AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1998
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PARKER-HANNIFIN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-0451060
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
6035 PARKLAND BOULEVARD
CLEVELAND, OHIO 44124-4141
(216) 896-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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JOSEPH D. WHITEMAN, ESQ.
Vice President, General Counsel and Secretary
Parker-Hannifin Corporation
6035 Parkland Boulevard
Cleveland, Ohio 44124-4141
(216) 896-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copies to:
THOMAS C. DANIELS, ESQ. EARL D. WEINER, ESQ.
Jones, Day, Reavis & Pogue Sullivan & Cromwell
901 Lakeside Avenue 125 Broad Street
Cleveland, Ohio 44114 New York, NY 10004
(216) 586-3939 (212) 558-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement 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, 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. [ ]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1)(2) OFFERING PRICE(3) PRICE (2)(3) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------
Senior Debt Securities......... $600,000,000 100% $600,000,000 $177,000.00
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(1) Such amount in U.S. dollars or the equivalent thereof in foreign currencies
or foreign currency units as shall result in an aggregate initial public
offering price for all securities of $600,000,000.
(2) Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
contained herein relates to an aggregate of $755,000,000 principal amount of
Senior Debt Securities, consisting of $600,000,000 principal amount of
Senior Debt Securities being registered hereby and the $155,000,000
principal amount of Senior Debt Securities that are as yet unsold that were
previously registered under the Company's Registration Statement on Form S-3
(No. 333-02761) that was filed with the Securities and Exchange Commission
on April 23, 1996 and for which a filing fee of $53,448.28 has previously
been paid.
(3) Estimated solely for the purpose of calculating the registration fee.
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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.
PURSUANT TO RULE 429 OF THE SECURITIES ACT OF 1933, THE PROSPECTUS INCLUDED
IN THIS REGISTRATION STATEMENT IS A COMBINED PROSPECTUS RELATING ALSO TO
REGISTRATION STATEMENT NO. 333-02761.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 13, 1998
PROSPECTUS
$755,000,000
PARKER-HANNIFIN CORPORATION
SENIOR DEBT SECURITIES*
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Parker-Hannifin Corporation (the "Company") intends to issue from time to
time in one or more series its senior unsecured debt securities (the "Senior
Debt Securities"), consisting of debentures, notes, bonds and/or other unsecured
evidences of indebtedness, at an aggregate initial offering price not to exceed
U.S. $755,000,000 or the equivalent thereof if Senior Debt Securities are
denominated in one or more foreign currencies or foreign currency units, at
prices and on terms to be determined at or prior to the time of sale.
Specific terms of the Senior Debt Securities in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in an
accompanying supplement to this Prospectus (each, a "Prospectus Supplement"),
together with the terms of the offering of the Offered Securities, the initial
offering price and the net proceeds to the Company from the sale thereof. The
accompanying Prospectus Supplement will set forth, among other items, the
following with respect to the Offered Securities: the specific designation,
aggregate principal amount, authorized denominations, maturity, rate or method
of calculation of interest, if any, and dates for payment thereof, any
redemption, prepayment or sinking fund provisions, any exchange rights, and the
currency, currencies or currency units in which principal, premium, if any, or
interest, if any, is payable.
The Offered Securities may be sold through underwriters, dealers or agents
or may be sold directly to purchasers. If any underwriters, dealers or agents
are involved in the sale of any Offered Securities, their names and any
applicable fee, commission or discount arrangements will be set forth in the
accompanying Prospectus Supplement. The net proceeds to the Company of the sale
of Offered Securities will be the purchase price of such Offered Securities less
attributable issuance expenses, including underwriters', dealers' or agents'
compensation. See "Plan of Distribution" for indemnification arrangements for
underwriters, dealers and agents.
* Pursuant to Rule 429 under the Securities Act of 1933 (the "Securities Act"),
this Prospectus also relates to an additional $155,000,000 of Senior Debt
Securities which were registered under Registration Statement No. 333-02761.
This Prospectus may not be used to consummate sales of Senior Debt
Securities unless accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 1998.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY AGENT, DEALER OR UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER
OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING PROSPECTUS SUPPLEMENT
CONSTITUTES AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY SENIOR DEBT
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at
the following regional offices of the Commission: New York Regional Office,
Seven World Trade Center, Suite 1300, New York, New York 10048, and Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can be obtained by mail at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a Web
site (http : / / www.sec.gov) that contains reports, proxy and information
statements regarding registrants that file electronically with the Commission.
The Company's Common Stock is listed on the New York Stock Exchange, and such
reports, proxy and information statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. This Prospectus and the accompanying Prospectus Supplement
omit certain of the information contained in the Registration Statement in
accordance with the rules and regulations of the Commission. Reference is hereby
made to the Registration Statement and related exhibits for further information
with respect to the Company and the Senior Debt Securities. Statements contained
herein concerning the provisions of any document are not necessarily complete
and, in each instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
are incorporated by reference in this Prospectus:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1997; and
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1997 and December 31, 1997; and
(iii) The Company's Current Report on Form 8-K, dated December 15, 1997.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering hereunder shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of the filing of such documents. Any statement contained
herein or 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 and this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein or in the accompanying Prospectus
2
Supplement 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 provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents which have been incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Parker-Hannifin Corporation, 6035 Parkland Blvd., Cleveland, Ohio
44124-4141, Attention: Joseph D. Whiteman, Esq., Vice President, General Counsel
and Secretary, telephone (216) 896-3000.
THE COMPANY
Parker-Hannifin Corporation (the "Company") is a leading worldwide
full-line manufacturer of motion control products, including fluid power
systems, electromechanical controls and related components. Fluid power involves
the transfer and control of power through the medium of liquid, gas or air, in
hydraulic, pneumatic and vacuum applications. Fluid power systems move and
position materials, control machines, vehicles and equipment and improve
industrial efficiency and productivity. Components of a simple fluid power
system include a pump which generates pressure, valves which control the fluid's
flow, an actuator which translates the pressure in the fluid into mechanical
energy, a filter to remove contaminants and numerous hoses, couplings, fittings
and seals. Electromechanical control involves the use of electronic components
and systems to control motion and precisely locate or vary speed in automation
applications. In addition to motion control products, the Company also is a
leading worldwide producer of fluid purification, fluid flow, process
instrumentation, air conditioning, refrigeration, and electromagnetic shielding
and thermal management products.
