Filed Pursuant to Rule 424(b)(3)
Registration No. 333-104648
PROSPECTUS
THE STANLEY WORKS
--------------
OFFER TO EXCHANGE
$150,000,000 OF OUR 3 1/2% NOTES DUE 2007
AND
$200,000,000 OF OUR 4 9/10% NOTES DUE 2012
--------------
The notes being offered by this prospectus, referred to as exchange
notes, are being issued in exchange for notes sold by us in a private placement
on November 1, 2002, referred to as initial notes. The exchange notes will be
governed by the same indenture governing the initial notes. The exchange notes
will be substantially identical to the initial notes, except the transfer
restrictions applicable to the initial notes will not apply to the exchange
notes.
The exchange offer expires at 5:00 p.m., New York City time, on
August 25, 2003, unless extended.
No public market exists for the initial notes or the exchange notes. We
do not intend to list the exchange notes on any securities exchange or to seek
approval for quotation through any automated quotation system.
SEE "RISK FACTORS" ON PAGE 8 FOR A DISCUSSION OF CERTAIN RISKS THAT YOU
SHOULD CONSIDER IN CONNECTION WITH THE TENDER OF YOUR INITIAL NOTES.
------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is July 22, 2003
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION............................................i
FORWARD-LOOKING STATEMENTS....................................................ii
SUMMARY........................................................................1
RISK FACTORS...................................................................8
USE OF PROCEEDS................................................................9
DESCRIPTION OF THE NOTES......................................................10
BOOK-ENTRY; DELIVERY AND FORM.................................................17
EXCHANGE OFFER................................................................19
UNITED STATES FEDERAL TAX CONSIDERATIONS......................................27
PLAN OF DISTRIBUTION..........................................................31
LEGAL MATTERS.................................................................32
EXPERTS.......................................................................32
INCORPORATION BY REFERENCE....................................................32
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We have not authorized any dealer, salesperson or other person to give
you written information other than this prospectus or to make representations as
to matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy these securities in any jurisdiction where
that would not be permitted or legal. Neither the delivery of this prospectus
nor any sales made under this prospectus after the date of this prospectus shall
create an implication that the information contained in this prospectus or our
affairs have not changed since the date of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-4, including all amendments, exhibits,
schedules and supplements, to register the exchange notes. Although this
prospectus, which forms a part of the registration statement, contains all
material information included in the registration statement, parts of the
registration statement have been omitted as permitted by the rules of the SEC.
For further information about us and the exchange notes offered in this
prospectus, you should refer to the registration statement and its exhibits. In
addition, we are subject to the informational requirements of the Securities
Exchange Act of 1934 and are required to file reports and other information with
the SEC. The registration statement, reports, proxy statements and other
information filed by us can be inspected and copied at prescribed rates at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. You
may obtain information regarding the Washington, DC Public Reference Room by
calling the SEC at 1-800-SEC-0330. In addition, reports, proxy statements and
other information we file with the SEC are publicly available through the SEC's
site on the Internet's World Wide Web, located at http://www.sec.gov.
Our common stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange. The reports, proxy statements and other information that
we file with the SEC concerning us can also be inspected and acquired at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005 and the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THE DOCUMENT.
SUCH INFORMATION IS AVAILABLE WITHOUT CHARGE TO SECURITY HOLDERS UPON WRITTEN OR
ORAL REQUEST BY CONTACTING THE STANLEY WORKS, 1000 STANLEY DRIVE, NEW BRITAIN,
CONNECTICUT 06053, (860) 225-5111, ATTENTION: TREASURER. TO OBTAIN TIMELY
DELIVERY OF SUCH INFORMATION, SECURITY HOLDERS MUST REQUEST THE INFORMATION NO
LATER THAN AUGUST 18, 2003, WHICH IS FIVE BUSINESS DAYS BEFORE THE EXPIRATION OF
THE EXCHANGE OFFER.
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FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 with respect to our financial condition, results of operations and
business. The Reform Act protects public companies from liability for
forward-looking statements in private securities actions if the forward-looking
statement is identified and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those included in the forward-looking statements.
Forward-looking statements by their nature involve a degree of risk and
uncertainty. You can find many of these forward-looking statements by looking
for words such as "believes," "expects," "anticipates," "estimates,"
"continues," "may," "intends," "plans" or similar expressions in this document
or in the documents incorporated in this prospectus by reference. You should be
aware that any forward-looking statements in this document are not guarantees of
future performance.
We have identified factors that could cause actual plans or results to
differ materially from those included in any forward-looking statements. These
factors, which are presented below in no particular order, include, but are not
limited to:
o failure to realize expected benefits of our acquisition on November 25,
2002 of Best Lock Corporation or other recent acquisitions;
o inability to maintain current production rates in certain mechanics
tools facilities;
o inability to integrate or perform with respect to the new mechanics
tool management personnel and processes;
o failure of demand recovery for Mac tools and mechanics tools
production;
o failure of marketing and/or sales efforts;
o failure of the Home Depot and Wal-Mart programs or other initiatives to
increase retail sales and stimulate demand for our products;
o inability of the sales force to adapt to changes made in the sales
organization and achieve adequate customer coverage;
o inability to fulfill demand for new and existing products;
o failure of acceptance of new products;
o failure to successfully integrate recently acquired businesses with
existing businesses and the failure to achieve the sales plans for such
businesses;
o increasing competition, and changes in trade, monetary and fiscal
policies and laws, inflation, currency exchange fluctuations and the
impact of dollar/foreign currency exchange rates and interest rates on
our competitiveness or the competitiveness of our products;
o pricing pressure and other changes within competitive markets and the
ability to defend market share;
o continued consolidation of customers in consumer channels and inventory
pressures on such customers;
o outcomes of pending and future litigation;
o events that cause or may cause disruption in distribution and sales
networks such as port closures or labor shortages, war, political
unrest and recessionary or expansive trends in world economies;
o future labor disputes;
o inability to continue improvements in productivity and cost reductions
including inventory reductions, payment terms and reducing selling,
general and administrative expenses as a percentage of sales;
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o the strength of the United States economy and the strength of foreign
currencies, including without limitation, the Euro;
o inability to continue to successfully close facilities and reduce
workforce;
o failure to increase the efficiency of routine business processes;
o failure to mitigate the effects of any material cost inflation;
o availability of vendors to perform outsourced functions;
o failure to recruit and train new employees;
o the failure of our efforts to restructure our Mac Tools organization
in order to return it to profitability, including, without limitation,
our ability to liquidate certain Mac Tools' retail channel assets at a
satisfactory price; and
o the failure of our efforts to decentralize our operations functions,
primarily into our Tools and Access Solutions business groups.
Actual results may differ materially from those expressed or implied by
forward-looking statements. Please take into account that forward-looking
statements speak only as of the date of this prospectus or, in the case of
documents incorporated by reference in this prospectus, the date of any such
document.
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SUMMARY
The following summary contains information about us and the exchange of
the initial notes. It does not contain all of the information that may be
important to you in making a decision to exchange the initial notes. For a more
complete understanding of us and the exchange of the initial notes, you are
encouraged to read this entire prospectus and the documents incorporated in this
prospectus by reference.
THE STANLEY WORKS
We were founded in 1843 by Frederick T. Stanley and incorporated in
1852. We are a worldwide producer of tools and door products for professional,
industrial and consumer use. Stanley(R) is a brand recognized around the world
for quality and value. Our principal executive office is located at 1000 Stanley
Drive, New Britain, Connecticut 06053 and our telephone number is (860)
225-5111.
Our operations are classified into two business segments: Tools and
Doors. The Tools segment manufactures and markets carpenters, mechanics,
pneumatic and hydraulic tools as well as tool sets. These products are
distributed directly to retailers (including home centers, mass merchants and
retail lumber yards) and end users as well as through third party distributors.
Carpenters tools include hand tools such as measuring instruments, planes,
hammers, knives and blades, screwdrivers, saws, garden tools, chisels, boring
tools, masonry, tile and drywall tools, as well as electronic stud sensors,
levels, alignment tools and elevation measuring systems.
The Doors segment manufactures and markets commercial and residential
doors, both automatic and manual, as well as closet doors and systems, home
decor and door and consumer hardware. Products in the Doors segment include
residential insulated steel, reinforced fiberglass and wood entrance door
systems, vinyl patio doors, mirrored closet doors and closet organizing systems,
automatic doors as well as related door hardware products ranging from hinges,
hasps, bolts and latches to shelf brackets and lock sets.
We believe that we are one of the largest manufacturers of hand tools
in the world featuring a broader line than any other toolmaker. We also believe
that we are a leader in the manufacture and sale of pneumatic fastening tools
and related fasteners to the construction, furniture and pallet industries as
well as a leading manufacturer of hydraulic tools used for construction,
railroads, utilities and public works. In the Doors segment, we believe that we
are a United States leader in the manufacture and sale of insulated steel
residential entrance doors, commercial hardware products, mirrored closet doors
and hardware for sliding, folding and pocket doors and the United States leader
in the manufacture, sale and installation of automatic sliding and swing powered
doors.
INITIAL OFFERING
The initial notes were originally issued by us on November 1, 2002 in a
private offering. We are parties to a registration rights agreement with the
initial purchasers of the initial notes pursuant to which we agreed, among other
things, to file a registration statement with respect to the exchange notes on
or before April 30, 2003, to use our best efforts to cause the registration
statement to be declared effective by July 29, 2003 and to complete the exchange
offer on or before August 28, 2003. We must pay liquidated damages to the
holders of the initial notes if we do not meet those deadlines.
RECENT DEVELOPMENTS
On May 20, 2003, we announced the retirement of John M. Trani, our
Chairman and Chief Executive Officer, effective December 31, 2003.
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SUMMARY OF THE EXCHANGE OFFER
We are offering to exchange:
o $150.0 million aggregate principal amount of our 3 1/2% Notes due 2007,
which we refer to as the exchange notes due 2007, for $150.0 million
aggregate principal amount of our outstanding 3 1/2% Notes due 2007,
which we refer to as the initial notes due 2007; and
o $200.0 million aggregate principal amount of our 4 9/10% Notes due
2012, which we refer to as the exchange notes due 2012, for $200.0
million aggregate principal amount of our outstanding 4 9/10% Notes
due 2012, which we refer to as the initial notes due 2012.
We refer to the exchange notes due 2007 and the exchange notes due 2012,
collectively, as the exchange notes, and the initial notes due 2007 and the
initial notes due 2012, collectively, as the initial notes.
To exchange your initial notes, you must properly tender them and we
must accept your tender. We will exchange all outstanding initial notes that are
validly tendered and not validly withdrawn.
Expiration Date.............. The exchange offer will expire at 5:00 p.m., New
York City time on August 25, 2003, unless we
extend it.
