-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, liap12nPiwff6+0C5Ohpc1plR8+k27318LA8/y/Vzk0k+/AeJbA0e+ah4jA0adj3 XDnwQR3Xd+0ZeqsdowvSuQ== 0000950123-94-000822.txt : 19940428 0000950123-94-000822.hdr.sgml : 19940428 ACCESSION NUMBER: 0000950123-94-000822 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19940427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES SURGICAL CORP CENTRAL INDEX KEY: 0000101788 STANDARD INDUSTRIAL CLASSIFICATION: 3841 IRS NUMBER: 132518270 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-53297 FILM NUMBER: 94524599 BUSINESS ADDRESS: STREET 1: 150 GLOVER AVE CITY: NORWALK STATE: CT ZIP: 06856 BUSINESS PHONE: 2038451000 MAIL ADDRESS: STREET 1: 150 GLOVER AVENUE CITY: NORWALK STATE: CT ZIP: 06856 FORMER COMPANY: FORMER CONFORMED NAME: AUTO SUTURE SURGICAL CORP DATE OF NAME CHANGE: 19700507 S-3 1 U.S. SURGICAL FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1994 REGISTRATION STATEMENT NO. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ UNITED STATES SURGICAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 13-2518270 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 150 GLOVER AVENUE, NORWALK, CONNECTICUT 06856 (203) 845-1000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ DONALD F. CRANE, JR. SENIOR SEC COUNSEL UNITED STATES SURGICAL CORPORATION 150 GLOVER AVENUE NORWALK, CONNECTICUT 06856 (203) 845-1000 (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 Registration Statement becomes effective. ------------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE AGGREGATE REGISTRATION SECURITIES BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE - --------------------------------------------------------------------------------------------------------------------- Depositary Shares, each representing one- fiftieth of a share of DECS, Series A Convertible Preferred Stock, par value $5 per share(1)................................ 8,870,000 Shares $22.55 $200,018,500 $68,972 - --------------------------------------------------------------------------------------------------------------------- DECS, Series A Convertible Preferred Stock, par value $1 per share...................... (2) (2) (2) N/A - --------------------------------------------------------------------------------------------------------------------- Common Stock, par value $.10 per share........ (3) (3) (3) N/A - --------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------
(1) 8,870,000 Depositary Shares, offered for resale hereunder, issued on March 28, 1994, at $22.55 per share. (2) One-fiftieth of the number of Depositary Shares registered hereby. DECS are represented by the Depository Shares and no additional registration fee is required. (3) Up to 8,870,000 shares issuable upon, or in connection with, the conversion or redemption of the Depository Shares, as to which no additional registration fee is required. ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 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. APRIL 27, 1994 PROSPECTUS [LOGO] 8,870,000 SHARES UNITED STATES SURGICAL CORPORATION $2.20 DEPOSITARY SHARES EACH REPRESENTING A ONE-FIFTIETH INTEREST IN A SHARE OF SERIES A CONVERTIBLE PREFERRED STOCK (DIVIDEND ENHANCED CONVERTIBLE STOCK(SM) -- DECS(SM)) COMMON STOCK This Prospectus relates to the resale of 8,870,000 of $2.20 Depositary Shares (the "Depositary Shares"), each representing a one-fiftieth interest in a share of Series A Convertible Preferred Stock, par value $5 per share ("DECS"), of United States Surgical Corporation (the "Company"), of the DECS, and of up to 8,870,000 shares of Common Stock issuable upon redemption or conversion of the Depositary Shares (collectively, the "Resale Securities") by the holders named herein of the Resale Securities (each, a "Selling Stockholder" and collectively, the "Selling Stockholders"). The Depositary Shares were issued in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act") by the Company on March 28, 1994. See "Issuance of Resale Securities to Selling Stockholders". The Selling Stockholders directly, through agents designated from time to time, or through dealers or underwriters to be designated, may sell the Resale Securities from time to time on terms determined at the time of sale. See "Plan of Distribution." The Company will not receive any of the proceeds from the sale of the Resale Securities by the Selling Stockholders. Upon any sale of the Resale Securities offered hereby, Selling Stockholders and participating agents, brokers and dealers may be deemed to be underwriters as that term is defined in the Securities Act. The Company, however, understands that the Selling Stockholders do not admit that they are underwriters within the meaning of the Securities Act. The Company will pay the expenses of registration of the Resale Securities, except for underwriters' discounts or commissions, if any. Dividends on the Depositary Shares are cumulative at the annual rate of $2.20 per share (being one-fiftieth of the annual dividend rate of $110.00 for each share of DECS), payable quarterly in arrears, commencing July 1, 1994. Each Depositary Share has a liquidation preference (being one-fiftieth of the liquidation preference of each share of DECS) equal to the sum of (i) $22.55 and (ii) one-fiftieth of the amount of accrued and unpaid dividends on each share of DECS. At any time after April 1, 1997 (subject to certain limitations), the Depositary Shares may be redeemed by the Company for an amount of Common Stock of the Company, par value $.10 per share (the "Common Stock"), equal to $20.50, together with an additional cash dividend as set forth herein. On April 1, 1998 (the "Mandatory Conversion Date"), each Depositary Share still outstanding will automatically convert into one share of Common Stock, subject to adjustment in certain events. Prior to any such redemption by the Company, each Depositary Share may be converted at any time at the option of the holder into 0.953 of a share of Common Stock (equivalent to 47.65 shares of Common Stock for each share of DECS). For a detailed description of the terms of DECS and the Depositary Shares, see "Description of DECS" and "Description of Depositary Shares". This Prospectus may not be used to consummate sales of the Resale Securities unless, if resold through underwriters, dealers, or agents, accompanied by a Prospectus Supplement which names such underwriters, dealers or agents and describes the arrangements therewith. The Common Stock will be listed for trading on the New York Stock Exchange under the symbol USS. Neither the Depositary Shares nor the DECS are listed for trading on any exchange or approved for trading with other market centers. The Depositary Shares are eligible for trading in the Private Offerings, Resales and Trading through Automatic Linkage ("Portal") Market. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER "INVESTMENT CONSIDERATIONS". ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ The date of this Prospectus is , 1994. 3 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, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., and at the Commission's regional offices in New York (75 Park Place, New York, New York 10007) and in Chicago (Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661). Copies of such materials can be obtained at prescribed rates by writing to the Securities and Exchange Commission, Public Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Such materials also can be inspected at the office of the New York Stock Exchange (20 Broad Street, New York, New York 10005). INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed with the Commission by the Company (File No. 1-9776) are incorporated by reference in their entirety in this Offering Memorandum: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1993. 2. The Company's Proxy Statement for the Annual Meeting to be held May 18, 1994. 3. The description of the Company's Common Stock, $.10 par value ("Common Stock") contained in the Company's Registration Statement on Form 8-B, dated August 3, 1990. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference in this Prospectus and to be a part of this Prospectus from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this Prospectus modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company hereby undertakes to provide without charge to each person to whom this Prospectus is delivered, upon the request of such person, a copy of any or all of the documents referred to above, other than exhibits to such documents unless such exhibits are specifically incorporated by reference herein or in any incorporated document. Requests should be directed to United States Surgical Corporation, Marianne Scipione, Vice President, Corporate Communications, 150 Glover Avenue, Norwalk, Connecticut 06856 (telephone number: (203) 845-1000). 2 4 THE COMPANY United States Surgical Corporation (the "Company") is a Delaware corporation primarily engaged in developing, manufacturing and marketing a proprietary line of technologically advanced surgical wound management products to hospitals throughout the world. (Prior to reincorporating in Delaware in 1990, the Company was a New York corporation which was organized in 1975 and was the successor to a Maryland corporation activated in 1964.) The Company currently operates domestically and internationally through subsidiaries, branches and distributors. Except where the context otherwise requires, the term Company includes the Company's divisions, subsidiaries, branches and predecessors. The Company is the leading manufacturer and marketer of innovative mechanical products for the wound closure market. Its principal products include a series of surgical stapling instruments (both disposable and reusable), disposable surgical clip appliers and presterilized disposable loading units for use with stapling instruments. The Company's stapling instruments are an alternative to manual suturing techniques and enable surgeons to reduce blood loss, tissue trauma and operating time while joining internal tissue, reconstructing or sealing off organs, removing diseased tissue, occluding blood vessels and closing skin, either with titanium, stainless steel, or absorbable POLYSURGICLIP(R) copolymer clips. Surgical stapling also makes possible several surgical procedures which cannot be achieved with surgical needles and suturing materials. The Company is also the leading manufacturer and marketer of specialized wound management products designed for use in the rapidly growing field of minimally invasive surgery. This surgical technique, also referred to as endoscopic or laparoscopic surgery, requires incisions of up to one-half inch and generally provides patients with significant reductions in post-operative hospital stays, pain, recuperative time and hospital costs. Applications for minimally invasive surgery include cholecystectomy (gallbladder removal), hysterectomy, hernia repair, and various forms of bowel, stomach, gynecologic and thoracic surgery. The Company's products in this area include a variety of specialized surgical clip appliers and staplers, trocars (which provide entry ports to the body for laparoscopic surgery) and a line of laparoscopic instruments which allow surgeons to cut, clamp, retract or otherwise manipulate tissue during laparoscopic procedures. Disposable instruments reduce the user's capital investment, eliminate the cleaning, maintenance, sterilizing and repair required for reusable instruments, and provide the surgeon with a new sterile instrument for each procedure, offering more efficacious and safer practice for both patients and operating room personnel. The Company also manufactures and markets a line of sutures, which was introduced in 1991. The Company believes that sutures, which represent a major portion of the wound closure market, are a natural complement to its other wound management products. This market is currently dominated by other manufacturers. The Company continued to expand its sutures line to enable it to compete effectively with the full range of suture products currently offered in the marketplace. The Company's executive offices are located at 150 Glover Avenue, Norwalk, Connecticut 06856, and its telephone number is (203) 845-1000. 3 5 SUMMARY DESCRIPTION OF DECS AND DEPOSITARY SHARES SECURITIES...................... Depositary Shares, each such share representing a one-fiftieth interest in a share of DECS and entitling the holder to that proportion of all the rights, preferences, and privileges of a share of DECS (including dividend, voting, conversion, and liquidation rights and preferences) represented thereby, are offered hereby. The Depositary Shares mandatorily convert into shares of Common Stock on April 1, 1998 (the "Mandatory Conversion Date"), and the Company has the option to redeem the shares of DECS (and the related Depositary Shares), in whole or in part, on or after April 1, 1997 (the "Initial Redemption Date") and prior to the Mandatory Conversion Date, at the DECS Call Price (as defined herein) payable in shares of Common Stock, provided that the Current Market Price (as defined herein) of the Common Stock is greater than a defined amount described herein. In addition, the Depositary Shares are convertible at the option of the holder at any time prior to the Mandatory Conversion Date as set forth below. DIVIDENDS....................... Annual cumulative dividends accrue at a rate of $2.20 with respect to each Depositary Share (equivalent to a rate of $110.00 per annum for each share of DECS), from the date of initial issuance, payable quarterly in arrears on each January 1, April 1, July 1 and October 1, commencing July 1, 1994. See "Description of DECS -- Dividends" and "Description of Depositary Shares -- Dividends and Other Distributions". MANDATORY CONVERSION............ On the Mandatory Conversion Date, unless previously redeemed or converted, each outstanding Depositary Share will mandatorily convert into (i) one share of Common Stock, subject to adjustment in certain events, and (ii) the right to receive cash in an amount equal to all accrued and unpaid dividends (other than previously declared dividends payable to a holder of record as of a prior date) with respect to such Depositary Share. See "Description of DECS -- Mandatory Conversion of DECS" and "Description of Depositary Shares -- Conversion and Call Provisions". The value of the Common Stock that may be received by holders of Depositary Shares upon their mandatory conversion may be more or less than the amount paid for the Depositary Shares offered hereby due to market fluctuations in the price of the Common Stock. OPTIONAL REDEMPTION............. Shares of DECS (and the related Depositary Shares) are not redeemable either (i) prior to the Initial Redemption Date or (ii) at any time on or after the Initial Redemption Date when the Current Market Price of the Common Stock is less than or equal to the sum of (x) the DECS Call Price and (y) the Additional Dividend (as defined herein) per Depositary Share. Subject to the foregoing, at any time 4 6 and from time to time on or after the Initial Redemption Date, and ending immediately prior to the Mandatory Conversion Date, the Company may redeem any or all of the outstanding shares of DECS (and thereby the related Depositary Shares). Upon any such redemption, each holder of Depositary Shares will receive, in exchange for each Depositary Share so redeemed, an amount of Common Stock having an aggregate Current Market Price on the applicable date of determination equal to the closing price ($20.50) of the Common Stock on the New York Stock Exchange (the "NYSE") on the date of this Offering Memorandum (the "DECS Call Price"). Each holder of Depositary Shares will also receive an additional cash dividend (the "Additional Dividend") upon redemption by the Company in an amount initially equal to $0.55 for each share of Depository Shares, declining ratably after the Initial Redemption Date to $0 one month prior to the Mandatory Conversion Date, as set forth herein. See "Description of DECS -- Optional Redemption" and "Description of Depositary Shares -- Conversion and Call Provisions". The number of shares of Common Stock to be delivered upon redemption will be determined by dividing the DECS Call Price by the Current Market Price of the Common Stock prior to the announcement of the redemption, and the market price of the Common Stock may vary between the date of such determination and the subsequent delivery of such shares. CONVERSION AT THE OPTION OF THE HOLDER........................ At any time prior to the Mandatory Conversion Date, unless previously redeemed, each Depositary Share is convertible at the option of the holder thereof into 0.953 of a share of Common Stock (the "Optional Conversion Rate"), equivalent to a conversion price of $21.50 per share of Common Stock (the "Conversion Price"), subject to adjustment as described below (such Optional Conversion Rate being equivalent to 47.65 shares of Common Stock for each share of DECS). The number of shares of Common Stock a holder will receive upon redemption, and the value of the shares received upon conversion, will vary depending on the market price of the Common Stock from time to time, all as set forth herein. The right of holders to convert shares of DECS called for redemption (and the related Depositary Shares) will terminate immediately prior to the close of business on the redemption date. See "Description of DECS -- Conversion at the Option of the Holder" and "Description of Depositary Shares -- Conversion and Call Provisions". ENHANCED DIVIDEND YIELD, LESS EQUITY APPRECIATION THAN COMMON STOCK............. Dividends will accrue on the Depositary Shares at a higher rate than the rate at which dividends are currently paid on the Common Stock. The opportunity for equity apprecia- 5 7 tion afforded by an investment in the Depositary Shares may be less than that afforded by an investment in the Common Stock to the extent the Conversion Price is higher than the purchase price and the Company may, at its option, redeem the shares of DECS (and thereby the Depositary Shares) at any time on or after April 1, 1997, and prior to the Mandatory Conversion Date, and may do so if, among other circumstances, the applicable Current Market Price of the Common Stock exceeds the DECS Call Price plus the Additional Dividend per Depositary Share. In such event, a holder of a Depositary Share will receive less than one share of Common Stock. A holder may also surrender for conversion any Depositary Shares called for redemption up to the close of business on the redemption date, and a holder that so elects to convert will receive 0.953 of a share of Common Stock per Depositary Share. The value of Common Stock received by a holder of a Depositary Share may be more or less than the per share amount paid for the Depositary Shares offered hereby, due to market fluctuations in the price of Common Stock. See "Description of DECS -- Enhanced Dividend Yield, Less Equity Appreciation than Common Stock" and "Description of Depositary Shares". VOTING RIGHTS................... The holders of shares of DECS shall have the right with the holders of Common Stock to vote in the election of Directors and upon each other matter coming before any meeting of the holders of Common Stock on the basis of 0.95 of a vote for each Depositary Share held (equivalent to 47.50 votes for each share of DECS). On such matters, the holders of shares of DECS and the holders of Common Stock will vote together as one class except as otherwise provided by law. In addition, (i) whenever dividends on the shares of DECS or any other series of the Company's preferred stock (all series of which, including the shares of DECS, hereinafter are called the "Preferred Stock") shall be in arrears and unpaid for six quarterly dividend periods, and in certain other circumstances, the holders of the shares of DECS (voting separately as a class with holders of all other series of outstanding Preferred Stock upon which the voting rights have been conferred and are exercisable) will be entitled to vote, on the basis of one vote for each share of DECS (equivalent to one-fiftieth of a vote for each Depositary Share), for the election of two Preferred Stock Directors (as defined herein) of the Company, these Directors to be in addition to the number of Directors constituting the Board of Directors immediately prior to the accrual of such right, and (ii) the holders of the shares of DECS will have voting rights with respect to certain alterations of the Company's Certificate of Incorporation and certain other matters, voting on the same basis or separately as a series. The owners of Depositary Shares will be entitled to direct the 6 8 voting of the shares of DECS represented thereby. See "Description of DECS -- Voting Rights", "Description of Depositary Shares -- Voting of DECS" and "Description of Capital Stock -- Common Stock". LIQUIDATION PREFERENCE AND RANKING....................... The shares of DECS will rank prior to the Common Stock as to payment of dividends and distributions of assets upon liquidation. The liquidation preference of each share of DECS is an amount equal to the sum of (i) $1,127.50, which is fifty times the offering price to investors per share shown on the cover page of this Offering Memorandum (equivalent to a liquidation preference per Depositary Share of $22.55) and (ii) all accrued and unpaid dividends thereon. See "Description of DECS -- Dividends" and "-- Liquidation Rights" and "Description of Depositary Shares". REGISTRATION RIGHTS............. The Company has agreed to file a shelf registration statement under the Securities Act relating to resales of the Depositary Shares and the Common Stock issuable upon conversion or redemption thereof. If such registration statement is not filed or declared effective within the time periods set forth herein, the dividend rate on the Depositary Shares will be temporarily or permanently increased in the manner described herein. This Prospectus is a part of the registration statement filed pursuant to the foregoing obligation of the Company. See "Description of Depositary Shares -- Registration Rights". 7 9 INVESTMENT CONSIDERATIONS LEVERAGE After giving effect to the receipt of approximately $192 million of net proceeds from the sale of the Depositary Shares, described above in "Issuance of Resale Securities to Selling Stockholders", the Company's consolidated indebtedness approximates 45% of the sum of its stockholders' equity and consolidated indebtedness. This degree of leverage increases the Company's vulnerability to adverse general economic and health care industry conditions and to increased competitive pressures, including pricing pressure from better capitalized competitors. RECENT LOSSES; REDUCTION IN STOCKHOLDERS' EQUITY The Company reported a net loss of approximately $138.7 million for the fiscal year ended December 31, 1993. This loss includes the effect of a total of approximately $138 million ($130 million after-tax) in restructuring charges incurred during that period. The Company expects to show a loss for the first quarter of 1994. The Company's losses have reduced its stockholders' equity. RECENT DEVELOPMENTS IN THE HEALTH CARE INDUSTRY Recent developments in the health care industry have had a significant impact on the Company's performance. Significant uncertainty exists regarding the impact that health care reforms proposed by the Clinton Administration or others may have on the Company and its business. The primary trend in the health care industry is toward cost containment. The increased use of managed care, stricter review processes instituted by insurance companies and greater supervision of doctors' referral patterns have resulted in a market in which payors have greater leverage. In the context of an uncertain environment concerning health care reform, pricing has become a more important factor in purchasing decisions by hospitals. As a result, the Company's traditional advantage of product superiority has been adversely impacted. This environment has also slowed the rate of acceptance of newer techniques utilizing the Company's products because of concerns about reimbursement. There can be no assurance that the Company will not continue to be adversely affected by these matters. JUST-IN-TIME DISTRIBUTION The Company's sales have also been affected by the shifting since early 1993 of approximately 40% of the Company's domestic product distribution toward third-party Just-In-Time ("JIT") distribution. This new distribution system provides hospitals with an opportunity to reduce their inventories. These inventory reductions have taken longer than anticipated and are expected to result in a further significant loss of sales during the first quarter of 1994 as customer inventories are brought down to the desirable levels. COMPETITION The medical device industry is highly competitive, and the Company competes with manufacturers and marketers of medical devices (including surgical stapling instruments, minimally invasive surgery products and sutures) that have greater financial resources than the Company, including Johnson & Johnson and its subsidiary, Ethicon, Inc. Competition in the markets served by the Company has in the past resulted, and may in the future result, in losses of market share and downward pressure on product pricing. Certain of the Company's competitors, particularly Ethicon, have engaged in deep price discounting, especially in aggressively pursuing evaluations of their products by hospitals, as compared to those of the Company, for trial periods of various durations. The length of these competitive evaluations may often extend from one to six months. Regardless of the outcome of the evaluation, the Company loses revenues during the evaluation period. In 8 10 addition, increased cost consciousness due to uncertainty over health care reform has revived competition from reusable instruments. REGULATION The Company's business is subject to varying degrees of governmental regulation in the countries in which it operates. In the United States, the Company's products are subject to regulation as medical devices by the Food and Drug Administration ("FDA") and other federal and state agencies. These regulations pertain to the manufacturing, labeling, development and testing of the Company's products as well as to the maintenance of required records. An FDA regulation also requires prompt reporting of an event or malfunction involving a medical device where such device caused or contributed to death or serious injury or may do so. Federal law provides for several alternatives by which the FDA reviews medical devices prior to their entry into the marketplace. To date all the Company's new products have been cleared by the FDA under the most expedited form of pre-market review. The Company, and in the Company's belief, the rest of the industry, has generally experienced longer FDA product approval periods in 1992 and 1993 than in prior years. Timely product approval is important to the Company's maintaining its technological competitive advantages. The FDA has proposed additional procedures for obtaining regulatory approvals. However, the extent, if any, to which any such additional procedures may affect the Company can not be determined at this time. In other countries, the degree of government regulation affecting the Company varies considerably among countries, ranging from stringent testing and approval procedures in certain locations to simple registration procedures (or no procedures at all) in others. In general, the Company has not encountered material delays or regulatory impediments in marketing its products internationally. Should establishment of uniform regulations for the European Community occur, the Company believes it will be subject to a single regulatory scheme for all the participating countries, but it anticipates that the process generally may be more rigorous than certain of the multiple formats currently in place. ABSENCE OF PUBLIC MARKET FOR DEPOSITARY SHARES There can be no assurance as to the development or liquidity of any market for the Depositary Shares and the DECS. The Depositary Shares are eligible for trading in the Private Offerings, Resales and Trading through Automatic Linkage ("PORTAL") Market. The Depositary Shares may be expected to trade on the over the counter market; the DECS are not expected to be separately traded but could also be traded in the over the counter market. RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The ratio of earnings to combined fixed charges and preferred stock dividends of the Company, computed for each of the last five fiscal years and on a proforma basis for the latest fiscal year, is as follows.
