<PAGE>
Pursuant to Rule 424(b)(2)
Registration No. 33-52789
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 8, 1994)
$1,000,000,000
Weyerhaeuser Company
MEDIUM-TERM NOTES, SERIES A
---------------
Due from Nine Months from Date of Issue
---------------
Weyerhaeuser Company may offer from time to time its Medium-Term Notes,
Series A (the "Notes"), having an aggregate initial public offering price of
up to $1,000,000,000 or the equivalent thereof in other currencies, including
composite currencies such as the European Currency Unit (the "Specified
Currency"). The interest rate on each Note will be either a fixed rate
established by the Company at the date of issue of such Note, which may be
zero in the case of certain Original Issue Discount Notes, or a floating rate
as set forth therein and specified in the applicable Pricing Supplement. A
Fixed Rate Note may pay a level amount in respect of both interest and
principal amortized over the life of the Note (an "Amortizing Note").
Unless otherwise indicated in the applicable Pricing Supplement, interest on
each Fixed Rate Note is payable semi-annually on each March 1 and September 1
and at maturity. Interest on each Floating Rate Note is payable on the dates
set forth herein and in the applicable Pricing Supplement. Amortizing Notes
will pay principal and interest semi-annually each March 1 and September 1, or
quarterly each March 1, June 1, September 1 and December 1 and at maturity.
Each Fixed Rate Note will mature on any day from nine months from the date of
issue, as set forth in the applicable Pricing Supplement. Each Floating Rate
Note will mature on an Interest Payment Date from nine months from the date of
issue, as set forth in the applicable Pricing Supplement. See "Description of
Notes." Unless otherwise specified in the applicable Pricing Supplement, the
Notes may not be redeemed by the Company or repaid at the option of the holder
prior to maturity and will be issued in fully registered form in denominations
of $1,000 (or, in the case of Notes not denominated in U.S. dollars, the
equivalent thereof in the Specified Currency, rounded down to the nearest
1,000 units of the Specified Currency) or any amount in excess thereof which
is an integral multiple of $1,000 (or, in the case of Notes not denominated in
U.S. dollars, 1,000 units of the Specified Currency). Any terms relating to
Notes being denominated in foreign currencies or composite currencies will be
as set forth in the applicable Pricing Supplement. Each Note will be
represented either by a Global Note registered in the name of a nominee of The
Depository Trust Company, as Depositary (a "Book-Entry Note"), or by a
certificate issued in definitive form (a "Certificated Note"), as set forth in
the applicable Pricing Supplement. Beneficial interests in Global Notes
representing Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to
its participants' interests) and its participants. Book-Entry Notes will not
be issuable as Certificated Notes except under the circumstances described in
this Prospectus Supplement.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CON-
TRARY IS A CRIMINAL OFFENSE.
---------------
<TABLE>
<CAPTION>
PRICE TO AGENT PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) COMPANY (2)(3)
---------- --------------- --------------
<S> <C> <C> <C>
Per Note ....... 100.000% .125%-.750% 99.875%-99.250%
Total (4) ...... $1,000,000,000 $1,250,000-$7,500,000 $998,750,000-$992,500,000
</TABLE>
- -------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold at 100% of their principal amount. If the Company issues any
Notes at a discount from or at a premium over its principal amount, the
Price to Public of any Note issued at a discount or premium will be set
forth in the applicable Pricing Supplement.
(2) The commission payable to an Agent for each Note sold through such Agent
will be computed based upon the Price to Public of such Note and will
depend upon such Note's maturity; provided, however, that commissions with
respect to Notes maturing in 30 years or more will be negotiated. The
Company may also sell Notes to an Agent, as principal, at negotiated
discounts, for resale to one or more investors.
(3) Before deducting expenses payable by the Company estimated at $507,000.
(4) Or the equivalent thereof in other currencies, including composite
currencies.
---------------
Offers to purchase the Notes are being solicited from time to time by the
Agents on behalf of the Company, and the Agents have agreed to use reasonable
efforts to solicit purchases of such Notes. The Company may also sell Notes to
an Agent acting as principal for its own account for resale to one or more
investors at varying prices related to prevailing market prices at the time of
resale or otherwise, to be determined by such Agent. The Company reserves the
right to sell Notes directly on its own behalf and to withdraw, cancel or
modify the offering contemplated hereby without notice. No termination date
for the offering of the Notes has been established. The Company or an Agent
may reject any order in whole or in part. 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 the Notes.
See "Plan of Distribution."
---------------
MORGAN STANLEY & CO.
Incorporated
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
December 22, 1994
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT, ANY
PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT, ANY
PRICING SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS. THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
----------------
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Notes in the Specified Currency, and
payments of principal of, premium, if any, and interest on, such Notes will be
made in the Specified Currency, unless otherwise provided in the applicable
Pricing Supplement. Currently, there are limited facilities in the United
States for the conversion of U.S. dollars into foreign currencies and vice
versa. In addition, most banks do not currently offer non-U.S. dollar
denominated checking or savings account facilities in the United States.
Accordingly, unless otherwise specified in a Pricing Supplement or unless
alternative arrangements are made, payment of principal of, premium, if any,
and interest on Notes in a Specified Currency other than U.S. dollars will be
made to an account at a bank outside the United States. See "Description of
Notes" and "Foreign Currency Risks."
If the applicable Pricing Supplement provides for payments of principal of
and interest on a non-U.S. dollar denominated Note to be made in U.S. dollars,
the conversion of the Specified Currency into U.S. dollars will be handled by
Chemical Bank, in its capacity as Exchange Rate Agent. The costs of such
conversion will be borne by the holder of a Note through deductions from such
payments.
References herein to "U.S. dollars" or "U.S.$ or $ are to the currency of the
United States of America.
----------------
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
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 reference is hereby made. The particular terms of the
Notes sold pursuant to any pricing supplement (a "Pricing Supplement") will be
described therein. The terms and conditions set forth in "Description of Notes"
will apply to each Note unless otherwise specified herein or in the applicable
Pricing Supplement and in such Note. There are no covenants or provisions
relating to the Notes that may afford debt holders protection in the event of a
highly leveraged transaction.
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars, and payment of principal of and premium,
if any, and interest on the Notes will be made in U.S. dollars. If any Note is
not to be denominated in U.S. dollars, the applicable Pricing Supplement will
specify the currency or currencies, including composite currencies such as the
European Currency Unit ("ECU"), in which such Note is to be denominated (the
"Specified Currency") and, if different, the currency or currencies
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in which the principal, premium, if any, and interest with respect to such Note
are to be paid, along with any other related terms, including exchange rates
for such Specified Currency as against the U.S. dollar at selected times during
the last five years, and any exchange controls or other foreign currency risks
relating to such Specified Currency. See "Foreign Currency Risks."
GENERAL
The Notes will be issued under an Indenture dated as of April 1, 1986, as
supplemented by the First Supplemental Indenture, dated as of February 15, 1991
and the Second Supplemental Indenture, dated as of February 1, 1993 (the
"Indenture") between the Company and Chemical Bank, as Trustee (the "Trustee"),
the terms of which are more fully described in the Prospectus. The Notes will
constitute a single series under the Indenture and may be issued from time to
time, in an aggregate principal amount of up to $1,000,000,000 or the
equivalent thereof in one or more foreign or composite currencies. The
Indenture does not limit the amounts of additional unsecured indebtedness
ranking pari passu with the Notes that the Company may incur and the Company
may incur additional obligations ranking pari passu with the Notes. For the
purpose of this paragraph, (i) the principal amount of any Original Issue
Discount Note (as defined below) means the Issue Price (as defined below) of
such Note and (ii) the principal amount of any Note issued in a foreign or
composite currency means the U.S. dollar equivalent on the date of issue of the
Issue Price of such Note.
Notes issued under the Indenture will be unsecured and unsubordinated
obligations of the Company and will rank equally and ratably with other
unsecured and unsubordinated obligations of the Company.
Fixed Rate Notes, Amortizing Notes and Original Issue Discount Notes will
mature on any day from nine months from the date of issue (the "Stated Maturity
Date"), as set forth in the applicable Pricing Supplement. Floating Rate Notes
will mature on an Interest Payment Date (as defined below) from nine months
from the date of issue, as set forth in the applicable Pricing Supplement. Such
Pricing Supplement will specify whether the Stated Maturity Date or Interest
Payment Date, as the case may be, may be extended by the Company, and if so,
the Final Maturity Date (as defined below). Notes denominated in a Specified
Currency other than U.S. dollars will be issued in denominations of the
equivalent of U.S. $1,000 (rounded down to an integral multiple of 1,000 units
of such Specified Currency), or any amount in excess thereof which is an
integral multiple of 1,000 units of such Specified Currency, as determined by
reference to the noon dollar buying rate in New York City for cable transfers
of such Specified Currency published by the Federal Reserve Bank of New York
(the "Market Exchange Rate") on the Business Day (as defined below) immediately
preceding the date of issuance; provided, however, in the case of ECUs, the
Market Exchange Rate shall be the rate of exchange determined by the Commission
of the European Communities (or any successor thereto) as published in the
Official Journal of the European Communities, or any successor publication, on
the Business Day immediately preceding the date of issuance. Except as may be
specified for Notes denominated in foreign or composite currencies or as
otherwise provided in the Pricing Supplement, the Notes will be issued only in
fully registered form in denominations of U.S. $1,000 or any amount in excess
thereof which is an integral multiple of U.S. $1,000.
