AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 2007
REGISTRATION NO. 333-
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UNITED STATES
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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CRANE CO.
(Exact name of registrant as specified in its charter)
DELAWARE 13-1952290
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 FIRST STAMFORD PLACE
STAMFORD, CT 06902
(203) 363-7300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
AUGUSTUS I. DUPONT
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CT 06902
(203) 363-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, 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 of 1933, 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 of 1933, 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 registration statement pursuant to General Instruction
I.D. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box. / X /
If this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. field to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box. / /
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CALCULATION OF REGISTRATION FEE
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AMOUNT TO BE REGISTERED/PROPOSED MAXIMUM
OFFERING PRICE PER UNIT/PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE OFFERING PRICE/AMOUNT
SECURITIES TO BE REGISTERED OF REGISTRATION FEE(1)
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Debt Securities
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(1) An indeterminate aggregate offering price and number or amount of debt
securities is being registered as may from time to time be offered and sold
at indeterminate prices. In accordance with Rules 456(b) and 457(r), Crane
Co. is deferring payment of all of the registration fee, except for $8,090
that has been paid previously with respect to $100,000,000 aggregate public
offering price of debt securities that already were registered pursuant to
Registration Statement No. 333-109002 that have not yet been issued and
sold. Pursuant to Rule 457(p) under the Securities Act, such unutilized
filing fee may be applied to the filing fee payable pursuant to this
registration statement.
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CRANE CO.
Debt Securities
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Crane Co. from time to time may offer to sell debt securities in one or
more series. This prospectus describes some of the general terms that may apply
to these securities and the general manner in which they may be offered. The
specific terms of any securities to be offered, and the specific manner in which
they may be offered, will be described in one or more supplements to this
prospectus or in one or more reports which we file with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
Our common stock is listed on the New York Stock Exchange and trades
under the ticker symbol "CR." If we decide to seek a listing of any securities
offered by this prospectus, we will disclose the exchange or market on which the
securities will be listed, if any, or where we have made an application for
listing, if any, in one or more supplements to this prospectus or in one or more
reports which we file with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
We may offer and sell these securities to or through one or more
underwriters, dealers or agents, or directly to other purchasers, on a
continuous or delayed basis. If any offering involves underwriters, dealers or
agents, arrangements with them will be described in a prospectus supplement that
relates to that offering or in one or more reports which we file with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
WE URGE YOU TO CAREFULLY READ THE INFORMATION INCLUDED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT FOR A DISCUSSION
OF FACTORS YOU SHOULD CAREFULLY CONSIDER BEFORE DECIDING TO INVEST IN ANY
SECURITIES OFFERED BY THIS PROSPECTUS, INCLUDING THE INFORMATION IN ITEM 1A OF
OUR MOST RECENTLY FILED ANNUAL REPORT ON FORM 10-K AND UNDER PART II, ITEM 1A OF
OUR SUBSEQUENTLY FILED QUARTERLY REPORTS ON FORM 10-Q.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR 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 May 7, 2007.
TABLE OF CONTENTS
SUMMARY...................................................................... 1
RISK FACTORS................................................................. 3
FORWARD-LOOKING STATEMENTS................................................... 3
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES.............................. 4
USE OF PROCEEDS.............................................................. 4
DESCRIPTION OF DEBT SECURITIES............................................... 4
PLAN OF DISTRIBUTION......................................................... 16
LEGAL MATTERS.................................................................19
EXPERTS.......................................................................19
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission, which we refer to in this prospectus as
the SEC or the Commission, utilizing a "shelf" registration process. Under this
shelf registration process, we may sell from time to time any combination of the
securities described in this prospectus in one or more offerings. This
prospectus provides you with a general description of the securities we may
offer. You should assume that the information appearing in this prospectus is
accurate only as of the date of this prospectus. Our business, financial
condition, results of operations and prospects may change after that date. Each
time we sell securities under this prospectus, we will provide a prospectus
supplement that will contain or incorporate by reference specific information
about the terms of that offering. Each prospectus supplement also may add,
update or change information contained in this prospectus. We urge you to read
both this prospectus and any prospectus supplement, together with the additional
information described below under "Where You Can Find More Information."
No person has been authorized to give any information or to make any
representations, other than as contained or incorporated by reference in this
prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by us or any underwriter, agent, dealer
or remarketing firm. Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create any implication that there has
been no change in our affairs since the date hereof or that the information
contained or incorporated by reference herein is correct as of any time
subsequent to the date of such information. This prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities by anyone
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 an unlawful to make such offer or solicitation.
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WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
We have filed a registration statement on Form S-3 (together with all
amendments, exhibits, schedules and supplements thereto, the "registration
statement") under the Securities Act of 1933, as amended (the "Securities Act").
This prospectus, which forms part of that registration statement, does not
contain all of the information set forth in that registration statement.
Statements contained in this prospectus as to the contents of any contract,
agreement or other document are not necessarily complete. For a more complete
understanding and description of each contract, agreement or other document
filed as an exhibit to the registration statement, we urge you to read the
documents contained in those exhibits.
We file reports, proxy statements and other information with the SEC.
These reports, proxy statements and other information that we file with the SEC
can be read and copied at the SEC's Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 to obtain further
information on the operation of the Public Reference Room. The SEC maintains an
internet site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC, including
us. The SEC's internet address is http://www.sec.gov. In addition, our common
stock is listed on the New York Stock Exchange, and our reports and other
information can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. Our internet address is http://www.craneco.com. The
information on our internet site is not a part of this prospectus.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we
file with it. This means that we can disclose important information to you by
referring you to other documents. Any information we incorporate in this manner
is considered part of this prospectus except to the extent updated and
superseded by information contained in this prospectus and any prospectus
supplement. Some information that we file with the SEC after the date of this
prospectus and until we sell all of the securities covered by this prospectus
will automatically update and supersede the information contained in this
prospectus.
We incorporate by reference the following documents that we have filed
with the SEC and any filings that we make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), until we sell all of the securities covered by
this prospectus, including between the date of this prospectus and the date on
which the offering of the securities under this prospectus is terminated, except
as noted in the following paragraph:
OUR SEC FILINGS (FILE NO. 1-1657) PERIOD FOR OR DATE OF FILING
Annual Report on Form 10-K Year Ended December 31, 2006
Quarterly Report on Form 10-Q Quarter Ended March 31, 2007
Current Reports on Form 8-K January 29 and April 23, 2007
Pursuant to General Instruction B of Form 8-K, any information
submitted under Item 2.02, Results of Operations and Financial Condition, or
Item 7.01, Regulation FD Disclosure, of Form 8-K is not deemed to be "filed" for
the purpose of Section 18 of the Exchange Act, and we are not subject to the
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liabilities of Section 18 with respect to information submitted under Item 2.02
or Item 7.01 of Form 8-K. We are not incorporating by reference any information
submitted under Item 2.02 or Item 7.01 of Form 8-K into any filing under the
Securities Act or the Exchange Act or into this prospectus.
