AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 2, 1997
REGISTRATION NO. 333-39201
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WESTELL TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE
(State or other jurisdiction of
incorporation or organization)
36-3154957
(I.R.S. Employer
Identification No.)
750 N. Commons Drive
Aurora, Illinois 60504
(630) 898-2500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Gary F. Seamans
Chairman and
Chief Executive Officer
750 N. Commons Drive
Aurora, Illinois 60504
(630) 898-2500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
Neal J. White
William J. Quinlan, Jr.
Heidi J. Steele
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
(312) 372-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined in
light of market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the securities
laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 2, 1997
PROSPECTUS
$300,000,000
WESTELL TECHNOLOGIES, INC.
DEBT SECURITIES AND CLASS A COMMON STOCK
Westell Technologies, Inc. ("Westell" or the "Company") may from time to
time offer, together or separately, (1) its debt securities (the "Debt
Securities"), which may be either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities") and (2) shares of its Class A Common Stock, par value $0.01 per
share (the "Class A Common Stock"). The Debt Securities and the Class A Common
Stock are collectively referred to herein as the "Securities."
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to $300,000,000 aggregate public
offering price (or its equivalent (based on the applicable exchange rate at the
time of the sale) in one or more foreign currencies, currency units or composite
currencies, including European currency units, as shall be designated by the
Company). Certain specific terms of the particular Securities in respect of
which this Prospectus is being delivered is set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement"), including, where
applicable, (i) in the case of Debt Securities, the specific title, aggregate
principal amount, currency, the denomination, whether such Debt Securities are
secured or unsecured obligations, whether such Debt Securities are senior or
subordinated, maturity, premium, if any, the interest rate (which may be fixed,
floating or adjustable), the time and method of calculating payment of interest,
if any, the place or places where principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, the currency in which
principal of (and premium, if any) and interest, if any, on such Debt Securities
will be payable, any terms of redemption at the option of the Company or the
Holder, any sinking fund provisions, terms for any conversion into other
Securities, the initial public offering price and other special terms and (ii)
in the case of Class A Common Stock, the number of shares offered for sale by
the Company and the public offering price or method of determining the public
offering price. If so specified in the applicable Prospectus Supplement, Debt
Securities of a series may be issued in whole or in part in the form of one or
more temporary or permanent global securities. The Company's Class A Common
Stock is listed on the Nasdaq National Market under the symbol "WSTL." Any Class
A Common Stock sold pursuant to a Prospectus Supplement will be quoted on such
market.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities, when issued, will be subordinated in right of payment to all Senior
Debt (as defined) of the Company, including any outstanding Senior Debt
Securities. See "Description of Debt Securities -- Subordination of Subordinated
Debt Securities."
The Prospectus Supplement may contain information concerning U.S. federal
income tax considerations, if applicable to the Securities offered.
The Securities may be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. See "Plan of Distribution." If agents of the Company or any dealers or
underwriters are involved in the sale of the Securities in respect of which the
Prospectus is being delivered, the names of such agents, dealers or underwriters
and any applicable commissions or discounts, if any, will be set forth in or may
be calculated from the Prospectus Supplement with respect to such Securities.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
SEE "RISK FACTORS" ON PAGE 5 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE SECURITIES.
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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 date of this Prospectus is , .
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, NW, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C.
20549, at prescribed rates. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the World Wide Web site is http://www.sec.gov. The Class A Common Stock is
listed for quotation on the Nasdaq National Market. Reports, proxy statements
and other information concerning the Company may be inspected at the office of
The Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities. This Prospectus which
constitutes part of the Registration Statement does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Securities offered
hereby, reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission at the addresses set forth above or
through the Commission's World Wide Web site.
Statements contained in this Prospectus as to the contents of any contract
or other document are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such contract or document
filed as an exhibit to the Registration Statement.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended June 30, 1997 and September 30, 1997;
(3) The Company's Current Reports on Form 8-K dated October 2, 1997 and
November 20, 1997; and
(4) The description of the Class A Common Stock contained in the Company's
Registration Statement on Form 8-A dated November 22, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Registration Statement of which
this Prospectus forms a part and prior to the termination of the offering of the
Securities offered hereby shall be deemed to be incorporated by reference into
this Prospectus and be a part hereof from the date of filing such documents.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Stephen J. Hawrysz, Corporate Secretary, Westell Technologies, Inc.,
750 N. Commons Drive, Aurora, Illinois, 60504 (telephone number: (630)
898-2500).
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or a Prospectus
Supplement in connection with the offering described herein and therein, and any
information or representations not contained herein or therein must not be
relied upon as having been authorized by the Company or by any underwriter,
dealer or agent. This Prospectus may not be used to consummate sales of Offered
Securities unless accompanied by a Prospectus Supplement. Neither this
Prospectus nor any Prospectus Supplement shall constitute an offer to sell or a
solicitation of an offer to buy any of the Offered Securities covered by this
Prospectus in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. The delivery of this Prospectus and
the applicable Prospectus Supplement at any time does not imply that the
information herein is correct as of any time subsequent to the date hereof.
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THE COMPANY
Since 1980, Westell has developed telecommunications products that address
the needs of telephone companies ("telcos") to upgrade their existing network
infrastructures in order to deliver advanced data and voice services to their
customers. Westell designs, manufactures, markets and services a broad range of
digital and analog products used by telcos to deliver services primarily over
existing copper telephone wires that connect end users to a telco's central
office (the "local access network"). Westell also markets its products and
services to other telecommunications and information service providers seeking
direct access to end-user customers. Westell's principal customers include the
Regional Bell Operating Companies (the "RBOCs") as well as GTE. In addition,
Westell sells products to several other entities, including public telephone
administrations located outside the U.S., independent domestic local exchange
carriers, competitive access providers, interexchange carriers, Internet service
providers and the U.S. federal government.