The Notes will be offered on a continuing basis, and each Note will be issued
initially as either a Book-Entry Note or a Certificated Note. Only Notes
payable solely in U.S. dollars may be issued as Book-Entry Notes. Except as set
forth in the Prospectus under "Description of Debt Securities-Global
Securities," Book-Entry Notes will not be issuable as Certificated Notes. See
"Book-Entry System" below.
The Notes may be presented for payment of principal and interest, transfer of
Notes will be registrable and the Notes will be exchangeable at the agency in
the Borough of Manhattan, The City of New York, maintained by the Company for
such purpose; provided that Book-Entry Notes will be exchangeable only in the
manner and to the extent set forth under "Description of Debt Securities-Global
Securities" in the Prospectus. On the date hereof, the agent for the payment,
transfer and exchange of the Notes (the "Paying Agent") is the Trustee.
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The applicable Pricing Supplement will specify the price (the "Issue Price")
of each Note to be sold pursuant thereto (unless such Note is to be sold at
100% of its principal amount), the interest rate or interest rate formula,
maturity, currency or composite currency and principal amount and any other
terms on which each such Note will be issued.
As used herein, the following terms shall have the meanings set forth below:
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and (i) with
respect to LIBOR Notes (as defined below), in the City of London, (ii) with
respect to Notes denominated in a Specified Currency other than U.S. dollars,
Australian dollars or ECUs, in the principal financial center of the country of
the Specified Currency, (iii) with respect to Notes denominated in Australian
dollars, in Sydney and (iv) with respect to Notes denominated in ECUs, in
Luxembourg and that is not a non-ECU clearing day, as determined by the ECU
Banking Association in Paris.
"Discount Note" means any Note that provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof pursuant to the Indenture.
An "Interest Payment Date" with respect to any Note shall be a date on which,
under the terms of such Note, regularly scheduled interest shall be payable.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
The "Record Date" with respect to any Interest Payment Date shall be the date
15 calendar days prior to such Interest Payment Date, whether or not such date
shall be a Business Day.
PAYMENT CURRENCY
If the applicable Pricing Supplement provides for payments of interest and
principal on a non-U.S. dollar denominated Note to be made, at the option of
the holder of such Note, in U.S. dollars, conversion of the Specified Currency
into U.S. dollars will be based on the highest bid quotation in The City of New
York received by the 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 (one of which may be the
Exchange Rate Agent) for the purchase by the quoting dealer of the Specified
Currency for U.S. dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to the holders of Notes and at which
the applicable dealer commits to execute a contract. If such bid quotations are
not available, payments will be made in the Specified Currency. All currency
exchange costs will be borne by the holders of Notes by deductions from such
payments.
Except as set forth below, if the principal of, premium, if any, or interest
on, any Note is payable in a Specified Currency other than U.S. dollars and
such Specified Currency is not available to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances
beyond the control of the Company or is no longer used by the government of the
country issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Company will
be entitled to satisfy its obligations to holders of the Notes by making such
payments in U.S. dollars on the basis of the Market Exchange Rate two Business
Days prior to the date of such payment or, if the Market Exchange Rate is not
available on such date, as of the most recent practicable date. Any payment
made under such circumstances in U.S. dollars where the required payment is in
a Specified Currency other than U.S. dollars will not constitute an Event of
Default.
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If payment in respect of a Note is required to be made in ECUs and 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 in respect of such Note shall be made in U.S. dollars
until ECUs are again available or so used. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars, determined as described below, as of the second Business Day prior to
the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date shall be determined
by the Company or its agent on the following basis. The component currencies of
the ECU for this purpose (the "Components") shall be the currency amounts that
were components of the ECU as of the last date on which the ECU was used in the
European Monetary System. The equivalent of the ECU 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
Company or such agent on the basis of the most recently available Market
Exchange Rates for such Components.
If the official unit of any Component 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 Components 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 appropriate amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or more
currencies, the amount of the original component currency shall be replaced by
the appropriate amounts of such two or more currencies, the sum of which shall
be equal to the amount of the original component currency.
All determinations referred to above made by the Company or its agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on holders of Notes.
INTEREST AND PRINCIPAL PAYMENTS
Interest will be payable to the person in whose name the Note is registered
at the close of business on the applicable Record Date; provided that the
interest payable upon maturity, redemption or repayment (whether or not the
date of maturity, redemption or repayment is an Interest Payment Date) will be
payable to the person to whom principal is payable. The initial interest
payment on a Note will be made on the first Interest Payment Date falling after
the date the Note is issued; provided, however, that payments of interest (or,
in the case of an Amortizing Note, principal and interest) on a Note issued
less than 15 calendar days before an Interest Payment Date will be paid on the
next succeeding Interest Payment Date to the holder of record on the Record
Date with respect to such succeeding Interest Payment Date. See "United States
Federal Taxation--Original Issue Discount Notes" below.
U.S. dollar payments of interest, other than interest payable at maturity (or
on the date of redemption or repayment, if a Note is redeemed or repaid by the
Company prior to maturity), will be made by check mailed to the address of the
person entitled thereto as shown on the Note register. U.S. dollar payments of
principal, premium, if any, and interest upon maturity, redemption or repayment
will be made in immediately available funds against presentation and surrender
of the Note. Notwithstanding the foregoing, (a) the Depositary, as holder of
Book-Entry Notes, shall be entitled to receive payments of interest by wire
transfer of immediately available funds and (b) a holder of $10,000,000 or more
in aggregate principal amount of Certificated Notes having the same Interest
Payment Date shall be entitled to receive payments of interest by wire transfer
of immediately available funds upon written request to the Paying Agent not
later than 15 calendar days prior to the applicable Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement or unless
alternative arrangements are made, payments of principal of, premium, if any,
and interest on Notes in a Specified Currency other than U.S. dollars will be
made by wire transfer of immediately available funds to an account maintained
by the
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payee with a bank located outside the United States and the holder of such
Notes shall provide the Paying Agent with the appropriate wire transfer
instructions not later than 15 calender days prior to the applicable payment
date. If such wire transfer instructions are not so provided, payments of
interest on such Notes (other than interest payable at maturity or on any
redemption or repayment date) will be made by check payable in U.S. dollars
mailed to the address of the person entitled thereto as such address shall
appear in the Note register. Conversion of the Specified Currency into U.S.
dollars shall be made at the Market Exchange Rate two Business Days prior to
the date of such payment, or if the Market Exchange Rate is not available on
such date, as of the most recent practicable date.
Certain Notes, including Discount Notes, may be considered to be issued with
original issue discount, which must be included in income for United States
federal income tax purposes at a constant rate. See "United States Federal
Taxation-Original Issue Discount Notes" below. Unless otherwise specified in
the applicable Pricing Supplement, if the principal of any Discount Note is
declared to be due and payable immediately as described under "Description of
Debt Securities-Events of Default" in the Prospectus, the amount of principal
due and payable with respect to such Note shall be limited to the aggregate
principal amount of such Note multiplied by the sum of its Issue Price
(expressed as a percentage of the aggregate principal amount) plus the original
issue discount amortized from the date of issue to the date of declaration,
which amortization shall be calculated using the "interest method" (computed in
accordance with generally accepted accounting principles in effect on the date
of declaration). Special considerations applicable to any such Notes will be
set forth in the applicable Pricing Supplement.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the annual
rate stated on the face thereof until the principal thereof is paid or made
available for payment. Such interest will be computed on the basis of a 360-day
year of twelve 30-day months. Payments of interest on Fixed Rate Notes other
than Amortizing Notes will be made semi-annually on each March 1 and September
1 and at maturity or upon any earlier redemption or repayment. Payments of
principal and interest on Amortizing Notes, which are securities on which
payments of principal and interest are made in equal installments over the life
of the security, will be made either quarterly on each March 1, June 1,
September 1 and December 1 or semi-annually on each March 1 and September 1, as
set forth in the applicable Pricing Supplement, and at maturity or upon any
earlier redemption or repayment. Payments with respect to Amortizing Notes will
be applied first to interest due and payable thereon and then to the reduction
of the unpaid principal amount thereof. A table setting forth repayment
information in respect of each Amortizing Note will be provided to the original
purchaser and will be available, upon request, to subsequent holders.