Statements contained in this prospectus as to the contents of any
contract or other document referred to in this prospectus do not purport to be
complete, and where reference is made to the particular provisions of that
contract or other document, those references are qualified in all respects by
reference to all of the provisions contained in that contract or other document.
Any statement contained in a document incorporated by reference, or deemed to be
incorporated by reference, into this prospectus will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated by reference in this prospectus modifies or supersedes that
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
We will provide without charge, upon written or oral request, a copy of
any or all of the documents that are incorporated by reference into this
prospectus and a copy of any or all other contracts or documents which are
referred to in this prospectus. Requests should be directed to: Crane Co., 100
First Stamford Place, Stamford, CT 06902, Attention: Corporate Secretary;
telephone number: (203) 363-7300. You also may review a copy of the registration
statement and its exhibits at the SEC's Public Reference Room in Washington,
D.C., as well as through the SEC's internet site at http://www.sec.gov.
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SUMMARY
This summary is a brief discussion of material information contained in, or
incorporated by reference into, this prospectus as further described above under
"Where You Can Find More Information." This summary does not contain all of the
information that you should consider before investing in any securities being
offered by this prospectus. We urge you to carefully read this entire
prospectus, the documents incorporated by reference into this prospectus and the
prospectus supplement relating to the securities that you propose to buy,
especially any description of investment risks that we may include in the
prospectus supplement. References to "Crane Co.", "Crane", the "Company", the
"registrant", "we", "our" and "us" and similar terms mean Crane Co. and its
subsidiaries, unless the context requires otherwise.
CRANE CO.
We are a diversified manufacturer of highly engineered industrial products.
Founded in 1855, we employ approximately 12,000 people in North America, South
America, Europe, Asia and Australia. Our primary markets are aerospace, defense
electronics, recreational vehicle, transportation, automated merchandising,
chemical, petrochemical, pharmaceutical, oil and gas, refining and power
generation. Our strategy is to grow the earnings of niche businesses with
leading market shares, acquire companies that offer strategic fits with existing
businesses, aggressively pursue operational and strategic linkages among our
businesses, build a performance culture that stresses continuous improvement and
a committed management team whose interests are directly aligned with those of
the shareholders and maintain a focused, efficient corporate structure.
We operate in the following five reportable segments, which accounted for
the following percentages of total revenues of $2.3 billion, $2.1 billion, and
$1.9 billion for the years ended December 31, 2006, 2005, and 2004,
respectively:
2006 2005 2004
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Aerospace and Electronics 25% 26% 26%
Engineered Materials 14% 15% 15%
Merchandising Systems 11% 8% 9%
Fluid Handling 44% 45% 45%
Controls 6% 6% 5%
We are a Delaware corporation with our principal executive offices located
at 100 First Stamford Place, Stamford, CT 06902, telephone number (203)
363-7300.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
offer from time to time any of the securities described in this prospectus. This
prospectus provides you with a general description of the securities that we may
offer. Each time we offer securities under this prospectus, we may provide you
with a prospectus supplement that contains the specific amounts, prices and
terms of the securities being offered. The prospectus supplement may also add,
update or change information contained in this prospectus. We also may provide
such information in one or more reports filed by us with the SEC from time to
time pursuant to the Exchange Act, which we refer to in this prospectus as
Exchange Act Reports, and incorporated by reference in this prospectus.
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When we use the term "securities" in this prospectus, we mean any of the
securities that we may offer under this prospectus, unless we say otherwise.
This prospectus describes the general terms that may apply to the securities.
The specific terms of any particular securities that we may offer will be
described in a separate supplement to this prospectus or incorporated by
reference to one or more Exchange Act Reports. You also should read the
documents we have referred to you in "Where You Can Find More Information -
Incorporation by Reference" for additional information about our company,
including our financial statements.
2
RISK FACTORS
Investing in our securities involves risks. Before deciding whether to
purchase any of our securities, you should carefully consider the risks involved
in an investment in our securities, as set forth in:
o Item 1A, Risk Factors, in our Annual Report on Form 10-K for our fiscal
year ended December 31, 2006;
o Part II, Item 1A, Risk Factors, in our Quarterly Report on Form 10-Q for
our fiscal quarter ended March 31, 2007; and
o the other risks described in any prospectus supplement or in any of the
other documents incorporated by reference in this prospectus.
FORWARD-LOOKING STATEMENTS
You should carefully review the information contained in or
incorporated by reference into this prospectus. In this prospectus, statements
that are not reported financial results or other historical information are
"forward-looking statements." Forward-looking statements give current
expectations or forecasts of future events and are not guarantees of future
performance. They are based on our management's expectations that involve a
number of business risks and uncertainties, any of which could cause actual
results to differ materially from those expressed in or implied by the
forward-looking statements.
You can identify these forward-looking statements by the fact that they
do not relate strictly to historic or current facts. They use words such as
"anticipates," "believes," "estimates," "expects," "would," "should," "will,"
"will likely result," "forecast," "outlook," "projects," and similar expressions
in connection with any discussion of future operating or financial performance.
We cannot guarantee that any forward-looking statements will be
realized. Achievement of future results is subject to risks, uncertainties and
assumptions that may prove to be inaccurate. Among others, the factors discussed
in "Risk Factors" could cause actual results to differ from those in
forward-looking statements included in or incorporated by reference into this
prospectus or that we otherwise make. If known or unknown risks or uncertainties
materialize, or if underlying assumptions prove to be inaccurate, actual results
could vary materially from those anticipated, estimated or projected. You should
bear this in mind as you consider any forward-looking statements.
We undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise,
except as may be required by law. You are advised, however, to consider any
additional disclosures that we may make on related subjects in future filings
with the SEC. You should understand that it is not possible to predict or
identify all factors that could cause our actual results to differ.
Consequently, you should not consider any list of factors to be a complete set
of all potential risks or uncertainties.
3
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges for the quarter
ended March 31, 2007 and the years ended December 31, 2006, 2005, 2004, 2003 and
2002 are as follows:
QUARTER ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------- -------------------------------
2007 2006 2005 2004 2003 2002
------------- ---- ---- ---- ---- ----
Ratios of earning to fixed charges 8.64x 9.01x 7.86x * 6.85x 2.00x
* Fixed charges exceeded earnings by $167.4 million for the year ended
December 31, 2004. Reflects an asbestos liabilities charge of $307.8
million and environmental liabilities charges of $40.0 million.
For the purpose of calculating the ratio of earnings to fixed charges,
our earnings consist of income before income taxes and fixed charges. Fixed
charges consist of interest expense and one-third of our rental expense, which
approximates the interest factor.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes unless otherwise indicated in the applicable
prospectus supplement relating to a specific issuance of securities or in an
Exchange Act Report. Our general corporate purposes include, but are not limited
to, repayment, redemption or refinancing of debt, capital expenditures,
investments in or loans to subsidiaries and joint ventures, funding of possible
acquisitions, working capital, satisfaction of other obligations and repurchase
of our outstanding securities. Pending any such use, the net proceeds from the
sale of the securities may be invested in interest-bearing instruments. We will
include a more detailed description of the use of proceeds of any specific
offering in the applicable prospectus supplement relating to the offering or in
an Exchange Act Report.