Registration Rights
Agreement................. You have the right to exchange the initial notes
that you hold for exchange notes with
substantially identical terms. This exchange offer
is intended to satisfy these rights. Once the
exchange offer is complete, you will no longer be
entitled to any exchange or registration rights
with respect to your initial notes.
Accrued Interest on the
Exchange Notes and
Initial Notes........... The exchange notes will bear interest from their
issuance date. Holders of initial notes which are
accepted for exchange will receive, in cash,
accrued interest on the initial notes to, but not
including, the issuance date of the exchange
notes. Such interest will be paid with the first
interest payment on the exchange notes.
Conditions to the
Exchange Offer.......... The exchange offer is subject to customary
conditions, which we may waive. You should read
the discussion under "Exchange Offer--Conditions
to the Exchange Offer" for more information
regarding conditions of the exchange offer.
Procedures for Tendering
Initial Notes........... If you are a holder of initial notes and wish to
accept the exchange offer, you must either:
o complete, sign and date the accompanying Letter
of Transmittal, or a facsimile of the Letter of
Transmittal; or
o arrange for The Depository Trust Company to
transmit required information to the exchange
agent in connection with a book-entry transfer.
The exchange agent must receive such documentation
or information and your initial notes on or prior
to the expiration date at the address set forth in
the section of
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this prospectus entitled "Exchange Offer--Exchange
Agent."
Representation Upon Tender... By tendering your initial notes in this manner,
you will be representing, among other things,
that:
o the exchange notes you acquire in the exchange
offer are being acquired in the ordinary course
of your business;
o you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate, in
the distribution of the exchange notes issued to
you in the exchange offer; and
o you are not a party related to us.
Procedures for Beneficial
Owners.................. If you are the beneficial owner of initial notes
registered in the name of a broker, dealer or
other nominee and you wish to tender your notes,
you should contact the person in whose name your
notes are registered and promptly instruct the
person to tender on your behalf within the time
period set forth in the section of this prospectus
entitled "Exchange Offer."
Material Federal Tax
Consequences............ The exchange of initial notes for exchange notes
will not result in any gain or loss to you for
federal income tax purposes. Your holding period
for the exchange notes will include the holding
period for the initial notes and your adjusted tax
basis of the exchange notes will be the same as
your adjusted tax basis of the initial notes at
the time of the exchange. For additional
information, you should read the discussion under
"U.S. Federal Tax Considerations."
Failure to Exchange Will
Affect You Adversely... Initial notes that are not tendered, or that are
tendered but not accepted, will be subject to the
existing transfer restrictions on the initial
notes after the exchange offer. We will have no
further obligation to register the initial notes
under the Securities Act of 1933. If you do not
participate in the exchange offer, the liquidity
of your notes could be adversely affected.
Guaranteed Delivery
Procedures.............. If you wish to tender your initial notes and time
will not permit your required documents to reach
the exchange agent by the expiration date, or the
procedure for book-entry transfer cannot be
completed on time, you may tender your notes
according to the guaranteed delivery procedures.
For additional information, you should read the
discussion under "Exchange Offer--Guaranteed
Delivery Procedure."
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Acceptance of Initial Notes;
Delivery of
Exchange Notes.......... Subject to customary conditions, we will accept
initial notes which are properly tendered in the
exchange offer and not withdrawn, before 5:00
p.m., New York City time, on the expiration date
of the exchange offer. The exchange notes will be
delivered as promptly as practicable following the
expiration date.
Use of Proceeds.............. We will not receive any proceeds from the exchange
offer.
Exchange Agent............... JPMorgan Chase Bank is the exchange agent for the
exchange offer.
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SUMMARY OF TERMS OF THE EXCHANGE NOTES
The exchange notes due 2007 are substantially identical to the initial
notes due 2007 and the exchange notes due 2012 are substantially identical to
the initial notes due 2012, with limited exceptions. The exchange notes are
subject to the same indenture as the initial notes. For additional information,
you should read the discussion under "Description of Notes."
Securities Offered .......... $150.0 million aggregate principal amount of
3 1/2% Notes due 2007
$200.0 million aggregate principal amount of
4 9/10% Notes due 2012
Maturity .................... The exchange notes due 2007 will mature on
November 1, 2007.
The exchange notes due 2012 will mature on
November 1, 2012.
Interest .................... Interest on the exchange notes due 2007 will
accrue at the rate of 3 1/2% per year, payable
semi-annually in arrears on May 1 and November 1
of each year, beginning on November 1, 2003.
Interest on the exchange notes due 2012 will
accrue at the rate of 4 9/10% per year, payable
semi-annually in arrears on May 1 and November 1
of each year, beginning on November 1, 2003.
Ranking ..................... The exchange notes will be unsecured and will rank
equally with all of our unsecured and
unsubordinated indebtedness. Holders of the
exchange notes will generally have a position
junior to the claims of the creditors, including
the trade creditors, of our subsidiaries.
Optional Redemption ......... We may redeem all or part of the exchange notes at
our option at a redemption price equal to the
greater of:
o 100% of the principal amount of the exchange
notes being redeemed; and
o the applicable Make-Whole Amount, as defined in
"Description of the Notes--Optional Redemption,"
for each series of exchange notes being
redeemed,
plus, in each case, accrued interest on such
exchange notes to the redemption date.
Book-entry .................. The exchange notes will be issued in book-entry
form and will be represented by permanent global
certificates deposited with, or on behalf of, DTC
and registered in the name of Cede & Co., DTC's
nominee. Beneficial interests in any of the
exchange notes will be shown on, and transfers
will be effected only through, records maintained
by DTC or its nominee, and such interests may not
be exchanged for certificated exchange notes,
except in limited circumstances. See "Book-Entry;
Delivery and Form."
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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables set forth our summary historical consolidated
financial data. The summary financial data is intended only as a convenient
reference. The income statement data and balance sheet data as of and for each
of the fiscal years in the three year period ended December 28, 2002 have been
derived from our audited consolidated financial statements, which have been
audited by Ernst & Young LLP. The tables should be read in conjunction with our
historical consolidated financial data incorporated in this prospectus by
reference.
Fiscal Year Ended Three Months Ended
--------------------------------------------- ---------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 30, MARCH 29, MARCH 30,
2002 2001 2000 2003 2002
----------- ----------- ----------- ----------- -----------
(unaudited)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net sales.............................. $ 2,593.0 $ 2,606.6 $ 2,730.6 $ 666.2 $ 616.7
Costs and expenses
Cost of sales........................ 1,757.2 1,701.3 1,751.5 447.7 401.2
Selling, general and administrative.. 547.2 575.9 638.3 172.3 135.1
Interest-net......................... 24.5 25.6 27.1 8.0 6.4
Other-net............................ (8.4) (5.3) 20.0 7.6 2.1
Restructuring charges and asset
impairments........................ -- 72.4 -- 3.1 --
----------- ----------- ----------- ----------- -----------
Total costs and expenses............... 2,320.5 2,369.9 2,436.9 638.7 544.8
----------- ----------- ----------- ----------- -----------
Earnings before income taxes........... 272.5 236.7 293.7 27.5 71.9
Income taxes........................... 87.5 78.4 99.3 8.3 23.0
----------- ----------- ----------- ----------- -----------
Net earnings........................... 185.0 158.3 194.4 19.2 48.9
=========== =========== =========== =========== ===========
Earnings per share:
Basic.................................. $ 2.14 $ 1.85 $ 2.22 $ 0.22 $ 0.57
Diluted................................ 2.10 1.81 2.22 0.22 0.56
OTHER FINANCIAL DATA:
Depreciation and amortization ......... $ 71.2 $ 81.8 $ 82.1 $ 22.6 $ 16.7
EBITDA(1).............................. 368.2 344.1 402.9 58.1 95.0
----------
(1) EBITDA represents earnings before interest, taxes, depreciation and
amortization, a measurement used by management to measure operating performance.
EBITDA is not a recognized term under generally accepted accounting principles
and does not purport to be an alternative to operating income as an indicator of
operating performance or to cash flows from operating activities as a measure of
liquidity. Additionally, EBITDA is not intended to be a measure of free cash
flow for management's discretionary use, as it does not consider certain cash
requirements such as interest payments, debt service requirements, tax payments
or capital expenditure requirements.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the fiscal years ended 1998, 1999,
2000, 2001 and 2002 are 5.7x, 5.9x, 6.9x, 6.3x and 7.7x, respectively. The ratio
of earnings to fixed charges for the quarterly period ended March 29, 2003 is
2.9x. The ratio of earnings to fixed charges is calculated on a total enterprise
basis. Earnings represent earnings before income taxes and fixed charges. Fixed
charges represent interest incurred plus that portion of rental expense deemed
to be interest.
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THE STANLEY WORKS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 29, 2003 AND DECEMBER 28, 2002
(DOLLARS IN MILLIONS)
2003 2002
-------- --------
Assets:
Current assets:
Cash and cash equivalents........................... $ 156.0 $ 121.7
Accounts and notes receivable....................... 521.6 548.0
Inventories......................................... 438.1 414.7
Other current assets................................ 110.5 106.0
-------- --------
Total current assets................................... 1,226.2 1,190.4
Property, plant and equipment, net.................. 481.0 494.8
Goodwill and other intangibles...................... 558.6 544.9
Other assets........................................ 173.4 188.1
-------- --------
Total assets........................................ $2,439.2 $2,418.2
======== ========
Liabilities and shareowners' equity:
Current liabilities:
Short-term borrowings............................... $ 169.8 $ 140.1
Current maturities of long-term debt................ 28.9 9.5
Accounts payable.................................... 250.0 260.3
Accrued expenses.................................... 273.9 271.0
-------- --------
Total current liabilities.............................. 722.6 680.9
Long-term debt......................................... 546.6 564.3
Other liabilities...................................... 185.1 189.2
Shareowners' equity:
Common stock........................................ 230.9 230.9
Retained earnings................................... 1,192.4 1,244.6
Accumulated other comprehensive loss................ (125.6) (123.4)
ESOP debt........................................... (179.1) (180.8)
-------- --------
1,118.6 1,171.3
Less: cost of common stock in treasury.............. 133.7 187.5
-------- --------
Total shareowners' equity.............................. 984.9 983.8
-------- --------
Total liabilities and shareowners' equity.............. $2,439.2 $2,418.2
======== ========
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RISK FACTORS
Participating in the exchange offer involves a high degree of risk. You
should carefully consider the risk factors set forth below, as well as other
information appearing elsewhere in this prospectus and the documents
incorporated in this prospectus by reference, before tendering your initial
notes in exchange for exchange notes.
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE
CONSEQUENCES
Holders of initial notes who do not exchange their initial notes for
exchange notes pursuant to the exchange offer will continue to be subject to the
restrictions on transfer of the initial notes as a consequence of the issuance
of the initial notes pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. In general,
initial notes may not be offered or sold, unless registered under the Securities
Act of 1933, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. We do not
anticipate that we will register the initial notes under the Securities Act.