If any Interest Payment Date for any Fixed Rate Note would fall on a day that
is not a Business Day, the interest payment shall be postponed to the next day
that is a Business Day, and no interest on such payment shall accrue for the
period from and after the Interest Payment Date. If the maturity date (or date
of redemption or repayment) of any Fixed Rate Note would fall on a day that is
not a Business Day, the pay- ment of interest and principal (and premium, if
any) may be made on the next succeeding Business Day, and no interest on such
payment shall accrue for the period from and after the maturity date (or date
of redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued interest from the
date of issue or from the last date in respect of which interest has been paid
(or duly provided for), as the case may be, to, but excluding, the Interest
Payment Date or the date of maturity or earlier redemption or repayment, as the
case may be. The interest rates the Company will agree to pay on newly-issued
Fixed Rate Notes are subject to change without notice by the Company from time
to time, but no such change will affect any Fixed Rate Notes theretofore issued
or that the Company has agreed to issue.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from the date of issue until the
principal thereof is paid or made available for payment at a rate determined by
reference to an interest rate basis (the "Base Rate"),
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which may be adjusted by a Spread and/or Spread Multiplier (each as defined
below). The applicable Pricing Supplement will designate one of the following
Base Rates 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 set forth in such
Pricing Supplement and in such Floating Rate Note. The "Index Maturity" for any
Floating Rate Note is the period of maturity of the instrument or obligation
from which the Base Rate is calculated and will be specified in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the interest
rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, and/or (ii)
multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points (one one-hundredth of a percentage point) specified in the
applicable Pricing Supplement to be added to or subtracted from the Base Rate
for such Floating Rate Note and the "Spread Multiplier" is the percentage
specified in the applicable Pricing Supplement to be applied to the Base Rate
for such Floating Rate Note.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any interest period
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate
of interest which may accrue during any interest period ("Minimum Interest
Rate"). In addition to any Maximum Interest Rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application. Under current New York law, the maximum rate of interest, subject
to certain exceptions, for any loan in an amount less than $250,000 is 16% and
for any loan in the amount of $250,000 or more but less than $2,500,000 is 25%
per annum on a simple interest basis. This limitation does not apply to loans
of $2,500,000 or more.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually 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 Pricing Supplement, the Interest
Reset Date will be, in the case of Floating Rate Notes (other than Treasury
Rate Notes) which reset daily, each Business Day; in the case of Floating Rate
Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of
each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday
of each week, except as provided below; in the case of Floating Rate Notes
which reset monthly, the third Wednesday of each month; in the case of Floating
Rate Notes which reset quarterly, the third Wednesday of March, June, September
and December; in the case of Floating Rate Notes which reset semi-annually, the
third Wednesday of two months of each year, as specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes which reset
annually, the third Wednesday of one month of each year, as specified in the
applicable Pricing Supplement; provided, however, that (a) the interest rate in
effect from the date of issue to the first Interest Reset Date with respect to
a Floating Rate Note will be the initial interest rate set forth in the
applicable Pricing Supplement (the "Initial Interest Rate") and (b) the
interest rate in effect for the fifteen days immediately prior to maturity,
redemption or repayment will be that in effect on the fifteenth day preceding
such maturity, redemption or repayment date. 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 succeeding Business Day,
except that 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 next preceding
Business Day.
Except as provided below, and unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the
case of Floating Rate Notes with a daily, weekly or monthly Interest Reset
Date, on the third Wednesday of each month or on the third Wednesday of March,
June, September and December, as specified in the applicable Pricing
Supplement; (ii) in the case of Floating Rate
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Notes with a quarterly Interest Reset Date, on the third Wednesday of March,
June, September and December, (iii) in the case of Floating Rate Notes with a
semi-annual Interest Reset Date, on the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (iv) in the case of
Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday
of the month specified in the applicable Pricing Supplement. If any Interest
Payment Date for any Floating Rate Note would fall on a day that is not a
Business Day with respect to such Floating Rate Note, such Interest Payment
Date will be postponed to the following day that is a Business Day with respect
to such Floating Rate Note, 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 day that is a Business Day with respect
to such LIBOR Note. If the maturity date or any earlier redemption or repayment
date of a Floating Rate Note would fall on a day that is not a Business Day,
the payment of principal, premium, if any, and interest will be made on the
next succeeding Business Day, and no interest on such payment shall accrue for
the period from and after such maturity, redemption or repayment date, as the
case may be.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments for Floating Rate Notes (except Floating Rate Notes on which interest
is reset daily or weekly) shall be the amount of interest accrued from the date
of issue or from the last date to which interest has been paid (or duly
provided for) to, but excluding, the Interest Payment Date. In the case of a
Floating Rate Note on which interest is reset daily or weekly, interest
payments shall be the amount of interest accrued from the date of issue or from
the last date to which interest has been paid (or duly provided for), as the
case may be, to and including the Record Date immediately preceding such
Interest Payment Date, except that at maturity or earlier redemption or
repayment, the interest payable will include interest accrued to, but
excluding, the maturity, redemption or repayment date, as the case may be.
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. The interest factor for each such day is 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. All percentages used in or resulting from any calculation of the
rate of interest on a Floating Rate Note will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point (.0000001), with five one-
millionths of a percentage point rounded upward, and all dollar amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded to
the nearest cent, with one-half cent rounded upward. The interest rate in
effect on any Interest Reset Date will be the applicable rate as reset on such
date. The interest rate applicable to any other day is the interest rate from
the immediately preceding Interest Reset Date (or, if none, the Initial
Interest Rate).
The applicable Pricing Supplement shall specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. Upon the
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
which will become effective on the next Interest Reset Date with respect to
such Floating Rate Note.
The "Interest Determination Date" pertaining to an Interest Reset Date for CD
Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and Prime
Rate Notes will be the second Business Day next 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 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 would normally be 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, but 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. If an auction falls on a day
that is an Interest Reset Date, such Interest Reset Date will be the next
following Business Day.
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The "Calculation Date," where applicable, pertaining to an Interest
Determination Date will be the earlier of the tenth calendar day after such
Interest Determination Date or the next succeeding Record Date after such
Interest Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Interest rates will be determined by the Calculation Agent as follows:
CD RATE NOTES
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CD Rate Notes 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 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)," or, if
not so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated 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" (the "Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate on 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, for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity designated
in the Pricing Supplement of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent 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; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the CD
Rate in effect for the applicable period will be the same as the CD Rate for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the CD Rate Notes for
which such CD Rate is being determined shall be the Initial Interest Rate).
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes and
in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date, the Money
Market Yield (as defined below) of the rate on such date for commercial paper
having the Index Maturity specified in the applicable Pricing Supplement, as
such rate shall be published in H.15(519), under the heading "Commercial
Paper." In the event that 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 shall be the Money Market Yield of the
rate on such Interest Determination Date for commercial paper of the specified
Index Maturity as published in Composite Quotations under the heading
"Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet available in either H.15(519) or Composite
Quotations, then the
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Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for commercial paper of the
specified Index Maturity, placed for an industrial issuer whose bond 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 offered rates as mentioned in this sentence, the Commercial Paper
Rate in effect for the applicable period will be the same as the Commercial
Paper Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable on the
Commercial Paper Rate Notes for which such Commercial Paper Rate is being
determined shall be the Initial Interest Rate).
"Money Market Yield" shall be 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 Index Maturity.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rate (calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
such date for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Federal Funds Rate will be the rate on such Interest Determination
Date as published in the Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate is not yet published in either H.15(519) or
the Composite Quotations 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
and will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds, as of 11:00 A.M., New York City time, on such Interest
Determination Date, arranged by three leading brokers of Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the Federal Funds Rate in effect for
the applicable period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Federal Funds Rate Notes for
which such Federal Funds Rate is being determined shall be the Initial Interest
Rate).
LIBOR NOTES
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject
to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified
in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each Interest Reset Date will be determined by the Calculation Agent as
follows:
(i) As of the Interest Determination Date, LIBOR will be either: (a) if
"LIBOR Reuters" is specified in 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 Index
Currency having the Index Maturity designated in the applicable Pricing
Supplement, commencing on such Interest Determination Date, that appear on
the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest
Determination
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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 applicable Pricing Supplement, the rate for
deposits in the Index Currency having the Index Maturity designated in the
applicable Pricing Supplement, commencing on such Interest Determination
Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London
time, on that Interest Determination Date. If fewer than two offered rates
appear or no rate appears (if, as aforesaid, only a single rate is required)
(if "LIBOR Reuters" is specified in the applicable Pricing Supplement) or no
rate appears (if "LIBOR Telerate" is specified in the applicable Pricing
Supplement), 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 an Interest Determination Date on which fewer than
two offered rates appear or no rate appears (if, as aforesaid, only a
single rate is required) (if "LIBOR Reuters" is specified in the applicable
Pricing Supplement) or no rate appears (if "LIBOR Telerate" is specified in
the applicable Pricing Supplement), the Calculation Agent will request the
principal London offices of each of four major reference banks in the
London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for deposits in the Index
Currency for the period of the Index Maturity designated in 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 at approximately 11:00 A.M., London time, on such Interest
Determination Date and in a principal amount of not less than $1,000,000
(or the equivalent in the Index Currency, if the Index Currency is not the
U.S. dollar) that is representative for a single transaction in such Index
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 at approximately 11:00 A.M. (or such
other time specified in the applicable Pricing Supplement), in the
applicable principal financial center for the country of the Index Currency
on such Interest Determination Date, by three major banks in such principal
financial center selected by the Calculation Agent for loans in the Index
Currency to leading European banks, having the Index Maturity designated in
the applicable Pricing Supplement and in a principal amount of not less
than $1,000,000 commencing on the second London Banking Day immediately
following such Interest Determination Date (or the equivalent in the Index
Currency, if the Index Currency is not the U.S. dollar) that is
representative for a single transaction in such Index 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
in effect for the applicable period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the LIBOR Notes for
which such LIBOR is being determined shall be the Initial Interest Rate).