PRO-FORMA YEAR ENDED YEARS ENDED DECEMBER 31, DECEMBER 31, --------------------------------------- 1993 1993 1992 1991 1990 1989 ------------ --- ---- ---- ---- ---- Ratio of earnings to combined fixed charges and preferred stock dividends.............................. (1) (2) 7.43 7.51 5.56 4.59
The pro-forma calculation of the ratio of earnings to combined fixed charges and preferred stock dividends assumes that the Company issued Depositary Shares for approximately $200 million and received net proceeds from the sale of $192 million which were used to repay long-term debt as of January 1, 1993. However, the Company has not yet applied the proceeds to long-term debt and there can be no assurance that such repayment will be accomplished. 9 11 - --------------- (1) Earnings are inadequate to cover combined fixed charges and preferred stock dividends. The dollar amount of the pro-forma deficiency at December 31, 1993 was $166.7 million. If the restructuring charges of $137.6 million were excluded from the calculation, the dollar amount of the pro-forma deficiency would have been $29.1 million. (2) Earnings are inadequate to cover fixed charges. The dollar amount of the deficiency at December 31, 1993 is $146.9 million. If the restructuring charges of $137.6 million were excluded from the calculation, the dollar amount of the deficiency would have been $9.3 million. USE OF PROCEEDS The Company will receive no proceeds from the sale of the Resale Securities by the Selling Stockholders. ISSUANCE OF RESALE SECURITIES TO SELLING STOCKHOLDERS On March 28, 1994 the Company issued 177,400 shares of its Series A Convertible Preferred Stock (convertible into a maximum of 8,870,000 shares of the Company's Common Stock), par value $5 per share, represented by 8,870,000 Depositary Shares, in an offering exempt from registration under the Securities Act at an offering price of $22.50 per Depositary Share. SELLING STOCKHOLDERS The following table sets forth certain information as of April , 1994 with respect to the Selling Stockholders:
SHARES OF COMMON STOCK SHARES OF COMMON BENEFICIALLY STOCK BENEFICIALLY OWNED PRIOR TO SHARES OWNED AFTER THE NAME OF SELLING STOCKHOLDER THE OFFERING(1) OFFERED HEREBY(2) OFFERING(1)(2)(3) - --------------------------------- ------------------- ----------------- ------------------- NUMBER PERCENT NUMBER PERCENT ------- ------- ------- -------
- --------------- (1) Information with respect to beneficial ownership is based upon information contained in filings made with the Commission, as modified by the Company to reflect the issuance of the Depositary Shares in March 1994 and information obtained from the Selling Stockholders. (2) Depositary Shares, and the maximum number of shares of Common Stock to be issued on redemption or conversion of the Depositary Shares, as described herein. (3) Assumes sale of all Resale Securities offered hereby and no other purchases or sales of Depositary Shares or Common Stock. See "Plan of Distribution." The Company and the Selling Stockholders have agreed to indemnify each other against certain civil liabilities under the Securities Act. PLAN OF DISTRIBUTION The Resale Securities may be sold from time to time to purchasers directly by any of the Selling Stockholders, including sales into the market. Alternatively, the Selling Stockholders may from time to time offer the Resale Securities through underwriters, dealers or agents who may receive 10 12 compensation in the form of underwriting discounts, concessions or commissions from the Selling Stockholders or the purchasers of the Resale Securities. The Selling Stockholders and any underwriters, dealers or agents that participate in the distribution of the Resale Securities may be deemed to be underwriters. The Company, however, understands that the Selling Stockholders do not admit that they are underwriters within the meaning of the Securities Act. The Selling Stockholders and any such underwriters, dealers, and agents may be entitled to indemnification against certain liabilities, including liabilities under the Securities Act, or be entitled to contributions as to payments they may be required to make in respect thereof. The Company will pay all of the expenses incident to the registration of the Resale Securities to the public, except for underwriters' discounts or commissions, if any. If the Resale Securities are sold through underwriters, dealers, or agents, a Prospectus Supplement will name such underwriters, dealers, or agents and describe the arrangements therewith. 11 13 DESCRIPTION OF DECS The summary contained herein of the terms of shares of DECS, including those terms applicable to shares of Preferred Stock, does not purport to be complete and is subject to and qualified in its entirety by reference to all of the provisions of the Company's Certificate of Incorporation and form of Certificate of Designation relating to the shares of DECS (the "Certificate of Designation"), a copy of which Certificate of Designation has been filed with the Registration Statement of which this Prospectus is a part. Each of the Depositary Shares represents beneficial ownership of one-fiftieth of a share of DECS and entitles the owner to that proportion of all the rights, preferences and privileges of the share of DECS represented thereby. See "Description of Depositary Shares". DIVIDENDS Holders of record of the shares of DECS (and thereby holders of Depositary Shares) shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, cash dividends from the date of initial issuance of the shares of DECS at the rate of $110.00 per annum or $27.50 per quarter (equivalent to a rate of $2.20 per annum or $0.55 per quarter for each Depositary Share), payable quarterly in arrears on January 1, April 1, July 1 and October 1 or, if any such date is not a business day, on the next succeeding business day. The first dividend period will be from the date of initial issuance of the shares of DECS to, but excluding, July 1, 1994, and will be payable on such date. Dividends will cease to accrue on the shares of DECS on the Mandatory Conversion Date or on the date of their earlier conversion or redemption. Dividends will be payable to holders of record of shares of DECS as they appear on the stock register of the Company on record dates not less than 15 nor more than 60 days preceding the payment date thereof, as shall be fixed by the Board of Directors. Dividends payable on shares of DECS for any period less than a full quarterly dividend period will be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in any period less than one month. Dividends on shares of DECS shall accrue whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on shares of DECS shall cumulate as of the dividend payment date on which they first become payable, but no interest shall accrue on accumulated but unpaid dividends on shares of DECS. The shares of DECS will rank on a parity, both as to payment of dividends and distribution of assets upon liquidation, with any Preferred Stock issued in the future by the Company that by its terms ranks pari passu with the shares of DECS. As long as any shares of DECS are outstanding, no dividends (other than dividends payable in shares of, or warrants, rights or options exercisable for or convertible into shares of, any capital stock, including, without limitation, the Common Stock, of the Company ranking junior to the shares of DECS as to the payment of dividends and the distribution of assets upon liquidation (collectively "Junior Stock") and cash in lieu of fractional shares in connection with any such dividend) will be paid or declared in cash or otherwise, nor will any other distribution be made (other than a distribution payable in Junior Stock and cash in lieu of fractional shares in connection with any such distribution), on any Junior Stock unless: (i) full dividends on Preferred Stock that does not constitute Junior Stock ("Parity Preferred Stock") have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Junior Stock dividend or distribution payment to the extent such dividends are cumulative; (ii) dividends in full for the current quarterly dividend period have been paid, or declared and set aside for payment, on all Parity Preferred Stock to the extent such dividends are cumulative; (iii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any Parity Preferred Stock; and (iv) the Company is not in default on any of its obligations to redeem any Parity Preferred Stock. 12 14 In addition, as long as any shares of DECS are outstanding, no shares of any Junior Stock may be purchased, redeemed or otherwise acquired by the Company or any of its subsidiaries (except in connection with a reclassification or exchange of any Junior Stock through the issuance of other Junior Stock (and cash in lieu of fractional shares in connection therewith) or the purchase, redemption or other acquisition of any Junior Stock with any Junior Stock (and cash in lieu of fractional shares in connection therewith)) nor may any funds be set aside or made available for any sinking fund for the purchase, redemption or acquisition of any Junior Stock unless: (i) full dividends on Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such purchase, redemption, acquisition, setting aside or making available to the extent such dividends are cumulative; (ii) dividends in full for the current quarterly dividend period have been paid, or declared and set aside for payment, on all Parity Preferred Stock to the extent such dividends are cumulative; (iii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any Parity Preferred Stock; and (iv) the Company is not in default on any of its obligations to redeem any Parity Preferred Stock. Subject to the provisions described above, such dividends or other distributions (payable in cash, property, or Junior Stock) as may be determined by the Board of Directors may be declared and paid on shares of any Junior Stock from time to time and Junior Stock may be purchased, redeemed or otherwise acquired by the Company or any of its subsidiaries, and funds may be set aside or made available for that purpose, from time to time. In the event of the declaration and payment of any such dividends or other distributions, the holders of such Junior Stock will be entitled, to the exclusion of holders of the Parity Preferred Stock, to share therein according to their respective interests. As long as any shares of DECS are outstanding, dividends or other distributions may not be declared or paid on any Parity Preferred Stock (other than dividends or other distributions payable in Junior Stock and cash in lieu of fractional shares in connection therewith), and the Company may not purchase, redeem or otherwise acquire any Parity Preferred Stock (except with any Junior Stock and cash in lieu of fractional shares in connection therewith and except with the right, subject to clause (b) of this paragraph and any similar requirement of any other Preferred Stock, to receive accrued and unpaid dividends), unless either: (a)(i) full dividends on Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Parity Preferred Stock dividend, distribution, redemption, purchase or acquisition payment to the extent such dividends are cumulative; (ii) dividends in full for the current quarterly dividend period have been paid, or declared and set aside for payment, on all Parity Preferred Stock to the extent such dividends are cumulative; (iii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any Parity Preferred Stock; and (iv) the Company is not in default on any of its obligations to redeem any Parity Preferred Stock; or (b) with respect to the declaration and payment of dividends only, any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per share of DECS and each other share of Parity Preferred Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per share of DECS and such other share of Parity Preferred Stock bear to each other. MANDATORY CONVERSION OF DECS Unless previously redeemed or voluntarily converted into Common Stock, as hereinafter described, on the Mandatory Conversion Date each outstanding share of DECS will mandatorily convert into (i) shares of Common Stock at the DECS Common Equivalent Rate (as defined herein) in effect on such date and (ii) the right to receive cash in an amount equal to all accrued and unpaid dividends on such share of DECS (other than previously declared dividends payable to a holder of record as of a prior date) to the Mandatory Conversion Date, whether or not declared, out 13 15 of funds legally available for the payment of dividends, subject to the requirement set forth in clause (b) in the immediately preceding paragraph and any similar requirement of any other Preferred Stock. The "DECS Common Equivalent Rate" is initially fifty shares of Common Stock for each share of DECS (equivalent to one share of Common Stock for each Depositary Share (the "Common Equivalent Rate")) and is subject to adjustment as described below. Dividends will cease to accrue on the Mandatory Conversion Date in respect of the shares of DECS then outstanding. Because the price of the Common Stock is subject to market fluctuations, the value of the Common Stock that may be received by holders of shares of DECS upon their mandatory conversion may be more or less than the amount paid for the shares of DECS offered hereby. OPTIONAL REDEMPTION Shares of DECS (and thereby the Depositary Shares) are not redeemable by the Company either (i) prior to the Initial Redemption Date or (ii) at any time on or after the Initial Redemption Date when the Current Market Price of the Common Stock is less than or equal to the sum of (x) the DECS Call Price and (y) the Additional Dividend (as defined herein) per Depositary Share. Subject to the foregoing, at any time and from time to time until immediately prior to the Mandatory Conversion Date, the Company will have the right to redeem, in whole or in part, the outstanding shares of DECS (and thereby the related Depositary Shares). Upon any such redemption, the Company will deliver to the holder thereof, in exchange for each share of DECS subject to redemption, (i) an amount of Common Stock having an aggregate Current Market Price equal to the DECS Call Price (the number of shares of which is equal to the DECS Call Price divided by the Current Market Price of the Common Stock) determined as of the date which is two trading days prior to the Notice Date (as defined herein), multiplied by the DECS Common Equivalent Rate, (ii) all accrued and unpaid dividends thereon and (iii) the Additional Dividend payable thereon. Dividends will cease to accrue on the shares of DECS on the date fixed for their redemption. The "Additional Dividend" is an additional cash dividend payable on each share of DECS only upon redemption by the Company in an amount equal to $27.50 ($0.55 per Depository Share) on or after April 1, 1997; $20.625 ($0.4125 per Depository Share) on or after July 1, 1997; $13.75 ($0.275 per Depository Share) on or after October 1, 1997; $6.875 ($0.1375 per Depository Share) on or after January 1, 1998; or $0 ($0 per Depositary Share) on or after March 1, 1998. The "Current Market Price" per share of the Common Stock on any date of determination means the lesser of (x) the average of the closing sale prices of the Common Stock as reported on the NYSE for the 15 consecutive trading days ending on and including such date of determination or (y) the closing sale price of the Common Stock as reported on the NYSE for such date of determination; provided, however, that, with respect to any redemption of shares of DECS, if any event that results in an adjustment of the DECS Common Equivalent Rate occurs during the period on the first day of such 15-day period and ending on the applicable redemption date, the Current Market Price as determined pursuant to the foregoing will be appropriately adjusted to reflect the occurrence of such event. The "Notice Date" with respect to any notice given by the Company in connection with a redemption of shares of DECS means the date on which first occurs either the public announcement of such call for redemption or the commencement of mailing of such notice to holders of shares of DECS. If fewer than all the outstanding shares of DECS are to be called for redemption, shares of DECS to be called will be selected by the Company from outstanding shares of DECS not previously called by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors in its sole discretion to be equitable. The Company will provide notice of any call for redemption of shares of DECS to holders of record of the shares of DECS to be called for redemption not less than 15 nor more than 60 days prior to the date fixed for redemption. Accordingly, the earliest mailing of notice of any call for redemption of shares of DECS will be February 1, 1997. Any such notice will be provided by mail, 14 16 sent to the holders of record of the shares of DECS to be called for redemption at such holder's address as it appears on the stock register of the Company, first class postage paid; provided, however, that failure to give such notice or any defect therein shall not affect the validity of the proceeding for redemption of any shares of DECS to be redeemed except as to a holder to whom the Company has failed to give said notice or whose notice was defective. On and after the redemption date, all rights of the holders of the shares of DECS called for redemption shall terminate except the right to receive the redemption price (unless the Company defaults on the payment of the redemption price). A public announcement of any call for redemption will be made by the Company prior to, or at the time of, the mailing of such notice of redemption. Each holder of shares of DECS called for redemption must surrender the certificates evidencing such shares of DECS to the Company at the place and in the manner designated in the notice of redemption and will thereupon be entitled to receive certificates for shares of Common Stock and cash for any fractional share amount. The Depositary Shares are subject to call upon substantially identical terms and conditions (including those as to notice to the owners of Depositary Shares) as the shares of DECS, adjusted to reflect the fact that fifty Depositary Shares represent one share of DECS. See "Description of Depositary Shares -- Conversion and Call Provisions". CONVERSION AT THE OPTION OF THE HOLDER The shares of DECS (and thereby the Depositary Shares) are convertible, in whole or in part, at the option of the holders thereof, at any time prior to the Mandatory Conversion Date, unless previously redeemed, into shares of Common Stock at a rate of 47.65 shares of Common Stock for each share of DECS (the "DECS Optional Conversion Rate") (or a rate of 0.953 shares of Common Stock for each Depositary Share) equivalent, for each Depositary Share, to a conversion price of $21.50 per share of Common Stock (the "DECS Conversion Price"), subject to adjustment as described below. The right to convert shares of DECS called for redemption will terminate immediately prior to the close of business on any redemption date with respect to such shares. Conversion of shares of DECS at the option of the holder may be effected by delivering certificates evidencing such shares of DECS, together with written notice of conversion and proper assignment of such certificates to the Company or in blank (and, if applicable, cash payment of an amount equal to the dividend attributable to the current quarterly dividend period payable on such shares), to the office of any transfer agent for shares of DECS or to any other office or agency maintained by the Company for that purpose and otherwise in accordance with conversion procedures established by the Company. Each optional conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the foregoing requirements shall have been satisfied. The conversion shall be at the DECS Optional Conversion Rate in effect at such time on such date. Holders of shares of DECS at the close of business on a record date for any payment of declared dividends will be entitled to receive the dividend payable on such shares of DECS on the corresponding dividend payment date notwithstanding the optional conversion of such shares of DECS following such record date and prior to such dividend payment date. However, shares of DECS surrendered for optional conversion after the close of business on a record date for any payment of declared dividends and before the opening of business on the next succeeding dividend payment date must be accompanied by payment in cash of an amount equal to the dividend attributable to the current quarterly dividend period payable on such date (unless such shares of DECS are subject to redemption on a redemption date subsequent to such record date and prior to or on such dividend payment date). Except as provided above, upon any optional conversion of shares of DECS, the Company will make no payment of or allowance for unpaid dividends, whether or not in arrears, on such shares of DECS or previously declared dividends or distributions on the shares of Common Stock issued upon such conversion. 15 17 The Depositary Shares may be voluntarily converted by the holders thereof upon the same terms and conditions (including those as to notice) as the shares of DECS represented by such Depositary Shares, adjusted to reflect the fact that fifty Depositary Shares represent one share of DECS. See "Description of Depositary Shares -- Conversion and Call Provisions". ENHANCED DIVIDEND YIELD, LESS EQUITY APPRECIATION THAN COMMON STOCK Dividends will accrue on the shares of DECS (and thereby on the Depositary Shares) at a higher rate than the rate at which dividends are currently paid on the Common Stock. The opportunity for equity appreciation afforded by an investment in shares of DECS is less than that afforded by an investment in the Common Stock because the DECS Conversion Price is higher than the closing price of Common Stock on the NYSE on the date of this Offering Memorandum and the Company may, at its option, redeem the shares of DECS at any time on or after the Initial Redemption Date and prior to the Mandatory Conversion Date, and may do so, among other circumstances, if the applicable Current Market Price of the Common Stock exceeds the DECS Call Price. In such event, a holder of a share of DECS will receive fewer than fifty shares of Common Stock (comparable to less than one share of Common Stock for each Depositary Share) upon such redemption. A holder may also surrender for conversion any shares of DECS called for redemption up to the close of business on the redemption date, and a holder that so elects to convert will receive 47.65 shares of Common Stock per share of DECS (or 0.953 of a share of Common Stock per Depositary Share). The value of shares of Common Stock received by holders of shares of DECS upon mandatory conversion may be more or less than the amount paid for the shares of DECS offered hereby, due to market fluctuations in the price of the Common Stock. As a result of these provisions, holders of shares of DECS would be expected to realize no equity appreciation if the market price of Common Stock is below the DECS Conversion Price, and less than all of such appreciation if the market price of Common Stock is above the DECS Conversion Price. Holders of shares of DECS will realize the entire decline in equity value if the market price of the Common Stock is less than one-fiftieth of the price paid for a share of DECS. CONVERSION ADJUSTMENTS The DECS Common Equivalent Rate and the DECS Optional Conversion Rate are each subject to adjustment as appropriate in certain circumstances, including if the Company shall (a) pay or make a dividend or other distribution with respect to its Common Stock in shares of Common Stock, (b) issue by reclassification of its shares of Common Stock any shares of Common Stock, (c) subdivide or split its outstanding Common Stock into a greater number of shares, (d) combine its outstanding Common Stock into a lesser number of shares, (e) issue certain rights or warrants to all holders of its Common Stock, or (f) pay a dividend or make a distribution to all holders of its Common Stock in the form of evidences of its indebtedness, cash or other assets (including capital stock of the Company other than Common Stock but excluding any cash dividends or distributions, other than "Extraordinary Cash Distributions", and dividends referred to in clause (a) above). In addition, the Company will be entitled (but shall not be required) to make such upward adjustments in the DECS Common Equivalent Rate and the DECS Optional Conversion Rate or the DECS Call Price as the Company, in its sole discretion, shall determine to be advisable, in order that any stock dividend, subdivision of stock, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction that could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended, or any successor provision) hereafter made by the Company to its stockholders will not be taxable in whole or in part. "Extraordinary Cash Distribution" means the portion of any cash dividend or cash distribution on the Common Stock that, when added to all other cash dividends and cash distributions on the Common Stock made during the immediately preceding 12-month period (other than cash dividends and cash distributions for which a prior adjustment to the DECS Common Equivalent Rate and the DECS Optional Rate was previously made) exceeds, on a per share of Common Stock basis, 10 percent of the average daily closing price of the Common Stock 16 18 over such 12-month period. All adjustments to the DECS Common Equivalent Rate and the DECS Optional Conversion Rate will be calculated to the nearest 1/100th of a share of Common Stock. No adjustment in the DECS Common Equivalent Rate or the DECS Optional Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent in the DECS Common Equivalent Rate, provided, however, that any adjustments which, by reason of the foregoing, are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All adjustments will be made successively. Whenever the DECS Common Equivalent Rate and the DECS Optional Conversion Rate are adjusted as provided in the preceding paragraph, the Company will file with each transfer agent for the shares of DECS a certificate with respect to such adjustment, make a prompt public announcement thereof and mail a notice to holder of the shares of DECS providing specified information with respect to such adjustment. At least 10 business days prior to certain specified actions that could result in certain adjustments in the DECS Common Equivalent Rate and the DECS Optional Conversion Rate, the Company will notify each holder of shares of DECS concerning such proposed action. ADJUSTMENT FOR CERTAIN CONSOLIDATIONS OR MERGERS In case of any consolidation or merger to which the Company is a party (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which each share of Common Stock outstanding immediately prior to the merger or consolidation remains unchanged in all material respects), or in case of any sale or transfer to another corporation of the property of the Company as an entirety or substantially as an entirety, or in case of any statutory exchange of securities with another corporation (other than in connection with a merger or acquisition), each share of DECS shall, after consummation of such transaction, be subject to (i) conversion at the option of the holder into the kind and amount of securities, cash, or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such share of DECS might have been converted immediately prior to consummation of such transaction, (ii) conversion on the Mandatory Conversion Date into the kind and amount of securities, cash, or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such share of DECS would have been converted if the conversion on the Mandatory Conversion Date had occurred immediately prior to the date of consummation of such transaction, plus the right, subject to the rights of other Preferred Stock, to receive cash in an amount equal to all accrued and unpaid dividends on such share of DECS (other than previously declared dividends payable to a holder of record as of a prior date), and (iii) redemption on any redemption date in exchange for the kind and amount of securities, cash, or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock that would have been issuable, using the DECS Call Price in effect on such redemption date, upon a redemption of such share of DECS immediately prior to consummation of such transaction, assuming that, if the Notice Date for such Redemption is not prior to such transaction, the Notice Date had been the date of such transaction; and assuming in each case that such holder of shares of Common Stock failed to exercise rights of election, if any, as to the kind or amount of securities, cash, or other property receivable upon consummation of such transaction (provided that, if the kind or amount of securities, cash or other property receivable upon consummation of such transaction is not the same for each non-electing share, then the kind and amount of securities, cash or other property receivable upon consummation of such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The kind and amount of securities into or for which the shares of DECS shall be convertible or redeemable after consummation of such transaction shall be subject to adjustment as described above under the caption "Conversion Adjustments" following the date of consummation of such transaction. The Company may not become a party to any such transaction unless the terms thereof are consistent with the foregoing. 17 19 FRACTIONAL SHARES No fractional shares of Common Stock will be issued upon redemption or conversion of shares of DECS. In lieu of any fractional share otherwise issuable in respect of the aggregate number of shares of DECS of any holder that are redeemed or converted on any redemption date or upon mandatory conversion or any optional conversion, such holder shall be entitled to receive an amount in cash equal to the same fraction of the (i) Current Market Price of the Common Stock in the case of redemption, or (ii) Closing Price (as defined in the Certificate of Designation) of the Common Stock determined (A) as of the fifth trading day immediately preceding the Mandatory Conversion Date, in the case of mandatory conversion, or (B) as of the second trading day immediately preceding the effective date of conversion, in the case of an optional conversion by a holder. If more than one share of DECS shall be surrendered for conversion or redemption at one time by or for the same holder, the number of shares of Common Stock issuable upon conversion or redemption thereof shall be computed on the basis of the aggregate number of shares of DECS so converted or redeemed. LIQUIDATION RIGHTS In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, and subject to the rights of holders of any other series of Preferred Stock, the holders of outstanding shares of DECS are entitled to receive an amount equal to the per share price to investors of the shares of DECS (equivalent to an amount equal to 50 times the per share price to investors of each Depositary Share shown on the cover page of this Offering Memorandum) plus accrued and unpaid dividends thereon, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Junior Stock upon liquidation, dissolution or winding up. If upon any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the assets of the Company are insufficient to permit the payment of the full preferential amounts payable with respect to shares of DECS and all other series of Parity Preferred Stock, the holders of shares of DECS and of all other series of Parity Preferred Stock will share ratably in any distribution of assets of the Company in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of DECS will not be entitled to any further participation in any distribution of assets by the Company. A consolidation or merger of the Company with one or more corporations or a sale or transfer of substantially all of the assets of the Company shall not be deemed to be a liquidation, dissolution or winding up of the Company. VOTING RIGHTS The holders of shares of DECS shall have the right with the holders of Common Stock to vote in the election of Directors and upon each other matter coming before any meeting of the holders of Common Stock on the basis of 47.50 votes for each share of DECS held (equivalent to 0.95 of a vote for each Depositary Share). The holders of shares of DECS and the holders of Common Stock will vote together as one class on such matters except as otherwise provided by law or the Certificate of Incorporation of the Company. In the event that dividends on the shares of DECS or any other series of Preferred Stock shall be in arrears and unpaid for six quarterly dividend periods, or of any other series of Preferred Stock shall be entitled for any other reason to exercise voting rights, separate from the Common Stock, to elect any Directors of the Company ("Preferred Stock Directors"), the holders of the shares of DECS (voting separately as a class with holders of all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable), with each share of DECS entitled to one vote (equivalent to one-fiftieth of a vote for each Depositary Share) on this and other matters in which Preferred Stock votes as a group, will be entitled to vote for the election of two Preferred Stock Directors, such Directors to be in addition to the number of Directors constituting the Board of Directors immediately prior to the accrual of such right. Such right, when vested, shall continue until 18 20 all dividends in arrears on the shares of DECS and such other series of Preferred Stock shall have been paid in full and the right of any other series of Preferred Stock to exercise voting rights, separate from the Common Stock, to elect any Preferred Stock Directors shall terminate or have terminated, and, when so paid and such termination occurs or has occurred, such right of the holders of the shares of DECS shall cease. Upon any termination of the aforesaid voting right, subject to the requirements of the Delaware corporation law and the Certificate of Incorporation of the Company, such Preferred Stock Directors shall cease to be Directors of the Company and shall resign. The Company will not, without the approval of the holders of at least 66 2/3 percent of all the shares of DECS then outstanding: (i) amend, alter, or repeal any of the provisions of the Certificate of Incorporation or the By-laws of the Company so as to affect adversely the powers, preferences, or rights of the holders of the shares of DECS then outstanding or reduce the minimum time required for any notice to which only the holders of the shares of DECS then outstanding may be entitled (an amendment of the Certificate of Incorporation to authorize or create, or increase the authorized amount of or to issue, Junior Stock, Preferred Stock ranking on parity with the shares of DECS or any stock of any class ranking on parity with the shares of DECS shall be deemed not to affect adversely the powers, preferences, or rights of the holders of the shares of DECS); (ii) create any series of Preferred Stock ranking prior to the shares of DECS as to payment of dividends or the distribution of assets upon liquidation; (iii) authorize or create, or increase the authorized amount of, any capital stock, or any security convertible into capital stock, of any class ranking prior to the shares of DECS as to payment of dividends or the distribution of assets upon liquidation; or (iv) merge or consolidate with or into any other corporation, unless each holder of the shares of DECS immediately preceding such merger or consolidation shall receive or continue to hold in the resulting corporation the same number of shares, with substantially the same rights and preferences, as correspond to the shares of DECS so held. Notwithstanding the provisions summarized in the preceding paragraph, however, no such approval described therein of the holders of the shares of DECS shall be required if, at or prior to the time when such amendment, alteration, or repeal is to take effect or when the authorization, creation or increase of any such prior or parity stock or such other stock or security is to be made, or when such consolidation or merger is to take effect, as the case may be, provision is made for the redemption of all shares of DECS at the time outstanding. TRANSFER AGENT AND REGISTRAR First Chicago Trust Company of New York is the transfer agent and registrar for, and paying agent for the payment of dividends on, shares of DECS and the Depositary Shares. First Chicago Trust Company of New York maintains a New York drop facility. MISCELLANEOUS Upon issuance, the shares of DECS will be fully paid and nonassessable. Holders of shares of DECS have no preemptive rights. The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion or redemption of shares of DECS, such number of shares of Common Stock as shall from time to time be issuable upon the conversion or redemption of all the shares of DECS then outstanding. Shares of DECS redeemed for, or converted into, Common Stock of the Company or otherwise acquired by the Company shall resume the status of authorized and unissued shares of Preferred Stock, undesignated as to series, and shall be available for subsequent issuance. 