DESCRIPTION OF DEBT SECURITIES
The securities will be either senior or subordinated debt securities.
This section summarizes terms of the debt securities that are common to all
series, the covenants of our company applicable to our senior debt securities
and the subordination provisions applicable to our subordinated debt securities.
The financial terms and other specific terms of the debt securities being
offered will be described in a prospectus supplement or one or more Exchange Act
Reports. Those terms may vary from the terms described here. A prospectus
supplement or one or more Exchange Act Reports may also describe special federal
income tax consequences of the debt securities.
The debt securities are governed by documents called "indentures."
The indentures are contracts between us and a financial institution acting as
the trustee. The trustee has two main roles. First, the trustee can enforce your
rights against us if we default. There are some limitations on the extent to
which the trustee acts on your behalf, described under " - Events of Default -
Remedies If an Event of Default Occurs." Second, the trustee performs
administrative duties for us.
Senior debt securities will be issued under an indenture between us
and The Bank of New York, as trustee, and subordinated debt securities will be
issued under an indenture between us and
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Lasalle Bank National Association, as trustee. The indentures contain
substantially the same terms, except for certain covenants in the indenture for
the senior debt securities and the subordination provisions in the indenture for
the subordinated debt securities.
The indentures contain the full text of the matters described in
this section. The indentures and the debt securities are governed by New York
law. Copies of the indentures have been filed with the SEC and have been filed
or incorporated by reference as exhibits to the registration statement of which
this prospectus is a part. See "Where You Can Find More Information" for
information on how to obtain copies of the indentures. The summary that follows
includes references to section numbers of the indentures so that you can more
easily locate these provisions.
Because this section is a summary, it does not describe every aspect
of the debt securities that we may offer pursuant to this prospectus. This
summary is subject to and qualified in its entirety by reference to all the
provisions of the indentures, including definitions used in the indentures. For
example, in this section we use capitalized words to signify defined terms that
have been given special meaning in the indentures. We describe the meaning in
detail in the indentures. In this prospectus, we summarize the meaning for only
the more important terms. Whenever we refer to sections or defined terms of the
indentures in this prospectus, those sections or defined terms are incorporated
by reference here or in the prospectus supplement. This summary also is subject
to and qualified by reference to the description of the particular terms of your
debt securities described in the related prospectus supplement or in one or more
Exchange Act Reports.
GENERAL
We may offer the debt securities from time to time in as many
distinct series as we may choose. All debt securities will be direct, unsecured
obligations of ours. The senior debt securities will have the same rank as all
of our other unsecured and unsubordinated debt. The subordinated debt securities
will be subordinated to Senior Indebtedness as described under " - Subordination
Provisions." Neither indenture limits the amount of debt that we may issue under
that indenture, nor does either indenture limit the amount of other unsecured
debt or securities that we or our subsidiaries may issue.
Our sources of payment for the debt securities are revenues from our
operations and investments and cash distributions from our subsidiaries. Our
subsidiaries account for most of our consolidated assets and a significant
portion of our earnings. As a result, our ability to pay our obligations,
including our obligation to make payments on the debt securities, depends upon
our subsidiaries repaying investments and advances we have made to them and upon
the earnings of our subsidiaries and their distributing those earnings to us.
Our subsidiaries are separate and distinct legal entities and have no obligation
whatsoever to pay any amounts due on the debt securities or to make funds
available to us. Our subsidiaries' ability to pay dividends or make other
payments or advances to us will depend upon their operating results and will be
subject to applicable laws and contractual restrictions. The indentures do not
limit our subsidiaries' ability to enter into agreements that prohibit or
restrict dividends or other payments or advances to us.
To the extent that we must rely on cash from our subsidiaries to pay
amounts due on the debt securities, the debt securities will be effectively
subordinated to all our subsidiaries' liabilities, including their trade
payables. This means that our subsidiaries must pay all their creditors in full
before their assets are available to pay holders of our debt securities. Even if
we are recognized as a creditor of our subsidiaries, our claim would be
subordinated to any security interests in their assets and also could be
subordinated to all other claims on their assets or earnings.
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You should look in the related prospectus supplement or in one or
more Exchange Act Reports for the following terms of the debt securities being
offered:
o The title of the debt securities and whether such debt securities will
be senior debt securities or subordinated debt securities;
o The total principal amount of such debt securities;
o The price at which such debt securities will be issued;
o The date or dates on which such debt securities will mature and the
right, if any, to extend such date or dates;
o The annual rate or rates, if any, at which such debt securities will
bear interest, and, if the interest rate is variable, the method of
determining such rate;
o The date or dates from which such interest will accrue, the interest
payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for
the determination of holders to whom interest is payable on any
interest payment dates;
o Any redemption, repayment or sinking fund provision;
o The form of such debt securities, including whether we will issue the
debt securities in individual certificates to each holder or in the
form of temporary or permanent global securities held by a depositary
on behalf of holders;
o If the amount of payments of principal of, premium, if any, or
interest on the debt securities may be determined by reference to an
index, the manner in which that amount will be determined; and
o Any other terms of the debt securities that will not conflict with the
applicable indenture, including any changes or additions to the events
of default or covenants described in this prospectus, and any terms
which may be required by or advisable under applicable laws or
regulations. (Section 2.3 and Section 4.1).
Debt securities bearing no interest or interest at a rate that at the
time of issuance is below the prevailing market rate may be sold at a discount
below their stated principal amount. Special federal income tax and other
special considerations applicable to any discounted debt securities or to debt
securities issued at par which are treated as having been issued at a discount
for federal income tax purposes will be described in the applicable prospectus
supplement or in one or more Exchange Act Reports.
RESTRICTIVE COVENANTS
We have agreed to two principal restrictions on our activities and the
activities of our Subsidiaries for the benefit only of holders of the senior
debt securities. The restrictive covenants summarized below will apply to each
series of senior debt securities as long as any of those senior debt securities
are outstanding, unless waived or amended, or unless the related prospectus
supplement or one or more Exchange Act Reports state otherwise.
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CAPITALIZED TERMS. Definitions of some of the important capitalized
terms used in this section can be found under " - Certain Definitions Relating
to our Restrictive Covenants."
RESTRICTIONS ON LIENS. Some of our property may be subject to a
mortgage or other legal mechanism that gives some of our lenders preferential
rights in that property over other general creditors, including the direct
holders of the senior debt securities, if we fail to pay them back. These
preferential rights are called "Liens." We agree in the indenture for the senior
debt securities that, with certain exceptions described below, we will not, and
we will not permit any of our Subsidiaries to, become obligated on any new debt
that is secured by a Lien on any of our or our Subsidiaries' property, unless we
or our Subsidiary grant an equal or higher-ranking Lien on the same property to
the direct holders of the senior debt securities and, if we so determine, to the
holders of any of our other debt that ranks equally with the senior debt
securities. (Section 3.9)
We do not need to comply with this restriction if the amount of all of
our and our Subsidiaries' debt that would be secured by Liens on our property or
the property of our Subsidiaries and all "Attributable Debt" as described under
" - Certain Definitions Relating to Our Restrictive Covenants" below, that
results from a Sale and Leaseback Transaction involving our property or the
property of our Subsidiaries, is not more than 10% of our Consolidated Net
Tangible Assets.