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, Page 3750) has been specified.
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The interest rate for each such Interest Reset Date shall be LIBOR plus or
minus the Spread and/or multiplied by the Spread Multiplier as specified in the
applicable Pricing Supplement; provided, however, the interest rate in effect
for the period from the Issue Date to the first Interest Reset Date will be the
Initial Interest Rate and the interest rate in effect for the 15 days
immediately prior to maturity or redemption will be that in effect on the 15th
day preceding such maturity or redemption. In addition, if any LIBOR Note is
issued between a Record Date and the related Interest Payment Date, and such
Note has weekly Interest Reset Dates, then, notwithstanding the fact that an
Interest Reset Date will occur prior to such Interest Payment Date, the Initial
Interest Rate set forth in the Pricing Supplement applicable to such Note shall
remain in effect through the first Interest Reset Date occurring on or
subsequent to such Interest Payment Date.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date, the rate set forth in
H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is
not yet published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate for such
Interest Determination Date will be the arithmetic mean of the rates of
interest publicly announced by each bank named on the Reuters Screen NYMF Page
(as defined below) as such bank's prime rate or base lending rate as in effect
for such Interest Determination Date as quoted on the Reuters Screen NYMF Page
on such Interest Determination Date, or, if fewer than four such rates appear
on the Reuters Screen NYMF Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money
center banks in The City of New York selected by the Calculation Agent from
which quotations are requested. If fewer than two quotations are provided, the
Prime Rate shall be calculated by the Calculation Agent and shall be determined
as the arithmetic mean on the basis of the prime rates in The City of New York
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, in
each case having total equity capital of at least U.S. $500 million and being
subject to supervision or examination by federal or state authority, selected
by the Calculation Agent to quote such rate or rates. "Reuters Screen NYMF
Page" means the display designated as Page "NYMF" on the Reuters Monitor Money
Rates Service (or such other page as may replace the NYMF Page on that service
for the purpose of displaying prime rates or base lending rates of major United
States banks).
If in any month or two consecutive months the Prime Rate is not published in
H.15(519) and the banks or trust companies selected as aforesaid are not
quoting as mentioned in the preceding paragraph, the "Prime Rate" for such
Interest Reset Period will be the same as the Prime Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the rate of interest payable on the Prime Rate Notes for which the
Prime Rate is being determined shall be the Initial Interest Rate). If this
failure continues over three or more consecutive months, the Prime Rate for
each succeeding Interest Determination Date until the maturity or redemption of
such Prime Rate Notes or, if earlier, until this failure ceases, shall be LIBOR
determined as if such Prime Rate Notes were LIBOR Notes, and the spread, if
any, shall be the number of basis points specified in the applicable Pricing
Supplement as the "Alternate Rate Event Spread."
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rate (calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the Treasury Rate Notes and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the
rate for the auction held on such date of direct obligations of the United
States ("Treasury Bills") having the Index Maturity designated in the
applicable Pricing Supplement, as published in H.15(519) under the heading
"Treasury Bills--auction average (investment)" or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (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 on such Interest Determination Date, then the Treasury Rate
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) calculated using 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 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 bid
rates as mentioned in this sentence, the Treasury Rate for such Interest Reset
Date will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the rate
of interest payable on the Treasury Rate Notes for which the Treasury Rate is
being determined shall be the Initial Interest Rate).
INDEXED NOTES
The Notes may be issued, from time to time, as Notes of which the principal
amount payable on a date from 9 months from the Issue Date and/or on which the
amount of interest payable on an Interest Payment Date will be determined by
reference to currencies, currency units, commodity prices, financial or non-
financial indices or other factors (the "Indexed Notes"), as indicated in the
applicable Pricing Supplement. Holders of Indexed Notes may receive a principal
amount at maturity that is greater than or less than the face amount of such
Notes depending upon the fluctuation of the relative value, rate or price of
the specified index. Specific information pertaining to the method for
determining the principal amount payable at maturity, a historical comparison
of the relative value, rate or price of the specified index and the face amount
of the Indexed Note and certain additional United States federal tax
considerations will be described in the applicable Pricing Supplement.
EXTENSION OF MATURITY
The Variable Rate Renewable Notes (the "Renewable Notes") will mature on an
Interest Payment Date as specified in the applicable Pricing Supplement (the
"Initial Maturity Date"), unless the maturity of all or any portion of the
principal amount thereof is extended in accordance with the procedures
described below. On the Interest Payment Dates in March and September in each
year (unless different Interest Payment Dates are specified in the applicable
Pricing Supplement) (each such Interest Payment Date, an "Election Date"), the
maturity of the Renewable Notes will be extended to the Interest Payment Date
occurring twelve months after such Election Date, unless the holder thereof
elects to terminate the automatic extension of the maturity of the Renewable
Notes or of any portion thereof having a principal amount of $1,000 or any
multiple of $1,000 in excess thereof by delivering such notes to the Paying
Agent not less than nor more than the number of days to be specified in the
applicable Pricing Supplement prior to such Election Date. Short-term notes
will be issued in the place of surrendered notes, and such short-term notes
will set forth the terms thereof, including the maturity date. Such option may
be exercised with respect to less than the entire principal amount of the
Renewable Notes; provided that the principal amount for which such option is
not exercised is at least $1,000 or any larger amount that is an integral
multiple of $1,000. Notwithstanding the foregoing, the maturity of the
Renewable Notes may not be extended beyond the Final Maturity Date, as
specified in
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the applicable Pricing Supplement (the "Final Maturity Date"). If the holder
elects to terminate the automatic extension of the maturity of any portion of
the principal amount of the Renewable Notes and such election is not revoked as
described below, such portion will become due and payable on the Interest
Payment Date falling six months (unless another period is specified in the
applicable Pricing Supplement) after the Election Date prior to which the
holder made such election.
An election to terminate the automatic extension of maturity may be revoked
as to any portion of the Renewable Notes having a principal amount of $1,000 or
any multiple of $1,000 in excess thereof by delivering a notice to such effect
to the Paying Agent on any day following the effective date of the election to
terminate the automatic extension of maturity and prior to the date 15 days
before the date on which such portion would otherwise mature. Such a revocation
may be made for less than the entire principal amount of the Renewable Notes
for which the automatic extension of maturity has been terminated; provided
that the principal amount of the Renewable Notes for which the automatic
extension of maturity has been terminated and for which such a revocation has
not been made is at least $1,000 or any larger amount that is an integral
multiple of $1,000. Notwithstanding the foregoing, a revocation may not be made
during the period from and including a Record Date to but excluding the
immediately succeeding Interest Payment Date.
An election to terminate the automatic extension of the maturity of the
Renewable Notes, if not revoked as described above by the holder making the
election or any subsequent holder, will be binding upon such subsequent holder.
The Renewable Notes may be redeemed in whole or in part at the option of the
Company on the Interest Payment Dates in each year specified in the applicable
Pricing Supplement, commencing with the Interest Payment Date specified in the
applicable Pricing Supplement, at a redemption price of 100% of the principal
amount of the Renewable Notes to be redeemed, together with interest accrued
and unpaid thereon to the date of redemption. Notwithstanding anything to the
contrary in this Prospectus Supplement, notice of redemption will be provided
by mailing a notice of such redemption to each holder by first class mail,
postage prepaid, at least 180 days and not more than 210 days prior to the date
fixed for redemption to the respective address of each holder as that address
appears upon the books maintained by the registrar.
The Renewable Notes are Floating Rate Notes as described herein.
BOOK-ENTRY SYSTEM
Upon issue, all Fixed Rate Book-Entry Notes having the same Issue Date,
interest rate, if any, amortization schedule, if any, maturity date and other
terms, if any, will be represented by one or more fully registered global
notes, (the "Global Notes") and all Floating Rate Book-Entry Notes having the
same Issue Date, Initial Interest Rate, Base Rate, Interest Period, Interest
Payment Dates, Index Maturity, Spread and/or Spread Multiplier, if any, Minimum
Interest Rate, if any, Maximum Interest Rate, if any, maturity date and other
terms, if any, will be represented by one or more Global Notes. Each such
Global Note representing Book-Entry Notes will be deposited with, or on behalf
of, The Depository Trust Company, New York, New York, as Depositary, and
registered in the name of the Depositary or a nominee thereof. Certificated
Notes will not be exchangeable for Book-Entry Notes and, except under the
circumstances described in the Prospectus under "Description of Debt
Securities-Global Securities," Book-Entry Notes will not be exchangeable for
Certificated Notes and will not otherwise be issuable as Certificated Notes.
A further description of the Depositary's procedures with respect to Global
Notes representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities-Global Securities."
OPTIONAL REDEMPTION OR REPAYMENT; REPURCHASE
Unless otherwise provided in the applicable Pricing Supplement, the Notes
will not be redeemable prior to maturity at the option of the Company or
repayable prior to maturity at the option of the holder. The Notes, except for
Amortizing Notes, will not be subject to any sinking fund.