19 21 DESCRIPTION OF DEPOSITARY SHARES The following summary of the terms and provisions of the Depositary Shares does not purport to be complete and is subject to, and qualified in its entirety by, the Deposit Agreement, as defined below (which contains the form of the Depositary Receipt, as defined below). Each Depositary Share represents one-fiftieth of a share of DECS deposited under a Deposit Agreement dated as of March 28, 1994 (the "Deposit Agreement"), among the Company, First Chicago Trust Company of New York, as depositary (including any successor, the "Depositary"), and the holders from time to time of depositary receipts executed and delivered thereunder (the "Depositary Receipts"). Subject to the terms of the Deposit Agreement, each owner of a Depositary Share is entitled, proportionately, to all the rights, preferences and privileges of the shares of DECS represented thereby (including dividend, voting, conversion, and liquidation rights), and subject to all of the limitations of the shares of DECS represented thereby, contained in the Certificate of Designations and summarized under "Description of DECS". The principal executive office of First Chicago Trust Company of New York is located at 30 West Broadway, New York, New York 10007. The Depositary Shares are evidenced by Depositary Receipts. Copies of the Deposit Agreement, the form of which has been filed with the Registration Statement of which this Prospectus is a part, are available for inspection at the office of the Depositary listed above. EXECUTION AND DELIVERY OF DEPOSITARY RECEIPTS Following the issuance of the shares of DECS by the Company to the Initial Purchaser, the shares of DECS were deposited by the Initial Purchaser, or on their behalf, with the Depositary, which executed and delivered the Depositary Receipts to the Initial Purchaser. Depositary Receipts will be executed and delivered evidencing only whole Depositary Shares. WITHDRAWAL OF DECS Upon surrender of Depositary Receipts at the Corporate Office of the Depositary, the owner of the Depositary Shares evidenced thereby is entitled to delivery at such office of certificates evidencing the number of shares of DECS (but only in whole shares of DECS) represented by such Depositary Receipts. If the Depositary Receipts delivered by the holder evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of DECS to be withdrawn, the Depositary will at the same time deliver to such holder a new Depositary Receipt or Receipts evidencing such excess number of Depositary Shares. The Company does not expect that there will be any public trading market for the shares of DECS except as represented by the Depositary Shares. See "Investment Considerations -- Restrictions on Transfer; Absence of Public Market". CONVERSION AND CALL PROVISIONS Mandatory Conversion or Call. As described under "Description of DECS -- Mandatory Conversion of DECS" and "-- Optional Redemption", the shares of DECS are subject to mandatory conversion into shares of Common Stock on the Mandatory Conversion Date, and to the right of the Company to call the shares of DECS, at the Company's option, for redemption. The Depositary Shares are subject to mandatory conversion or call upon substantially the same terms and conditions (including as to notice to the owners of Depositary Shares) as the shares of DECS, except that the number of shares of Common Stock received upon mandatory conversion or redemption of each Depositary Share will be equal to the number of shares of Common Stock received upon mandatory conversion or redemption of each share of DECS divided by the DECS Common Equivalent Rate. 20 22 If fewer than all of the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall be selected by lot or pro rata or by any other equitable method determined by the Depositary to be consistent with the method determined by the Board of Directors with respect to the shares of DECS. If fewer than all of the Depositary Shares evidenced by a Depositary Receipt are called for redemption, the Depositary will deliver to the holder of such Depositary Receipt upon its surrender to the Depositary, together with the redemption payment, a new Depositary Receipt evidencing the Depositary shares evidenced by such prior Depositary Receipt and not called for redemption. Conversion at the Option of the Holder. As described under "Description of DECS -- Conversion at the Option of the Holder", the shares of DECS may be converted, in whole or in part, into shares of Common Stock at the option of the holders of shares of DECS at any time prior to the Mandatory Conversion Date, unless previously redeemed. The Depositary Shares may, at the option of holders thereof, be converted into shares of Common Stock upon the same terms and conditions as the shares of DECS, except that the number of shares of Common Stock received upon conversion of each Depositary Share will be equal to the number of shares of Common Stock received upon conversion of each share of DECS divided by the DECS Common Equivalent Rate. To effect such an optional conversion, a holder of Depositary Shares must deliver Depositary Receipts evidencing the Depositary Shares to be converted, together with a written notice of conversion and a proper assignment of the Depositary Receipts to the Company or in blank (and, if applicable, payment in cash of an amount equal to the dividend attributable to the current quarterly dividend period payable on such Depositary Shares), to the Depositary or its agent. Each optional conversion of Depositary Shares shall be deemed to have been effected immediately prior to the close of business on the date on which the foregoing requirements shall have been satisfied. The conversion shall be at the DECS Optional Conversion Rate in effect at such time and on such date, adjusted to reflect the fact that fifty Depositary Shares are the equivalent of one share of DECS. No fractional share of DECS may be converted. If only a portion of the Depositary Shares evidenced by a Depositary Receipt is to be converted, a new Depositary Receipt or Receipts will be issued for any Depositary Shares not converted. No fractional shares of Common Stock will be issued upon conversion or redemption of Depositary Shares, and, if such conversion or redemption would otherwise result in a fractional share of Common Stock being issued, an amount will be paid in cash as described in "Description of DECS -- Fractional Shares" or as set forth in the Deposit Agreement. After the date fixed for conversion or redemption, the Depositary Shares so converted or called for redemption will no longer be deemed to be outstanding and all rights of the holders of such Depositary Shares will cease, except the right to receive the Common Stock and amounts payable on such conversion or redemption and any money or other property to which the holders of such Depositary Shares were entitled upon such conversion or redemption, upon surrender to the Depositary of the Depositary Receipt or Receipts evidencing such Depositary Shares. DIVIDENDS AND OTHER DISTRIBUTIONS The Depositary will distribute all cash dividends or other cash distributions in respect of the shares of DECS to the record holders of Depositary Receipts in proportion, insofar as practicable, to the number of Depositary Shares owned by such holders. In the event of a distribution other than cash in respect of the shares of DECS, the Depositary will distribute property received by it to the record holders of Depositary Receipts in proportion, insofar as practicable, to the number of Depositary Shares owned by such holders, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with the approval of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including sale (at public or private sale) of such property and distribution of the net proceeds from such sale to such holders. 21 23 The amount distributed in any of the foregoing cases will be reduced by any amount required to be withheld by the Company or the Depositary on account of taxes. RECORD DATE Whenever (i) any cash dividend or other cash distribution shall become payable, any distribution other than cash shall be made, or any rights, preferences or privileges shall be offered with respect to the shares of DECS, or (ii) the Depositary shall receive notice of any meeting at which holders of shares of DECS are entitled to vote or of which holders of shares of DECS are entitled to notice, or of any election on the part of the Company to call for redemption any shares of DECS, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date for the shares of DECS) for the determination of the holders of Depositary Receipts (x) who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof, (y) who shall be entitled to give instructions for the exercise of voting rights at any such meeting or to receive notice of such meeting, or (z) who shall be subject to such redemption, subject to the provisions of the Deposit Agreement. VOTING OF DECS Upon receipt of notice of any meeting at which holders of shares of DECS are entitled to vote, the Depositary will mail the information contained in such notice of meeting to the record holders of Depositary Receipts. Each record holder of Depositary Receipts on the record date (which will be the same date as the record date for the shares of DECS) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the number of shares of DECS represented by such holder's Depositary Shares. The Depositary will endeavor, insofar as practicable, to vote the number of shares of DECS represented by such Depositary Shares in accordance with such instructions, and the Company has agreed to take all reasonable action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting shares of DECS to the extent it does not receive specific written voting instructions from the holders of Depositary Receipts representing the shares of DECS. AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT The form of Depositary Receipts and any provision of the Deposit Agreement may at any time be amended by agreement between the Company and the Depositary. However, any amendment that imposes any fees, taxes or other charges payable by holders of Depositary Receipts (other than taxes and other governmental charges, fees and other expenses payable by such holders as stated under "Charges of Depositary"), or that otherwise prejudices any substantial existing right of holders of Depositary Receipts, will not take effect as to outstanding Depositary Receipts until the expiration of 90 days after notice of such amendment has been mailed to the record holders of outstanding Depositary Receipts. Every holder of Depositary Receipts at the time any such amendment becomes effective shall be deemed to consent and agree to such amendment and to be bound by the Deposit Agreement, as so amended. In no event may any amendment impair the right of any owner of Depositary Shares, subject to the conditions specified in the Deposit Agreement, upon surrender of the Depositary Receipts evidencing such Depositary Shares to receive shares of DECS or, upon conversion of the shares of DECS represented by the Depositary Receipts, to receive shares of Common Stock, and in each case any money or other property represented thereby, except in order to comply with mandatory provisions of applicable law. Whenever so directed by the Company, the Depositary will terminate the Deposit Agreement after mailing notice of such termination to the record holders of all Depositary Receipts then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Depositary may likewise terminate the Deposit Agreement if at any time 45 days shall have expired after the Depositary shall have delivered to the Company a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment. If any 22 24 Depositary Receipts remain outstanding after the date of termination, the Depositary thereafter will discontinue the transfer of Depositary Receipts, will suspend the distribution of dividends to the holders thereof, and will not give any further notices (other than notice of such termination) or perform any further acts under the Deposit Agreement except as provided below and except that the Depositary will continue (i) to collect dividends on the shares of DECS and any other distributions with respect thereto and (ii) to deliver the shares of DECS together with such dividends and distributions and the net proceeds of any sales of rights, preferences, privileges or other property, without liability for interest thereon, in exchange for Depositary Receipts surrendered. At any time after the expiration of two years from the date of termination, the Depositary may sell the shares of DECS then held by it at public or private sale, at such place or places and upon such terms as it deems proper and may thereafter hold the net proceeds of any such sale, together with any money and other property then held by it, without liability for interest thereon, for the pro rata benefit of the holders of Depositary Receipts which have not been surrendered. The Company does not intend to terminate the Deposit Agreement or to permit the resignation of the Depositary without appointing a successor depositary. In the event the Deposit Agreement is terminated and a sufficient number of shares of DECS remain outstanding, the Company will use its best efforts to list the shares of DECS on the NYSE (unless the holders of a majority of the outstanding shares of DECS shall consent to the Company not effecting such listing). CHARGES OF DEPOSITARY The Company will pay all charges of the Depositary including charges in connection with the initial deposit of the shares of DECS, the initial execution and delivery of the Depositary Receipts, the distribution of information to the holders of Depositary Receipts with respect to matters on which shares of DECS are entitled to vote, withdrawals of the shares of DECS by the holders of Depositary Receipts or redemption or conversion of the shares of DECS, except for taxes (including transfer taxes, if any) and other governmental charges and such other charges as are provided in the Deposit Agreement to be at the expense of holders of Depositary Receipts or persons depositing shares of DECS. GENERAL The Depositary will make available for inspection by holders of Depositary Receipts at its Corporate Office all reports and communications from the Company that are delivered to the Depositary and made generally available to the holders of the shares of DECS. Neither the Depositary nor the Company will be liable if it is prevented or delayed by law or any circumstance beyond its control from or in performing its obligations under the Deposit Agreement. FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion regarding the material United States Federal income tax consequences under existing law of the ownership and disposition of the shares of DECS. This discussion is intended for informational purposes only, and does not address aspects of taxation, other than Federal income taxation, or all tax consequences that may be relevant in the particular circumstances of each holder (some of which, such as dealers in securities, banks, insurance companies, tax-exempt organizations and foreign persons, may be subject to special rules). There can be no assurance that future changes in applicable law or administrative and judicial interpretations thereof, any of which could have a retroactive effect, will not adversely affect the tax consequences discussed herein or that there will not be differences of opinion as to the interpretation of applicable law. Stock having terms closely resembling those of the shares of DECS has not been the subject of any regulation, ruling or judicial decision currently in effect, and there can be no assurance that the Internal Revenue Service (the "Service") will take the positions set forth below. The Company has not and will not seek a ruling from the Service as to any tax matters relating to the 23 25 shares of DECS. Persons considering the purchase of shares of DECS should consult their tax advisors with respect to the application of the United States Federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any state, local, or foreign taxing jurisdiction. The following discussion relates only to shares of DECS or shares of Common Stock received upon conversion thereof or in exchange therefor that are held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). Dividends Dividends paid on the shares of DECS out of the Company's current or accumulated earnings and profits will be taxable as ordinary income and will generally qualify for the 70 percent intercorporate dividends-received deduction subject to the minimum holding period (generally at least 46 days) and other applicable requirements. Under certain circumstances, a corporate holder may be subject to the alternative minimum tax with respect to the amount of its dividends-received deduction. As of December 31, 1993, the Company had no accumulated earnings and profits for federal income tax purposes. There can be no assurance that the Company's operations during the years that the DECS are outstanding will generate the necessary amounts of income so that the distributions with respect to the DECS will be treated as made from earnings and profits and thereby qualify as dividends for federal income tax purposes. To the extent the Company does not have sufficient current or accumulated earnings and profits in the years that the DECS are outstanding, distributions made with respect to the DECS for any such year will not constitute dividends for federal income tax purposes and, as a result, will not be eligible for the dividends-received deduction. Under certain circumstances, a corporation that receives an "extraordinary dividend", as defined in Section 1059(c) of the Code, is required to reduce its stock basis by the non-taxed portion of such dividend. Generally, quarterly dividends not in arrears paid to an original holder of the shares of DECS will not constitute extraordinary dividends under Section 1059(c). In addition, under Section 1059(c), any dividend with respect to "disqualified preferred stock" is treated as an "extraordinary dividend". For these purposes, "disqualified preferred stock" includes stock which is preferred as to dividends if the issue price of such stock exceeds its liquidation rights or redemption price. It is unclear whether the shares of the DECS will be determined to constitute disqualified preferred stock and, thus, whether dividends distributed with respect to the DECS will constitute extraordinary dividends. Redemption Premium Under certain circumstances, Section 305(c) of the Code requires that any excess of the redemption price of preferred stock over its issue price be includable in income, prior to receipt, as a constructive dividend. However, it is believed that Section 305(c) does not apply to stock with terms such as those of the shares of DECS. Redemption or Mandatory or Optional Conversion into Common Stock Gain or loss generally will not be recognized by a holder upon the redemption of shares of DECS for shares of Common Stock or the conversion of shares of DECS into shares of Common Stock if no cash is received. Income may be recognized, however, to the extent Common Stock or cash is received in payment of accrued and unpaid dividends or as an Additional Dividend upon a redemption or conversion. Such income would probably be characterized as dividend income although some uncertainty exists as to the appropriate characterization of payments in satisfaction of undeclared accrued and unpaid dividends or as an Additional Dividend. In addition, a holder who receives cash in lieu of a fractional share will be treated as having received such fractional share and having exchanged it for cash in a transaction subject to Section 302 of the Code and related provisions. Such exchange should generally result in capital gain or loss measured by the difference 24 26 between the cash received for the fractional share interest and the holder's basis in the fractional share interest. Generally, a holder's basis in the Common Stock received upon the redemption or conversion of the shares of DECS, other than shares of Common Stock taxed upon receipt, will equal the adjusted tax basis of the redeemed or converted shares of DECS (exclusive of any basis allocable to a fractional share interest) and the holding period of such Common Stock will include the holding period of the redeemed or converted shares of DECS. Adjustment of Conversion Rate Certain adjustments to the DECS Common Equivalent Rate and the DECS Optional Conversion Rate to reflect the Company's issuance of certain rights, warrants, evidences of indebtedness, securities or other assets to holders of Common Stock may result in constructive distributions taxable as dividends to the holders of the shares of DECS which may constitute (and cause other dividends to constitute) "extraordinary dividends" to corporate holders as described above. Conversion of DECS After Dividend Record Date If a holder of shares of DECS exercises such holder's right to convert shares of DECS into shares of Common Stock after a dividend record date but before payment of the dividend, then such holder generally will be required to pay the Company an amount equal to the portion of such dividend attributable to the current quarterly dividend period upon conversion, which amount would increase the basis of the Common Stock received. The holder would recognize the dividend payment as income. Backup Withholding Certain non-corporate holders may be subject to backup withholding at a current rate of 31 percent on dividends and certain consideration received upon the call or conversion of the shares of DECS. Generally, backup withholding applies only when the taxpayer fails to furnish or certify a proper Taxpayer Identification Number or when the taxpayer is notified by the Service that the taxpayer has failed to report payments of interest and dividends properly. Holders should consult their tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining any applicable exemption. REGISTRATION RIGHTS The Company entered into a Registration Agreement (the "Registration Agreement") dated March 28, 1994, with the Initial Purchaser of the Depositary Shares for the benefit of the holders thereof. The following summary of certain provisions of the Registration Agreement does not purport to be complete and is subject to, and is qualified by reference to, all the provisions of the Registration Agreement, a copy of which has been filed with the registration statement of which this Prospectus is a part. Such registration statement has been filed to satisfy the obligations of the Company described below. Pursuant to the Registration Agreement the Company agreed, for the benefit of the holders of Depositary Shares, that it would, at its cost, (a) within 30 days after March 28, 1994, file a shelf registration statement (a "Shelf Registration Statement") with the Commission covering resales of the Depositary Shares and the Common Stock issuable upon conversion or redemption thereof, (b) cause such Shelf Registration Statement to be declared effective under the Securities Act within 90 days of March 28, 1994, and (c) maintain such Shelf Registration Statement continuously effective under the Securities Act until March 28, 1997 or such earlier date as of which all the Depositary Shares or the Common Stock issuable upon conversion or redemption thereof have been sold pursuant to such Shelf Registration Statement. If the Company fails to comply with clause (a) above, then, at such time, the annual dividend rate will increase by $0.057 per Depositary Share. 25 27 Such increase will remain in effect until the date on which such Shelf Registration Statement is filed, on which date the annual dividend rate will revert to the original dividend rate plus any increase in such dividend rate pursuant to the following sentence. If the Shelf Registration Statement is not declared effective as provided in clause (b) above, then, at such time and on each date that would have been the successive 30th day following such time, the annual dividend rate (which dividend rate will be the original dividend rate plus any increase or increases in such dividend rate pursuant to the preceding sentence and this sentence) will increase by an additional $0.057 per Depositary Share, provided that the dividend rate will not be increased by more than $0.114 per Depositary Share pursuant to this sentence. Such increase or increases will remain in effect until the date on which such Shelf Registration Statement is declared effective, on which date the annual dividend rate will revert to the original dividend rate. Pursuant to clause (c) above, however, if the Company fails to keep the Shelf Registration Statement continuously effective for the period specified above, then at such time as the Shelf Registration Statement is no longer effective and on each date thereafter that is the successive 30th day subsequent to such time and until the earlier of (i) the date that the Shelf Registration Statement is again declared effective, (ii) March 28, 1997 or (iii) the date as of which all the Depositary Shares or the Common Stock issuable upon conversion or redemption thereof are sold pursuant to the Shelf Registration Statement, the annual dividend rate will increase by an additional $0.057 per Depositary Share, provided that the annual dividend rate will not be increased by more than $0.114 per Depositary Share pursuant to this sentence. DESCRIPTION OF CAPITAL STOCK The following summary of the terms and provisions of the Company's capital stock does not purport to be complete and is subject to, and qualified in its entirety by, the Certificate of Incorporation and By-laws of the Company, copies of which are available from the Company upon request. GENERAL The authorized capital stock of the Company consists of 250,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock. As of February 28, 1994, 56,351,560 shares of Common Stock were issued and outstanding and held of record by approximately 13,800 stockholders. As of March 28, 1994, there were 177,400 shares of Preferred Stock issued and outstanding. Directors of the Company hold office until the date of the annual meeting for the election of directors following the annual meeting at which they were elected and until their successors are elected. The By-laws provide that directors can be removed from office at any time, with or without cause, by the affirmative vote of the holders of a majority of the shares of capital stock then entitled to vote at an election of directors, and vacancies on the Board of Directors shall be filled by majority vote of the stockholders present at such meeting, or by a majority of the directors then in office. The Company's Certificate of Incorporation provides that any action required or permitted to be taken by stockholders of the Company shall be effected only at an annual or special meeting of the stockholders of the Company, and no action required to be taken or that may be taken at any annual or special meeting of stockholders of the Company may be taken without a meeting, except by the unanimous written consent of all stockholders entitled to vote on such action. The Company's By-laws provide that special meetings of stockholders shall only be called by either the Chairman of the Board, the President or any Vice-President. The Certificate of Incorporation and the By-laws of the Company provide that, except under certain circumstances, directors of the Company shall not be personally liable to the Company or its stockholders for breach of fiduciary duties as a director. That provision may not exonerate the directors from liability under federal securities laws and has no effect on any non-monetary remedies that may be available to the Company and its stockholders. The Certificate of Incorpora- 26 28 tion and the By-laws of the Company provide for indemnification of the officers and directors of the Company to the fullest extent permitted by applicable law. COMMON STOCK Holders of Common Stock are entitled to one vote for each share held of record on all matters on which shareholders are entitled to vote. There are no cumulative voting rights and holders of Common Stock have no preemptive rights. All issued and outstanding shares of Common Stock are validly issued, fully paid and non-assessable. Holders of Common Stock are entitled to such dividends as may be declared from time to time by the Board of Directors out of funds legally available for that purpose. Upon dissolution, holders of Common Stock are entitled to share pro rata in the assets of the Company remaining after payment in full of all its liabilities and obligations, including payment of the liquidation preference, if any, of any Preferred Stock then outstanding. The Common Stock is listed on the New York Stock Exchange, under the symbol USS. PREFERRED STOCK The Board of Directors, generally without further action by the shareholders, is authorized to issue Preferred Stock in one or more series and to designate as to any such series the dividend rate, redemption prices, preferences on liquidation or dissolution, conversion rights, voting rights and any other preferences, and relative, participating, optional or other special rights and qualifications, limitations and restrictions. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of the holders of any Preferred Stock that may be issued in the future. Issuance of a new series of Preferred Stock, while providing desirable flexibility in connection with possible acquisitions or other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from acquiring, a majority of the outstanding voting stock of the Company. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW Generally, Section 203 of the Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging in any "business combination" with any "interested stockholder" for a period of three years following the date that such stockholder became an interested stockholder, unless (i) prior to such date either the business combination or the transaction which resulted in the stockholder being an interested stockholder is approved by the board of directors of the corporation, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (A) by persons who are both directors and officers and (B) certain employee stock plans, or (iii) on or after such date the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. A "business combination" includes certain mergers, consolidations, asset sales, transfers and other transactions resulting in a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns (or within the preceding three years, did own) 15% or more of the corporation's voting stock. TRANSFER AGENT First Chicago Trust Company of New York is the transfer agent and registrar for the Company's Common Stock. 27 29 LEGAL MATTERS The validity of the Securities offered hereby has been passed upon by Donald F. Crane, Jr., Senior SEC Counsel for the Company. EXPERTS The financial statements and the related financial statement schedules incorporated in this prospectus by reference from the Company's Annual Report in Form 10-K for the year ended December 31, 1993 have been audited by Deloitte & Touche, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts at accounting and auditing. 28 30 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASER. 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 THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION 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 ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information.................. 2 Incorporation of Certain Documents by Reference............................ 2 The Company............................ 3 Summary Description of DECs and Depositary Shares.................... Investment Considerations.............. 8 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends............................ 9 Use of Proceeds........................ 10 Issuance of Resale Securities to Selling Stockholders................. 10 Selling Stockholders................... 10 Plan of Distribution................... 11 Description of DECS.................... 12 Description of Depositary Shares....... 20 Description of Capital Stock........... 26 Legal Matters.......................... 28 Experts................................ 28
8,870,000 SHARES UNITED STATES SURGICAL CORPORATION $2.20 DEPOSITARY SHARES EACH REPRESENTING A ONE-FIFTIETH INTEREST IN A SHARE OF SERIES A CONVERTIBLE PREFERRED STOCK (DIVIDEND ENHANCED CONVERTIBLE STOCK(SM) -- DECS(SM)) COMMON STOCK [LOGO] PROSPECTUS DATED , 1994 31 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The estimated expenses to be incurred in connection with the issuance and distribution of the securities covered by this Registration Statement, all of which will be paid by the Registrant, are as follows: Registration Fee................................................ $ Printing and Engraving Expenses................................. * Accounting Fees and Expenses.................................... * Legal Fees and Expenses......................................... * Miscellaneous................................................... * ----------- Total................................................. $ ----------- -----------
* To be provided by amendment hereto. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law empowers a corporation to indemnify its directors and officers or former directors or officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers. Such law provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under a corporation's Certificate of Incorporation, Bylaws, any agreement or otherwise. Article Eight of the Company's Certificate of Incorporation, as amended, provides that, to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended, a director of the Company shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. Article XI of the Company's By-laws provides for indemnification of officers and directors to the fullest extent provided by law. Insofar 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 advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 16. EXHIBITS The following is a list of all exhibits filed as a part of this Registration Statement on Form S-3, including those incorporated herein by reference. II-1 32
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION OF EXHIBIT PAGE - -------- ---------------------- ------------ 4(a) Certificate of Designations. Incorporated by reference to the Exhibits filed with the Company's Form 10-K Annual Report for 1993. Commission file no. 1-9776. 4(b) Registration Rights Agreement dated March 28, 1994, between the Company and Salomon Brothers Inc. 4(c) Depositary Agreement dated March 28, 1994 between the Company and First Chicago Trust Company 4(d) Form of Certificate representing Series A Convertible Preferred Stock. 4(e) Form of Depositary Receipt. 5 Opinion of Donald F. Crane, Jr. as to the legality of the Securities. 12 Statements of computation of ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends. 23(a) Consent of Deloitte & Touche, Independent Auditors, as Experts. 23(b) Consent of Donald F. Crane, Jr. Included in Exhibit 5 above. 24 Powers of Attorney.