When we calculate the limits imposed by this restriction, we can
disregard the following types of Liens:
o Liens on the property of any of our Subsidiaries, if those Liens are
existing at the time the corporation becomes our Subsidiary;
o Liens on property existing at the time we acquire the property,
including property we may acquire through a merger or similar
transaction, or that we grant in order to purchase the property
(sometimes called "purchase money mortgages");
o Intercompany Liens in favor of us or our wholly owned Subsidiaries;
o Liens in favor of federal or state governmental bodies or any other
country or political subdivision of another country, that we may grant
in order to assure our payments to such bodies that we owe by law or
because of a contract we entered into;
o Liens that extend, renew or replace any of the Liens described above;
o Liens that arise in the ordinary course of business and that relate to
amounts that are not yet due or that we are contesting in good faith;
o Liens that arise under worker's compensation laws or similar laws;
o Liens that arise from lawsuits that we are contesting in good faith,
judgment Liens that are satisfied within 15 days after the imposition
of the Lien becomes unappealable, and Liens incurred by us for the
purpose of securing our discharge from a lawsuit;
o Liens in favor of a taxing authority for taxes that are not
delinquent, that we can pay without penalty, or that we are contesting
in good faith; and
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o Other Liens that arise in the ordinary course of our business that are
not incurred in connection with the creation of debt and that do not,
in our opinion, impair the value of the assets encumbered by the
Liens.
We are permitted to have as much unsecured debt as we choose.
RESTRICTIONS ON SALES AND LEASEBACKS. We agree that we will not and
will not permit our Subsidiaries to enter into any Sale and Leaseback
Transaction involving our property or the property of our Subsidiaries, unless
we comply with this restrictive covenant. A "Sale and Leaseback Transaction"
generally is an arrangement between us and a bank, insurance company or other
lender or investor where we lease a property which was or will be sold by us to
that lender or investor, other than a lease for a period of three years or less.
(Section 3.10)
We can comply with this restrictive covenant in one of two ways:
o We will be in compliance if we could, at the time of the transaction,
grant a Lien on the property to be leased in an amount equal to the
Attributable Debt for the Sale and Leaseback Transaction without being
required to grant an equal or higher-ranking Lien to the direct
holders of the senior debt securities as described above under " -
Restrictions on Liens."
o We can also comply if the proceeds of the sale of the property are at
least equal to its fair market value and within 90 days of the
transaction we apply an amount equal to the proceeds either to
purchase property or to retire senior debt securities, or any other
debt that has a maturity of more than one year or is by its terms
renewable or extendible beyond one year at our option.
CERTAIN DEFINITIONS RELATING TO OUR RESTRICTIVE COVENANTS. Following
are summary definitions of some of the capitalized terms that are important in
understanding the restrictive covenants previously described.
"Attributable Debt" means the total present value of the rental
payments during the remaining term of any lease associated with a Sale and
Leaseback Transaction. To determine that present value, we use a discount rate
equal to the average interest borne by all outstanding senior debt securities
determined on a weighted average basis and compounded semi-annually.
"Consolidated Net Tangible Assets" is the total amount of assets
after subtracting all current liabilities and all trade names, trademarks,
licenses, patents, copyrights, goodwill, organizational costs and deferred
charges, other than prepaid items and tangible assets being amortized, as those
amounts appear on our most recent quarterly or annual consolidated balance
sheet.
"Subsidiary" means a corporation in which we and/or one or more of
our other Subsidiaries owns at least 50% of the voting stock, which means stock
that ordinarily permits its owners to vote for the election of directors.
(Section 1.1)
SUBORDINATION PROVISIONS
Under the indenture for the subordinated debt securities, payment
of the principal, interest and any premium on the subordinated debt securities
will generally be subordinated to the prior payment in full of all of our Senior
Indebtedness. (Section 12.1)
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"Senior Indebtedness" is defined as the principal of, premium, if any,
and interest on, and any other payment due pursuant to, any of the following,
whether outstanding on the date of the indenture for the subordinated debt
securities or incurred or created after that date:
o All our indebtedness for money borrowed;
o All our indebtedness evidenced by notes, debentures, bonds or other
securities, including the senior debt securities;
o All our lease obligations that are capitalized on our books in
accordance with generally accepted accounting principles;
o All indebtedness and all lease obligations of others of the kinds
described above assumed by or guaranteed in any manner by us or in
effect guaranteed by us; and
o All renewals, extensions or refundings of indebtedness, leases or
other obligations of the kinds described above.
None of the indebtedness described above will be part of Senior
Indebtedness, however, if the relevant instrument or lease expressly provides
that such indebtedness, lease, renewal, extension or refunding is subordinate to
any of our other indebtedness, or is not higher-ranking than, or is of an equal
rank with, the subordinated debt securities. Senior Indebtedness also will not
include (i) any of our obligations to any Subsidiary or (ii) indebtedness for
trade payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business. (Section 1.1)
If and as long as there is a continuing default in the payment of any
Senior Indebtedness after any applicable grace period, we will not make or agree
to make any payments of principal, premium or interest on the subordinated debt
securities, or for any redemption, retirement, purchase, other acquisition or
defeasance of the subordinated debt securities.
Payment of principal and interest on the subordinated debt securities
upon our dissolution, winding up, liquidation or reorganization also will
generally be subordinated to the prior payment in full of all Senior
Indebtedness. As a result, in such an event holders of Senior Indebtedness may
receive more, ratably, and holders of the subordinated debt securities may
receive less, ratably, than our other creditors. (Section 12.2)
Subordination will not prevent the occurrence of any Event of Default
under the indenture for the subordinated debt securities. (Section 12.1)
Upon the effectiveness of any defeasance for a series of subordinated
debt securities as described under " - Defeasance," the series will cease to be
subordinated. (Section 12.8)
If this prospectus is being delivered in connection with a series of
subordinated debt securities, the prospectus supplement or the information
incorporated by reference will set forth the approximate amount of Senior
Indebtedness as of a recent date. Except for the restrictive covenants in the
indenture for the senior debt securities, the indentures do not limit other debt
that may be incurred or issued by us or our subsidiaries or contain financial or
similar restrictions on us or our subsidiaries.
9
MERGERS AND SIMILAR EVENTS
We are generally permitted to consolidate or merge with another
company or firm. We are also permitted to sell substantially all of our assets.