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If applicable, the Pricing Supplement relating to each Note will indicate
that the Note will be repayable at the option of the holder on a date or dates
specified prior to its maturity date and, unless otherwise specified in such
Pricing Supplement, at a price equal to 100% of the principal amount thereof,
together with accrued interest to the date of repayment, unless such Note was
issued with original issue discount, in which case the Pricing Supplement will
specify the amount payable upon such repayment.
In order for such a Note to be repaid, the Paying Agent must receive at least
15 days but not more than 30 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 a letter from a
member of a national securities exchange, or the National Association of
Securities Dealers, Inc. ("NASD") 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, together with the duly completed form
entitled "Option to Elect Repayment" on the reverse of the Note, will be
received by the Paying Agent not later than the fifth Business Day after the
date of such telegram, telex, facsimile transmission or letter; provided,
however, that such telegram, telex, facsimile transmission or letter shall only
be effective if 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 will be irrevocable, except as otherwise provided herein under
"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 but, in that
event, the principal amount of the Note remaining outstanding after repayment
must be an authorized denomination.
If a Note is represented by a Global Note, 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 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.
The Company may purchase Notes at any price in the open market or otherwise.
Notes so purchased by the Company may, at the discretion of the Company, be
held or resold or surrendered to the Trustee for cancellation.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than U.S. dollars entails
significant risks that are not associated with a similar investment in a
security denominated in U.S. dollars. Such risks include the possibility of
significant changes in rates of exchange between the U.S. dollar and the
various foreign currencies (or composite currencies) and the possibility of the
imposition or modification of exchange controls by either the U.S. or foreign
governments. Such risks generally depend on economic and political events over
which the Company has no control. In recent years, rates of exchange between
U.S. dollars and certain foreign currencies have been highly volatile and such
volatility may be expected to continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in such rate that may occur during the
term of any Note. Depreciation against the U.S. dollar of the currency in which
a Note is payable would result in a decrease in the effective yield of such
Note below its coupon rate
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and, in certain circumstances, could result in a loss to the investor on a U.S.
dollar basis. In addition, depending on the specific terms of a currency linked
Note, changes in exchange rates relating to any of the currencies involved may
result in a decrease in its effective yield and, in certain circumstances,
could result in a loss of all or a substantial portion of the principal of a
Note to the investor.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of, premium,
if any, and interest on the Notes. Such persons should consult their own
counsel with regard to such matters.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at the time of payment of principal of,
premium, if any, or interest on a Note. In addition to the risks associated
with relative currency valuations discussed above, the imposition of exchange
controls might impact the liquidity of any Note denominated in, or the value of
which is linked to, a foreign currency. Even if there are no actual exchange
controls, it is possible that the Specified Currency for any particular Note
not denominated in U.S. dollars would not be available when payments on such
Note are due. In that event, the Company would make required payments in U.S.
dollars on the basis of the Market Exchange Rate on the date of such payment,
or if such rate of exchange is not then available, on the basis of the Market
Exchange Rate as of the most recent practicable date. See "Description of
Notes--Payment Currency."
With respect to any Note denominated in, or the payment of which is related
to the value of, a foreign currency or currency unit, the applicable Pricing
Supplement will include information with respect to applicable current exchange
controls, if any, and historic exchange rate information on such currency or
currency unit. The information contained therein shall constitute a part of
this Prospectus Supplement and is furnished as a matter of information only and
should not be regarded as indicative of the range of or trends in fluctuations
in currency exchange rates that may occur in the future.
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. In the event an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a court in the
United States, it is likely that such court would grant judgment relating to
the Notes only in U.S. dollars. If an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a New York court,
however, such court would render or enter a judgment or decree in the Specified
Currency. Such judgment would then be converted into U.S. dollars at the rate
of exchange prevailing on the date of entry of the judgment or decree.
UNITED STATES FEDERAL TAXATION
In the opinion of Davis Polk & Wardwell, special tax counsel to the Company,
the following summary accurately describes the principal United States federal
income tax consequences of ownership and disposition of the Notes to initial
holders purchasing Notes at the "issue price" (as defined below). This summary
is based on the Internal Revenue Code of 1986, as amended to the date hereof
(the "Code"), administrative pronouncements, judicial decisions and existing
and proposed Treasury Regulations, including regulations concerning the
treatment of debt instruments issued with original issue discount (the "OID
Regulations"), changes to any of which subsequent to the date of this
Prospectus Supplement may affect the tax consequences described herein. This
summary discusses only Notes held as capital assets within the meaning of
Section 1221 of the Code. It does not discuss all of the tax consequences that
may be relevant to a holder in light of his particular circumstances or to
holders subject to special rules, such as certain financial institutions,
insurance companies, dealers in securities or foreign currencies, persons
holding Notes as a hedge against, or
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which are hedged against, currency risks, or Holders whose functional currency
(as defined in Code Section 985) is not the U.S. dollar. Finally, this summary
does not discuss Original Issue Discount Notes (as defined below) which qualify
as "applicable high-yield discount obligations" under Section 163(i) of the
Code. Holders of Original Issue Discount Notes which are "applicable high-yield
discount obligations" may be subject to special rules. Persons considering the
purchase of Notes should consult their tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign taxing jurisdiction.
As used herein, the term "Holder" means an owner of a Note that is (i) for
United States federal income tax purposes a citizen or resident of the United
States, (ii) 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 (iii) an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
TAX CONSEQUENCES TO HOLDERS
Payments of Interest. Interest paid on a Note will generally be taxable to a
Holder as ordinary interest income at the time it accrues or is received in
accordance with the Holder's method of accounting for federal income tax
purposes. Under the OID Regulations, all payments of interest on a Note that
matures one year or less from its date of issuance will be included in the
stated redemption price at maturity of the Notes and will be taxed in the
manner described below under "Original Issue Discount Notes." Special rules
governing the treatment of interest paid with respect to Original Issue
Discount Notes, including certain Floating Rate Notes and Indexed Notes,
Foreign Currency Notes, and Currency Indexed Notes are described under
"Original Issue Discount Notes," "Foreign Currency Notes" and "Currency Indexed
Notes" below.
Original Issue Discount Notes. A Note which is issued for an amount less than
its stated redemption price at maturity will generally be considered to have
been issued at an original issue discount for federal income tax purposes (an
"Original Issue Discount Note"). The "issue price" of a Note will equal the
first price to the public (not including bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers) at which a substantial amount of the Notes is sold for
money. The stated redemption price at maturity of a Note will equal the sum of
all payments required under the Note other than payments of "qualified stated
interest". "Qualified stated interest" is stated interest unconditionally
payable as a series of payments in cash or property (other than debt
instruments of the issuer) at least annually during the entire term of the Note
and equal to the outstanding principal balance of the Note multiplied by a
single fixed rate of interest. In addition, a Floating Rate Note providing for
one or more qualified floating rates of interest, a single fixed rate and one
or more qualified floating rates, a single objective rate, or a single fixed
rate and a single objective rate that is a qualified inverse floating rate will
have qualified stated interest if interest is unconditionally payable at least
annually during the term of the Note at a single qualified floating rate or a
single objective rate. If a Floating Rate Note provides for two or more
qualified floating rates that can reasonably be expected to have approximately
the same values throughout the term of the Note, the qualified floating rates
together constitute a singled qualified floating rate. If interest on a debt
instrument is stated at a fixed rate for an initial period of less than 1 year
followed by a variable rate that is either a qualified floating rate or an
objective rate for a subsequent period, and the value of the variable rate on
the issue date is intended to approximate the fixed rate, the fixed rate and
the variable rate together constitute a single qualified floating rate or
objective rate. Two or more rates will be conclusively presumed to meet the
requirements of the preceding sentences if the values of the applicable rates
on the issue date are within 1/4 of 1 percent of each other. Special tax
considerations (including possible original issue discount) may arise with
respect to Floating Rate Notes providing for (i) one Base Rate followed by one
or more Base Rates, (ii) a single fixed rate followed by a qualified floating
rate or (iii) a Spread Multiplier. Purchasers of Floating Rate Notes with any
of such features should carefully examine the applicable Pricing Supplement and
should consult their tax advisors with respect to such a feature since the tax
consequences will depend, in part, on the particular terms of the purchased
Note. Special rules may apply if a Floating Rate Note bears interest at an
objective rate and it is reasonably expected that the average value of the rate
during the first half of the Note's term will be either significantly less than
or significantly greater than the average value of
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the rate during the final half of the Note's term. Special rules may also apply
if a Floating Rate Note is subject to a cap, floor, governor or similar
restriction that is not fixed throughout the term of the Note and is reasonably
expected as of the issue date to cause the yield on the Note to be
significantly less or more than the expected yield determined without the
restriction.
Proposed regulations issued on December 15, 1994, address, among other
things, the accrual of original issue discount on, and the character of gain
realized on the sale, exchange or retirement of, debt instruments providing for
contingent payments. Such regulations would apply to contingent payment debt
instruments issued on or after 60 days after the date final regulations are
published. Prospective Holders of Indexed Notes or Floating Rate Notes that
provide for contingent payments should refer to the discussion regarding
taxation in the applicable Pricing Supplement.
