AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1996
REGISTRATION NO. 333-6333
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ARMSTRONG WORLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-0366390
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
313 WEST LIBERTY STREET
LANCASTER, PENNSYLVANIA 17603
(717) 397-0611
(Address of principal executive offices)
L.A. PULKRABEK, ESQUIRE
SENIOR VICE-PRESIDENT, SECRETARY AND GENERAL COUNSEL
313 WEST LIBERTY STREET
LANCASTER, PENNSYLVANIA 17603
(Name and address of agent for service)
717-397-0611
(Telephone number, including area code, of agent for service)
WITH COPIES TO:
Vincent C. Deluzio, Esquire Robert S. Risoleo, Esquire
Buchanan Ingersoll Professional Sullivan & Cromwell
Corporation 125 Broad Street
One Oxford Centre New York, N.Y. 10004
301 Grant Street, 20th Floor (212) 558-4000
Pittsburgh, Pennsylvania 15219-1410
(412) 562-8947
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
please check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2)(3) FEE(3)
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Common Stock, $1.00 par value(4) $250,000,000 100% $250,000,000 $86,208
Preferred Stock Purchase Rights
(5) Class A Preferred Stock, no
par value Depository Shares
Debt Securities(6)
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(1) In U.S. Dollars or the equivalent thereof in one or more foreign
currencies or currencies units or composite currencies, including the
European Currency Unit.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(3) The aggregate initial offering price of all securities registered pursuant
to this Registration Statement and offered from time to time will not
exceed $250,000,000. An additional $250,000,000 of Debt Securities has
been previously registered on a Registration Statement on Form S-3 (No.
33-38837) for which a registration fee in the amount of $62,500 has been
previously paid. The previously registered debt securities may also be
sold pursuant to the Prospectus contained herein. Any securities
registered hereunder or under Registration Statement No. 33-38837 may be
sold separately or as units with other securities registered hereunder or
thereunder.
(4) Includes Preferred Stock Purchase Rights (the "Rights").
(5) The Rights attach to the shares of Common Stock to be offered hereby.
Prior to the occurrence of certain events, such Rights will not be
exercisable or evidenced separately from the Common Stock.
(6) Or, if Debt Securities are issued at original issue discount, such greater
amount as shall not exceed an aggregate initial offering price of
$250,000,000.
Pursuant to Rule 429 of the rules and regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended, the combined
prospectus contained herein also relates to the Registration Statement on Form
S-3 (No. 33-38837).
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 that 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 Section 8(a), may
determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT WITH RESPECT 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion) Issued November , 1996
$500,000,000
LOGO
OF ARMSTRONG WORLD INDUSTRIES, INC.]
Armstrong World Industries, Inc.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
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Armstrong World Industries, Inc., a Pennsylvania corporation ("Armstrong" or
the "Company"), may offer and sell from time to time, together or separately,
up to an aggregate initial public offering price of $500,000,000 or the
equivalent thereof in other currencies, foreign currency units or composite
currencies such as the European Currency Unit (the "Specified Currency"),
subject to the limitations set forth below, in one or more series (a) debt
securities ("Debt Securities"), which may be either senior debt securities
("Senior Debt Securities") or subordinated debt securities ("Subordinated Debt
Securities"); (b) shares of common stock, $1.00 par value per share ("Common
Stock"), including Preferred Stock Purchase Rights which attach to each share
of Common Stock (the "Rights"); (c) shares of Class A preferred stock, no par
value per share ("Preferred Stock"); and (d) depositary shares ("Depositary
Shares") or any combination of the foregoing, each in amounts, at prices and on
terms to be determined at the time of sale. The Debt Securities, Common Stock
with attached Rights, Preferred Stock, and Depositary Shares are collectively
referred to herein as the "Securities".
All specific terms of the offering and sale of Securities, including the
initial public offering price, aggregate amount, listing on any securities
exchange or quotation system, risk factors, if any, and the agents,
underwriters or dealers, if any, to be utilized in connection with the sale of
the Securities, will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"). With respect to the Debt Securities, the related
Prospectus Supplement will set forth the specific designation, rights and
restrictions, whether they are senior or subordinated, the currencies or
currency units or composite currencies in which they are denominated, the
aggregate principal amount, the maturity, rate and time of payment of interest,
any conversion, exchange, redemption or sinking fund provisions, and any other
terms of the Securities offered thereby. With respect to the Preferred Stock,
the related Prospectus Supplement will set forth the specific designation,
rights, preferences, privileges and restrictions thereof, including dividend
rate or rates (or method of ascertaining the same), dividend payment dates,
voting rights, liquidation preference, any conversion, exchange, redemption or
sinking fund provisions, and any other terms of the Securities offered thereby.
The Prospectus Supplement will also contain information, where applicable,
regarding certain United States federal income tax considerations relating to
the Securities offered thereby.
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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
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The Company may sell the Securities directly, or through agents, underwriters
or dealers designated from time to time, or through a combination of such
methods, which underwriters may include Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co. and Merrill Lynch & Co. or may be a group of underwriters
represented by firms including one or more of such firms and such firms may act
as agents. See "Plan of Distribution." If agents of the Company or underwriters
or any dealers are involved in the sale of Securities in respect of which this
Prospectus is being delivered, the name of such agents, underwriters or
dealers, and any applicable commissions or discounts, will be set forth in or
may be calculated from the Prospectus Supplement relating to such Securities.
The Company reserves the sole right to accept and, together with their
respective agents from time to time, to reject in whole or in part any proposed
purchase of Securities to be made directly or through agents.
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The Prospectus may not be used to consummate the sale of Securities unless
accompanied by a Prospectus Supplement.
November , 1996
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES DESCRIBED HEREIN OR THEREIN OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THE PROSPECTUS
OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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TABLE OF CONTENTS
PAGE
Available Information....................................................... 3
Incorporation of Certain Documents by Reference............................. 3
The Company................................................................. 5
Use of Proceeds............................................................. 5
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and
Preferred Stock Dividends................................................... 5
Description of Debt Securities.............................................. 6
Description of Capital Stock................................................ 17
Description of Depositary Shares............................................ 22
Plan of Distribution........................................................ 24
Validity of Securities...................................................... 25
Experts..................................................................... 25
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK, PACIFIC AND/OR PHILADELPHIA
STOCK EXCHANGES. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
2
AVAILABLE INFORMATION
Armstrong is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC" or the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices of
the SEC located at Citicorp Center, Suite 1400, 500 West Madison Street, Room
1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such information can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. Such reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, the
offices of the Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco,
California 94104-7098, and the offices of the Philadelphia Stock Exchange,
1900 Market Street, Philadelphia, Pennsylvania 19103, on which exchanges
certain of Armstrong's securities are listed. Armstrong's Common Stock is
listed on the New York, Pacific and Philadelphia Stock Exchanges under the
symbol "ACK."
Armstrong has filed with the SEC two Registration Statements on Form S-3
(the "Registration Statements") under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to the Securities. This Prospectus does not
contain all of the information set forth in the Registration Statements,
certain parts of which are omitted in accordance with the rules and
regulations of the SEC. Reference is hereby made to the Registration
Statements and related exhibits for further information with respect to the
Company and the Securities offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the SEC. The Registration
Statements and the exhibits thereto may be inspected without charge at the
office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies thereof may be obtained from the SEC at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding the Company that is electronically
filed through the Commission's Electronic Data Gathering, Analysis and
Retrieval system. Such information is publicly available through the
Commission's Web site (http://www. sec. gov.).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the SEC by Armstrong under the
1934 Act (file number 001-02116) are incorporated herein by reference: (1) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
certain portions of which are superseded by the Company's Current Report on
Form 8-K filed on October 18, 1996; (2) the Company's Current Report on Form
8-K filed on January 16, 1996; (3) the Company's Current Report on Form 8-K
filed on January 16, 1996, as amended by a Form 8-K/A filed on March 13, 1996;
(4) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, certain portions of which are superseded by the Company's Current
Report on Form 8-K filed on October 18, 1996; (5) the Company's Current Report
on Form 8-K filed on May 13, 1996; (6) the Company's Current Report on Form
8-K filed on July 29, 1996, and any amendments or reports filed for the
purpose of updating the Description of the Company's Capital Stock contained
in such report; (7) the description of the Company's Preferred Stock Purchase
Rights, set forth in the Registration Statement on Form 8-A/A dated March 15,
1996; (8) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, certain portions of which are superseded by the Company's
Current Report on Form 8-K filed on October 18, 1996; (9) the Company's
Current Report on Form 8-K filed on October 15, 1996; and (10) the Company's
Current Report on Form 8-K filed on October 18, 1996.
All documents filed by Armstrong with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus
and prior to the termination of the offering or offerings of the Securities
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof
3
from the date of filing of such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Prospectus. All information
appearing in this Prospectus is qualified in its entirety by the information
and financial statements (including the notes thereto) contained in the
documents incorporated by reference herein.
Armstrong will provide without charge, upon written or oral request, to each
person, including any beneficial owner, to whom a copy of this Prospectus is
delivered, a copy of any or all of the documents incorporated by reference in
this Prospectus (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to L.A. Pulkrabek, Senior Vice-President, Secretary and
General Counsel, Armstrong World Industries, Inc., 313 West Liberty Street,
Lancaster, Pennsylvania 17603-2717 (telephone 717-397-0611).