ITEM 17. CERTAIN UNDERTAKINGS UNDERTAKINGS TO FILE PROSPECTUSES AS AMENDMENTS 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 this 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 this Registration Statement and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement, provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by 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, as amended, each such post-effective amendment and each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (and, where applicable, each filing of the plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in this 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; and (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. 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 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 II-2 33 registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. UNDERTAKING WITH REGARD TO INDEMNIFICATION 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-3 34 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 Norwalk, State of Connecticut, on April 27, 1994. UNITED STATES SURGICAL CORPORATION By /s/ THOMAS R. BREMER ---------------------------------- Thomas R. Bremer Senior Vice President and General Counsel Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE - ---------------------------------------- ------------------------------------ --------------- * Chairman of the Board, President, April , 1994 - ---------------------------------------- Chief Executive Officer and Director Leon C. Hirsch (Principal Executive Officer) * Director April , 1994 - ---------------------------------------- John A Bogardus, Jr. /s/ THOMAS R. BREMER Director April 27, 1994 - ---------------------------------------- Thomas R. Bremer Director April , 1994 - ---------------------------------------- Turi Josefsen * Director April , 1994 - ---------------------------------------- Douglas L. King Director April , 1994 - ---------------------------------------- Zanvyl Krieger Director April , 1994 - ---------------------------------------- Bruce S. Lustman * Director April , 1994 - ---------------------------------------- William F. May
II-4 35
SIGNATURES TITLE DATE - ---------------------------------------- ------------------------------------ --------------- * Director April , 1994 - ---------------------------------------- Marianne Scipione * Director April , 1994 - ---------------------------------------- Douglas T. Tansill * Senior Vice President, Finance and April , 1994 - ---------------------------------------- Chief Financial Officer (Principal Howard M. Rosenkrantz Financial Officer) /s/ JOSEPH C. SCHERPF Vice President and Controller April 27, 1994 - ---------------------------------------- (Principal Accounting Officer) Joseph C. Scherpf
* By Power of Attorney II-5 36 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION LOCATION - -------- ----------- -------- 4(a) Certificate of Designations. Incorporated by reference to the Exhibits filed with the Company's Form 10-K Annual Report for 1993. Commission file no. 1-9776. 4(b) Registration Rights Agreement dated March 28, 1994, between the Company and Salomon Brothers Inc. 4(c) Depositary Agreement dated March 28, 1994 between the Company and First Chicago Trust Company 4(d) Form of Certificate representing Series A Convertible Preferred Stock. 4(e) Form of Depositary Receipt. 5 Opinion of Donald F. Crane, Jr. as to the legality of the Securities. 12 Statements of computation of ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends. 23(a) Consent of Deloitte & Touche, Independent Auditors, as Experts. 23(b) Consent of Donald F. Crane Jr. Included in Exhibit 5 above. 24 Powers of Attorney.
EX-4.B 2 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4(b) EXECUTION COPY UNITED STATES SURGICAL CORPORATION 8,870,000 Depositary Shares REGISTRATION AGREEMENT New York, New York March 28, 1994 Salomon Brothers Inc Seven World Trade Center New York, New York 10048 Dear Sirs: United States Surgical Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to you (the "Purchaser"), upon the terms set forth in a Purchase Agreement of even date herewith (the "Purchase Agreement"), 8,870,000 of its $2.20 Depositary Shares (the "Securities"), each representing a one-fiftieth interest in a share of Series A Convertible Preferred Stock (the "Preferred Stock") (the "Initial Placement"). As an inducement to you to enter into the Purchase Agreement and in satisfaction of a condition to your obligations thereunder, the Company agrees with you (i) for your benefit and (ii) for the benefit of the holders (including you) from time to time (each of the foregoing a "Holder" and together the "Holders") of the Securities or the Converted Securities (each as defined below) as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" means the Securities Act of 1933 and the rules and regulations of the Commission promulgated thereunder. "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified person. For purposes of this definition, control 2 2 of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether through ownership of voting securities or by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Closing Date" has the meaning set forth in the Purchase Agreement. "Commission" means the Securities and Exchange Commission. "Common Stock" means the Common Stock, $.10 par value, of the Company. "Converted Securities" means Securities that have been converted or redeemed into shares of Common Stock. "Exchange Act" means the Securities Exchange Act of 1934 and the rules and regulations of the Commission promulgated thereunder. "Final Memorandum" has the meaning set forth in the Purchase Agreement. "Holder" and "Holders" have the meanings set forth in the preamble hereto. "Initial Placement" has the meaning set forth in the preamble hereto. "Losses" has the meaning set forth in Section 5(d). "Majority Holders" means the Holders of a majority of the shares of securities registered or to be registered under the Shelf Registration Statement. "Managing Underwriters" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering of securities under the Shelf Registration Statement. "Prospectus" means the prospectus included in the Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as 3 3 amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the securities covered by the Shelf Registration Statement, and all amendments and supplements to such prospectus, including post-effective amendments. "Purchaser" has the meaning set forth in the preamble hereto. "Securities" has the meaning set forth in the preamble hereto. "Shelf Registration Period" has the meaning set forth in Section 2(b). "Shelf Registration Statement" means a "shelf" registration statement of the Company pursuant to the provisions of Section 2 which covers the Securities and the Converted Securities, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "underwriter" means any underwriter of securities in connection with an offering thereof under the Shelf Registration Statement. 2. Shelf Registration. (a) The Company shall prepare and, not later than 30 days following the Closing Date, shall file with the Commission, and thereafter shall, not later than 90 days following the Closing Date, cause to be declared effective under the Act a Shelf Registration Statement relating to the offer and sale by the Holders (subject to the Holders' right to elect, pursuant to Section 3(a)(2), not to be included as a "selling security holder" in the Shelf Registration Statement) of the Securities and the Converted Securities from time to time in accordance with the methods of distribution elected by the Holders and set forth in the Shelf Registration Statement. (b) The Company shall keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by the Holders 4 4 for a period of three years from the Closing Date or such shorter period that will terminate when all the Securities and Converted Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). (c) The Shelf Registration Statement will not be deemed to have become effective unless it has been declared effective by the Commission; provided, however, that if, after it has been declared effective, the offering of Securities and Converted Securities pursuant to the Shelf Registration Statement is interfered with by any stop order, inunction or other order or requirement of the Commission or any other governmental agency, authority or court, the Registration Statement will be deemed not to have been effective during the period of such interference until the offering of the securities registered thereunder may legally resume. (d) The Holders will suffer damages if the Company fails to fulfill its obligations under this Section 2 and it would not be feasible to ascertain as of the date of this Agreement the extent of such damages with precision. Accordingly, the certificate of designations relating to the Securities provides for increases in the annual dividend rate for the Securities if the Company fails to comply its obligations under this Section 2. The liquidated damages provided for in such certificate of designations constitute a reasonable estimate of the damages that may be incurred by the Holders by reason of the failure of the Company to fulfill its obligations under this Section 2 and such liquidated damages shall be the sole remedy of you and the Holders for any such failure. 3. Registration Procedures. In connection with the Shelf Registration Statement, the following provisions shall apply: (a) (1) The Company shall furnish to you and each Holder, prior to the filing thereof with the Commission, a copy of the Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as you or any Holder reasonably may propose. 5 5 (2) Each Holder shall have the right to elect, prior to the initial filing of the Shelf Registration Statement, not to be included in the Shelf Registration as a "selling security holder"; provided, that, notwithstanding any such election, any subsequent Holder that is a direct or indirect transferee of Securities or Converted Securities of such an original Holder so electing not be included as a "selling security holder" shall have the right to elect to be included in the Shelf Registration Statement as a "selling security holder". Any original Holder so electing not to be included as a "selling security holder" shall notify the Company of such election within three business days of receipt, pursuant to paragraph (a)(1) of this Section 3, of the Shelf Registration Statement prior to the filing thereof with the Commission. (3) The Company shall amend and supplement the Shelf Registration Statement and the Prospectus forming part thereof if requested to do so by any subsequent Holder to the extent necessary to list such Holder as a "selling security holder" pursuant to paragraph (a)(2) of this Section 3. (b) The Company shall ensure that (i) the Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act, (ii) the Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of the Shelf Registration Statement, and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. 6 6 (c) (1) The Company shall advise you and the Holders and, if requested by you or any Holder, confirm such advice in writing: (i) when the Shelf Registration Statement and any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the Prospectus included therein or for additional information. (2) Promptly upon becoming aware of such events, the Company shall advise you and the Holders and, if requested by you or any Holder, confirm such advice in writing: (i) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose; (ii) of the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (iii) of the happening of any event that requires the making of any changes in the Shelf Registration Statement or the Prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (d) The Company shall use its best efforts to obtain the withdrawal of any order suspending the 7 7 effectiveness of the Shelf Registration Statement at the earliest possible time. (e) The Company shall furnish to each Holder, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Holder so requests in writing, all exhibits (including those incorporated by reference). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as the Holder may reasonably request; and the Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of securities in connection with the offering and sale of the securities covered by the Prospectus or any amendment or supplement thereto. (g) Prior to any offering of securities pursuant to the Shelf Registration Statement, the Company shall register or qualify or cooperate with the Holders of securities included therein and their respective counsel in connection with the registration or qualification of such securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the securities covered by the Shelf Registration Statement; provided, however, that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. (h) The Company shall cooperate with the Holders to facilitate the timely preparation and delivery of Depositary Receipts representing Securities and certificates representing Converted Securities to be sold pursuant to the Shelf Registration Statement free of any restrictive legends and registered in such names as the Holders may request in connection with sales of 8 8 securities pursuant to the Shelf Registration Statement. (i) Upon the occurrence of any event contemplated by paragraph (c)(2)(iii) above, the Company shall promptly prepare a post-effective amendment to the Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) Not later than the effective date of the Shelf Registration Statement hereunder, the Company shall identify the securities registered under such Shelf Registration Statement, and provide the applicable trustee with printed certificates (and Depositary Receipts, if applicable) for such securities, in a form, if requested by the applicable Holder or Holder's Counsel, eligible for deposit with The Depository Trust Company. (k) The Company shall use its best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders as soon as practicable after the effective date of the Shelf Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Act. (l) The Company may require each Holder of securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding such Holder and the distribution of such securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement. (m) The Company shall, if requested, promptly incorporate in a Prospectus supplement or post-effective amendment to the Shelf Registration Statement, such information as the Managing Underwriters and Majority Holders reasonably agree should be included therein and shall make all required 9 9 filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment. (n) The Company shall enter into such agreements (including underwriting agreements) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Securities and Converted Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 5 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any, with respect to all parties to be indemnified pursuant to Section 5 from Holders). (o) The Company shall (i) make reasonably available for inspection by the Holders, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; (ii) cause the Company's officers, directors and employees to supply all relevant information reasonably requested by any such persons in connection with the Shelf Registration Statement as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information, including, without limitation, all material non-public information, shall be kept confidential by any such persons, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; (iii) make such representations and warranties to the Holders and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, 10 10 scope and substance) shall be reasonably satisfactory to Holder's Counsel and the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by the Holders and underwriters; (v) obtain "comfort" letters (or, in the case of any person that does not satisfy the conditions for receipt of a "comfort" letter specified in Statement on Auditing Standards No. 72, an "agreed upon procedures letter") and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each selling Holder of securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type then customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such other documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this paragraph (o) shall be performed at (A) the effectiveness of the Shelf Registration Statement and each post-effective amendment thereto and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (p) The Holders may enter into, in their sole discretion, one or more underwriting arrangements in connection with the offering of securities under the Shelf Registration Statement; provided, however, that any such underwriting arrangement shall be with respect to Securities or Converted Securities having an aggregate public offering price of no less than $50 million; provided, further, however, that, notwithstanding the foregoing proviso, if, at any time three such underwriting arrangements have each resulted in the closing of the public offering of Securities or 11 11 Converted Securities offered thereby, the Holders may enter into one underwriting arrangement which may have an aggregate public offering price for the Securities or Converted Securities offered thereunder of less than $50 million. (q) The Company may offer securities of the Company, other than the Securities and the Converted Securities, under the Shelf Registration Statement. 4. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 2 and 3 (other than any discount or commission payable or paid to any underwriter, which shall be the responsibility of the Holders) and shall reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith. 5. Indemnification and Contribution. (a) In connection with the Shelf Registration Statement, the Company agrees to indemnify and hold harmless each Holder of securities covered thereby (including, without limitation, the Purchaser), the directors, officers, employees and agents of each Holder and each person who controls any Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory laws or regulations, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that (i) the Company will not be liable in any case to the extent that any such loss, claim, damage or liability arises out of or is based 12 12 upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any such Holder or by the Managing Underwriter specifically for inclusion therein and (ii) such indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Holder (or any director, officer, employee or agent of such Holder or any person controlling such Holder) from whom the person asserting any such loss, claim, damage or liability purchased the Securities or Converted Securities, as the case may be, which are the subject thereof if such person did not receive a copy of the final prospectus (or the final prospectus as supplemented) excluding documents incorporated therein by reference at or prior to the confirmation of the sale of Securities or Converted Securities, as the case may be, to such person in any case where such delivery is required by the Securities Act and the untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in such final prospectus (or final prospectus as supplemented). This indemnity agreement will be in addition to any liability which the Company may otherwise have. The Company also agrees to indemnify or contribute to Losses of, as provided in Section 5(d), any underwriters, their officers and directors and each person who controls such underwriters on substantially the same basis as that of the indemnification of the Purchaser and the selling Holders provided in this Section 5(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 3(m). (b) Each Holder of securities covered by the Shelf Registration Statement (including, without limitation, the Purchaser) severally agrees to indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii) each of its officers who signs the Shelf Registration Statement and (iv) each person who controls the Company within the meaning of either the Act or the Exchange Act to the same extent as the foregoing indemnity from the Company to each Holder, but only with reference to written information relating to Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any Holder may otherwise have. 13 13 (c) Promptly after receipt by an indemnified party under this Section 5 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel (and local counsel), if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it or any other indemnified party which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle, compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or 14 14 contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) above is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal and other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Shelf Registration Statement; provided, however, that in no case shall the Purchaser or any other Holder be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to the Securities, as set forth on the cover page of the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Shelf Registration Statement. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the sum of (x) the total net proceeds from the Initial Placement (before deducting expenses) as set forth on the cover page of the Final Memorandum and (y) the total amount of additional dividends specified in the certificate of designations relating to the Securities which the Company would have been required to pay as a result of not registering the Securities or Converted Securities. Benefits received by the Purchaser shall be deemed to be equal to the purchase discount and commission set forth on the cover page of the Final Memorandum, and 15 15 benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities and Converted Securities registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the underwriting discount and commission set forth on the cover page of the Prospectus forming a part of the Shelf Registration Statement. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of a Holder shall have the same rights to contribution as such Holder, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Shelf Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 5 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company or any of the officers, directors or controlling persons referred to in this Section 5, and will survive the sale by a Holder of Securities or Converted Securities. 5. Preferred Stock. If, for any reason, the Preferred Stock shall not be represented by the Securities under a depositary agreement, all rights, benefits and obligations applicable hereunder to the Securities and Holders thereof shall be automatically deemed applicable to the Preferred Stock and the holders thereof. 6. Miscellaneous. (a) No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, 16 16 enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders; provided, that, with respect to any matter that directly or indirectly affects the rights of the Purchaser hereunder, the Company shall obtain the written consent of the Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to the Shelf Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of securities being sold rather than registered under the Shelf Registration Statement. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 6(c), which address initially is, with respect to each Holder, the address of such Holder maintained by the registrar for the Securities or Converted Securities, as the case may be, with a copy in like manner to the Purchaser; (ii) if to the Purchaser; initially at its address set forth in the Purchase Agreement; and (iii) if to the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given when received. The Purchaser or the Company by notice to the other may designate 17 17 additional or different addresses for subsequent notices or communications. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without the need for an express assignment or any consent by the Company thereto, all current and future Holders. The Company hereby agrees to extend the benefits of this Agreement to any Holder and any Holder may specifically enforce the provisions of this Agreement as if an original party hereto. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without reference to conflicts of law rules). (h) Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. (i) Securities Held by the Company, etc. Whenever the consent or approval of the Majority Holders is required hereunder, securities held by the Company or its Affiliates (other than Holders deemed to be Affiliates of the Company solely by reason of their holdings of Securities or Converted Securities) shall not be counted in determining whether such consent or approval was given by the Majority Holders. 18 18 Please confirm that the foregoing correctly sets forth the agreement between the Company and you by confirming and accepting this Agreement as set forth below. Very truly yours, UNITED STATES SURGICAL CORPORATION By: ------------------------ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON BROTHERS INC By: ----------------------- Name: Title: EX-4.C 3 DEPOSITARY AGREEMENT 1 EXHIBIT 4(c) DEPOSIT AGREEMENT DEPOSIT AGREEMENT, dated as of March 28, 1994, among United States Surgical Corporation, a Delaware corporation, First Chicago Trust Company of New York, a New York trust company, as Depositary, and all holders from time to time of Depositary Receipts issued hereunder. WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit Agreement, for the deposit of shares of Series A Convertible Preferred Stock of the Company with the Depositary for the purposes set forth in this Deposit Agreement and for the issuance hereunder of the Receipts evidencing Depositary Shares each representing 1/50th of a share of such Preferred Stock so deposited; and WHEREAS, the Depositary Receipts are to be substantially in the form of Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided in this Deposit Agreement; NOW, THEREFORE, in consideration of the premises contained herein, it is agreed by and among the parties hereto as follows: ARTICLE ARTICLE I DEFINITIONS The following definitions shall apply to the respective terms (in the singular and plural forms of such terms) used in this Deposit Agreement and the Depositary Receipts: SECTION 1.1 The term "Certificate of Designations" shall mean the Certificate of Designations adopted by the Board of Directors of the Company or a duly authorized committee thereof establishing and setting forth the rights, preferences, privileges and limitations of the Preferred Stock. 2 SECTION 1.2 The term "Certificate of Incorporation" shall mean the Certificate of Incorporation, as amended from time to time, of the Company. SECTION 1.3 The term "Company" shall mean United States Surgical Corporation, a Delaware corporation having its principal office at 150 Glover Avenue, Norwalk, Connecticut, 06856, and its successors. SECTION 1.4 The term "Corporate Office" shall mean the corporate office of the Depositary at which at any particular time its depositary receipt business shall be administered. SECTION 1.5 The term "Deposit Agreement" shall mean this agreement, as the same may be amended, modified or supplemented from time to time. SECTION 1.6 The term "Depositary" shall mean First Chicago Trust Company of New York, a New York trust company, having its principal office at 14 Wall Street, New York, New York 10005, and any successor as Depositary hereunder. SECTION 1.7 The term "Depositary Shares" shall mean an interest in one-fiftieth of a share of the Preferred Stock deposited with the Depositary hereunder and the same proportional interest in any and all other property received by the Depositary in respect of such share of Preferred Stock and held under this Depositary Agreement, all as evidenced by the Receipts executed and delivered hereunder. Subject to the terms of this Deposit Agreement, each holder of a Depositary Share is entitled, proportionately, to all the rights, preferences and privileges of the Preferred Stock represented by such Depositary Share, including the dividend, voting and liquidation rights contained in the Certificate of Designations, and to the benefits of all obligations of the Company under the Certificate of Designations. SECTION 1.8 The term "Depositary's Agent" shall mean an agent appointed by the Depositary as provided, and for the purposes specified, in Section 7.5. SECTION 1.9 The term "Preferred Stock" shall mean shares of the Company's Series A Convertible Pre- 2 3 ferred Stock, par value $5.00 per share, $1,127.50 liquidation preference per share. SECTION 1.10 The term "Receipt" shall mean a Depositary Receipt issued hereunder to evidence one or more Depositary Shares, whether in definitive or temporary form. SECTION 1.11 The term "record holder" as applied to a Receipt shall mean the person in whose name a Receipt is registered on the books maintained by the Depositary for such purpose. SECTION 1.12 The term "Registrar" shall mean any bank or trust company appointed to register Receipts as herein provided. SECTION 1.13 The term "Securities Act" shall mean the Securities Act of 1933. ARTICLE ARTICLE II FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK, EXECUTION AND DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS SECTION 2.1 Form and Transferability of Receipts. Definitive Receipts shall be engraved or printed or lithographed with steel-engraved borders and underlying tint and shall be substantially in the form set forth in Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided. Pending the preparation of definitive receipts, the Depositary shall, upon written order in accordance with Section 2.2, execute and deliver temporary Receipts which are printed, lithographed, typewritten, mimeographed or otherwise substantially of the tenor of definitive Receipts in lieu of which they are issued and with such appropriate insertions, modifications and omissions as hereinafter provided. The Company will cause definitive Receipts to be prepared without unreasonable delay. After the preparation of definitive Receipts, the temporary Receipts shall be exchangeable for definitive Receipts upon surrender of the temporary Receipts, at the Corporate Office, without charge to the holder. Upon surrender for cancellation of 3 4 any one or more temporary Receipts, the Depositary shall execute and deliver in exchange therefor definitive Receipts representing the same number of Depositary Shares as represented by the surrendered temporary Receipt or Receipts. Such exchange shall be made at the Company's expense and without any charge to the holder thereof. Until so exchanged, the temporary Receipts shall in all respects be entitled to the same benefits under this Deposit Agreement as definitive Receipts. Receipts shall be executed by the Depositary by the manual signature of a duly authorized signatory of the Depositary, provided that such signature may be a facsimile if a Registrar (other than the Depositary) shall have countersigned the Receipts by manual signature of a duly authorized signatory of the Registrar. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose unless it shall have been executed as provided in the preceding sentence. The Depositary shall record on its books each Receipt executed as provided above and delivered as hereinafter provided. Receipts shall be in denominations of any number of whole Depositary Shares. All Receipts shall be dated the date of their execution. Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Deposit Agreement as may be required by the Depositary or required to comply with any applicable law or regulation or with the rules and regulations of any securities exchange upon which the Preferred Stock, the Depositary Shares or the Receipts may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts are subject by reason of the date of issuance of the Preferred Stock or otherwise; provided, however, that for three years following the date of this agreement, each Receipt shall bear the legend set forth on Annex I hereto, unless the Depositary shall have received written notice and an opinion of counsel from the Company that the Depositary Shares have been registered under the Securities Act; and provided, further, that from and after receipt of such notice, holders of Receipts shall have the right to exchange Receipts held for Receipts without the legend set forth on Annex I. 4 5 Title to any Receipt (and to the Depositary Shares evidenced by such Receipt) that is properly endorsed or accompanied by a properly executed instrument of transfer or endorsement shall be transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that until a Receipt shall be transferred on the books of the Depositary as provided in Section 2.4, the Depositary may, notwithstanding any notice to the contrary, treat the record holder thereof at such time as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes. SECTION 2.2 Deposit of Preferred Stock; Execution and Delivery of Receipts in Respect Thereof. On each date on which the Preferred Stock is initially issued by the Company, the Depositary, upon receipt of written instructions from the Company or the holder to which such Preferred Stock was issued, and a Certificate or certificates for the Preferred Stock to be deposited under this Deposit Agreement in accordance with the provisions of this Section 2.2, shall execute and deliver a Receipt or Receipts for the number of Depositary Shares representing such deposited Preferred Stock to the person or persons stated in such instructions. Subject to the terms and conditions of this Deposit Agreement, any holder of Preferred Stock may deposit such Preferred Stock (including any fractional share of Preferred Stock) under this Deposit Agreement by delivery to the Depositary of a certificate or certificates for the Preferred Stock to be deposited, properly endorsed or accompanied, if required by the Depositary, by a properly executed instrument of transfer or endorsement in form satisfactory to the Depositary, together with (i) all such certifications as may be required by the Depositary in accordance with the provisions of this Deposit Agreement and (ii) a written order directing the Depositary to execute and deliver to or upon the written order of the person or persons stated in such order a Receipt or Receipts for the number of Depositary Shares representing such deposited Preferred Stock. If required by the Depositary, Preferred Stock presented for deposit at any time, whether or not the 5 6 register of stockholders of the Company is closed, shall also be accompanied by an agreement or assignment, or other instrument satisfactory to the Depositary, that will provide for the prompt transfer to the Depositary or its nominee of any dividend or right to subscribe for additional Preferred Stock or to receive other property that any person in whose name the Preferred Stock is or has been registered may thereafter receive upon or in respect of such deposited Preferred Stock, or in lieu thereof such agreement of indemnity or other agreement as shall be satisfactory to the Depositary. Upon receipt by the Depositary of a certificate or certificates for Preferred Stock to be deposited hereunder, together with the other documents specified above, the Depositary shall, as soon as transfer and registration can be accomplished, present such certificate or certificates to the registrar and transfer agent of the Preferred Stock for transfer and registration in the name of the Depositary or its nominee of the Preferred Stock being deposited. Deposited Preferred Stock shall be held by the Depositary in an account to be established by the Depositary at the Corporate Office or at such other office as the Depositary shall determine. Upon receipt by the Depositary of a certificate or certificates for Preferred Stock to be deposited hereunder, together with the other documents specified above, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall execute and deliver to or upon the order of the person or persons named in the written order delivered to the Depositary referred to in the first or second paragraph of this Section 2.2 a Receipt or Receipts for the number of whole Depositary Shares representing the Preferred Stock so deposited and registered in such name or names as may be requested by such person or persons. The Depositary shall execute and deliver such Receipt or Receipts at the Corporate Office, except that, at the request, risk and expense of any person requesting such delivery, such delivery may be made at such other place which may be designated by such person. In each case, delivery will be made only upon payment to the Depositary of all taxes and other governmental charges and any fees payable in connection with such deposit and the transfer of the deposited Preferred Stock. The Company shall deliver to the Depositary from time to time such quantities of Receipts as the Deposi- 6 7 tary may request to enable the Depositary to perform its obligations under this Deposit Agreement. SECTION 2.3 Optional Redemption of Preferred Stock for Cash. Whenever the Company shall elect to redeem shares of Preferred Stock in accordance with the Certificate of Designations it shall (unless otherwise agreed in writing with the Depositary) give the Depositary in its capacity as Depositary notice of the date of such proposed redemption of the Preferred Stock, which notice shall be given not less than 5 Business Days prior to the date the Depositary is to mail notice of the redemption to the record holders of Receipts, in the case of a redemption of all outstanding Depositary Shares, and not less than 10 days prior to the date the Depositary is to mail notice of the redemption to the record holders of Receipts evidencing the Depositary Shares to be redeemed, in the case of a partial redemption of outstanding Depositary Shares, and be accompanied by a certificate from the Company stating that such redemption of the Preferred Stock is in accordance with the provisions of the Certificate of Designations. Such notice shall be in addition to the notice required to be given by the Company for redemption pursuant to the Certificate of Designations. On the date of any such redemption of Preferred Stock, provided that the Company shall then have deposited with the Depositary the shares of Common Stock as required pursuant to the Certificate of Designations to be delivered in exchange for the Preferred Stock to be redeemed, the Depositary shall redeem (using the shares of Common Stock and any cash deposited with it) the number of Depositary Shares representing such redeemed Preferred Stock. The Depositary shall mail, first class postage prepaid, notice of the redemption of Preferred Stock and the proposed simultaneous redemption of the Depositary Shares representing the Preferred Stock to be redeemed, not less than 15 and not more than 60 days prior to the date fixed for redemption of such Preferred Stock and Depositary Shares (the "Redemption Date"), to the record holders of the Receipts evidencing the Depositary Shares to be so redeemed, at the addresses of such holders as they appear on the records of the Depositary; but neither failure to mail any such notice to one or more such holders nor any defect in any notice to one or more such holders shall affect the sufficiency of the proceedings for redemption as to other holders. Each such notice shall state: (i) the Redemption Date; (ii) the number of 7 8 Depositary Shares to be redeemed and, if less than all the Depositary Shares held by any such holder are to be redeemed, the number of such Depositary Shares held by such holder to be so redeemed; (iii) the DECS Call Price (as defined in the Certificate of Designations); (iv) the number of shares of Common Stock deliverable upon redemption of each share of Preferred Stock to be redeemed, and the Current Market Price (as defined in the Certificate of Designations) used to calculate such number of shares of Common Stock; (v) the place or places where Receipts evidencing Depositary Shares are to be surrendered for payment of the redemption price; and (vi) that dividends in respect of the shares of Preferred Stock represented by the Depositary Shares to be redeemed will cease to accumulate on such Redemption Date. Notices shall be mailed and published by the Company pursuant to Section 3 of the Certificate of Designations. In case fewer than all the outstanding Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall be selected by lot or pro rata (as nearly as may be) or by any other equitable method determined by the Depositary to be consistent with the method determined by the Board of Directors of the Company with respect to the Preferred Stock. Notice having been mailed and published as aforesaid, from and after the Redemption Date (unless the Company shall have failed to redeem the shares of Preferred Stock to be redeemed by it, as set forth in the Company's notice provided for in the preceding paragraph), the Depositary Shares called for redemption shall be deemed no longer to be outstanding and all rights of the holders of Receipts evidencing such Depositary Shares (except the right to receive the shares of Common Stock upon redemption and cash for any fractional share amount) shall, to the extent of such Depositary Shares, cease and terminate. Upon surrender in accordance with said notice of the Receipts evidencing such Depositary Shares (properly endorsed or assigned for transfer, as the Depositary shall so require), such Depositary Shares shall be redeemed for shares of Common Stock and cash for any fractional share amount at a rate per Depositary Share equal to one-fiftieth of the number of shares of Common Stock (including fractional amounts) delivered upon redemption of a share of Preferred Stock pursuant to the Certificate of Designations. 8 9 If fewer than all the Depositary Shares evidenced by a Receipt are called for redemption, the Depositary will deliver to the holder of such Receipt upon its surrender to the Depositary, together with the shares of Common Stock for the Depositary Shares called for redemption, a new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and not called for redemption. To the extent that Depositary Shares are redeemed for shares of Common Stock and all such shares of Common Stock cannot be distributed to the record holders of Receipts without creating fractional interests in such shares, the Depositary may, with the consent of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including the sale (at public or private sale) of such shares of Common Stock at such place or places and upon such terms as it may deem proper, and the net proceeds of any such sale shall, subject to Section 3.2, be distributed or made available for distribution to such record holders that would otherwise receive fractional interests in such shares of Common Stock. Except with respect to a conversion of Depositary Shares which may occur pursuant to Section 3 of the Certificate of Designations, the Depositary shall not be required (a) to execute and deliver, transfer or exchange any Receipts for a period beginning 15 days next preceding any selection of Depositary Shares and Preferred Stock to be redeemed and ending at the close of business on the day of the mailing of notice or redemption of Depositary Shares or (b) to transfer or exchange for another Receipt any Receipt evidencing Depositary Shares called or being called for redemption in whole or in part, except as provided in the third paragraph of this Section 2.3. SECTION 2.4 Transfer of Receipts. Subject to the terms and conditions of this Deposit Agreement, the Depositary shall make transfers on its books from time to time of Receipts upon any surrender thereof at the Corporate Office or such other office as the Depositary may designate by the holder in person or by a duly authorized attorney, properly endorsed or accompanied by a properly executed instrument of transfer or endorsement, or other instrument satisfactory to the Depositary, together with 9 10 evidence of the payment of any transfer taxes as may be required by law. Upon such surrender, the Depositary shall execute a new Receipt or Receipts and deliver the same to or upon the order of the person or persons entitled thereto evidencing the same aggregate number of Depositary Shares evidenced by the Receipt or Receipts surrendered. SECTION 2.5 Combinations and Split-ups of Receipts. Upon surrender of a Receipt or Receipts at the Corporate Office or such other office as the Depositary may designate for the purpose of effecting a split-up or combination of Receipts, subject to the terms and conditions of this Deposit Agreement, the Depositary shall issue a new Receipt or Receipts in the authorized denominations requested evidencing the same aggregate number of Depositary Shares evidenced by the Receipt or Receipts surrendered; provided, however, that the Depositary shall not issue any Receipt evidencing a fractional Depositary Share. SECTION 2.6 Surrender of Receipts and Withdrawal of Preferred Stock. Any holder of a Receipt or Receipts may withdraw any or all of the Preferred Stock (but only in whole shares of Preferred Stock) represented by the Depositary Shares evidenced by such Receipts and all money and other property, if any, represented by such Depositary Shares by surrendering such Receipt or Receipts at the Corporate Office or at such other office as the Depositary may designate for such withdrawals. After such surrender, without unreasonable delay, the Depositary shall deliver to such holder, or to the person or persons designated by such holder as hereinafter provided, certificates for the whole number of shares of Preferred Stock and all such money and other property, if any, represented by the Depositary Shares evidenced by the Receipt or Receipts so surrendered for withdrawal. If the Receipt or Receipts delivered by the holder to the Depositary in connection with such withdrawal shall evidence a number of Depositary Shares in excess of the number of whole Depositary Shares representing the number of shares of Preferred Stock to be withdrawn, the Depositary shall at the same time, in addition to such whole number of shares of Preferred Stock and such money and other property, if any, to be withdrawn, deliver to such holder, or (subject to Section 2.4) upon his order, a new Receipt or Receipts evidencing such excess number of 10 11 whole Depositary Shares. Delivery of the Preferred Stock and such money and other property being withdrawn may be made by the delivery of such certificates, documents of title and other instruments as the Depositary may deem appropriate, which, as required by the Depositary, shall be properly endorsed or accompanied by proper instruments of transfer. If the Preferred Stock and the money and other property being withdrawn are to be delivered to a person or persons other than the record holder of the Receipt or Receipts being surrendered for withdrawal of Preferred Stock, such holder shall execute and deliver to the Depositary a written order so directing the Depositary and the Depositary may require that the Receipt or Receipts surrendered by such holder for withdrawal of such shares of Preferred Stock be properly endorsed in blank or accompanied by a properly executed instrument of transfer or endorsement in blank. The Depositary shall deliver the Preferred Stock and the money and other property, if any, represented by the Depositary Shares evidenced by Receipts surrendered for withdrawal at the Corporate Office, except that, at the request, risk and expense of the holder surrendering such Receipt or Receipts and for the account of the holder thereof, such delivery may be made at such other place as may be designated by such holder. SECTION 2.7 Limitations on Execution and Delivery, Transfer, Split-up, Combination, Redemption, Surrender and Exchange of Receipts. As a condition precedent to the execution and delivery, transfer, split-up, combination, redemption, surrender or exchange of any Receipt or the exercise of any conversion right referred to in Section 2.10, the Depositary, any of the Depositary's Agents or the Company may require any or all of the following: (i) payment to it of a sum sufficient for the payment (or, in the event that the Depositary or the Company shall have made such payment, the reimbursement to it) of any tax (including applicable interest, penalties or additions) or other governmental charge with respect thereto (including any such tax or charge with respect to the Preferred Stock being deposited or withdrawn or with respect to the Common Stock (as defined in Section 2.10) or other securities or property of the Company being issued upon conversion or redemption); (ii) 11 12 the production of proof satisfactory to it as to the identity and genuineness of any signature; and (iii) compliance with such regulations, if any, as the Depositary or the Company may establish consistent with the provisions of this Deposit Agreement. The deposit of Preferred Stock may be refused, the delivery of Receipts against Preferred Stock may be suspended, the transfer of Receipts may be refused, and the transfer, split-up, combination, surrender or exchange of outstanding Receipts may be suspended (i) during any period when the register of stockholders of the Company is closed, (ii) if any such action is deemed necessary or advisable by the Depositary, any of the Depositary's Agents or the Company at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of this Deposit Agreement, or (iii) with the approval of the Company, for any other reason. SECTION 2.8 Lost Receipts, etc. In case any Receipt shall be mutilated or destroyed or lost or stolen, the Depositary in its discretion may execute and deliver a Receipt of like form and tenor in exchange and substitution for such mutilated Receipt or in lieu of and in substitution for such destroyed, lost or stolen Receipt; provided that the holder thereof provides the Depositary with (i) evidence satisfactory to the Depositary of such destruction, loss or theft of such Receipt, of the authenticity thereof and of his ownership thereof, (ii) reasonable indemnification satisfactory to the Depositary and (iii) payment of any expense (including fees, charges and expenses of the Depositary) in connection with such execution and delivery. SECTION 2.9 Cancellation and Destruction of Surrendered Receipts. All Receipts surrendered to the Depositary or any Depositary's Agent shall be cancelled by the Depositary and returned to the Company. Except as prohibited by applicable law or regulation, at any time after six years from the date of issuance of any Receipt the Company may destroy such Receipts so cancelled. SECTION 2.10 Optional Conversion of Preferred Stock into Common Stock. Receipts may be surrendered with written instructions to the Depositary to instruct the Company to cause the conversion of any specified 12 13 number of whole shares of Preferred Stock represented by whole Depositary Shares evidenced by such Receipts into whole shares of Common Stock, par value $0.10 per share, of the Company ("Common Stock"), and cash for any fractional share amount at the conversion price then in effect for the Preferred Stock pursuant to the Certificate of Designations as such conversion price may be adjusted by the Company from time to time as provided in the Certificate of Designations. Subject to the terms and conditions of this Deposit Agreement and the Certificate of Designations, a holder of a Receipt or Receipts evidencing Depositary Shares representing whole or fractional shares of Preferred Stock may surrender such Receipt or Receipts at the Corporate Office or at such office or to such Depositary's Agents as the Depositary may designate for such purpose, together with a notice of conversion duly completed and executed, thereby directing the Depositary to instruct the Company to cause the conversion of the number of whole shares of underlying Preferred Stock specified in such notice of conversion into shares of Common Stock, and an assignment of such Receipt or Receipts to the Company or in blank, duly completed and executed (or, if applicable, payable in cash in an amount equal to the dividend attributable to the current quarterly dividend period payable on such Depositary Shares). To the extent that a holder delivers to the Depositary for conversion a Receipt or Receipts which in the aggregate are convertible into less than one whole share of Common Stock, the holder shall receive payment in cash in lieu of such fractional share of Common Stock otherwise issuable. If more than one Receipt shall be delivered for conversion at one time by the same holder, the number of whole shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of Depositary Shares represented by the Receipts so delivered. Upon receipt by the Depositary of a Receipt or Receipts, together with notice of conversion, duly completed and executed, directing the Depositary to instruct the Company to cause the conversion of a specified number of shares of Preferred Stock, and an assignment of such Receipt or Receipts to the Company or in blank, duly completed and executed (or, if applicable, payable in cash in an amount equal to the dividend attributable to the current quarterly dividend period payable on such Depositary Shares), the Depositary shall instruct the 13 14 Company (i) to cause the conversion of the number of whole shares of Preferred Stock represented by the Depositary Shares evidenced by the receipts so surrendered for conversion as specified in the written notice to the Depositary and (ii) to cause the delivery to the holders of such Receipts of a certificate or certificates evidencing the number of whole shares of Common Stock and the amount of money, if any, to be delivered to the holders of Receipts surrendered for conversion in lieu of fractional shares of Common Stock otherwise issuable. The Company shall as promptly as practicable after receipt thereof cause the delivery of (i) a certificate or certificates evidencing the number of whole shares of Common Stock into which the Preferred Stock represented by the Depositary Shares evidenced by such Receipt or Receipts has been converted, and (ii) any money or other property to which the holder is entitled by reason of such conversion. Upon such conversion, the Depositary (i) shall deliver to the holder a Receipt evidencing the number of Depositary Shares evidenced by the surrendered Receipt over the number of Depositary Shares evidenced by such Receipt that has been so converted, (ii) shall cancel the Depositary Shares evidenced by Receipts surrendered for conversion and (iii) shall deliver to the Company or its transfer agent for the Preferred Stock for cancellation the shares of Preferred Stock represented by the Depositary Shares evidenced by the Receipts so surrendered and so converted. Upon the delivery of the shares of Preferred Stock to be cancelled due to such conversion by the Depositary to the Company, the Company shall deliver to the Depositary a certificate or certificates evidencing the number of shares of Preferred Stock, if any, that equals the excess of the number of shares of Preferred Stock evidenced by the surrendered certificate over the number of shares of Preferred Stock evidenced by that certificate that has been so converted. If Preferred Stock shall be called by the Company for redemption, the Depositary Shares representing such Stock may be converted into Common Stock as provided in this Deposit Agreement until but not after the close of business on the Redemption Date unless the Company shall fail to deposit with the Depositary the shares of Common Stock and cash for any fractional share amounts required to redeem the Preferred Stock held by the Depositary, in which case the Depositary Shares representing such Preferred Stock may continue to be 14 15 converted into Common Stock until, but not after, the close of business on the date on which the Company deposits with the Depositary such shares of Common Stock and cash for any fractional share amounts as are required by the Certificate of Designations to make full payment of the amounts payable upon such redemption. The record holder of Depositary Shares on any dividend payment record date established by the Depositary shall be entitled to receive the dividend payable with respect to such Depositary Shares on the corresponding dividend payment date notwithstanding the conversion subsequent to such record date of the shares of Preferred Stock to which such Depositary Shares relate. However, if a share of Preferred Stock is converted between the record date with respect to any dividend payment on the Preferred Stock and the corresponding dividend payment date, any holder of Receipts surrendered with instructions to the Depositary for conversion of the underlying Preferred Stock shall pay to the Depositary an amount equal to the dividend attributable to the current quarterly dividend period payable on such dividend payment date on the Depositary Shares represented by the Receipts being surrendered for conversion (except for Depositary Shares redeemed on a redemption date between such record date and dividend payment date). Any holder of Receipts on a dividend payment record date who (or whose transferee) surrenders the Receipts with instructions to the Depositary for conversion of the underlying Preferred Stock on the corresponding dividend payment date will receive the dividend payable with respect to the Depositary Shares underlying such Receipts and will not be required to include payment of the amount of such dividend upon surrender of the Receipts for conversion. Upon the conversion of any share of Preferred Stock for which a request for conversion has been made by the holder of Depositary Shares representing such share, all dividends in respect of such Depositary Shares shall cease to accrue, such Depositary Shares shall be deemed no longer outstanding, all rights of the holder of the Receipt with respect to such Depositary Shares (except the right to receive the Common Stock, any cash payable with respect to any fractional shares of Common Stock as provided herein and any cash payable on account of accrued dividends as provided herein and any Receipts evidencing Depositary Shares no so converted) shall 15 16 terminate, and the Receipt evidencing such Depositary Shares shall be cancelled in accordance with Section 2.9 hereof. No fractional shares of Common Stock shall be issuable upon conversion of Preferred Stock underlying the Depositary Shares. If any holder of Receipts surrendered with instructions to the Depositary for conversion of the underlying Preferred Stock would be entitled to a fractional share of Common Stock upon such conversion, the Company shall cause to be delivered to such holder an amount in cash for such fractional share as provided in the Certificate of Designations. SECTION 2.11 Mandatory Conversion of Preferred Stock into Common Stock. The following provisions shall apply to any Preferred Stock on deposit with the Depositary as to which the Company has not exercised its right to redeem and the record holder has not exercised its right of optional conversion on the date fixed for mandatory conversion of such Preferred Stock and Depositary Shares (the "Mandatory Conversion Date"). On the Mandatory Conversion Date, all then outstanding shares of Preferred Stock shall mandatorily convert into shares of Common Stock, cash for any fractional share amounts and the right to receive amounts in cash equal to all accrued and unpaid dividends on such shares of Preferred Stock to the Mandatory Conversion Date (other than previously declared dividends payable to a holder of record as of a prior date), all as provided in and subject to Section 3 of the Certificate of Designations. From and after the Mandatory Conversion Date, the Depositary Shares representing the shares of Preferred Stock mandatorily converted shall be deemed no longer to be outstanding and all rights of the record holders of Receipts evidencing such Depositary Shares (except the right to receive the shares of Common Stock, any cash for accrued and unpaid dividends (other than previously declared dividends payable to a holder of record as of a prior date) and any fractional share amount deliverable or payable upon mandatory conversion or in connection therewith) shall, to the extent of such Depositary Shares, cease and terminate. Upon surrender, in accordance with said notice, of the Receipts evidenc- 16 17 ing such Depositary Shares (properly endorsed or assigned for transfer, as the Depositary shall so require), such Depositary Shares shall be exchanged for shares of Common Stock and cash for any fractional share amount (and the right to receive cash for any accrued and unpaid dividends payable in connection therewith) at a rate