If the difference between a Note's stated redemption price at maturity and
its issue price is less than a de minimis amount, i.e., 1/4 of 1 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity, then the Note will not be considered to have original issue
discount. Holders of Notes with a de minimis amount of original issue discount
will generally include such original issue discount in income, as capital gain,
on a pro rata basis as principal payments are made on the Note.
A Holder of Original Issue Discount Notes will be required to include any
qualified stated interest payments in income in accordance with the Holder's
method of accounting for federal income tax purposes. Holders of Original Issue
Discount Notes that mature more than one year from their date of issuance will
be required to include original issue discount in income for federal income tax
purposes as it accrues, in accordance with a constant yield method based on a
compounding of interest, before the receipt of cash payments attributable to
such income. Under this method, Holders of Original Issue Discount Notes
generally will be required to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
Under the OID Regulations, Notes that pay interest annually that are issued
less than 15 calendar days before an Interest Payment Date may be treated as
Original Issue Discount Notes. Holders intending to purchase such Notes should
refer to the discussion relating to taxation in the applicable Pricing
Supplement.
Under the OID Regulations, a Note that matures one year or less from its date
of issuance will be treated as a "short-term Original Issue Discount Note". In
general, a cash method Holder of a short-term Original Issue Discount Note is
not required to accrue original issue discount for United States federal income
tax purposes unless it elects to do so. Holders who make such an election,
Holders who report income for federal income tax purposes on the accrual method
and certain other Holders, including banks and dealers in securities, are
required to include original issue discount in income on such short-term
Original Issue Discount Notes as it accrues on a straight-line basis, unless an
election is made to accrue the original issue discount according to a constant
yield method based on daily compounding. In the case of a Holder who is not
required and who 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 yield method based on daily compounding) through the
date of sale, exchange or retirement. In addition, such Holders will be
required to defer deductions for any interest paid on indebtedness incurred to
purchase or carry short-term Original Issue Discount Notes in an amount not
exceeding the deferred interest income, until such deferred interest income is
recognized.
Under the OID Regulations, a Holder may make an election (the "Constant Yield
Election") to include in gross income all interest that accrues on a Note
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) in accordance with a constant yield method based on the
compounding of interest.
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Certain of the Original Issue Discount Notes may be redeemed prior to
maturity. Original Issue Discount Notes containing such a feature may be
subject to rules that differ from the general rules discussed above. Purchasers
of Original Issue Discount Notes with such a feature should carefully examine
the applicable Pricing Supplement and should consult their tax advisors with
respect to such a feature since the tax consequences with respect to original
issue discount will depend, in part, on the particular terms and the particular
features of the purchased Note.
The OID Regulations contain aggregation rules stating that in certain
circumstances if more than one type of Note is issued as part of the same
issuance of securities to a single holder, some or all of such Notes may be
treated together as a single debt instrument with a single issue price,
maturity date, yield to maturity and stated redemption price at maturity for
purposes of calculating and accruing any original issue discount. Unless
otherwise provided in the related Pricing Supplement, the Company does not
expect to treat any of the Notes as being subject to the aggregation rules for
purposes of computing original issue discount.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of a Note, a Holder will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement and
such Holder's adjusted tax basis in the Note. For these purposes, the amount
realized does not include any amount attributable to accrued interest on the
Note, which is treated as a payment of interest. See "Payments of Interest"
above. A Holder's adjusted tax basis in a Note will equal the cost of the Note
to such Holder, increased by the amounts of any original issue discount
previously included in income by the Holder with respect to such Note and
reduced by any amortized premium and any principal payments received by the
Holder and, in the case of an Original Issue Discount Note, by the amounts of
any other payments that do not constitute qualified stated interest (as defined
above).
Subject to the discussion under "Foreign Currency Notes" below, gain or loss
realized on the sale, exchange or retirement of a Note will be capital gain or
loss (except in the case of a short-term Original Issue Discount Note, to the
extent of any accrued original issue discount not previously included in the
Holder's taxable income), and will be long-term capital gain or loss if at the
time of sale, exchange or retirement the Note has been held for more than one
year. See "Original Issue Discount Notes" above. The excess of net long-term
capital gains over net short-term capital losses is taxed at a lower rate than
ordinary income for certain non-corporate taxpayers. The distinction between
capital gain or loss and ordinary income or loss is also relevant for purposes
of, among other things, limitations on the deductibility of capital losses.
Amortizable Bond Premium. If a Holder purchases a Note for an amount that is
greater than the amount payable at maturity, such Holder will be considered to
have purchased such Note with "amortizable bond premium" equal in amount to
such excess, and may elect (in accordance with applicable Code provisions) to
amortize such premium, using a constant yield method, over the remaining term
of the Note (where such Note is not optionally redeemable prior to its maturity
date). If such Note may be optionally redeemed prior to maturity, the amount of
amortizable bond premium is determined with reference to the amount payable on
maturity or, if it results in a smaller premium attributable to the period
before the earlier redemption date, with reference to the amount payable on the
earlier redemption date. A Holder who elects to amortize bond premium must
reduce his tax basis in the Note by the amount of the premium amortized in any
year. An election to amortize bond premium applies to all taxable debt
obligations then owned and thereafter acquired by the taxpayer and may be
revoked only with the consent of the Internal Revenue Service.
If a Holder makes a Constant Yield Election for a Note with amortizable bond
premium, such election will result in a deemed election to amortize bond
premium for all of the Holder's debt instruments with amortizable bond premium
and may be revoked only with the permission of the Internal Revenue Service
with respect to debt instruments acquired after revocation.
Foreign Currency Notes. The following summary relates to Notes that are
denominated in a currency or currency unit other than the U.S. dollar ("Foreign
Currency Notes").
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A Holder who uses the cash method of accounting and who receives a payment of
interest in a foreign currency with respect to a Foreign Currency Note (other
than an Original Issue Discount Note on which original issue discount is
accrued on a current basis, except to the extent any qualified stated interest
is received), will be required to include in income the U.S. dollar value of
the foreign currency payment (determined on the date such payment is received),
regardless of whether the payment is in fact converted to U.S. dollars at that
time, and such U.S. dollar value will be the Holder's tax basis in the foreign
currency. A cash method Holder who receives such a payment in U.S. dollars
pursuant to an option available under such Note will be required to include the
amount of such U.S. dollar payment in income upon receipt.
To the extent the above paragraph is not applicable, a Holder will be
required to include in income the U.S. dollar value of the amount of interest
income (including original issue discount, but reduced by amortizable bond
premium to the extent applicable) that has accrued and is otherwise required to
be taken into account with respect to a Foreign Currency Note during an accrual
period. The U.S. dollar value of such accrued income will be determined by
translating such income at the average rate of exchange for the accrual period
or, with respect to an accrual period that spans two taxable years, at the
average rate for the partial period within the taxable year. Such Holder will
recognize ordinary income or loss with respect to accrued interest income on
the date such income is actually received. The amount of ordinary income or
loss recognized will equal the difference between the U.S. dollar value of the
foreign currency payment received (determined on the date such payment is
received) in respect of such accrual period (or, where a Holder receives U.S.
dollars, the amount of such payment in respect of such accrual period) and the
U.S. dollar value of interest income that has accrued during such accrual
period (as determined above). A Holder may elect to translate interest income
(including original issue discount) into U.S. dollars at the spot rate on the
last day of the interest accrual period (or, in the case of a partial accrual
period, the spot rate on the last day of the taxable year) or, if the date of
receipt is within five business days of the last day of the interest accrual
period, the spot rate on the date of receipt. A Holder that makes such an
election must apply it consistently to all debt instruments from year to year
and cannot change the election without the consent of the Internal Revenue
Service.
Original issue discount and amortizable bond premium on a Foreign Currency
Note are to be determined in the relevant foreign currency.
Any loss realized on the sale, exchange or retirement of a Foreign Currency
Note with amortizable bond premium by a Holder who has not elected to amortize
such premium under Section 171 of the Code will be a capital loss to the extent
of such bond premium. If an election to amortize is made, amortizable bond
premium taken into account on a current basis shall reduce interest income in
units of the relevant foreign currency. Exchange gain or loss is realized on
such amortized bond premium with respect to any period by treating the bond
premium amortized in such period as a return of principal.
A Holder's tax basis in a Foreign Currency Note, and the amount of any
subsequent adjustment to such Holder's tax basis, will be the U.S. dollar value
of the foreign currency amount paid for such Foreign Currency Note, or of the
foreign currency amount of the adjustment, determined on the date of such
purchase or adjustment. A Holder who purchases a Foreign Currency Note with
previously owned foreign currency will recognize ordinary income or loss in an
amount equal to the difference, if any, between such Holder's tax basis in the
foreign currency and the U.S. dollar fair market value of the Foreign Currency
Note on the date of purchase.