[Remainder Of This Page Is Intentionally Left Blank]
4
THE COMPANY
Armstrong World Industries, Inc. is a Pennsylvania corporation incorporated
in 1891. The Company is a manufacturer of interior furnishings, including
floor coverings, and building products which are sold primarily for use in the
furnishing, refurbishing, repair, modernization and construction of
residential, commercial and institutional buildings. It also manufactures
various industrial and other products. In late 1995, Armstrong sold its
furniture business and combined its ceramic tile business with Dal-Tile
International Inc. ("Dal-Tile"), retaining a minority equity interest in the
combined company. Unless the context indicates otherwise, the term "Company"
means Armstrong World Industries, Inc. and its consolidated subsidiaries.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement, Armstrong
intends to use the net proceeds from the sale of the Securities offered hereby
for general corporate purposes, which may include additions to working
capital, refinancing existing indebtedness, capital expenditures and possible
acquisitions. Armstrong has
not allocated a specific portion of the net proceeds for any particular use at
this time. Specific information concerning the use of proceeds from the sale
of any Securities may be included in the Prospectus Supplement relating to
such Securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's consolidated ratios of earnings
to fixed charges for the indicated periods.(1)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996
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1991 1992 1993 1994 1995
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2.56 N/A(2) 2.49 8.70 1.20 7.59
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(1) Excluding restructuring charges for all periods and the pre-tax loss on
the ceramic tile business combination for 1995, the ratios would have been
2.80, 2.89, 4.50, 8.70 and 7.40 for 1991, 1992, 1993, 1994 and 1995,
respectively.
(2) Earnings were inadequate to cover fixed charges by $66.3 million.
The following table sets forth the Company's consolidated ratio of earnings
to combined fixed charges and preferred dividends for the indicated
periods:(1)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996
--------------------------------------------------------------- ----------------
1991 1992 1993 1994 1995
---- ------ ---- ---- ------
1.88 N/A(2) 1.74 5.61 N/A(3) 4.79
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(1) Excluding restructuring charges for all periods and the pre-tax loss on
the ceramic tile business combination for 1995, the ratios would have been
2.05, 2.08, 3.14, 5.61 and 5.04 for 1991, 1992, 1993, 1994 and 1995,
respectively.
(2) Earnings were inadequate to cover fixed charges and preferred stock
dividends by $85.6 million.
(3) Earnings were inadequate to cover fixed charges plus preferred stock
dividends by $10.6 million.
5
The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. The ratio of earnings to fixed charges and
preferred stock dividends has been computed by dividing earnings by the sum of
fixed charges and preferred stock dividend requirements. For purposes of
calculating these ratios, earnings consist of consolidated earnings from
continuing business operations before income taxes plus fixed charges. Fixed
charges consist of interest expense, one-third of rent expense which is deemed
to be representative of interest and amortization of finance costs. In June
1989, the Company established an Employee Stock Ownership Plan (the "ESOP").
The Company is the guarantor of a $270 million loan to the ESOP. Contributions
made by the Company to the ESOP and dividends paid by the Company on the
convertible preferred stock purchased by the ESOP are used by the ESOP to pay
installments of principal and interest on the ESOP loan. Such contributions
and dividends are not included in the above ratios of earnings to fixed
charges or ratios to combined fixed charges and preferred stock dividends.
Interest expense on the ESOP loan was approximately $23.2 million, $22.9
million, $22.3 million, $21.7 million and $21.0 million for the years ended
December 31, 1991, 1992, 1993, 1994 and 1995, respectively. Part of the
contributions made by the Company represent payroll deductions made by
participants in the ESOP.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
August 6, 1996 (the "Senior Indenture"), between the Company and Mellon Bank,
N.A. , as Trustee (the "Trustee" or "Mellon"). The Subordinated Debt
Securities are to be issued under a separate Indenture, dated as of August 6,
1996 (the "Subordinated Indenture"), also between the Company and Mellon as
Trustee. The Senior Indenture and Subordinated Indenture are sometimes
referred to collectively as the "Indentures". Copies of the Senior Indenture
and Subordinated Indentures are filed as exhibits to the Registration
Statement of which this Prospectus is a part. The Debt Securities may be
issued from time to time in one or more series. The particular terms of each
series, or of Debt Securities forming a part of a series, which are offered by
a Prospectus Supplement will be described in such Prospectus Supplement.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indentures, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
GENERAL
The Indentures will provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate
principal amount. The Company may specify a maximum aggregate principal amount
for the Debt Securities of any series. (Section 301) The Debt Securities are
to have such terms and provisions which are not inconsistent with the
Indentures, including as to maturity, principal and interest, as the Company
may determine. Unless otherwise specified in the applicable Prospectus
Supplement, the Senior Debt Securities when issued will be unsecured and
unsubordinated obligations of the Company and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities when issued will be subordinated in right of
payment to the prior payment in full of all Senior Debt of the Company, as
described under "Subordination of Subordinated Debt Securities" and in the
applicable Prospectus Supplement.
The applicable Prospectus Supplement will set forth whether the Debt
Securities offered shall be Senior Debt Securities or Subordinated Debt
Securities, the price or prices at which the Debt Securities to be offered
will be issued and will describe the following terms of such offered Debt
Securities: (1) the title of such Debt Securities; (2) any limit on the
aggregate principal amount of such Debt Securities or the series of which they
are a part; (3) the Person to whom any interest on a Debt Security of the
series shall be payable, if other than the
6
Person in whose name that Debt Security (or one or more predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest; (4) the date or dates on which the principal of any of such
Debt Securities will be payable; (5) the rate or rates at which any of such
Debt Securities will bear interest, if any, the date or dates from which any
such interest will accrue, the Interest Payment Dates on which any such
interest will be payable and the Regular Record Date for any such interest
payable on any Interest Payment Date; (6) the place or places where the
principal of and any premium and interest on any of such Debt Securities will
be payable; (7) the period or periods within which, the price or prices at
which and the terms and conditions on which any of such Debt Securities may be
redeemed, in whole or in part, at the option of the Company; (8) the
obligation, if any, of the Company to redeem or purchase any of such Debt
Securities pursuant to any sinking fund or analogous provision or at the
option of the Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions on which any of such
Debt Securities will be redeemed or purchased, in whole or in part, pursuant
to any such obligation; (9) the denominations in which any of such Debt
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof; (10) if the amount of principal of or any premium
or interest on any of such Debt Securities may be determined with reference to
an index or pursuant to a formula, the manner in which such amounts will be
determined; (11) if other than the currency of the United States of America,
the currency, currencies or currency units in which the principal of or any
premium or interest on any of such Debt Securities will be payable (and the
manner in which the equivalent of the principal amount thereof in the currency
of the United States of America is to be determined for any purpose, including
for the purpose of determining the principal amount deemed to be Outstanding
at any time); (12) if the principal of or any premium or interest on any of
such Debt Securities is to be payable, at the election of the Company or the
Holder thereof, in one or more currencies or currency units other than those
in which such Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of any such amount as to which
such election is made will be payable, the periods within which and the terms
and conditions upon which such election is to be made and the amount so
payable (or the manner in which such amount is to be determined); (13) if
other than the entire principal amount thereof, the portion of the principal
amount of any of such Debt Securities which will be payable upon declaration
of acceleration of the Maturity thereof; (14) if the principal amount payable
at the Stated Maturity of any of such Debt Securities will not be determinable
as of any one or more dates prior to the Stated Maturity, the amount which
will be deemed to be such principal amount as of any such date for any
purpose, including the principal amount thereof which will be due and payable
upon any Maturity other than the Stated Maturity or which will be deemed to be
Outstanding as of any such date (or, in any such case, the manner in which
such deemed principal amount is to be determined); (15) if applicable, that
such Debt Securities, in whole or any specified part, are defeasible pursuant
to the provisions of the Indentures described under "Defeasance and Covenant
Defeasance--Defeasance and Discharge" or "Defeasance and Covenant Defeasance--
Covenant Defeasance", or under both such captions; (16) if applicable, the
terms of any right to convert Debt Securities into shares of Common Stock of
the Company or other securities or property; (17) whether any of such Debt
Securities will be issuable, in whole or in part, in the form of one or more
Global Securities, defined below, and, if so, the respective Depositaries for
such Global Securities, the form of any legend or legends to be borne by any
such Global Security in addition to or in lieu of the legend referred to under
"Form, Exchange and Transfer--Global Securities" and, if different from those
described under such caption, any circumstances under which any such Global
Security may be exchanged, in whole or in part, for Debt Securities
registered, and any transfer of such Global Security, in whole or in part, may
be registered, in the names of Persons other than the Depositary for such
Global Security or its nominee; (18) any addition to or change in the Events
of Default applicable to any of such Debt Securities and any change in the
right of the Trustee or the Holders to declare the principal amount of any of
such Debt Securities due and payable; (19) any addition to or change in the
covenants in the Indentures described under "Certain Restrictive Covenants"
applicable to any of such Debt Securities; and (20) any other terms of such
Debt Securities not inconsistent with the provisions of the applicable
Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount will be described in a
Prospectus Supplement under "United States Taxation". In addition, certain
special United States federal income tax or other considerations (if any)
7
applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars will be described in a
Prospectus Supplement under "United States Taxation".