However, we may not take any of these actions unless the following conditions
are met:
o If we merge out of existence or sell our assets, the other company
must be a corporation organized under the laws of a state of the
United States or the District of Columbia or under federal law and it
must agree to be legally responsible for the debt securities.
o The merger, sale of assets or other transaction must not cause a
default on the debt securities. For purposes of this no default test,
a default would include an Event of Default that has occurred and not
been cured, as described under " - Events of Default - What is an
Event of Default?" and would also include any event that would be an
Event of Default if the requirements for giving us default notice or
our default having to exist for a specific period of time were
disregarded. (Section 8.1)
o It is possible that the merger, sale of assets or other transaction
would cause some of our property to become subject to Liens. Under the
indenture for the senior debt securities, we have agreed to limit
Liens, as discussed under " - Restrictive Covenants - Restrictions on
Liens." If a merger or other transaction would create Liens on our
property or the property of our Subsidiaries that are not permitted by
that restrictive covenant, we or our successor would be required to
grant an equal or higher-ranking Lien on the same property to the
direct holders of senior debt securities. (Section 3.9)
EVENTS OF DEFAULT
You will have special rights if an Event of Default occurs and is not
cured, as described later in this subsection.
WHAT IS AN EVENT OF DEFAULT? The term "Event of Default" means any of
the following:
o We do not pay interest on a debt security within 30 days of its due
date;
o We do not pay the principal of or premium on a debt security on its
due date;
o We do not pay any sinking fund installment on its due date;
o We remain in breach of any other term of the indenture for 60 days
after we receive a notice of default stating we are in breach. The
notice must be sent by either the trustee or holders of 25% of the
principal amount of debt securities of the affected series;
o We file for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur; or
o Any other Event of Default described in the prospectus supplement
occurs.
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an Event of Default has
occurred and has not been cured, the trustee or the holders of 25% in principal
amount of the debt securities of the affected series may declare the entire
principal amount of all the debt securities of the affected series to be due and
10
immediately payable. This is called a "declaration of acceleration of maturity."
Under some circumstances, a declaration of acceleration of maturity may be
canceled by the holders of at least a majority in principal amount of the debt
securities of that series. (Section 4.1)
Except in cases of default, where the trustee has some special duties,
the trustee is not required to take any action under the indentures at the
request of any holders unless the holders offer the trustee reasonable
protection from expenses and liability.
If reasonable protection from expenses and liabilities is provided,
the holders of a majority in principal amount of the outstanding debt securities
of the relevant series may direct the time, method and place of conducting any
lawsuit or other formal legal action seeking any remedy available to the
trustee. The trustee may refuse to follow those directions in some
circumstances.
(Section 4.9)
Before you bypass the trustee and bring your own lawsuit or other
formal legal action or take any other steps to enforce your rights or protect
your interests relating to the debt securities, the following must occur:
o You must give the trustee written notice that an Event of Default has
occurred and remains uncured;
o The holders of 25% in principal amount of all outstanding debt
securities of the affected series must make a written request that the
trustee take action because of the default, and must offer reasonable
protection to the trustee against the cost and other liabilities of
taking that action; and
o The trustee must have not taken action for 60 days after receipt of
the above notice and offer of protection. (Section 4.6)
However, you are entitled at any time to bring a lawsuit for the
payment of money due on your debt security on or after its due date. (Section
4.7)
"Street Name" and other indirect holders should consult their banks or
brokers for information on how to give notice or direction to or make a request
of the trustee and to make or cancel a declaration of acceleration.
We will furnish to the trustee every year a written statement of
certain of our officers certifying that to their knowledge we are in compliance
with the indentures and the debt securities, or else specifying any default.
(Section 3.5)
MODIFICATION AND WAIVER
There are three types of changes we can make to the indentures and the
debt securities.
CHANGES REQUIRING APPROVAL OF ALL HOLDERS. First, there are changes
that cannot be made to your debt securities without the approval of every holder
affected by the proposed change. A list of those types of changes follows:
o Change the due date of the principal of or interest on a debt
security;
o Reduce any amounts due on a debt security;
11
o Change the currency of payment on a debt security;
o Impair your right to sue for payment;
o Reduce the percentage of holders of debt securities whose consent is
needed to modify or amend the indentures; and
o Reduce the percentage of holders of debt securities whose consent is
needed to waive compliance with some provisions of the indentures or
to waive some defaults. (Section 7.2)
CHANGES REQUIRING APPROVAL OF LESS THAN ALL HOLDERS. The second type
of change to the indentures and the debt securities is the kind that requires
the approval of less than all holders of the affected series. This category
includes changes that require approval of holders owning either 66-2/3% or, in
some cases, a majority, of the outstanding principal amount of the affected
series.
Most changes to the indentures and debt securities cannot be made
without a 66-2/3% vote. (Section 7.2) The same 66-2/3% vote is required to waive
compliance in whole or in part with the restrictive covenants described under "
- Restrictive Covenants."
(Section 3.11)
A majority vote is required to waive any default under the indentures,
other than a default that results from the breach of a covenant or other
provision that cannot be amended without the consent of all the holders of the
affected series. (Section 4.10)
CHANGES NOT REQUIRING APPROVAL OF HOLDERS. The third type of change
does not require any vote by holders of debt securities. This type of change is
limited to clarifications and other changes that would not adversely affect
holders of the debt securities.
(Section 7.1)
With respect to any vote of holders of debt securities, we will
generally be entitled to set any day as a record date for the purpose of
determining the holders of outstanding debt securities that are entitled to vote
or take other action under the indentures. (Section 6.2)
"Street Name" and other indirect holders should consult their banks or
brokers for information on how approval may be granted or denied if we seek to
change the indentures or the debt securities or request a waiver.
DEFEASANCE
When we use the term "defeasance," we mean discharge from some or all
of our obligations under an indenture. If we deposit with the trustee funds or
government securities sufficient to make payments on a series of debt securities
on their due dates, then, at our option, one of the following will occur:
o We will be discharged from our obligations with respect to the debt
securities of that series (called legal defeasance); or
o We will no longer have to comply with the restrictive covenants under
the indenture, and the related events of default will no longer apply
to us (called covenant defeasance).
In the case of legal defeasance of a series of debt securities, the
direct holders of that series of debt securities will not be entitled to the
benefits of the indenture. You would have to rely solely on the
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funds deposited with the trustee for repayment of the debt securities. In the
unlikely event of a shortfall in those funds, you could not look to us for
repayment. (Section 9.3) The funds deposited with the trustee, however, would
most likely be protected from claims of our lenders and other creditors if we
ever became bankrupt or insolvent. You would also be released from the
subordination provisions of the subordinated debt securities described under " -
Subordination Provisions." (Section 12.8)
In the case of covenant defeasance of a series of debt securities, we
would still be obligated to pay principal, premium, if any, and interest on the
debt securities of the affected series. You would lose the protection of the
restrictive covenants described under " - Restrictive Covenants" and our
obligations described above under " - Mergers and Similar Events," but you would
have the added protection of having money and securities set aside in trust to
repay the debt securities. If there were a shortfall in the trust deposit, you
could still look to us for repayment of the debt securities. Depending on the
event causing the default, however, you may not be able to obtain payment of the
shortfall. You would also be released from the subordination provisions of the
subordinated debt securities described under " - Subordination Provisions."