The Company's manufacturing, service, distribution and administrative
facilities are located in 35 states, Puerto Rico and worldwide in 37 foreign
countries. Its motion control technology is used in products of its two business
segments: Industrial and Aerospace. The products are sold as original and
replacement equipment through product and distribution centers worldwide. The
Company markets its products through its direct-sales employees and more than
7,500 independent distributors. The Company's products are supplied to over
350,000 customer outlets in virtually every significant manufacturing,
transportation and processing industry.
The Company was incorporated in Ohio in 1938. Its principal executive
offices are located at 6035 Parkland Boulevard, Mayfield Heights, Ohio
44124-4141, telephone (216) 896-3000.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for each of the last five fiscal years ended June 30, 1997 and for
the six months ended December 31, 1997 and December 31, 1996. For the purpose of
calculating the ratio of earnings to fixed charges, "earnings" consist of income
from continuing operations before income taxes and fixed charges (excluding
capitalized interest). "Fixed charges" consist of (i) interest on indebtedness,
whether expensed or capitalized, and (ii) that portion of rental expense the
Company believes to be representative of interest.
SIX MONTHS ENDED FISCAL YEAR ENDED
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DECEMBER 31, DECEMBER 31, JUNE 30,
1997 1996 1997 1996 1995 1994 1993
------------ ------------ ---- ---- ----- ---- ----
Ratio of earnings to fixed
charges................... 8.98 6.52 8.34 9.09 10.16 3.68 3.05
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Senior
Debt Securities for general corporate purposes, which may include refinancing or
repayment of indebtedness, financing acquisitions as they may arise,
repurchasing the Company's equity securities, and financing of capital
expenditures and working capital. Further details relating to the uses of the
net proceeds of any such offering will be set forth in the applicable Prospectus
Supplement.
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DESCRIPTION OF SENIOR DEBT SECURITIES
The following description of the Senior Debt Securities sets forth certain
general terms and provisions of the Senior Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Senior Debt
Securities offered by any Prospectus Supplement (the "Offered Securities") and
the extent, if any, to which such general provisions may apply to the Senior
Debt Securities so offered will be described in the Prospectus Supplement or
Prospectus Supplements relating to such Offered Securities.
The Offered Securities are to be issued under an Indenture (the
"Indenture"), dated as of May 3, 1996, between the Company and National City
Bank, as Trustee (the "Trustee"). The Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus is a part and is available for
inspection at the corporate trust office of the Trustee at 1900 East Ninth
Street, Cleveland, Ohio 44114, or as described above under "Available
Information." The following summaries of certain provisions of the Senior Debt
Securities and the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms, and, with respect
to any particular Offered Securities, to the description of the terms thereof
included in the Prospectus Supplement relating thereto. Section numbers below
refer to provisions of the Indenture.
GENERAL
The Senior Debt Securities will be unsecured obligations of the Company and
will rank on a parity with all other unsecured unsubordinated indebtedness of
the Company. The Indenture does not limit the amount of Senior Debt Securities
that may be issued thereunder and provides that Senior Debt Securities may be
issued from time to time in one or more series. (Section 301)
The Prospectus Supplement or Prospectus Supplements relating to the
particular series of Senior Debt Securities offered thereby will describe the
following terms of the Offered Securities or the series of which they are a
part: (i) the title of the Offered Securities; (ii) any limit on the aggregate
principal amount of the Offered Securities; (iii) the Person to whom any
interest on the Offered Securities shall be payable, if other than the Person in
whose name that Offered Security is registered on the Regular Record Date for
such interest; (iv) the date or dates on which the principal of any Offered
Security is payable; (v) the rate or rates at which the Offered Securities will
bear interest, if any, and the date or dates from which such interest will
accrue and the dates on which such interest will be payable and the Regular
Record Dates for such Interest Payment Dates; (vi) the place or places where the
principal of and any premium and interest on any Offered Securities is payable;
(vii) the period or periods within which, the price or prices at which and the
terms and conditions upon which the Offered Securities may be redeemed in whole
or in part at the option of the Company; (viii) any mandatory or optional
sinking fund or analogous provisions; (ix) if other than denominations of $1,000
and any integral multiple thereof, the denominations in which any securities
will be issuable; (x) if the amount of payments of principal of and any premium
or the interest on the Offered Securities may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts shall be
determined; (xi) 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 Offered Securities is payable and the manner of determining
the equivalent thereof in the currency of the United States of America under the
Indenture; (xii) if the principal of or any premium or interest on any Offered
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 that or those in
which such Offered Securities are stated to be payable, the currency, currencies
or currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall 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 shall be
determined; (xiii) if other than the entire principal amount thereof, the
portion of the principal amount of any Offered Securities which will be payable
upon declaration of acceleration of the Maturity thereof; (xiv) if the principal
amount payable at the Stated Maturity of any Offered Securities will not be
determinable as of any one or more dates prior to the Stated Maturity, the
amount which shall be deemed to be the principal amount of such Offered
Securities as of any such date for any purpose under the Indenture; (xv) if
applicable, that the Offered Securities, in whole or any specified part, shall
be defeasible pursuant to the Indenture; (xvi) if applicable, that any Offered
Securities will be issuable in whole or in part in the form of one or more
Global Securities and, if so,
4
the respective Depositaries for such Global Securities, the form of any legend
or legends to be borne by any such Global Security in addition to or in lieu of
the legend referred to under "Book-Entry System" and, if different from those
described under such caption, any circumstances under which any such Global
Security may be exchanged in whole or in part for Senior Debt Securities
registered, and any transfer of such Global Security in whole or in part may be
registered, in the names of persons other than the Depositary for such Global
Security or its nominee; (xvii) any addition to or change in the Events of
Default applicable to any Offered Securities and any change in the right of the
Trustee or the requisite Holders of such Offered Securities to declare the
principal amount thereof due and payable pursuant to the Indenture; (xviii) any
addition to or change in the covenants set forth in Article Ten of the
Indenture, including, without limitation, those described in "Certain Covenants
of Senior Debt Securities," which apply to such Offered Securities; and (xix)
any other terms of the Offered Securities not inconsistent with the provisions
of the Indenture. (Section 301)
DENOMINATIONS, REGISTRATION OF TRANSFER AND EXCHANGE
Unless otherwise indicated in the Prospectus Supplement or Prospectus
Supplements relating thereto, the Senior Debt Securities will be issued only in
registered form, without coupons and only in denominations of $1,000 or any
integral multiple thereof. (Section 302)
Senior Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
stated principal amount. Certain United States federal income tax consequences,
if any, and other special considerations applicable to any such Original Issue
Discount Securities will be described in the Prospectus Supplement or Prospectus
Supplements relating thereto. "Original Issue Discount Security" means any
Senior Debt Security which provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of the Maturity
thereof upon the occurrence of an Event of Default and the continuation thereof.