Unless otherwise set forth in the applicable Prospectus Supplement, neither
the Indentures nor the Debt Securities will contain provisions which would
afford holders of the Debt Securities protection in the event of a takeover,
recapitalization, or similar restructuring involving the Company that could
adversely affect such holders.
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into Common
Stock or other securities or property will be set forth in the Prospectus
Supplement relating thereto. Such terms shall include provisions as to whether
conversion is mandatory or at the option of the holder and may include
provisions pursuant to which the number of shares of Common Stock or other
securities or property to be received by the Holders of Debt Securities would
be calculated according to the market price of Common Stock or other
securities or property as of a time stated in the applicable Prospectus
Supplement. (Article Fourteen)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior
payment in full of all Senior Debt, including the Senior Debt Securities. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the Holders of the Subordinated
Debt Securities will be entitled to receive or retain any payment in respect
of the principal of (and premium, if any) or interest, if any, on the
Subordinated Debt Securities. (Section 1502)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are not holders of Senior Debt or Holders of
Subordinated Debt Securities may recover less, ratably, than holders of Senior
Debt and may recover more, ratably, than the Holders of the Subordinated Debt
Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Section 1503)
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to
Senior Debt, or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. (Section 1504) For purposes
of the subordination provisions, the payment, issuance and delivery of cash,
property or securities (other than stock and certain subordinated securities
of the Company) upon conversion of a Subordinated Debt Security will be deemed
to constitute payment on account of the principal of such Subordinated Debt
Security.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any, (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company to the extent that
such claim for post-petition interest is allowed in such proceeding) on Debt
(as defined under "Restrictive Covenants--Limitation on Liens"), whether
incurred on or prior to the date of the Subordinated Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debt
Securities or to other Debt which is pari passu with, or subordinated to, the
Subordinated Debt Securities; provided, however, that Senior Debt shall not be
deemed to include the Subordinated Debt Securities.
8
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indentures and the
limitations applicable to Global Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indentures and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305) The Company may at any time designate additional transfer agents
or rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Debt Security of that series (or of
that series and specified terms, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing or (ii) register
the transfer of or exchange any Debt Security so selected for redemption, in
whole or in part, except the unredeemed portion of any such Debt Security
being redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more global securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby (a "Global Security"). Each Global Security will be registered in the
name of a Depositary or a nominee thereof identified in the applicable
Prospectus Supplement, will be deposited with such Depositary or nominee or a
custodian therefor and will bear a legend regarding the restrictions on
exchanges and registration of transfer thereof referred to below and any such
other matters as may be provided for pursuant to the Indentures.
Notwithstanding any provision of the Indentures or any Debt Security
described herein, no Global Security may be exchanged, in whole or in part,
for Debt Securities registered, and no transfer of a Global Security, in whole
or in part, may be registered, in the name of any Person other than the
Depositary for such Global Security or any nominee of such Depositary unless
(i) the Depositary has notified the Company that it is unwilling or unable to
continue as Depositary for such Global Security or has ceased to be qualified
to act as such as required by the Indentures, (ii) there shall have occurred
and be continuing an Event of Default with respect to the Debt Securities
represented by such Global Security or (iii) there shall exist such
circumstances, if any, in addition to
9
or in lieu of those described above as may be described in the applicable
Prospectus Supplement. All securities issued in exchange for a Global Security
or any portion thereof will be registered in such names as the Depositary may
direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indentures. Except in the limited circumstances referred to above, owners
of beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered
to be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the
Indentures. All payments of principal of and any premium and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to
the Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears
in the Security Register. Unless otherwise indicated in the applicable
Prospectus Supplement, the corporate trust office of the Trustee in The City
of New York will be designated as the Company's sole Paying Agent for payments
with respect to Debt Securities of each series. Any other Paying Agents
initially designated by the Company for the Debt Securities of a particular
series will be named in the applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the designation of
any Paying Agent or approve a change in the office through which any Paying
Agent acts, except that the Company will be required to maintain a Paying
Agent in each Place of Payment for the Debt Securities of a particular series.
(Section 1002)
All monies paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
has become due and payable will be repaid to the Company, and the Holder of
such Debt Security thereafter may look only to the Company for payment
thereof. (Section 1003)
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RESTRICTIVE COVENANTS
Limitation on Liens. The Senior Indenture will provide that, except as
otherwise provided in the next succeeding paragraph, the Company shall not,
and shall not permit any Restricted Subsidiary to, issue, assume or guarantee
any indebtedness for borrowed money ("Debt") secured by any mortgage, pledge,
security interest, lien or other encumbrance (a "Lien") upon any Principal
Property of the Company or of any Restricted Subsidiary or upon any shares of
stock or Debt of any Restricted Subsidiary (whether such Principal Property,
shares of stock or Debt are now owned or hereafter acquired) without in any
such case effectively providing concurrently with the issuance, assumption or
guaranty of any such Debt that the Senior Debt Securities (together with, if
the Company shall so determine, any other indebtedness of or guaranty by the
Company or such Restricted Subsidiary then existing or thereafter created
which is not subordinate to the Senior Debt Securities) shall be secured
equally and ratably with (or, at the option of the Company, prior to) such
Debt, so long as such Debt shall be so secured; provided, however, that the
foregoing restrictions shall not prevent, restrict or apply to (and there
shall be excluded from secured Debt in any computation made for purposes of
the "Limitation on Liens" covenant) Debt secured by (A) Liens on property,
shares of stock or indebtedness of any corporation existing at the time such
corporation becomes a Restricted Subsidiary or arising thereafter (i)
otherwise than in connection with the borrowing of money arranged thereafter
and (ii) pursuant to contractual commitments entered into prior to and not in
contemplation of such corporation's becoming a Restricted Subsidiary; (B)
Liens on any property (including shares of stock or Debt) existing at the time
of acquisition thereof (including acquisition through merger or consolidation)
or securing the payment of all or any part of the purchase price or
construction cost thereof or securing any Debt incurred prior to, at the time
of or within 180 days after, the acquisition of such property, shares of stock
or Debt or the completion of any such construction, whichever is later, for
the purpose of financing all or any part of the purchase price or construction
costs thereof (provided such Liens are limited to such property, improvements
thereon and the land upon which such property and improvements are located and
any other property not then constituting a Principal Property); (C) Liens on
any property to secure all or any part of the cost of development, operations,
construction, alteration, repair or improvement of all or any part of such
property, or to secure Debt incurred prior to, at the time of or within 180
days after, the completion of such development, operation, construction,
alteration, repair or improvement, whichever is later, for the purpose of
financing all or any part of such cost (provided such Liens are limited to
such property, improvements thereon and the land upon which such property and
improvements are located and any other property not then constituting a
Principal Property); (D) Liens which secure Debt owing by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary or by the
Company to a Restricted Subsidiary; (E) Liens securing indebtedness of a
corporation which becomes a successor of the Company in accordance with the
provisions described under "Consolidation, Merger and Sale of Assets"; (F)
Liens on property of the Company or a Restricted Subsidiary in favor of the
United States of America or any State thereof, or any department agency or
instrumentality or political subdivision of the United States of America or
any State thereof, or in favor of any other country or any political
subdivision thereof, to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the cost of
construction of the property subject to such Liens, or in favor of any trustee
or mortgagee for the benefit of holders of indebtedness of any such entity
incurred for any such purpose; (G) Liens existing at August 6, 1996; and (H)
any extension, renewal or replacement (or successive extension, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses (A) to (G), inclusive, or of any Debt secured thereby; provided that
such extension, renewal or replacement Lien shall be limited to all or any
part of the same property that secured the Lien extended, renewed or replaced
(plus any improvements on such property) and shall secure no larger amount of
Debt than that existing at the time of such extension, renewal or replacement.
Notwithstanding the foregoing restrictions, the Company and any one or more
Restricted Subsidiaries may issue, assume or guarantee Debt secured by a Lien
which would otherwise be subject to the foregoing restrictions if at the time
it does so (the "Incurrence Time") the aggregate amount of such Debt plus all
other Debt of the Company and its Restricted Subsidiaries secured by a Lien
which would otherwise be subject to the foregoing
11
restrictions (not including Debt permitted to be secured under clauses (A)
through (H) of the next preceding paragraph), plus the aggregate Attributable
Debt (determined as of the Incurrence Time) of Sale and Leaseback Transactions
(other than Sale and Leaseback Transactions permitted by clause (1) under "--
Limitations on Sale and Leaseback Transactions") entered into after August 6,
1996 and in existence at the Incurrence Time (less the aggregate amount of
proceeds of such Sale and Leaseback Transactions which shall have been applied
in accordance with clause (3) under "Limitations on Sale and Leaseback
Transactions"), does not exceed 15% of Consolidated Net Tangible Assets.