per Depositary Share equal to one-fiftieth of the number (including fractional shares) of shares of Common Stock (and one-fiftieth of the right to receive cash for any accrued and unpaid dividends) exchanged for each share of Preferred Stock pursuant to the Certificate of Designations. The foregoing shall be subject further to the terms and conditions of the Certificate of Designations. On or prior to the Mandatory Conversion Date, the Company shall deposit with the Depositary certificates for the shares of Common Stock and the cash for any fractional share amounts into which the shares of Preferred Stock held by the Depositary shall mandatorily convert on the Mandatory Conversion Date, plus, subject to the Certificate of Designations, an amount in cash equal to all accrued and unpaid dividends on such shares of Preferred Stock (other than previously declared dividends payable to a holder of record as of a prior date) to the Mandatory Conversion Date. Using such shares of Common Stock and cash, the Depositary shall deliver certificates for the appropriate number of shares of Common Stock and the appropriate amount of cash, without interest, to record holders who properly deliver their Receipts to the Depositary. No fractional shares of Common Stock shall be issuable upon mandatory conversion of Preferred Stock underlying the Depositary Shares. If any holder of Receipts surrendered to the Depositary for mandatory conversion of the underlying Preferred Stock would be entitled to a fractional share of Common Stock upon such mandatory conversion, the Company shall cause to be delivered to such holder an amount in cash for such fractional share as provided in the Certificate of Designations. To the extent that Depositary Shares are mandatorily converted into shares of Common Stock and all such shares of Common Stock cannot be distributed to the record holders of Receipts without creating fractional interest in such shares, the Depositary may, with the consent of the Company, adopt such method as it deemed equitable and practicable for the purpose of effecting 17 18 such distribution, including the sale (at public or private sale) of such shares of Common Stock at such place or places and upon such terms as it may deem proper, and the net proceeds of any such sale shall, subject to Section 3.2, without interest, be distributed or made available for distribution to such record holders that would otherwise receive fractional interests in such shares of Common Stock. ARTICLE ARTICLE III CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY SECTION 3.1 Filing Proofs, Certificates and Other Information. Any person presenting Preferred Stock for deposit or any holder of a Receipt may be required from time to time to file such proof of residence or other information, to execute such certificates and to make such representations and warranties as the Depositary or the Company may reasonably deem necessary or proper. The Depositary or the Company may withhold or delay the delivery of any Receipt, the transfer, redemption or exchange of any Receipt, the withdrawal of the Preferred Stock represented by the Depositary Shares evidenced by any Receipt, the distribution of any dividend or other distribution, the sale of any rights or of the proceeds thereof, the exercise of any conversion right referred to in Section 2.10 and 2.11 or the delivery of any Common Stock upon such conversion until such proof or other information is filed, such certificates are executed or such representations and warranties are made. SECTION 3.2 Payment of Taxes or Other Governmental Charges. If any tax (including applicable interest, penalties or additions) or other governmental charge shall become payable by or on behalf of the Depositary with respect to any Receipt, the Depositary Shares evidenced by such Receipt, the Preferred Stock (or any fractional interest therein) represented by such Depositary Shares, the exercise of any conversion right referred to in Section 2.10 or any transaction referred to in Section 4.6 with respect to a Receipt or the Preferred Stock represented by such Receipt, such tax (including transfer, issuance or acquisition taxes, if any) or 18 19 governmental charge shall be payable by the holder of such Receipt. Until such payment is made, transfer of any Receipt or any withdrawal of the Preferred Stock or money or other property, if any, represented by the Depositary Shares evidenced by such Receipt may be refused, any dividend or other distribution may be withheld, such conversion right may be refused and any part or all of the Preferred Stock or other property represented by the Depositary Shares evidenced by such Receipt may be sold for the account of the holder thereof (after attempting by reasonable means to notify such holder prior to such sale). Any dividend or other distribution so withheld and the proceeds of any such sale may be applied to any payment of such tax or other governmental charge, the holder of such Receipt remaining liable for any deficiency. In the event the Depositary is required to pay any such amounts, the Company shall reimburse the Depositary for payment thereof upon the request of the Depositary and the Depositary shall, upon the Company's request and as instructed by the Company, pursue its rights against such holder at the Company's expense. SECTION 3.3 Representations and Warranties as to Preferred Stock. Each person (including, without limitation, the Company) depositing Preferred Stock under this Deposit Agreement shall be deemed thereby to represent and warrant that such Preferred Stock and each certificate therefor are valid, fully paid and nonassessable shares and that the person making such deposit is duly authorized to do so. Such representations and warranties shall survive the deposit of the Preferred Stock and the issuance of Receipts. ARTICLE ARTICLE IV THE PREFERRED STOCK NOTICES SECTION 4.1 Cash Distributions. Whenever the Depositary shall receive any cash dividend or other cash distribution on the Preferred Stock, the Depositary shall, subject to Section 3.2, distribute to record holders of Receipts on the record date fixed pursuant to Section 4.4 such amounts of such sum as are, as nearly as practicable, attributable to the respective numbers of Depositary Shares evidenced by the Receipts held by such holders; provided, however, that in case the Company or 19 20 the Depositary shall be required to withhold and does withhold from any cash dividend or other cash distributed in respect of the Preferred Stock an amount on account of taxes, the amount made available for distribution or distributed in respect of Depositary Shares shall be reduced accordingly. The Depositary shall distribute or make available for distribution, as the case may be, only such amount, however, as can be distributed without attributing to any owner of Depositary Shares a fraction of one cent and any balance not so distributable shall be rounded to the next highest whole cent and, upon request of the Depositary, the Company shall pay the additional amount to the Depositary for distribution. SECTION 4.2 Distributions Other Than Cash. Whenever the Depositary shall receive any distribution other than cash on the Preferred Stock, the Depositary shall, subject to Section 3.2, distribute to record holders of Receipts on the record date fixed pursuant to Section 4.4 such amounts of the securities or property received by it as are, as nearly as practicable, in proportion to the respective numbers of Depositary Shares evidenced by the Receipts held by such holders, in any manner that the Depositary and the Company may deem equitable and practicable for accomplishing such distribution. If, in the opinion of the Company after consultation with the Depositary, such distribution cannot be made proportionately among such record holders, or if for any other reason (including any requirement that the Company or the Depositary withhold an amount on account of taxes or as otherwise required by law, regulation, or court process), the Depositary deems, after consultation with the Company, such distribution not to be feasible, the Depositary may, with the approval of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including the sale (a public or private sale) of the securities or property thus received, or any part thereof, at such place or places and upon such terms as it may deem proper. The net proceeds of any such sale shall, subject to Section 3.2, be distributed or made available for distribution, as the case may be, by the Depositary to record holders of Receipts as provided by Section 4.1 in the case of a distribution received in cash. SECTION 4.3 Subscription Rights, Preferences or Privileges. If the Company shall at any time offer or 20 21 cause to be offered to the persons in whose names Preferred Stock is registered on the books of the Company any rights, preferences or privileges to subscribe for or to purchase any securities or any rights, preferences or privileges of any other nature, such rights, preferences or privileges shall, in each such instance be made available by the Depositary to the record holders of Receipts if the Company so directs in such manner as the Company shall instruct (including by the issuance to such record holders of warrants representing such rights, preferences or privileges); provided, however, that (a) if at the time of issue or offer of any such rights, preferences or privileges the Company determines that it is not lawful or feasible to make such rights, preferences or privileges available to some or all holders of Receipts (by the issue of warrants or otherwise) or (b) if and to the extent instructed by holders of Receipts who do not desire to exercise such rights, preferences or privileges, the Depositary shall then, if so instructed by the Company, and if applicable laws or the terms of such rights, preferences or privileges so permit, sell such rights, preferences or privileges of such holders at public or private sale, at such place or places and upon such terms as it may deem proper. The net proceeds of any such sale shall be distributed by the Depositary to the record holders of Receipts entitled thereto as provided by Section 4.1 in the case of a distribution received in cash. If registration under the Securities Act of the securities to which any rights, preferences or privileges relate is required in order for holders of Receipts to be offered or sold the securities to which such rights, preferences or privileges relate, the Company will promptly file a registration statement pursuant to the Securities Act with respect to such rights, preferences or privileges and securities and use its best efforts and take all steps available to it to cause such registration statement to become effective sufficiently in advance of the expiration of such rights, preferences or privileges to enable such holders to exercise such rights, preferences or privileges. In no event shall the Depositary make available to the holders of Receipts any right, preference or privilege to subscribe for or to purchase any securities unless and until the Depositary receives written notice and an opinion of counsel from the Company that a registration statement shall have become effective 21 22 or the offering and sale of such securities to such holders are exempt from registration under the provisions of the Securities Act. If any other action under the law of any jurisdiction or any governmental or administrative authorization, consent or permit is required in order for such rights, preferences or privileges to be made available to holders of Receipts, the Company will use its best efforts to take such action or obtain such authorization, consent or permit sufficiently in advance of the expiration of such rights, preferences or privileges to enable such holders to exercise such rights, preferences or privileges. SECTION 4.4 Notice of Dividends, Fixing of Record Date for Holders of Receipts. Whenever any cash dividend or other cash distribution shall become payable, any distribution other than cash shall be made, or any rights, preferences or privileges shall at any time be offered, with respect to the Preferred Stock or the Depositary shall receive notice of (i) any meeting at which holders of Preferred Stock are entitled to vote or of which holders of Preferred Stock are entitled to notice or (ii) any election on the part of the Company to redeem any shares of Preferred Stock, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date fixed by the Company in respect of the Preferred Stock) for the determination of the holders of Receipts who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof, to give instructions for the exercise of voting rights at any such meeting or to receive notice of such meeting or whose Depositary Shares are to be so redeemed. SECTION 4.5 Voting Rights. Upon receipt of notice of any meeting at which the holders of Preferred Stock are entitled to vote, the Depositary shall, as soon as practicable thereafter, mail to the record holders of Receipts a notice, which shall be provided by the Company and which shall contain (i) such information as is contained in such notice of meeting, (ii) a statement that the holders of Receipts at the close of business on a specified record date fixed pursuant to Section 4.4 will be entitled, subject to any applicable provision of law, the Certificate of Incorporation or the Certificate of 22 23 Designations, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Preferred Stock represented by their respective Depositary Shares and (iii) a brief statement as to the manner in which such instructions may be given. Upon the written request of a holder of a Receipt on such record date, the Depositary shall endeavor insofar as practicable to vote or cause to be voted the number of shares of Preferred Stock represented by the Depositary Shares evidenced by such Receipt in accordance with the instructions set forth in such request. The Company hereby agrees to take all reasonable action that may be deemed necessary by the Depositary in order to enable the Depositary to vote such shares of Preferred Stock or cause such shares of Preferred Stock to be voted. In the absence of specific instructions from the holder of a Receipt, the Depositary will abstain from voting to the extent of the Preferred Stock represented by the Depositary Shares evidenced by such Receipt. After aggregating all voting Depositary Shares, the Depositary will disregard for voting purposes any fractional share of Preferred Stock remaining. SECTION 4.6 Changes Affecting Preferred Stock and Reclassifications, Recapitalizations, etc. Upon any split-up, consolidation or any other reclassification of Preferred Stock, or upon any recapitalization, reorganization, merger, amalgamation or consolidation affecting the Company or to which it is a party or sale of all or substantially all of the Company's assets, the Depositary shall, upon the instructions of the Company, treat any shares of stock or other securities or property (including cash) that shall be received by the Depositary in exchange for or upon conversion of or in respect of the Preferred Stock as new deposited property under this Deposit Agreement, and Receipts then outstanding shall thenceforth represent the proportionate interests of holders thereof in the new deposited property so received in exchange for or upon conversion or in respect of such Preferred Stock. In any such case the Depositary may, in its discretion, with the approval of the Company, execute and deliver additional Receipts, or may call for the surrender of all outstanding Receipts to be exchanged for new Receipts specifically describing such new deposited property. 23 24 ARTICLE ARTICLE V THE DEPOSITARY AND THE COMPANY SECTION 5.1 Maintenance of Offices, Agencies, Transfer Books by the Depositary; the Registrar. Upon execution of this Deposit Agreement in accordance with its terms, the Depositary shall maintain at the Corporate Office facilities for the execution and delivery, transfer, surrender and exchange, split-up, combination and redemption of Receipts and deposit and withdrawal of Preferred Stock and at the offices of the Depositary's Agents, if any, facilities for the delivery, transfer, surrender and exchange, split-up, combination, conversion and redemption of Receipts and deposit and withdrawal of Preferred Stock, all in accordance with the provisions of this Deposit Agreement. The Depositary shall keep books at the Corporate Office for the registration and transfer of Receipts, which books at all reasonable times and during normal business hours shall be open for inspection by the record holders of Receipts as provided by applicable law; provided, that any such holder requesting to exercise such right shall certify to the Depositary that such inspection shall be for a proper purpose reasonably related to such person's interest as an owner of Depositary Shares evidenced by the Receipts. The Depositary shall consult with the Company upon receipt of any request for inspection and shall not permit such inspection unless authorized by the Company in writing. The Depositary may close such books, at any time or from time to time, when deemed expedient by it in connection with the performance of its duties hereunder. The Depositary shall make available for inspection by holders of Receipts at the Corporate Office and at such other places as it may from time to time deem advisable during normal business hours any reports and communications received from the Company that are both received by the Depositary as the holder of Preferred Stock and made generally available to the holders of Preferred Stock. Promptly upon request from time to time by the Company, the Depositary shall, at the Company's sole expense, furnish to it a list, as of a recent date, of 24 25 the names, addresses and holdings of Depositary Shares of all persons in whose names Receipts are registered on the books of the Depositary. If the Receipts or the Depositary Shares evidenced thereby or the Preferred Stock represented by such Depositary Shares shall be listed on The New York Stock Exchange, Inc., the Depositary may, with the approval of the Company, appoint a Registrar for registry of such Receipts or Depositary Shares in accordance with the requirements of such Exchange. Such Registrar (which may be the Depositary if so permitted by the requirements of such Exchange) may be removed and a substitute registrar appointed by the Depositary upon the request or with the approval of the Company. If the Receipts, such Depositary Shares or the Preferred Stock is listed on one or more other stock exchanges, the Depositary will, at the request of the Company, arrange such facilities for the delivery, transfer, surrender and exchange of such Receipts, such Depositary Shares or such Preferred Stock as may be required by law or applicable stock exchange regulations. SECTION 5.2 Prevention or Delay in Performance by the Depositary, the Depositary's Agents or the Company. Neither the Depositary nor any Depositary's Agent nor the Company shall incur any liability to any holder of any Receipt, if by reason of any provision of any present or future law or regulation thereunder of the United States of America or of any other governmental authority or, in the case of the Depositary or the Depositary's Agent, by reason of any provision, present or future, of the Certificate of Incorporation or the Certificate of Designations or, in the case of the Company, the Depositary or the Depositary's Agent, by reason of any act of God or war or other circumstance beyond the control of the relevant party, the Depositary, any Depositary's Agent or the Company shall be prevented or forbidden from doing or performing any act or thing that the terms of this Deposit Agreement provide shall be done or performed; nor shall the Depositary, any Depositary's Agent or the Company incur any liability to any holder of a Receipt by reason of any nonperformance or delay, caused as aforesaid, in the performance of any act or thing that the terms of this Deposit Agreement provide shall or may be done or performed, or by reason of any 25 26 exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement. SECTION 5.3 Obligations of the Depositary, the Depositary's Agents and the Company. Neither the Depositary, the Registrar, any Depositary's Agent nor the Company assumes any obligation or shall be subject to any liability under this Deposit Agreement or any Receipt to holders of Receipts other than for their negligence (including the failure to meet customary trade practice) or willful misconduct and that each of them agrees to act in good faith in the performance of such duties as are specifically set forth in this Deposit Agreement. Neither the Depositary, the Registrar nor any Depositary's Agent nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding with respect to the Preferred Stock, Depositary Shares, Receipts or Common Stock that in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required. Neither the Depositary, the Registrar, any Depositary's Agent nor the Company shall be liable for any action or any failure to act by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Preferred Stock for deposit, any holder of a Receipt or any other person believed by it in good faith to be competent to give such advice or information. The Depositary, any Depositary's Agent and the Company may each rely and shall each be protected in acting upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary, its parent, affiliate, or subsidiaries, the Registrar and any Depositary's Agent may own, buy, sell or deal in any class of securities of the Company and its affiliates and in Receipts or Depositary Shares or become pecuniarily interested in any transaction in which the Company and its affiliates may be interested or contract with or lend money to or otherwise act as fully or as freely as if the Depositary, the Registrar or the Depositary's Agent, as the case may be, was not the Depositary, the Registrar or the Depositary's Agent hereunder. The Depositary may also act as transfer 26 27 agent or registrar of any of the securities of the Company and its affiliates. It is intended that neither the Depositary nor any Depositary's Agent shall be deemed to be an "issuer" of the securities under the federal securities laws or applicable state securities laws, it being expressly understood and agreed that the Depositary and any Depositary's Agent are acting only in a ministerial capacity as Depositary for the Preferred Stock. The Depositary agrees to comply with all information reporting and withholding requirements applicable to it under law or this Deposit Agreement in its capacity as Depositary. Neither the Depositary (or its officers, directors, employees or agents) nor any Depositary's Agent makes any representation or has any responsibility as to the validity of the Preferred Stock, the Depositary Shares or the Receipts (except for its counter-signatures thereon) or any instruments referred to therein or herein, or as to the correctness of any statement made therein or herein. The Depositary assumes no responsibility for the correctness of the description that appears in the Receipts, which can be taken as a statement of the Company summarizing certain provisions of this Deposit Agreement. Notwithstanding any other provision herein or in the Receipts, the Depositary makes no warranties or representations as to the validity, genuineness or sufficiency of any Preferred Stock at any time deposited with the Depositary hereunder or of the Depositary Shares, as to the validity or sufficiency of this Deposit Agreement, as to the value of the Depositary Shares or as to any right, title or interest of the record holders of Receipts in and to the Depositary Shares. The Depositary shall not be accountable for the use or application by the Company of the proceeds of the Depositary Shares or the Preferred Stock. The Depositary shall act as the withholding agent for any payments, distributions, and exchanges made with respect to the Depositary Shares and Receipts, and the Preferred Stock, Common Stock or other securities or assets represented thereby (collectively, the "Securities"). The Depositary shall be responsible with respect 27 28 to the Securities for the timely (i) collection and deposit of any required withholding or backup withholding tax, and (ii) filing of any information returns or other documents with Federal taxing authorities. SECTION 5.4 Resignation and Removal of the Depositary, Appointment of Successor Depositary. The Depositary may at any time resign as Depositary hereunder by notice of its election to do so delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. The Depositary may at any time be removed by the Company by notice of such removal delivered to the Depositary, such removal to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall, within 45 days after the delivery of the notice of resignation or removal, as the case may be, appoint a successor depositary, which shall be a bank or trust company having its principal office in the United States of America and having a combined capital and surplus of at least $50,000,000. If a successor depositary shall not have been appointed in 45 days, the resigning Depositary may petition a court of competent jurisdiction to appoint a successor depositary. Every successor depositary shall execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor and for all purposes shall be the Depositary under this Deposit Agreement, and such predecessor, upon payment of all sums due it and on the written request of the Company, shall promptly execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all rights, title and interest in the Preferred Stock and any moneys or property held hereunder to such successor and shall deliver to such successor a list of the record holders of all outstanding Receipts and such other records respecting the Receipts, the Depositary Shares and the Preferred Stock as the 28 29 successor shall require in order to perform its duties. Any successor depositary shall promptly mail notice of its appointment to the record holders of Receipts. Any corporation into or with which the Depositary may be merged, consolidated or converted shall be the successor of such Depositary without the execution or filing of any document or any further act. Such successor depositary may execute the Receipts either in the name of the predecessor depositary or in the name of the successor depositary. SECTION 5.5 Corporate Notices and Reports. The Company agrees that it will deliver to the Depositary, and the Depositary will, promptly after receipt thereof, transmit to the record holders of Receipts, in each case at the address recorded in the Depositary's books, copies of all notices and reports (including financial statements) required by law, by the rules of any national securities exchange upon which the Preferred Stock, the Depositary Shares or the Receipts are listed or by the Certificate of Incorporation and the Certificate of Designations to be furnished by the Company to holders of Preferred Stock. Such transmission will be at the Company's expense and the Company will provide the Depositary with such number of copies of such documents as the Depositary may reasonably request. In addition, the Depositary will transmit to the record holders of Receipts at the Company's expense such other documents as may be requested by the Company. SECTION 5.6 Deposit of Preferred Stock by the Company. The Company agrees with the Depositary that neither the Company nor any company controlled by the Company will at any time deposit any Preferred Stock if such Preferred Stock is required to be registered under the provisions of the Securities Act and no registration statement is at such time in effect as to such Preferred Stock. SECTION 5.7 Indemnification by the Company. The Company agrees to indemnify the Depositary, any Depositary's Agent and any Registrar against, and hold each of them harmless from, any liability, costs and expenses (including the reasonable fees and expenses of counsel) that may arise out of or in connection with its acting as Depositary, Depositary's Agent or Registrar, 29 30 respectively, under this Deposit Agreement and the Receipts, except for any liability arising out of negligence or bad faith on the part of any such person or persons. SECTION 5.8 Fees, Charges and Expenses. No fees, charges and expenses of the Depositary or any Depositary's Agent hereunder or of any Registrar shall be payable by any person other than the Company, except for any taxes (including transfer taxes, if any) and other governmental charges and except as provided in this Deposit Agreement. If the Depositary incurs fees, charges or expenses for which it is not otherwise liable hereunder due to any action or inaction of a holder of a Receipt or other person, such holder or other person will be liable for such fees, charges and expenses. All other fees, charges and expenses of the Depositary and any Depositary's Agent hereunder and of any Registrar (including, in each case, the reasonable fees and expenses of counsel) incident to the performance of their respective obligations hereunder will be paid upon consultation and agreement between the Depositary and the Company as to the amount and nature of such fees, charges and expenses. The Depositary shall present its statement for fees, charges and expenses to the Company once every month or at such other intervals as the Company and the Depositary may agree. ARTICLE ARTICLE VI AMENDMENT AND TERMINATION SECTION 6.1 Amendment. The form of the Receipts and any provision of this Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect that they may deem necessary or desirable. Any amendment that shall impose any fees, taxes or charges (other than taxes and other governmental charges, fees and expenses provided for herein or in the Receipts), or that shall otherwise prejudice any substantial existing right of holders of Receipts, shall not become effective as to outstanding Receipts until the expiration of 90 days after notice of such amendment shall have been given to the record holders of outstanding Receipts. Every holder of an outstanding Receipt at the time any such amendment 30 31 becomes effective shall be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by this Deposit Agreement as amended thereby. In no event shall any amendment impair the right, subject to the provisions of Sections 2.3, 2.4, 2.6, 2.7, 2.10 and 2.11 and Article III, of any