Gain or loss realized upon the sale, exchange or retirement of a Foreign
Currency Note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between (i) the U.S. dollar value of the foreign currency
principal amount of such Note, and any payment with respect to accrued
interest, determined on the date such payment is received or such Note is
disposed of, and (ii) the U.S. dollar value of the foreign currency principal
amount of such Note, determined on the date such Holder acquired such Note, and
the U.S. dollar value of the accrued interest received,
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determined by translating such interest at the average exchange rate for the
accrual period as described above. Such foreign currency gain or loss will be
recognized only to the extent of the total gain or loss realized by a Holder on
the sale, exchange or retirement of the Foreign Currency Note. The source of
such foreign currency gain or loss will be determined by reference to the
residence of the Holder or the "qualified business unit" of the Holder on whose
books the Note is properly reflected. Any gain or loss realized by such a
Holder in excess of such foreign currency gain or loss will be capital gain or
loss (except in the case of a short-term Original Issue Discount Note, to the
extent of any accrued original issue discount not previously included in the
Holder's income).
A Holder will have a tax basis in any foreign currency received on the sale,
exchange or retirement of a Foreign Currency Note equal to the U.S. dollar
value of such foreign currency, determined at the time of such sale, exchange
or retirement. Regulations issued under Section 988 of the Code provide a
special rule for purchases and sales of publicly traded Foreign Currency Notes
by a cash method taxpayer under which units of foreign currency paid or
received are translated into U.S. dollars at the spot rate on the settlement
date of the purchase or sale. Accordingly, no exchange gain or loss will result
from currency fluctuations between the trade date and the settlement of such a
purchase or sale. An accrual method taxpayer may elect the same treatment
required of cash-method taxpayers with respect to the purchase and sale of
publicly traded Foreign Currency Notes provided the election is applied
consistently. Such election cannot be changed without the consent of the
Internal Revenue Service. Any gain or loss realized by a Holder on a sale or
other disposition of foreign currency (including its exchange for U.S. dollars
or its use to purchase Foreign Currency Notes) will be ordinary income or loss.
Currency Indexed Notes. Notes of which the principal amount payable and/or
on which the amount of interest payable will be determined by reference to
currencies or currency units ("Currency Indexed Notes") should constitute debt
obligations of the Company for United States federal income tax purposes and no
portion of the issue price of the Notes should be separately allocated to the
foreign exchange feature of the Notes. However, the proper treatment of
payments of principal of and interest on such Currency Indexed Notes is
uncertain at this time. Holders of Currency Indexed Notes should consult with
their tax advisors as to the federal income tax consequences of the ownership
and disposition of such Notes.
Extension of Maturity. While the matter is not free from doubt, proposed
regulations promulgated by the Internal Revenue Service suggest that the
extension of the maturity of a Renewable Note pursuant to its original terms
(as described above under the heading "Extension of Maturity") should not be
viewed as a taxable exchange. An extension of the maturity of other Notes could
have different U.S. federal income tax consequences, and holders intending to
purchase such Notes should refer to the discussion relating to taxation in the
applicable Pricing Supplement.
Backup Withholding and Information Reporting. Certain non-corporate Holders
may be subject to backup withholding at a rate of 31% on payments of principal,
premium and interest (including original issue discount, if any) on, and the
proceeds of disposition of, a Note. Backup withholding will apply only if the
Holder (i) fails to furnish its Taxpayer Identification Number ("TIN") which,
for an individual, would be his Social Security number, (ii) furnishes an
incorrect TIN, (iii) is notified by the Internal Revenue Service that it has
failed to properly report payments of interest and dividends or (iv) under
certain circumstances, fails to certify, under penalty of perjury, that it has
furnished a correct TIN and has not been notified by the Internal Revenue
Service that it is subject to backup withholding for failure to report interest
and dividend payments. Holders should consult their tax advisors regarding
their qualification for exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a Holder will be
allowed as a credit against such Holder's United States federal income tax
liability and may entitle such Holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through one
or more of Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and J.P.
Morgan Securities Inc. (the "Agents"), who have agreed to use reasonable
efforts to solicit such offers. The Company will have the sole right to accept
offers to purchase Notes and may reject any offer to purchase Notes in whole or
in part. Each Agent will have the right to reject any offer to purchase Notes
solicited by it in whole or in part. Payment of the purchase price of the Notes
will be required to be made in immediately available funds. The Company will
pay an Agent, in connection with sales of Notes resulting from a solicitation
made or an offer to purchase received by such Agent, a commission ranging from
.125% to .750% of the principal amount of the Notes to be sold, depending upon
the maturity of the Notes; provided, however, that commissions with respect to
Notes maturing in 30 years or more will be negotiated. The Company may appoint
additional agents to solicit sales of the Notes, provided that any such
solicitation and sale of Notes shall be on the same terms and conditions as the
Agents have agreed to. The Company may also sell Notes directly on its own
behalf.
The Company may also sell Notes to an Agent as principal for its own account
at discounts to be agreed upon at the time of sale. Such Notes may be resold at
a fixed offering price or at prevailing market prices, or prices related
thereto at the time of such resale or otherwise, as determined by such Agent
and specified in the applicable Pricing Supplement. The Agent may offer the
Notes it has purchased as principal to other dealers. The Agent may sell the
Notes to any dealer at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed to any dealer will not be
in excess of 66 2/3% of the discount to be received by the Agent from the
Company. After the initial public offering of Notes that are to be resold by
the Agent to investors and other purchasers on a fixed public offering price
basis, the public offering price, concession and discount may be changed.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933 (the "Securities Act"). The Company and the Agents have
agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments made in
respect thereof. The Company has also agreed to reimburse the Agents for
certain expenses.
Concurrently with the offering of the Notes through the Agents as described
herein, the Company may issue other debt securities pursuant to the Indenture.
Any debt securities so issued and sold will reduce correspondingly the
aggregate initial offering price of Notes that may be offered by this
Prospectus Supplement and the Prospectus.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange, but has been advised by the Agents that the
Agents intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Agents are not obligated to do so, however, and the Agents
may discontinue making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
In the ordinary course of their respective businesses, affiliates of J.P.
Morgan Securities Inc. have engaged and will in the future engage in commercial
banking transactions with the Company.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Sandy D.
McDade, Esq., Secretary and Senior Legal Counsel of the Company. Certain legal
matters relating to the Notes will be passed upon for the Agents by Davis Polk
& Wardwell, New York, New York. The accuracy of the summary of certain tax
matters described under the caption "United States Federal Taxation," will be
passed upon by Davis Polk & Wardwell, New York, New York, special tax counsel
for the Company.
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PROSPECTUS
Weyerhaeuser Company
Debt Securities
Preferred Shares
Preference Shares
----------------
Weyerhaeuser Company (the "Company") may offer from time to time its (i)
debt securities (the "Debt Securities") (ii) preferred shares and (iii)
preference shares, at an aggregate initial offering price not to exceed the
equivalent of $1,000,000,000, on terms to be determined at the time of sale.
The Debt Securities, preferred shares and preference shares are herein
collectively referred to as the "Securities". As used herein, Debt Securities
shall include Debt Securities denominated in U.S. dollars or, at the option of
the Company if so specified in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), in any other currency, including composite
currencies such as the European Currency Unit. If this Prospectus is being
delivered in connection with a sale of Debt Securities, the specific
designation, aggregate principal amount, maturity, rate and time of payment of
any interest, purchase price, any terms for mandatory or optional redemption
(including any sinking fund), any modification of the covenants and any other
specific terms in connection with the sale of the Debt Securities in respect
of which this Prospectus is being delivered (the "Offered Debt Securities"),
are set forth in the accompanying Prospectus Supplement. If this Prospectus is
being delivered in connection with a sale of preferred shares or preference
shares, the specific designation, number of shares, purchase price and rights,
preference and privileges thereof and any qualifications or restrictions
thereon (including dividends, liquidation value, voting rights, terms of
conversion or exchange (if any), terms for mandatory or optional redemption
(if any) and any other specific terms of the preferred shares or the
preference shares in respect of which this Prospectus is being delivered (the
"Offered Shares"), are set forth in the accompanying Prospectus Supplement.
The Offered Debt Securities and the Offered Shares are herein collectively
referred to as the "Offered Securities." The Prospectus Supplement also
contains information about any listing of the Offered Securities on a
securities exchange.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Securities may be offered directly, through agents designated from time
to time, through dealers or through underwriters. Such underwriters may
include Morgan Stanley & Co. Incorporated and/or Goldman, Sachs & Co. and/or
other underwriters, acting alone or with other underwriters. See "Plan of
Distribution." Any such agents, dealers or underwriters are set forth in the
Prospectus Supplement. If an agent of the Company or a dealer or underwriter
is involved in the offering of the Offered Securities, the agent's commission,
dealer's purchase price, underwriter's discount and net proceeds to the
Company will be set forth in, or may be calculated from, the Prospectus
Supplement. Any underwriters, dealers or agents participating in the offering
may be deemed "underwriters" within the meaning of the Securities Act of 1933.
