicable Indenture, elect to terminate its obligations with
respect to certain covenants that are set forth in either Indenture or in a
Prospectus Supplement, and any omission to comply with such obligation shall
not constitute a Default or an Event of Default with respect to such series of
Securities ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance with respect to
any series of Securities (i) the applicable Issuer must irrevocably deposit
with the Trustee under the relevant Indenture, in trust, for the benefit of the
holders of Securities of such series cash, Government Obligations (as defined
in such Indenture), or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
the outstanding Securities of such series to redemption or maturity; (ii) the
applicable Issuer shall have
17
delivered to such Trustee an opinion of counsel to the effect that the holders
of the outstanding Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, and
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred (in the case of defeasance,
such opinion must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable federal income tax laws); (iii) no Default or
Event of Default with respect to such series shall have occurred and be
continuing on the date of such deposit; (iv) such deposit will not result in a
breach or violation of, or constitute a default under, any other instrument to
which the applicable Issuer is a party or by which it is bound; and (v) the
applicable Issuer shall have delivered to such Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent under
such Indenture to either defeasance or covenant defeasance, as the case may be,
have been complied with.
SATISFACTION AND DISCHARGE
Unless otherwise indicated in a Prospectus Supplement, the provisions of the
Indenture applicable to any series of Securities will be discharged and will
cease to be of further effect (except as to surviving rights of registration of
transfer or exchange of Securities of such series, as expressly provided for in
the Indenture or a supplemental indenture) as to all outstanding Securities of
such series when (i) either (a) all the Securities of such series theretofore
authenticated and delivered (except lost, stolen or destroyed Securities which
have been replaced or paid and Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
applicable Issuer and thereafter repaid to the applicable Issuer or discharged
from such trust) have been delivered to the Trustee under such Indenture for
cancellation or (b) all Securities of such series not theretofore delivered to
such Trustee for cancellation have become due and payable and the applicable
Issuer has irrevocably deposited or caused to be deposited with such Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Securities of such series not theretofore delivered to such Trustee for
cancellation, for principal of, premium, if any, and interest on the Securities
of such series to the date of deposit together with irrevocable instructions
from the applicable Issuer directing such Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be; (ii) no Default
or Event of Default with respect to the applicable Indenture or the Securities
of such series shall have occurred and be continuing on the date of such
deposit or shall occur as a result thereof and such deposit will not result in
a breach or violation of, or constitute a default under, any other instrument
to which the applicable Issuer is a party or by which it is bound; (iii) the
applicable Issuer has paid all other sums payable under such Indenture by the
applicable Issuer; and (iv) the applicable Issuer has delivered to such Trustee
an officers' certificate and an opinion of counsel stating that all conditions
precedent under such Indenture relating to the satisfaction and discharge of
such Indenture applicable to Securities of such series have been complied with.
AMENDMENTS AND WAIVERS
From time to time, the applicable Issuer, when authorized by a resolution of
its Board of Directors, and the Trustee under the applicable Indenture may,
without the consent of the holders of any outstanding Securities thereunder,
amend, waive or supplement such Indenture or the Securities thereunder for
certain specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies, qualifying, or maintaining the qualification of,
such Indenture under the Trust Indenture Act or making any change that does not
adversely affect the rights of any holder of Securities thereunder. Other
amendments and modifications of the applicable Indenture as it relates to any
series of Securities may be made by the applicable Issuer and the relevant
Trustee with the consent of the holders of not less than a majority of the
aggregate outstanding principal amount of the series of Securities thereunder
so affected; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding Security thereunder
affected thereby, (i) reduce the principal amount or extend the fixed maturity
or alter the redemption provisions of any Security thereunder or reduce the
principal amount of any outstanding original issue discount Security thereunder
that would be due and payable upon declaration of acceleration of maturity
18
thereof; (ii) reduce the percentage in principal amount of outstanding
Securities of such series that must consent to an amendment, supplement or
waiver or consent to any action under such Indenture or such Security
thereunder; (iii) waive a default in payment with respect to any Security
thereunder; (iv) reduce the rate or change the time for payment of interest on
any Security thereunder; (v) in the case of Subordinated Securities modify or
change any provision affecting the subordination of such Subordinated
Securities in a manner adverse to the holders of such Securities; (vi) in the
case of the K-H Indentures, release the Guarantor from its obligations; or
(vii) make such other changes as may require such consent pursuant to any
supplemental indenture.