(Section 101) In addition, certain United States federal income tax or other
considerations, if any, applicable to any Senior Debt Securities which are
denominated in a currency or currency unit other than United States dollars may
be described in the applicable Prospectus Supplement.
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, upon surrender for registration of transfer of any Senior
Debt Security of a series at the office or agency of the Company in the Place of
Payment for that series, the Company will execute, and the Trustee will
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Senior Debt Securities of the same series, of any
authorized denominations and of like tenor and aggregate principal amount. At
the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Senior Debt Securities of any
series may be exchanged for other Senior Debt Securities of the same series, of
any authorized denominations and of like tenor and aggregate principal amount,
upon surrender of the Senior Debt Securities to be exchanged at such office or
agency. No service charge will be made for any registration of transfer or
exchange of the Offered Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms.
"Subsidiary" is defined as a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company and/or
one or more Subsidiaries of the Company.
"Restricted Subsidiary" is defined as a Subsidiary of the Company
substantially all the property of which is located, or substantially all of the
business of which is carried on, within the United States and which owns a
Principal Property.
"Principal Property" is defined to mean any manufacturing or processing
plant or warehouse owned by the Company or any Restricted Subsidiary which is
located within the United States and the gross book value of which (including
related land, improvements, machinery and equipment without deduction of any
depreciation reserves) on the date as of which the determination is being made,
exceeds 1% of Consolidated Net Tangible
5
Assets, other than properties or any portion of a particular property which in
the opinion of the Company's Board of Directors are not of material importance
to the Company's business or to the use or operation of such property.
"Attributable Debt" is defined to mean the total net amount of rent
required to be paid during the remaining primary term of certain leases,
discounted at a rate per annum equal to the weighted average yield to maturity
of the Senior Debt Securities calculated in accordance with generally accepted
financial practices.
"Consolidated Net Tangible Assets" is defined to mean the aggregate amount
of assets, less applicable reserves and other properly deductible items, after
deducting (i) all liabilities other than deferred income taxes, Funded Debt and
shareholders' equity, and (ii) all goodwill and other intangibles of the Company
and its consolidated Subsidiaries.
"Funded Debt" is defined to mean (i) all indebtedness for money borrowed
having a maturity of more than 12 months from the date as of which the
determination is made or having a maturity of 12 months or less but by its terms
being renewable or extendible beyond 12 months from such date at the option of
the borrower and (ii) rental obligations payable more than 12 months from such
date under leases which are capitalized in accordance with generally accepted
accounting principles (such rental obligations to be included as Funded Debt at
the amount so capitalized at the date of such computation and to be included for
the purposes of the definition
of Consolidated Net Tangible Assets both as an asset and as Funded Debt at the
respective amounts so capitalized).
CERTAIN COVENANTS OF SENIOR DEBT SECURITIES
The Indenture contains, among other things, the following covenants:
Restrictions of Secured Debt. The Company will not itself, and will not
permit any Restricted Subsidiary to, incur, issue, assume or guarantee any
evidence of indebtedness for money borrowed ("Debt") secured by a mortgage,
pledge or lien ("Mortgage") on any Principal Property of the Company or any
Restricted Subsidiary, or on any shares of stock of or Debt of any Restricted
Subsidiary, without effectively providing that the Senior Debt Securities are
secured equally and ratably with, or, at the Company's option, prior to, such
secured Debt, unless the aggregate amount of all such secured Debt, together
with all Attributable Debt of the Company and its Restricted Subsidiaries with
respect to sale and leaseback transactions involving Principal Properties, with
the exception of such transactions which are excluded as described in
"Restrictions on Sales and Leasebacks" below, would not exceed 10% of
Consolidated Net Tangible Assets.
The above restriction does not apply to, and there will be excluded from
Debt in any computation under such restriction, (i) Debt secured by Mortgages on
property of, or on any shares of stock of or Debt of, any corporation existing
at the time such corporation becomes a Restricted Subsidiary, (ii) Debt secured
by Mortgages in favor of the Company or a Restricted Subsidiary, (iii) Debt
secured by Mortgages in favor of governmental bodies to secure progress or
advance payments or payments pursuant to contracts or statute, (iv) Debt secured
by Mortgages on property, shares of stock or Debt existing at the time of
acquisition thereof, including acquisition through merger or consolidation, and
Debt secured by Mortgages to finance the acquisition of property, shares of
stock or Debt or to finance construction on property which is incurred within
180 days of such acquisition or completion of construction, (v) Debt secured by
Mortgages securing industrial revenue or pollution control bonds, or (vi) any
extension, renewal or replacement of any Debt referred to in the foregoing
clauses (i) through (v) inclusive, provided, however, that such extension,
renewal or replacement Mortgage shall be limited to all or part of the same
property, shares of stock or Debt that secured the Mortgage extended, renewed or
replaced, plus improvements on such property. (Section 1007)
Restrictions on Sales and Leasebacks. Neither the Company nor any
Restricted Subsidiary may enter into any sale and leaseback transaction
involving any Principal Property, unless the aggregate amount of all
Attributable Debt of the Company and its Restricted Subsidiaries with respect to
such transaction plus all secured Debt to which the restrictions described under
"Restrictions on Secured Debt" above apply would not exceed 10% of Consolidated
Net Tangible Assets.