Westell is a leading worldwide innovator and developer of broadband
telecommunications access systems using an emerging technology known as
Asymmetric Digital Subscriber Line ("ADSL"), which is part of the family of
Digital Subscriber Line ("DSL") products. ADSL systems will allow telcos and
other local access providers to provide interactive multimedia services over
existing copper wire, thus offering a more cost-effective and faster deployment
alternative to fiber optic cable in the "last-mile" of the local access network.
ADSL systems enable interactive multimedia services such as advanced data
applications, including high speed Internet access, local area network ("LAN")
extension, telecommuting and medical imaging, as well as emerging video
applications, including video-on-demand, distance learning, video conferencing
and work at home. Currently, over 100 domestic and international customers,
including Ameritech, Bell Atlantic, Bell Canada, British Telecom, GTE, MCI, US
West Interprise, Telecom Italia and leading Internet service providers are
conducting or have conducted technical or marketing trials for new interactive
multimedia services that rely on Westell's ADSL systems. These ADSL trials
primarily began in 1995 and 1996, except for the Bell Atlantic trial which
commenced in 1993. Early trials focused on video applications such as video on
demand and distance learning. Currently, the focus is on more intense data
applications such as high speed Internet access, LAN extension and
telecommuting. Westell is unable to predict the outcome of such trials or when
such trials will be completed.
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RISK FACTORS
Prior to making an investment decision with respect to the Securities
offered hereby, prospective investors should carefully consider the specific
factors set forth under the caption "Risk Factors" in the applicable Prospectus
Supplement pertaining thereto, together with all of the other information
appearing herein or therein or incorporated by reference herein, in light of
their particular investment objectives and financial circumstances.
USE OF PROCEEDS
Unless otherwise specified in an applicable Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Securities will be
used for general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the unaudited consolidated ratios of earnings to fixed
charges for the six months ended September 30, 1997 and September 30, 1996 and
for each of the years in the five-year period ended March 31, 1997:
SIX MONTHS ENDED
--------------------- FISCAL YEAR ENDED MARCH 31,
SEPT. 30, SEPT. 30, ----------------------------------------
1997 1996 1997 1996 1995 1994 1993
--------- --------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges(1)........................... -- -- -- -- -- -- 12.2
Coverage deficiency (in thousands)(2).. $14,957 $6,112 $24,521 $3,339 $913 $676 $ --
- ------------------------------
(1) For purposes of computing the ratios of earnings to fixed charges, income
before income tax expense (excluding interest costs capitalized) plus fixed
charges has been divided by fixed charges. Fixed charges consist of interest
costs (including interest costs capitalized) and estimated interest included
in rentals (one-third of net rental expense).
(2) Coverage deficiency represents the dollar amount of earnings required to
achieve a one-to-one ratio of earnings to fixed charges.
DESCRIPTION OF DEBT SECURITIES
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 Senior Debt Securities are to be issued under an
Indenture (the "Senior Indenture"), between the Company, as issuer, and LaSalle
National Bank, as Trustee (the "Trustee"). The Subordinated Debt Securities are
to be issued under a separate Indenture (the "Subordinated Indenture"), also
between the Company, as issuer, and LaSalle National Bank, as Trustee. The
Senior Indenture and Subordinated Indenture are sometimes referred to
collectively as the "Indentures." A copy of the form of each Indenture is filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The following summaries of certain provisions of the 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, Articles or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement, such Sections,
Articles or defined terms are incorporated by reference herein or therein, as
the case may be. Section and Article references used herein are references to
the Indentures.
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GENERAL
The Indentures will provide that the Debt Securities may be issued in
separate series 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, including any outstanding Senior Debt
Securities, 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 and the price or prices at which the Debt Securities to be offered
will be issued and will describe the following terms of such 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 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
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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-Defeasance of Certain Covenants," or under
both such captions; (16) if applicable, the terms of any right to convert Debt
Securities into shares of Class A 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 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 legends referred to under "Form, Exchange and Transfer" or "Global
Securities" and, if different from those described under such captions, any
circumstances under which any such Global Security may be exchanged in whole or
in part for 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) the nonapplicability
of, or any addition to or change in the covenants in the Indentures described
under "Certain Covenants of the Company" applicable to any of such Debt
Securities; and (20) any other terms of such Debt Securities not inconsistent
with the provisions of the relevant 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 the applicable
Prospectus Supplement under "United States Taxation." In addition, certain
special United States federal income tax or other considerations (if any)
applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars will be described in the
applicable Prospectus Supplement.
CONVERSION AND EXCHANGE RIGHTS
The terms on which Debt Securities of any series are convertible or
exchangeable into Class A 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 or exchange is mandatory or at the
option of the Holder and may include provisions pursuant to which the number of
shares of Class A Common Stock or other securities or property to be received by
the Holders of Debt Securities upon conversion or exchange would be calculated
according to the market price of Class A 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. In the event
of any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization, debt restructuring or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or any assignment for the benefit of creditors or any
other marshaling of assets and liabilities of the Company, the holders of Senior
Debt will be entitled to receive payment in full of all amounts due or to become
due on or in respect of all Senior Debt in cash or other payment satisfactory to
the holders of Senior Debt before the Holders of the Subordinated Debt
Securities are entitled to receive any payment on account of principal of or any
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premium or interest on the Subordinated Debt Securities or on account of the
purchase, redemption or other acquisition of Subordinated Debt Securities or
before the Company may make any sinking fund or defeasance payment to the
Trustee or any Paying Agent in accordance with the Subordinated Indenture.