THE TRUSTEES
Each Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in such Indenture. If an Event of Default under such
Indenture has occurred and is continuing, the Trustee thereunder will exercise
such rights and powers vested in it under such Indenture and use the same
degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
Each Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee thereunder,
should it become a creditor of Kelsey-Hayes or Varity, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. Each Trustee will be
permitted to engage in other transactions; provided, however, that if its
acquires any conflicting interest (as defined), it must eliminate such conflict
or resign. Manufacturers and Traders Trust Company also serves as trustee for
Varity's 11 3/8% Senior Notes due 1998.
GOVERNING LAW
The Indentures, the Securities and the Guarantees will be governed by the
laws of the State of New York, without regard to the principles of conflicts of
law.
PLAN OF DISTRIBUTION
Each Issuer may sell Securities in any of the following ways: (1) through
underwriters or dealers; (2) directly to one or more purchasers; or (3) through
agents. The Prospectus Supplement with respect to the Securities being offered
thereby will set forth the terms of the offering of such Securities, including
the name or names of any underwriters or agents, the purchase price of such
Securities and the proceeds to the Issuer from such sale, any underwriting
discounts, commissions and other items constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Securities may be listed. Any underwriter or agent may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, as amended
(the "Act").
If underwriters are used in the sale of Securities, 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 a
fixed public offering price or at varying prices determined at the time of
sale. The Securities may be offered to the public either through underwriting
syndicates (which may be represented by managing underwriters designated by the
Issuer), or directly by one or more underwriters acting alone. The obligations
of the underwriters to purchase the Securities offered thereby will be subject
to certain conditions precedent, and the underwriters will be obligated to
purchase all such Securities if any are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
The Securities may be sold directly by the applicable Issuer or through
agents designated by such Issuer from time to time. The Prospectus Supplement
with respect to any Securities sold in this manner will set
19
forth the name of any agent involved in the offer or sale of the Securities as
well as any commissions payable by the applicable Issuer to such agent. Unless
otherwise indicated in the Prospectus Supplement, any such agent is acting on a
best efforts basis for the period of its appointment.
If dealers are utilized in the sale of any Securities, the applicable Issuer
will sell the Securities to the dealers, as principal. Any dealer may then
resell the Securities to the public at varying prices to be determined by the
dealer at the time of resale. The name of any dealer and the terms of the
transaction will be set forth in the Prospectus Supplement with respect to the
Securities being offered thereby.
If so indicated in the Prospectus Supplement, the Issuer of the Securities
will authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Securities from the applicable Issuer at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. The obligations of any purchaser under any such contract
will be subject to the condition that the purchase of the offered Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject.
It has not been determined whether any Securities will be listed on a
securities exchange. Underwriters will not be obligated to make a market in any
Securities. The Company cannot predict the activity of trading in, or liquidity
of, any Securities.
Agents, underwriters and dealers may be entitled, under agreements entered
into with Kelsey-Hayes and/or Varity, to indemnification by Kelsey-Hayes and/or
Varity against certain civil liabilities, including liabilities under the Act
or to contribution with respect to payments which the agents, underwriters or
dealers may be required to make in respect thereof. Agents, underwriters and
dealers may be customers of, engage in transactions with, or perform services
for Kelsey-Hayes, Perkins and/or Varity in the ordinary course of business.
LEGAL MATTERS
Certain legal matters with respect to the Securities and the Guarantees will
be passed upon for Kelsey-Hayes and Varity by Cahill Gordon & Reindel (a
partnership including a professional corporation), 80 Pine Street, New York,
New York 10005 and for the underwriters by Andrews & Kurth L.L.P., 425
Lexington Avenue, New York, New York 10017.
EXPERTS
The consolidated financial statements and financial statement schedules of
Varity and its subsidiaries as of January 31, 1994, and January 31, 1993, and
for each of the years in the three year period ended January 31, 1994, are
incorporated herein by reference to Varity's Annual Report on Form 10-K for the
fiscal year ended January 31, 1994, in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing.