THERE WILL BE NO PUBLIC MARKET FOR THE EXCHANGE NOTES AND YOUR ABILITY
TO TRANSFER THEM IS LIMITED
The exchange notes are a new issue of securities with no existing
trading market. We do not intend to have the notes listed on a national
securities exchange. In addition, while the initial purchasers of the initial
notes have advised us that they currently intend to make a market in the
exchange notes, they are not obligated to do so, and may discontinue market
making activities at any time without notice. Accordingly, we cannot assure you
as to the liquidity of the market for the exchange notes or the prices at which
you may be able to sell the exchange notes.
-8-
USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement we entered into with the initial purchasers of the
initial notes. We will not receive any cash proceeds from the issuance of the
exchange notes in the exchange offer.
We received net proceeds of approximately $347 million from the private
offering of the initial notes, after application of offering discounts and
underwriters fees. We used approximately $316 million of the net proceeds to
finance our acquisition on November 25, 2002 of 100% of the outstanding common
shares of Best Lock Corporation dba Best Access Systems. The balance of the net
proceeds related to the fees and expenses associated with the acquisition of
Best Lock, other fees and expenses relating to the offering of the initial
notes, and for general corporate purposes, including the financing of our
operations and the repayment of short-term indebtedness.
The payment of our short-term indebtedness included repayment of a
portion of our U.S. commercial paper indebtedness issued at varying rates and
a portion of our 7 3/8% Notes that became due December 2002 in the principal
amount of $100 million.
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DESCRIPTION OF THE NOTES
The initial notes due 2007 and the initial notes due 2012 were issued,
and the exchange notes due 2007 and the exchange notes due 2012 will be issued,
as separate series of securities under an indenture dated as of November 1,
2002, between us and JPMorgan Chase Bank, as trustee. Unless otherwise
specified, as used in this section "notes" shall mean both the exchange notes
due 2007 and the exchange notes due 2012.
The indenture provides that we will have the ability to issue
securities with terms different than those of the notes, to "reopen" a previous
issue of a series of securities (including the notes) and to issue additional
securities of any series (including the notes). Copies of the indenture and the
form of the notes are available from us upon request. The following summary of
certain provisions of the indenture and the notes does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the indenture, including those made part of the indenture
by reference to the Trust Indenture Act of 1939, as in effect on the date of the
indenture, and the definitions in the indenture of certain terms. The notes are
subject to all such terms, and holders of notes are referred to the indenture
and the Trust Indenture Act for a statement of those terms.
Because the following is only a summary, it does not contain all
information that you may find useful. For further information you should read
the notes and the indenture. Capitalized terms used and not defined in this
summary have the meaning ascribed to such terms in the indenture.
GENERAL
The notes will have the following basic terms:
o the notes will be our unsecured obligations and will rank equally with
all of our other unsecured and unsubordinated indebtedness;
o the notes due 2007 will accrue interest at a rate of 3 1/2% per year
and will mature on November 1, 2007;
o the notes due 2012 will accrue interest at a rate of 4 9/10% per year
and will mature on November 1, 2012;
o interest will accrue on the notes (excluding the maturity date) from
the most recent interest payment date to or for which interest has been
paid or duly provided (or if no interest has been paid or duly provided
for, from the issue date of the notes), payable semi-annually in
arrears on May 1 and November 1 of each year, beginning on November 1,
2003; and
o we may redeem the notes at any time at our option as described below
under "-Optional Redemption."
Interest will be paid to the person in whose name a note is registered
at the close of business on the April 15 or October 15, as the case may be,
immediately preceding the relevant interest payment date. Interest on the notes
will be computed on the basis of a 360-day year composed of twelve 30-day
months.
If any interest payment date, maturity date or redemption date of a
note falls on a day that is not a business day, the required payment of
principal and interest will be made on the next succeeding business day as if
made on the date that the payment was due and no interest will accrue on that
payment for the period from and after that interest payment date, maturity date
or redemption date, as the case may be, to the date of that payment on the next
succeeding business day. The term "business day" means, with respect to any
note, any day other than a Saturday, a Sunday or a day on which banking
institutions or trust companies in The City of New York are authorized or
required by law, regulation or executive order to close.
The notes will be issued only in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000 above that amount.
The notes will be represented by one or more global notes registered in the name
of a nominee of DTC.
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RANKING
Payment of the principal and interest on the notes will rank equally
with all our other unsecured and unsubordinated indebtedness. Since our
operations are partially conducted through our subsidiaries, the cash flow and
the consequent ability to service our indebtedness, including the notes, is
partially dependent upon the earnings of our subsidiaries and the distribution
of those earnings or upon the payments of funds by those subsidiaries to us. Our
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the notes or to make
funds available to us, whether by dividends, loans or other payments. In
addition, the payment of dividends and the making of loans and advances to us by
our subsidiaries may be subject to contractual or statutory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Any right we may have to receive assets of any of our
subsidiaries upon their liquidation or reorganization (and the consequent right
of the holders of the notes to participate in those assets) will be effectively
subordinated to the claims of such subsidiary's creditors, including trade
creditors.
OPTIONAL REDEMPTION
The Stanley Works (the "Company") may redeem any of the notes in whole
or in part, at its option, at any time prior to their maturity, at a redemption
price equal to the greater of (i) 100% of the principal amount of such notes and
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of interest accrued to the date of
redemption) discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at, in each case, the Treasury
Rate plus 15 basis points for the notes due 2007 (the "2007 Make-Whole Amount")
and 20 basis points for the notes due 2012 (the "2012 Make-Whole Amount;" and,
together with the 2007 Make-Whole Amount, the "Make-Whole Amount"), plus, in
each case, accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semi-annual equivalent yield to maturity or interpolated
(on a day count basis) of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
or securities selected by an Independent Investment Banker as having an actual
or interpolated maturity comparable to the remaining term of the notes to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of a comparable maturity to the remaining term of such notes.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotation or (ii) if the Company obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Smith Barney Inc. or their affiliates which are
primary United States government securities dealers, and their respective
successors, and three other firms which are primary United States government
securities dealers that the Company selects; provided, however, that if any of
the foregoing shall cease to be a primary United States government securities
dealer in The City of New York (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 3:30 p.m. New York
time on the third business day preceding such redemption date.
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The Company will mail notice of any redemption at least 30 days, but
not more than 60 days, before the redemption date to each holder of notes to be
redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the notes or portion
thereof called for redemption.
CERTAIN COVENANTS
Except as set forth below or in any indenture supplemental to the
indenture or in a board resolution of the Company establishing a series of
securities under the indenture, the indenture does not:
o limit the amount of indebtedness or lease obligations that may be
incurred by us and our subsidiaries; or
o contain provisions which would give holders of the notes the right to
require us to repurchase their notes in the event of a decline in the
credit rating of our debt securities resulting from a change in
control, recapitalization or similar restructuring or in the case of
any other event.
LIMITATION ON LIENS
The indenture provides that if the Company or any Restricted Subsidiary
shall issue, assume or guarantee any evidence of indebtedness for money borrowed
("Indebtedness") secured by a mortgage, security interest, pledge or lien
("Mortgage") on any Principal Property, or shares of stock or Indebtedness of
any Restricted Subsidiary, the Company will secure or cause such Restricted
Subsidiary to secure any debt securities issued under the indenture (the
"Securities") equally and ratably with such secured Indebtedness, unless the
aggregate amount of all such secured Indebtedness, together with all
Attributable Debt outstanding pursuant to the first paragraph of the "Limitation
on Sale and Lease-back Transactions" covenant described below, would not exceed
10% of Consolidated Net Worth.
Such limitation will not apply to Indebtedness secured by (a) Mortgages
on property of any corporation existing at the time such corporation becomes a
Restricted Subsidiary, (b) Mortgages on any property existing at the date of the
indenture or at the time of acquisition by the Company or a Restricted
Subsidiary (including acquisition through merger or consolidation), (c)
Mortgages securing Indebtedness of a Restricted Subsidiary to the Company or to
another Restricted Subsidiary, (d) purchase money and construction Mortgages
entered into within specified time limits, (e) mechanics' liens, tax liens,
liens in favor of any governmental body to secure progress, advance or other
payments or the acquisition of real or personal property from any governmental
body pursuant to contract or provision of statute, any other liens, charges and
encumbrances incidental to construction, conduct of business or ownership of
property of the Company or any Restricted Subsidiary which were not incurred in
connection with borrowing money, obtaining advances or credits or the
acquisition of property and in the aggregate do not materially impair use of any
Principal Property or which are being contested in good faith or (f) any
extension, renewal or replacement of any of the aforementioned Mortgages not in
excess of the principal amount of such Indebtedness plus the fee incurred in
connection with such transaction.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
The indenture provides that neither the Company nor any Restricted
Subsidiary may enter into any sale and lease-back transaction involving any
Principal Property unless the aggregate amount of all Attributable Debt with
respect to such transactions, together with all Indebtedness outstanding
pursuant to the first paragraph of the "Limitation on Liens" covenant described
above, would not exceed 10% of Consolidated Net Worth.
Such limitation will not apply to any sale and lease-back transaction
if (a) the lease is for a period of not more than three years, (b) the
purchaser's commitment is obtained within a specified period after the
acquisition, construction or placing in service of the Principal Property, (c)
the rent payable
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pursuant to such lease is to be reimbursed under a contract with the United
States Government or instrumentality or agency thereof, (d) the transaction is
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries, (e) the Company or such Restricted Subsidiary would be entitled as
described in "Limitation on Liens," above, to mortgage such Principal Property
without equally and ratably securing the Securities, or (f) the Company or such
Restricted Subsidiary, within 180 days after the effective date of the
transaction, applies to the retirement of Securities or other Indebtedness of
the Company or a Restricted Subsidiary an amount equal to (A) either (i) the
lesser of the net proceeds of the sale or transfer or the book value at the date
of such sale or transfer of the Principal Property leased, if the transaction is
for cash, or (ii) the fair market value of the Principal Property leased, if the
transaction is for other than cash, minus (B) the amount equal to the principal
amount of Securities delivered to the trustee within such 180 days for
cancellation and the principal amount of Indebtedness voluntarily retired
(including any premium or fee paid in connection therewith) within such 180
days.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may consolidate or merge with or into any other
corporation, and the Company may sell or transfer all or substantially all of
its assets to another corporation, provided, among other things, that (a) the
corporation formed by or resulting from any such consolidation or merger or the
transferee of such assets shall be a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia and
shall expressly assume by supplemental indenture payment of the principal of and
premium, if any, and interest, if any, on the Securities and the performance and
observance of the indenture and (b) the Company or such successor corporation
shall not immediately thereafter be in default under the indenture.