This restriction does not apply to, and there shall be excluded from
Attributable Debt in any computation under such restriction, any sale and
leaseback transaction if (i) the lease is for a period of not in excess of three
6
years, including renewal rights, (ii) the sale or transfer of the Principal
Property is made within 180 days after the later of its acquisition or
completion of construction, (iii) the lease secures or relates to industrial
revenue or pollution control bonds, (iv) the transaction is between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries, or (v) the
Company or such Restricted Subsidiary, within 180 days after the sale is
completed, applies (A) to the retirement of the Senior Debt Securities, other
Funded Debt of the Company ranking on a parity with or senior to the Senior Debt
Securities, or Funded Debt of a Restricted Subsidiary, or (B) to the purchase of
other property which will constitute a Principal Property having a value at
least equal to the value of the Principal Property leased, an amount equal to
the greater of (i) the net proceeds of the sale of the Principal Property
leased, or (ii) the fair market value of the Principal Property leased. In lieu
of applying proceeds to the retirement of Funded Debt, the Company may surrender
debentures or notes, including the Senior Debt Securities, to the Trustee for
retirement and cancellation, or the Company or a Restricted Subsidiary may
receive credit for the principal amount of Funded Debt voluntarily retired
within 180 days after such sale. (Section 1008)
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to Senior Debt
Securities of any series as being any one of the following events and such other
events as may be established for the Senior Debt Securities of a particular
series: (i) default for 30 days in any payment of interest on any Senior Debt
Security of such series; (ii) default in any payment of principal of or any
premium on any Senior Debt Security of such series when due; (iii) default in
the payment of any sinking fund installment with respect to such series when
due; (iv) default for 60 days after appropriate notice in performance of any
other covenant or warranty included in the Indenture, other than those covenants
or warranties included solely for the benefit of series of Senior Debt
Securities other than that series; (v) default under any evidence of
indebtedness of the Company or any Restricted Subsidiary exceeding $10,000,000
in aggregate principal amount, including a default with respect to Senior Debt
Securities of series other than that series or under any mortgage, indenture or
instrument under which any such indebtedness is issued or secured, including the
Indenture, which default results in acceleration of the maturity of such
indebtedness, if such acceleration is not rescinded or annulled or if such
indebtedness is not discharged within 10 days after written notice as provided
in the Indenture; (vi) certain events in bankruptcy, insolvency or
reorganization; or (vii) any other Event of Default provided with respect to
Senior Debt Securities of that series. (Section 501) If an Event of Default with
respect to Senior Debt Securities of any series at the time Outstanding occurs
and is continuing, either the Trustee or the Holders of at least 25% in
principal amount of the Outstanding Senior Debt Securities of that series may
declare the principal of such series, or, if the Senior Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal as
may be specified by the terms of that series, to be due and payable immediately.
At any time after a declaration of acceleration with respect to Senior Debt
Securities of any series has been made, but before a judgment or decree based on
acceleration has been obtained, the Holders of a majority in principal amount of
the Outstanding Senior Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502)
Reference is made to the Prospectus Supplement or Prospectus Supplements
relating to each series of Offered Securities which are Original Issue Discount
Securities for the particular provisions relating to acceleration of the
Maturity of a portion of the principal amount of such Original Issue Discount
Securities upon the occurrence of an Event of Default and the continuation
thereof.
The Indenture requires the Company to file annually with the Trustee an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 1009) The Indenture provides that if a default occurs
with respect to Senior Debt Securities of any series, the Trustee will give the
Holders of such series notice of such default when, as and to the extent
provided by the Trust Indenture Act, provided, however, that in the case of any
default under any covenant referenced in clause (iv) above with respect to such
series, no such notice to Holders will be given until at least thirty days after
the occurrence thereof. (Section 602)
The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the Indenture 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 indemnification of the Trustee, the Holders of a majority
7
in principal amount of the Outstanding Senior Debt 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 Senior Debt Securities of that
series. (Section 512)
MODIFICATION AND WAIVER
Without the consent of any Holders, the Company and the Trustee, at any
time from time to time, may modify or amend the Indenture to (i) evidence the
succession of another Person to the Company and such Person's assumption of any
covenants of the Company under the Indenture and any Senior Debt Securities;
(ii) add covenants of the Company for the benefit of Holders of all or any
series of Senior Debt Securities or to surrender any right or power conferred
upon the Company; (iii) add any additional Events of Default for the benefit of
the Holders of all or any series of Senior Debt Securities; (iv) add to or
change any provisions of the Indenture to the extent necessary to permit or
facilitate the issuance of Senior Debt Securities in bearer form, registrable or
not registrable as to principal, and with or without interest coupons, or to
permit or facilitate the issuance of Senior Debt Securities in uncertificated
form; (v) add to, change or eliminate any of the provisions of the Indenture in
respect of one or more series of Senior Debt Securities, subject to certain
limitations; (vi) secure the Senior Debt Securities; (vii) establish the form or
terms of Senior Debt Securities of any series; (viii) evidence and provide for
the acceptance of appointment by a successor Trustee with respect to one or more
series of Senior Debt Securities; or (ix) to cure any ambiguity, to correct or
supplement any provision in the Indenture which may be defective or inconsistent
with any other provision of the Indenture, provided that such action will not
adversely affect the interests of Holders of Senior Debt Securities of any
series in any material respect. (Section 901)
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of 66 2/3% in principal amount
of the Outstanding Senior Debt 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 Senior Debt
Security affected thereby, (i) change the stated maturity date of the principal
of, or any installment of principal of or interest on, any Senior Debt Security,
(ii) reduce the principal amount of, or any premium or interest on, any Senior
Debt Security, (iii) reduce the amount of principal of an Original Issue
Discount Security or any other Senior Debt Security payable upon acceleration of
the Maturity thereof, (iv) change the place or currency of payment of principal
of, or any premium or interest on, any Senior Debt Security, (v) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Senior Debt Security or (vi) reduce the percentage in principal amount of
Outstanding Senior Debt Securities of any series, the consent of whose Holders
is required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. (Section 902)
