<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 6, 1995
REGISTRATION NO. 33-60109
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
WMX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2660763
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3003 BUTTERFIELD ROAD
OAK BROOK, ILLINOIS 60521
PHONE: 708-572-8800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
HERBERT A. GETZ, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
WMX TECHNOLOGIES, INC.
3003 BUTTERFIELD ROAD
OAK BROOK, ILLINOIS 60521
708-572-8800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
ATTN: DAVID SCHUETTE
312-782-0600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(1)(2) FEE
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<S> <C> <C> <C> <C>
Debt Securities........ $1,000,000,000 100% $1,000,000,000 $344,827.58
</TABLE>
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(1) In U.S. dollars or the equivalent thereof in other currencies or composite
securities, and, if any Debt Securities are to be issued at an original
issue discount, such greater amount as shall result in an aggregate
offering price of $1,000,000,000.
(2) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 6, 1995
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED JULY , 1995)
WMX TECHNOLOGIES, INC.
U.S. 1,000,000,000
MEDIUM-TERM NOTES, SERIES C
DUE FROM NINE MONTHS TO 60 YEARS FROM DATE OF ISSUE
-----------
WMX Technologies, Inc. (the "Company") may from time to time offer its
unsecured debt securities ("Debt Securities") consisting of Medium-Term Notes,
Series C (the "Notes"). The aggregate principal amount of Notes to be offered
will not exceed an aggregate amount sufficient to result in net proceeds to the
Company of U.S. $1,000,000,000 or the equivalent thereof in other currencies or
composite currencies, subject to reduction as the result of the sale of other
Debt Securities. The Notes will be offered at varying maturities from nine
months to 60 years from their dates of issue, may be subject to redemption at
the option of the Company or repayment at the option of the holder prior to
maturity, and may be denominated in U.S. dollars or in other currencies,
European Currency Units ("ECUs") or other composite currencies (the "Specified
Currency"), all as set forth in a pricing supplement (the "Pricing Supplement")
to this Prospectus Supplement. See "Important Currency Information" and
"Certain Currency Risks." Each Note will bear interest at either a fixed rate
(a "Fixed Rate Note"), which may be zero in the case of certain Notes issued at
a price representing a discount from the principal amount payable at maturity
(a "Zero-Coupon Note"), or a floating rate (a "Floating Rate Note") determined
by reference to one or more of the CD Rate, the Commercial Paper Rate, the
Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate, or other rate
index, as set forth in the applicable Pricing Supplement. A Note may be issued
as an indexed note (an "Indexed Note"), the principal amount of which, payable
at maturity, is determined by the relationship between the currency in which
such Note is denominated and another currency or composite currency. See
"Description of Notes--Indexed Notes."
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes, other than in the case of Zero-Coupon Notes, is payable each
February 15 and August 15 and at maturity. Interest on Floating Rate Notes is
payable on the dates determined at the time of issuance and set forth in the
applicable Pricing Supplement. The Notes will be issued only in denominations
of U.S. $1,000 or any amount which is an integral multiple of U.S. $1,000 or in
the case of Notes denominated in a Specified Currency other than U.S. dollars,
in the denominations set forth in the applicable Pricing Supplement.
Unless the applicable Pricing Supplement specifies that a Note initially will
be issued as a certificate in definitive registered form ("Certificated
Notes"), each Note initially will be represented by a global certificate (a
"Book-Entry Note") registered in the name of a nominee of The Depository Trust
Company ("DTC") or other depositary (DTC or such other depositary as is
specified in the applicable Pricing Supplement is herein referred to as the
"Depositary"). A beneficial interest in a Book-Entry Note will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its participants. See "Description of Debt Securities--Book-
Entry, Delivery and Form" in the accompanying Prospectus.
The Specified Currency, any applicable interest rate or formula, the issue
price, the maturity, any interest payment dates, any redemption and repayment
provisions, whether a Note will be a Book-Entry Note or a Certificated Note,
whether a Note is an Indexed Note and any other terms applicable to each Note
will be established at the date of issue of such Note and set forth in the
applicable Pricing Supplement.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO
PUBLIC(1) AGENTS' COMMISSION(2) PROCEEDS TO COMPANY(2)(3)
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<S> <C> <C> <C>
Per Note............... 100% .125% to .750% 99.250% to 99.875%
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U.S.$1,250,000 to
Total(4)............... U.S.$1,000,000,000 $7,500,000 U.S.$992,500,000 to $998,750,000
</TABLE>
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(1) The Notes will be issued at 100% of their principal amount, unless
otherwise specified in the applicable Pricing Supplement.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated or Donaldson, Lufkin & Jenrette
Securities Corporation, each as agent (collectively the "Agents"), which
may be in the form of a discount, ranging from .125% to .750%, depending on
the maturity of the Note, of the principal amount of any Note sold through
such Agent (provided, that the commission payable with respect to Notes
with maturities greater than 30 years will be negotiated at the time of
issuance of such Notes). The Company may also sell Notes to an Agent as
principal at or above par or at a discount to be agreed upon at the time of
sale or resale to investors at varying prices related to prevailing market
prices at the time of resale, as determined by such Agent.
(3) Before deducting expenses payable by the Company estimated to be $821,328,
including reimbursement of certain of the Agents' expenses.
(4) Or the equivalent thereof in other currencies or composite currencies.
-----------
The Notes are being offered on a continuous basis by the Company through the
Agents, each of whom has agreed to use its best efforts to solicit offers to
purchase the Notes. The Notes may be sold at or above par or at a discount to
any Agent as principal for resale to investors at varying prices related to
prevailing market prices at the time of resale as determined by such Agent. The
Notes may also be sold at or above par or at a discount through any Agent to
investors and to other purchasers. The Company may also sell Notes directly to
investors on its behalf. The Notes will not be listed on any securities
exchange, and there can be no assurance that the Notes offered hereby will be
sold or that there will be a secondary market for any of the Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or the Agent who solicits any offer may reject such offer
in whole or in part. See "Plan of Distribution."
MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
The date of this Prospectus Supplement is July , 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
Net proceeds to the Company from the sale of the Notes will be used to retire
outstanding indebtedness of the Company arising from the Company's issuance of
commercial paper or other debt bearing interest rates and maturing as specified
in the applicable Pricing Supplement, to fund future acquisitions and for
general corporate purposes. Pending any such application, the proceeds may be
invested in short-term securities.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for Notes in the Specified Currency applicable
thereto. Currently, there are limited facilities in the United States for
conversion of U.S. dollars into foreign currencies and vice versa, and banks
generally do not offer non-U.S. dollar checking or savings account facilities
in the United States. However, if requested by a prospective purchaser of Notes
denominated in a Specified Currency other than U.S. dollars, the Agent
soliciting the offer to purchase may arrange for the conversion of U.S. dollars
into such Specified Currency to enable the purchaser to pay for such Notes.
Such requests must be made on or before the fifth Business Day preceding the
date of delivery of the Notes, or by such other date as determined by such
Agent. Each such conversion will be made by the relevant Agent on such terms
and subject to such conditions, limitations and charges as such Agent may from
time to time establish in accordance with its regular foreign exchange
practice. All costs of exchange will be borne by purchasers of the Notes.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
(referred to in the accompanying Prospectus as the "Offered Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made. The following
description will apply to each Note unless otherwise specified in the
applicable Pricing Supplement.
GENERAL
The Notes constitute a single series of Debt Securities (as defined in the
accompanying Prospectus) to be issued under the Indenture dated as of June 1,
1993, between the Company and The Fuji Bank and Trust Company, as trustee (the
"Trustee"). The Notes will be offered on a continuing basis and will mature
from nine months to 60 years from the date of issue, as selected by the
purchaser and agreed to by the Company, and may be subject to redemption at the
option of the Company or repayment at the option of the holder prior to
maturity as set forth under "Redemption and Repayment." The Notes are limited
to an aggregate amount sufficient to result in net proceeds to the Company of
up to U.S. $1,000,000,000 or the equivalent thereof in other currencies or
composite currencies, subject to reduction as a result of the sale of other
Debt Securities. The U.S. dollar equivalent of Notes denominated in currencies
other than U.S. dollars will be determined by the Exchange Rate Agent (as
defined below) on the basis of the noon buying rate for cable transfers in The
City of New York, as determined by the Federal Reserve Bank of New York (the
"Market Exchange Rate"), for such currencies on the applicable issue dates.
The Notes will be unsecured obligations of the Company and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the Company.
Unless the applicable Pricing Supplement states to the contrary, the
Indenture provisions described under "Description of Debt Securities--
Redemption at the Option of the Holders in Certain Circumstances" in the
accompanying Prospectus will not be applicable to the Notes. Other than such
provisions, the Indenture does not contain any covenants or other provisions
which might afford holders of Notes protection in the event of a highly
leveraged transaction, change in credit rating of the Notes or other similar
occurrence.
S-2
<PAGE>
Each Note will be denominated in U.S. dollars or in other currencies,
European Currency Units ("ECUs") or such other composite currencies (the
"Specified Currency") as is specified in the applicable Pricing Supplement.
Each Note will bear interest at either (i) a fixed rate (a "Fixed Rate Note"),
which may be zero in the case of certain Notes issued at an Issue Price (as
defined below) representing a discount from the principal amount payable at
maturity (a "Zero-Coupon Note"), or (ii) a floating rate (a "Floating Rate
Note") determined by reference to the interest rate basis or combination of
interest rate bases (the "Base Rate") specified in the applicable Pricing
Supplement which may be adjusted by a Spread or Spread Multiplier (each as
defined below).
The Notes may be issued as Indexed Notes the principal amount of which,
payable at maturity, will be determined by the relationship between the
currency in which such Note is denominated and another currency or composite
currency set forth in the applicable Pricing Supplement. See "Indexed Notes."
Each Note offered hereby will be issued initially as either a beneficial
interest in a global note (a "Book-Entry Note") registered in the name of a
nominee of The Depository Trust Company ("DTC") or other depositary (DTC or
such other depositary as is specified in the applicable Pricing Supplement is
herein referred to as the "Depositary") or a Note issued as a certificate in
definitive registered form (a "Certificated Note"). One or more global notes
(each a "Global Security") will represent all Book-Entry Notes issued on the
same day and having the same terms, including, but not limited to, the same
Specified Currency, interest payment dates, rates of interest (if any),
maturity and repayment and redemption provisions (if any). Ownership of
beneficial interests in Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
(with respect to interests of participants) and its participants (with respect
to interests of persons other than participants). Payments of principal and
interest on beneficial interests in Book-Entry Notes will be made through the
Trustee to the Depositary. Book-Entry Notes will not be exchangeable for
Certificated Notes and, except as set forth under "Description of Debt
Securities--Book-Entry, Delivery and Form" in the accompanying Prospectus, will
not otherwise be issuable in definitive form. Unless otherwise specified in the
applicable Pricing Supplement, Notes denominated in a Specified Currency other
than U.S. dollars will not be issued as Book-Entry Notes. See "Description of
Debt Securities--Book-Entry, Delivery and Form" in the accompanying Prospectus.
The authorized denominations of the Notes denominated in U.S. dollars will be
U.S. $1,000 or any amount that is an integral multiple of U.S. $1,000. The
authorized denominations of Notes denominated in a Specified Currency other
than U.S. dollars will be set forth in the applicable Pricing Supplement.
"Business Day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements: the day is (i) not a day on
which banking institutions are authorized or required by law or regulation to
be closed in The City of New York, New York, (ii) if the Note is denominated in
a Specified Currency other than U.S. dollars (a) not a day on which banking
institutions are authorized or required by law or regulation to be closed in
the financial center of the country issuing the Specified Currency (which in
the case of ECUs shall be Brussels, Belgium) and (b) a day on which banking
institutions in such financial center are carrying out transactions in such
Specified Currency and (iii) with respect to LIBOR Notes, a London Banking Day.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Original Issue Discount Note" means (i) a Note, including any Zero-Coupon
Note, that has a stated redemption price at maturity that exceeds its Issue
Price by at least .25% of its stated redemption price at maturity multiplied by
the number of full years from the Original Issue Date to the Stated Maturity
Date (each as defined below) for such Note and (ii) any other Note designated
by the Company as issued with original issue discount for United States federal
income tax purposes.
The Pricing Supplement relating to each Note will describe the following
terms: (i) the Specified Currency with respect to such Note (and, if such
Specified Currency is other than U.S. dollars, certain other terms relating to
such Note, including the authorized denominations); (ii) the price (which may
be expressed as a percentage of the aggregate principal amount thereof) at
which such Note will be issued (the "Issue Price"); (iii) the date on which
such Note will be issued (the "Original Issue Date"); (iv) the date on which
S-3
<PAGE>
such Note will mature (the "Stated Maturity Date") and whether the Stated
Maturity Date may be extended by the Company and, if so, the Final Maturity
Date (as defined below); (v) whether such Note is a Fixed Rate Note or a
Floating Rate Note; (vi) if such Note is a Fixed Rate Note, the rate per annum
at which such Note will bear interest, if any, the interest payment dates if
different from those set forth below under "Fixed Rate Notes" and whether such
rate may be changed by the Company prior to the Stated Maturity Date; (vii) if
such note is a Floating Rate Note, the Base Rate, the Interest Payment Period,
the Initial Interest Rate, the Interest Reset Period, the Interest Reset Dates,
the Interest Payment Period, the interest payment dates, the Index Maturity,
the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the
Spread or Spread Multiplier, if any (all as defined herein), and any other
terms relating to the particular method of calculating the interest rate for
such Note, and whether such Spread or Spread Multiplier may be changed by the
Company prior to the Stated Maturity Date; (viii) whether such Note is an
Original Issue Discount Note and if so, the yield to maturity; (ix) whether
such Note is an Indexed Note and, if so, the Face Amount, the Denominated
Currency, the Indexed Currency, the Base Exchange Rate, the Determination Agent
and the Reference Dealers (all as defined herein) relating to such Indexed
Note; (x) whether such Note may be repaid at the option of the holder or
redeemed at the option of the Company prior to the Stated Maturity Date and if
so, the provisions relating to such repayment or redemption; (xi) whether such
Note will be issued initially as a Book-Entry Note or a Certificated Note; and
(xii) any other terms of such Note not inconsistent with the provisions of the
Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and any premium and interest on each Note will be
denominated in the Specified Currency indicated in the Pricing Supplement for
such Note. If the Specified Currency for a Note is other than U.S. dollars, the
Company will, unless otherwise specified in the applicable Pricing Supplement,
appoint an agent (initially The Fuji Bank and Trust Company) (the "Exchange
Rate Agent") to determine the exchange rate for converting all payments in
respect of such Note into U.S. dollars in the manner described in the following
paragraph. Notwithstanding the foregoing, the holder of a Note having a
Specified Currency other than U.S. dollars may (if the Note and the applicable
Pricing Supplement so indicate) elect to receive all such payments in the
Specified Currency by delivery of a written request to the Paying Agent (as
defined below) at Two World Trade Center, 81st Floor, New York, New York 10048,
Attention: Trust Administrative Department, which must be received by the
Paying Agent on or prior to the applicable record date or at least 15 calendar
days prior to maturity, as the case may be. Such election shall remain in
effect unless and until changed by written notice to the Paying Agent, but the
Paying Agent must receive written notice of any such change on or prior to the
applicable Record Date or at least 15 calendar days prior to maturity, as the
case may be. Any such election or change thereof shall be deemed to be made for
all Notes denominated in such Specified Currency which are registered in the
name of such holder, unless such holder specifies in such written request the
particular Notes (by the Note number of each such Note) with regard to which
such election or change thereof shall not apply. However, such election may not
be effective under certain circumstances as described below under "Currency
Risks--Payment Currency." In the absence of manifest error, all determinations
by the Exchange Rate Agent shall be final and binding on the Company and all
holders of Notes. Until the Notes are paid or payment thereof is duly provided
for, the Company will, at all times, maintain a paying agent (the "Paying
Agent") in The City of New York, New York or Chicago, Illinois capable of
performing the duties described herein to be performed by the Paying Agent. The
Company has initially appointed the Trustee as the Paying Agent. The Company
will notify the holders of the Notes, in accordance with the Indenture, of any
change in the Paying Agent or its address.