DEFINITION OF CERTAIN TERMS
"Restricted Subsidiary" means a Subsidiary (i) substantially all the
property of which is located, or substantially all the business of which is
carried on, within the United States, and (ii) which owns a Principal Property;
provided, however, that the term shall not include any Subsidiary which is
solely or primarily engaged in the business of providing or obtaining financing
for the sale or lease of products sold or leased by the Company or any
Subsidiary or which is primarily engaged in the business of a finance company
either on a secured or an unsecured basis.
"Principal Property" means all real property and tangible personal
property constituting a manufacturing plant located within the United States
owned by the Company or a Restricted Subsidiary, exclusive of (i) motor
vehicles, mobile materials-handling equipment and other rolling stock, (ii)
office furnishings and equipment, information and electronic data processing
equipment, (iii) any property financed through obligations issued by a state or
possession of the United States, or any political subdivision or instrumentality
of the foregoing, on which the interest is not, in the opinion of tax counsel of
recognized standing or in accordance with a ruling issued by the Internal
Revenue Service, includable in gross income of the holder by reason of Section
103(a) of the Internal Revenue Code (or any successor to such provision) as in
effect at the time of the issuance of such obligations, (iv) any real property
held for development or sale, or (v) any property the gross book value of which
(including related land and improvements thereon and all machinery and equipment
included therein without deduction of any depreciation reserves) is less than
10% of Consolidated Net Worth or which the board of directors of the Company
determines is not material to the operation of the business of the Company and
its Subsidiaries taken as a whole.
"Consolidated Net Worth" means the excess over current liabilities of
all assets properly appearing on a consolidated balance sheet of the Company and
its consolidated Subsidiaries after deducting the minority interests of others
in Subsidiaries. A Subsidiary is defined to mean any corporation of which at
least a majority of all outstanding stock having ordinary voting power in the
election of directors of such corporation is at the time, directly or
indirectly, owned by the Company or by one or more Subsidiaries of the Company
or by the Company and one or more Subsidiaries.
"Attributable Debt" in respect of any Sale and Lease-Back Transaction
means, as of the time of the determination, the lesser of (i) the sale price of
the Principal Property so leased multiplied by a
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fraction the numerator of which is the remaining portion of the base term of the
lease included in such transaction and the denominator of which is the base term
of such lease, and (ii) the total obligation (discounted to present value at the
implicit interest factor, determined in accordance with generally accepted
financial practice, included in the rental payments or, if such interest factor
cannot readily be determined, at a rate of interest of 10% per annum, compounded
semi-annually) of the lessee for rental payments (other than amounts required to
be paid on account of property taxes as well as maintenance, repairs, insurance,
water rates and other items which do not constitute payments for property
rights) during the remaining portion of the base term of lease included in such
transaction.
EVENTS OF DEFAULT
The following events are defined in the indenture as "Events of
Default" with respect to a series of Securities:
(1) default in the payment of any installment of interest on any
Securities in such series for 30 days after becoming due;
(2) default in the payment of principal or premium, if any, of
any Securities in such series when due;
(3) default in the performance of any other covenant for 90 days
after notice;
(4) involuntary acceleration of the maturity of other
Indebtedness of the Company in excess of $10 million for
money borrowed which acceleration shall not be rescinded or
annulled, or which Indebtedness shall not be discharged,
within 10 days after notice;
(5) entry of certain court orders which would require the Company
to make payments exceeding $25 million and where 60 days have
passed since the entry of the order without it having been
satisfied or stayed;
(6) certain events of bankruptcy, insolvency or reorganization;
and
(7) any other Event of Default that may be set forth in the
supplemental indenture or board resolution with respect to a
particular series of Securities.
If an Event of Default shall occur and be continuing with respect to a
series of Securities, either the trustee or the holders of at least 25% in
principal amount of the outstanding Securities (or such lesser amount as may be
provided for in the Securities of such series) of such series may declare the
entire principal amount of all the Securities of such series to be due and
payable.
The indenture provides that the trustee shall, within 90 days after the
occurrence of default with respect to a particular series of Securities, give
the holders of the Securities of such series notice of such default known to it
(the term default to mean the events specified above without grace periods);
provided that, except in the case of default in the payment of principal or
premium, if any, or interest, if any, on any of the Securities of such series,
the trustee shall be protected in withholding such notice if it in good faith
determines the withholding of such notice is in the interest of the holders of
the Securities of such series.
The Company is required to furnish the trustee annually a statement by
certain officers of the Company to the effect that to the best of their
knowledge the Company is not in default in the fulfillment of any of its
obligations under the indenture or, if there has been a default in the
fulfillment of any such obligation, specifying each such default.
No holder of any Security of any particular series shall have any right
to institute any judicial or other proceeding with respect to the indenture, or
for the appointment of a receiver or trustee, or for any other remedy unless:
(1) an Event of Default shall have occurred and be continuing and
such holder shall have given the trustee prior written notice
of such continuing Event of Default;
(2) the holders of not less than 25% of the outstanding principal
amount of Securities of a particular series shall have
requested the trustee for such series to institute
proceedings in respect of such Event of Default;
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(3) the trustee shall have been offered reasonable indemnity
against its costs, expenses and liabilities in complying with
such request;
(4) the trustee shall have failed to institute proceedings 60
days after the receipt of such notice, request and offer of
indemnity; and
(5) no direction inconsistent with such written request shall
have been given for 60 days by the holders of a majority in
principal amount of the outstanding Securities of such
series.
The holders of a majority in principal amount of a particular series of
Securities outstanding will have the right, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee with respect to such series or exercising any trust or
power conferred to the trustee, and to waive certain defaults. The indenture
provides that in case an Event of Default shall occur and be continuing, the
trustee shall exercise such of its rights and powers under the indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
Subject to such provisions, the trustee will be under no obligation to exercise
any of its rights or powers under the indenture at the request of any of the
holders of the Securities unless they shall have offered to the trustee security
or indemnity reasonably satisfactory to the trustee against the costs, expenses
and liabilities which might be incurred by it in compliance with such request.
MODIFICATION AND WAIVERS
Modification and amendments of the indenture may be made by the Company
and the trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the holder of each outstanding Security affected thereby, (a)
change the stated maturity of the principal of, or any premium or installment of
interest on, or any additional amounts with respect to, any Security, (b) reduce
the principal amount of, or the rate (or modify the calculation of such rate) of
interest on, or any additional amounts with respect to, or any premium payable
upon the redemption of, any Security, (c) change the obligation of the Company
to pay additional amounts with respect to any Security or reduce the amount of
the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof or the amount
thereof provable in bankruptcy, (d) change the redemption provisions of any
Security or adversely affect the right of repayment at the option of any holder
of any Security, (e) change the place of payment or the coin or currency in
which the principal of, any premium or interest on or any additional amounts
with respect to any Security is payable, (f) impair the right to institute suit
for the enforcement of any payment on or after the stated maturity of any
Security, (g) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose holders is required in order to take certain
actions, (h) reduce the requirements for quorum or voting by holders of
Securities in Section 15.4 of the indenture, (i) modify any of the provisions in
the indenture regarding the waiver of past defaults and the waiver of certain
covenants by the holders of Securities except to increase any percentage vote
required or to provide that certain other provisions of the indenture cannot be
modified or waived without the consent of the holder of each Security affected
thereby, (j) make any change that adversely affects the right to convert or
exchange any Security into or for common stock of the Company or other
securities in accordance with its terms or (k) modify any of the above
provisions.
The holders of at least a majority in aggregate principal amount of the
Securities of any series may, on behalf of the holders of all Securities of such
series, waive compliance by the Company with certain restrictive provisions of
the indenture. The holders of not less than a majority in aggregate principal
amount of the outstanding Securities of any series may, on behalf of the holders
of all Securities of such series, waive any past default and its consequences
under the indenture with respect to the Securities of such series, except a
default (a) in the payment of principal of (or premium, if any), any interest on
or any additional amounts with respect to Securities of such series or (b) in
respect of a covenant or provision of the indenture that cannot be modified or
amended without the consent of the holder of each Security of any series.
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Under the indenture, the Company will be required to furnish the
trustee annually a statement as to performance by the Company of certain of its
obligations under the indenture and as to any default in such performance. The
Company is also required to deliver to the trustee, within five days after
occurrence thereof, written notice of any Event of Default or any event which
after notice or lapse of time or both would constitute an Event of Default.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series
of Securities that have not already been delivered to the trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
depositing with the trustee, in trust, funds in U.S. dollars or in the foreign
currency in which such Securities are payable in an amount sufficient to pay the
entire indebtedness on such Securities with respect to principal (and premium
and additional amounts, if any) and interest to the date of such deposit (if
such Securities have become due and payable) or to the maturity thereof or the
date of redemption of such securities, as the case may be.
The indenture provides that, unless the provisions of Section 4.2
thereof are made inapplicable to the Securities of or within any series pursuant
to Section 3.1 thereof, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Securities (except
for, among other things, the obligation to pay additional amounts, if any, upon
the occurrence of certain events of taxation, assessment or governmental charge
with respect to payments on such Securities and other obligations to register
the transfer or exchange of such Securities, to replace temporary or mutilated,
destroyed, lost or stolen Securities, to maintain an office or agency with
respect to such Securities and to hold moneys for payment in trust)
("defeasance") or (b) to be released from its obligations with respect to such
Securities under the covenants described under "Limitation on Liens" and
"Limitation on Sale and Lease-back Transactions" above or, if provided pursuant
to Section 3.1 of the indenture, its obligations with-respect to any other
covenant, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Securities ("covenant
defeasance"). Defeasance or covenant defeasance, as the case may be, shall be
conditioned upon, among other things, the irrevocable deposit by the Company
with the trustee, in trust, of an amount in U.S. dollars or in the foreign
currency in which such Securities are payable at stated maturity, or government
obligations, or both, applicable to such Securities which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
interest on such Securities on the scheduled due dates therefor.
In the event the Company effects covenant defeasance with respect to
any Securities and such Securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to Sections 10.5 and 10.6 of the indenture (which Sections would no longer be
applicable to such Securities after such covenant defeasance) or with respect to
any other covenant as to which there has been covenant defeasance, the amount in
such foreign currency in which such Securities are payable, and government
obligations on deposit with the trustee, will be sufficient to pay amounts due
on such Securities at the time of the stated maturity but may not be sufficient
to pay amounts due on such Securities at the time of the acceleration resulting
from such Event of Default. However, the Company would remain liable to make
payment of such amounts due at the time of acceleration.
GOVERNING LAW
The indenture is, and the notes will be, governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The trustee is permitted to engage in other transactions with the
Company and its subsidiaries from time to time, provided that if the trustee
acquires any conflicting interest it must eliminate such conflict upon the
occurrence of an Event of Default, or else resign.