Notwithstanding the foregoing, any amounts previously deposited by the Company
with the Trustee or Paying Agent in accordance with the subordination provisions
of Article Fifteen of the Subordinated Indenture at the time of such deposit may
be paid to the Holders of Subordinated Debt Securities ("Defeased Payments").
(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 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 that any Subordinated Debt Securities are declared due and
payable before their Stated Maturity as a result of an Event of Default, the
holders of the Senior Debt outstanding at the time such Subordinated Debt
Securities so become due and payable will be entitled to receive payment in full
of all amounts due or to become due on or in respect of all Senior Debt in cash
or other payment satisfactory to the holders of Senior Debt before the Holders
of the Subordinated Debt Securities are entitled to receive any payment by the
Company on account of the principal of or any premium or interest on the
Subordinated Debt Securities or on account of the purchase, redemption or other
acquisition of Subordinated Debt Securities or before the Company may make any
sinking fund or defeasance payment to the Trustee or any Paying Agent in
accordance with the Subordinated Indenture (other than Defeased Payments). If
the payment of Subordinated Debt Securities is accelerated because of an Event
of Default, the Company is required under the Subordinated Indenture to promptly
notify holders of Senior Debt of the acceleration. (Section 1503)
The Company may not make any payment of principal (or premium, if any) or
interest, if any, in respect of the Subordinated Debt Securities or on account
of the purchase, redemption or other acquisition of Subordinated Debt Securities
or any payment constituting a sinking fund or defeasance payment to the Trustee
or Paying Agent in accordance with the Subordinated Indenture (other than
Defeased Payments) if (i) a default in the payment of principal, premium, if
any, or interest (including a default under any repurchase or redemption
obligation) or other amounts with respect to any Senior Debt occurs and is
continuing beyond the applicable grace period or (ii) any other event of default
occurs and is continuing with respect to Designated Senior Debt (as defined)
that permits the holders thereof or their representatives to accelerate the
maturity thereof, and the Trustee under the Subordinated Indenture receives a
notice of such default (a "Payment Blockage Notice") from the Company, a holder
of such Designated Senior Debt or other person permitted to give such notice
under the Subordinated Indenture. The Company may and shall resume payments on
the Subordinated Debt Securities and may purchase, redeem or otherwise acquire
the Subordinated Debt Securities and may make a sinking fund or defeasance
payment to the Trustee or Paying Agent in accordance with the Subordinated
Indenture (a) in the case of a payment default, upon the date on which such
default is cured or waived or ceases to exist and (b) in the case of a
nonpayment default, the earlier of the date on which such nonpayment default is
cured or waived or ceases to exist or 179 days after the date on which the
applicable Payment Blockage Notice is received (unless the subordination
provisions of Article Fifteen of the Subordinated Indenture prohibit the
payment, distribution, purchase, redemption, acquisition, sinking fund payment
or defeasance payment at the time of such payment, distribution, purchase,
redemption, acquisition, sinking fund payment or defeasance payment (including,
without limitation, in the case of a nonpayment default referred to in clause
(ii) above, as a result of a payment default with respect to the applicable
Senior Debt as a consequence of the acceleration of the maturity thereof or
otherwise)). No new period of payment blockage may be commenced unless and until
365 days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and all scheduled payments of principal, premium if any, and
interest on the Subordinated Debt Securities that have come due have been paid
in full in cash. No nonpayment default that existed or was
8
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
(unless such default was waived, cured or otherwise ceased to exist and
thereafter subsequently reoccurred) under the Subordinated Indenture shall be,
or be made, the basis for a subsequent Payment Blockage Notice. (Section 1504)
In the case of Subordinated Debt Securities that are convertible at the option
of the Holder, 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. (Section
1515)
"Senior Debt" is defined in the Subordinated Indenture to mean: 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, rent with respect to, and
all fees and other amounts payable in connection with, the following, whether
absolute or contingent, secured or unsecured, due or to become due, outstanding
on the date of the Subordinated Indenture or thereafter created, incurred or
assumed: (a) indebtedness of the Company evidenced by a credit or loan
agreement, note, bond, debenture or other written obligation, (b) all
obligations of the Company for money borrowed, (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind, (d) obligations
of the Company (i) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles, or
(ii) under any lease or related document (including a purchase agreement) that
provides that the Company is contractually obligated to purchase or cause a
third party to purchase the leased property and the obligations of the Company
under such lease or related document to purchase or to cause a third party to
purchase such leased property, (e) all obligations of the Company under interest
rate and currency swaps, caps, floors, collars, hedge agreements, forward
contracts, or similar agreements or arrangements, (f) all obligations of the
Company with respect to letters of credit, bankers' acceptances or similar
facilities (including reimbursement obligations with respect to any of the
foregoing), (g) all obligations of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
arising in the ordinary course of business), (h) all obligations of the type
referred to in clauses (a) through (g) above of another Person and all dividends
of another Person, the payment of which, in either case, the Company has assumed
or guaranteed (or in effect guaranteed through an agreement to purchase or
otherwise (including, without limitation, "take or pay" and similar
arrangements)), or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on property of the Company, and all obligations of the
Company with respect thereto, and (i) renewals, extensions, modifications,
replacements, restatements and refundings of, or any indebtedness or obligation
issued in exchange for, any such indebtedness or obligation described in clauses
(a) through (h) of this paragraph; provided, however, that Senior Debt shall not
include the Subordinated Debt Securities or any such indebtedness or obligation
if the terms of such indebtedness or obligation (or the terms of the instrument
under which, or pursuant to which it is issued) expressly provide that such
indebtedness or obligation is not superior in right of payment to the
Subordinated Debt Securities.