In the case of a Note denominated in a Specified Currency other than U.S.
dollars, unless the holder has elected otherwise, payment in respect of such
Note shall be made in U.S. dollars based upon the exchange rate as determined
by the Exchange Rate Agent based on the highest firm bid quotation expressed in
U.S. dollars received by such Exchange Rate Agent at approximately 11:00 A.M.,
New York City time, on the second Business Day preceding the applicable payment
date from three recognized foreign exchange dealers
in The City of New York, New York or Chicago, Illinois selected by the Exchange
Rate Agent and approved by the Company (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer, for settlement on such payment
date, of the aggregate amount of the Specified Currency payable to all holders
of
S-4
<PAGE>
Notes denominated in such Specified Currency electing to receive payment in
U.S. dollars on such payment date. If no such bid quotations are available,
payments will be made in the Specified Currency, unless such Specified Currency
is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described below under "Certain Currency Risks--Payment Currency." All
currency exchange costs will be borne by the holders of such Notes by
deductions from such payments.
Unless otherwise specified in the applicable Pricing Supplement, payments in
U.S. dollars of interest on Certificated Notes (other than interest payable at
maturity or upon earlier redemption or repayment) will be made by mailing a
check to the holder at the address of such holder appearing on the security
register on the applicable record date. Notwithstanding the foregoing, a holder
of U.S. $10,000,000 or more in aggregate principal amount of Certificated Notes
of like tenor and terms (or a holder of the equivalent thereof in a Specified
Currency other than U.S. dollars) shall be entitled to receive such payments in
U.S. dollars by wire transfer of immediately available funds, but only if
appropriate payment instructions have been received in writing by the Paying
Agent not less than 15 calendar days prior to the applicable Interest Payment
Date (as defined below). Simultaneously with the election by any holder to
receive payments in a Specified Currency other than U.S. dollars (by written
request to the Paying Agent, as provided above), such holder shall provide
appropriate payment instructions to the Paying Agent, and all such payments
will be made in immediately available funds to an account maintained by the
payee in the Specified Currency. Beneficial owners of interests in Book-Entry
Notes will be paid in accordance with the Depositary's and the participant's
procedures in effect from time to time as described under "Description of Debt
Securities--Book-Entry, Delivery and Form" in the accompanying Prospectus."
Unless otherwise specified in the applicable Pricing Supplement, principal and
any premium and interest payable at maturity or upon earlier redemption or
repayment in respect of a Certificated Note will be paid in immediately
available funds upon surrender of such Note accompanied by wire transfer
instructions at the office of the Paying Agent.
Any payment otherwise required to be made in respect of a Note on a date that
is not a Business Day for such Note need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such date, and no additional interest shall accrue as a result of such
delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described in the Prospectus under "Description of Debt
Securities--Events of Default; Notice and Waiver" or in the event of the
redemption or payment thereof prior to its Stated Maturity Date, the amount of
principal due and payable with respect to such Note shall be the Amortized Face
Amount of such Note as of the date of declaration, redemption or payment, as
the case may be. The "Amortized Face Amount" of an Original Issue Discount Note
shall be the amount equal to (i) the Issue Price set forth in the applicable
Pricing Supplement plus (ii) the portion of the difference between the Issue
Price and the principal amount of such Note that has accrued at the yield to
maturity set forth in the Pricing Supplement (computed in accordance with
generally accepted United States bond yield computation principles) to such
date of declaration, redemption or repayment, as the case may be, but in no
event shall the Amortized Face Amount of an Original Issue Discount Note exceed
its principal amount.
The "Record Date" with respect to any Interest Payment Date shall be the date
(whether or not a Business Day) 15 calendar days immediately preceding such
Interest Payment Date. Interest payable and punctually paid or duly provided
for on any Interest Payment Date will be paid to the person in whose name a
Note is registered at the close of business on the Record Date immediately
preceding such Interest Payment Date; provided, however, that the first payment
of interest on any Note with an Original Issue Date between a Record Date and
an Interest Payment Date or on an Interest Payment Date will be made on the
Interest Payment Date following the next succeeding Record Date to the
registered holder on such next succeeding Record Date; provided, further, that
interest payable at maturity or upon earlier redemption or repayment will be
payable to the person to whom principal shall be payable.
S-5
<PAGE>
All percentages resulting from any calculation will be rounded, if necessary,
to the nearest one hundred-thousandth of a percentage point, with five one-
millionths of a percentage point being rounded upward (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544)
being rounded to 9.87654% (or .0987654)), and all currency or currency unit
amounts used in or resulting from such calculation on the Notes will be rounded
to the nearest one hundredth of a unit, with five one-thousandths of a unit
being rounded upward.
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by Illinois law as the same may be modified by United States law
of general application. Under present Illinois law, no maximum rate of interest
would apply to the Notes.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum stated on the face thereof until the principal amount thereof is
paid or payment thereof is duly provided for, except as described below under
"Subsequent Interest Periods" and "Extension of Maturity." Unless otherwise set
forth in the applicable Pricing Supplement, interest on each Fixed Rate Note
will be payable semiannually on each February 15 and August 15 of each year
(each such date and any other payment date specified in the applicable Pricing
Supplement being referred to herein as an "Interest Payment Date") and at
maturity or upon earlier redemption or repayment. Each payment of interest in
respect of an Interest Payment Date will include interest accrued to but
excluding such Interest Payment Date. Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Original Issue Date at
rates determined by reference to the Base Rate plus or minus the Spread, if
any, or multiplied by the Spread Multiplier, if any (each as specified in the
applicable Pricing Supplement), until the principal thereof is paid or payment
thereof is duly provided for. The "Spread" is the number of basis points (one
basis point equals one-hundredth of a percentage point) specified in the
applicable Pricing Supplement as being applicable to such Note, and the "Spread
Multiplier" is the percentage specified in the applicable Pricing Supplement as
being applicable to such Note. Any Floating Rate Note may also have either or
both of the following; (i) a maximum numerical interest rate limitation, or
ceiling, on the rate of interest that may accrue during any interest period
(the "Maximum Interest Rate") and (ii) a minimum numerical interest rate
limitation, or floor, on the rate of interest that may accrue during any
interest period (the "Minimum Interest Rate"). The applicable Pricing
Supplement will designate one of the following Base Rates (all as defined
below) as applicable to each Floating Rate Note: (a) the CD Rate (a "CD Rate
Note"), (b) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (c) the
Federal Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR (a "LIBOR Note"),
(e) the Prime Rate (a "Prime Rate Note"), (f) the Treasury Rate (a "Treasury
Rate Note"), or (g) such other Base Rate as is specified in the applicable
Pricing Supplement.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note, and the first day of each Interest Reset Period
being an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Date will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below); in the case of Floating Rate Notes that reset monthly, the third
Wednesday of each month; in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December; in the
case of Floating Rate Notes that reset semiannually, the third Wednesday of
each of the two months specified in the applicable Pricing Supplement; and in
the case of Floating Rate Notes that reset annually, the third Wednesday of the
month specified in the applicable Pricing Supplement. If any Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next day that is a
Business
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Day, except, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day. If a Treasury bill (as defined below) auction falls on
a day that is an Interest Reset Date for Treasury Rate Notes, the Interest
Reset Date shall be postponed to the next day that is a Business Day.
Except as provided below or in the applicable Pricing Supplement, interest on
Floating Rate Notes will be payable, (i) in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified on the face thereof and in the applicable Pricing Supplement; (ii) in
the case of Floating Rate Notes that reset quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) in the case of Floating
Rate Notes that reset semiannually, on the third Wednesday of each of two
months of each year specified on the face thereof and in the applicable Pricing
Supplement; and (iv) in the case of Floating Rate Notes that reset annually, on
the third Wednesday of one month of each year specified on the face thereof and
in the applicable Pricing Supplement (each such day being on "Interest Payment
Date") and, in each case, at maturity. If any Interest Payment Date, other than
maturity, for any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next day
that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the maturity for any
Floating Rate Note falls on a day that is not a Business Day, payment of
principal, premium, if any, and interest with respect to such Note will be made
on the next succeeding Business Day with the same force and effect as if made
on the due date, and no additional interest shall be payable as a result of
such delayed payment.
Interest payments on each Interest Payment Date for Floating Rate Notes
(except in the case of Floating Rate Notes that reset daily or weekly) will
include accrued interest from and including the Original Issue Date or from and
including the last date in respect of which interest has been paid, as the case
may be, to, but excluding, such Interest Payment Date. In the case of Floating
Rate Notes that reset daily or weekly, interest payments will include accrued
interest from and including the Original Issue Date or from and including the
last date in respect of which interest has been paid, as the case may be, to,
and including, the Record Date immediately preceding the applicable Interest
Payment Date, and at maturity the interest payments will include accrued
interest from and including the Original Issue Date, or from and including the
last date in respect of which interest has been paid, as the case may be, to,
but excluding, the Stated Maturity Date.
Accrued interest will be calculated by multiplying the principal amount of a
Floating Rate Note by an accrued interest factor. This accrued interest factor
will be computed by adding the interest factors calculated for each day in the
period for which accrued interest is being calculated. The interest factor
(expressed as a decimal) for each such day will be computed by dividing the
interest rate applicable to such day by 360, in the case of CD Rate Notes,
Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes, and Prime
Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes. The interest rate in effect on each day will be (i) if
such day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date (as defined below) pertaining to such Interest
Reset Date, or (ii) if such day is not an Interest Reset Date, the interest
rate with respect to the Interest Determination Date pertaining to the next
preceding Interest Reset Date, subject in either case to any Maximum or Minimum
Interest Rate limitation referred to above and to any adjustment by a Spread or
Spread Multiplier referred to above; provided, however, that the interest rate
in effect for the period from the Original Issue Date to the first Interest
Reset Date set forth in the applicable Pricing Supplement will be the "Initial
Interest Rate" specified in the applicable Pricing Supplement.
The "Interest Determination Date" pertaining to an Interest Reset Date for CD
Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes or Prime Rate
Notes will be the second Business Day next
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preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for a LIBOR Note will be the second London Banking
Day next preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a Treasury Rate Note will be the day
of the week in which such Interest Reset Date falls on which Treasury bills of
the Index Maturity specified on the face of such Note are auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Interest Determination Date pertaining to the Interest
Reset Date occurring in the next succeeding week.
The "Calculation Date," where applicable, pertaining to an Interest
Determination Date is the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, The Fuji
Bank and Trust Company shall be the calculation agent (the "Calculation Agent")
with respect to Floating Rate Notes. Upon request of the holder of any Floating
Rate Note, the Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate that will become effective on the next
Interest Reset Date with respect to such Floating Rate Note.
CD Rate Notes
Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the specified maturity (an "Index
Maturity") designated in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication of the Board
of Governors of the Federal Reserve System ("H.15(519)") under the heading "CDs
(Secondary Market)." If such rate is not published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
then the CD Rate with respect to such Interest Determination Date will be the
rate on such Interest Determination Date for negotiable certificates of deposit
of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication of Federal Reserve Bank of New York ("Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the CD Rate with respect to such
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such Interest Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in New York
City selected by such Calculation Agent (after consultation with the Company)
for negotiable certificates of deposit of major United States money center
banks of the highest credit standing in the market for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity designated
in the Pricing Supplement in the denomination of $5,000,000; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting as set forth above, the CD Rate with respect to such Interest
Determination Date will be the CD Rate in effect on such Interest Determination
Date.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any) specified in such Note and in the applicable Pricing
Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date, the Money
Market Yield (calculated as described below) of the rate on that date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as such rate is published in H.15(519) under the heading "Commercial
Paper." If such rate is not published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Commercial Paper Rate with respect to such Interest Determination Date shall be
the Money Market Yield of the rate on that Interest Determination Date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published in Composite Quotations under the heading "Commercial
Paper." If such rate is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Commercial Paper Rate with respect to such Interest Determination Date shall be
calculated by the Calculation Agent and shall be the Money Markey Yield of the
arithmetic mean of the offered rates of three leading dealers of commercial
paper in The City of New York, New York selected by the Calculation Agent
(after consultation with the Company) as of 11:00 A.M., New York City time, on
the Interest Determination Date, for commercial paper having the Index Maturity
designated in the applicable Pricing Supplement placed for an industrial issuer
whose senior debt rating is "AA," or the equivalent, from a nationally
recognized rating agency; provided, however, that, if the dealers selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the
Commercial Paper Rate with respect to such Interest Determination Date will be
the Commercial Paper Rate in effect on such Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper, quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any) specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
such day for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)." If such rate is not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, then the Federal Funds Rate with respect to such Interest Determination
Date will be the rate on such Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate". If such
rate is not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Federal Funds Rate for such
Interest Determination Date will be calculated by the Calculation Agent will be
the arithmetic mean of the rates for the last transaction in overnight Federal
Funds arranged by each of three leading dealers of Federal Funds transactions
in New York City selected by the Calculation Agent (after consultation with the
Company) as of 11:00 A.M., New York City time, on such Interest Determination
Date; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as set forth above, the Federal Funds Rate
with respect to such Interest Determination Date will be the Federal Funds Rate
in effect on such Interest Determination Date.
LIBOR Notes
Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in
such Note and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to any Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified in the Note and the applicable
Pricing Supplement, the arithmetic mean of the offered rates (unless the
specified Designated LIBOR Page (as defined below) by its terms provides
only for a single rate, in which case such single rate shall be used) for
deposits in the Designated LIBOR Currency (as defined below) having the
Index Maturity designated in the Note and the applicable Pricing
Supplement, commencing on the second London Banking Day immediately
following the Interest Determination Date, which appear on the Designated
LIBOR Page specified in the Note and the applicable Pricing Supplement as
of 11:00 A.M., London time, on that Interest Determination Date, if at
least two such offered rates appear (unless, as aforesaid, only a single
rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate"
is specified in the Note and the applicable Pricing Supplement, the rate
for deposits in the Designated LIBOR Currency (as defined below) having the
Index Maturity designated in the Note and the applicable Pricing
Supplement, commencing on the second London Banking Day immediately
following such Interest Determination Date, which appears on the Designated
LIBOR Page specified in the Note and the applicable Pricing Supplement as
of 11:00 A.M. London time on that Interest Determination Date.
Notwithstanding the foregoing, if fewer than two offered rates appear on
the Designated LIBOR Page with respect to LIBOR Reuters (unless the
specified Designated LIBOR Page with respect to LIBOR Reuters by its terms
provides only for a single rate, in which case such single rate shall be
used), or if no rate appears on the Designated LIBOR Page with respect to
LIBOR Telerate, whichever may be applicable, LIBOR in respect of the
related Interest Determination Date will be determined as if the parties
had specified the rate described in clause (ii) below.
(ii) With respect to any Interest Determination Date on which fewer than
two offered rates appear on the Designated LIBOR Page with respect to LIBOR
Reuters (unless the Designated LIBOR Page by its terms provides only for a
single rate, in which case such single rate shall be used), or if no rate
appears on the Designated LIBOR Page with respect to LIBOR Telerate, as the
case may be, the Calculation Agent will request the principal London office
of each of four major banks in the London interbank market selected by the
Calculation Agent (after consultation with the Company) to provide the
Calculation Agent with its offered rate quotation for deposits in the
Designated LIBOR Currency (as defined below) for the period of the Index
Maturity designated in the Note and the applicable Pricing Supplement
commencing on the second London Banking Day immediately following such
Interest Determination Date, to prime banks in the London interbank market
as of 11:00 A.M., London time, on such Interest Determination Date and in a
principal amount that is representative for a single transaction in such
Designated LIBOR Currency in such market at such time. If at least two such
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of the rates quoted as of 11:00 A.M. in
the applicable Principal Financial Center (as defined below), on such
Interest Determination Date by three major banks in such Principal
Financial Center selected by the Calculation Agent (after consultation with
the Company) for loans in the Designated LIBOR Currency to leading banks,
having the Index Maturity designated in the Note and the applicable Pricing
Supplement in a principal amount that is representative for a single
transaction in such Designated LIBOR Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, LIBOR determined on such
Interest Determination Date will be LIBOR in effect on such Interest
Determination Date.