The Holders of 66 2/3% in principal amount of the Outstanding Senior Debt
Securities of any series may on behalf of the Holders of all Senior Debt
Securities of that series waive, insofar as that series is concerned, compliance
by the Company with certain restrictive provisions of the Indenture. (Section
1010) The Holders of a majority in principal amount of the Outstanding Senior
Debt Securities of any series may on behalf of the Holders of all Senior Debt
Securities of that series waive any past default under the Indenture with
respect to that series, except a default in the payment of the principal of, or
any premium or interest on, any Senior Debt Security of that series or in
respect of a provision which under the Indenture cannot be modified or amended
without the consent of the Holder of each Outstanding Senior Debt Security of
that series affected. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into or convey, transfer or
lease its property and assets substantially as an entirety to any person (a
"successor Person") unless (i) that person is a corporation, partnership or
trust organized and validly existing under the laws of the United States of
America or any State or the District of Columbia, (ii) the successor Person
assumes by supplemental indenture all of the Company's obligations on the Senior
Debt Securities outstanding at that time, (iii) after giving effect thereto, no
Event of Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing and (iv)
certain other conditions are met. The Indenture further provides that no
consolidation
8
or merger of the Company with or into any other corporation and no conveyance,
transfer or lease of its property substantially as an entirety to another
corporation may be made if, as a result thereof, any Principal Property of the
Company or any Restricted Subsidiary or any shares of Capital Stock or Debt of a
Restricted Subsidiary would become subject to a Mortgage which is not expressly
excluded from the restrictions or permitted by the provisions of Section 1008
(see "Restrictions on Secured Debt"), unless the Senior Debt Securities are
secured equally and ratably with, or prior to, all indebtedness secured thereby.
(Section 801)
DEFEASANCE AND DISCHARGE, COVENANT DEFEASANCE
The Company may elect, at its option at any time, to effect a defeasance
and discharge (a "Defeasance") or a covenant defeasance (a "Covenant
Defeasance") in respect of the Senior Debt Securities or any series thereof
designated as being defeasible pursuant to its terms.
Upon the Company's exercise of its option to effect a Defeasance, the
Company will be deemed to have been discharged from its obligations with respect
to such Senior Debt Securities on and after the date the conditions to
Defeasance described below are satisfied. For purposes of the Indenture,
Defeasance means the Company will be deemed to have paid and discharged the
entire indebtedness represented by such Senior Debt Securities and to have
satisfied all of its other obligations under or with respect to such Senior Debt
Securities and under the Indenture, except for the following (i) the rights of
Holders of such Senior Debt Securities to receive, solely from the trust fund
described in the Indenture, payments in respect of principal of, and any premium
and interest on, such Senior Debt Securities when due, (ii) certain of the
Company's obligations under the Indenture with respect to temporary securities;
registration, registration of transfer and exchange; mutilated, destroyed, lost
or stolen securities; maintenance of an office or agency; and money held in
trust for the benefit of Holders of Senior Debt Securities, (iii) the rights,
powers, trusts, duties and immunities of the Trustee and (iv) the foregoing
provisions. (Section 1302)
Upon the Company's exercise of its option to effect a Covenant Defeasance
with respect to any Senior Debt Securities or any series thereof, (i) the
Company will be released from its obligations with respect to liens resulting
from consolidations or mergers and its covenants relating to existence,
maintenance of properties, payment of taxes and other claims as well as any
additional covenants specified in the terms of such series of Senior Debt
Securities or any supplemental indenture related thereto, and (ii) the
occurrence of certain events of default related to the foregoing covenants will
be deemed not to be or result in an Event of Default, in each case after the
date that the conditions to Covenant Defeasance described below are satisfied.
(Section 1303)
The conditions that the Company must satisfy in order to effect a
Defeasance or a Covenant Defeasance in respect of the Senior Debt Securities or
any series thereof are as follows: (i) the Company will irrevocably deposit or
cause to be deposited with the Trustee as trust funds for the purpose of making
payments when due under the Indenture money or U.S. Government Obligations or a
combination thereof in an amount sufficient to pay and discharge the principal
of and any premium and interest on such Senior Debt Securities on the respective
Stated Maturities in accordance with the terms of such Senior Debt Securities
and the Indenture; (ii) delivery by the Company of an Opinion of Counsel
regarding the tax effects of such action on the Holders of Senior Debt
Securities; (iii) delivery of an Officer's Certificate to the effect that no
listed Senior Debt Securities will be delisted; (iv) no Event of Default shall
have occurred and be continuing at the time of the deposit or, regarding
bankruptcy-related events, at any time on or prior to the 90th day after such
deposit; (v) such deposit will not cause the Trustee to have a conflicting
interest under the Trust Indenture Act; (vi) such Defeasance or Covenant
Defeasance will not result in a breach of or default under any other agreement
to which the Company is a party or by which it is bound; (vii) such Defeasance
or Covenant Defeasance will not result in the trust arising from such deposit
constituting an investment company within the meaning of the Investment Company
Act unless the trust is registered or exempted thereunder; and (viii) delivery
by the Company to the Trustee of any Officer's Certificate and Opinion of
Counsel, each stating that all conditions precedent with respect to such
Defeasance or Covenant Defeasance have been complied with. (Section 1304)
9
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Senior Debt Security on any Interest Payment Date will be made
to the person in whose name such Senior Debt Security or one or more Predecessor
Senior Debt Securities is registered at the close of business on the Regular
Record Date for such interest. (Section 307)
The Company will maintain in each Place of Payment for any series of Senior
Debt Securities an office or agency where Senior Debt Securities of that series
may be presented or surrendered for payment, where Senior Debt Securities of
that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Senior Debt
Securities of that series and the Indenture may be served. (Section 1002)
If the Company acts as its own Paying Agent with respect to any series of
Senior Debt Securities, it will, on or before each due date of the principal of,
or any premium or interest on, any securities of such series, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal and any premium and interest so becoming due until such sums are
paid to such Persons or otherwise disposed of and will promptly notify the
Trustee of its action or failure to so act. Whenever the Company will have one
or more Paying Agents for any series of Senior Debt Securities, it will, prior
to each due date of the principal of, or any premium or interest on, any Senior
Debt Securities of that series, deposit with the Paying Agent a sum sufficient
to pay such amount, such sum to be held as provided by the Trust Indenture Act,
and, unless such Paying Agent is the Trustee, the Company will promptly notify
the Trustee of its action or failure to so act.