"Designated Senior Debt" means the Company's obligations under certain
existing Senior Debt and the Company's obligations under any other particular
Senior Debt in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such Senior Debt shall be
"Designated Senior Debt" for purposes of the Subordinated Indenture (provided
that such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Debt to exercise the rights of Designated
Senior Debt).
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
9
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 imposed 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 tenor)
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 tenor, 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 (the "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
10
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 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 others 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 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
11
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 moneys 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 for a period ending the earlier of 10 business days prior to the date
such money would escheat to the state or 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)
CERTAIN COVENANTS OF THE COMPANY
Except as set forth below or as otherwise provided in the applicable
Prospectus Supplement with respect to any series of Senior Debt Securities, the
Company is not restricted by the Senior Indenture from incurring, assuming or
becoming liable for any type of debt or other obligations, from paying dividends
or making distributions on its capital stock or purchasing or redeeming its
capital stock. The Senior Indenture does not require the maintenance of any
financial ratios or specified levels of net worth or liquidity. In addition, the
Senior Indenture does not contain any provision that would require the Company
to repurchase or redeem or otherwise modify the terms of any of its Senior Debt
Securities upon a change in control or other events involving the Company which
may adversely affect the creditworthiness of the Senior Debt Securities.
Unless otherwise indicated in the applicable Prospectus Supplement, certain
covenants contained in the Senior Indenture which are summarized below will be
applicable (unless waived or amended) to the series of Senior Debt Securities to
which such Prospectus Supplement relates so long as any of the Senior Debt
Securities of such series are outstanding.
LIMITATIONS ON LIENS
The Company covenants that it will not issue, incur, create, assume or
guarantee, and will not permit any Restricted Subsidiary to issue, incur,
create, assume or guarantee, any debt for borrowed money secured by a mortgage,
security interest, pledge, lien, charge or other encumbrance ("mortgages") upon
any Principal Property (as defined below) of the Company or any Restricted
Subsidiary or upon any shares of stock or indebtedness of any Restricted
Subsidiary (whether such Principal Property, shares or indebtedness are now
existing or owned or hereafter created or acquired) without in any such case
effectively providing concurrently with the issuance, incurrence, creation,
assumption or guarantee of any such secured debt, or the grant of a mortgage
with respect to any such indebtedness, that the Senior Debt Securities (together
with, if the Company shall so determine, any other indebtedness of or guarantee
by the Company or such Restricted Subsidiary ranking equally with the Senior
Debt Securities) shall be secured equally and ratably with (or, at the option of
the Company, prior to) such secured debt. The foregoing restriction, however,
will not apply to: (a) mortgages on property existing at the time of acquisition
thereof by the Company or any Subsidiary, provided that such mortgages were in
existence prior to the contemplation of such acquisition; (b) mortgages on
property, shares of stock or indebtedness or other assets of any corporation
existing at the time such corporation becomes a Restricted Subsidiary, provided
that such mortgages are not incurred in anticipation of such corporation
becoming a Restricted Subsidiary (which may include property previously leased
by the Company and leasehold interests thereon, provided that the lease
terminates prior to or upon the acquisition); (c) mortgages on property, shares
of stock or indebtedness existing at the time of acquisition thereof by the
Company or a Subsidiary or mortgages thereon to secure the payment of all or any
part of the purchase price thereof, or mortgages on property, shares of stock or
indebtedness to secure any indebtedness for borrowed money incurred prior to, at
the time of, or within 270 days after, the latest of the acquisition thereof,
or, in the case of property, the completion of construction, the completion of
improvements, or the commencement of substantial commercial operation of such
12
property for the purpose of financing all or any part of the purchase price
thereof, such construction, or the making of such improvements; (d) mortgages to
secure indebtedness owing to the Company or to a Restricted Subsidiary; (e)
mortgages existing at the date of the Senior Indenture; (f) mortgages on
property of a corporation existing at the time such corporation is merged into
or consolidated with the Company or a Subsidiary or at the time of a sale, lease
or other disposition of the properties of a corporation as an entirety or
substantially as an entirety to the Company or a Restricted Subsidiary, provided
that such mortgage was not incurred in anticipation of such merger or
consolidation or sale, lease or other disposition; (g) mortgages in favor of the
United States or any State, territory or possession thereof (or the District of
Columbia), or any department, agency, instrumentality or political subdivision
of the United States or any State, territory or possession thereof (or the
District of Columbia), 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
constructing or improving the property subject to such mortgages; (h) mortgages
created in connection with the acquisition of assets or a project financed with,
and created to secure, a Nonrecourse Obligation (as defined below); and (i)
extensions, renewals, refinancings or replacements of any mortgage referred to
in the foregoing clauses (a), (b), (c), (d), (e), (f), (g), and (h) provided,
however, that any mortgages permitted by any of the foregoing clauses (a), (b),
(c), (d), (e), (f), (g), and (h) shall not extend to or cover any property of
the Company or such Restricted Subsidiary, as the case may be, other than the
property, if any, specified in such clauses and improvements thereto, and
provided further that any refinancing or replacement of any mortgages permitted
by the foregoing clauses (g) and (h) shall be of the type referred to in such
clauses (g) or (h), as the case may be.