"Designated LIBOR Currency" means, as with respect to any LIBOR Note, the
currency (including a composite currency), if any, designated in the Note and
the applicable Pricing Supplement as the Designated LIBOR Currency. If no such
currency is designated in the Note and the applicable Pricing Supplement, the
Designated LIBOR Currency shall be U.S. dollars.
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"Designated LIBOR Page" means either (a) the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates of
major banks for the applicable Designated LIBOR Currency (if "LIBOR Reuters" is
designated in the Note and the applicable Pricing Supplement), or (b) the
display on the Dow Jones Telerate Service for the purpose of displaying the
London interbank rates of major banks for the applicable Designated LIBOR
Currency (if "LIBOR Telerate" is designated in the Note and the applicable
Pricing Supplement). If neither LIBOR Reuters nor LIBOR Telerate is specified
in the Note and applicable Pricing Supplement, LIBOR for the applicable
Designated LIBOR Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Designated LIBOR Currency, page 3750) had been chosen.
"Principal Financial Center" means, with respect to any LIBOR Note, unless
otherwise specified in the Note and the applicable Pricing Supplement, the
capital city of the country that issues as its legal tender the Designated
LIBOR Currency of such Note, except that with respect to U.S. dollars and ECUs
the Principal Financial Center shall be The City of New York and Brussels,
respectively.
If LIBOR with respect to any LIBOR Note is indexed to the offered rates for
deposits in a Specified Currency other than U.S. dollars, the applicable
Pricing Supplement will set forth the method for determining such rate.
Prime Rate Notes
Each Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to an Interest Determination Date, the rate set forth on
such date in H.15(519) under the heading "Bank Prime Loan." If such rate is not
published prior to 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the Prime Rate will be
determined by the Calculation Agent and will be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen NYMF Page (as defined below) and such bank's prime rate or base lending
rate as in effect for that Interest Determination Date. If fewer than four such
rates but more than one such rate appear on the Reuters Screen NYMF Page for
the Interest Determination Date, the Prime Rate with respect to such Interest
Determination Date will be determined by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business on such
Interest Determination Date by major money center banks in New York City
selected by the Calculation Agent (after consultation with the Company). If
fewer than two such rates appear on the Reuters Screen NYMF Page, the Prime
Rate with respect to such Interest Determination Date will be determined by the
Calculation Agent on the basis of the rates furnished in New York City on such
Interest Determination Date by the appropriate number of substitute banks or
trust companies organized and doing business under the laws of the United
States, or any State thereof, having total equity capital of at least U.S.
$500,000,000 and being subject to supervision or examination by Federal or
State authority, selected by the Calculation Agent (after consultation with the
Company) to provide such rate or rates; provided, however, that if the banks
selected as aforesaid are not quoting as set forth above, the Prime Rate with
respect to such Interest Determination Date will be the Prime Rate in effect on
such Interest Determination Date. "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such
other pages that may replace the NYMF page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
Treasury Rate Notes
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any) specified in such Note and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date, the rate for the
auction held on such Interest Determination Date of direct obligations of the
United States ("Treasury bills") having the Index Maturity designated in the
applicable Pricing Supplement as such rate is published in H.15(519) under the
heading "U.S. Government Securities--Treasury bills--auction average
(investment)" or, if such rate is not so published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
then the Treasury Rate shall be the auction average rate (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the Index Maturity designated in the applicable Pricing
Supplement are not published or reported as provided above by 3:00 P.M., New
York City time, on such Calculation Date or if no such auction is held in a
particular week, then the Treasury Rate for that Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield to maturity (
expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Interest Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent (after
consultation with the Company) for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity designated in the applicable Pricing
Supplement; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as set forth above, the Treasury Rate with
respect to such Interest Determination Date will be the Treasury Rate in effect
on such Interest Determination Date.
INDEXED NOTES
General
The Company may from time to time offer Notes ("Indexed Notes") the principal
amount of which payable at the Stated Maturity Date is determined by the rate
of exchange between the currency or composite currency in which such Notes are
denominated (the "Denominated Currency") and the other currency or composite
currency (the "Indexed Currency") specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
holders of Indexed Notes will be entitled to receive a principal amount of such
Indexed Notes exceeding the amount designated as the face amount of such
Indexed Notes in the applicable Pricing Supplement (the "Face Amount") if, at
the Stated Maturity Date, the rate at which the Denominated Currency can be
exchanged for the Indexed Currency is greater than the rate of such exchange
designated as the Base Exchange Rate, expressed in units of the Indexed
Currency per one unit of the Denominated Currency, in the applicable Pricing
Supplement (the "Base Exchange Rate"), and will be entitled to receive a
principal amount of such Indexed Notes less than the Face Amount of such
Indexed Notes, if, at the Stated Maturity Date, the rate at which the
Denominated Currency can be exchanged for the Indexed Currency is less than
such Base Exchange Rate, in each case determined as described below under
"Payment of Principal and Interest." Information as to the relative value of
the applicable Denominated Currency against the applicable Indexed Currency,
any currency and/or exchange controls applicable to such Denominated Currency
or Indexed Currency, and the tax consequences to holders will be set forth in
the applicable Pricing Supplement. An investment in Indexed Notes entails
significant risks that are not associated with a similar investment in a
security the principal amount of which payable at maturity is not determined by
the rate of exchange between two currencies or composite currencies. See
"Certain Currency Risks."
Unless otherwise specified in the applicable Pricing Supplement, the term
"Exchange Rate Day" shall mean any day which is a Business Day in The City of
New York, New York and, (a) if the Denominated Currency or Indexed Currency is
the Canadian Dollar, in Toronto, Canada, (b) if the Denominated Currency or
Indexed Currency is the Australian Dollar, in Melbourne, Australia, (c) if the
Denominated Currency or the Indexed Currency is the ECU, in Brussels, Belgium,
and/or (d) if the Denominated Currency or the Indexed Currency is any other
currency or currency unit (other than the U.S. Dollar), in the principal
financial center of the country of such Denominated Currency or Indexed
Currency.
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Payment of Principal and Interest
Unless otherwise specified in the applicable Pricing Supplement, interest
will be payable by the Company in the Denominated Currency based on the Face
Amount of the Indexed Notes and at the rate and times and in the manner set
forth herein and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, principal of
an Indexed Note will be payable by the Company in the Denominated Currency at
the Stated Maturity Date in an amount equal to the Face Amount of the Indexed
Note, plus or minus an amount determined by the determination agent specified
in the applicable Pricing Supplement (the "Determination Agent") by reference
to the difference between the Base Exchange Rate and the rate at which the
Denominated Currency can be exchanged for the Indexed Currency as determined on
the second Exchange Rate Day (the "Determination Date") prior to the Stated
Maturity Date of such Indexed Note by the Determination Agent based upon the
arithmetic mean of the open market spot offer quotations for the Indexed
Currency (spot bid quotations for the Denominated Currency) obtained by the
Determination Agent from the Reference Dealers (as defined below) in The City
of New York, New York at 11:00 A.M., New York City time, on the Determination
Date, for an amount of Indexed Currency equal to the Face Amount of such
Indexed Note multiplied by the Base Exchange Rate, with the Denominated
Currency for settlement at the Stated Maturity Date (such rate of exchange, as
so determined, expressed in units of the Indexed Currency per one unit of the
Denominated Currency, is hereafter referred to as the "Spot Rate"). If such
quotations from the Reference Dealers are not available on the Determination
Date due to circumstances beyond the control of the Company or the
Determination Agent, the Spot Rate will be determined on the basis of the most
recently available quotations from the Reference Dealers. The principal amount
of the Indexed Notes determined by the Determination Agent to be payable at the
Stated Maturity Date will be payable to the holders thereof in the manner set
forth herein and in the applicable Pricing Supplement. As used herein, the term
"Reference Dealers" shall mean the three banks or firms specified as such in
the applicable Pricing Supplement or, if any of them shall be unwilling or
unable to provide the requested quotations, such other major money center bank
or banks in The City of New York, New York selected by the Company, in
consultation with the Determination Agent, to act as Reference Dealer or
Dealers in replacement therefor. In the absence of manifest error, the
determination by the Determination Agent of the Spot Rate and the principal
amount of Indexed Notes payable at the Stated Maturity Rate thereof shall be
final and binding on the Company and the holders of such Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, on the basis
of the aforesaid determination by the Determination Agent and the formulae and
limitations set forth below, (i) if the Base Exchange Rate equals the Spot Rate
for any Indexed Note, then the principal amount of such Indexed Note payable at
the Stated Maturity Date would be equal to the Face Amount of such Indexed
Note; (ii) if the Spot Rate exceeds the Base Exchange Rate (i.e., the
Denominated Currency has appreciated against the Indexed Currency during the
term of the Indexed Note), then the principal amount so payable would be
greater than the Face Amount of such Indexed Note up to an amount equal to
twice the Face Amount of such Indexed Note; (iii) if the Spot Rate is less than
the Base Exchange Rate (i.e., the Denominated Currency has depreciated against
the Indexed Currency during the term of the Indexed Note) but is greater than
one half of the Base Exchange Rate, then the principal amount so payable would
be less than the Face Amount of such Indexed Note; and (iv) if the Spot Rate is
less than or equal to one-half of the Base Exchange Rate, then the Spot Rate
will be deemed to be one-half of the Base Exchange Rate and no principal amount
of the Indexed Note would be payable at the Stated Maturity Date.
Unless otherwise specified in the applicable Pricing Supplement, the formulae
to be used by the Determination Agent to determine the principal amount of an
Indexed Note payable at the Stated Maturity Date will be as follows:
If the Spot Rate exceeds or equals the Base Exchange Rate, the principal
amount of an Indexed Note payable at the Stated Maturity Date shall equal:
Spot Rate - Base Exchange Rate
Face Amount + ( Face Amount X ------------------------------ )
Spot Rate
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If the Base Exchange Rate exceeds the Spot Rate, the principal amount of an
Indexed Note payable at the Stated Maturity Date (which shall, in no event, be
less than zero) shall equal:
Base Exchange Rate - Spot Rate
Face Amount - ( Face Amount X ------------------------------ )
Spot Rate
If the formulae set forth above are applicable to an Indexed Note, the
maximum principal amount payable at the Stated Maturity Date in respect of such
Indexed Note would be an amount equal to twice the Face Amount and the minimum
principal amount payable would be zero.
Unless otherwise specified in the applicable Pricing Supplement, in the event
of any redemption or repayment of the Indexed Notes prior to the Stated
Maturity Date, the term "Stated Maturity Date" used above would refer to the
redemption or repayment date of such Indexed Notes.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate, in
the case of a Fixed Rate Note, or to reset the Spread or Spread Multiplier, in
the case of a Floating Rate Note, and, if so, the date or dates on which such
interest rate or such Spread or Spread Multiplier, as the case may be, may be
reset (each an "Optional Reset Date").
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Optional Reset Date for such Note. Not later than 40 days prior to such
Optional Reset Date, the Trustee will mail to the holder of such Note a notice
(the "Reset Notice"), first class, postage prepaid, setting forth (i) the
election of the Company to reset the interest rate, in the case of a Fixed Rate
Note, or the Spread or Spread Multiplier, in the case of a Floating Rate Note,
(ii) such new interest rate or such new Spread or Spread Multiplier, as the
case may be, and (iii) the provisions, if any, for redemption during the period
from such Optional Reset Date to the next Optional Reset Date or, if there is
no such next Optional Reset Date, to the Stated Maturity Date of such Note
(each such period being referred to herein as a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in
the case of a Floating Rate Note, provided for in the Reset Notice and
establish a higher interest rate, in the case of a Fixed Rate Note, or a higher
Spread or Spread Multiplier, in the case of a Floating Rate Note, for the
Subsequent Interest Period commencing on such Optional Reset Date by causing
the Trustee to mail notice of such higher interest rate or higher Spread or
Spread Multiplier, as the case may be, first class, postage prepaid, to the
holder of such Note. Such notice shall be irrevocable. All Notes with respect
to which the interest rate or Spread or Spread Multiplier is reset on an
Optional Reset Date will bear such higher interest rate, in the case of a Fixed
Rate Note, or higher Spread or Spread Multiplier, in the case of a Floating
Rate Note, whether or not tendered for repayment.
If the Company elects to reset the interest rate or the Spread or Spread
Multiplier of a Note, the holder of such Note will have the option to elect
repayment of such Note by the Company on any Optional Reset Date at a price
equal to the principal amount thereof plus any accrued interest to such
Optional Reset Date. In order for a Note to be so repaid on an Optional Reset
Date, the holder thereof must follow the procedures set forth below under
"Redemption and Repayment" for optional repayment, except that the period for
delivery of such Note or notification to the Trustee shall be at least 25 but
not more than 35 days prior to such Optional Reset Date and except that a
holder who has tendered a Note for repayment pursuant to a Reset Notice may, by
written notice to the Trustee, revoke any such tender for repayment until the
close of business on the tenth day prior to such Optional Reset Date.
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EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether the
Company has the option to extend the Stated Maturity Date of such Note for one
or more periods of from one to five whole years (each an "Extension Period") up
to but not beyond the date (the "Final Maturity Date") set forth in such
Pricing Supplement.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity Date of such Note in effect prior to the exercise of such
option (the "Original Stated Maturity Date"). Not later than 40 days prior to
the Original Stated Maturity Date, the Trustee will mail to the holder of such
Note a notice (the "Extension Notice") relating to such Extension Period, first
class, postage prepaid, setting forth (i) the election of the Company to extend
the Stated Maturity Date of such Note, (ii) the new Stated Maturity Date, (iii)
in the case of a Fixed Rate Note, the interest rate applicable to the Extension
Period, or in the case of the Floating Rate Note, the Spread or Spread
Multiplier, if any, applicable to the Extension Period, and (iv) the
provisions, if any, for redemption during the Extension Period, including the
date or dates on which, or the period or periods during which, and the price or
prices at which, such redemption may occur during the Extension Period. Upon
the mailing by the Trustee of an Extension Notice to the holder of a Note, the
Stated Maturity Date of such Note shall be extended automatically, and, except
as modified by the Extension Notice and as described in the next paragraph,
such Note will have the same terms as prior to the mailing of such Extension
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity Date for a Note, the Company may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread or Spread Multiplier, in the case of a Floating Rate Note,
for the Extension Period by causing the Trustee to mail notice of such higher
interest rate or higher Spread or Spread Multiplier, as the case may be, first
class, postage prepaid, to the holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the Stated Maturity Date is
extended will bear such higher interest rate, in the case of a Fixed Rate Note,
or higher Spread or Spread Multiplier, in the case of a Floating Rate Note, for
the Extension Period, whether or not tendered for repayment.
If the Company elects to extend the Stated Maturity Date of a Note, the
holder of such Note will have the option to elect repayment of such Note by the
Company on the Original Stated Maturity Date at a price equal to the principal
amount thereof plus any accrued interest to such date. In order for a Note to
be so repaid on the Original Stated Maturity Date, the holder thereof must
follow the procedures set forth below under "Redemption and Repayment" for
optional repayment, except that the period for delivery of such Note or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to the Original Stated Maturity date and except that a holder who has
tendered a Note for repayment pursuant to an Extension Notice may, by written
notice to the Trustee, revoke any such tender for payment until the close of
business on the tenth day prior to the Original Stated Maturity Date.
REDEMPTION AND REPAYMENT
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to maturity or that such Note will be redeemable
at the option of the Company on a date or dates specified prior to maturity at
a price or prices set forth in the applicable Pricing Supplement, together with
accrued interest to the date of redemption. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will not be subject to any sinking
fund. The Company may redeem any of the Notes that are redeemable and remain
outstanding either in whole or from time to time in part, upon not less than 30
nor more than 60 days' notice. If less than all of the Notes with like tenor
and terms are to be redeemed, the Notes to be redeemed shall be selected by the
Trustee by such method as the Trustee shall deem fair and appropriate.