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BOOK-ENTRY; DELIVERY AND FORM
Principal and interest payments on global securities registered in the
name of DTC's nominee will be made in immediate available funds to DTC's nominee
as the registered owner of the global securities. We and the trustee will treat
DTC's nominee as the owner of the global securities for all other purposes as
well. Accordingly, we, the trustee, any paying agent and the initial purchasers
will have no direct responsibility or liability for any aspect of the records
relating to payments made on account of beneficial interests in the global
securities or for maintaining, supervising or reviewing any records relating to
these beneficial interests. It is DTC's current practice, upon receipt of any
payment of principal or interest, to credit direct participants' accounts on the
payment date according to their respective holdings of beneficial interests in
the global securities. These payments will be the responsibility of the direct
and indirect participants and not of DTC, the trustee or us.
So long as DTC or its nominee is the registered owner or holder of the
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global security for the
purposes of:
o receiving payment on the notes;
o receiving notices; and
o for all other purposes under the Indenture and the notes.
Beneficial interests in the notes will be evidenced only by, and
transfers of the notes will be effected only through, records maintained by DTC
and its participants.
Except as described below, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of certificated notes
in definitive form and will not be considered the holders of the global security
for any purposes under the Indenture. Accordingly, each person owning a
beneficial interest in a global security must rely on the procedures of DTC.
And, if that person is not a participant, the person must rely on the procedures
of the participant through which that person owns its interest, to exercise any
rights of a holder under the Indenture. Under existing industry practices, if we
request any action of holders or an owner of a beneficial interest in a global
security desires to take any action under the Indenture, DTC would authorize the
participants holding the relevant beneficial interest to take that action. The
participants then would authorize beneficial owners owning through the
participants to take the action or would otherwise act upon the instructions of
beneficial owners owning through them.
DTC has advised us that it will take any action permitted to be taken
by a holder of notes only at the direction of one or more participants to whose
account with DTC interests in the global security are credited. Further, DTC
will take action only as to the portion of the aggregate principal amount at
maturity of the notes as to which the participant or participants has or have
given the direction.
Although DTC, the Euroclear System ("Euroclear") and Clearstream
Banking, S.A. of Luxembourg ("Clearstream") have agreed to the procedures
described above in order to facilitate transfers of interests in global
securities among participants in DTC, Euroclear and Clearstream, they are under
no obligation to perform these procedures, and the procedures may be
discontinued at any time. None of us, the trustee, any agent of the initial
purchasers or ours will have any responsibility for the performance by DTC,
Euroclear and Clearstream or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
DTC has provided the following information to us. DTC is a:
o limited-purpose trust company organized under the New York Banking Law;
o banking organization within the meaning of the New York Banking Law;
o member of the U.S. Federal Reserve System;
o clearing corporation within the meaning of the New York Uniform
Commercial Code; and
o clearing agency registered under the provisions of Section 17A of the
Securities Exchange Act.
-17-
CERTIFICATED NOTES
Except as otherwise provided in or pursuant to the Indenture, notes
represented by a global security are exchangeable for certificated notes only
if:
o DTC notifies us that it is unwilling, unable or ineligible to continue
as depository and a successor depository is not appointed by us within
90 days;
o we execute and deliver to the Trustee a statement that such global
security shall be so exchangeable; or
o an event of default or an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default relating
to the notes represented by the global security has occurred and is
continuing.
Any global security that is exchangeable for certificated notes in
accordance with the preceding sentence will be transferred to, and registered
and exchanged for, certificated notes in authorized denominations and registered
in the names as DTC or its nominee may direct. However, a global security is
only exchangeable for a global security of like denomination. If a global
security becomes exchangeable for certificated notes:
o certificated notes will be issued only in fully registered form in
denominations of $5,000 or integral multiples of $5,000;
o payment of principal, premium, if any, and interest on the certificated
notes will be payable, and the transfer of the certificated notes will
be registrable, at the office or agency we maintain for these purposes;
and
o no service charge will be made for any issuance of the certificated
notes, although the issuers may require payment of a sum sufficient to
cover any tax or governmental charge imposed in connection with the
issuance.
Transfers between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes, cross-market transfers between the participants in DTC, on the one hand,
and Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparts in such system in
accordance with the rules and procedures and within the established deadlines,
Brussels time, of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant global notes in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear
or Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Clearstream participant, during the securities
settlement processing day, which must be a business day for Euroclear and
Clearstream, immediately following the settlement date of DTC. Cash received in
Euroclear or Clearstream as a result of sales of interest in a global security
by or through a Euroclear or Clearstream participant to a participant in DTC
will be received with value on the settlement date of DTC but will be available
in the relevant Euroclear or Clearstream cash account only as of the business
day for Euroclear or Clearstream following DTC's settlement date.
-18-
EXCHANGE OFFER
REGISTRATION RIGHTS AGREEMENT
The initial notes were originally issued on November 1, 2002 to Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., BNP
Paribas Securities Corp. and Fleet Securities, Inc., pursuant to a purchase
agreement dated October 29, 2002. The initial purchasers subsequently resold the
initial notes to qualified institutional buyers in reliance on Rule 144A under
the Securities Act, and outside the United States in accordance with Regulation
S under the Securities Act. We are parties to a registration rights agreement
with the initial purchasers entered into as a condition to the closing under the
purchase agreement. Pursuant to the registration rights agreement, we agreed,
for the benefit of the holders of the initial notes, at our cost to:
o file an exchange offer registration statement on or before April 30,
2003 with the Securities and Exchange Commission with respect to the
exchange offer for the initial notes; and
o use our best efforts to cause the exchange offer registration statement
to be declared effective under the Securities Act by July 29, 2003.
Upon the exchange offer registration statement being declared
effective, we will offer the exchange notes due 2007 in exchange for surrender
of the initial notes due 2007 and the exchange notes due 2012 in exchange for
surrender of the initial notes due 2012. We will keep the exchange offer open
for not less than 30 calendar days, or longer if required by applicable law,
after the date on which notice of the exchange offer is mailed to the holders of
the initial notes. For each initial note due 2007 or initial note due 2012
surrendered to us pursuant to the exchange offer, the holder of such initial
note will receive an exchange note due 2007 or exchange note due 2012, as the
case may be, having a principal amount equal to that of the surrendered initial
note.
Under existing interpretations of the staff of the Securities and
Exchange Commission contained in several no-action letters to third parties, we
believe that the exchange notes will in general be freely tradeable after the
exchange offer without further registration under the Securities Act. However,
any purchaser of initial notes who is an "affiliate" of ours or who intends to
participate in the exchange offer for the purpose of distributing the exchange
notes:
o will not be able to rely on these interpretations of the staff of the
Securities and Exchange Commission;
o will not be able to tender its initial notes in the exchange offer; and
o must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or transfer of the
initial notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the registration rights
agreement, each holder accepting the exchange offer is required to represent to
us in the letter of transmittal that:
o the holder is not an "affiliate" of ours within the meaning of Rule 405
under the Securities Act;
o the holder or any such other person is not engaged in, does not intend
to engage in, and has no arrangement or understanding with any person
to participate in, a distribution of the exchange notes; and
o it is acquiring the exchange notes in the ordinary course of business.
Each holder participating in the exchange offer for the purpose of
distributing the exchange notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale of the
exchange notes and cannot rely on those no-action letters.
For a description of the procedures for resales by broker-dealers, see
"Plan of Distribution."
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SHELF REGISTRATION STATEMENT
If applicable interpretations of the Commission do not permit us to
effect the exchange of the initial notes for the exchange notes, or, under
certain other circumstances, including if for any other reason the exchange
offer registration statement is not declared effective by July 29, 2003, we
will:
o as promptly as practicable, file a shelf registration statement
covering resales of the initial notes;
o use our best efforts to cause the shelf registration statement to be
declared effective under the Securities Act by August 28, 2003; and
o use our reasonable efforts to keep effective the shelf registration
statement until the earlier of two years after its effective date or
until all of the initial notes covered by the shelf registration
statement have been sold or otherwise cease to be registrable
securities within the meaning of the registration rights agreement.
We will, in the event of the filing of a shelf registration statement,
provide to each holder of the notes copies of the prospectus which is a part of
the shelf registration statement and notify each such holder when the shelf
registration statement for the notes has become effective. A holder of notes
that sells such notes pursuant to the shelf registration statement generally
will be required to be named as a selling securityholder in the related
prospectus and to deliver a prospectus to purchasers, will be subject to certain
of the civil liability provisions under the Securities Act in connection with
such sales and will be bound by the provisions of the registration rights
agreement which are applicable to such a holder (including certain
indemnification obligations). In addition, each holder of the notes will be
required to deliver information to be used in connection with the shelf
registration statement and to provide comments on the shelf registration
statement in order to have their notes included in the shelf registration
statement and to benefit from the provisions regarding the increase in the
interest rate borne by the notes described in the succeeding paragraph.
In the event that either (a) the exchange offer registration statement
is not filed with the SEC on or prior to April 30, 2003, (b) the exchange offer
registration statement is not declared effective on or prior to July 29, 2003 or
(c) the exchange offer is not consummated or a shelf registration statement with
respect to the notes is not declared effective on or prior to August 28, 2003,
the interest rate borne by the notes shall be increased by 0.25% per year with
respect to the first 90-day period (or portion thereof) following April 30, 2003
in the case of clause (a) above, July 29, 2003 in the case of clause (b) above
and August 28, 2003 in the case of clause (c) above. The additional interest
payable as described in the immediately preceding sentence will increase by an
additional 0.25% per year for each subsequent 90-day period (or portion
thereof), up to a maximum amount of 0.50% per year. Upon (i) the filing of the
exchange offer registration statement after April 30, 2003 described in clause
(a) above, (ii) the effectiveness of the exchange offer registration statement
after July 29, 2003 described in clause (b) above or (iii) the consummation of
the exchange offer or the effectiveness of the shelf registration statement,
after August 28, 2003 described in clause (c) above, the interest rate on the
notes from the date of such filing, effectiveness or consummation, as the case
may be, will be reduced to the original interest rate set forth on the cover
page of this prospectus.
This summary of certain provisions of the registration rights agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by, all the provisions of the registration rights agreement, a copy of
which is filed as an exhibit to the registration statement of which this
prospectus is a part.
Following consummation of the exchange offer, holders of initial notes
who are eligible to participate in the exchange offer but who do not tender
their initial notes will not have any additional registration rights and such
initial notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such initial notes could be
adversely affected.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The exchange offer will expire at 5:00 p.m., New York City time, on
August 25, 2003, unless we extend it in our reasonable discretion. The
expiration date of the exchange offer will be at least 30
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calendar days after we mail notice of the exchange offer to holders as provided
in Rule 14e-1(a) under the Securities Exchange Act of 1934 and the registration
rights agreement.