20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table sets forth an itemized statement of all estimated
expenses to be paid in connection with the issuance and distribution of the
securities being registered:
Securities and Exchange Commission Registration Fee.......... $ 34,482.76
Accounting Fees and Expenses................................. 185,000.00
Legal Fees and Expenses...................................... 250,000.00
Printing and Engraving Expenses.............................. 300,000.00
Blue Sky Fees and Expenses................................... 15,000.00
Trustees' Fees and Expenses.................................. 6,000.00
Miscellaneous................................................ 14,517.24
-----------
Total...................................................... $805,000.00
===========
- --------
* Except for the Securities and Exchange Commission registration fee, all
expenses are estimated.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Kelsey-Hayes and Varity
Each of Kelsey-Hayes and Varity, both Delaware corporations, is empowered by
Section 145 of the Delaware General Corporation Law, subject to the procedures
and limitations stated therein, to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in the defense of any threatened, pending or
completed action, suit or proceeding in which such person is made a party by
reason of his or her being or having been a director or officer of Kelsey-Hayes
or Varity, as the case may be. The statute provides that such indemnification
is not exclusive of other rights or indemnification to which a person may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Certificate of Incorporation and Bylaws of each of
Kelsey-Hayes and Varity provide that Kelsey-Hayes and Varity, respectively,
shall indemnify its directors and officers to the full extent permitted by the
Delaware General Corporation Law.
II-1
ITEM 16. EXHIBITS
(a) Exhibits.
The following Exhibits are filed as part of this Registration Statement:
1.1 Form of Kelsey-Hayes Standard Underwriting Agreement Provisions for
Debt Securities.
1.2 Form of Varity Standard Underwriting Agreement Provisions for Debt
Securities.
1.3 Form of Kelsey-Hayes Agency Agreement.
1.4 Form of Varity Agency Agreement.
4.1 Form of Senior Indenture relating to Kelsey-Hayes Senior Debt
Securities.
4.2 Form of Subordinated Indenture relating to Kelsey-Hayes Subordinated
Debt Securities.
4.3 Form of Senior Indenture relating to Varity Senior Debt Securities.
4.4 Form of Subordinated Indenture relating to Varity Subordinated Debt
Securities.
5.1 Opinion of Cahill Gordon & Reindel, special counsel to Kelsey-Hayes.
5.2 Opinion of Cahill Gordon & Reindel, special counsel to Varity.
12 Calculation of Ratio of Earnings to Fixed Charges for Varity.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Cahill Gordon & Reindel (included in Exhibits 5.1 and 5.2).
24.1 Power of Attorney relating to Kelsey-Hayes (included on page II-4).
24.3 Power of Attorney relating to Varity (included on page II-5).
25.1 Form T-1 of Manufacturers and Traders Trust Company, as Trustee under
the Kelsey-Hayes Senior Indenture.
25.2 Form T-1 of Manufacturers and Traders Trust Company, as Trustee under
the Kelsey-Hayes Subordinated Indenture.
25.3 Form T-1 of Manufacturers and Traders Trust Company, as Trustee under
the Varity Senior Indenture.
25.4 Form T-1 of Manufacturers and Traders Trust Company, as Trustee under
the Varity Subordinated Indenture.
II-2
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) 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 (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Varity 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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants 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 Registrants 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 of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Varity's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) 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.
II-3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, KELSEY-HAYES
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 LIVONIA, MICHIGAN, ON JANUARY 20, 1995.
Kelsey-Hayes Company
/s/ E.J. Gulda
By __________________________________
NAME: E.J. Gulda
TITLE: President
POWER OF ATTORNEY
Each person whose signature appears below appoints Neil D. Arnold, Kevin C.
Shanahan and Kenneth L. Walker, and each of them, as his attorney-in-fact and
agent, with full power of substitution and resubstitution, to sign and file
with the Securities and Exchange Commission any amendments to this Registration
Statement (including post-effective amendments) and to file with the Securities
and Exchange Commission one or more supplements to any prospectus included in
any of the foregoing, and generally to do anything else necessary and proper in
connection therewith.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ E.J. Gulda President and January 20, 1995
- --------------------------------- Director (Principal
E.J. GULDA Executive Officer)
/s/ K.C. Shanahan Vice President, January 20, 1995
- --------------------------------- Finance (Principal
K. C. SHANAHAN Financial Officer
and Principal
Accounting Officer)
/s/ J.E. Utley Chairman and January 20, 1995
- --------------------------------- Director
J.E. UTLEY
II-4
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, VARITY
CORPORATION 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 BUFFALO, NEW YORK, ON JANUARY 20, 1995.