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The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid prior to maturity or that such Note will be repayable at
the option of the holder on a date or dates specified prior to maturity at a
price or prices set forth in the applicable Pricing Supplement, together with
accrued interest to the date of repayment.
In order for a Note to be repaid, the Paying Agent must receive at least 30
days but not more than 45 days prior to the repayment date (i) the Note with
the form entitled "Option to Elect Repayment" on the reverse of the Note duly
completed or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States setting forth the name of the holder of the Note, the principal amount
of the Note, the principal amount of the Note to be repaid, the certificate
number or a description of the tenor and terms of the Note, a statement that
the option to elect repayment is being exercised thereby and a guarantee that
the Note to be repaid with the form entitled "Option to Elect Repayment" on the
reverse of the Note duly completed will be received by the Paying Agent not
later than five Business Days after the date of such telegram, telex, facsimile
transmission or letter and such Note and form duly completed are received by
the Paying Agent by such fifth Business Day. Exercise of the repayment option
by the holder of a Note shall be irrevocable, except as otherwise provided
above under "Subsequent Interest Periods" and "Extension of Maturity". The
repayment option may be exercised by the holder of a Note for less than the
entire principal amount of the Note provided that the principal amount of the
Note remaining outstanding after repayment is an authorized denomination.
If a Note is represented by a Global Security, the Depositary's nominee will
be the holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note,
the beneficial owner of an interest in such Note must instruct the broker or
other direct or indirect participant through which it holds an interest in such
Note to notify the Depositary of its desire to exercise a right to repayment.
Different firms have different cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in a Note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to the
Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is
an Original Issue Discount Note, the amount payable on such Note in the event
of redemption or repayment prior to its Stated Maturity Date shall be the
Amortized Face Amount of such Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of an Original Issue
Discount Note shall be the amount equal to (i) the Issue Price set forth in the
applicable Pricing Supplement plus (ii) that portion of the difference between
the Issue Price and the principal amount of such Note that has accrued at the
yield to maturity set forth in the Pricing Supplement (computed in accordance
with generally accepted United States bond yield computation principles) to
such date of redemption or repayment, but in no event shall the Amortized Face
Amount of an Original Issue Discount Note exceed its principal amount.
REPURCHASE
The Company may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by the Company may be held or resold
or, at the discretion of the Company, may be surrendered to the Trustee for
cancellation.
DEFEASANCE OF CERTAIN COVENANTS
Unless the applicable Pricing Supplement otherwise specifies, the Company
will have the option to omit to comply with the covenants described under the
headings "Description of Debt Securities--Limitation on Security Interests,"
"--Limitation on Sale and Leaseback Transactions" and "--Limitation on Funded
Debt of Restricted Subsidiaries" in the accompanying Prospectus. See
"Description of Debt Securities--Defeasance of Certain Covenants" in the
accompanying Prospectus.
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CERTAIN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Note denominated in a Specified Currency other than the
currency of the country in which a purchaser is resident or the currency
(including any composite currency) in which a purchaser conducts its primary
business (the "home currency") entails significant risks that are not
associated with a similar investment in a security denominated and payable in
the home currency. Similarly, an investment in an Indexed Note entails
significant risks that are not associated with a similar investment in Notes
which are not Indexed Notes. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the home
currency and the Specified Currency or the Indexed Currency and the possibility
of the imposition or modification of foreign exchange controls with respect to
the Specified Currency or the Indexed Currency. Such risks generally depend on
factors over which the Company has no control, such as economic and political
events and the supply of and demand for the relevant currencies. In recent
years, rates of exchange for certain currencies have been highly volatile, and
such volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any
Note. Depreciation of the Specified Currency in which a Note is denominated
against the relevant home currency would result in a decrease in the effective
yield of such Note below its coupon rate and in certain circumstances could
result in a loss to the investor on a home currency basis. Similarly,
depreciation of the Denominated Currency of an Indexed Note against the
relevant Indexed Currency would result in the principal amount payable at the
Stated Maturity Date being less than the Face Amount of such Indexed Note
which, in turn, would decrease the effective yield of such Note below its
stated interest rate and could also result in a loss to the investor. See
"Description of Notes--Indexed Notes."
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments with respect to a Note. At present,
the Company has identified the following currencies and currency units in which
payments on Notes may be made: Australian dollars, British pounds sterling,
Canadian dollars, Danish kroner, German deutsche marks, Italian lire, Japanese
yen, New Zealand dollars, Swiss francs, United States dollars and ECUs. There
can be no assurances that exchange controls will not restrict or prohibit
payments in any such currency or currency unit. Even if there are no actual
exchange controls, it is possible that on a payment date with respect to any
particular Note, the Specified Currency for such Note would not be available to
the Company to make payments then due. In that event, the Company will make
such payments in the manner set forth below under "Payment Currency."
THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE PROSPECTUS
DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED OR INDEXED
IN A CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER THAN A PROSPECTIVE
PURCHASER'S HOME CURRENCY, OR OF AN INVESTMENT IN INDEXED NOTES, AND THE
COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH
RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES
DENOMINATED, OR INDEXED IN A CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER
THAN THE PARTICULAR HOME CURRENCY OR OF AN INVESTMENT IN INDEXED NOTES. SUCH
NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED
WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise provided in the applicable Pricing Supplement, Notes
denominated in foreign currencies other than ECUs will not be sold in, or to
residents of, the country of the Specified Currency in which particular Notes
are denominated.
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The Pricing Supplement relating to each Note denominated in a Specified
Currency other than U.S. dollars or any Indexed Note will contain information
concerning historical exchange rates for such Specified Currency against U.S.
dollars, Denominated Currency and/or Indexed Currency, as the case may be, a
description of such currency or currencies and any exchange controls affecting
such currency or currencies.
PAYMENT CURRENCY
Except as set forth below, if payment on a Note is required to be made in a
Specified Currency other than U.S. dollars and on a payment date with respect
to such Note such currency is unavailable due to the imposition of exchange
controls or other circumstances beyond the Company's control, or is no longer
used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the
international banking community, then all payments due on such payment date
shall be made in U.S. dollars. The amount so payable on any payment date in
such foreign currency shall be converted into U.S. dollars at a rate determined
by the Exchange Rate Agent on the basis of the Market Exchange Rate as of the
second Business Day prior to such payment date or, if no Market Exchange Rate
is available as of such date, as of the most recently available Market Exchange
Rate for such currency, or as otherwise indicated in the applicable Pricing
Supplement. Any payment in respect of such Note made under such circumstances
will not constitute an Event of Default under the Indenture.
If payment on a Note is required to be made in ECUs and on a payment date
with respect to such Note ECUs are unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control, or are
no longer used in the European Monetary System, then all payments due on such
payment date shall be made in U.S. dollars. The amount so payable on any
payment date in ECUs shall be converted into U.S. dollars at a rate determined
by the Exchange Rate Agent as of the second Business Day prior to the date on
which such payment is due on the following basis: The component currencies of
the ECUs for this purpose (the "Components") shall be the currency amounts that
were components of the ECUs as of the last date on which ECUs were used in the
European Monetary System. The equivalent of ECUs in U.S. dollars shall be
calculated by aggregating the U.S. dollar equivalents of the Components. The
U.S. dollar equivalent of each of the Components shall be determined by the
Exchange Rate Agent on the basis of the Market Exchange Rate as of the second
Business Day prior to such payment date or, if no Market Exchange Rate is
available as of such date, as of the most recently available Market Exchange
Rate for the Components, or as otherwise indicated in the applicable Pricing
Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into
two or more currencies, the amount of that currency as a Component shall be
replaced by amounts of such two or more currencies, each of which shall have a
value on the date of division equal to the amount of the former component
currency divided by the number of currencies into which that currency was
divided.
All determinations referred to above made by the Exchange Rate Agent shall be
at its sole discretion (except to the extent expressly provided herein or in
the applicable Pricing Supplement that any determination is subject to approval
by the Company) and, in the absence of manifest error, shall be conclusive for
all purposes and binding on holders of the Notes and the Company, and the
Exchange Rate Agent shall have no liability therefor.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of Illinois. Judgments for money damages by courts in the United
States, including a money judgment based on an
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obligations expressed in a foreign currency, have ordinarily been rendered only
in U.S. dollars. Certain Illinois decisions have permitted the conversion of an
amount of money damages denominated in a foreign currency into a judgment in
U.S. dollars at the rate of exchange prevailing either on the date the cause of
action arose or the date the judgment was entered. However, under Illinois law,
a judgment of an Illinois court on a claim under an obligation expressed in a
currency other than U.S. dollars must be stated in the currency of the claim.
Unless otherwise provided in the obligation, such a judgment is payable in the
currency of the judgment, or, at the option of the debtor, in U.S. dollars
based upon the spot rate of exchange on the banking day next preceding the date
on which the judgment is satisfied.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the ownership of a Note is based upon the advice of Bell, Boyd
& Lloyd, tax counsel to the Company. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), temporary and final regulations
(the "Regulations"), rulings and decisions in effect on the date of this
Prospectus Supplement and proposed regulations under the Code, all of which are
subject to change. It deals only with Notes held as capital assets and does not
address tax considerations applicable to investors that may be subject to
special tax rules, such as financial institutions, tax-exempt organizations,
insurance companies or dealers in securities or currencies, persons that will
hold Notes as a position in a "straddle" or as part of a hedging transaction
for tax purposes, or persons that have a "functional currency" other than U.S.
dollars. It does not deal with holders of the Notes other than original
purchasers. Additional United States federal income tax considerations
applicable to particular Notes may be set forth in the applicable Pricing
Supplement.
Potential investors should consult their own tax advisors in determining the
tax considerations that may be relevant in connection with holding, purchasing
or disposing of the Notes, including the application to their particular
situation of the tax considerations discussed below, as well as the application
of state, local, foreign or other tax laws.
UNITED STATES HOLDERS
For purposes of the following discussion, "United States holder" means (i) an
individual who is a citizen or resident of the United States for United States
federal income tax purposes, a corporation, partnership or other entity created
or organized in or under the laws of the United States or of any political
subdivision thereof, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source ("United States
persons"), or (ii) any other person or entity that otherwise is subject to
United States federal income taxation on a net income basis in respect of a
Note. The following discussion pertains only to United States holders. Certain
federal income tax consequences of the ownership of Notes by persons other than
United States holders ("non-United States Holders") are summarized below under
"Non-United States Holders."
Payments of Interest
Payments of interest on a Note will be taxable to a United States holder as
ordinary interest income at the time that such payments are accrued or are
received (in accordance with the United States holder's method of tax
accounting). The treatment of interest payments on a Note denominated in a
currency or currency unit other than the U.S. dollar (a "Foreign Currency
Note") is described below under "Foreign Currency Notes."
Purchase, Sale and Retirement of Notes
A United States holder's tax basis in a Note generally will equal the cost of
such Note to such holder, increased by any amounts includible in income by the
holder as original issue discount and reduced by any amortized premium and any
payments other than interest made on such Note.
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Upon the sale, exchange or retirement of a Note, a United States holder
generally will recognize gain or loss equal to the difference between the
amount realized on the sale, exchange or retirement (less any accrued interest,
which will be taxable as such) and the holder's tax basis in the Note. The
treatment of the purchase, sale and retirement of a Foreign Currency Note is
described below under "Foreign Currency Notes."
Except as discussed below with respect to foreign currency gain or loss, gain
or loss recognized by a United States holder on the sale, exchange or
retirement of a Note generally will be long-term capital gain or loss if the
United States holder has held the Note for more than one year at the time of
such disposition. Capital gains recognized to United States holders which are
corporations will generally be taxed in the same manner as ordinary income.
Long-term capital gains recognized to United States holders other than
corporations will be subject to tax at a maximum rate of 28%. Capital losses in
excess of capital gains may be deducted from ordinary income by United States
holders other than corporations only in an amount not to exceed $3,000 in any
taxable year; capital losses are deductible by United States holders which are
corporations only to the extent of capital gains.
Original Issue Discount
United States holders of Original Issue Discount Notes generally will be
subject to the special tax accounting rules for original issue discount
obligations provided by the Code, the Regulations and certain proposed
regulations thereunder (the "Proposed Regulations"). Because the Proposed
Regulations do not address certain issues, are unclear in certain respects and
are not in final form (and thus cannot be relied upon as legal authority), the
application of the original issue discount rules to the Notes cannot be fully
determined until regulations are issued in final or temporary form or until
further guidance is issued by the Internal Revenue Service. United States
holders of such Notes should be aware that, as described in greater detail
below, they generally must include original issue discount in ordinary gross
income for United States federal income tax purposes as it accrues, in advance
of the receipt of cash attributable to that income. Additional rules applicable
to Original Issue Date Discount Notes that also are Foreign Currency Notes are
set forth below under "Foreign Currency Notes."
In general, each United States holder of an Original Issue Discount Note,
whether such holder uses the cash or the accrual method of tax accounting, will
be required to include in ordinary gross income the sum of the "daily portions"
of original issue discount on the Note for all days during the taxable year on
which the United States holder owns the Note. The daily portions of original
issue discount on an Original Issue Discount Note are determined by allocating
to each day in any accrual period a pro rata portion of the original issue
discount allocable to that accrual period. The "accrual period" for an Original
Issue Discount Note may be of any length and may vary in length over the term
of the Note, provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occurs on the first day or the
final day of an accrual period. The amount of original issue discount on an
Original Issue Discount Note allocable to each accrual period is determined by
(i) multiplying the "adjusted issue price" (as defined below) of the Note at
the beginning of an accrual period by a fraction, the numerator of which is the
applicable yield to maturity (determined by compounding at the end of each
accrual period and properly adjusted for the length of the accrual period) of
the Note and the denominator of which is the number of accrual periods in a
year and (ii) subtracting from that product the amount payable as interest
during that accrual period. The "adjusted issue price" of an Original Issue
Discount Note at the beginning of any accrual period will be the sum of its
issue price (including accrued interest) and the amount of original issue
discount allocable to all prior accrual periods, reduced by the amount of all
payments other than interest payments made with respect to such Note in all
prior accrual periods. As a result of this "constant yield" method of including
original issue discount income, the amounts so includible in income by a United
States holder in respect of an Original Issue Discount Note are lesser in the
earlier years and greater in the later years than the amounts that would be
includible on a straight-line basis (ignoring the effect of foreign currency
exchange rate fluctuations in the case of a Foreign Currency Note).
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For purposes of determining the yield to maturity and the amount of original
issue discount of an Original Issue Discount Note, all Notes issued to a holder
as part of the same issue (i.e., Notes with the same credit and payment terms
and sold at substantially the same time pursuant to a common plan of marketing)
may be aggregated as a single Note.
The Regulations also set forth certain rules regarding the treatment of a
debt instrument that may be either purchased or retired by the issuer before
its stated maturity date, or have its maturity date extended, at the option of
the issuer or the holder of such debt instrument. Pursuant to these rules, the
debt instrument will be presumed to be purchased or retired by the issuer or to
have its maturity date extended, depending on the impact of such action on the
yield to maturity of such debt instrument. These rules may affect the amount of
original issue discount of an Original Issue Discount Note depending on the
specific terms of such Note.
In the case of a Floating Rate Note, if the rate of interest on such Note is
based on current values of a single "qualified floating rate" and the Note is
an Original Issue Discount Note, then the "yield to maturity," the "adjusted
issue price" and the "amount payable as interest" will be determined for
purposes of computing the original issue discount on such Note allocable to
each accrual period as if the Note were to bear interest in all periods at a
fixed rate equal to the level of the Base Rate (as adjusted by the applicable
Spread or Spread Multiplier) on the Original Issue Date. Interest on such Note
that is actually paid to the holder on an Interest Payment Date will be
includible by the holder in income, as described above. Under Proposed
Regulations with respect to contingent payment debt obligations released by the
Internal Revenue Service on December 16, 1994, if the rate of interest on such
Note is not based on current values of an "objective rate" or "qualified
floating rates," then such Note would be treated as a contingent payment debt
instrument. The Proposed Regulations will not be effective until 60 days after
final regulations are published in the Federal Register. Any final regulations
may differ substantially from the Proposed Regulations. Each potential
purchaser of the Notes should consult such purchaser's own tax advisor
regarding the Proposed Regulations.