Limitations on Sale and Leaseback Transactions. The Senior Indenture will
provide that the Company shall not itself, and shall not permit any Restricted
Subsidiary to, enter into any arrangements after August 6, 1996 with any bank,
insurance company or other lender or investor (other than the Company or
another Restricted Subsidiary) providing for the leasing as lessee by the
Company or by any such Restricted Subsidiary of any Principal Property (except
a lease for a temporary period not to exceed three years by the end of which
it is intended the use of such Principal Property by the lessee will be
discontinued), which was or is owned by the Company or a Restricted Subsidiary
and which has been or is to be sold or transferred by the Company or a
Restricted Subsidiary more than 180 days after the completion of construction
and commencement of full operation thereof by the Company or such Restricted
Subsidiary, to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
Principal Property (herein called a "Sale and Leaseback Transaction") unless
(1) the Company or such Restricted Subsidiary would (at the time of entering
into such arrangement) be entitled pursuant to clauses (A) through (H) above
under "--Limitation on Liens", without equally and ratably securing the Senior
Debt Securities, to issue, assume or guarantee indebtedness secured by a Lien
on such Principal Property; or (2) the Attributable Debt of the Company and
its Restricted Subsidiaries in respect of such Sale and Leaseback Transaction
and all other Sale and Leaseback Transactions entered into after August 6,
1996 (other than such Sale and Leaseback Transactions as are permitted by
clause (1) or clause (3) of this paragraph), plus the aggregate principal
amount of Debt secured by Liens on Principal Properties then outstanding
(excluding any such Debt secured by Liens covered in subdivisions (A) through
(H) under "--Limitation on Liens") which do not equally and ratably secure the
Senior Debt Securities, would not exceed 15% of Consolidated Net Tangible
Assets; or (3) the Company, within 180 days after the sale or transfer,
applies or causes a Restricted Subsidiary to apply an amount equal to the
greater of the net proceeds of such sale or transfer or fair market value of
the Principal Property so sold and leased back at the time of entering into
such Sale and Leaseback Transaction (in either case as determined by the Board
of Directors) to the retirement of Senior Debt Securities or other
indebtedness of the Company (other than indebtedness subordinated to the
Senior Debt Securities) or indebtedness of a Restricted Subsidiary, for money
borrowed, having a stated maturity more than 12 months from the date of such
application or which is extendible at the option of the obligor thereon to a
date more than 12 months from the date of such application, provided that the
amount to be so applied shall be reduced by (i) the principal amount of Senior
Debt Securities delivered within 180 days after such sale or transfer to the
Trustee for retirement and cancellation, and (ii) the principal amount of any
such indebtedness of the Company or a Restricted Subsidiary other than Senior
Debt Securities voluntarily retired by the Company or a Restricted Subsidiary
within 180 days after such sale or transfer; provided, further, that
notwithstanding the foregoing, no retirement referred to in this clause (3)
may be affected by payment at Maturity.
Notwithstanding the foregoing, where the Company or any Restricted
Subsidiary is the lessee in any Sale and Leaseback Transaction, Attributable
Debt shall not include any Debt resulting from the guarantee by the Company or
any other Restricted Subsidiary of the lessee's obligation thereunder.
CERTAIN DEFINITIONS
The term "Attributable Debt" means, in respect of a Sale and Leaseback
Transaction and as of any particular time, the present value (discounted at
the rate of interest implicit in the terms of the lease involved in such Sale
and Leaseback Transaction, as determined in good faith by the Company) of the
obligation of the lessee thereunder for net rental payments (excluding,
however, any amounts required to be paid by such lessee,
12
whether or not designated as rent or additional rent, on account of
maintenance and repairs, services, insurance, taxes, assessments, water rates
or similar charges or any amounts required to be paid by such lessee
thereunder contingent upon monetary inflation or the amount of sales,
maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges) during the remaining term of such lease (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended).
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, and (b) all
current liabilities, all as reflected in the Company's latest audited
consolidated balance sheet contained in the Company's most recent annual
report to its stockholders under Rule 14a-3 of the Exchange Act prior to the
time as of which "Consolidated Net Tangible Assets" shall be determined.
The term "Maturity", when used with respect to any security, means the date
on which the principal of such security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
The term "Principal Property" means any single manufacturing plant, research
laboratory or other similar facility located within the United States of
America (other than its territories and possessions) and owned by, or leased
to, the Company or any Restricted Subsidiary, the book value of the property,
plant and equipment of which (as shown, net of depreciation, on the books of
the owner or owners) is not less than 2% of the Consolidated Net Tangible
Assets at the end of the most recent fiscal year of the Company, reflected in
the latest audited consolidated statement of financial position contained in
the Company's most recent annual report to its stockholders under Rule 14a-3
of the Exchange Act, except (a) any such plant or facility (i) owned or leased
jointly or in common with one or more Persons other than the Company and its
Subsidiaries, in which the interest of the Company and its Restricted
Subsidiaries does not exceed 50%, or (ii) which the Board of Directors
determines by Board Resolution in good faith is not of material importance to
the total business conducted, or assets owned, by the Company and its
Subsidiaries as an entirety, or (b) any portion of any such plant or facility
which the Board of Directors determines by Board Resolution in good faith not
to be of material importance to the use or operation thereof.
The term "Restricted Subsidiary" means any Subsidiary substantially all the
property of which is located, or substantially all of the business of which is
carried on, within the United States of America (other than its territories
and possessions) which shall at the time, directly or indirectly through one
or more Subsidiaries or in combination with one or more other Subsidiaries,
own or be a lessee of a Principal Property.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that the Company may not consolidate with or
merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person (a "successor Person"), and may
not permit any Person to merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to, the Company, unless (i)
the successor Person (if any) is a corporation, partnership, trust or other
entity organized and validly existing under the laws of any domestic
jurisdiction and assumes the Company's obligations on the Debt Securities and
under the Indentures, (ii) immediately after giving effect to the transaction,
no Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be continuing,
(iii) if, as a result of the transaction, property of the Company or a
Restricted Subsidiary would become subject to a Lien that would not be
permitted under "Restrictive Covenants--Limitations on Liens", the Company
takes such steps as shall be necessary to secure the Senior Debt Securities,
if any, equally and ratably with (or prior to) the indebtedness secured by
such Lien, and (iv) certain other conditions are met. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indentures with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due (with
respect to Subordinated Debt Securities, whether or not such payment is
prohibited by the
13
subordination provisions of the Subordinated Indenture); (b) failure to pay
any interest on any Debt Securities of that series when due, continued for 30
days (with respect to Subordinated Debt Securities whether or not such payment
is prohibited by the subordination provision of the Subordinated Indenture);
(c) failure to deposit any sinking fund payment, when due, in respect of any
Debt Security of that series (with respect to Subordinated Debt Securities,
whether or not such deposit is prohibited by the subordination provisions of
the Subordinated Indenture); (d) failure to perform any other covenant of the
Company in the Indentures (other than a covenant included in the Indentures
solely for the benefit of a series other than that series), continued for 60
days after written notice has been given by the Trustee, or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that
series, as provided in the Indentures; (e) certain events in bankruptcy,
insolvency or reorganization; and (f) any other Event of Default specified in
the applicable Prospectus Supplement. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities of
that series by notice as provided in the Indentures may declare the principal
amount of the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Security or the principal amount
of which is not then determinable, such portion of the principal amount of
such Debt Security, or such other amount in lieu of such principal amount, as
may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (e) above with respect
to the Debt Securities of any series at the time Outstanding shall occur, the
principal amount of all the Debt Securities of that series (or, in the case of
any such Original Issue Discount Security or other Debt Security, such
specified amount) will automatically, and without any action by the Trustee or
any Holder, become immediately due and payable. After any such acceleration,
but before a judgment or decree based on acceleration, the Holders of a
majority in aggregate principal amount of the Outstanding Securities of that
series may, under certain circumstances, rescind and annul such acceleration
if all Events of Default, other than the non-payment of accelerated principal
(or other specified amount), have been cured or waived as provided in the
Indentures. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver".