To extend the expiration date, we will need to notify the exchange
agent of any extension by oral, promptly confirmed in writing, or written
notice. We will also need to notify the holders of the initial notes by mailing
an announcement or by means of a press release or other public announcement
communicated, unless otherwise required by applicable law or regulation, before
9:00 A.M., New York City time, on the next business day after the previously
scheduled expiration date.
We expressly reserve the right:
o to delay acceptance of any initial notes, to extend the exchange offer
or to terminate the exchange offer and not permit acceptance of initial
notes not previously accepted if any of the conditions described below
under "--Conditions to the Exchange Offer" have occurred and have not
been waived by us, if permitted to be waived, by giving oral or written
notice of the delay, extension or termination to the exchange agent; or
o to amend the terms of the exchange offer in any manner.
If we amend the exchange offer in a manner determined by us to
constitute a material change, we will promptly disclose the amendment in a
manner reasonably calculated to inform the holders of the initial notes of the
amendment including providing public announcement, or giving oral or written
notice to the holders of the initial notes. A material change in the terms of
the exchange offer could include a change in the timing of the exchange offer, a
change in the exchange agent and other similar changes in the terms of the
exchange offer. If any material change is made to the terms of the exchange
offer, we will disclose the change by means of a post-effective amendment to the
registration statement of which this prospectus is a part and will distribute an
amended or supplemented prospectus to each registered holder of initial notes.
In addition, we will also extend the exchange offer for an additional five to
ten business days as required by the Securities Exchange Act, depending on the
significance of the amendment, if the exchange offer would otherwise expire
during that period. Any delay in acceptance, extension, termination or amendment
will be followed as promptly as practicable by oral, promptly confirmed in
writing, or written notice to the exchange agent.
PROCEDURES FOR TENDERING INITIAL NOTES
To tender your initial notes in this exchange offer, you must use one
of the three alternative procedures described below:
Regular Delivery Procedure: Complete, sign and date the letter of transmittal,
or a facsimile of the letter of transmittal. Have
the signatures on the letter of transmittal
guaranteed if required by the letter of
transmittal. Mail or otherwise deliver the letter
of transmittal or the facsimile, together with the
certificates representing your initial notes being
tendered and any other required documents, to the
exchange agent on or before 5:00 p.m., New York
City time, on the expiration date.
Book-entry
Delivery Procedure: Send a timely confirmation of a book-entry
transfer of your initial notes, if this procedure
is available, into the exchange agent's account at
The Depository Trust Company ("DTC") as
contemplated by the procedures for book-entry
transfer described under "--Book-Entry Delivery
Procedure" below, on or before 5:00 p.m., New York
City time, on the expiration date.
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Guaranteed Delivery
Procedure: If time will not permit you to complete your
tender by using the procedures described above
before the expiration date, comply with the
guaranteed delivery procedures described under
"--Guaranteed Delivery Procedure" below.
The method of delivery of initial notes, the letter of transmittal and
all other required documents is at your election and risk. Instead of delivery
by mail, we recommend that you use an overnight or hand-delivery service. If you
choose the mail, we recommend that you use registered mail, properly insured,
with return receipt requested. In
all cases, you should allow sufficient time to assure timely delivery. You
should not send any letters of transmittal or initial notes to us. You must
deliver all documents to the exchange agent at its address provided below. You
may also request your respective brokers, dealers, commercial banks, trust
companies or nominees to tender your initial notes on your behalf.
Only a holder of initial notes may tender initial notes in this
exchange offer. For purposes of this exchange offer, a holder is any person in
whose name initial notes are registered on our books or any other person who has
obtained a properly completed bond power from the registered holder.
If you are the beneficial owner of initial notes that are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
and you wish to tender your notes, you must contact this registered holder
promptly and instruct this registered holder to tender these notes on your
behalf. If you wish to tender these initial notes on your own behalf, you must,
before completing and executing the letter of transmittal and delivering your
initial notes, either make appropriate arrangements to register the ownership of
these notes in your name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
You must have any signatures on a letter of transmittal or a notice of
withdrawal guaranteed by an eligible institution. An eligible institution is:
o a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
o a commercial bank or trust company having an office or correspondent in
the United States; or
o an eligible guarantor institution within the meaning of Rule 17Ad-15
under the Securities Exchange Act.
However, signatures on a letter of transmittal do not have to be
guaranteed if initial notes are tendered:
o by a registered holder, or by a participant in DTC in the case of
book-entry transfers, whose name appears on a security position listing
as the owner, who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the letter of
transmittal and only if the exchange notes are being issued directly to
this registered holder, or deposited into this participant's account at
DTC in the case of book-entry transfers; or
o for the account of an eligible institution.
If the letter of transmittal or any bond powers are signed by:
o the recordholder(s) of the initial notes tendered: The signature must
correspond with the name(s) written on the face of the initial notes
without alteration, enlargement or any change whatsoever;
o a participant in DTC: The signature must correspond with the name as it
appears on the security position listing as the holder of the initial
notes;
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o a person other than the registered holder of any initial notes: These
initial notes must be endorsed or accompanied by bond powers and a
proxy that authorize this person to tender the initial notes on behalf
of the registered holder, in satisfactory form to us as determined in
our sole discretion, in each case, as the name of the registered holder
or holders appears on the initial notes; or
o trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or
representative capacity: These persons should so indicate such
capacities when signing. Unless waived by us, evidence satisfactory to
us of their authority to so act must also be submitted with the letter
of transmittal.
BOOK-ENTRY DELIVERY PROCEDURE
Any financial institution that is a participant in DTC's system may
make book-entry deliveries of initial notes by causing DTC to transfer these
initial notes into the exchange agent's account at DTC according to DTC's
procedures for transfer. To effectively tender notes through DTC, the financial
institution that is a participant in DTC will electronically transmit its
acceptance through the Automatic Tender Offer Program. DTC will then edit and
verify the acceptance and send an agent's message to the exchange agent for its
acceptance. An agent's message is a message transmitted by DTC to the exchange
agent stating that DTC has received an express acknowledgment from the
participant in DTC tendering the initial notes that the participant has received
and agrees to be bound by the terms of the letter of transmittal, and that we
may enforce this agreement against the participant. The exchange agent will make
a request to establish an account for the initial notes at DTC for purposes of
the exchange offer within two business days after the date of this prospectus.
A delivery of initial notes through a book-entry transfer into the
exchange agent's account at DTC will only be effective if an agent's message or
the letter of transmittal or a facsimile of the letter of transmittal with any
required signature guarantees and any other required documents is transmitted to
and received by the exchange agent at the address indicated below under
"--Exchange Agent" on or before the expiration date unless the guaranteed
delivery procedures described below are complied with. Delivery of documents to
DTC does not constitute delivery to the Exchange Agent.
GUARANTEED DELIVERY PROCEDURE
If you are a registered holder of initial notes and desire to tender
your notes, and (1) these notes are not immediately available, (2) time will not
permit your notes or other required documents to reach the exchange agent before
the expiration date or (3) the procedures for book-entry transfer cannot be
completed on a timely basis and an agent's message delivered, you may still
tender in this exchange offer if:
o you tender through an eligible institution, on or before the expiration
date, and the exchange agent receives a properly completed and duly
executed letter of transmittal or facsimile of the letter of
transmittal and a notice of guaranteed delivery, substantially in the
form provided by us, with your name and address as holder of the
initial notes and the amount of notes tendered, stating that the tender
is being made by this letter and notice and guaranteeing that within
three New York Stock Exchange trading days after the expiration date,
the certificates for all the initial notes tendered, in proper form for
transfer, or a book-entry confirmation with an agent's message, as the
case may be, and any other documents required by the letter of
transmittal, will be deposited by the eligible institution with the
exchange agent; and
o the certificates for all your tendered initial notes in proper form for
transfer, or a book-entry confirmation, as the case may be, and all
other documents required by the letter of transmittal are received by
the exchange agent within three New York Stock Exchange trading days
after the expiration date.
ACCEPTANCE OF INITIAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Your tender of initial notes will constitute an agreement between you
and us governed by the terms and conditions provided in this prospectus and in
the letter of transmittal.
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We will be deemed to have received your tender as of the date when your
duly signed letter of transmittal accompanied by your initial notes tendered, or
a timely confirmation of a book-entry transfer of these notes into the exchange
agent's account at DTC with an agent's message, or a notice of guaranteed
delivery from an eligible institution is received by the exchange agent.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal tenders will be determined by us in our sole
discretion. Our determination will be final and binding.
We reserve the absolute right to reject any and all initial notes not
properly tendered or any initial notes which, if accepted, would, in our opinion
or our counsel's opinion, be unlawful. We also reserve the absolute right to
waive any conditions of this exchange offer or irregularities or defects in
tender as to particular notes. Our interpretation of the terms and conditions of
this exchange offer, including the instructions in the letter of transmittal,
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of initial notes must be cured within
the time that we shall determine. Neither the exchange agent, any other person
or we will be under any duty to give notification of defects or irregularities
with respect to tenders of initial notes. Neither the exchange agent nor we will
incur any liability for any failure to give notification of these defects or
irregularities. Tenders of initial notes will not be deemed to have been made
until the irregularities have been cured or waived. The exchange agent will
return without cost to their holders any initial notes that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived as promptly as practicable following the expiration date.
If all the conditions to the exchange offer are satisfied or waived on
the expiration date, we will accept all initial notes properly tendered and will
issue the exchange notes promptly thereafter. Please refer to the section of
this prospectus entitled "--Conditions to the Exchange Offer" below. For
purposes of this exchange offer, initial notes will be deemed to have been
accepted as validly tendered for exchange when, as and if, we give oral or
written notice of acceptance to the exchange agent.
We will issue the exchange notes in exchange for the initial notes
tendered by a notice of guaranteed delivery by an eligible institution only
against delivery to the exchange agent of the letter of transmittal, the
tendered initial notes and any other required documents, or the receipt by the
exchange agent of a timely confirmation of a book-entry transfer of initial
notes into the exchange agent's account at DTC with an agent's message, in each
case, in form satisfactory to us and the exchange agent.
If any tendered initial notes are not accepted for any reason or if
initial notes are submitted for a greater principal amount than the holder
desires to exchange, the unaccepted or non-exchanged initial notes will be
returned without expense to the tendering holder, or, in the case of initial
notes tendered by book-entry transfer procedures described above, will be
credited to an account maintained with the book-entry transfer facility, as
promptly as practicable after withdrawal, rejection of tender or the expiration
or termination of the exchange offer.
In addition, we reserve the right in our sole discretion, but in
compliance with the provisions of the indenture, to:
o purchase or make offers for any initial notes that remain outstanding
after the expiration date, or, as described under "--Expiration Date;
Extensions; Amendments; Termination," to terminate the exchange offer
as provided by the terms of our registration rights agreement; and
o purchase initial notes in the open market, in privately negotiated
transactions or otherwise, to the extent permitted by applicable law.