In general, a holder of a Note who uses the cash method of tax accounting
(e.g., an individual) is not required to accrue original issue discount with
respect to an Original Issue Discount Note that matures one year or less from
the date of its issuance (a "short-term Original Issue Discount Note") unless
an election is made by such holder to do so. A United States holder who reports
income for United States federal income tax purposes on the accrual method of
tax accounting or who makes the election to accrue original issue discount with
respect to such a Note is required to include original issue discount on such a
Note on a straight-line basis, unless an election is made to accrue the
original issue discount according to a constant interest method based on daily
compounding. In the case of a United States holder who is not required, and
does not elect, to include original issue discount in income currently, any
gain realized on the sale, exchange or retirement of the short-term Original
Issue Discount Note will be ordinary income to the extent of the original issue
discount accrued on a straight-line basis (or, if elected, according to a
constant interest method based on daily compounding) through the date of sale,
exchange or retirement. In addition, such a non-electing holder who is not
subject to the current inclusion requirement described in this paragraph will
be required to defer deductions for any interest paid on indebtedness incurred
or continued to purchase or carry such a short-term Original Issue Discount
Note in an amount not exceeding the deferred interest income, until such
deferred interest income is realized.
Premium
A United States holder of a Note who purchases the Note at a cost greater
than its principal amount generally will be considered to have purchased the
Note at a premium. Such holder may amortize such premium, using a constant
yield method, over the remaining term of the Note and, except as future
regulations issued by the United States Treasury Department may otherwise
provide, may apply such amortized amounts to reduce the amount of interest
income reportable with respect to such Note over the period from the purchase
date to the date of maturity of the Note. The treatment of premium on a Foreign
Currency Note is described below under "Foreign Currency Notes."
S-21
<PAGE>
Foreign Currency Notes
The following is a summary of certain United States federal income tax
considerations that may be relevant to a United States holder of a Foreign
Currency Note. Certain United States federal income tax considerations that may
be relevant to a non-United States holder of a Foreign Currency Note are
summarized under "Non-United States Holders" below.
If a United States holder elects to receive payments of interest pursuant to
the terms of a Foreign Currency Note in a currency or composite currency other
than U.S. dollars ( a "foreign currency"), the amount of interest income
realized by the United States holder will be the U.S. dollar value of the
foreign currency payment (determined as of the time that such payment is
accrued or is received, in accordance with the United States holder's method of
tax accounting), regardless of whether the payment in fact is converted into
U.S. dollars. A United States holder that is required to accrue interest income
(pursuant to the original issue discount provisions, as described above, or
because it uses an accrual method of accounting for tax purposes) will
recognize foreign currency gain or loss, as the case may be, on the receipt of
a foreign currency interest payment or an interest payment in U.S. dollars, the
amount of which is determined by reference to the value of a foreign currency,
if the exchange rate in effect on the date the payment is received differs from
the average exchange rate applicable for the accrual period. An additional
foreign currency gain or loss could result on the sale or other disposition of
foreign currency received if the exchange rate on the date of sale or other
disposition differs from the exchange rate on the date of receipt. A United
States holder will have a tax basis in foreign currency equal to the U.S.
dollar value of such foreign currency, determined at the time of receipt. Any
foreign currency gain or loss recognized by a United States holder on the
accrual of interest income or on a sale or other disposition of foreign
currency (including its exchange for U.S. dollars) will be treated as ordinary
income or loss, and will not be treated as interest income or expense.
Treasury Regulations currently specify the exchange rates to be used to
convert foreign currency denominated interest payments into U.S. dollars for
United States federal income tax purposes. These exchange rates may not be the
same exchange rates as those determined by the Exchange Rate Agent for
converting interest payments on a Foreign Currency Note into U.S. dollars.
Therefore, a holder of a Foreign Currency Note that receives interest payments
in U.S. dollars may realize more or less interest income for United States
federal income tax purposes than it receives in cash.
The cost of a Foreign Currency Note to a United States holder will be the
U.S. dollar value of the foreign currency purchase price on the date of
purchase. The amount of any subsequent adjustments to a United States holder's
tax basis in a Foreign Currency Note in respect of original issue discount and
premium will be determined in the manner described generally above and more
specifically below. A United States holder who purchases a Note with foreign
currency will recognize foreign currency gain or loss attributable to the
difference, if any, between his tax basis in the foreign currency and the fair
market value of the Note in U.S. dollars on the date of purchase of such Note.
If a United States holder elects to receive foreign currency in respect of
the sale, exchange or retirement of a Foreign Currency Note, the amount
realized generally will be the U.S. dollar value of the foreign currency
received (on the date that payment is received or the Note is disposed of, in
accordance with the United States holder's method of tax accounting). In
addition, a holder will recognize foreign currency gain or loss on the
principal of a Foreign Currency Note attributable to the movement in exchange
rates between the time of purchase and the time of sale, exchange or retirement
of the Note. Such foreign currency gain or loss cannot exceed the related non-
exchange gain or loss. An additional foreign currency gain or loss could result
on the sale or other disposition of the foreign currency received if the
exchange rate on the date of sale or other disposition differs from the
exchange rate on the date of receipt. A United States holder will have a tax
basis in any foreign currency received on the sale, exchange or retirement of a
Note equal to the U.S. dollar value of such foreign currency, determined at the
time of such sale, exchange or retirement. Any foreign currency gain or loss
realized by a United States holder on the sale, exchange or retirement of a
Foreign Currency Note or on a sale or other disposition of foreign currency
(including its exchange for U.S. dollars) will be treated as ordinary income or
loss and will not be treated as interest income or expense.
S-22
<PAGE>
A holder who receives U.S. dollar payments on the sale, exchange or
retirement of a Foreign Currency Note may have a different amount realized for
United States federal income tax purposes than the amount it receives in cash,
because the relevant exchange rates required to be used for United States
federal income tax purposes may not be the same as the exchange rates used by
the Exchange Rate Agent to convert foreign currency payments into U.S. dollar
payments.
In the case of a Foreign Currency Note that is also an Original Issue
Discount Note, a United States holder should determine the U.S. dollar amount
includible in income as original issue discount for each accrual period by (i)
calculating the amount of original issue discount allocable to each accrual
period in the foreign currency using the constant yield method described above
and (ii) translating the foreign currency amount so derived at the average
exchange rate in effect during that accrual period. Because exchange rates may
fluctuate, a United States holder of a Foreign Currency Note that is also an
Original Issue Discount Note may recognize a different amount of original issue
discount income in each accrual period than would the holder of a similar
Original Issue Discount Note denominated in U.S. dollars. As noted above, such
holder may recognize foreign currency gain or loss with respect to original
issue discount on a Foreign Currency Note that is also an Original Issue
Discount Note. Under regulations yet to be issued, the application of the
foreign currency provisions to a Foreign Currency Note that is also an Original
Issue Discount Note may differ if such a Note is considered to be a contingent
payment debt instrument, as discussed above.
A United States holder should calculate the amortizable premium on a Foreign
Currency Note in the foreign currency in which the Note is denominated (or in
which the payments are determined). Amortizable premium generally will reduce
the United States holder's interest income measured in foreign currency.
Foreign currency exchange gain or loss will be realized with respect to
amortizable premium based on the difference between the spot exchange rate on
the date the premium is paid to acquire the Note and the spot exchange rate on
the date the premium is treated as being returned as part of the stated
interest.
The provisions governing the taxation of foreign currency transactions
otherwise may affect the taxation of payments received by a United States
holder of a Foreign Currency Note. Thus, for example, the source of foreign
currency gains and losses is generally determined by reference to the residence
of the taxpayer. Under the Proposed Regulations, exchange gain or loss with
respect to debt instruments denominated in hyperinflationary currencies is
determined by reference to the change in exchange rates between (i) the later
of the first day of the taxable year or the date the instrument was entered
into and (ii) the earlier of the last day of the taxable year or the date the
instrument is disposed of or terminated. These regulations are proposed to be
effective for transactions entered into on or after the date final regulations
are published.
Indexed Notes
Because of the lack of existing authority, potential investors should consult
their own tax advisors in determining the tax consequences of holding,
purchasing or disposing of Indexed Notes, including the application of the
United States federal income tax laws to their particular situations, as well
as the application of state, local, foreign or other tax laws.
NON-UNITED STATES HOLDERS
Under present United States federal income tax law, and subject to the
discussion of backup withholding below, interest and principal payments,
including premium, and original issue discount on an Original Issue Discount
Note, made by the Company or any of its paying agents on a Note to any holder
which is not a United States holder (a "foreign holder") will not be subject to
United States withholding tax, provided that in the case of original issue
discount or interest, (i) the holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote, (ii) the holder is not a controlled foreign
corporation that is related to the Company through stock ownership, (iii) the
holder is not a bank receiving interest described in section 881 (c)(3)(A) of
the Code, and (iv) either (A)
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<PAGE>
the beneficial owner of the Note certifies to the Company or its agent, under
penalties of perjury, that it is not a United States person (as defined above)
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and holds
the Note on behalf of the beneficial owner certifies to the Company or its
agent, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof.
If a foreign holder of a Note is engaged in a trade or business in the United
States and interest, including original issue discount, on the Note is
effectively connected with the conduct of such trade or business, such holder,
although exempt from the withholding tax discussed in the preceding paragraph,
may be subject to United States federal income tax on such interest and
original issue discount in the same manner as if it were a United States
holder. In lieu of the certificate described in the preceding paragraph, such a
holder must provide the payor with a properly executed Internal Revenue Service
Form 4224 to claim an exemption from United States federal withholding tax.
However, such holder of a Note may still be required to provide the
certification described in the preceding paragraph in order to obtain an
exemption from "backup" withholding, discussed below. In addition, if such a
holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% of its effectively connected earnings and profits for the taxable
year, subject to certain adjustments. For this purpose, interest and original
issue discount on a Note will be included in earnings and profits if the
interest and original issue discount is effectively connected with the conduct
of the United States trade or business of the holder.
A foreign holder will not be subject to United States federal income tax on
gain realized on the sale, exchange or retirement of a Note if such gain is not
effectively connected with the conduct of a United States trade or business
and, in the case of a foreign holder who is an individual, such holder is not
present in the United States for a total of 183 days or more during the taxable
year in which such gain is realized.
A Note held by an individual who at the time of death is not a citizen or
resident of the United States (including its territories, possessions and other
areas subject to its jurisdiction, such as the Commonwealth of Puerto Rico)
will not be subject to United States federal estate tax as a result of such
individual's death if the individual does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote and, at the time of the individual's death, payments
with respect to the Note would not have been effectively connected with the
conduct of a trade or business by the individual in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The 31% "back-up" withholding and information reporting requirements apply to
certain payments of principal (and premium, if any) and interest on an
obligation, and to certain payments of proceeds of the sale or redemption of an
obligation, to certain noncorporate United States persons. The Company, its
agent, a broker, the Trustee or the Paying Agent, as the case may be, will be
required to withhold from any payment that is subject to backup withholding a
tax equal to 31% of such payment if the holder fails to furnish his taxpayer
identification number (social security number or employer number), to certify
that such holder is not subject to backup withholding, or to otherwise comply
with the applicable requirements of the backup withholding rules. Certain
holders (including, among others, all corporations and persons who are not
United States persons) are not subject to the backup withholding and reporting
requirements.
Under the Regulations, backup withholding and information reporting will not
apply to payments made by the Company or any agent thereof (in its capacity as
such) to a holder of a Note with respect to which the holder has provided
certification that it is not a United States person under penalties of perjury
as set forth in clause (iv) in the first paragraph under "Non-United States
Holders", or has otherwise established an exemption (provided that neither the
Company nor such agent has actual knowledge that the holder is a United States
person or that the conditions of any other exemption are not in fact
satisfied).
S-24
<PAGE>
Under the Regulations, payments on the sale, exchange or retirement of a Note
to or through a foreign office of a broker will be subject to information
reporting if the broker is a United States person, a controlled foreign
corporation for United States federal income tax purposes or a foreign person
50% or more of whose gross income from all sources is effectively connected
with the conduct of a United States trade or business for a specified three-
year period, unless the broker has in its records documentary evidence that the
beneficial owner is not a United States person and certain other conditions are
met , or the beneficial owner otherwise establishes an exemption. However,
under the Regulations such payments will not be subject to backup withholding
unless the payor has actual knowledge that the payee is a United States person.
Payment of the proceeds from the sale of a Note to or through the United States
office of a broker is subject to information reporting and backup withholding
unless the holder or beneficial owner certifies that it is not a United States
person or otherwise establishes an exemption from information reporting and
backup withholding.
Any amounts withheld under the backup withholding rules from a payment to a
holder will be allowed as a refund or a credit against such holder's United
States federal income tax liability, provided that the required information is
provided to the Internal Revenue Service.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation, which have agreed to use
their best efforts to solicit purchases of the Notes, and may also be sold to
any Agent for resale to investors at varying prices related to prevailing
market prices at the time of resale to be determined by such Agent. The Company
reserves the right to sell Notes directly on its own behalf, through an
affiliated entity or through other agents on substantially similar terms. The
Company will have the sole right to accept offers to purchase Notes. The
Company or the Agents may reject any proposed purchase of Notes in whole or in
part. The Company will pay each Agent a commission, which may be in the form of
a discount, of .125% to .750%, depending upon maturity, of the principal amount
of Notes sold through such Agent (provided that the commission payable with
respect to Notes with maturities greater than 30 years will be negotiated at
the time of issuance of such Notes), and may also sell Notes to any Agent, as
principal, at or above par or at a discount to be agreed upon at the time of
sale for resale to one or more investors at varying prices related to
prevailing market prices at the time of resale, as determined by such Agent.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each Agent may make a market in the
Notes, but no Agent is obligated to do so and may discontinue any market-making
at any time without notice. There can be no assurance that the Notes offered
hereby will be sold or that there will be a secondary market for any of the
Notes.
The Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act of 1933. The Company has also
agreed to reimburse the Agents for certain expenses.
The Agents engage in transactions with and perform various investment banking
and other services for the Company.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed on for the Company by
Herbert A. Getz, Esq., General Counsel of the Company, and for the Agents by
Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603. As of
May 31, 1995, Mr. Getz, his wife and his children had an aggregate beneficial
ownership of 41,957 shares of common stock of the Company and options to
purchase 119,000 shares of common stock of the Company. Mr. Getz disclaims
beneficial ownership of his wife's and children's shares.
Attorneys who are members or employees of Bell, Boyd & Lloyd, tax counsel to
the Company with respect to the offer and sale of Notes, had aggregate
beneficial ownership as of May 31, 1995 of 3,675 shares of common stock of the
Company.
S-25
<PAGE>
PROSPECTUS
$1,000,000,000
LOGO
WMX TECHNOLOGIES, INC.
DEBT SECURITIES
----------------
WMX Technologies, Inc. (the "Company"), formerly named Waste Management,
Inc., intends from time to time to issue up to U.S. $1,000,000,000, or the
equivalent thereof in other currencies or composite currencies, aggregate
principal amount of its unsecured debt securities (the "Debt Securities"). The
Debt Securities will be offered for sale on terms to be determined when the
agreement to sell is made or at the time of sale, as the case may be. For each
issue of Debt Securities in respect of which this Prospectus is being delivered
(the "Offered Debt Securities") there is an accompanying Prospectus Supplement
(the "Prospectus Supplement") that sets forth the designation, designated
currency, aggregate principal amount, rate or method of calculation of
interest, if any, and dates for payment thereof, maturity, authorized
denominations, initial price, any redemption or prepayment rights at the option
of the Company or the holder and other special terms of the Offered Debt
Securities, together with the terms of the offering of the Offered Debt
Securities and the net proceeds to the Company from the sale thereof. In the
event of the issuance of Debt Securities at original issue discount, the
aggregate principal amount of Debt Securities offered hereby will be a higher
amount, provided that the total price at which Debt Securities are sold to the
public pursuant to this Prospectus will not exceed U.S. $1,000,000,000, or the
equivalent thereof in other currencies or composite currencies. If any agents
of the Company or any underwriters are involved in the sale of the Offered Debt
Securities in respect of which this Prospectus is being delivered, the names of
such agents or underwriters and any applicable commissions and discounts are
set forth in the Prospectus Supplement.