Subject to the provisions of the Indentures relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indentures at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indentures, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of that series, (ii) the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series have made written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee and (iii) the Trustee has failed to institute such
proceeding, and has not received from the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507) However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of
the principal of or any premium or interest on such Debt Security on or after
the applicable due date specified in such Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the Indentures and, if so, specifying all such
known defaults. (Section 1004)
14
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security, (b) reduce the
principal amount of, or any premium or interest on, any Debt Security, (c)
reduce the amount of principal of an Original Issue Discount Security or any
other Debt Security payable upon acceleration of the Maturity thereof, (d)
change the place or currency of payment of principal of, or any premium or
interest on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, (f), in
the case of Subordinated Debt Securities, modify the subordination provisions
in a manner adverse to the Holders of the Subordinated Debt Securities, (g)
reduce the percentage in principal amount of Outstanding Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indentures, (h) reduce the percentage in principal amount of
Outstanding Securities of any series necessary for waiver of compliance with
certain provisions of the Indentures or for waiver of certain defaults, or (i)
modify such provisions with respect to modification and waiver. (Section 902)
The Holders of a majority in principal amount of the Outstanding Securities
of any series may waive compliance by the Company with certain restrictive
provisions of the Indentures. (Sections 1010 and 1008 of the Senior Indenture
and the Subordinated Indenture, respectively.) The Holders of a majority in
principal amount of the Outstanding Securities of any series may waive any
past default under the Indentures, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
Indentures which cannot be amended without the consent of the Holder of each
Outstanding Security of such series affected. (Section 513)
The Indentures will provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken
any direction, notice, consent, waiver or other action under the Indentures as
of any date, (i) the principal amount of an Original Issue Discount Security
that will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of such date upon acceleration of the
Maturity thereof to such date, (ii) if, as of such date, the principal amount
payable at the Stated Maturity of a Debt Security is not determinable (for
example, because it is based on an index), the principal amount of such Debt
Security deemed to be Outstanding as of such date will be an amount determined
in the manner prescribed for such Debt Security, and (iii) the principal
amount of a Debt Security denominated in one or more foreign currencies or
currency units that will be deemed to be Outstanding will be the U.S. dollar
equivalent, determined as of such date in the manner prescribed for such Debt
Security, of the principal amount of such Debt Security (or, in the case of a
Debt Security described in clause (i) or (ii) above, of the amount described
in such clause). Certain Debt Securities, including those for whose payment or
redemption money has been deposited or set aside in trust for the Holders and
those that have been fully defeased pursuant to Section 1302, will not be
deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indentures, in the manner
and subject to the limitations provided in the Indentures. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such shorter period as
may be specified by the Company (or the Trustee, if it set the record date),
and may be shortened or lengthened (but not beyond 180 days) from time to
time. (Section 104)
15
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of
Section 1302, relating to defeasance and discharge of indebtedness, or Section
1303, relating to defeasance of certain restrictive covenants in the
Indentures, applied to the Debt Securities of any series, or to any specified
part of a series. (Section 1301)
Defeasance and Discharge. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1302 applied to any
Debt Securities, with respect to any Subordinated Debt Securities, the
provisions of Article Fifteen of the Subordinated Indenture relating to
subordination will cease to be effective and, with respect to any Debt
Securities, the Company will be discharged from all its obligations with
respect thereto (except for certain obligations to exchange or register the
transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the Indentures and such Debt
Securities. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling, or there has been a change in
tax law, in either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304)
Defeasance of Certain Covenants. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Restrictive Covenants" and in the
last sentence under "Consolidation, Merger and Sale of Assets" and any that
may be described in the applicable Prospectus Supplement, and the occurrence
of certain Events of Default, which are described above in clause (d) (with
respect to such restrictive covenants) under "Events of Default" and any that
may be described in the applicable Prospectus Supplement, will be deemed not
to be or result in an Event of Default, in each case with respect to such Debt
Securities, and, in the case of the Subordinated Indenture, the provisions of
Article Fifteen relating to subordination will cease to be effective with
respect to any Subordinated Debt Securities. The Company, in order to exercise
such option, will be required to deposit, in trust for the benefit of the
Holders of such Debt Securities, money or U.S. Government Obligations, or
both, which, through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount sufficient to
pay the principal of and any premium and interest on such Debt Securities on
the respective Stated Maturities in accordance with the terms of the
Indentures and such Debt Securities. The Company will also be required, among
other things, to deliver to the Trustee an Opinion of Counsel to the effect
that Holders of such Debt Securities will not recognize gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case
if such deposit and defeasance were not to occur. In the event the Company
exercised this option with respect to any Debt Securities and such Debt
Securities were declared due and payable because of the occurrence of any
Event of Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such Debt
Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any acceleration
resulting from such Event of Default. In such case, the Company would remain
liable for such payments. (Sections 1303 and 1304)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
16
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the
purpose of making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The Trustee is the trustee for the Debt Securities to be issued. The Trustee
is also trustee under the Company's ESOP, as defined below, as discussed more
fully herein. In addition, Chemical Mellon Shareholder Services, L.L.C., an
affiliate of the Trustee, is the Rights Agent under the Company's Rights Plan,
as defined below, as discussed more fully herein. The Trustee also provides
cash management and other banking and advisory services to the Company in the
normal course of business.
Upon the occurrence of an Event of Default or an event which, after notice
or lapse of time or both, would become an Event of Default, or upon the
occurrence of a default under such other indenture, the Trustee may be deemed
to have a conflicting interest with respect to the Debt Securities for
purposes of the Trust Indenture Act of 1939 and, unless the Trustee is able to
eliminate any such conflicting interest, the Trustee may be required to resign
as Trustee under either the Subordinated Indenture or the Senior Indenture. In
that event, the Company would be required to appoint a successor trustee for
such Indenture.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 200,000,000 shares
of Common Stock, par value $1.00 per share, and 20,000,000 shares of Class A
Preferred Stock, without par value. The following description of the capital
stock of the Company is a summary, and as such, it does not purport to be
complete and is subject, and qualified in its entirety by reference to, the
more complete descriptions contained in (i) the Articles of Incorporation of
the Company, as amended (the "Articles"), the Bylaws of the Company, as
amended (the "Bylaws"), and the Rights Agreement, effective March 21, 1996,
between the Company and Chemical Mellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agreement"), copies of each of which are
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part, and (ii) the certificate of designation relating to
each series of Preferred Stock.
COMMON STOCK
Dividends. Subject to the rights and preferences that may be applicable to
any outstanding Preferred Stock, the holders of Common Stock are entitled to
receive dividends, when, if and as declared by the Board of Directors of the
Company, out of funds legally available therefor.
Voting Rights. The holders of Common Stock are entitled to one vote per
share on all matters to be voted upon by shareholders, except that
shareholders are entitled to cumulate their votes in the election of
directors. Under cumulative voting, a shareholder has the right to multiply
the total number of shares which the shareholder is entitled to vote by the
number of directors to be elected and to cast the whole number of votes so
determined for one nominee or to distribute them among different nominees. The
Bylaws require shareholders desiring to nominate persons for election as a
director to give advance notice of such nominations to the Company.
17
Other than in the election of directors, whenever any corporate action is to
be taken by vote of the shareholders of the Company, or by a class of such
shareholders of the Company, generally, it shall be authorized upon receiving
the affirmative vote of a majority of the votes cast by such shareholders, or
by such class of shareholders, entitled to vote thereon. The Articles and
Bylaws require, however, the approval by the holders of at least 80% of the
votes which all shareholders of the Company would be entitled to cast at an
annual election of directors, voting together as a single class, for the
removal of any director, class of directors or the entire Board of Directors
(subject to nonremoval if sufficient votes are cast against removal) or for
any change to any provision of the Articles or Bylaws providing for the number
of directors, the classification of directors or the filling of vacancies on
the Board of Directors, unless any such change is unanimously approved by the
Board of Directors of the Company. In addition, the Bylaws of the Company may
be amended only by a vote of two-thirds of the Board of Directors then in
office, subject to the power of the shareholders to change such action.
The Bylaws provide for the Board of Directors to be divided into three
classes of directors, each class as nearly equal in number as possible, with
one class being elected each year for a three-year term. The classification of
the Board helps to ensure continuity and stability of corporate leadership and
policy; however, it also has the effect of making it more difficult for a
person to acquire control of the Company because at least two annual meetings
are necessary to effect a change in a majority of the Company's directors.
Further, while cumulative voting enables minority shareholders to gain
representation on the Board, the existence of a classified Board increases the
number of shares required to elect at least one director.
Liquidation. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after the payment of the liabilities and the liquidation
preferences of any outstanding preferred stock.
Other Information. The Common Stock does not carry preemptive rights, is not
redeemable, does not have any conversion rights, is not subject to further
calls and is not subject to any sinking fund provisions. The shares of Common
Stock currently outstanding are freely alienable, fully paid and
nonassessable. Except in certain circumstances as discussed below under
"Description of Capital Stock--Certain Provisions Affecting Control of the
Company," the Common Stock is not subject to discriminatory provisions based
on ownership thresholds.
Conversion of Series A ESOP Preferred Stock. On July 31, 1996, the Trustee
appointed by the Company's Employee Stock Ownership Plan, Mellon Bank, N.A.,
converted the shares of Series A ESOP Preferred Stock formerly held by the
trustee for the account of participants in the Employee Stock Ownership Plan
into Company Common Stock.
CLASS A PREFERRED STOCK
The Class A Preferred Stock, other than Series One Preferred Stock as
discussed below, is issuable in one or more series and will have the dividend,
conversion, redemption, voting and liquidation rights set forth below unless
otherwise provided in the Prospectus Supplement relating to a particular
series of the Preferred Stock. Reference is made to the Prospectus Supplement
relating to the particular series of the Preferred Stock offered thereby for
specific terms, including: (i) the title of the series and the number of
shares in the series offered; (ii) the price at which such series will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to accumulate for such series; (iv) any redemption or sinking fund provisions
of such series; (v) any conversion provisions of such series; (vi) the voting
rights, if any, of such series; (vii) the liquidation preference of such
series; and (viii) any additional dividend, liquidation, redemption, sinking
fund and other special or relative rights, preferences, qualifications,
privileges, limitations, options and restrictions of such series. The Class A
Preferred Stock is available for possible future financing and acquisition
transactions, to pay stock dividends or make distributions, to fund employee
benefit plans and for other general corporate purposes. Under certain
circumstances, the Class A Preferred Stock could be used to create voting
impediments for persons seeking to gain control of the Company.
18
Dividends. The Preferred Stock will be preferred over the Common Stock (but
may be subordinated as to the other series of Preferred Stock) as to the
payment of dividends. Before any dividends or distributions on the Common
Stock shall be declared and set apart for payment or paid, the holders of
shares of each series of Preferred Stock shall be entitled to receive
dividends (either in cash, shares of Common Stock or Preferred Stock, or
otherwise), when, as and if declared by the Board of Directors, at the rate
and on the date or dates as set forth in the Prospectus Supplement. With
respect to each series of Preferred Stock, the dividends on each share of such
series shall be cumulative from the date of issuance of such shares unless
some other date is set forth in the Prospectus Supplement relating to any such
series. Accruals of dividends shall not bear interest.
Conversion. Shares of any series of Preferred Stock will be convertible into
shares of Common Stock or into shares of any other series of Preferred Stock
to the extent set forth in the Prospectus Supplement relating to any such
series.