(Section 9.4)
We will be required to deliver to the trustee an opinion of counsel
that the deposit and related defeasance would not cause the holders of the
affected series of debt securities to recognize income, gain or loss for federal
income tax purposes. If we elect legal defeasance, that opinion must be based on
a ruling from the IRS or a change in tax law to that effect. (Section 9.5)
"STREET NAME" AND OTHER INDIRECT HOLDERS
Investors who hold securities in accounts at banks or brokers will
generally not be recognized by us as legal holders of debt securities. This is
called holding in "Street Name." Instead, we would recognize only the bank or
broker, or the financial institution the bank or broker uses to hold its
securities. These intermediary banks, brokers and other financial institutions
pass along principal, interest and other payments on the debt securities, either
because they agree to do so in their customer agreements or because they are
legally required to. If you hold debt securities in "Street Name," you should
check with your own institution to find out:
o How it handles payments and notices;
o Whether it imposes fees or charges;
o How it would handle voting if applicable;
o Whether and how you can instruct it to send you debt securities
registered in your own name so you can be a direct holder as described
below; and
o If applicable, how it would pursue rights under the debt securities if
there were a default or other event triggering the need for holders to
act to protect their interests.
DIRECT HOLDERS
Our obligations, as well as the obligations of the trustees under the
indentures and those of any third parties employed by us or the trustees, run
only to persons who are registered as holders of debt securities. As noted
above, we do not have obligations to you if you hold in "Street Name" or other
indirect means, either because you choose to hold debt securities in that manner
or because the debt securities are issued in the form of global securities as
described below. For example, once we make
13
payment to the registered holder, we have no further responsibility for the
payment even if that holder is legally required to pass the payment along to you
as a "Street Name" customer but does not do so.
GLOBAL SECURITIES
WHAT IS A GLOBAL SECURITY? A global security is a special type of
indirectly held debt security as described under " - `Street Name' and Other
Indirect Holders." If we choose to issue debt securities in the form of global
securities, the ultimate beneficial owners can only be indirect holders. We do
this by requiring that the global security be registered in the name of a
financial institution we select and by requiring that the debt securities
included in the global security not be transferred to the name of any other
direct holder unless the special circumstances described below occur. The
financial institution that acts as the sole direct holder of the global security
is called the "depositary." Any person wishing to own a debt security must do so
indirectly by virtue of an account with a broker, bank or other financial
institution that in turn has an account with the depositary. The prospectus
supplement indicates whether your series of debt securities will be issued only
in the form of global securities and, if so, describes the specific terms of the
arrangement with the depositary.
SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES. As an indirect
holder, an investor's rights relating to a global security will be governed by
the account rules of the investor's financial institution and of the depositary,
as well as general laws relating to securities transfers. We do not recognize
this type of investor as a holder of securities and instead deal only with the
depositary that holds the global security.
An investor should be aware that if securities are issued only in the
form of global securities:
o The investor cannot get debt securities registered in his or her own
name;
o The investor cannot receive physical certificates for his or her
interest in the debt securities;
o The investor will be a "Street Name" holder and must look to his or
her own bank or broker for payments on the debt securities and
protection of his or her legal rights relating to the debt securities.
See " - `Street Name' and Other Indirect Holders;"
o The investor may not be able to sell interests in the debt securities
to some insurance companies and other institutions that are required
by law to own their securities in the form of physical certificates;
and
o The depositary's policies will govern payments, transfers, exchange
and other matters relating to the investor's interest in the global
security. We and the trustees have no responsibility for any aspect of
the depositary's actions or for its records of ownership interests in
the global security. We and the trustees also do not supervise the
depositary in any way.
SPECIAL SITUATIONS WHEN GLOBAL SECURITY WILL BE TERMINATED. In a few
special situations, the global security will terminate and interests in it will
be exchanged for physical certificates representing debt securities. After that
exchange, the choice of whether to hold debt securities directly or in "Street
Name" will be up to the investor. Investors must consult their own banks or
brokers to find out how to have their interests in debt securities transferred
to their own name, so that they will be direct holders. The rights of "Street
Name" investors and direct holders in the debt securities have been previously
described in subsections entitled " - `Street Name' and Other Indirect Holders"
and " - Direct Holders."
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The special situations for termination of a global security are:
o When the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary and we do not appoint a
successor depositary.
o When an Event of Default on the debt securities has occurred and has
not been cured.
o At any time if we decide to terminate a global security.
The prospectus supplement may also list additional situations for
terminating a global security that would apply only to the particular series of
securities covered by the prospectus supplement. When a global security
terminates, only the depositary is responsible for deciding the names of the
institutions that will be the initial direct holders.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
We will issue the debt securities in registered form, without interest
coupons, and, unless we inform you otherwise in the prospectus supplement, only
in denominations of $1,000 and multiples of $1,000. We will not charge a service
fee for any registration of transfer or exchange of the debt securities. We may,
however, require the payment of any tax or other governmental charge payable for
that registration.
Debt securities of any series will be exchangeable for other debt
securities of the same series, the same total principal amount and the same
terms but in different authorized denominations in accordance with the
applicable indenture. Holders may present debt securities for registration of
transfer at the office of the security registrar or any transfer agent we
designate.
The security registrar or transfer agent will effect the transfer or
exchange when it is satisfied with the documents of title and identity of the
person making the request.
We have appointed the trustee under each indenture as security
registrar for the debt securities issued under that indenture. If the prospectus
supplement refers to any transfer agents initially designated by us, we may at
any time rescind that designation or approve a change in the location through
which any transfer agent acts. We are required to maintain an office or agency
for transfers and exchanges in each place of payment. We may at any time
designate additional transfer agents for any series of debt securities.
In the case of any redemption, neither the security registrar nor the
transfer agent will be required to register the transfer or exchange of any debt
security during a period beginning 15 business days prior to the mailing of the
relevant notice of redemption and ending at the close of business on the day of
mailing of the notice, except the unredeemed portion of any debt security being
redeemed in part.
PAYMENT AND PAYING AGENTS
Unless we inform you otherwise in the prospectus supplement:
o Payments on the debt securities will be made in U.S. dollars by check
mailed to the holder's registered address or, with respect to global
debt securities, by wire transfer;
15
o We will make interest payments to the person in whose name the debt
security is registered at the close of business on the record date for
the interest payment; and
o The trustee under each indenture will be designated as our paying
agent for payments on debt securities issued under that indenture. We
may at any time designate additional paying agents or rescind the
designation of any paying agent or approve a change in the office
through which any paying agent acts.
Subject to the requirements of any applicable abandoned property laws,
the trustee and paying agent will pay to us upon written request any money held
by them for payments on the debt securities that remain unclaimed for two years
after the date when the payment was due. After payment to us, holders entitled
to the money must look to us for payment. In that case, all liability of the
trustee or paying agent with respect to that money will cease. (Section 9.8)
PLAN OF DISTRIBUTION
We may offer the offered securities in one or more of the following
ways, or any other way set forth in an applicable prospectus supplement or in
one or more Exchange Act Reports from time to time:
o to or through underwriting syndicates represented by managing
underwriters;
o through one or more underwriters without a syndicate for them to offer
and sell to the public;
o through dealers or agents;
o to investors directly in negotiated sales or in competitively bid
transactions; or
o to holders of other securities in exchanges in connection with
acquisitions.