The terms of any of the purchases or offers described above could
differ from the terms of the exchange offer.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw
tenders of initial notes at any time before 5:00 p.m., New York City time, on
the expiration date.
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For a withdrawal to be effective, you must send a written or facsimile
transmission notice of withdrawal to the exchange agent before 5:00 p.m., New
York City time, on the expiration date at the address provided below under
"Exchange Agent" and before acceptance of your tendered initial notes for
exchange by us.
Any notice of withdrawal must:
o specify the name of the person having tendered the initial notes to be
withdrawn;
o identify the initial notes to be withdrawn, including, if applicable,
the registration number or numbers and total principal amount of these
notes;
o be signed by the person having tendered the initial notes to be
withdrawn in the same manner as the original signature on the letter of
transmittal by which these initial notes were tendered, including any
required signature guarantees, or be accompanied by documents of
transfer sufficient to permit the trustee for the initial notes to
register the transfer of these notes into the name of the person having
made the original tender and withdrawing the tender; and
o state that you are withdrawing your tender of initial notes.
We will determine all questions as to the validity, form and
eligibility, including time of receipt, of all notices of withdrawal and our
determination will be final and binding on all parties. Initial notes that are
withdrawn will be deemed not to have been validly tendered for exchange in this
exchange offer.
You may retender properly withdrawn initial notes in this exchange
offer by following one of the procedures described under "--Procedures for
Tendering Initial Notes" above at any time before the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
With exceptions, we will not be required to accept initial notes for
exchange, or issue exchange notes in exchange for any initial notes, and we may
terminate or amend the exchange offer as provided in this prospectus before the
acceptance of the initial notes, if:
o the exchange offer violates applicable law or any interpretation of the
staff of the Securities and Exchange Commission;
o any required governmental approval has not been obtained; or
o a court or any governmental authority has issued an injunction, order
or decree that would prevent or impair our ability to proceed with the
exchange offer.
These conditions are for our sole benefit. We may assert any of these
conditions regardless of the circumstances giving rise to any of them. We may
also waive these conditions, in whole or in part, at any time and from time to
time, if we determine in our reasonable discretion, but within the limits of
applicable law, that any of the foregoing events or conditions has occurred or
exists or has not been satisfied. Our failure at any time to exercise any of our
rights described in this prospectus will not be deemed a waiver of these rights
and these rights will be deemed ongoing rights which we may assert at any time
and from time to time.
If we determine that we may terminate the exchange offer, as provided
above, we may:
o refuse to accept any initial notes and return any initial notes that
have been tendered to their holders;
o extend the exchange offer and retain all initial notes tendered before
the expiration date, allowing, however, the holders of tendered initial
notes to exercise their rights to withdraw their tendered initial
notes; or
o waive any termination event with respect to the exchange offer and
accept all properly tendered initial notes that have not been withdrawn
or otherwise amend the terms of the exchange offer in any respect as
provided under "--Expiration Date; Extensions; Amendments;
Termination."
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If we determine that we may terminate the exchange offer, we may be
required to file a shelf registration statement with the Securities and Exchange
Commission as described under "--Shelf Registration Statement." The exchange
offer is not dependent upon any minimum principal amount of initial notes being
tendered for exchange.
ACCOUNTING TREATMENT
We will record the exchange notes at the same carrying value as the
initial notes, as reflected in our accounting records on the date of the
exchange. Accordingly, we will not recognize any gain or loss for accounting
purposes. We will amortize the costs of the exchange offer and the unamortized
expenses related to the issuance of the exchange notes over the term of the
exchange notes.
EXCHANGE AGENT
We have appointed JPMorgan Chase Bank as exchange agent for the
exchange offer. You should direct all requests for additional copies of this
prospectus or the letter of transmittal to the exchange agent as follows:
JPMorgan Chase Bank
Corporate Trust Services
2001 Bryan Street - 10th Floor
Dallas, Texas 75201
Attention: Frank Ivins
Telephone: (214) 468-6464
FEES AND EXPENSES
We will bear the expenses of soliciting tenders under the exchange
offer. The principal solicitation for tenders under the exchange offer is being
made by mail; however, our officers and other employees may make additional
solicitations by telegraph, telephone, telecopy or in person.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. However, we will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket expenses in connection with the
exchange offer. If required by law, we will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of the prospectus, letters of transmittal
and related documents to the beneficial owners of the initial notes, and in
handling or forwarding tenders for exchange.
We will pay the expenses incurred in connection with the exchange
offer, including fees and expenses of the exchange agent and trustee and
accounting, legal, printing and related fees and expenses.
Tendering holders will pay the amount of any transfer taxes, if any,
applicable to the exchange of initial notes under the exchange offer, whether
imposed on the registered holder or any other person, if:
o certificates representing exchange notes or initial notes for principal
amounts not tendered or accepted for exchange are to be delivered to,
or are to be registered or issued in the name of, any person other than
the registered holder of the initial notes tendered;
o tendered initial notes are registered in the name of any person other
than the person signing the letter of transmittal; or
o a transfer tax is imposed for any reason other than the exchange of
initial notes under the exchange offer.
If satisfactory evidence of payment of these taxes or exemption
therefrom is not submitted with the letter of transmittal, the amount of the
transfer taxes will be billed directly to the tendering holder.
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YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE
CONSEQUENCES
If you do not properly tender your initial notes in the exchange offer,
your initial notes will remain outstanding and continue to accrue interest.
However, you will not be able to resell, offer to resell or otherwise transfer
the initial notes unless they are registered under the Securities Act or unless
you resell them, offer to resell or otherwise transfer them under an exemption
from the registration requirements of, or in a transaction not governed by, the
Securities Act. In addition, you will no longer be able to obligate us to
register the initial notes under the Securities Act, except in the limited
circumstances provided under our registration rights agreement. To the extent
the initial notes are tendered and accepted in the exchange offer, the trading
market, if any, for the initial notes would be adversely affected. You should
refer to "Risk Factors--Your failure to participate in the exchange offer will
have adverse consequences."
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UNITED STATES FEDERAL TAX CONSIDERATIONS
The following general discussion summarizes the material U.S. federal
tax aspects of the exchange offer. This discussion is a summary for general
information only and does not consider all aspects of U.S. federal tax that may
be relevant to the purchase, ownership and disposition of exchange notes by a
prospective investor in light of such investor's personal circumstances. This
discussion also does not address the U.S. federal tax consequences of ownership
of notes not held as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), or the U.S. federal tax
consequences to investors subject to special treatment under the U.S. federal
income tax laws, such as dealers in securities of foreign currency, tax-exempt
entities, banks, thrifts, insurance companies, persons that hold the notes as
part of a "straddle," a "hedge" against currency risk or a "conversion
transaction," U.S. Holders (as defined below) that have a "functional currency"
other than the U.S. dollar, and investors in pass-through entities. In addition,
except as otherwise provided, this discussion addresses only certain U.S.
federal income tax consequences and does not describe U.S. federal estate or
gift tax consequences or the tax consequences arising out of the tax laws of any
state, local, or foreign jurisdiction.
A U.S. Holder is a beneficial owner of a note that is (1) a citizen or
resident of the U.S.; (2) a corporation (or other entity treated as a
corporation for U.S. federal income tax purposes) that is created or organized
in or under the laws of the U.S. or any political subdivision thereof; (3) an
estate the income of which is subject to U.S. federal income taxation regardless
of its source; or (4) a trust which is either subject to the supervision of a
court within the U.S. and the control of one or more U.S. persons, or has a
valid election in effect under applicable Treasury Regulations to be treated as
a U.S. person. A Foreign Holder is a beneficial owner of a note that is not a
U.S. Holder.
This discussion is based upon the Code, existing and proposed Treasury
regulations thereunder, Internal Revenue Service ("IRS") rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change (possibly on a retroactive basis). We have not and will not seek any
opinions of counsel or rulings from the IRS with respect to the matters
discussed below. There can be no assurance that the IRS will not take positions
concerning the tax consequences of the purchase, ownership, or disposition of
the notes which are different from those discussed herein.
INVESTORS IN NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE,
LOCAL, OR FOREIGN TAXING JURISDICTION, IN LIGHT OF THEIR PARTICULAR SITUATIONS.
EXCHANGE OF NOTES
The exchange of notes pursuant to the exchange offer will not be
treated as a taxable sale, exchange or other disposition of the corresponding
initial notes because the terms of the exchange notes are not materially
different from the terms of the initial notes. Accordingly:
o a holder will not recognize gain or loss upon receipt of an exchange
note;
o the holding period of an exchange note will include the holding period
of the initial note exchanged therefor; and
o the adjusted tax basis of an exchange note will be the same as the
adjusted tax basis of the initial note exchanged.
The filing of a shelf registration statement will not result in a
taxable exchange to us or to any holder of a note.
U.S. FEDERAL INCOME TAXATION OF U.S. HOLDERS
PAYMENTS OF INTEREST
A U.S. Holder of an exchange note generally will be required to report
as ordinary income for U.S. federal income tax purposes interest received or
accrued on the exchange note in accordance with the U.S. Holder's method of
accounting.
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BOND PREMIUM AND MARKET DISCOUNT
A U.S. Holder who purchases an exchange note for an amount in excess of
its stated principal amount will be considered to have purchased the exchange
note at a premium equal to the amount of such excess. A U.S. Holder generally
may elect to amortize the premium on the constant yield method. The amount
amortized in any year under such method will be treated as a reduction of the
holder's interest income from the exchange note during such year and will reduce
the holder's adjusted tax basis in the exchange note by such amount. A holder of
an exchange note that does not make the election to amortize the premium will
not reduce its tax basis in the exchange note, and thus effectively will realize
a smaller gain or a larger loss on a taxable disposition of the exchange note
than it would have realized had the election been made. The election to amortize
the premium on a constant yield method, once made, applies to all debt
obligations held or acquired by the electing holder on or after the first day of
the first taxable year to which the election applies and may not be revoked
without the consent of the IRS.
If a U.S. Holder purchases an exchange note for an amount that is less
than its stated principal amount, the amount of the difference will be treated
as "market discount" for federal income tax purposes unless such difference is
less than a specified de minimis amount. Under the de minimis exception, an
exchange note is considered to have no market discount if the excess of the
stated redemption price at maturity of the exchange note over the holder's tax
basis in such note immediately after its acquisition is less than 0.25% of the
stated redemption price at maturity of the exchange note multiplied by the
number of complete years to the maturity date of the exchange note after the
acquisition date.
Under the market discount rules, a U.S. Holder is required to treat any
principal payment on, or any gain from the sale, exchange, retirement or other
disposition of, an exchange note as ordinary income to the extent of the accrued
market discount not previously included in income at the time of such payment or
disposition. In addition, such a holder may be required to defer until maturity
of the exchange note or its earlier disposition in a taxable transaction the
deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such exchange note.