Redemption. Shares of any series of Preferred Stock will be redeemable to
the extent set forth in the Prospectus Supplement relating to any such series,
which may or may not include any restrictions on the repurchase or redemption
thereof while there is any arrearage in the payment of dividends.
Voting Rights. Unless otherwise provided in the Prospectus Supplement, the
holders of shares of Preferred Stock will be entitled to one vote for each
share of Preferred Stock held by them on all matters presented to
shareholders.
Liquidation. The Preferred Stock will be preferred over the Common Stock
(but may be subordinated as to other series of Preferred Stock, as described
herein) as to assets so that the holders of each series of Preferred Stock
will be entitled to be paid, upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company and before any distribution is made
to the holders of Common Stock, the amount set forth in the Prospectus
Supplement relating to any such series, but in such case the holders of such
series of Preferred Stock will not be entitled to any other or further
payment.
Other Information. Unless otherwise provided in the Prospectus Supplement,
the Preferred Stock will not carry any preemptive rights, will not be, upon
issuance, subject to further calls and will not be, upon issuance, subject to
any sinking fund provisions. The Preferred Stock will be, when issued, fully
paid and nonassessable. Unless otherwise provided in the Prospectus
Supplement, and except in certain circumstances as discussed below under
"Description of Capital Stock--Certain Provisions Affecting Control of the
Company," the Preferred Stock will not be, upon issuance, subject to
discriminatory provisions based on ownership thresholds.
SERIES ONE PREFERRED STOCK AND PREFERRED STOCK PURCHASE RIGHTS
Preferred Stock Purchase Rights. The Series One Preferred Stock, which is a
series of Class A Preferred Stock, is issuable pursuant to the exercise of
rights to purchase Series One Preferred Stock ("Rights"). The Series One
Preferred Stock is not being offered hereby, although the Rights will attach
to any Common Stock which may be sold pursuant to this Prospectus and any
Prospectus Supplement. On March 21, 1996, the Board of Directors of the
Company paid a distribution of one Right for each outstanding share of Common
Stock of the Company to shareholders of record on January 19, 1996, and with
respect to each share of Common Stock that may be issued by the Company prior
to the date on which the Rights first become exercisable (or the earlier
redemption or expiration of the Rights), subject to adjustment in certain
events. In general, the Rights become exercisable ten days after a person or
group either acquires beneficial ownership of shares representing 20% or more
of the voting power of the Company or announces a tender or exchange offer
that would result in such person or group beneficially owning shares
representing 28% or more of the voting power of the Company. When the Rights
become exercisable, each Right entitles its holder (other than such 20%
shareholder or tender or exchange offeror) to buy one one-hundredth of a newly
issued share of Series One Preferred Stock at a purchase price of $300,
subject to adjustment. If, after the Rights become exercisable, any person or
group becomes the beneficial owner of 28% or more of the voting power of the
Company or if the Company is the surviving corporation in a merger with a
person or group that owns 20% or more of the voting power of the Company, then
each owner of a Right (other than such 20% or 28% shareholder) will be
entitled to purchase
19
shares of Armstrong's Common Stock having a value equal to twice the exercise
price of the Right. In addition, if, after the Rights become exercisable, the
Company is a party to a merger and is not the surviving company or 50% or more
of the Company's assets or earnings power are sold in a single or series of
related transactions, then each owner of a Right will be entitled to purchase
shares of the acquiring person having a value equal to twice the exercise
price of the Right. Until the Rights first become exercisable, the Rights
attach to and trade with shares of the Company's Common Stock. Generally, the
Rights are redeemable at the option of the Company for $.05 per Right at any
time prior to the tenth day following a public announcement that a person or
group has acquired beneficial ownership of 20% or more of the voting power of
the Company. The Rights expire by their terms on March 21, 2006, unless
earlier redeemed.
The terms of the Rights are set forth in the Rights Agreement which has been
filed with the SEC as an Exhibit to a Registration Statement on Form 8-A/A
filed on March 15, 1996, file number 001-02116, and is incorporated herein by
reference.
Dividends. Subject to the rights and preferences of the holders of any other
series of Class A Preferred Stock, the holders of Series One Preferred Stock
are entitled to receive cumulative, quarterly dividends, without interest,
when and as declared by the Board of Directors of the Company, out of funds
legally available therefor, in preference to the holders of Common Stock and
in an amount per share equal to the greater of $36.00 or 100 times, as
adjusted, the aggregate per share amount of all cash and non-cash dividends or
other distributions, other than a dividend or distribution payable in shares
of Common Stock, paid on the Common Stock in the immediately preceding
quarter.
Conversion Rights. In the event the Company enters into any consolidation,
merger, combination or other transaction in which the Common Stock is
exchanged for or changed into other stock or securities, cash and/or any other
property, then the Series One Preferred Stock will be at the same time,
similarly exchanged for or converted into an amount per share equal to 100
times, as adjusted, the aggregate amount for or into which the Common Stock is
exchanged or converted.
Voting Rights. Holders of Series One Preferred Stock have no voting rights
except as may be provided by law.
Redemption. The Series One Preferred Stock may be redeemed at the option of
the Board of Directors of the Company, as a whole, but not in part, at any
time, at a cash price per share equal to 100 times, as adjusted, the average
market value, as defined, of the Common Stock, plus all accrued but unpaid
dividends. The Company is not entitled, however, to purchase or otherwise
acquire shares of the Series One Preferred Stock if the quarterly dividend in
respect thereof is accrued and has not been paid or declared and a sum
sufficient for the payment thereof set apart unless all shares of such stock
at the time outstanding are purchased or otherwise acquired.
Liquidation. Subject to the rights and preferences of the holders of any
other series of Class A Preferred Stock, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Series
One Preferred Stock are entitled to $100 per share, plus all accrued and
unpaid dividends, plus an amount equal to the holder's pro rata share of
assets that would be available for distribution after payment of all
liabilities, liquidation preferences and distributions on the Common Stock, if
any, as determined according to a formula and subject to adjustment in certain
events. The amount payable to the holders of Series One Preferred Stock as so
determined is prior to any payment or distribution to the holders of Common
Stock.
Other Information. The Series One Preferred Stock does not carry any
preemptive rights, will not be subject, upon issuance, to any sinking fund
provisions and will not be subject, upon issuance, to any further calls. Upon
issuance, the shares of the Series One Preferred Stock will be freely
alienable, fully paid and nonassessable. Except in certain circumstances as
discussed below under "Description of Capital Stock--Certain Provisions
Affecting Control of the Company," the Series One Preferred Stock will be,
upon issuance, freely alienable and not subject to discriminatory provisions
based on ownership thresholds.
20
CERTAIN PROVISIONS AFFECTING CONTROL OF THE COMPANY
General. Certain provisions of the Company's Articles, Bylaws and the
Pennsylvania Business Corporation Law (the "PBCL") operate only with respect
to extraordinary corporate transactions, such as mergers, reorganizations,
tender offers, sales or transfers of substantially all of the Company's assets
or the liquidation of the Company, and could have the effect of delaying or
making more difficult a change in control of the Company in certain
circumstances.
Certain Provisions of the Articles. The Articles provide that a Business
Combination (as defined below) with an Interested Shareholder (as defined
below) requires the affirmative vote of shareholders entitled to cast at least
a majority of the votes which all shareholders, other than the Interested
Shareholder, would be entitled to cast at an annual election of directors,
voting together as a single class, unless the transaction is approved by a
majority of the Disinterested Directors (as defined below) or the transaction
meets certain fair price and procedural requirements. An "Interested
Shareholder" is, with certain exceptions, any person, or his assignee or
successor (not including Armstrong or an affiliate of Armstrong), who is (or
was within the previous two years) the beneficial owner of more than ten
percent of the voting power of the outstanding voting stock, together with
such person's affiliates and associates. A "Business Combination" includes,
among other transactions, the following: (i) the merger or consolidation of
the Company with the Interested Shareholder; (ii) the sale of all or
substantially all of the assets of the Company to the Interested Shareholder
or its affiliates or associates; (iii) the issuance of securities of the
Company to an Interested Shareholder having a value equal to greater than ten
percent of the assets of the Company; (iv) the adoption of any plan for the
liquidation or dissolution of the Company proposed by or on behalf of the
Interested Shareholder; or (v) any reclassification or recapitalization of
securities which effectively increases the proportional equity share of the
Interested Shareholder. The term "Disinterested Director" means a director who
is neither affiliated with nor a representative of an Interested Shareholder
and (i) was a director prior to the time an Interested Shareholder became
such, (ii) was recommended or elected to fill a vacancy created by an increase
in the size of the Board of Directors by a majority of the Disinterested
Directors then in office, or (iii) was a successor of a Disinterested Director
and was recommended or elected to succeed a Disinterested Director by a
majority of the Disinterested Directors then in office. Certain other
provisions of the Articles and Bylaws which could have the effect of delaying
or preventing a Change in Control of the Company are described above under the
captions "Description of Capital Stock--Common Stock" and "Description of
Capital Stock--Class A Preferred Stock."