The Debt Securities will be sold directly, through agents designated from
time to time, or through underwriters or dealers.
The Company may make application to list one or more series of Debt
Securities on one or more national securities exchanges. Any such application
to list the Offered Debt Securities is described in the Prospectus Supplement
related thereto.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is July , 1995
<PAGE>
AVAILABLE INFORMATION
WMX Technologies, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934 (the "1934 Act") and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the regional offices of the
Commission at Seven World Trade Center, New York, New York 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports and
other information concerning the Company can also be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities offered hereby.
Any statements contained herein concerning the provisions of any document are
not necessarily complete, and, in each instance, reference is hereby made to
the copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1994, Quarterly Report on Form 10-Q for the three month period ended March 31,
1995 and Current Reports on Form 8-K dated January 24 and March 17, 1995,
heretofore filed by the Company with the Commission under the 1934 Act, are
incorporated herein by reference.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities offered hereby (except to
the extent specified therein or in rules or regulations of the Commission)
shall be deemed to be incorporated in this Prospectus by reference and to be
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated in this Prospectus by reference other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the incorporated document. Requests for such copies should be directed to: WMX
Technologies, Inc., 3003 Butterfield Road, Oak Brook, Illinois 60521,
Attention: Corporate and Public Affairs Department (telephone: 708/572-8800).
2
<PAGE>
WMX TECHNOLOGIES, INC.
WMX Technologies, Inc. (the "Company"), formerly named Waste Management,
Inc., is a leading international provider of environmental, engineering and
construction, industrial and related services.
Through Waste Management, Inc. (formerly named Waste Management of North
America, Inc.), a wholly owned subsidiary of the Company (referred to herein,
together with its subsidiaries and certain affiliated companies providing solid
waste management and related services, as "WMI"), the Company provides
integrated solid waste management services in North America to commercial,
industrial, municipal and residential customers, as well as to other waste
management companies. These services consist of solid waste collection,
transfer, resource recovery and disposal services. As part of these services,
the Company is engaged in providing, through its Recycle America (R) and
Recycle Canada (R) programs, paper, glass, plastic and metal recycling services
to commercial and industrial operations and curbside collection of such
materials from residences; in removing methane gas from sanitary landfill
facilities for use in electricity generation; and in providing medical and
infectious waste management services to hospitals and other health care and
related facilities. In addition, through WMI the Company provides street
sweeping and parking lot cleaning services and Port-O-Let (R) portable
sanitation services to municipalities and commercial and special event
customers.
The Company's wholly owned Chemical Waste Management, Inc. subsidiary
(referred to herein, together with its subsidiaries other than Rust (as defined
below), as "CWM"), is a leading provider of hazardous waste management services
in the United States. The Company's chemical waste management services provided
through CWM, including transportation, treatment, resource recovery and
disposal, are furnished to commercial and industrial customers, as well as to
other waste management companies and to governmental entities. Through CWM, the
Company also furnishes radioactive waste management services, primarily to
electric utilities and governmental entities. Prior to January 24, 1995, the
Company's ownership of CWM was approximately 79%, with the balance being
publicly held. On that date, the Company acquired the publicly held shares of
CWM in a merger of a Company subsidiary into CWM. See "Acquisitions and
Dispositions" incorporated in this Prospectus by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
Wheelabrator Technologies Inc., an approximately 56%-owned subsidiary of the
Company (referred to herein, together with its subsidiaries, as "WTI"),
provides a wide array of environmental products and services in North America
and abroad. WTI's clean energy group is a leading developer of facilities and
systems for, and provider of services to, the trash-to-energy, energy, and
independent power markets. Through the clean energy group, WTI develops,
arranges financing for, operates and owns facilities that dispose of trash and
other waste materials in an environmentally acceptable manner by recycling them
into energy in the form of electricity and steam. WTI's clean water group is
principally involved in the design, manufacture and operation of facilities and
systems used to purify water, to treat municipal and industrial wastewater, to
treat and manage biosolids resulting from the treatment of wastewater by
converting them into useful fertilizers, and to recycle organic wastes into
compost material useable for horticultural and agricultural purposes. The clean
water group also designs and manufactures various products and systems used in
water and wastewater treatment facilities and industrial processes, precision
profile wire screens for use in groundwater wells and other industrial and
municipal applications, and certain other industrial equipment. WTI's clean air
group designs, fabricates and installs technologically advanced air pollution
emission control and measurement systems and equipment, including systems which
remove pollutants from the emissions of WTI's trash-to-energy facilities as
well as power plants and other industrial facilities.
Rust International Inc., a subsidiary owned approximately 56% by CWM and 40%
by WTI (referred to herein, together with its subsidiaries, as "Rust"),
furnishes engineering, construction, environmental and infrastructure
consulting, hazardous and radioactive substance remediation and a variety of
other on-site industrial and related services primarily to clients in
government and in the chemical, petrochemical, nuclear, energy, utility, pulp
and paper, manufacturing, environmental services and other industries. Rust
also has an approximately 40% interest in NSC Corporation, a publicly traded
provider of asbestos abatement services
3
<PAGE>
("NSC"). The Company has agreed to acquire the shares of Rust not owned by CWM
and WTI for a purchase price of $16.35 per Rust share, a transaction which is
expected to be completed in the third quarter of 1995. In addition, in May
1995, Rust contributed its hazardous and radioactive substance remediation
operations to OHM Corporation ("OHM") and received an approximately 37%
interest in OHM.
The Company provides comprehensive waste management and related services
internationally, primarily through Waste Management International plc, a
subsidiary owned approximately 56% by the Company, 12% by Rust and 12% by WTI
(referred to herein, together with its subsidiaries, as "Waste Management
International"). Waste Management International provides a wide range of solid
and hazardous waste management services (or has interests in projects or
companies providing such services) in ten countries in Europe and in Argentina,
Australia, Brunei, Hong Kong, Indonesia, Malaysia, Taiwan, Singapore and New
Zealand. Waste Management International also has an approximately 20% interest
in Wessex Water Plc, an English publicly traded company providing water
treatment, water distribution, wastewater treatment and sewerage services.
On January 1, 1993, CWM and WTI formed Rust and acquired 58% and 42%,
respectively, of Rust's outstanding shares, Rust was created to serve the
engineering, construction, environmental and infrastructure consulting,
hazardous substance remediation and on-site industrial and related services
markets, which the management of CWM, WTI and The Brand Companies, Inc.
(referred to herein as "Brand") believed could be served more effectively by
organizing the Company's several business units serving those markets into a
single integrated company. WTI contributed primarily its engineering and
construction and environmental and infrastructure consulting services
businesses and its then recently formed international engineering unit based in
London. CWM contributed primarily its hazardous substance remediation services
business, its approximately 56% ownership interest in Brand, and its 12%
ownership interest in Waste Management International. On May 7, 1993, Brand was
merged into a subsidiary of Rust, and shares of Brand (other than those owned
by Rust or exchanged for cash in the merger) were converted into shares of
Rust. As a result of such merger, Brand became a wholly owned subsidiary of
Rust.
The Company also owns an approximately 28% interest in ServiceMaster Consumer
Services L.P., a provider of lawn care, pest control and other consumer
services. The remaining ownership interest is held indirectly by ServiceMaster
Limited Partnership.
Through the end of 1992, the Company categorized its operations into four
industry segments--solid waste management and related services; hazardous waste
management and related services; energy, environmental and industrial projects
and systems; and international waste management and related services
(consisting of comprehensive waste management and related services provided
outside the United States, Canada and Mexico). Beginning in 1993, the Company
categorized the operations of Rust, which was formed from businesses
contributed by CWM and WTI, as a fifth industry segment--engineering,
construction, industrial and related services--and modified the name of its
energy, environmental and industrial projects and systems segment to "trash-to-
energy, water treatment, air quality and related services."
4
<PAGE>
The following table shows the respective revenues of these segments for the
Company's last three years, presented as if the above-described formation of
Rust had occurred prior to the periods presented.
<TABLE>
<CAPTION>
(000'S OMITTED)
-----------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
1992 1993 1994
---------- ---------- -----------
<S> <C> <C> <C>
Solid Waste Management and Related
Services................................. $4,309,614 $4,702,166 $ 5,117,871
Hazardous Waste Management and Related
Services................................. 755,088 661,860 649,581
Engineering, Construction, Industrial and
Related Services......................... 1,441,050 1,534,465 1,682,907
Trash-To-Energy, Water Treatment, Air
Quality and Related Services............. 928,313 1,142,219 1,324,567
International Waste Management and Related
Services................................. 1,445,734 1,411,211 1,710,862
Eliminations of Intercompany Revenue...... (218,772) (316,344) (388,470)
---------- ---------- -----------
Consolidated Revenue...................... $8,661,027 $9,135,577 $10,097,318
========== ========== ===========
</TABLE>
For information relating to expenses and identifiable assets attributable to
the Company's different industry segments, see Note 12 to the Company's
Consolidated Financial Statements incorporated in this Prospectus by reference
to the Company's Annual Report on Form 10-K for the year ended December 31,
1994. For interim periods, the revenues and net income of certain of the
Company's businesses may fluctuate for a number of reasons, including there
being for some businesses less activity during the winter months.
Regulatory or technological developments relating to the environment may
require companies engaged in environmental services businesses, including the
Company, to modify, supplement or replace equipment and facilities at costs
which may be substantial. Because certain of the businesses in which the
Company is engaged are intrinsically connected with the protection of the
environment and the potential discharge of materials into the environment, a
material portion of the Company's capital expenditures is, directly or
indirectly, related to such items. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated in this Prospectus
by reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 for a review of property and equipment expenditures by the
Company for the last three years. The Company does not expect such
expenditures, which are incurred in the ordinary course of business, to have a
materially adverse impact on its and its subsidiaries' combined earnings or its
or its subsidiaries' competitive position in the foreseeable future because the
Company's businesses are based upon compliance with environmental laws and
regulations and its services are priced accordingly.
Although the Company strives to conduct its operations in compliance with
applicable laws and regulations, the Company believes that in the existing
climate of heightened legal, political and citizen awareness and concerns,
companies in the environmental services industry, including the Company, will
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend funds for remedial work and related activities
with respect to waste treatment, disposal and trash-to-energy facilities. Where
the Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Such estimates are subsequently revised, as necessary,
as additional information becomes available. While the Company does not
anticipate that the amount of any such revision will have a material adverse
effect on the Company's operations or financial
5
<PAGE>
condition, the measurement of environmental liabilities is inherently difficult
and the possibility remains that technological, regulatory or enforcement
developments, the results of environmental studies, or other factors could
materially alter this expectation at any time. Such matters could have a
material adverse impact on earnings for one or more fiscal quarters or years.
While in general the Company's environmental services businesses have
benefited substantially from increased governmental regulation, the
environmental services industry itself has become subject to extensive and
evolving regulation by federal, state, local and foreign authorities. Due to
the complexity of regulation of the industry and to public pressure,
implementation of existing and future laws, regulations or initiatives by
different levels of government may be inconsistent and difficult to foresee. In
addition, the demand for certain of the Company's services may be adversely
affected by the amendment or repeal or reduction in enforcement of federal,
state and foreign laws and regulations on which the Company's businesses
engaged in providing such services are dependent. The Company makes a
continuing effort to anticipate regulatory, political and legal developments
that might affect its operations but is not always able to do so. The Company
cannot predict the extent to which any legislation or regulation that may be
enacted, amended, repealed or enforced, or any failure of legislation or
regulations to be enacted or enforced, in the future may affect its operations.
The Company was incorporated in Delaware in 1968 and subsequently succeeded
to certain businesses owned by its organizers and others. The Company's common
stock is listed on the New York Stock Exchange under the trading symbol "WMX"
and is also listed on the Frankfurt Stock Exchange, the London Stock Exchange,
the Chicago Stock Exchange and the Swiss Stock Exchanges in Basle, Zurich and
Geneva.
USE OF PROCEEDS
Except as otherwise set forth in the Prospectus Supplement relating to the
Offered Debt Securities, net proceeds to be received by the Company from the
sale of the Debt Securities will be used to retire outstanding indebtedness of
the Company arising from the Company's issuance of commercial paper or other
debt, to fund future acquisitions by the Company and for general corporate
purposes. Pending any such application, the proceeds may be invested
temporarily in short-term securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (the "Indenture")
dated as of June 1, 1993, between the Company and The Fuji Bank and Trust
Company, as trustee (the "Trustee"). A copy of the Indenture has been
incorporated by reference as an exhibit to the Registration Statement. The
following summaries of certain provisions of the Debt Securities and the
Indenture do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Indenture,
including the definitions therein of certain terms. Wherever particular
provisions or defined terms of the Indenture (or of any Form of Debt Security
which is adopted pursuant to the Indenture) are referred to, such provisions or
defined terms are incorporated herein by reference.
GENERAL
The Indenture does not limit the amount of Debt Securities which can be
issued thereunder and provides that Debt Securities may be issued thereunder in
one or more series up to the aggregate principal amount which may be authorized
from time to time by the Company. Reference is made to the Prospectus
Supplement for the following terms of the Offered Debt Securities: (i) the
designation, aggregate principal amount and authorized denominations of the
Offered Debt Securities; (ii) the percentage of their principal amount at which
such Offered Debt Securities will be issued; (iii) the date on which the
Offered Debt
6
<PAGE>
Securities will mature; (iv) the rate per annum at which the Offered Debt
Securities will bear interest, if any; (v) the times at which such interest
will be payable; and (vi) any redemption terms and other special terms.
Reference is also made to the Prospectus Supplement relating to the Offered
Debt Securities for information with respect to any additional covenants that
may be included in the terms of such securities.
The Debt Securities will be issued only in fully registered form without
coupons, which form may be a Global Debt Security as described below. See
"Book-Entry, Delivery and Form." The Company will not charge a service charge
for any registration of transfer or exchange of Debt Securities but may require
payment of a sum sufficient to cover any tax or other governmental charge in
connection therewith. (Section 2.6.)
The Debt Securities will be direct obligations of the Company and will be
unsecured. The Indenture does not restrict the amount of additional unsecured
debt which the Company may incur.
Some of the Debt Securities may be issued at a substantial discount below
their stated principal amount. Certain federal income tax consequences and
other special considerations applicable to any such discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.
BOOK-ENTRY, DELIVERY AND FORM
If the accompanying Prospectus Supplement so indicates, the Offered Debt
Securities will be issued in the form of one or more fully registered global
debt securities (each a "Global Debt Security"). Each Global Debt Security will
be deposited with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC") and registered in the name of DTC's nominee. DTC currently limits
the maximum denomination of any single Global Debt Security to $200,000,000.
Therefore for purposes hereof, "Global Debt Security" refers to the Global Debt
Security or Global Debt Securities representing the entire issue of Offered
Debt Securities.
A Global Debt Security will represent all Offered Debt Securities issued on
the same day and having the same terms, including, but not limited to, the same
interest payment dates, rates of interest (if any), maturity and repayment and
redemption provisions (if any). Ownership of beneficial interests in Global
Debt Securities will be shown on, and transfers thereof will be effected only
through, records maintained by DTC (with respect to interests of participants)
and its participants (with respect to interests of persons other than
participants). Payments of principal and interest on beneficial interests in
Global Debt Securities will be made through the Trustee to DTC. Global Debt
Securities will not be exchangeable for a certificate in definitive registered
form ("Certificated Notes") and, except as set forth herein, will not otherwise
be issuable in definitive form.
Except as set forth below, the Global Debt Security may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee.