Notwithstanding the restrictions outlined in the preceding paragraph, the
Company or any Restricted Subsidiary will be permitted to issue, incur, create,
assume or guarantee debt secured by a mortgage which would otherwise be subject
to such restrictions, without equally and ratably securing the Senior Debt
Securities, provided that after giving effect thereto, the aggregate amount of
all debt so secured by mortgages (not including mortgages permitted under
clauses (a) through (i) above) does not exceed 10% of the Consolidated Net
Tangible Assets of the Company. (Section 1008 of the Senior Indenture)
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
The Company covenants that it will not, nor will it permit any Restricted
Subsidiary to, enter into any Sale and Lease-Back Transaction (as defined below)
with respect to any Principal Property, other than any such transaction
involving a lease for a term of not more than three years or any such
transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries, unless (a) the Company or such Restricted Subsidiary
would be entitled to incur indebtedness secured by a mortgage on the Principal
Property involved in such transaction at least equal in amount to the
Attributable Debt with respect to such Sale and Lease-Back Transaction, without
equally and ratably securing the Senior Debt Securities, pursuant to the
limitation on liens in the Senior Indenture; or (b) the Company shall apply an
amount equal to the greater of the net proceeds of such sale or the Attributable
Debt with respect to such Sale and Lease-Back Transaction within 180 days of
such sale to either (or a combination of) the retirement (other than any
mandatory retirement, mandatory prepayment or sinking fund payment or by payment
at maturity) of debt for borrowed money of the Company or a Restricted
Subsidiary that matures more than 12 months after the creation of such
indebtedness or the purchase, construction or development of other comparable
property.
Notwithstanding the restrictions outlined in the preceding paragraph, the
Company or any Restricted Subsidiary will be permitted to enter into Sale and
Lease-Back Transactions which would otherwise be subject to such restrictions,
without applying the net proceeds of such transactions in the manner set forth
in clause (b) above, provided that after giving effect thereto, the aggregate
amount of such Sale and Lease-Back Transactions, together with the aggregate
amount of all debt
13
secured by mortgages not permitted by clauses (a) through (i) under the
limitation in the Senior Indenture on liens, does not exceed 10% of the
Consolidated Net Tangible Assets of the Company. (Section 1009 of the Senior
Indenture)
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS (SECTION 101)
The term "Attributable Debt" when used in connection with a Sale and
Lease-Back Transaction involving a Principal Property shall mean, at the time of
determination, the lesser of: (a) the fair value of such property (as determined
in good faith by the Board of Directors of the Company); or (b) the present
value of the total net amount of rent required to be paid under such lease
during the remaining term thereof (including any renewal term or period for
which such lease has been extended), discounted at the rate of interest set
forth or implicit in the terms of such lease or if not practicable to determine
such rate, the weighted average interest rate per annum (in the case of Original
Issue Discount Securities, the imputed interest rate) borne by the Senior Debt
Securities of each series outstanding pursuant to the Indenture compounded
semi-annually. For purposes of the foregoing definition, rent shall not include
amounts required to be paid by the lessee, whether or not designated as rent or
additional rent, on account of or contingent upon maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges. In the case of
any lease which is terminable by the lessee upon the payment of a penalty, such
net amount shall be the lesser of the net amount determined assuming termination
upon the first date such lease may be terminated (in which case the net amount
shall also include the amount of the penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated) and the net amount determined assuming no such
termination.
The term "Consolidated Net Tangible Assets" shall mean, as of any
particular time, total assets (excluding applicable reserves) less: (a) total
current liabilities, except for (1) notes and loans payable; (2) current
maturities of long-term debt and (3) current maturities of obligations under
capital leases; and (b) certain intangible assets to the extent included in
total assets; all as set forth on the most recent consolidated balance sheet of
the Company and its consolidated subsidiaries and computed in accordance with
generally accepted accounting principles.
The term "Nonrecourse Obligation" means indebtedness or other obligations
substantially related to (i) the acquisition of assets not previously owned by
the Company or any Restricted Subsidiary or (ii) the financing of a project
involving the development or expansion of properties of the Company or any
Restricted Subsidiary, as to which the obligee with respect to such indebtedness
or obligation has no recourse to the Company or any Restricted Subsidiary or any
assets of the Company or any Restricted Subsidiary other than the assets which
were acquired with the proceeds of such transaction or the project financed with
the proceeds of such transaction (and the proceeds thereof).
The term "Principal Property" shall mean the land, land improvements,
buildings and fixtures (to the extent they constitute real property interests
(including any leasehold interest therein)) constituting the principal corporate
office or any manufacturing facility (whether now owned or hereafter acquired)
which: (a) is owned by the Company or any Subsidiary; (b) is located within any
of the present 50 states of the United States of America (or the District of
Columbia); (c) has not been determined in good faith by the Board of Directors
of the Company not to be materially important to the total business conducted by
the Company and its Subsidiaries taken as a whole; and (d) has a book value on
the date as of which the determination is being made in excess of 1.0% of
Consolidated Net Tangible Assets of the Company as most recently determined on
or prior to such date.
The term "Restricted Subsidiary" shall mean any Subsidiary which owns any
Principal Property; provided, however, that the term "Restricted Subsidiary"
shall not include (a) any Subsidiary which is principally engaged in financing
receivables, or which is principally engaged in financing the Company's
operations outside the United States of America; or (b) any Subsidiary less than
80% of
14
the voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries if the common stock of such Subsidiary is traded on any national
securities exchange or quoted on the Nasdaq National Market or in the
over-the-counter market.