Certain Provisions of the PBCL. The Company is governed by certain "anti-
takeover" provisions in the PBCL which include the following: (i) provisions
which prohibit certain business combinations (as defined in the PBCL)
involving a corporation that has voting shares registered under the Exchange
Act and an "interested shareholder" (generally defined to include a person who
beneficially owns shares representing at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors of the
corporation) unless certain conditions are satisfied or an exemption is
applicable; (ii) provisions concerning a "control-share acquisition" in which
the voting rights of certain shareholders of the corporation (specifically, a
shareholder who acquires 20%, 33 1/3% or 50% or more of the voting power of
the corporation ) are conditioned upon the consent of a majority vote at a
meeting of the independent shareholders of the corporation after disclosure by
such shareholder of certain information, and with respect to which such
shareholder is effectively deprived of voting rights if consent is not
obtained; (iii) provisions pursuant to which any profit realized by a
"controlling person or group," generally defined as a 20% beneficial owner,
from the disposition of any equity securities within twenty-four months prior
to, and eighteen months succeeding, the acquisition of such control is
recoverable by the corporation; (iv) provisions pursuant to which severance
payments are to be made by the corporation to any eligible employee of a
covered corporation whose employment is terminated, other than for willful
misconduct, with ninety days before, or twenty-four months after, a control-
share acquisition; (v) provisions pursuant to which any holder of voting
shares of a registered corporation who objects to a "control transaction"
(generally defined as the acquisition by a person or group (the "controlling
person or group") that would entitle the holders thereof to cast at least 20%
of the votes that all shareholders would be entitled to cast in an election of
the directors of the corporation) is entitled to make a written demand on the
controlling person or group for payment of the fair value of the voting shares
of the corporation held by the shareholder; (vi) a set of interrelated
21
provisions which are designed to support the validity of actions taken by the
Board of Directors in response to takeover bids, including specifically the
Board's authority to "accept, reject or take no action" with respect to a
takeover bid, and permitting the unfavorable disparate treatment of a takeover
bidder; and (viii) provisions which allow the directors broad discretion in
considering the best interests of the corporation, including a provision which
permits the Board to consider various corporate interests including the short
and long-term interests of the corporation and the resources, intent and
conduct of any person seeking to acquire the corporation.
DESCRIPTION OF DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue to purchasers receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock)
of a share of a particular series of Preferred Stock.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the name
and address of the Depositary. Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share will be entitled, in proportion to the
applicable fractional interest in a share of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights). The Depositary Shares will be evidenced by
Depositary Receipts issued pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts
but not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will
be exchangeable for definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to
the terms thereof, a holder of Depositary Shares is entitled to have the
Depositary deliver to such holder the whole shares of Preferred Stock
underlying the Depositary Shares evidenced by the surrendered Depositary
Receipts.
Dividends. The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction
of one cent, and any balance not so distributed shall be added to and treated
as part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
Conversion and Exchange. If any Preferred Stock underlying the Depositary
Shares is subject to provisions relating to its conversion or exchange as set
forth in a Prospectus Supplement relating thereto, each record holder of
Depositary Shares will have the right or obligation to convert or exchange
such Depositary Shares into other securities of the Company or rights or
payments pursuant to the terms thereof.
Redemption. After the date fixed for redemption as may be set forth in any
Prospectus Supplement relating to the Depositary Shares, the Depositary Shares
so called for redemption will no longer be deemed to be outstanding, and all
rights of the holders of the Depositary Shares will cease, except the right to
receive the
22
moneys payable upon such redemption and any money or other property to which
the holders of such redeemed Depositary Shares were entitled upon surrender to
the Depositary of the Depositary Receipts in respect thereof. Unless otherwise
provided in the Prospectus Supplement or in the Deposit Agreement, the
Depositary Shares will not be subject to any restriction on the repurchase or
redemption thereof while there is any arrearage in the payment of dividends.
Voting Rights. Upon receipt of notice of any meeting at which the holders of
the Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
shares of Preferred Stock underlying such holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the number of shares
of Preferred Stock underlying such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action which may be
deemed necessary by the Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting shares of Preferred Stock to the
extent it does not receive specific instructions from the holders of
Depositary Shares relating to such Preferred Stock.
Other Information. Unless otherwise provided in the Prospectus Supplement or
the Deposit Agreement, the Depositary Shares will not carry any conversion
rights, will not be subject, upon issuance, to any sinking fund provisions,
will not carry any liquidation or preemption rights and will not be, upon
issuance, subject to any further calls. The Depositary Shares will be, when
issued, freely alienable, fully paid and nonassessable. Unless otherwise
provided in the Prospectus Supplement or the Deposit Agreement, and except in
certain circumstances as described above under "Description of Capital Stock--
Anti-Takeover Provisions," the Preferred Stock will not be, upon issuance,
subject to discriminatory provisions based on ownership thresholds.
Amendment and Termination of the Deposit Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Depositary. However, any amendment which materially and adversely alters the
rights of the existing holders of Depositary Shares will not be effective
unless such amendment has been approved by the record holders of at least a
majority of the Depositary Shares then outstanding. A Deposit Agreement may be
terminated by the Company Depositary only if (i) all outstanding Depositary
Shares relating thereto have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock of the relevant series in
connection with any liquidation, dissolution or winding up of the Company and
such distribution has been distributed to the holders of the related
Depositary Shares.
Charges of Depositary. The Company will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. The Company will also pay charges of the Depositary in
connection with the initial deposit of the Preferred Stock and any redemption
of the Preferred Stock. Holders of Depositary Shares will pay transfer and
other taxes and governmental charges and such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary will forward to the holders of Depositary
Shares all reports and communications which are delivered to the Depositary
and which are required to be furnished to the holders of the Preferred Stock.
Neither the Depositary nor the Company will be liable if either is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares
or Preferred Stock unless satisfactory indemnity is furnished. Either may rely
upon written advice of its counsel or accountants, or information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Shares
or other persons believed to be competent and on documents believed to be
genuine.
23
Resignation and Removal of Depositary. The Depositary may resign at any time
by delivering to the Company notice of its election to do so, and the Company
may at any time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and the Company's
acceptance of such appointment. Such successor Depositary must be appointed
within 90 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in any of four
ways: (i) directly to purchasers, (ii) through agents, (iii) through
underwriters, and (iv) through dealers. Offers to purchase Securities may be
made by potential investors or their agents on an unsolicited basis or may be
solicited directly by the Company or agents designated by the Company from
time to time. The applicable Prospectus Supplement or Prospectus Supplements
will set forth the terms of the offering of the Securities, including the name
or names of any agents, underwriters or dealers, the purchase price of the
Securities and the proceeds to be received by the Company from such sale, any
underwriting discounts and other items constituting underwriters' compensation
and any discounts and commissions allowed or reallowed or paid to dealers or
agents. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers or agents may be changed from time to
time.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company in the form of underwriting discounts or
commissions. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters. Underwriters, dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act of 1933, as
amended. Such underwriters, dealers and agents may be entitled under
agreements which may be entered into by the Company to indemnification by the
Company against and contribution toward certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Securities may be distributed in one or more transactions from time to
time at a fixed price or prices, which may be changed, or from time to time at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so indicated in the applicable Prospectus Supplement or Prospectus
Supplements, the Company will authorize dealers or other persons acting as the
Company's agents to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
applicable Prospectus Supplement or Prospectus Supplements pursuant to delayed
delivery contracts ("Contracts") providing for payment and delivery on the
future date or dates stated in the applicable Prospectus Supplement or
Prospectus Supplements. Each Contract will be for an amount not less than, and
the aggregate amount of Securities sold pursuant to Contracts shall be not
less nor more than, the respective amounts stated in the applicable Prospectus
Supplement or Prospectus Supplements. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will in all cases be subject to the
approval of the Company. The obligations of any purchaser under any Contract
will not be subject to any conditions except (1) the purchase by an
institution of the Securities covered by its Contract shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject and (2) if Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of such Securities less the principal amount thereof covered
by Contracts. Underwriter and such other persons will not have any
responsibility in respect of the validity or performance of Contracts.
The Securities (other than Common Stock) will be a new issue of securities
with no established trading market. If so indicated in the applicable
Prospectus Supplement, any underwriters or agents to or through whom
Securities are sold by the Company for public offering and sale may make a
market in such Securities, but such
24
underwriters and agents will not be obligated to do so and may discontinue any
market-making at any time without notice. No assurance can be given as to the
liquidity of the trading market for any Securities, other than Common Stock.
Certain of the underwriters, dealers and/or agents and their associates may
be customers of, engage in transactions with and perform services for the
Company, including its subsidiaries, in the ordinary course of business.
VALIDITY OF SECURITIES
Unless indicated otherwise in a Prospectus Supplement relating thereto, the
validity of the Securities will be passed upon for Armstrong by Buchanan
Ingersoll Professional Corporation, Pittsburgh, Pennsylvania. With the
exception of the Preferred Stock Purchase Rights, the validity of the
Securities will be passed upon for the underwriters or agents, as the case may
be, by Sullivan & Cromwell, New York, New York. Sullivan & Cromwell will rely
upon the opinion of Buchanan Ingersoll Professional Corporation as to all
matters of Pennsylvania law.