DTC has advised the Company and any underwriters named in the accompanying
Prospectus Supplement as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in each Participant's account, thereby eliminating the need for
physical movement of securities certificates. Direct Participants ("Direct
Participants") include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc.
7
<PAGE>
Access to DTC's system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of beneficial interests in Global Debt Securities under DTC's
system must be made by or through Direct Participants, which will receive a
credit for the beneficial interests in Global Debt Securities on DTC's records.
The ownership interest of each actual purchaser of each beneficial interest in
a Global Debt Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of beneficial interests in Global Debt Securities are to
be accomplished by entries made on the books of Participants acting on behalf
of the Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Global Debt Securities, except in the
event that use of the book-entry system for one or more Debt Securities is
discontinued.
To facilitate subsequent transfers, all Global Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global Debt Securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Global
Debt Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Global Debt Securities; are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Global
Debt Securities within an issue are being redeemed, DTC's current practice is
to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to Global Debt
Securities. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Global Debt Securities are credited on the record date (identified
in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Debt Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the payable
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case of securities held for the
accounts of customers in bearer form or registered in "street name," and will
be the responsibility of such Participant and not of DTC, or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility of
the Company, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its interest in a
Global Debt Security purchased or tendered, through its Participant, to the
Paying Agent, and shall effect delivery of such interest in a Global
8
<PAGE>
Debt Security by causing the Direct Participant to transfer the Participant's
interest, on DTC's records, to the Paying Agent. The requirement for physical
delivery of Global Debt Securities in connection with a demand for purchase or
a mandatory purchase will be deemed satisfied when the ownership rights in the
Global Debt Securities are transferred by a Direct Participant on DTC's
records.
DTC may discontinue providing its services as securities depositary with
respect to the Global Debt Securities at any time by giving reasonable notice
to the Company or the agents or underwriters involved in the sale of the Global
Debt Securities. Under such circumstances, in the event that a successor
securities depositary is not obtained, Certificated Notes will be printed and
delivered in exchange for the Global Debt Securities held by DTC.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Certificated Notes will be printed and delivered in exchange for the Global
Debt Securities held by DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
Neither the Company, the Trustee, any Paying Agent nor the registrar for the
Debt Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Debt Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
REDEMPTION AT THE OPTION OF THE HOLDERS IN CERTAIN CIRCUMSTANCES
The Indenture provides, if such provision is made applicable to the Debt
Securities of any series, that if, during the period beginning on the date of
first public announcement by the Company or any other Person (including,
without limitation, directors or officers of the Company) of an intention to
effect or the occurrence of (whichever is the first to occur) a Restructuring
Event and ending 90 days thereafter (or such longer period as the rating of the
Debt Securities of such series shall be under publicly announced consideration
by Moody's or Standard & Poor's), both Moody's and Standard & Poor's shall have
(A) lowered their rating of the Debt Securities of such series from an
Investment Grade rating to a rating below Investment Grade, or (B) withdrawn an
Investment Grade rating from and ceased to rate the Debt Securities of such
series (a "Rating Event") (it being understood that, if the Debt Securities of
such series are already rated below Investment Grade by Moody's or Standard &
Poor's at the beginning of such period, a subsequent lowering or withdrawal of
such rating shall not be deemed to be a Rating Event), the Company shall give
notice of such Rating Event not more than 15 days after the occurrence of such
Rating Event, to the trustee and to each Holder, together with the information
referred to in the penultimate sentence of this paragraph (the "Put Option
Notice"). Each Holder shall have the option (the "Put Option") exercisable
during the period of 30 days commencing on the date such Put Option Notice is
given (the "Option Period") to have all his Debt Securities of such series (or
any portion thereof designated by such Holder and having an aggregate principal
amount of $1,000 or a whole multiple thereof) redeemed on the date falling 15
days after the end of the Option Period, or if such day is not a Business Day,
on the next succeeding Business Day (the "Payment Date"), at their principal
amount together with interest accrued to the Payment Date. To exercise the Put
Option, a Holder must deliver to the Company or the Put Agent, if any, on or
before the end of the Option Period, (i) written notice of such Holder's
exercise of such Put Option, which notice shall set forth expressly the name
and address of such Holder and the aggregate principal amount of Debt
Securities of such series with respect to which such Put Option is exercised
and (ii) the Debt Security or Debt Securities of such series as to which such
Holder is exercising such Put Option, duly endorsed, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the Put
Agent, if any, duly executed by such Holder or his attorney duly authorized in
writing. Once a Holder has exercised his Put Option, such exercise may not be
withdrawn without the prior written consent of the Company. The Company shall
include in the Put Option Notice a
9
<PAGE>
statement of facts showing that a Rating Event has occurred (including details
of the first public announcement, or (as the case may be) the occurrence, of
the Restructuring Event) and a statement to the effect that each Holder has the
benefit of the Put Option referred to above and shall also specify the dates of
the Option Period, the Payment Date, the fact that interest will cease to
accrue on and after the Payment Date, the Put Agent, if any, and the manner in
which Holders will be able to exercise the Put Option. Notwithstanding the
foregoing, the Company need not give the Put Option Notice, and Holders shall
not have a Put Option, with respect to a Rating Event if either Moody's or
Standard & Poor's shall have publicly announced that such Rating Event was
solely the result of events or circumstances wholly unrelated to a
Restructuring Event. (Article 10.)
For the purposes of this provision, the following terms shall have the
following meanings:
(i) "Restructuring Event" means any of the following: (1) any Person
becoming the Beneficial Owner of Voting Stock of the Company having more
than 30 percent of the voting power or all of the then outstanding Voting
Stock of the Company; (2) individuals who are not Continuing Directors
constituting a majority of the Board of Directors of the Company; (3) the
Company consolidating with or merging into any other Person, or any other
Person consolidating with or merging into the Company, pursuant to a
transaction in which capital stock of the Company then outstanding (other
than capital stock held by the Company or capital stock held by any Person
which is a party to such consolidation or merger) is changed or exchanged;
(4) the Company, in one transaction or a series of related transactions,
conveying, transferring or leasing, directly or indirectly, all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole (other than to a wholly owned subsidiary of the Company); or (5)
the Company or any of its Subsidiaries paying or effecting a dividend or
distribution (including by way of recapitalization or reclassification) in
respect of its capital stock (other than solely to the Company or any of
its wholly owned subsidiaries and other than solely for capital stock of
the Company), or purchasing, redeeming, retiring, exchanging or otherwise
acquiring for value any of its capital stock (other than solely from the
Company or any of its wholly owned subsidiaries and other than solely for
capital stock of the Company), if the cash and Fair Market Value of the
securities and assets paid or distributed (except to the Company or any
Subsidiary) in connection therewith (determined on the record date for such
dividend or distribution or the effective date for such purchase,
redemption, retirement, exchange or other acquisition), together with the
cash and Fair Market Value of the securities and assets paid or distributed
in connection with all other such dividends, distributions, purchases,
redemptions, retirements, exchanges and acquisitions effected (except as
received by the Company or any Subsidiary) within the 12-month period
preceding the record date for such dividend or distribution or the
effective date for such purchase, redemption, retirement, exchange or other
acquisition (any such Fair Market Value being determined on the respective
record or effective dates for such other dividends, distributions,
purchases, redemptions, retirements, exchanges and acquisitions), exceeds
30 percent of the aggregate Fair Market Value of all capital stock of the
Company outstanding on the record date for such dividend or distribution or
the effective date for such purchase, redemption, retirement, exchange or
other acquisition (determined on such record or effective date);
(ii) "Moody's" means Moody's Investors Service, Inc. and "Standard &
Poor's" means Standard & Poor's Corporation or, in either case, any of
their respective successors carrying on substantially the same business of
providing ratings for securities as carried on by the predecessor
corporation;
(iii) "Investment Grade" means a rating of at least Baa3 (or the
equivalent thereof), in the case of a rating by Moody's, and a rating of at
least BBB- (or the equivalent thereof), in the case of a rating by Standard
& Poor's.
If such provision is made applicable to the Debt Securities of any series,
the Board of Directors will have no authority under the Indenture to waive such
provision.
The Company has agreed that for so long as any of the Debt Securities of such
series are outstanding and the Put Option has not arisen, it shall provide such
information, pay such customary rating service fees and related expenses and
take all other reasonable action as shall be necessary or appropriate to enable
each of Moody's and Standard & Poor's to provide a rating of the Debt
Securities of such series. There can be no assurance that the Company will have
available funds for redemption of Debt Securities on the Payment Date.
10
<PAGE>
The Company will comply with Section 14(e) under the 1934 Act to the extent
applicable, and any other tender offer rules under the 1934 Act which may then
be applicable, in connection with any obligation of the Company to purchase
Offered Debt Securities at the option of the holders thereof as described
above. Any such obligation applicable to a series of Debt Securities will be
described in the Prospectus Supplement or Prospectus Supplements relating
thereto.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may consolidate with or merge into any other corporation, or
transfer or lease all or substantially all of its assets to another
corporation, provided that (i) the corporation formed by such consolidation or
into which the Company is merged or the corporation to which all or
substantially all of the Company's assets are transferred or leased shall
expressly assume the payment of the principal of the Debt Securities and the
performance of the other covenants of the Company under the Debt Securities and
the Indenture, and (ii) no Event of Default, or event which, after notice or
lapse of time or both, would become an Event of Default, shall exist
immediately after such transaction. (Section 5.1.)
LIMITATION ON SECURITY INTERESTS
The Company covenants in the Indenture that it will not, nor will it permit
any Restricted Subsidiary to, create, incur, assume or suffer to exist any
Indebtedness if such Indebtedness is secured by a Security Interest upon any
property or assets of the Company or a Restricted Subsidiary, whether owned at
the date of the Indenture or thereafter acquired, without effectively securing
the Debt Securities equally and ratably with (or prior to) such Indebtedness.
The foregoing restriction does not apply to (i) any Security Interest on any
property acquired, constructed, developed or improved which is created or
assumed within 120 days after such acquisition, construction, development or
improvement, or the commencement of operation or use of such property, to
secure or provide for the payment of the purchase price or cost thereof; (ii)
any Security Interest existing on property at the time it is acquired, or any
conditional sales agreement or other title retention agreement with respect to
property acquired, by the Company or a Restricted Subsidiary, any Security
Interest existing on any property or shares of stock of a corporation or firm
at the time it is merged into or consolidated with, or sells, leases or
disposes of its property as an entirety to, the Company or a Restricted
Subsidiary, or becomes a Restricted Subsidiary, or any Security Interest
existing on the property, assets or capital stock of any successor to the
Company; provided, in each case, that such Security Interest shall not apply to
any property or assets theretofore owned by the Company or a Restricted
Subsidiary; (iii) any mechanics', materialmen's, carriers' or other similar
liens arising in the ordinary course of business in respect of obligations
which are not yet due or which are being contested in good faith; (iv) any
Security Interest arising by reason of deposits with, or the giving of any form
of security to, any governmental agency or similar body, which is required by
law or regulation as a condition to the transaction of any business or the
exercise of any privilege, franchise or license; (v) any Security Interest for
taxes, assessments or governmental charges or levies not yet delinquent, or
already delinquent but the validity of which is being contested in good faith;
(vi) any Security Interest arising in connection with legal proceedings being
contested in good faith, including any judgment lien so long as execution
thereon is stayed; (vii) any landlord's lien on fixtures located on premises
leased by the Company or a Restricted Subsidiary in the ordinary course of
business; (viii) any Security Interest securing an obligation issued by the
United States or any state or any political subdivision thereof in connection
with financing the cost of construction or acquisition of property; (ix) any
Security Interest arising by reason of deposits necessary to qualify the
Company or any Restricted Subsidiary to conduct business, maintain self-
insurance, or obtain the benefit of, or comply with, any law; (x) any Security
Interest that secures any Indebtedness of a Restricted Subsidiary owing to the
Company or another Restricted Subsidiary; and (xi) extensions, renewals or
refundings of the foregoing. (Section 4.4.)
The foregoing restriction does not apply to the creation, incurrence,
assumption or sufferance by the Company or any Restricted Subsidiary of
Indebtedness secured by a Security Interest that would otherwise
11
<PAGE>
be subject to such restriction up to an aggregate amount which, together with
all other Indebtedness secured by Security Interests (not including secured
Indebtedness permitted under the foregoing exceptions) and the Attributable
Debt (generally defined as discounted net rental payments) associated with Sale
and Leaseback Transactions existing at such time (other than Sale and Leaseback
Transactions the proceeds of which have been or will be applied as set forth in
clause (c) or (d) of the next succeeding caption "Limitation on Sale and
Leaseback Transactions", other than Sale and Leaseback Transactions in which
the property involved would have been permitted to be secured under clause (i)
of the immediately preceding paragraph and other than Sale and Leaseback
Transactions between the Company and a Subsidiary), does not exceed 20% of the
consolidated net worth of the Company and its Subsidiaries as shown on the
latest available published consolidated balance sheet of the Company and its
Subsidiaries. (Section 4.4.)
The Indenture defines "Restricted Subsidiary" as any Subsidiary (other than
any Subsidiary of which the Company owns less than all of the outstanding
voting stock) principally engaged in, or whose principal assets consist of
property used by the Company or any Restricted Subsidiary in, the storage,
collection, transfer, interim processing of disposal of waste within the United
States or Canada, or which the Company designates as a Restricted Subsidiary.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Company covenants in the Indenture that neither it nor any Restricted
Subsidiary will enter into any arrangement (other than with a Subsidiary)
providing for the leasing to the Company or any Restricted Subsidiary of any
property (except for temporary leases for a term, including renewals, of not
more than three years and except for leases between the Company and any
Restricted Subsidiary or between any Restricted Subsidiaries) which has been or
is to be sold by the Company or such Restricted Subsidiary to the lessor unless
(a) the Company or such Restricted Subsidiary would be entitled to incur
Indebtedness secured by a Security Interest on the property to be leased
without securing the Debt Securities under clause (i) of the first paragraph
under the preceding caption "Limitation on Security Interests", (b) the
Attributable Debt associated therewith would be an amount permitted under the
second paragraph under the preceding caption, (c) the Company applies an amount
equal to the fair value (as determined by the Board of Directors) of such
property to the retirement of Debt Securities on certain funded debt of the
Company or a Restricted Subsidiary, or (d) the Company enters into a bona fide
commitment to expend for the acquisition or capital improvement of an Important
Property an amount at least equal to the fair value of such property.
(Section 4.5.)
LIMITATION ON FUNDED DEBT OF RESTRICTED SUBSIDIARIES
The Company covenants in the Indenture that it will not permit any Restricted
Subsidiary (a) to create, assume or suffer to exist any funded debt other than
(i) funded debt secured by a Security Interest which is permitted to such
Restricted Subsidiary under the limitations set forth under the preceding
caption "Limitation on Security Interests," (ii) funded debt owed to the
Company or any Subsidiary, (iii) funded debt of a corporation or other entity
existing at the time it becomes a Restricted Subsidiary or is merged with or
into the Company or a Restricted Subsidiary or other entity, (iv) funded debt
of a corporation or other entity assumed by the Company or a Restricted
Subsidiary in the acquisition of all or a portion of the business of such
corporation or other entity, (v) funded debt existing as of the date of the
Indenture, or (vi) funded debt created in connection with, or with a view to,
compliance by such Restricted Subsidiary with the requirements of, any program
adopted by any federal, state or local governmental authority and applicable to
such Restricted Subsidiary and providing financial or tax benefits to such
Restricted Subsidiary which are not available directly to the Company on
substantially the same terms as such Restricted Subsidiary, or (b) to
guarantee, directly or indirectly through any arrangement which is
substantially the equivalent of a guarantee, any funded debt except for (i)
guarantees existing as of the date of the Indenture, (ii) guarantees which, as
of the date of the Indenture, a Restricted Subsidiary is obligated to give,
(iii) guarantees issued to the Company or any Restricted Subsidiary or (iv)
guarantees of funded debt which is permitted to a Restricted Subsidiary under
the preceding clause (a).