The term "Sale and Lease-Back Transaction" shall mean any arrangement with
any Person providing for the leasing by the Company or any Restricted Subsidiary
of any Principal Property which property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such person.
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding voting stock of such corporation is at the time
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries, and the
accounts of which are consolidated with those of the Company in the most recent
consolidated financial statements in accordance with generally accepted
accounting principles. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that the Company may not consolidate with or
merge into any other Person (in a transaction in which the Company is not the
surviving corporation), or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person (a "Successor Person"), unless (i)
the Successor Person (if any) is a corporation, limited liability company,
partnership, trust or other entity organized and 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, and (iii) certain other conditions are met. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under each
Indenture with respect to Debt Securities of any series outstanding under such
Indenture (unless such event is specifically inapplicable to a particular series
as described in the Prospectus Supplement relating thereto): (a) failure to pay
principal of or any premium on any Debt Security of that series when due whether
or not such payment is prohibited by the subordination provision of the
Subordinated Indenture; (b) failure to pay any interest on any Debt Securities
of that series when due, continued for 30 days 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 whether or not such payment is prohibited by the
subordination provision of the Subordinated Indenture; (d) failure to perform
any other covenant of the Company in such Indenture (other than a covenant
included in the Indenture 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 aggregate principal amount of the
Outstanding Securities of that series, as provided in the Indenture; (e) certain
events in bankruptcy, insolvency or reorganization with respect to the Company;
and (f) any other Event of Default specified in the applicable Prospectus
Supplement. (Section 501)
Each Indenture will provide that, 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 under such Indenture 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 Indenture may declare the principal amount of the Debt
Securities of that series (or, in the case of
15
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. Any payment by the Company on the
Subordinated Debt Securities following any such acceleration will be subject to
the subordination provisions of Article Fifteen of the Subordinated Indenture.
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 a 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)
Each Indenture will include a covenant requiring the Company 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 Indenture and, if so,
specifying all such known defaults. (Section 1004)
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
16
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 Indenture, (h) reduce the percentage in
principal amount of Outstanding Securities of any series necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (i) modify any of the provisions set forth in this paragraph except to
increase any such percentage or to provide that certain other provisions of the
Indenture may not be modified or waived without the consent of the Holder of
each Outstanding Debt Security affected thereby, or (j) if applicable, make any
change that adversely affects the right to convert or exchange any Debt Security
as provided in, and subject to the terms of, the Indenture. (Section 902)
The Indentures will provide that the Holders of a majority in aggregate
principal amount of the Outstanding Securities of any series may waive, on
behalf of the Holders of all Debt Securities of such series, compliance by the
Company with certain restrictive provisions of the Indentures. (Section 1010 and
1008 of the Senior Indenture and the Subordinated Indenture, respectively). The
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive any past default under the Indenture with respect to Debt
Securities of that series, except a default (a) in the payment of principal of
or any premium or interest on any Debt Security of such series or (b) in respect
of a covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of such
series affected. (Section 513)
Each Indenture 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 Indenture as of any
date, or whether a quorum is present at a meeting of Holders of Debt Securities
(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 other 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)
17
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
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, to hold moneys for payment in
trust and, if applicable, to effect conversion of Debt Securities) 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 "Certain Covenants of the Company"
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)
18
The Company may, at its option, satisfy and discharge each of the
Indentures (except for certain obligations of the Company and the Trustee,
including, among others the obligations to apply money held in trust) when (i)
either (a) all Debt Securities under such Indenture previously authenticated and
delivered (other than (1) Debt Securities that were destroyed, lost or stolen
and that have been replaced or paid and (2) Debt Securities for the payment of
which money has been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust) have
been delivered to the Trustee for cancellation or discharge from such trust)
have been delivered to the Trustee for cancellation or (b) all such Debt
Securities under such Indenture not theretofore delivered to the Trustee for
cancellation (1) have become due and payable, (2) will become due and payable at
their Stated Maturity within one year, or (3) are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name and at the expense of the
Company, and the Company has deposited or caused to be deposited with the
Trustee as trust funds in trust for such purpose an amount sufficient to pay and
discharge the entire indebtedness on such Debt Securities under such Indenture
not previously delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of Debt Securities
under such Indenture which have become due and payable) or to the Stated
Maturity or redemption date as the case may be, (ii) the Company has paid or
caused to be paid all other sums payable under such Indenture by the Company,
and (iii) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each to the effect that all conditions precedent relating
to the satisfaction and discharge of such Indenture have been satisfied.
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)
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, without regard to conflict
of law principles thereof. (Section 112)
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. (Section 613) The Trustee is
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest and there is a default under the Securities of any series
for which the Trustee serves as trustee, the Trustee must eliminate such
conflict or resign. (Section 608)
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 43,500,000 shares
of Class A Common Stock, 25,000,000 shares of Class B Common Stock (the "Class B
Common Stock") and 1,000,000 shares of Preferred Stock, each with a par value of
$0.01 per share.
19
The following description of the capital stock of the Company and certain
provisions of the Company's Amended and Restated Certificate of Incorporation
and By-laws is a summary and is qualified in its entirety by the provisions of
the Amended and Restated Certificate of Incorporation and By-laws, which are
incorporated by reference as exhibits to the Registration Statement.