The Company will cause each Paying Agent for any series of Senior Debt
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent agrees with the Trustee, subject to the
Indenture, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company , or any other obligor upon the Senior
Debt Securities of that series, in the making of any payment in respect of the
Senior Debt Securities of that series, upon the written request of the Trustee,
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Senior Debt Securities of that series. (Section 1003)
REGARDING THE TRUSTEE
National City Bank is the Trustee under the Indenture. National City Bank
is currently committed to provide loans to the Company under (i) a $100,000,000
unsecured revolving credit facility, which expires October 31, 2002, and (ii) a
$3,000,000 line of credit for the leasing of manufacturing equipment, which
expires October 31, 2002. Both Duane E. Collins, President, Chief Executive
Officer and Director of the Company, and John G. Breen, a Director of the
Company, are directors of National City Bank.
BOOK-ENTRY SYSTEM
If so specified in the Prospectus Supplement or Prospectus Supplements,
Senior Debt Securities of any series may be issued under a book-entry system in
the form of one or more global securities (each a "Global Security"). Each
Global Security will be deposited with, or on behalf of, a depositary, which,
unless otherwise specified in the Prospectus Supplement or Prospectus
Supplements, will be The Depository Trust Company, New York, New York (the
"Depositary"). The Global Securities will be registered in the name of the
Depositary or its nominee and will bear a legend regarding the restrictions on
exchanges and registration of transfers thereof referred to below and any other
matters as may be provided for pursuant to the Indenture.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
was created to hold securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's
10
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of whom, and/or
their representatives, own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Upon the issuance of a Global Security in registered form, the Depositary
will credit, on its book-entry registration and transfer system, the respective
principal amounts of the Senior Debt Securities represented by such Global
Security to the accounts of participants. The accounts to be credited will be
designated by the underwriters, dealers or agents, if any, or by the Company, if
such Senior Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in the Global Security will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in the Global Security will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by such participants. The laws of some jurisdictions may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to transfer
beneficial interest in a Global Security.
So long as the Depositary or its nominee is the registered owner of a
Global Security, it will be considered the sole owner or holder of the Senior
Debt Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in such
Global Security will not be entitled to have the Senior Debt Securities
represented thereby registered in their names, will not receive or be entitled
to receive physical delivery of certificates representing the Senior Debt
Securities and will not be considered the owners or holders thereof under the
Indenture. Accordingly, each person owning a beneficial interest in such Global
Security must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing practice, in the event
that the Company requests any action of the holders or a beneficial owner
desires to take any action a holder is entitled to take, the Depositary would
act upon the instructions of, or authorize, the participant to take such action.
Payment of principal of, and any premium and interest on, Senior Debt
Securities represented by a Global Security will be made to the Depositary or
its nominee, as the case may be, as the registered owner and holder of the
Global Security representing such Senior Debt Securities. None of the Company,
the Trustee, any paying agent or registrar for such Senior Debt Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company has been advised by the Depositary that the Depositary will
credit participants' accounts with payments of principal and any premium or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary. The Company expects that payments by
participants to owners of beneficial interests in the Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
A Global Security may not be exchanged or transferred except as a whole by
the Depositary to a nominee or successor of the Depositary or by a nominee of
the Depositary to another nominee of the Depositary. A Global Security
representing all but not part of the Senior Debt Securities being offered hereby
is exchangeable or transferable for Senior Debt Securities in definitive form of
like tenor and terms if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as depositary for such Global Security or if at
any time the Depositary is no longer eligible to be or in good standing as a
clearing agency registered under the Exchange Act, and in either case, a
successor depositary is not appointed by the Company within 90 days of receipt
by the Company of such notice or of the Company becoming aware of such
ineligibility, or (ii) the Company in its sole discretion at any time determines
not to have all of the Senior Debt Securities represented by a Global Security
and notifies the Trustee thereof. A Global Security exchangeable pursuant to the
preceding sentence shall be exchangeable for Senior Debt Securities registered
in such names and in such authorized denominations as the Depositary for such
Global Security shall direct. (Section 305)
11
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in four ways: (i) directly to
purchasers, (ii) through agents, (iii) to or through underwriters and (iv) to
dealers.
The distribution of Senior Debt Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
In connection with the sale of Senior Debt Securities, underwriters or
agents may receive compensation from the Company or from purchasers of Senior
Debt Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell Senior Debt Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commission
from the purchasers from whom they may act as agents. Any underwriters or agents
participating in the distribution of Senior Debt Securities may be deemed to be
underwriters, and any discounts or commissions received by them from the Company
and any profit on the resale of Senior Debt Securities may be deemed to be
underwriting discounts and commission under the Securities Act.