owner of any Depositary Shares to surrender the Receipt evidencing such Depositary Shares with instructions to the Depositary to deliver to the holder the Preferred Stock or to cause the conversion of the underlying Preferred Stock into Common Stock and cash for fractional shares and, in each case, all money and other property, if any, represented thereby, except in order to comply with mandatory provisions of applicable law. SECTION 6.2 Termination. Whenever so directed by the Company, the Depositary will terminate this Deposit Agreement by mailing notice of such termination to the record holders of all Receipts then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Depositary may likewise terminate this Deposit Agreement if at any time 45 days shall have expired after the Depositary shall have delivered to the Company a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.4. If any Receipts remain outstanding after the date of termination, the Depositary thereafter will discontinue the transfer of Receipts, will suspend the distribution of dividends to the holders thereof, and will not give any further notices (other than notice of such termination) or perform any further acts under this Deposit Agreement except as provided below and except that the Depositary will continue (i) to collect dividends on the Preferred Stock and any other distributions with respect thereto and (ii) to deliver Preferred Stock together with such dividends and distributions and the net proceeds of any sales of rights, preferences, privileges or other property, without liability for interest thereon, in exchange for Receipts surrendered. At any time after the expiration of two years from the date of termination, the Depositary may sell the Preferred Stock then held by it at public or private sales, at such place or places and upon such terms as it deems proper and may thereafter hold the net proceeds of any such sale, together with any money and other property then held by it, without liability for interest thereon, for the pro rata benefit of the 31 32 holders of Receipts which have not been surrendered. In the event this Deposit Agreement is terminated and a sufficient number of shares of Preferred Stock remain outstanding, the Company will use its best efforts to list the shares of Preferred Stock on the New York Stock Exchange (unless the holders of a majority of the outstanding shares of Preferred Stock shall consent to the Company not effecting such listing). Upon termination, the Company and the Depositary shall be discharged from all obligations under this Deposit Agreement, except from the Company's obligations to the Depositary, any Depositary's Agent or any Registrar under Sections 5.7 and 5.8. ARTICLE ARTICLE VII MISCELLANEOUS SECTION 7.1 Counterparts. This Deposit Agreement may be executed by the Company and the Depositary in separate counterparts, each of which counterparts, when so executed an delivered, shall be deemed an original, but all such counterparts taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Deposit Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Deposit Agreement. Copies of this Deposit Agreement shall be filed with the Depositary and the Depositary's Agent at the Corporate Office and the respective offices of the Depositary's Agents, if any, by any holder of a Receipt. SECTION 7.2 Exclusive Benefits of Parties. This Deposit Agreement is for the exclusive benefit of the parties hereto, and their respective successors hereunder, and shall not be deemed to give any legal or equitable right, remedy or claim to any other person whatsoever. SECTION 7.3 Invalidity of Provisions. In case any one or more of the provisions contained in this Deposit Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby. 32 33 SECTION 7.4 Notices. Any notices to be given to the Company hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by overnight, registered or certified mail, or by telegram or telex confirmed by letter, addressed to the Company at 150 Glover Avenue, Norwalk, Connecticut 06856; Attention: Chief Financial Officer, or at such other address as shall be specified by the Company by like notice. Any notices to be given to the Depositary hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by overnight, registered or certified mail, or by telegram or telex confirmed by letter, addressed to the Depositary at 14 Wall Street, Suite 4680, New York, New York, 10005, Attention: Account Manager Officer, or at such other address as shall be specified by the Depositary by like notice. Any notices given to any record holder of a Receipt hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail, or by telegram or telex confirmed by letter, addressed to such record holder at the address of such record holder as it appears on the books of the Depositary or, if such holder shall have filed with the Depositary a written request that notices intended for such holder be mailed to some other address, at the address designated in such request. Delivery of a notice sent by mail, or by telegram or telex shall be deemed to be effected at the time when a duly addressed letter containing the same (or a duly addressed letter confirming an earlier notice in the case of a telegram or telex message) is deposited, postage prepaid, in a post office letter box. The Depositary or the Company may, however, act upon any telegram or telex message received by it from the other or from any holder of a Receipt, notwithstanding that such telegram or telex message shall not subsequently be confirmed by letter as aforesaid. SECTION 7.5 Depositary's Agents. The Depositary may from time to time appoint Depositary's Agents to act in any respect for the Depositary for the purposes of this Deposit Agreement and may at any time appoint additional Depositary's Agents and vary or terminate the 33 34 appointment of such Depositary's Agents. The Depositary will notify the Company of any such action. SECTION 7.6 Holders of Receipts Are Parties. The holders of Receipts from time to time shall be deemed to be parties to this Deposit Agreement and shall be bound by all of the terms and conditions hereof and of the Receipts by acceptance of delivery thereof. SECTION 7.7 Governing Law. This Deposit Agreement and the Receipts and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws rules. SECTION 7.8 Headings. The headings of articles and sections in this Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto have been inserted for convenience only and are not to be regarded as a part of this Deposit Agreement or the Receipts or to have any bearing upon the meaning or interpretation of any provision contained herein or in the Receipts. 34 35 IN WITNESS WHEREOF, the Company and the Depositary have duly executed this agreement as of the day and year first above set forth and all holders of Receipts shall become parties hereto by and upon acceptance by them of delivery of Receipts issued in accordance with the terms hereof. U.S. SURGICAL CORPORATION Attest: By: ---------------- ----------------------- Name: Title: FIRST CHICAGO TRUST COMPANY OF NEW YORK Attest: By: ---------------- ----------------------- Name: Title: 35 EX-4.D 4 FORM OF CERTIFICATE 1 EXHIBIT 4(d) United States Surgical Corporation SERIES A CONVERTIBLE PREFERRED STOCK SEE REVERSE FOR CERTAIN INCORPORATED UNDER THE LAWS DEFINITIONS AND TRANSFER RESTRICTIONS OF THE STATE OF DELAWARE CUSIP 912707 30 4 THIS CERTIFIES THAT is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK OF THE PAR VALUE OF $5.00 EACH OF -------------------UNITED STATES SURGICAL CORPORATION--------------------- transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of the certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be subject to all the provisions of the Certificate of Incorporation of the Corporation, as in effect from time to time, to all of which the holder hereof by acceptance hereof assents. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: By: By: [signature] [corporate seal] [signature] SECRETARY CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED: FIRST CHICAGO TRUST COMPANY OF NEW YORK TRANSFER AGENT BY AND REGISTRAR AUTHORIZED SIGNATURE 2 UNITED STATES SURGICAL CORPORATION THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO UNITED STATES SURGICAL CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144, IF APPLICABLE, UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY IN CERTIFICATED FORM WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH BELOW RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY, AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. In connection with any transfer of any of the shares of Series A Preferred Stock evidenced by this certificate (or any issuance of shares of Common Stock upon conversion or redemption of the shares of Series A Preferred Stock represented hereby) occurring prior to the third anniversary of the date of original issuance of this certificate, the undersigned states that such shares of Series A Preferred Stock (or such shares of Common Stock, as the case may be) are being transferred: / / inside the United States to a qualified institutional buyer pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or / / outside the United States pursuant to and in compliance with Rule 904 under the Securities Act of 1933, as amended; or / / to an institutional accredited investor pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or / / pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended (if available). Unless one of the boxes above is checked, the Depositary will refuse to register any of the shares of Series A Preferred Stock evidenced by this certificate (or such shares of Common Stock, as the case may be) in the name of any person other than the registered holder hereof; provided, however, that the Depositary will, in its sole discretion, register the transfer of such shares of Series A Preferred Stock or Common Stock, as the case may be, if it has received such certifications, legal opinions and/or other information as it has reasonably requested stating that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. In addition, if the transferee is an institutional accredited investor, the holder must furnish to the Depositary (i) a signed letter containing certain representations and agreements relating to the restrictions on transfer of the security evidenced hereby, and (ii) such other certifications, legal opinions or other information as it may reasonably require stating that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ........ Custodian ........ TEN ENT -- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants Act.......................... in common (State)
Additional abbreviations may also be used though not in the above list. For value received, ------------- hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ---------------------------------------- - ---------------------------------------- ----------------------------------- - ----------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------shares of the preferred stock represented by the within Certificate, and do hereby irrevocably constitute and appoint - --------------------------------------------------------------------Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated _________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE CORPORATION WILL FURNISH THE STOCKHOLDER A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE TO EACH CLASS OF ITS SHARES AND THE VARIATIONS IN RIGHTS, PREFERENCES, AND LIMITATIONS DETERMINED FOR EACH SERIES ON REQUEST AND WITHOUT CHARGE. THIS CERTIFICATE IS SUBJECT TO THE INTERESTS OF DEPOSITARY RECEIPTS PURSUANT TO A DEPOSIT AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE CORPORATION. EX-4.E 5 FORM OF DEPOSITARY RECEIPT 1 EXHIBIT 4(e) THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO UNITED STATES SURGICAL CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144, IF APPLICABLE, UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY IN CERTIFICATED FORM WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE OF THIS CERTIFICATE RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. DEPOSITARY RECEIPT FOR DEPOSITARY SHARES, EACH REPRESENTING ONE-FIFTIETH OF A SHARE OF SERIES A CONVERTIBLE PREFERRED STOCK, PAR VALUE $5 PER SHARE OF ------------------------- DEPOSITARY SHARES UNITED STATES SURGICAL CORPORATION (INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE) DR CUSIP 912707 20 5 FIRST CHICAGO TRUST COMPANY OF NEW YORK, as Depositary (the "Depositary"), hereby certifies that is the registered owner of DEPOSITARY SHARES (the "Depositary Shares"), each Depositary Share representing one-fiftieth of a share of Series A Convertible Preferred Stock, par value $5 per share (the "Series A Preferred Stock"), of United States Surgical Corporation, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), and the same proportionate interest in any and all other property received by the Depositary in respect of such shares of Series A Preferred Stock and held by the Depositary under the Deposit Agreement (as defined below). Subject to the terms of the Deposit Agreement, each owner of a Depositary Share is entitled, proportionately, to all the rights, preferences and privileges of the Series A Preferred Stock represented thereby, including the dividend, voting, conversion, liquidation and other rights contained in the Certificate of Designations of the Series A Convertible Preferred Stock, par value $5 per share, establishing the rights, preferences, privileges and limitations of the Series A Preferred Stock (the "Certificate of Designations"), copies of which are on file at the office of the Depositary at which at any particular time its business in respect of matters governed by the Deposit Agreement shall be administered, which at the time of the execution of the Deposit Agreement is located at the corporate office of the Depositary at which at any time its depositary receipt business shall be administered (the "Corporate Office"). THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK. THE DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE DESCRIPTION SET FORTH IN THIS RECEIPT, WHICH CAN BE TAKEN AS A STATEMENT OF THE COMPANY SUMMARIZING CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT. UNLESS EXPRESSLY SET FORTH IN THE DEPOSIT AGREEMENT, THE DEPOSITARY MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY OF ANY STOCK AT ANY TIME DEPOSITED WITH THE DEPOSITARY UNDER THE DEPOSIT AGREEMENT OR OF THE DEPOSITARY SHARES OR RECEIPTS (EXCEPT FOR ITS COUNTERSIGNATURES THEREON), AS TO THE VALIDITY OR SUFFICIENCY OF THE DEPOSIT AGREEMENT, AS TO THE VALUE OF DEPOSITARY SHARES OR AS TO ANY RIGHT, TITLE OR INTEREST OF THE RECORD HOLDERS OF THE RECEIPTS IN AND TO THE DEPOSITARY SHARES. The Company will furnish to any holder of a Receipt, without charge, upon request addressed to its executive office or the office of its transfer agent, a statement or summary of the powers, designations, preferences and relative, participating, optional or other special rights of each authorized class of capital stock of the Company, and of each series of preferred stock of the Company authorized to be issued, so far as the same may have been fixed, and of the qualifications, limitations or restrictions of such preferences and/or rights. This Depositary Receipt (the "Receipt") is continued on the reverse hereof and the additional provisions therein set forth for all purposes have the same effect as if set forth at this place. This Receipt shall not be entitled to any benefits under the Deposit Agreement or be valid or obligatory for any purpose, unless this Receipt shall have been executed manually by the Depositary or, if a Registrar for the Receipts (other than the Depositary) shall have been appointed, by facsimile of the Depositary, by the signature of a duly authorized officer and, if executed by facsimile signature of the Depositary, shall have been countersigned manually by such Registrar by the signature of a duly authorized officer. Dated: FIRST CHICAGO TRUST COMPANY OF NEW YORK Depositary and Registrar By: [SIGNATURE] Authorized Officer 2 UNITED STATES SURGICAL CORPORATION 1. THE DEPOSIT AGREEMENT. Depositary Receipts (the "Receipts"), of which this Receipt is one, are made available upon the terms and conditions set forth in the Deposit Agreement, dated as of March 28, 1994 (the "Deposit Agreement") among the Company, the Depositary and all holders from time to time of Receipts. The Deposit Agreement (copies of which are on file at the Corporate Office and at the office of any Agent of the Depositary) sets forth the rights of holders of Receipts and the rights and duties of the Depositary. The statements made on the face and the reverse of this Receipt are summaries of certain provisions of the Deposit Agreement and are subject to the detailed provisions thereof, to which reference is hereby made. In the event of any conflict between the provisions of this Receipt and the provisions of the Deposit Agreement, the provisions of the Deposit Agreement will govern. 2. DEFINITIONS. Unless otherwise expressly herein provided, all defined terms used herein shall have the meanings ascribed thereto in the Deposit Agreement. 3. REDEMPTION OF SERIES A PREFERRED STOCK. Whenever the Company shall elect to redeem shares of Series A Preferred Stock for shares of its Common Stock, par value $.10 per share ("Common Stock"), in accordance with the Certificate of Designations, it shall (unless otherwise agreed in writing with the Depositary) give the Depositary in its capacity as Depositary the notice required by the Deposit Agreement. The Depositary shall mail, first class postage prepaid, notice of such redemption and the proposed simultaneous redemption of the number of Depositary Shares representing the Series A Preferred Stock to be redeemed, not less than 15 and not more than 60 days prior to the date fixed for redemption of such Series A Preferred Stock and Depositary Shares (the "Redemption Date"), to the record holders of the Receipts evidencing the Depositary Shares to be so redeemed, at the addresses of such holders as they appear on the records of the Depositary; but neither failure to mail any such notice to one or more such holders nor any defect in any notice to one or more such holders shall affect the sufficiency of the proceedings for redemption as to other holders. Each such notice shall state: (i) the Redemption Date; (ii) the number of Depositary Shares to be redeemed and, if less than all the Depositary Shares held by any such holder are to be redeemed, the number of such Depositary Shares held by such holder to be so redeemed; (iii) the DECS Call Price (as defined in the Certificate of Designations); (iv) the number of shares of Common Stock deliverable upon redemption of each share of Series A Preferred Stock to be redeemed, and the Current Market Price (as defined in the Certificate of Designations) used to calculate such number of shares of Common Stock; (v) the place or places where Receipts evidencing Depositary Shares are to be surrendered for payment of the redemption price; and (vi) that dividends in respect of the shares of Series A Preferred Stock represented by the Depositary Shares to be redeemed will cease to accumulate on such Redemption Date. Notices shall be mailed and published by the Company pursuant to Section 3 of the Certificate of Designations. In case fewer than all the outstanding Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall be selected by lot or pro rata (as nearly as may be) or by any other equitable method determined by the Depositary to be consistent with the method determined by the Board of Directors of the Company with respect to the Series A Preferred Stock. Notice having been mailed and published as aforesaid, from and after the Redemption Date (unless the Company shall have failed to redeem the shares of Series A Preferred Stock to be redeemed by it, as set forth in the Company's notice provided for above), the Depositary Shares called for redemption shall be deemed no longer to be outstanding and all rights of the holders of Receipts evidencing such Depositary Shares (except the right to receive the shares of Common Stock upon redemption and cash for any fractional share amount) shall, to the extent of such Depositary Shares, cease and terminate. Upon surrender in accordance with said notice of the Receipts evidencing such Depositary Shares (properly endorsed or assigned for transfer, as the Depositary shall so require), such Depositary Shares shall be redeemed for shares of Common Stock and cash for any fractional share amount at a rate per Depositary Share equal to one-fiftieth of the number of shares of Common Stock (including fractional amounts) delivered upon redemption of a share of Series A Preferred Stock pursuant to the Certificate of Designations. If fewer than all the Depositary Shares evidenced by this Receipt are called for redemption, the Depositary will deliver to the holder of this Receipt upon its surrender to the Depositary, together with shares of Common Stock for the Depositary Shares called for redemption, a new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and not called for redemption. 4. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SERIES A PREFERRED STOCK. Upon surrender of this Receipt to the Depositary at the Corporate Office or such other offices as the Depositary may designate, and subject to the provisions of the Deposit Agreement, the holder hereof is entitled to withdraw, and to obtain delivery of, to or upon the order of such holder, any or all of the Series A Preferred Stock (but only in whole shares of Series A Preferred Stock) and any or all money and other property, if any, at the time represented by the Depositary Shares evidenced by this Receipt; provided, however, that, in the event this Receipt shall evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the whole number of shares of Series A Preferred Stock to be withdrawn, the Depositary shall, in addition to such whole number of shares of Series A Preferred Stock and such money and other property, if any, to be withdrawn, deliver, to or upon the order of such holder, a new Receipt or Receipts evidencing such excess number of whole Depositary Shares. 5. OPTIONAL CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON STOCK. Subject to the terms and conditions of the Deposit Agreement and the Certificate of Designations, this Receipt may be surrendered with written instructions to the Depositary to instruct the Company to cause the conversion of any specified number of whole shares of Series A Preferred Stock represented by whole Depositary Shares evidenced hereby into whole shares of Common Stock and cash for any fractional share amount at the conversion price then in effect for the Series A Preferred Stock pursuant to the Certificate of Designations as such conversion price may be adjusted by the Company from time to time as provided in the Certificate of Designations. Subject to the terms and conditions of the Deposit Agreement and the Certificate of Designations, a holder of a Receipt or Receipts evidencing Depositary Shares representing whole or fractional shares of Series A Preferred Stock may surrender such Receipt or Receipts at the Depositary's Office or at such office or to such Depositary's Agents as the Depositary may designate for such purpose, together with a notice of conversion duly completed and executed, thereby directing the Depositary to instruct the Company to cause the conversion of the number of whole shares of underlying Series A Preferred Stock specified in such notice of conversion into shares of Common Stock, and an assignment of such Receipt or Receipts to the Company or in blank, duly completed and executed. To the extent that a holder delivers to the Depositary for conversion a Receipt or Receipts which in the aggregate are convertible into less than one whole share of Common Stock, the holder shall receive payment in cash in lieu of such fractional share of Common Stock otherwise issuable. If more than one Receipt shall be delivered for conversion at one time by the same holder, the number of whole shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of Depositary Shares represented by the Receipts so delivered. If Series A Preferred Stock shall be called by the Company for redemption, the Depositary Shares representing such Series A Preferred Stock may be converted into Common Stock as provided in the Deposit Agreement until, but not after, the close of business on the Redemption Date unless the Company shall fail to deposit with the Depositary the shares of Common Stock and cash for any fractional share amounts required to redeem the Series A Preferred Stock, in which case the Depositary Shares representing such Series A Preferred Stock may continue to be converted into Common Stock until, but not after, the close of business on the date on which the Company deposits with the Depositary such shares of Common Stock and cash for any fractional share amounts as are required by the Certificate of Designations to make full payment of the amounts payable upon such redemption. Upon receipt by the Depositary of a Receipt or Receipts, together with a properly completed and executed notice of conversion, representing any Series A Preferred Stock called for redemption, the shares of Series A Preferred Stock held by the Depositary represented by such Depositary Shares for which conversion is requested shall be deemed to have been received by the Company for conversion as of immediately prior to the close of business on the date of such receipt by the Depositary. 3 6. MANDATORY CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON STOCK. The following provisions shall apply to any Series A Preferred Stock on deposit with the Depositary as to which the Company has not exercised its right to redeem and the record holder has not exercised its right of optional conversion on the date fixed for mandatory conversion of such Series A Preferred Stock and Depositary Shares (the "Mandatory Conversion Date"): On the Mandatory Conversion Date, all then outstanding shares of Series A Preferred Stock shall mandatorily convert into shares of Common Stock, cash for any fractional share amounts and the right to receive amounts in cash equal to all accrued and unpaid dividends on such shares of Series A Preferred Stock to the Mandatory Conversion Date (other than previously declared dividends payable to a holder of record as of a prior date), all as provided in and subject to paragraph 3 of the Certificate of Designations. From and after the Mandatory Conversion Date, the Depositary Shares representing the shares of Series A Preferred Stock mandatorily converted shall be deemed no longer to be outstanding and all rights of the record holders of Receipts evidencing such Depositary Shares (except the right to receive the shares of Common Stock, any cash for accrued and unpaid dividends (other than previously declared dividends payable to a holder of record as of a prior date) and any fractional share amount deliverable or payable upon mandatory conversion or in connection therewith) shall, to the extent of such Depositary Shares, cease and terminate. Upon surrender, in accordance with said notice, of the Receipts evidencing such Depositary Shares (properly endorsed or assigned for transfer, as the Depositary shall so require), such Depositary Shares shall be exchanged for shares of Common Stock and cash for any fractional share amount (and the right to receive cash for any accrued and unpaid dividends payable in connection therewith) at a rate per Depositary Share equal to one-fiftieth of the number (including fractional amounts) of shares of Common Stock (and one-fiftieth of the right to receive cash for any accrued and unpaid dividends) exchanged for each share of Series A Preferred Stock pursuant to the Certificate of Designations. The foregoing shall be subject further to the terms and conditions of the Certificate of Designations and the Deposit Agreement. On or prior to the Mandatory Conversion Date, the Company shall deposit with the Depositary certificates for the shares of Common Stock and the cash for any fractional share amounts into which the shares of Series A Preferred Stock held by the Depositary shall mandatorily convert on the Mandatory Conversion Date, plus, subject to the Certificate of Designations, an amount in cash equal to all accrued and unpaid dividends on such shares of Series A Preferred Stock (other than previously declared dividends payable to a holder of record as of a prior date) to the Mandatory Conversion Date. Using such shares of Common Stock and cash, the Depositary shall deliver certificates for the appropriate number of shares of Common Stock and the appropriate amount of cash, without interest, to record holders who properly deliver their Receipts to the Depositary. 7. TRANSFERS, SPLIT-UPS, COMBINATIONS. Subject to Paragraphs 8, 9 and 10 below, this Receipt is transferable on the books of the Depositary upon surrender of this Receipt to the Depositary at the Corporate Office or such other offices as the Depositary may designate, properly endorsed or accompanied by a properly executed instrument of transfer or endorsement, or other instrument satisfactory to the Depositary, and upon such transfer the Depositary shall issue a Receipt to or upon the order of the person entitled thereto, all as provided in and subject to the Deposit Agreement. This Receipt may be split into other Receipts or combined with other Receipts into one Receipt evidencing the same aggregate number of Depositary Shares evidenced by the Receipt or Receipts surrendered; provided, however, that the Depositary shall not execute and deliver any Receipt evidencing a fractional Depositary Share. 