Any market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the exchange note,
unless the U.S. Holder elects to accrue the market discount on a constant
interest method. A U.S. Holder of an exchange note may elect to include market
discount in income currently as it accrues (on either a ratable or constant
interest method), in which case the rule described above regarding deferral of
interest deductions will not apply. This election to include market discount in
income currently, once made, applies to all market discount obligation acquired
on or after the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
SALE, EXCHANGE, OR REDEMPTION OF THE EXCHANGE NOTES
Upon the sale, exchange, retirement, or other disposition of an
exchange note, a U.S. Holder generally will recognize taxable gain or loss equal
to the difference between the amount realized on the disposition and the U.S.
Holder's adjusted tax basis in the exchange note. A U.S. Holder's adjusted tax
basis in an exchange note generally will equal the cost of the exchange note (or
the cost of the initial note exchanged for the exchange note) to the U.S.
Holder, increased by any market discount previously included in income by such
U.S. Holder and decreased by any amortized bond premium applied to reduce
interest and by any principal payments on the exchange note. Such gain or loss
generally will constitute capital gain or loss, except to the extent of any
accrued market discount not previously included in income, which will be taxed
as ordinary income. Amounts received attributable to accrued but unpaid interest
will be treated as ordinary interest income.
U.S. FEDERAL INCOME TAXATION OF FOREIGN HOLDERS
PAYMENT OF INTEREST
The payment to a Foreign Holder of interest on an exchange note
generally will not be subject to a 30% U.S. federal withholding tax provided
that the Foreign Holder (1) does not actually or
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constructively own 10% or more of the total combined voting power of all classes
of our voting stock within the meaning of the Code and Treasury regulations; (2)
is not a controlled foreign corporation that is related to us through stock
ownership as provided in the Code and Treasury regulations; (3) is not a bank
whose receipt of interest on the exchange notes is in connection with an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business; and (4) (a) provides its name and
address on an IRS Form W-8BEN (or successor form) and certifies under penalty of
perjury that it is not a U.S. person or (b) a bank, brokerage house or other
financial institution that holds the notes on behalf of the Foreign Holder in
the ordinary course of its trade or business certifies to us, under penalty of
perjury, that it has received an IRS Form W-8BEN (or a successor form) from the
beneficial owner and furnishes us with a copy thereof (hereinafter referred to
as the "portfolio interest exception").
If a Foreign Holder cannot satisfy the requirements described in the
immediately preceding paragraph, payments of interest made to the Foreign Holder
will be subject to a 30% U.S. federal withholding tax, unless the Foreign Holder
provides us with a properly executed (1) IRS Form W-8BEN (or a successor form)
claiming an exemption from or reduction in the rate of withholding under the
benefit of an applicable income tax treaty or (2) IRS Form W-8ECI (or a
successor form) stating that the interest paid on the exchange note is not
subject to withholding tax because it is effectively connected with the Foreign
Holder's conduct of a trade or business in the U.S.
If a Foreign Holder of an exchange note is engaged in a trade or
business in the U.S. and interest on the exchange note is effectively connected
with the conduct of such trade or business, the Foreign Holder will be subject
to U.S. federal income tax on such interest in the same manner as if it were a
U.S. Holder, unless the Foreign Holder can claim an exemption under the benefit
of an applicable income tax treaty. In addition, if such Foreign Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% (or
lower applicable treaty rate) of its earnings and profits for the taxable year,
subject to adjustments, that are effectively connected with its conduct of a
trade or business in the U.S.
SALE, EXCHANGE, OR REDEMPTION OF THE EXCHANGE NOTES
Generally, a Foreign Holder will not be subject to U.S. federal income
tax with respect to gain realized on the sale, exchange, redemption or other
disposition of an exchange note unless (1) the gain is effectively connected
with the conduct by the Foreign Holder of a trade or business in the U.S.; (2)
in the case of a Foreign Holder who is a nonresident alien individual, such
individual is present in the U.S. for 183 days or more in the taxable year of
disposition and certain other conditions are met. Notwithstanding (1) and (2), a
Foreign Holder will not be subject to U.S. federal income tax if a treaty
exemption applies and the appropriate documentation is provided.
U.S. FEDERAL ESTATE TAXATION OF FOREIGN HOLDERS
An exchange note that is held by an individual who at the time of death
is not a citizen or resident of the U.S. generally will not be subject to U.S.
federal estate tax as a result of such individual's death, provided that, at the
time of the individual's death, payments of interest with respect to such
exchange note would have qualified for the portfolio interest exception.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders may be subject, under certain circumstances, to
information reporting and "backup withholding" at a rate equal to the fourth
lowest rate of tax under Section 1(c) of the Code (which is 30% for amounts paid
during the calendar year 2003) with respect to cash payments in respect of
principal, interest, and the gross proceeds from dispositions of the exchange
notes. Backup withholding may apply if the U.S. Holder (1) fails to furnish its
social security or other taxpayer identification number ("TIN") on an IRS Form
W-9 within a reasonable time after a request therefor; (2) furnishes an
incorrect TIN; (3) fails to report properly any interest or dividends; or (4)
fails, under certain circumstances, to provide a certified statement, signed
under penalty of perjury, that the TIN provided is its correct number and that
it is not subject to backup withholding. Certain persons are exempt from backup
withholding, including corporations and financial institutions.
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Foreign Holders generally will not be subject to backup withholding at the rate
described in the immediately preceding paragraph on payments of interest made to
a Foreign Holder provided that we do not have actual knowledge or reason to know
that the Foreign Holder is a U.S. person and the Foreign Holder provides the
requisite certification on IRS Form W-8BEN or otherwise establishes an exemption
from backup withholding, although such payments may be subject to certain
reporting requirements. Payments of the proceeds of a disposition of exchange
notes by or through a U.S. office of a broker generally will be subject to
backup withholding and information reporting unless the Foreign Holder provides
the requisite certification on IRS Form W-8BEN or otherwise establishes an
exemption. Generally, information reporting and backup withholding will not
apply to a payment of disposition proceeds where the sale is effected outside
the U.S. through a non-U.S. office of a non-U.S. broker and payment is not
received in the U.S..
The amount of any backup withholding imposed on a payment to a U.S. or
Foreign Holder of an exchange note will be allowed as a credit against such
holder's U.S. federal income tax liability, and such holder may be entitled to a
refund, provided that the required information is furnished to the IRS. U.S. and
Foreign Holders should consult their tax advisors as to their qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
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PLAN OF DISTRIBUTION
A broker-dealer that is the holder of initial notes that were acquired
for the account of such broker-dealer as a result of market-making or other
trading activities, other than initial notes acquired directly from us or any of
our affiliates, may exchange such initial notes for exchange notes pursuant to
the exchange offer; provided, that each broker-dealer that receives exchange
notes for its own account in exchange for initial notes, where such initial
notes were acquired by such broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of exchange notes received in exchange for initial notes
where such initial notes were acquired as a result of market-making activities
or other trading activities. We have agreed that for a period of time not to
exceed 180 days after the registration statement of which this prospectus forms
a part is declared effective, we will make this prospectus, as it may be amended
or supplemented from time to time, available to any broker-dealer for use in
connection with any such resale. All dealers effecting transactions in the
exchange notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers or any other holder of exchange notes. Exchange notes received by
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
exchange notes. Any broker-dealer that resells exchange notes that were received
by it for its own account pursuant to the exchange offer and any broker or
dealer that participates in a distribution of such exchange notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of exchange notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after consummation of the exchange offer or
such time as any broker-dealer no longer owns any registrable securities, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. We have agreed to pay all expenses incident to the
exchange offer and to our performance of, or compliance with, the registration
rights agreement, other than commissions or concessions of any brokers or
dealers, and will indemnify the holders of the notes, including any
broker-dealers, against certain liabilities described in the registration rights
agreement, including liabilities under the Securities Act.
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LEGAL MATTERS
The validity of the exchange notes offered by this prospectus will be
passed upon for us by Sonnenschein Nath & Rosenthal LLP, Washington, DC.
EXPERTS
The consolidated financial statements of The Stanley Works and
subsidiaries appearing in The Stanley Works' Annual Report (Form 10-K) for the
year ended December 28, 2002, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference the information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus and information we file later with the SEC will automatically update
and supersede this information. The documents we are incorporating by reference
are as follows:
o The Stanley Works' Annual Report on Form 10-K for the fiscal year ended
December 28, 2002;
o The Stanley Works' Quarterly Report on Form 10-Q for the quarterly
period ended March 29, 2003;
o The Stanley Works' Current Report on Form 8-K dated July 22, 2003,
filed with the SEC on July 22, 2003, solely to the extent the
information in such Form 8-K relates to historical financial data;
o The Stanley Works' Current Report on Form 8-K dated May 20, 2003, filed
with the SEC on May 21, 2003;
o The Stanley Works' Current Report on Form 8-K dated May 8, 2003, filed
with the SEC on May 8, 2003, solely to the extent the information in
such Form 8-K relates to historical financial data;
o The Stanley Works' Current Report on Form 8-K dated April 29, 2003,
filed with the SEC on April 29, 2003, solely to the extent the
information in such Form 8-K relates to historical financial data;
o The Stanley Works' Current Report on Form 8-K dated April 9, 2003,
filed with the SEC on April 9, 2003, solely to the extent the
information in such Form 8-K relates to historical financial data;
o The Stanley Works' Current Report on Form 8-K dated January 24, 2003,
filed with the SEC on January 24, 2003, solely to the extent the
information in such Form 8-K relates to historical financial data;
o The Stanley Works' Current Report on Form 8-K dated January 17, 2003,
filed with the SEC on January 17, 2003, solely to the extent the
information in such Form 8-K relates to historical financial data; and
o The definitive proxy statement relating to The Stanley Works' 2003
Annual Meeting of Shareholders dated April 2, 2003.
This prospectus also incorporates by reference any future filings that
we make with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act (except for information furnished to the SEC that is not deemed to
be "filed" for purposes of the Exchange Act) subsequent to the date of
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this prospectus until all the notes being offered by this prospectus are sold or
until the offering of the notes is otherwise terminated. "Incorporation by
reference" means that we are disclosing important information to you by
referring to those documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this prospectus is considered to be
a part of this prospectus and information that we file with the SEC after the
date of this prospectus will automatically supplement, update or supercede
previously filed information.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents which we incorporate by reference in this prospectus
(not including exhibits to such documents unless such exhibits are specifically
incorporated by reference to such documents). Requests should be directed to:
The Stanley Works, 1000 Stanley Drive, New Britain, Connecticut 06053, (860)
225-5111, Attention: Treasurer.
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THE STANLEY WORKS