EXPERTS
The consolidated financial statements and schedule of the Company and its
subsidiaries as of December 31, 1995 and 1994 and for each of the fiscal years
in the three-year period ended December 31, 1995, have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick L.L.P., independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended June 30, 1996 and 1995, and, March 31, 1996 and 1995, incorporated by
reference herein, the independent certified public accountants have reported
that they applied limited procedures in accordance with professional standards
for a review of such information. However, their separate reports included in
the Company's quarterly report on Form 10-Q for the quarters ended June 30,
1996 and March 31, 1996, certain portions of which are superseded by the
Company's Current Report on Form 8-K filed on October 18, 1996, and
incorporated by reference herein, state that they did not audit and they do
not express an opinion on the interim financial information. Accordingly, the
degree of reliance on such reports should be restricted in light of the
limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of section 11 of the 1933 Act for their
reports on the unaudited interim financial information because those reports
are not "reports" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of sections 7 and 11 of the
1933 Act.
The consolidated financial statements of Dal-Tile International Inc.
incorporated by reference in the Company's Current Report on Form 8-K, as
amended, for the fiscal year ended December 31, 1994, have been audited by
Ernst & Young L.L.P., independent auditors, as set forth in their report
thereon (which contains an explanatory paragraph with respect to a change in
the method of accounting for income taxes as discussed in Note 8 to the
consolidated financial statements) incorporated therein and herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
25
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Securities and Exchange Commission registration fee**.............. $86,208
Legal fees and expenses............................................ 75,000
Rating agencies' fees.............................................. 150,000
Printing fees and expenses......................................... 80,000
Trustee's fees and expenses........................................ 15,000
Accounting fees and expenses....................................... 35,000
Blue Sky fees and expenses......................................... 20,000
Transfer Agent's and registrar's fees and expenses................. 25,000
Miscellaneous...................................................... 13,792
-------
Total**.......................................................... 500,000
- --------
* All amounts are estimated except for the registration fee.
** A Securities and Exchange Commission filing fee of $62,500 was previously
paid when Registration Statement 33-38837 was initially filed. In addition,
approximately $290,000 of expenses not reflected in Item 14 was previously
paid in connection with Registration Statement 33-38837.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subchapter D of Chapter 17 of the PBCL provides in general that a
corporation may indemnify any person, including its directors, officers and
employees, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative (including actions by or in the
right of the corporation) by reason of the fact that he or she is or was a
representative of or serving at the request of the corporation, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
the action or proceeding if he or she is determined by the board of directors,
or in certain circumstances by independent legal counsel to the shareholders,
to have acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal proceeding, had no reason to believe his conduct was
unlawful. In the case of actions by or in the right of the corporation,
indemnification is not permitted in respect of any claim, issue or matter as
to which the person has been adjudged to be liable to the corporation except
to the extent a court determines that the person is fairly and reasonably
entitled to indemnification. In any case, to the extent that the person has
been successful on the merits or otherwise in defense of any claim, issue or
matter, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
Subchapter D of Chapter 17 also provides that the indemnification permitted or
required thereby is not exclusive of any other rights to which a person
seeking indemnification may be entitled.
Article IX of the Company's By-laws, as amended, provides that the Company
shall indemnify any person who was or is made a party to, or threatened to be
made a party to, or is involved in, any action, suit, or proceeding (including
actions by or in the right of the Company) by reason of the fact that he or
she is or was a director or officer of the Company (or is or was serving at
the request of the Company as a director, officer, trustee, employee, or agent
of a related enterprise including service with respect to an employee benefit
plan or is or was serving at the specific written request of the Company as a
director, officer, trustee, employee, or agent of an unrelated enterprise)
against all expenses and liability he or she actually incurs, including,
without limitation, judgments and amounts paid or to be paid in settlement of
or in actions brought by or in the right of the Company, to the fullest extent
permitted by law. Article IX also provides that directors and officers shall
be entitled to payment in advance of expenses incurred in defending any such
action, suit, or proceeding, upon receipt of an undertaking to repay all
amounts so advanced if it is ultimately determined that they are not entitled
II-1
to be indemnified or, in the case of criminal action, a majority of the Board
of Directors so determines. In addition, the Company has entered into
indemnification agreements with each of its directors which entitle the
director to indemnification for certain expenses to the fullest extent
permitted by law.
The By-laws of Armstrong also provide pursuant to Section 1713 of the PBCL
that a director of Armstrong shall not be personally liable for monetary
damages as such for any action taken, or any failure to take any action,
unless: (1) the director has breached or failed to perform the duties of
his/her office under Section 1712 of the 1988 BCL (relating to standard of
conduct and justifiable reliance); and (2) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. This limitation
on the personal liability of directors of Armstrong does not apply to: (1) the
responsibility or liability of a director pursuant to any criminal statute; or
(2) the liability of a director for the payment of taxes pursuant to local,
state or Federal law.
Armstrong and its subsidiaries also carry insurance insuring their officers
and directors against certain liabilities which they might incur as directors
or officers of the Company or of any other organization which they serve at its
request, including certain liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS
This Registration Statement includes the following Exhibits:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
Form of Underwriting Agreement for Debt Securities and Preferred
1.1 -- Stock
1.2 -- Form of Underwriting Agreement for Common Stock
3.1 -- Articles of Incorporation, as amended
3.2 -- By-laws, as amended
4.1 -- Indenture for Senior Debt Securities dated August 6, 1996
4.2 -- Indenture for Subordinated Debt Securities dated August 6, 1996
4.3 -- Form of Deposit Agreement
4.4 -- Rights Agreement between the Company and Chemical Mellon
Shareholder Services, L.L.C. effective as of March 21, 1996
5.1 -- Opinion of Buchanan Ingersoll Professional Corporation
12.1 -- Calculation of Ratios of Earnings to Fixed Charges
Calculation of Ratios of Earnings to Fixed Charges and Preferred
12.2 -- Stock Dividends
Letter re: unaudited interim financial information for the period
15.1 -- ended March 31, 1996
Letter re: unaudited interim financial information for the period
15.2 -- ended June 30, 1996
23.1 -- Consent of Buchanan Ingersoll Professional Corporation (contained
in its opinion filed as Exhibit 5.1 to this Registration
Statement)
23.2 -- Consent of KPMG Peat Marwick L.L.P.
23.3 -- Consent of Ernst & Young L.L.P.
24.1 -- Powers of Attorney
Statement of Eligibility on Form T-1 with respect to the Senior
25.1 -- Debt Securities
25.2 -- Statement of Eligibility on Form T-1 with respect to the
Subordinated Debt Securities
II-2
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i)To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) 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.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, that paragraphs (i) and (ii) above 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 Armstrong pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulations S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to
provide such interim financial information.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(7) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
(8) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of section
310 of the Trust Indenture Act ("Act") in accordance with the rules
and regulations prescribed by the Commission under section
305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Lancaster,
Commonwealth of Pennsylvania, on this 30th day of October, 1996.
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ L. A. Pulkrabek
----------------------------------
L. A. Pulkrabek
Senior Vice President, Secretary
and General Counsel
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
date above indicated:
George A. Lorch Chairman of the
Board and President
(Principal Executive Officer)
Frank A. Riddick, III Senior Vice-President,
Finance, and Chief Financial
Officer (Principal Financial Officer)
Bruce A. Leech, Jr. Controller (Principal
Accounting Officer)
H. Jesse Arnelle Director
Van C. Campbell Director
/s/ L. A. Pulkrabek
Donald C. Clark Director Attorney-in-Fact
E. Allen Deaver Director
Ursula F. Fairbairn Director
James E. Marley Director
J. Phillip Samper Director
Jerre L. Stead Director
II-5
EXHIBIT INDEX
Unless otherwise noted, the following exhibits are filed herewith:
PAGE
NUMBER IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION SYSTEM
----------- ----------- ----------
1.1 -- Form of Underwriting Agreement for Debt
Securities and Preferred Stock*
1.2 -- Form of Underwriting Agreement for Common Stock*
3.1 -- Articles of Incorporation, as amended, previously
filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994, file no. 1-2116, filed with
the Commission on March 28, 1995
3.2 -- By-laws, as amended, previously filed as an
exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994,
file no. 1-2116, filed with the Commission on
March 28, 1995
4.1 -- Indenture for Senior Debt Securities dated August
6, 1996*
4.2 -- Indenture for Subordinated Debt Securities dated
August 6, 1996*
4.3 -- Form of Deposit Agreement**
4.4 -- Rights Agreement between the Company and Chemical
Mellon Shareholder Services, effective as of
March 21, 1996, previously filed as an exhibit to
Form 8A/A, filed with the Commission on March 15,
1996, file no. 1-2116
5.1 -- Opinion of Buchanan Ingersoll Professional
Corporation**
12.1 -- Calculation of Ratios of Earnings to Fixed
Charges**
12.2 -- Calculation of Ratios of Earnings to Fixed
Charges and Preferred Stock Dividends**
15.1 -- Letter re: unaudited interim financial
information for the period ended March 31, 1996**
15.2 -- Letter re: unaudited interim financial
information for the period ended June 30, 1996**
23.1 -- Consent of Buchanan Ingersoll Professional
Corporation (contained in its opinion filed as
Exhibit 5.1 to this Registration Statement)**
23.2 -- Consent of KPMG Peat Marwick L.L.P.**
23.3 -- Consent of Ernst & Young L.L.P.**
24.1 -- Powers of Attorney*
25.1 -- Statement of Eligibility on Form T-1 with respect
to the Senior Debt Securities*
25.2 -- Statement of Eligibility on Form T-1 with respect
to the Subordinated Debt Securities*
- --------
*Previously filed
**Filed herewith
II-6