8. CONDITIONS TO SIGNING AND DELIVERY, TRANSFER, ETC., OF RECEIPTS. Prior to the execution and delivery, transfer, split-up, combination, surrender or exchange of this Receipt, the Depositary, any of the Depositary's Agents or the Company may require any or all of the following: (i) payment to it of a sum sufficient for the payment (or, in the event that the Depositary or the Company shall have made such payment, the reimbursement to it) of any tax or other governmental charge with respect thereto (including any such tax or charge with respect to Series A Preferred Stock being deposited or withdrawn or with respect to Common Stock or other securities or property of the Company being issued upon conversion or redemption); (ii) the production of proof satisfactory to it as to the identity and genuineness of any signature; and (iii) compliance with such regulations, if any, as the Depositary or the Company may establish not inconsistent with the Deposit Agreement. Any person presenting Series A Preferred Stock for deposit, or any holder of this Receipt, may be required to file such proof of information, to execute such certificates and to make such representations and warranties as the Depositary or the Company may reasonably deem necessary or proper. The Depositary or the Company may withhold or delay the delivery of any Receipt, the transfer, redemption, conversion or exchange of any Receipt, the withdrawal of the Series A Preferred Stock or money or other property, if any, represented by the Depositary Shares evidenced by this Receipt or the distribution of any dividend or other distribution until such proof or other information is filed, such certificates are executed or such representations and warranties are made. 9. SUSPENSION OF DELIVERY, TRANSFER, ETC. The deposit of Series A Preferred Stock may be refused, the delivery of this Receipt against Series A Preferred Stock may be suspended, and the transfer, split-up, combination, surrender or exchange of this Receipt may be suspended (i) during any period when the register of holders of Receipts is closed, (ii) if any such action is deemed necessary or advisable by the Depositary, any of the Depositary's Agents or the Company at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of the Deposit Agreement, or (iii) with the approval of the Company, for any other reason. Except with respect to a conversion of Depositary Shares which may occur pursuant to paragraph 3 of the Certificate of Designations, the Depositary shall not be required (a) to execute and deliver, transfer or exchange any Receipts for a period beginning at the opening of business 15 days next preceding any selection of Depositary Shares and Series A Preferred Stock to be redeemed and ending at the close of business on the day of the mailing of notice of redemption of Depositary Shares or (b) to transfer or exchange for another Receipt any Receipt evidencing Depositary Shares called or being called for redemption, in whole or in part, except as provided in the second to last paragraph of Paragraph 3 above. 10. PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES. If any tax or other governmental charge shall become payable by or on behalf of the Depositary with respect to this Receipt, the Depositary Shares evidenced by this Receipt, the Series A Preferred Stock (or any fractional interest therein) represented by such Depositary Shares or any transaction referred to in Section 4.6 of the Deposit Agreement, such tax (including transfer, issuance or acquisition taxes, if any) or governmental charge shall be payable by the holder hereof. Until such payment is made, transfer, redemption, conversion or exchange of this Receipt or any withdrawal of the Series A Preferred Stock or money and other property, if any, represented by the Depositary Shares evidenced by this Receipt may be refused, any dividend or other distribution may be withheld and any part or all of the Series A Preferred Stock or other property represented by the Depositary Shares evidenced by this Receipt may be sold for the account of the holder hereof (after attempting by reasonable means to notify such holder prior to such sale). Any dividend or other distribution so withheld and the proceeds of any such sale may be applied to any payment of such tax or other governmental charge, the holder of this Receipt remaining liable for any deficiency. The Depositary shall act as the withholding agent for any payments, distributions, and exchanges made with respect to the Depositary Shares and Receipts, and the Preferred Stock, Common Stock or other securities or assets represented thereby (collectively, the "Securities"). The Depositary shall be responsible with respect to the Securities for the timely (i) collection and deposit of any required withholding or backup withholding tax, and (ii) filing of any information returns or other documents with federal (and other applicable) taxing authorities. In the event the Depositary is required to pay any such amounts, the Company shall reimburse the Depositary for payment thereof upon the request of the Depositary and the Depositary shall, upon the Company's request and as instructed by the Company, pursue its rights against such holder at the Company's expense. 4 11. AMENDMENT. The form of the Receipts and any provision of the Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect that they may deem necessary or desirable. Any amendment that shall impose any fees, taxes or charges payable by holders of Receipts (other than taxes and other governmental charges, fees and other expenses provided for herein or in the Deposit Agreement), or that shall otherwise prejudice any substantial existing right of holders of Receipts, shall not become effective as to outstanding Receipts until the expiration of 90 days after notice of such amendment shall have been given to the record holders of outstanding Receipts. The holder of this Receipt at the time any such amendment becomes effective shall be deemed, by continuing to hold this Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right, subject to the provisions of Paragraphs 3, 4, 5, 6, 7, 8, 9 and 10 hereof and of Sections 2.3, 2.4, 2.6, 2.7, 2.10 and 2.11 and Article III of the Deposit Agreement, of the owner of the Depositary Shares evidenced by this Receipt to surrender this Receipt with instructions to the Depositary to deliver to the holder the Series A Preferred Stock and all money and other property, if any, represented hereby, or to cause the conversion of the underlying Series A Preferred Stock into Common Stock and cash for any fractional share amount, except in order to comply with mandatory provisions of applicable law. 12. FEES, CHARGES AND EXPENSES. The Company will pay all fees, charges and expenses of the Depositary, except for taxes (including transfer taxes, if any) and other governmental charges and such charges as are expressly provided in the Deposit Agreement to be at the expense of persons depositing Series A Preferred Stock, holders of Receipts or other persons. 13. TITLE TO RECEIPTS. It is a condition of this Receipt, and every successive holder hereof by accepting or holding the same consents and agrees, that title to this Receipt (and to the Depositary Shares evidenced hereby) when properly endorsed or accompanied by a properly executed instrument of transfer or endorsement, is transferable by delivery; provided, however, that until this Receipt shall be transferred on the books of the Depositary as provided in Section 2.04 of the Deposit Agreement, the Depositary may, notwithstanding any notice to the contrary, treat the record holder hereof at such time as the absolute owner hereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in the Deposit Agreement and for all other purposes. 14. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary receives any cash dividend or other cash distribution on the Series A Preferred Stock, the Depositary will, subject to the provisions of the Deposit Agreement, distribute such portions of such sum to record holders of Receipts as are, as nearly as practicable, proportionate to the respective numbers of Depositary Shares evidenced by the Receipts held by such holders; provided, however, that in case the Company or the Depositary shall be required to withhold and does withhold from any cash dividend or other cash distribution in respect of the Series A Preferred Stock an amount on account of taxes or as otherwise required by law, regulation or court order, the amount made available for distribution or distributed in respect of Depositary Shares shall be reduced accordingly. The Depositary shall distribute or make available for distribution, as the case may be, only such amount, however, as can be distributed without attributing to any owner of Depositary Shares a fraction of one cent and any balance not so distributable shall be rounded to the next highest whole cent and, upon request of the Depositary, the Company shall pay the additional amount to the Depositary for distribution. 15. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If the Company shall at any time offer or cause to be offered to the persons in whose names Series A Preferred Stock is registered on the books of the Company any rights, preferences or privileges to subscribe for or to purchase any securities or any rights, preferences or privileges of any other nature, such rights, preferences or privileges shall in each such instance, subject to the provisions of the Deposit Agreement, be made available by the Depositary to the record holders of Receipts if the Company so directs in such manner as the Company shall instruct. 5 16. NOTICE OF DIVIDENDS, FIXING OF RECORD DATE. Whenever any cash dividend or other cash distribution shall become payable, any distribution other than cash shall be made, or any rights, preferences or privileges shall at any time be offered, with respect to the Series A Preferred Stock, or the Depositary shall receive notice of (i) any meeting at which holders of Series A Preferred Stock are entitled to vote or of which holders of Series A Preferred Stock are entitled to notice or (ii) any election on the part of the Company to call for redemption of any shares of Series A Preferred Stock, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date fixed by the Company with respect to the Series A Preferred Stock) for the determination of the holders of Receipts (i) who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof, or to give instructions for the exercise of voting rights at any such meeting or to receive notice of such meeting or (ii) whose Depositary Shares are to be so redeemed. 17. VOTING RIGHTS. Upon issuance of notice of any meeting at which the holders of Series A Preferred Stock are entitled to vote, the Company shall direct the Depositary, as soon as practicable thereafter, to mail to the record holders of Receipts a notice, which shall contain (i) such information as is contained in such notice of meeting, (ii) a statement that the holders of Receipts at the close of business on a specified record date determined as provided in Paragraph 16 will be entitled, subject to any applicable provision of law, the Certificate of Incorporation or the Certificate of Designations, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Series A Preferred Stock represented by their respective Depositary Shares, and (iii) a brief statement as to the manner in which such instructions may be given. Upon the written request of a holder of a Receipt on such record date, the Depositary shall endeavor insofar as practicable to vote or cause to be voted an amount of Series A Preferred Stock represented by the Depositary Shares evidenced by such Receipt in accordance with the instructions set forth in such request. The Company has agreed to take all reasonable action that may be deemed necessary by the Depositary in order to enable the Depositary to vote such Series A Preferred Stock or cause such Series A Preferred Stock to be voted. In the absence of specific instructions from the holder of a Receipt, the Depositary will abstain from voting to the extent of the Series A Preferred Stock represented by the Depositary Shares evidenced by such Receipt. After aggregating all voting Depositary Shares, the Depositary will disregard for voting purposes any fractional share of Series A Preferred Stock remaining. 18. REPORTS, INSPECTION OF TRANSFER BOOKS. The Depositary shall make available for inspection by holders of Receipts at the Corporate Office and at such other places as it may from time to time deem advisable during normal business hours any reports and communications received from the Company that are both received by the Depositary as the holder of Series A Preferred Stock and made generally available to the holders of Series A Preferred Stock by the Company. The Depositary shall keep books at the Corporate Office for the registration and transfer of Receipts, which books during normal business hours will be open for inspection by the record holders of Receipts as provided by applicable law. 19. LIABILITY OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS AND THE COMPANY. Neither the Depositary nor any Depositary's Agent nor the Company shall incur any liability to any holder of any Receipt, if by reason of any provision of any present or future law or regulation of any governmental authority or, in the case of the Depositary or the Depositary's Agent, by reason of any provision, present or future, of the Certificate of Incorporation or the Certificate of Designations or, in the case of the Company, the Depositary or the Depositary's Agent, by reason of any act of God or war or other circumstance beyond the control of the relevant party, the Depositary, any Depositary's Agent or the Company shall be prevented or forbidden from doing or performing any act or thing that the terms of the Deposit Agreement provide shall be done or performed; nor shall the Depositary, any Depositary's Agent or the Company incur any liability to any holder of a Receipt by reason of any nonperformance or delay, caused as aforesaid, in the performance of any act or thing that the terms of the Deposit Agreement provide shall or may be done or performed or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. 20. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS AND THE COMPANY. Neither the Depositary, the Registrar, any Depositary's Agent nor the Company assumes any obligation or shall be subject to any liability hereunder or under the Deposit Agreement to holders of Receipts other than for their negligence (including the failure to comply with customary trade practice) or willful misconduct and each of them agrees to use good faith in the performance of such duties as are specifically set forth in the Deposit Agreement. Neither the Depositary, the Registrar, any Depositary's Agent nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding with respect to Series A Preferred Stock, Depositary Shares, Receipts or Common Stock that in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required. Neither the Depositary, the Registrar, any Depositary's Agent nor the Company will be liable for any action or failure to act by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Series A Preferred Stock for deposit, any holder of a Receipt or any other person believed by it in good faith to be competent to give such advice or information. 6 21. TERMINATION OF DEPOSIT AGREEMENT. Whenever so directed by the Company, the Depositary will terminate the Deposit Agreement, provided, that notice of such termination has been given by mailing notice of such termination to the record holders of all Receipts then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Depositary may likewise terminate the Deposit Agreement if at any time 45 days shall have expired after the Depositary shall have delivered to the Company a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.4 of the Deposit Agreement. Upon the termination of the Deposit Agreement, the Company shall be discharged from all obligations thereunder except for its obligations to the Depositary, any Depositary's Agent and any Registrar under Sections 5.7 and 5.8 of the Deposit Agreement. If any Receipts remain outstanding after the date of termination, the Depositary thereafter shall discontinue all functions and be discharged from all obligations as provided in the Deposit Agreement, except as specifically provided therein. 22. GOVERNING LAW. The Deposit Agreement and this Receipt and all rights thereunder and hereunder and provisions thereof and hereof shall be governed by, and construed in accordance with, the law of the State of New York without giving effect to principles of conflict of laws. 7 NOTICE OF CONVERSION The undersigned holder of this Receipt for Depositary Shares hereby irrevocably exercises the option to convert that number of whole shares of Series A Convertible Preferred Stock of the Company represented by [ ] Depositary Shares into shares of Common Stock of the Company and cash for any fractional share amount in accordance with the terms of and subject to the conditions of the Series A Preferred Stock, including the Certificate of Designations in respect thereof, and the Deposit Agreement, and directs the Depositary to instruct the Company that the shares of Common Stock deliverable upon such conversion be registered in the name of, and delivered together with a check in payment for any fractional shares of Common Stock to, the undersigned unless a different name has been indicated below. If the shares of Common Stock are to be registered in the name of a person other than the undersigned, the undersigned will pay all transfer and similar taxes payable with respect thereto. If the number of whole shares of Series A Preferred Stock represented by the number of Depositary Shares set forth above is less than the number of shares of Series A Preferred Stock on deposit in respect of this Receipt, the undersigned directs that the Depositary execute and deliver to the undersigned, unless a different name is indicated below, a new Receipt evidencing Depositary Shares for the balance of such Series A Preferred Stock not to be converted. Dated: _________________________________________________________________________ Signature: ______________________________________________________________ NOTE: The signature on this notice of conversion must correspond with the name as written upon the face of this Receipt in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a commercial bank, trust company, securities broker or dealer, credit union, savings association or other eligible guarantor institution which is a member of or participant in a signature guarantee program acceptable to the Depositary. Name: __________________________________________________________________________ Address: _______________________________________________________________________ (Please print names and address of Registered Holder) Name: __________________________________________________________________________ Address: _______________________________________________________________________ (Please indicate other delivery instructions, if applicable) In connection with any transfer of any of the Depositary Shares evidenced by this Receipt (or any issuance of shares of Common Stock upon conversion or redemption of the Series A Preferred Stock represented by such Depositary Shares) occurring prior to the third anniversary of the date of original issuance of this Receipt, unless and until a registration statement is effective with respect to the Depositary Shares, Series A Preferred Stock, or Common Stock, as the case may be, the undersigned states that such Depositary Shares (or such shares of Common Stock, as the case may be) are being transferred: / / inside the United States to a qualified institutional buyer pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or / / outside the United States pursuant to and in compliance with Rule 904 under the Securities Act of 1933, as amended; or / / to an institutional accredited investor pursuant to and in compliance with the Securities Act of 1933, as amended; or / / pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended (if available). Unless one of the boxes above is checked, unless and until a registration statement is effective with respect to the Depositary Shares, Series A Preferred Stock, or Common Stock, as the case may be, the Depositary will refuse to register any of the Depositary Shares evidenced by this Receipt (or such shares of Common Stock, as the case may be) in the name of any person other than the registered holder hereof; provided, however, that the Depositary will, in its sole discretion, register the transfer of such Depositary Shares or Common Stock, as the case may be, if it has received such certifications, legal opinions and/or other information as it has reasonably requested stating that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. In addition, if the transferee is an institutional accredited investor, the holder must furnish to the Depositary (i) a signed letter containing certain representations and agreements relating to the restrictions on transfer of the security evidenced hereby, and (ii) such other certifications, legal opinions or other information as it may reasonably require stating that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. Dated: ---------------------------------------------------------------------- Signature Guarantee: Signature: ------------------------------------------------------------------ NOTE: The signature to this Agreement must correspond with the name as written upon the face of this Receipt in every particular, without alteration or enlargement, or any change whatsoever. 8 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ------------------------------------ - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) - -------------------------------------------------------------------------------- the within Receipt and all rights and interests represented by the Depositary Shares evidenced thereby, and hereby irrevocably constitutes and appoints - ----------------------------------------------------------------- his attorney, to transfer the same on the books of the within-named Depositary, with full power of substitution in the premises. Dated: ------------------------------------------------------------------------ Signature: -------------------------------------------------------------------- NOTE: The signature on this assignment must correspond with the name as written upon the face of this Receipt in every particular, without alteration or enlargement, or any change whatsoever, and must be guaranteed by a commercial bank, trust company, securities broker or dealer, credit union, savings association or other eligible guarantor institution which is a member of or participant in a signature guarantee program acceptable to the Depositary. EX-5 6 OPINION OF DONALD F. CRANE 1 EXHIBIT 5 April 27, 1994 United States Surgical Corporation 150 Glover Avenue Norwalk, Connecticut 06856 Dear Sirs: I refer to the Registration Statement on Form S-3 (the "Registration Statement") to be filed by United States Surgical Corporation, a Delaware corporation (the "Company"), on or about the date hereof with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of 8,870,000 Depositary Shares, each representing a one- fiftieth interest in a share of the Company's Series A Convertible Preferred Stock, $5.00 par value (the "Series A Preferred Stock") of 177,400 shares of the Series A Preferred Stock, and of 8,870,000 shares of the Company's common stock, par value $.10 per share (the "Common Stock"), issuable on conversion or redemption of the Series A Preferred Stock. I am familiar with the Certificate of Incorporation and By-laws of the Company and have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, evidence of corporate action, certificates and other instruments, and have made such other investigations of law and fact, as I have deemed necessary or appropriate for the purposes of this opinion. Based upon the foregoing, it is my opinion that the 177,400 shares of the Series A Preferred Stock, and the 8,870,000 shares of the Common Stock, issuable on conversion or redemption of the Series A Preferred Stock, have been duly authorized and are or, when issued will be, validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion in the Registration Statement referred to above. Very truly yours, /s/ Donald F. Crane, Jr. Donald F. Crane, Jr. Senior SEC Counsel EX-12 7 STATEMENTS OF COMPUTATION OF RATIOS OF EARNINGS 1 EXHIBIT 12 UNITED STATES SURGICAL CORPORATION STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
PRO-FORMA YEAR ENDED DECEMBER 31, 1993 ------------ Determination of earnings: Income before provision for Income taxes ($ 127,200) Fixed charges 19,700 ------------ Total earnings as defined (107,500) ------------ Fixed charges and other: Interest expense 8,300 (1) Interest portion of rent expense 11,400 ------------ Fixed charges 19,700 Capitalized Interest 9,500 ------------ Total fixed charges and capitalized interest 29,200 Preferred stock dividends (2) 30,000 ------------ Combined fixed charges and preferred stock dividends $ 59,200 ============ Ratio of Earnings to Fixed Charges Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends N.M.(4)
YEARS ENDED DECEMBER 31 ----------------------------------------------------------------------- 1993 1992 1991 1990 1989 ----------- --------- --------- --------- -------- Determination of earnings: Income before provision for Income taxes ($ 137,400) $192,900 $130,300 $ 66,200 $43,700 Fixed charges 29,900 22,600 16,900 12,800 10,000 ----------- --------- --------- --------- -------- Total earnings as defined (107,500) 215,500 147,200 79,000 53,700 ----------- --------- --------- --------- -------- Fixed charges and other: Interest expense 18,500 14,700 12,000 9,800 7,800 Interest portion of rent expense 11,400 7,900 4,900 3,000 2,200 ----------- --------- --------- --------- -------- Fixed charges 29,900 22,600 16,900 12,800 10,000 Capitalized Interest 9,500 6,400 2,700 1,400 1,700 ----------- --------- --------- --------- -------- Total fixed charges and capitalized interest $ 39,400 $ 29,000 $ 19,600 $ 14,200 $11,700 =========== ========= ========= ========= ======== Preferred stock dividends (2) Combined fixed charges and preferred stock dividends Ratio of Earnings to Fixed Charges N.M.(3) 7.4 7.5 5.6 4.6 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
The ratio of earnings to fixed charges and to combined fixed charges and preferred stock dividends is computed by dividing the sum of earnings before provision for income taxes and fixed charges (excluding capitalized interest) by total fixed charges and capitalized interest, or by the sum of total fixed charges and capitalized interest and preferred stock dividends. Total fixed charges and capitalized interest includes all interest (including capitalized interest) and the interest factor of all rentals, assumed to be one-third of consolidated rent expense. (1) Pro-forma interest expense assumes that the net proceeds form the issuance of preferred stock of $192 million were received on January 1, 1993 and were used to repay bank loans with an average interest rate of 5.3%. (2) Using the same assumptions in (1) above, preferred stock dividends have been increased to an amount representing the pretax earnings which would be required to cover such dividend requirements, assuming a statutory tax rate of 35%. (3) Earnings are inadequate to cover fixed charges. The dollar amount of the deficiency at 12/31/93 is $146.9 million. If the restructuring charges of $137.6 million were excluded from the calculation, the dollar amount of the deficiency would have been $9.3 million. (4) Earnings are inadequate to cover combined fixed charges and preferred stock dividends. The dollar amount of the pro-forma deficiency at December 31, 1993 was $166.7 million. If the restructuring charges of $137.6 million were excluded from the calculation, the dollar amount of the pro-forma deficiency would have been $29.1 million. EX-23.A 8 CONSENT OF DELOITTE & TOUCHE 1 EXHIBIT 23(A) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of United States Surgical Corporation on Form S-3 of our report dated February 1, 1994 except as to notes H, K and L as to which the date is March 28, 1994, appearing in the Annual Report on Form 10-K of United States Surgical Corporation for the year ended December 31, 1993 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche Deloitte & Touche New York, New York April 26, 1994 EX-24 9 POWERS OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of UNITED STATES SURGICAL CORPORATION, a Delaware corporation (the "Corporation"), in connection with the filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended (the "Act") a Registration Statement on Form S-3 with respect to the registration under the Act of 8,870,000 Depositary Shares, each representing a one-fiftieth interest in a share of the Company's Series A Convertible Preferred Stock, $5,00 par value, of 177,400 shares of the Series A Preferred Stock, and of 8,870,000 shares of the Company's common stock, par value $.10 per share, issuable on conversion or redemption of the Series A Preferred Stock, hereby constitutes and appoints Thomas R. Bremer and Howard M. Rosenkrantz such undersigned's true and lawful attorneys-in-fact and agents, and each of them with full power to act without the other as such undersigned's true and lawful attorney-in-fact and agent, for and in the name, place and stead of such undersigned, in any and all capacities, to sign said Registration Statement and any and all future amendments thereto and to file said Registration Statement and each such future amendment, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such undersigned might or could do in person, hereby ratifying and confirming all the said attorneys-in-fact and agents, or either of them, may lawfully do or cause to be done by virtue hereof. 2 IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals this 26th day of April, 1994. /s/ LEON C. HIRSCH /s/ DOUGLAS L. KING - ------------------------------------------ ------------------------------------------ Leon C. Hirsch Douglas L. King Chairman of the Board, President, Director Chief Executive Officer and Director (Principal Executive Officer) /s/ BRUCE S. LUSTMAN /s/ WILLIAM F. MAY - ------------------------------------------ ------------------------------------------ Bruce S. Lustman William F. May Director Director /s/ TURI JOSEFSEN /s/ MARIANNE SCIPIONE - ------------------------------------------ ------------------------------------------ Turi Josefsen Marianne Scipione Director Director /s/ JOHN A. BOGARDUS, JR. /s/ DOUGLAS T. TANSILL - ------------------------------------------ ------------------------------------------ John A. Bogardus, Jr. Douglas T. Tansill Director Director /s/ THOMAS R. BREMER /s/ HOWARD M. ROSENKRANTZ - ------------------------------------------ ------------------------------------------ Thomas R. Bremer Howard M. Rosenkrantz Director Senior Vice President, Finance, Chief Financial Officer (Principal Financial Officer)
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