The prospectus supplement for each series of securities we sell or one
or more Exchange Act Reports will describe the offering, including:
o the name or names of any underwriters;
o the purchase price and the proceeds to us from that sale;
o any underwriting discounts and other items constituting underwriters'
compensation, which in the aggregate will not exceed eight percent of
the gross proceeds of the offering;
o any commissions paid to agents;
o the initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and
o any securities exchanges on which the securities may be listed.
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UNDERWRITERS
If underwriters are used in a sale, we will execute an underwriting
agreement with them regarding those securities. Unless otherwise described in
the applicable prospectus supplement or in one or more Exchange Act Reports, the
obligations of the underwriters to purchase these securities will be subject to
conditions, and the underwriters must purchase all of these securities if any
are purchased.
The securities subject to the underwriting agreement may be acquired
by the underwriters for their own account and may be resold by them from time to
time in one or more transactions, including negotiated transactions, at a fixed
offering price or at varying prices determined at the time of sale. Underwriters
may be deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from the purchasers of
these securities for whom they may act as agent. Underwriters may sell these
securities to or through dealers. These dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and
commissions from the purchasers for whom they may act as agent. Any initial
offering price and any discounts or concessions allowed or re-allowed or paid to
dealers may be changed from time to time.
We may authorize underwriters to solicit offers by institutions to
purchase the securities subject to the underwriting agreement from us, at the
public offering price stated in the applicable prospectus supplement or in one
or more Exchange Act Reports under delayed delivery contracts providing for
payment and delivery on a specified date in the future. If we sell securities
under these delayed delivery contracts, the applicable prospectus supplement or
one or more Exchange Act Reports will state that this is the case and will
describe the conditions to which these delayed delivery contracts will be
subject and the commissions payable for that solicitation.
In connection with underwritten offerings of the securities, the
underwriters may engage in over-allotment, stabilizing transactions, covering
transactions and penalty bids in accordance with Regulation M under the Exchange
Act, as follows:
o Over-allotment transactions involve sales in excess of the offering
size, which create a short position for the underwriters.
o Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified
maximum.
o Covering transactions involve purchases of the securities in the open
market after the distribution has been completed in order to cover
short positions.
o Penalty bids permit the underwriters to reclaim a selling concession
from a broker/dealer when the securities originally sold by that
broker-dealer are repurchased in a covering transaction to cover short
positions.
These stabilizing transactions, covering transactions and penalty bids
may cause the price of the securities to be higher than it otherwise would be in
the absence of these transactions. If these transactions occur, they may be
discontinued at any time.
AGENTS
We also may sell any of the securities through agents designated by us
from time to time. We will name any agent involved in the offer or sale of these
securities and will list commissions payable by
17
us to these agents in the applicable prospectus supplement or in one or more
Exchange Act Reports. These agents will be acting on a best efforts basis to
solicit purchases for the period of their appointment, unless we state otherwise
in the applicable prospectus supplement or in one or more Exchange Act Reports.
DIRECT SALES
We may sell any of the securities directly to purchasers. In this case,
we will not engage underwriters or agents in the offer and sale of these
securities.
In addition, debt securities described in this prospectus may be issued
upon the exercise of warrants or the settlement of purchase contracts or units.
INDEMNIFICATION
We may indemnify underwriters, dealers or agents who participate in the
distribution of securities against certain liabilities, including liabilities
under the Securities Act, and may agree to contribute to payments that these
underwriters, dealers or agents may be required to make.
NO ASSURANCE OF LIQUIDITY
The securities we offer may be a new issue of securities with no
established trading market. Any underwriters that purchase securities from us
may make a market in these securities. The underwriters will not be obligated,
however, to make a market and may discontinue market-making at any time without
notice to holders of the securities. We cannot assure you that there will be
liquidity in the trading market for any securities of any series.
LEGAL MATTERS
Augustus I. duPont, Esq., our Vice President, General Counsel and
Secretary, will give an opinion on the validity of the securities for us. As of
May 3, 2007, Mr. duPont beneficially owned 81,390 shares of our common stock
directly, of which 28,604 shares are subject to forfeiture upon failure of the
vesting conditions in our restricted stock award plans; 2,692 shares of common
stock under our Savings and Investment Plan; and options to purchase 290,056
shares of common stock granted under our stock option plans which are
exercisable within 60 days of such date.
EXPERTS
The financial statements, the related financial statement schedule, and
management's report on the effectiveness of internal control over financial
reporting incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports, which express an
unqualified opinion and include an explanatory paragraph relating to the
adoption of Statement of Financial Accounting Standards No. 158, "Employer's
Accounting for Defined Benefit Pension and Other Postretirement Plans,"
effective December 31, 2006, and Statement of Financial Accounting Standards No.
123 (Revised 2004), "Share Based Payments," effective January 1, 2006, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
SEC registration fee ............................................... $ *
Blue Sky fees and expenses ......................................... 5,000
Legal fees and expenses ............................................ 75,000
Accounting fees and expenses ....................................... 75,000
Trustee's fees and expenses ........................................ 15,000
Printing and engraving fees ........................................ 50,000
Miscellaneous ...................................................... 80,000
Total ......................................................... $ 300,000
-------------
* In accordance with Rules 456(b) and 457(r), we are deferring payment
of all of the registration fee, except for $8,090 that has already
been paid with respect to $100,000,000 aggregate initial offering
price of securities that were previously registered on a separate
registration statement and were not sold thereunder.
All of the above amounts are estimates only.
Item 15. Indemnification of Directors and Officers.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a Delaware corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of a director
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty, except for liability (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit. Article IX of the
Company's Certificate of Incorporation provides that the personal liability of
directors of the Company is eliminated to the fullest extent permitted by
Section 102(b)(7) of the DGCL.
Under Section 145 of the DGCL, a Delaware corporation has the power to
indemnify directors and officers under certain prescribed circumstances and,
subject to certain limitations, against certain costs and expenses, including
attorneys' fees, actually and reasonably incurred in connection with any action,
suit or proceeding, whether civil, criminal, administrative or investigative, to
which any of them is a party by reason of being a director or officer of the
Corporation if it is determined that the director or the officer acted in
accordance with the applicable standard of conduct set forth in such statutory
provision. Article X of the Company's By-Laws provides that the Company will
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 by reason of
the fact that he is or was an authorized representative of the Company, against
all expenses (including attorneys' fees) and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in accordance with the standard of conduct set
forth in Article X. Article X further permits the Company to
II-1
maintain insurance on behalf of any such person against any liability asserted
against such person and incurred by such person in any such capacity or arising
out of his status as such, whether or not the Company would have the power to
indemnify such person against such liability under Article X. The Company
maintains standard policies of insurance under which coverage is provided (a) to
its directors and officers against loss arising from claims made by reason of
breach of duty or other wrongful act and (b) to the Company with respect to
payments which may be made by the Company to such officers and directors
pursuant to the above indemnification provisions or otherwise as a matter of
law.