Offers to purchase Offered Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales will be set forth in the
accompanying Prospectus Supplement.
Offers to purchase Offered Securities may be solicited by agents designated
by the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the offer
or sale of the Offered Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the accompanying Prospectus Supplement. Unless otherwise
indicated in the accompanying Prospectus Supplement, any such agent will be
acting on a reasonable efforts basis for the period of its appointment. Agents
may be entitled under agreements which may be entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act, and may be customers of, engage in
transactions with or perform services for the Company in the ordinary course of
business.
If any underwriters are utilized in the sale of the Offered Securities in
respect of which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters at the time of sale to them and
the names of the specific managing underwriter or underwriters, as well as any
other underwriters and the terms of the transaction will be set forth in the
accompanying Prospectus Supplement, which will be used by the underwriters to
make resales of the Offered Securities in respect of which this Prospectus is
delivered to the public. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with, or perform services for, the Company
in the ordinary course of business.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealer, as principal. The dealer may then resell such Offered
Securities to the public at varying prices to be determined by such dealer at
the time of resale. Dealers may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act, and
may be customers of, engaged in transactions with, or perform services of, the
Company in the ordinary course of business.
Offered Securities may also be offered or sold, if so indicated in the
accompanying Prospectus Supplement, in connection with a remarketing upon their
purchase, in accordance with their terms, by one or more firms ("remarketing
firms"), acting as principals for their own accounts or as agents for the
Company. Any remarketing firm will be identified and the terms of its agreement,
if any, with the Company and its compensation will be described in the
accompanying Prospectus Supplement. Remarketing firms may be entitled under
agreements which may be entered into with the Company to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with, or perform
services for, the Company in the ordinary course of business.
12
If so indicated in the accompanying Prospectus Supplement, the Company will
authorize agents and underwriters or dealers to solicit offers by certain
purchasers to purchase Offered Securities from the Company at the public
offering price set forth in the accompanying Prospectus Supplement pursuant to
delayed delivery contracts providing for payments and delivery on a specified
date in the future. Such contracts will be subject to only those conditions set
forth in the accompanying Prospectus Supplement, and the accompanying Prospectus
Supplement will set forth the commission payable for solicitation of such
offers. The obligations of any purchaser under any such contract will be subject
to the condition that the purchase of such Senior Debt Securities shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject. The underwriters and such other agents will not have
any responsibility in respect of the validity or performance of such contracts.
Any underwriters, agents or dealers utilized in the sale of Offered
Securities will not confirm sales to accounts over which they exercise
discretionary authority.
LEGAL MATTERS
The validity of the Senior Debt Securities offered hereby will be passed
upon for the Company by Jones, Day, Reavis & Pogue, Cleveland, Ohio, and for any
underwriters or agents by Sullivan & Cromwell, New York, New York. Sullivan &
Cromwell has on occasion been retained to perform legal services for the
Company.
EXPERTS
The consolidated financial statements of the Company contained in its
Annual Report on Form 10-K for the fiscal year ended June 30, 1997, filed with
the Commission and incorporated in this Prospectus have been examined by Coopers
& Lybrand L.L.P., independent accountants, to the extent and for the periods set
forth in their report dated July 31, 1997, incorporated in this Prospectus by
reference, and are incorporated by reference in reliance upon the report and the
authority of said firm as experts in accounting and auditing.
13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a list of the expenses to be incurred by the Company in
connection with the issuance and distribution of the Senior Debt Securities
being registered hereby, other than underwriting discounts and commissions. All
of the amounts shown are estimates except for the Commission registration fee.
Commission registration fee................................. $177,000
Printing and engraving costs................................ $ 15,000
Accounting fees and expenses................................ $ 16,500
Trustee fees and expenses................................... $ 15,000
Legal fees and expenses..................................... $ 35,000
Miscellaneous expenses...................................... $ 1,500
--------
Total....................................................... $260,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Registrant's Code of Regulations provides as follows:
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The Corporation shall indemnify, to the full extent permitted or authorized
by the Ohio General Corporation Law as it may from time to time be amended, any
person made or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer or
employee of the Corporation, or is or was serving at the request of the
Corporation as a director, trustee, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise. The indemnification
provided by this Article VII shall not be deemed exclusive of any other rights
to which any person seeking indemnification may be entitled under the articles
of incorporation or the regulations, or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, trustee, officer
or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 1701.13(E) of the Ohio Revised Code provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify any person
who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, other than an action by
or in the right of the corporation, by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, limited liability company, or a
partnership, joint venture, trust, or other enterprise, against expenses,
including attorneys' fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, if he
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgement, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of it self, create a presumption that the person did
not act in good faith and in a manner which he
II-1
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who
was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the corporation
to procure a judgment in its favor, by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, limited liability company, or a
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged
to be liable for negligence or misconduct in the performance of his duty
to the corporation unless, and only to the extent that, the court of
common pleas or the court in which such action or suit was brought
determines, upon application, that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses as the
court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against
a director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding.
(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, trustee, officer, employee, member, manager, or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in division (E)(1) or (2) of this section. Such
determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or
threatened with any such action, suit, or proceeding referred to in
division (E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4) (a) of this section
is not obtainable or if a majority vote of a quorum of disinterested
directors so directs, in a written opinion by independent legal counsel
other than an attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services for the
corporation or any person to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the action,
suit, or proceeding referred to in division (E)(1) or (2) of this
section was brought.
Any determination made by the disinterested directors under division (E)(4)
(a) or by independent legal counsel under division (E)(4)(b) of this section
shall be promptly communicated to the person who threatened or brought the
action or suit by or in the right of the corporation under division (E)(2) of
this section, and within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness of such
determination.