COMMON STOCK
DIVIDENDS. Holders of record of shares of common stock are entitled to
receive such dividends when, if and as may be declared by the Board of Directors
out of funds legally available for such purposes. No dividends may be declared
or paid on any share of any class of common stock, unless such dividend, at the
same rate per share, is simultaneously declared or paid on each share of the
other class of common stock. In the case of a stock dividend or distribution,
holders of Class A Common Stock are entitled to receive the same percentage
dividend or distribution as holders of Class B Common Stock and vice versa,
except that stock dividends and distributions shall be made in Class A Common
Stock to the holders of Class A Common Stock and in Class B Common Stock to the
holders of Class B Common Stock.
VOTING RIGHTS. Holders of Class A Common Stock are entitled to one vote per
share and holders of Class B Common Stock are entitled to four votes per share.
Holders of shares of common stock will vote as a single class on all matters
submitted to a vote of stockholders except with respect to future issuances of
Class B Common Stock and as otherwise required by law. The Amended and Restated
Certificate of Incorporation provides that all issuances of Class B Common Stock
must be approved by the affirmative vote of a majority of each class of common
stock, voting separately as a class, except with respect to (i) payment of stock
dividends on Class B Common Stock and (ii) a stock split, reclassification or
other subdivision of the Class B Common Stock. Under Delaware law, the
affirmative vote of the holders of a majority of the outstanding shares of any
class of common stock is required to approve, among other things, a change in
the designations, preferences or limitations of the shares of such class of
common stock.
CONVERTIBILITY. Each Class B Common Stock is convertible, at the option of
its holder, into one share of Class A Common Stock at any time. The Class A
Common Stock is not convertible into Class B Common Stock. Each share of Class B
Common Stock shall automatically be converted into one share of Class A Common
Stock in the event (i) such share shall be transferred (including, without
limitation, by way of sale, assignment, exchange, gift, bequest, appointment or
otherwise) to any person or entity other than a "Permitted Transferee" or (ii)
the number of shares of Class B Common Stock outstanding at any time is equal to
or less than 10% of the total number of outstanding shares of Class B Common
Stock and Class A Common Stock. A "Permitted Transferee" includes (i) any other
holder of Class B Common Stock, (ii) any member of the Penny family (as defined
in the Voting Trust Agreement dated February 23, 1994, as amended (the "Voting
Trust")), or the Simon family (as defined in the Voting Trust), (iii) Gary F.
Seamans, his spouse or any of their descendants and (iv) certain other permitted
transferees.
LIQUIDATION RIGHTS. Upon liquidation, dissolution or winding-up of the
Company, the holders of Class A Common Stock are entitled to share ratably with
the holders of Class B Common Stock in all assets available for distributions
after payment in full to creditors.
OTHER PROVISIONS. The holders of common stock are not entitled to
preemptive or subscription rights. In any merger, consolidation or business
combination, the consideration to be received per share by holders of Class A
Common Stock must be identical to that received by holders of Class B Common
Stock. No class of common stock may be subdivided, consolidated, reclassified or
otherwise changed unless the other class of common stock concurrently is
subdivided, consolidated, reclassified or otherwise changed in the same
proportion and in the same manner. All outstanding shares are, and the Class A
Common Stock offered hereby will be upon issuance, validly issued, fully paid
and nonassessable.
20
PREFERRED STOCK
The Board of Directors has the authority to issue up to 1,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the designation
of such series, without any further vote or action by stockholders. The issuance
of Preferred Stock could adversely affect the voting power of holders of both
classes of common stock and the likelihood that such holders will receive
dividend payments and payments upon liquidation and could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company has no present plan to issue any shares of Preferred Stock.
PLAN OF DISTRIBUTION
The Company may sell the Securities separately or together, (i) to one or
more underwriters or dealers for public offering and sale by them and (ii) to
investors directly or through agents. The distribution of the Securities may be
effected from time to time in one or more transactions at a fixed price or
prices (which may be changed 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. Each Prospectus Supplement will describe the method of
distribution of the Securities offered thereby.
In connection with the sale of the Securities, underwriters, dealers or
agents may receive compensation from the Company or from purchasers of the
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers or agents which
participate in the distribution of the Securities may be deemed to be
underwriters under the Securities Act and any discounts or commissions received
by them and any profit on the resale of the Securities received by them may be
deemed to be underwriting discounts and commissions thereunder. Any such
underwriter, dealer or agent will be identified and any such compensation
received from the Company will be described in the Prospectus Supplement. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Under agreements that may be entered into with the Company, underwriters,
dealers and agents may be entitled to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the underwriters, dealers or agents
may be required to make in respect thereof.
The Company may grant underwriters who participate in the distribution of
Securities an option to purchase additional Securities to cover over-allotments,
if any.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with or perform services for the Company in the
ordinary course of business.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by McDermott, Will & Emery, Chicago, Illinois.
EXPERTS
The consolidated financial statements and schedules of the Company as set
forth as of March 31, 1997 and 1996, and for each of the three years in the
period ended March 31, 1997, have been incorporated by references in this
Prospectus and in the Registration Statement on Form S-3, of which this
Prospectus is a part, in reliance upon the reports of Arthur Andersen LLP,
independent public accountants, incorporated by reference herein, and are
included in reliance upon the authority of such firm as experts in giving said
reports.