12
<PAGE>
Notwithstanding the foregoing, any Restricted Subsidiary may create, assume
or guarantee funded debt in addition to that permitted under the preceding
paragraph, and renew, extend or replace such funded debt, provided that at the
time of such creation, assumption, guarantee, renewal, extension or
replacement, and after giving effect thereto, funded debt of Restricted
Subsidiaries not otherwise permitted pursuant to provisions described in the
preceding paragraph does not exceed 10% of the consolidated net worth of the
Company and its Subsidiaries as shown on the latest available published
consolidated balance sheet of the Company and its Subsidiaries. (Section 4.6.)
EVENTS OF DEFAULT; NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein occurs
and is continuing with respect to any series of Debt Securities, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the Debt Securities then outstanding of the series may declare the principal of
such series (or such portion of the principal as may be specified as due upon
acceleration at that time in the terms of that series), to be immediately due
and payable. (Section 6.2.)
Events of Default with respect to any series of Debt Securities are defined
as: (i) default in the payment of interest on such Debt Securities which has
continued for a period of 30 days, (ii) default in the payment of principal on
such Debt Securities when such becomes due and payable, (iii) failure by the
Company to comply with any of its other agreements in the Debt Securities of
such series or in the Indenture upon the specified notice to the Company of
such default by the Trustee or by the Holders of not less than 25% in aggregate
principal amount of the Debt Securities then outstanding of the series, and the
Company's failure to cure such Default with 60 days after receipt of such
notice, or (iv) certain events of bankruptcy or insolvency. (Section 6.1.)
The Trustees shall mail to the Holders of each series of Debt Securities a
notice of any continuing Default known to the Trustee with respect to such
series within 90 days of the occurrence of such Default, but the Trustee may
withhold from such Holders such notice as to any Default other than a Default
in any payment on any Debt Security if the Trustee determines in good faith
that the withholding of such notice is in the interests of such Holders.
(Section 7.5.)
No Holder of any Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless (i) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default with respect to that series, (ii) the
Holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of the series shall have made written request to the Trustee to
institute such proceeding as Trustee, (iii) such Holders have offered to the
Trustee indemnity satisfactory to the Trustee, (iv) the Trustee shall not have
complied with the request within 60 days after receipt of the request and offer
of indemnity, and (v) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the outstanding Debt Securities of
the series a direction inconsistent with such request within such 60 day
period. A Holder of any series may not use the Indenture to prejudice the
rights of another Holder of that series or to obtain a preference or priority
over another Holder of that series. (Section 6.6.) The Holder of any Debt
Security, however, has an absolute right to receive payment of the principal of
such Debt Security, and any interest thereon, on or after the due date
expressed in such Debt Security and to institute suit for the enforcement of
any such payment. (Section 6.7.) The Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series may, with
proper notice to the Trustee, waive an existing Default other than a Default in
any payment of the principal of, or any interest on, such Debt Security of that
Series. (Section 6.4.)
The Company will be required to furnish to the Trustee annually a statement
as to any default by the Company in the performance and observance of its
obligations under the Indenture. (Section 4.3.)
MODIFICATION
The Company and the Trustee may amend the Indenture or the Debt Securities of
any series with the written consent of the Holders of at least a majority in
aggregate principal amount of the outstanding Debt
13
<PAGE>
Securities of such series affected by the amendment. However, without the
consent of the Holder of each Debt Security affected thereby, no amendment may,
among other things: (i) reduce the amount of Debt Securities whose Holders must
consent to an amendment; (ii) reduce the rate or change the time for payment of
interest on any such Debt Security; (iii) reduce the principal of or change the
fixed maturity of any such Debt Security; or (iv) make any such Debt Security
payable in money other than that stated in the Debt Security. (Section 9.2.)
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company and the Trustee may, without the
consent of the Holders, execute a supplemental indenture to provide that the
Company will be discharged from any and all obligations in respect of the Debt
Securities of any series (except for certain obligations to register the
transfer or exchange of Debt Securities, to replace stolen, lost or mutilated
Debt Securities, to maintain a paying agency and to hold moneys for payment in
trust) upon the deposit with the Trustee, in trust, of money or U.S. Government
Obligations or both, which through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, and any interest on, and any mandatory
sinking fund or analogous payments in respect of, the Debt Securities of that
series on the date such amounts are due and payable, in accordance with the
terms of the Indenture and such Debt Securities. Such a supplemental indenture
may only be executed if the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling to the effect
that such a discharge will not be deemed, or result in, a taxable event with
respect to the Holders. The provisions of such a supplemental indenture will
not be applicable to any series of Debt Securities then listed on the New York
Stock Exchange if the provision would cause that series to be delisted as a
result thereof. (Section 9.1.)
DEFEASANCE OF CERTAIN COVENANTS
The terms of the Debt Securities may provide the Company with the option to
omit to comply with the covenants described under the headings "Limitation on
Security Interests", "Limitation on Sale and Lease-back Transactions" and
"Limitation on Funded Debt of Restricted Subsidiaries" above. If such terms
make such option available with respect to the Debt Securities of any series,
the Company, in order to exercise such option, will be required to deposit with
the Trustee, in trust, money or U.S. Government Obligations or both, which
through the payment of interest and principal in respect thereof in accordance
with their terms will provide money in an amount sufficient to pay the
principal of, and any interest on, and any mandatory sinking fund or analogous
payments in respect of, the Debt Securities of that series on the date such
amounts are due and payable, in accordance with the terms of the Indenture and
such Debt Securities. The Company must also deliver to the Trustee an opinion
of counsel to the effect that the deposit and related covenant defeasance will
not cause the Holders of such Debt Securities to recognize income, gain or loss
for federal income tax purposes. (Section 4.7.)
INFORMATION CONCERNING THE TRUSTEE
The Fuji Bank and Trust Company is the Trustee under the Indenture. The
Company has issued various series of debt securities under the Indenture, as
well as another indenture pursuant to which the Trustee is trustee. The Company
maintains deposit accounts and conducts other banking transactions with the
Trustee in the ordinary course of business.
Under the Indenture, the Trustee is required to transmit annual reports to
all Holders regarding its eligibility and qualifications as Trustee under the
Indenture and certain related matters. (Section 7.6.)
Subject to certain exceptions, the Holders of a majority in aggregate
principal amount of outstanding Debt Securities of any series may direct the
Trustee in its exercise of the trust and powers conferred upon it by the
Indenture (Section 6.5.), and may remove the Trustee with the giving of proper
notice. (Section 7.8.)
14
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters or dealers, (ii) directly to a limited number of purchasers or to
a single purchaser or (iii) through agents. The Prospectus Supplement with
respect to the Offered Debt Securities sets forth the terms of the offering of
the Offered Debt Securities, including the name or names of any underwriters,
the purchase price of the Offered Debt Securities and the proceeds to the
Company from such sale, any delayed delivery arrangements, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If underwriters are used in the sale, the Debt Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The Debt
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The underwriter or underwriters with respect to a
particular underwritten offering of Offered Debt Securities are named in the
Prospectus Supplement relating to such offering and, if in an underwriting
syndicate is used, the managing underwriter or underwriters are set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Offered Debt Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all the Offered Debt Securities if
any are purchased.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Debt Securities in respect of which this Prospectus is
delivered is named, and any commissions payable by the Company to such agent
are set forth, in the Prospectus Supplement relating thereto. Unless otherwise
indicated in the Prospectus Supplement, any such agent is acting on a best
efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Offered Debt Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of business.
LEGAL OPINIONS
Certain legal matters in connection with this offering will be passed upon
from the Company by Herbert A. Getz, General Counsel of the Company, and for
any underwriters or agents by Mayer, Brown & Platt, 190 South LaSalle Street,
Chicago, Illinois 60603. Mayer, Brown & Platt acts as counsel for the Company
from time to time on other matters.
EXPERTS
The audited consolidated financial statements and schedule of WMX
Technologies, Inc. and subsidiaries for the year ended December 31, 1994,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in auditing and accounting in giving said
reports. Reference is made to the report of Arthur Andersen LLP on such
financial statements, which includes an explanatory paragraph with respect to
the Company's change in its methods of accounting for income taxes and
postretirement benefits other than pensions, effective January 1, 1992, as
discussed in Notes 2 and 11 to the consolidated financial statements.
15
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) OR THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR AGENT. THIS PRO-
SPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) OR
THE PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Use of Proceeds............................................................ S-2
Important Currency Information............................................. S-2
Description of Notes....................................................... S-2
Certain Currency Risks..................................................... S-17
Certain United States Federal Tax Considerations........................... S-19
Plan of Distribution....................................................... S-25
Legal Opinions............................................................. S-25
PROSPECTUS
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
WMX Technologies, Inc. .................................................... 3
Use of Proceeds............................................................ 6
Description of Debt Securities............................................. 6
Plan of Distribution....................................................... 15
Legal Opinions............................................................. 15
Experts.................................................................... 15
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
WMX TECHNOLOGIES, INC.
U.S. $1,000,000,000
MEDIUM-TERM NOTES, SERIES C DUE FROM NINE MONTHS TO 60 YEARS FROM DATE OF
ISSUE
-----------------
PROSPECTUS SUPPLEMENT
-----------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JULY , 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The registrant estimates that expenses in connection with the offering
described in this Registration Statement will be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $344,828
Printing expenses................................................ 10,000
Accountants' fees and expenses................................... 10,000
Legal fees and expenses.......................................... 10,000
Blue Sky fees and expenses....................................... 10,000
Trustee fees..................................................... 1,500
New York Stock Exchange listing fee (if listed).................. 150,000
Rating Agency fees............................................... 270,000
Miscellaneous.................................................... 15,000
--------
Total.......................................................... $821,328
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware empowers the
registrant to indemnify, subject to the standards set forth therein, any person
in connection with any action, suit or proceeding brought or threatened by
reason of the fact that he is or was a director, officer, employee or agent of
the registrant, or is or was serving as such with respect to another
corporation at the request of the registrant. The General Corporation Law of
Delaware also provides that the registrant may purchase indemnification
insurance on behalf of any such director, officer, employee or agent. Article
Twelfth of the registrant's Restated Certificate of Incorporation and Section 6
of Article VII of the registrant's by-laws provide for the indemnification by
the registrant of each director, officer, employee or agent of the registrant
to the full extent permitted by the General Corporation Law of Delaware.
Under an insurance policy maintained by the registrant, the directors and
officers of the registrant are insured, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of certain claims, actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such claims, actions, suits
or proceedings, which may be brought against them by reason of being or having
been such directors or officers.
The proposed form of Underwriting Agreement--Basic Provisions incorporated by
reference as Exhibit 1(a) and the proposed form of Distribution Agreement
incorporated by reference as Exhibit 1(b) to this Registration Statement
provide for indemnification of the registrant's directors and its officers who
signed the Registration Statement against certain liabilities, including
liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS.
A list of the exhibits included or incorporated by reference as part of this
Registration Statement is set forth in the Exhibit Index which immediately
precedes such exhibits, and is hereby incorporated by reference herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(6) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by a Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 shall be deemed to be part of
the registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Security Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT, OR AMENDMENT THERETO, TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN OAK BROOK, ILLINOIS ON JULY 6, 1995.
WMX Technologies, Inc.
/s/ Dean L. Buntrock
By __________________________________
DEAN L. BUNTROCK, Chairman of the
Board and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT, OR AMENDMENT THERETO, HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
/s/ Dean L. Buntrock Director, Chairman of
- ------------------------------------- the Board and Chief
DEAN L. BUNTROCK Executive Officer
/s/ Jerry E. Dempsey Director
- -------------------------------------
JERRY E. DEMPSEY
/s/ Phillip B. Rooney Director
- -------------------------------------
PHILLIP B. ROONEY
/s/ Donald F. Flynn Director
- -------------------------------------
DONALD F. FLYNN
/s/ Peter H. Huizenga Director
- -------------------------------------
PETER H. HUIZENGA
/s/ Peer Pedersen Director
- -------------------------------------
PEER PEDERSEN
/s/ James R. Peterson Director
- -------------------------------------
JAMES R. PETERSON
/s/ Alexander B. Trowbridge Director
- ------------------------------------- July 6,
ALEXANDER B. TROWBRIDGE 1995
/s/ Howard H. Baker, Jr. Director
- -------------------------------------
HOWARD H. BAKER, JR.
/s/ H. Jesse Arnelle Director
- -------------------------------------
H. JESSE ARNELLE
/s/ Pastora San Juan Cafferty Director
- -------------------------------------
PASTORA SAN JUAN CAFFERTY
/s/ James B. Edwards Director
- -------------------------------------
JAMES B. EDWARDS
/s/ Thomas C. Hau Vice President and
- ------------------------------------- Principal Accounting
THOMAS C. HAU Officer
/s/ James E. Koenig Senior Vice President,
- ------------------------------------- Treasurer and Principal
JAMES E. KOENIG Financial Officer
II-3
<PAGE>
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT
---------------------------------
<C> <S>
1(a) Form of proposed Underwriting Agreement--Basic Provisions, including Terms
Agreement (incorporated by reference to Exhibit 1 to registrant's
registration statement on Form S-3, Registration No. 33-30190)
1(b) Form of proposed Distribution Agreement (incorporated by reference to
Exhibit 1(b) to registrant's registration statement on Form S-3,
Registration No. 33-38746)
2 None
4(a) Indenture dated as of June 1, 1993 between the Company and The Fuji Bank and
Trust Company, as Trustee (incorporated by reference to Exhibit 4 to
registrant's Form 8-K Current Report dated July 15, 1993, registrant file
no. 1-7327)
4(b) Form of Fixed Rate Note (incorporated by reference to Exhibit 4(b) to
registrant's Form 8-K Current Report dated December 12, 1990, registrant
file no. 1-7327)
4(c) Form of Debenture (incorporated by reference to Exhibit 4(c) to registrant's
registration statement on Form S-3, Registration No. 33-30190)
5 Opinion of Herbert A. Getz, Senior Vice President, General Counsel and
Secretary, including consent
8 Opinion of Bell, Boyd & Lloyd as to certain tax matters, including consent
12(a) Computation of Ratio of Earnings to Fixed Charges for the years ended
December 31, 1990, 1991, 1992, 1993 and 1994 (incorporated by reference to
Exhibit 12 to registrant's Annual Report on Form 10-K for the year ended
December 31, 1994, registrant file no. 1-7327)
12(b) Computation of Ratio of Earnings to Fixed Charges for the three-month
periods ended March 31, 1994 and 1995 (incorporated by reference to Exhibit
12 to registrant's Quarterly Report on Form 10-Q for the three-month period
ended March 31, 1995, registrant file no. 1-7327)
15 None
23(a) Consent of Herbert A. Getz, Senior Vice President, General Counsel and
Secretary (included in Exhibit 5)
23(b) Consent of Independent Public Accountants
23(c) Consent of Bell, Boyd & Lloyd (included in Exhibit 8)
25 Statement of Eligibility of Trustee on Form T-1
26 None
27 None
28 None
</TABLE>
<PAGE>
EXHIBIT 8
[LETTERHEAD LOGO OF BELL, BOYD & LLOYD]
July 6, 1995
WMX Technologies, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60521
Re: WMX Technologies, Inc. Medium-Term Notes, Series C
Due From 9 Months to 60 Years From Date of Issue
Ladies & Gentlemen:
In connection with the Prospectus Supplement (the "Prospectus Supplement")
being filed on or about the date of this letter with the Securities and
Exchange Commission as part of the registration statement on Form S-3 to which
this letter is filed as an exhibit and a previously filed registration
statement (no. 33-53005) by WMX Technologies, Inc., a Delaware corporation (the
"Company"), relating to the offer of up to $1,000,000,000 of aggregate purchase
price of the Company's Medium-Term Notes, Series C, due from 9 months to 60
years from date of issue, we hereby consent to the use of our name and confirm
to you, as of the date of this letter, our advice as set forth under "Certain
United States Federal Tax Considerations" in the Prospectus Supplement.
Very truly yours,
/s/ Bell, Boyd & Lloyd
Bell, Boyd & Lloyd