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding refereed to in division (E)(1) or
(2) of this section, the articles or the regulations of a corporation
II-2
state, by specific reference to this division, that the provisions of this
division do not apply to the corporation and unless the only liability
asserted against a director in an action, suit, or proceeding referred to
in divisions (E)(1) and (2) of this section is pursuant to section 1701.95
of the Revised Code, expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding shall be paid by the
corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding upon receipt of an undertaking by or on
behalf of the director in which be agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure
to act involved an act or omission undertaken with deliberate intent to
cause injury to the corporation or undertaken with reckless disregard
for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, member, manager, or agent in defending any
action, suit, or proceeding referred to in division (E)(1) or (2) of this
section, may be paid by the corporation as they are incurred, in advance of
the final disposition of the action, suit, or proceeding, as authorized by
the directors in the specific case, upon receipt of an undertaking by or on
behalf of the director, trustee, officer, employee, member, manager, or
agent to repay such amount, if it ultimately is determined that he is not
entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to any other rights granted to those
seeking indemnification under the articles or the regulations, any
agreement, a vote of shareholders or disinterested directors, or otherwise,
both as to action in their official capacities and as to action in another
capacity while holding their offices or positions, and shall continue as to
a person who has ceased to be a director, trustee, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish
similar protection, including, but not limited to, trust funds, letters of
credit, or self-insurance, on behalf of or for any person who is or was a
director, officer, employee, member, manager, or agent of the corporation,
or is or was serving at the request of the corporation as a director,
trustee, officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, limited liability company, or a
partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under this section.
Insurance may be purchased from or maintained with a person in which the
corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and (7)
of this section. Divisions (E) (1) and (2) of this section do not create
any obligation to repay or return payments made by the corporation pursuant
to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes
all constituent entities in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director,
officer, employee, trustee, member, manager, or agent of such a constituent
entities, or is or was serving at the request of such constituent entity as
a director, trustee, officer, employee, trustee, member, manager, or agent
of another corporation, domestic or foreign, nonprofit or for profit,
limited liability company, or partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section with
respect to the new or surviving corporation as would if he had served the
new or surviving corporation in the same capacity.
The Company carries directors' and officers' liability insurance that
covers certain liabilities and expenses of the Company's directors and officers.
II-3
Reference is also made to the indemnification provisions in the form of
United States Distribution Agreement filed as exhibit 1.1 to this Registration
Statement and to the undertaking "(c)" in Item 17 of this Registration
Statement.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following exhibits are filed herewith and made a part
hereof:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
1.1 Form of United States Distribution Agreement.
4.1 Indenture, dated May 3, 1996, between the Company and
National City Bank, as Trustee, relating to the Senior Debt
Securities.
5.1 Opinion of Jones, Day, Reavis & Pogue as to the validity of
the securities being offered.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Powers of Attorney.
25.1 Statement of Eligibility of National City Bank under the
Trust Indenture Act of 1939 on Form T-1 relating to the
Indenture.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated 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 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the registration statement is on Form
S-3, Form S-8 or Form F-3, and 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 section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this 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 post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned 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 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report
II-4
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) 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 Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CLEVELAND, STATE OF OHIO, ON MARCH 13, 1998.
PARKER-HANNIFIN CORPORATION
By: /s/ THOMAS A. PIRAINO
------------------------------------
Thomas A. Piraino
Vice President -- Law and Assistant
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
* /s/ P.S. PARKER Chairman of the Board and Director March 13, 1998
- ------------------------------------------------
P.S. Parker
* /s/ D. E. COLLINS President, Chief Executive Officer March 13, 1998
- ------------------------------------------------ and Director
D. E. Collins (Principal Executive Officer)
* /s/ M. J. HIEMSTRA Vice President -- Finance and March 13, 1998
- ------------------------------------------------ Administration and
M. J. Hiemstra Chief Financial Officer
(Principal Financial Officer)
* /s/ H. C. GUERITEY, JR. Controller March 13, 1998
- ------------------------------------------------ (Principal Accounting Officer)
H. C. Gueritey, Jr.
Director March 13, 1998
- ------------------------------------------------
Allan L. Rayfield
* /s/ J. G. BREEN Director March 13, 1998
- ------------------------------------------------
J. G. Breen
* /s/ P. G. SCHLOEMER Director March 13, 1998
- ------------------------------------------------
P. G. Schloemer
* /s/ P. C. ELY, JR. Director March 13, 1998
- ------------------------------------------------
Paul C. Ely, Jr.
Director March 13, 1998
- ------------------------------------------------
Allen H. Ford
* /s/ W. R. SCHMITT Director March 13, 1998
- ------------------------------------------------
W. R. Schmitt
II-6
SIGNATURE TITLE DATE
--------- ----- ----
* /s/ H.R. ORTINO Director March 13, 1998
- ------------------------------------------------
Hector R. Ortino
* /s/ D. W. SULLIVAN Director March 13, 1998
- ------------------------------------------------
D. W. Sullivan
* /s/ S. A. STREETER Director March 13, 1998
- ------------------------------------------------
S.A. Streeter
* /s/ P.W. LIKINS Director March 13, 1998
- ------------------------------------------------
Peter W. Likins
* /s/ M.A. TRESCHOW Director March 13, 1998
- ------------------------------------------------
Michael A. Treschow
Director March 13, 1998
- ------------------------------------------------
Debra L. Starnes
* The undersigned, by signing his name hereto, does hereby sign and execute this Registration Statement pursuant
to the Powers of Attorney executed by the above-named officers and directors of the Registrant and which have
been filed with the Securities and Exchange Commission on behalf of such officers and directors.
/s/ THOMAS A. PIRAINO March 13, 1998
- ------------------------------------------------
Thomas A. Piraino, Attorney-in-Fact
II-7
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
1.1 Form of United States Distribution Agreement.
4.1 Indenture, dated May 3, 1996, between the Company and
National City Bank, as Trustee, relating to the Senior Debt
Securities.
5.1 Opinion of Jones, Day, Reavis & Pogue as to the validity of
the securities being offered.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Powers of Attorney.
25.1 Statement of Eligibility of National City Bank under the
Trust Indenture Act of 1939 on Form T-1 relating to the
Indenture.
II-8