21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate, subject to future contingencies, of the
expenses to be incurred by the Registrant in connection with the issuance and
distribution of the securities being registered:
Registration Fee............................................ $ 90,910
*Legal Fees and Expense..................................... 250,000
*Trustee Fees and Expenses.................................. 25,000
*Accounting Fees and Expenses............................... 75,000
*Blue Sky and Legal Investment Fees and Expenses............ 10,000
*Printing and Engraving Fees................................ 150,000
Rating Agency Fees.......................................... Not Applicable
*Listing Fees............................................... Not Applicable
*Miscellaneous.............................................. $99,090
--------------
Total....................................................... $700,000
==============
- ---------------
*Estimated pursuant to instruction to Item 511 of Regulation S-K.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to an action (other than an action by
or in the right of the corporation) by reason of his service as a director or
officer of the corporation, or his service, at the corporation's request, as a
director, officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees) that are actually and reasonably
incurred by him ("Expenses"), and judgments, fines and amounts paid in
settlement that are actually and reasonably incurred by him, in connection with
the defense or settlement of such action, provided that he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Although Delaware law permits a corporation to indemnify any person referred to
above against Expenses in connection with the defense or settlement of an action
by or in the right of the corporation, provided that he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the corporation's
best interests, if such person has been judged liable to the corporation,
indemnification is only permitted to the extent that the Court of Chancery (or
the court in which the action was brought) determines that, despite the
adjudication of liability, such person is entitled to indemnity for such
Expenses as the court deems proper. The determination as to whether a person
seeking indemnification has met the required standard of conduct is to be made
(1) by a majority vote of a quorum of disinterested members of the board of
directors, or (2) by independent legal counsel in a written opinion, if such a
quorum does not exist or if the disinterested directors so direct, or (3) by the
stockholders. The General Corporation Law of the State of Delaware also provides
for mandatory indemnification of any director, officer, employee or agent
against Expenses to the extent such person has been successful in any proceeding
covered by the statute. In addition, the General Corporation Law of the State of
Delaware provides the general authorization of advancement of a director's or
officer's litigation expenses in lieu of requiring the authorization of such
advancement by the board of directors in specific cases, and that
indemnification and advancement of expenses provided by the statute shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement or otherwise.
The Company's Amended and Restated Certificate of Incorporation and the
Company's Amended and Restated By-laws provide for indemnification of the
Company's directors, officers, employees and other agents to the fullest extent
not prohibited by the Delaware law.
II-1
The Company understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws.
The Company maintains liability insurance for the benefit of its directors
and officers.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
*1.1(a) Form of Underwriting Agreement for Debt Securities.
*1.1(b) Form of Underwriting Agreement for Class A Common Stock.
4.1 Amended and Restated Certificate of Incorporation, as
amended (incorporated herein by reference to Exhibit 3.2 to
Westell Technologies, Inc.'s Registration Statement on Form
S-1, as amended, Registration No. 33-98024).
4.2 Amended and Restated By-laws (incorporated herein by
reference to Exhibit 3.3 to Westell Technologies, Inc.'s
Registration Statement on Form S-1, as amended, Registra-
tion No. 33-98024).
4.3 Form of Senior Indenture.
4.4 Form of Subordinated Indenture.
4.5 Form of Senior Security (included in Exhibit 4.3).
4.6 Form of Subordinated Security (included in Exhibit 4.4).
5.1 Opinion of McDermott, Will & Emery.
9.1 Voting Trust Agreement dated February 23, 1994, as amended
(incorporated herein by reference to Exhibit 9.1 to Westell
Technologies, Inc.'s Registration Statement on Form S-1, as
amended, Registration No. 33-98024).
12.1 Statement Regarding Computation of Ratios.
21.1 Subsidiaries of the Registrant (incorporated herein by
reference to Exhibit 21.1 to Westell Technologies, Inc.'s
Registration Statement on Form S-1, as amended, Registration
No. 33-98024).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of McDermott, Will & Emery (included in Exhibit
5.1).
+24.1 Powers of Attorney of certain officers and the directors of
Westell Technologies, Inc.
25.1 Statement of Eligibility of Trustee on Form T-1 of LaSalle
National Bank, as trustee for the Senior Debt Securities.
25.2 Statement of Eligibility of Trustee on Form T-1 of LaSalle
National Bank, as trustee for the Subordinated Debt
Securities.
- ------------------------------
* To be filed on a Current Report on Form 8-K.
+ Previously Filed.
ITEM 17. UNDERTAKINGS
(a) The 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
II-2
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 and 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 percent 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 (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrant hereby undertakes 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.
(c) The Registrant hereby undertakes 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 Securities and Exchange Commission under Section
305(b)(2) of the Act.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the 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 Securities Act of 1933 and will be governed by the
final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement, or amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized on the day of December 1, 1997.
WESTELL TECHNOLOGIES, INC.
By: /s/ STEPHEN J. HAWRYSZ
------------------------------------
Stephen J. Hawrysz
Chief Financial Officer, Vice
President,
Secretary and Treasurer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on December 1, 1997.
SIGNATURE TITLE
--------- -----
* Chairman of the Board of Directors, President and
- ------------------------------------------------ Chief Executive Officer (Principal Executive Officer)
Gary F. Seamans
* Vice-Chairman of the Board of Directors
- ------------------------------------------------
Robert H. Gaynor
/s/ MELVIN J. SIMON Assistant Secretary and Treasurer and Director
- ------------------------------------------------
Melvin J. Simon
* Chief Financial Officer, Vice President, Secretary and
- ------------------------------------------------ Treasurer (Principal Financial Officer and Principal
Stephen J. Hawrysz Accounting Officer)
* Director
- ------------------------------------------------
Stefan D. Abrams
* Director
- ------------------------------------------------
Michael A. Brunner
* Director
- ------------------------------------------------
Paul A. Dwyer
* Director
- ------------------------------------------------
Ormand J. Wade
* Pursuant to Power of Attorney
/s/ MELVIN J. SIMON
- ------------------------------------------------
Melvin J. Simon
II-4