The Company has entered into agreements with each of its directors and
officers pursuant to which the Company has agreed to indemnify such directors
and officers, and to advance expenses in connection therewith, to the fullest
extent permitted by law, and to maintain Director's and Officers' liability
insurance on behalf of such indemnified persons unless, in the business judgment
of the Board of Directors of the Company, the premium cost for such insurance is
substantially disproportionate to the amount of coverage or the coverage is so
limited by exclusions that there is insufficient benefit from such insurance.
The agreements further provide that, if indemnification is not available, then
in any case in which the Company is jointly liable with the indemnified person
the Company will contribute to the fullest extent permitted by law to the amount
of expenses, judgments, fines and settlements paid or payable by the indemnified
person in such proportion as is appropriate to reflect the relative benefits
received, and the relative fault of, the Company and the indemnified person.
Such rights cannot be modified, except as required by law, or by any change in
the Company's Certificate of Incorporation or By-Laws.
The indemnification described in the preceding paragraphs may include
indemnification against liabilities arising under the Securities Act. In so far
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits.
The following Exhibits are filed as part of this Registration
Statement:
Exhibit Number Description
-------------- --------------------------------------------
* 1.1 Form of Underwriting Agreement.
* 1.2 Form of Distribution Agreement.
4.1 Senior Indenture dated as of April 1, 1991,
between Crane Co. and The Bank of New York,
as Trustee (incorporated by reference to
Exhibit 4.2 to the Annual Report on Form
10-K of Crane for the year ended December
31, 2005).
4.2 Form of Subordinated Indenture between Crane
Co. and Lasalle Bank National Association,
as Trustee (incorporated by reference to
Exhibit 4.2 to the Registration Statement
on Form S-3 of Crane (File No. 333-109002)).
* 4.3 Form of Senior Note.
* 4.4 Form of Subordinated Note.
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+ 5.1 Opinion of Augustus I. duPont.
+ 12.1 Computation of Ratio of Earnings to Fixed
Charges.
+ 23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Augustus I. duPont (included as
part of Exhibit 5.1).
24.1 Powers of Attorney (included on signature
page).
+ 25.1 Form of T-1 Statement of Eligibility of
Senior Debt Indenture Trustee.
+ 25.2 Form of T-1 Statement of Eligibility of
Subordinated Debt Indenture Trustee.
* To be filed either by amendment to this Registration Statement or as an
exhibit to a report filed under the Securities Exchange Act of 1934, as
amended, and incorporated herein by reference.
+ Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment of this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information relating to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement or
is contained in a form of prospectus filed pursuant to Rule 424(b) under the
Securities Act of 1933 that is part of the registration statement.
(2) That, for purposes 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.
II-3
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial distribution of
the securities, the undersigned registrant undertakes that in a primary offering
of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser.
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be filed
pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used or
referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about the
undersigned registrant or its securities provided by or on behalf o
the undersigned registrant; and
(iv) Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as
of the date the filed prospectus was deemed part of and included in
the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) as part of a registration statement in
reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the
information required by Section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed
to be a new effective date of the registration statement relating to
the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Provided, however
that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such
effective date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such
effective date.
(6) 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 (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.
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.
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 Stamford, State of Connecticut on May 7, 2007.
CRANE CO.
By: /s/ J. Robert Vipond
-----------------------------------------------------
Name: J. Robert Vipond
Title: Vice President, Finance and Chief Financial Officer
POWER OF ATTORNEY
Each of the undersigned directors and officers of Crane Co., a Delaware
corporation, do hereby constitute and appoint J. Robert Vipond and Augustus I.
duPont, or either one of them, the undersigned's true and lawful attorneys and
agents, with full power of substitution and resubstitution in each, to do any
and all acts and things in our name and on our behalf in our respective
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either one of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this registration statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our names
in the capacities indicated below, any and all amendments (including
post-effective amendments, whether pursuant to Rule 462(e) or otherwise) hereto,
and each of the undersigned does hereby ratify and confirm all that said
attorneys and agents, or either one of them or any substitute, shall do or cause
to be done by virtue hereof. This Power of Attorney may be executed in any
number of counterparts.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Eric C. Fast President and Chief Executive May 7, 2007
--------------------------------------- Officer and a Director (Principal
Eric C. Fast Executive Officer)
/s/ J. Robert Vipond Vice President, Finance and Chief May 7, 2007
--------------------------------------- Financial Officer (Principal
J. Robert Vipond Financial Officer); Acting Controller
(Principal Accounting Officer)
/s/ Robert S. Evans Chairman of the Board May 7, 2007
---------------------------------------
Robert S. Evans
/s/ E. Thayer Bigelow Director May 7, 2007
---------------------------------------
E. Thayer Bigelow
/s/ Donald G. Cook Director May 7, 2007
---------------------------------------
Donald G. Cook
--------------------------------------- Director
Karen E. Dykstra
/s/ Richard S. Forte Director May 7, 2007
---------------------- ----------------
Richard S. Forte
/s/ Dorsey R. Gardner Director May 7, 2007
---------------------------------------
Dorsey R. Gardner
/s/ William E. Lipner Director May 7, 2007
---------------------------------------
William E. Lipner
/s/ Philip R. Lochner, Jr. Director May 7, 2007
---------------------------------------
Philip R. Lochner, Jr.
/s/ Ronald F. McKenna Director May 7, 2007
---------------------------------------
Ronald F. McKenna
/s/ Charles J. Queenan, Jr. Director May 7, 2007
---------------------------------------
Charles J. Queenan, Jr.
/s/ James L. L. Tullis Director May 7, 2007
---------------------------------------
James L. L. Tullis
EXHIBIT INDEX
Exhibit Number Description
-------------- ---------------------------------------------
* 1.1 Form of Underwriting Agreement.
* 1.2 Form of Distribution Agreement.
4.1 Senior Indenture dated as of April 1, 1991,
between Crane Co. and The Bank of New York,
as Trustee (incorporated by reference to
Exhibit 4.2 to the Annual Report on Form
10-K of Crane for the year ended December
31, 2005).
4.2 Form of Subordinated Indenture between Crane
Co. and Lasalle Bank National Association,
as Trustee (incorporated by reference to
Exhibit 4.2 to the Registration Statement on
Form S-3 of Crane (File No. 333-109002)).
* 4.3 Form of Senior Note.
* 4.4 Form of Subordinated Note.
+ 5.1 Opinion of Augustus I. duPont.
+ 12.1 Computation of Ratio of Earnings to Fixed
Charges.
+ 23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Augustus I. duPont (included as
part of Exhibit 5.1).
24.1 Powers of Attorney (included on signature
page).
+ 25.1 Form of T-1 Statement of Eligibility of
Senior Debt Indenture Trustee.
+ 25.2 Form of T-1 Statement of Eligibility of
Subordinated Debt Indenture Trustee.
* To be filed either by amendment to this Registration Statement or as an
exhibit to a report filed under the Securities Exchange Act of 1934, as
amended, and incorporated herein by reference.
+ Filed herewith.