Varity Corporation
/s/ Kenneth L. Walker
By___________________________________
NAME: KENNETH L. WALKER
TITLE: VICE PRESIDENT, LEGAL
POWER OF ATTORNEY
Each person whose signature appears below appoints Neil D. Arnold, Kevin C.
Shanahan and Kenneth L. Walker, and each of them, as his attorney-in-fact and
agent, with full power of substitution and resubstitution, to sign and file
with the Securities and Exchange Commission any amendments to this Registration
Statement (including post-effective amendments) and to file with the Securities
and Exchange Commission one or more supplements to any prospectus included in
any of the foregoing, and generally to do anything else necessary and proper in
connection therewith.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Victor A. Rice Chairman of the January 20, 1995
- --------------------------------- Board, Chief
VICTOR A. RICE Executive Officer
and Director
(Principal
Executive Officer)
/s/ Neil D. Arnold Senior Vice January 20, 1995
- --------------------------------- President and Chief
NEIL D. ARNOLD Financial Officer
(Principal
Financial Officer)
/s/ Kevin C. Shanahan Vice President, January 20, 1995
- --------------------------------- Controller
KEVIN C. SHANAHAN (Principal
Accounting Officer)
/s/ Vince D. Laurenzo Vice Chairman of the January 20, 1995
- --------------------------------- Board and Director
VINCE D. LAURENZO
/s/ William A. Corbett Director January 20, 1995
- -------------------------------
WILLIAM A. CORBETT
II-5
SIGNATURE TITLE DATE
/s/ Thomas N. Davidson Director January 20, 1995
- -----------------------------------
THOMAS N. DAVIDSON
/s/ Robert M. Gates Director January 20, 1995
- -----------------------------------
ROBERT M. GATES
/s/ Luiz F. Kahl Director January 20, 1995
- -----------------------------------
LUIZ F. KAHL
/s/ W. Darcy McKeough Director January 20, 1995
- -----------------------------------
W. DARCY MCKEOUGH
/s/ Sir Bryan Nicholson Director January 20, 1995
- -----------------------------------
SIR BRYAN NICHOLSON
/s/ Warren S. Rustand Director January 20, 1995
- -----------------------------------
WARREN S. RUSTAND
/s/ William R. Teschke Director January 20, 1995
- -----------------------------------
WILLIAM R. TESCHKE
/s/ The Hon. Robin H. Warrender Director January 20, 1995
- -----------------------------------
THE HON. ROBIN H. WARRENDER
/s/ Paul M. F. Cheng Director January 20, 1995
- -----------------------------------
PAUL M. F. CHENG
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1.1 Form of Kelsey-Hayes Standard Underwriting Agreement
Provisions for Debt Securities.
1.2 Form of Varity Standard Underwriting Agreement Provisions for
Debt Securities.
1.3 Form of Kelsey-Hayes Agency Agreement.
1.4 Form of Varity Agency Agreement.
4.1 Form of Senior Indenture relating to Kelsey-Hayes Senior Debt
Securities.
4.2 Form of Subordinated Indenture relating to Kelsey-Hayes
Subordinated Debt Securities.
4.3 Form of Senior Indenture relating to Varity Senior Debt
Securities.
4.4 Form of Subordinated Indenture relating to Varity Subordinated
Debt Securities.
5.1 Opinion of Cahill Gordon & Reindel, special counsel to Kelsey-
Hayes.
5.2 Opinion of Cahill Gordon & Reindel, special counsel to Varity.
12 Calculation of Ratio of Earnings to Fixed Charges for Varity.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Cahill Gordon & Reindel (included in Exhibits 5.1
and 5.2).
24.1 Power of Attorney relating to Kelsey-Hayes (included on page
II-4).
24.3 Power of Attorney relating to Varity (included on page II-5).
25.1 Form T-1 of Manufacturers and Traders Trust Company, as
Trustee under the Kelsey-Hayes Senior Indenture.
25.2 Form T-1 of Manufacturers and Traders Trust Company, as
Trustee under the Kelsey-Hayes Subordinated Indenture.
25.3 Form T-1 of Manufacturers and Traders Trust Company, as
Trustee under the Varity Senior Indenture.
25.4 Form T-1 of Manufacturers and Traders Trust Company, as
Trustee under the Varity Subordinated Indenture.