----------------
April 8, 1994
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, DEALER OR AGENT. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT SHALL 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 OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE THEREOF.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C.; Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois; and 7
World Trade Center, New York, New York. Copies of such information can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Reports, proxy
statements and other information concerning the Company can also be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York, at the office of the Midwest Stock Exchange, 440 South LaSalle
Street, Chicago, Illinois, and at the office of the Pacific Stock Exchange, 301
Pine Street, San Francisco, California or 618 South Spring Street, Los Angeles,
California. This Prospectus does not contain all information set forth in the
Registration Statement and the exhibits thereto which the Company has filed
with the Commission under the Securities Act of 1933, as amended, and to which
reference is hereby made.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 26, 1993
filed with the Commission pursuant to Section 13 or 15(d) of the 1934 Act is
incorporated by reference in this Prospectus.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement 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 part of this Prospectus.
The Company will provide without charge upon written or oral request, to each
person to whom a copy of this Prospectus is delivered, a copy of the material
described above (not including exhibits to such documents unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to Weyerhaeuser Company, Tacoma, Washington 98477,
Attention: Richard J. Taggart, Director of Investor Relations, telephone (206)
924-2058.
IN CONNECTION WITH THE OFFERING OF CERTAIN SECURITIES, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES
OF SUCH OFFERED SECURITIES OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE
THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
ii
<PAGE>
THE COMPANY
Weyerhaeuser Company was incorporated in the state of Washington in January
1900, as Weyerhaeuser Timber Company. It is principally engaged in the growing
and harvesting of timber and the manufacture, distribution and sale of forest
products; real estate development and construction; and financial services.
Its principal business segments include timberlands and wood products, pulp
and paper products, real estate development and construction, and financial
services.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Securities offered
hereby will be added to the Company's general funds and will be used for
general corporate purposes, including working capital, capital expenditures,
reduction of the Company's short-term debt or commercial paper presently
classified as long-term debt and acquisitions. Pending such application, the
net proceeds may be invested in marketable securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES AND
PREFERRED AND PREFERENCE SHARE DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to fixed charges and preferred and preference share dividends for the
Company for the periods indicated.
<TABLE>
<CAPTION>
YEAR
------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)................. 2.89 2.27 0.52 2.19 1.82
Ratio of earnings to fixed charges and preferred and
preference share dividends(2)........................ 2.89 2.27 0.52 2.10 1.72
</TABLE>
- --------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes, extraordinary item, effect
of accounting changes and fixed charges. Fixed charges consist of interest
on indebtedness, amortization of debt expense and one-third of rents which
is deemed representative of an interest factor. This ratio excludes the
interest paid on deposit accounts by Republic Federal Savings and Loan
Association, a subsidiary of the Company acquired during 1985 and
dissolved during 1992. If such interest is included, the ratio would be
2.89, 2.25, 0.57, 2.05 and 1.71 for the fiscal years ended December 26,
1993, December 27, 1992, December 29, 1991, December 30, 1990 and December
31, 1989, respectively. The ratio of Weyerhaeuser Company with its
Weyerhaeuser Real Estate Company and Weyerhaeuser Financial Services, Inc.
subsidiaries accounted for on the equity method, but excluding the
undistributed earnings of those subsidiaries is 4.02, 3.32, 0.61, 3.67 and
3.92 for the fiscal years ended December 26, 1993, December 27, 1992,
December 29, 1991, December 30, 1990 and December 31, 1989, respectively.
(2) For the purpose of calculating the ratio of earnings to fixed charges and
preferred and preference share dividends, earnings consist of income
before income taxes, extraordinary item, effect of accounting changes,
fixed charges and preferred and preference share dividends. Fixed charges
consist of interest on indebtedness, amortization of debt expense and one-
third of rents which is deemed representative of an interest factor. This
ratio excludes the interest paid on deposit accounts by Republic Federal
Savings and Loan Association, a subsidiary of the Company acquired during
1985 and dissolved during 1992. If such interest is included, the ratio
would be 2.89, 2.25, 0.57, 1.97 and 1.63 for the fiscal years ended
December 26, 1993, December 27, 1992, December 29, 1991, December 30, 1990
and December 31, 1989, respectively. The ratio of Weyerhaeuser Company
with its Weyerhaeuser Real Estate Company and Weyerhaeuser Financial
Services, Inc. subsidiaries accounted for on the equity method, but
excluding the undistributed earnings of those subsidiaries is 4.02, 3.32,
0.61, 3.32 and 3.30 for the fiscal years ended December 26, 1993, December
27, 1992, December 29, 1991, December 30, 1990 and December 31, 1989,
respectively.
iii
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Offered Debt Securities are to be issued in one or more series under an
Indenture, dated as of April 1, 1986, as supplemented by the First Supplemental
Indenture, dated as of February 15, 1991 and the Second Supplemental Indenture,
dated as of February 1, 1993 (the "Indenture"), between the Company and
Chemical Bank, as Trustee (the "Trustee"). A copy of the Indenture dated April
1, 1986 is filed as an exhibit to the Company's Annual Report on Form 10-K
(File No. 1-4825) for the year ended December 28, 1986 and copies of the First
Supplemental Indenture and the Second Supplemental Indenture have been filed as
exhibits to the Company's Registration Statement on Form S-3 (No. 33-52982).
The following summary of certain provisions of the Indenture does not purport
to be complete and is qualified in its entirety by reference to the Indenture.
The numerical references in parentheses below are to provisions of the
Indenture. Whenever a defined term is indicated, the definition thereof is
contained in the Indenture.
GENERAL
The Indenture does not limit the amount of debentures, notes or other
evidences of indebtedness ranking pari passu with the Debt Securities which may
be issued thereunder (such securities issued under the Indenture being herein
referred to as "Debt Securities"). The Indenture provides that Debt Securities
may be issued from time to time in one or more series and may be denominated
and payable in foreign currencies or units based on or relating to foreign
currencies, including European Currency Units ("ECUs"). The ECU is an
accounting unit calculated as the weighted average of currencies of the
European Community countries in which relative weights are derived based on
each country's share in intra-European trade and output. Such weights are
subject to periodic realignment upon the deviation of any such currency beyond
its prescribed band of fluctuation. The ECU serves primarily as the accounting
unit for the European Monetary System. Special United States federal income tax
considerations applicable to any Debt Securities as denominated are described
in the relevant Prospectus Supplement. The Debt Securities will be unsecured
and will rank on a parity with any other unsecured and unsubordinated
obligations of the Company.
Reference is made to the Prospectus Supplement for the following terms of the
Offered Debt Securities (to the extent such terms are applicable to such Debt
Securities): (i) designation, aggregate principal amount, purchase price and
denomination; (ii) currency or units based on or relating to currencies in
which such Debt Securities are denominated and/or in which principal (and
premium, if any) and/or any interest will or may be payable; (iii) any date of
maturity; (iv) interest rate or rates (or method by which such rate will be
determined), if any; (v) the dates on which any such interest will be payable;
(vi) the place or places where the principal of, premium, if any, and interest,
if any, on the Offered Debt Securities will be payable; (vii) any redemption or
sinking fund provisions; (viii) any applicable United States federal income tax
consequences, including whether and under what circumstances the Company will
pay additional amounts on Offered Debt Securities held by a person who is not a
U.S. person (as defined in the Prospectus Supplement) in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether the
Company will have the option to redeem such Debt Securities rather than pay
such additional amounts; and (ix) any other specific terms of the Offered Debt
Securities, including additional events of default or covenants provided for
with respect to such Debt Securities and any terms which may be required by or
advisable under United States laws or regulations.
Debt Securities may be presented for exchange and registered Debt Securities
may be presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Debt Securities and the Prospectus Supplement.
See "Description of Debt Securities-Global Securities" below. Such services
will be provided without charge, other than any tax or other governmental
charge payable in connection therewith, but subject to the limitations provided
in the Indenture.
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities (bearing either no interest or bearing interest at a rate which at
the time of issuance is below the prevailing market rate) to be sold at a
substantial discount below their stated principal amount. Any special United
States federal
iv
<PAGE>
income tax and other considerations applicable to such Original Issue Discount
Securities will be described in the Prospectus Supplement relating thereto.
Debt Securities may be issued, from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on any
interest payment date, to be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors. Holders of
such Debt Securities may receive a principal amount on any principal payment
date, or a payment of interest on any interest payment date, that is greater
than or less than the amount of principal or interest otherwise payable on such
dates, depending upon the value on such dates of the applicable currency,
commodity, equity index or other factor. Information as to the methods for
determining the amount of principal or interest payable on any date, the
currencies, commodities, equity indices or other factors to which the amount
payable on such date is linked and certain additional tax considerations will
be set forth in the applicable Prospectus Supplement.
GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security")
that will be deposited with a depositary (a "Depositary") or with a nominee for
a Depositary identified in the Prospectus Supplement relating to such series
and registered in the name of the Depositary or a nominee thereof. In such
case, one or more Registered Global Securities will be issued in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole for Debt Securities in definitive registered form, a
Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by such Depositary or any such nominee to a successor of
such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of 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 (the "Exchange Act"). The Depositary holds securities that its
Participants (as defined below) deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities transactions
through electronic computerized book-entry changes in Participants' accounts
thereby eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including one or more
underwriters or agents of the Company), banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to the
Depositary and its Participants are on file with the Commission.
Ownership of beneficial interests in a Registered Global Security registered
in the name of Depositary (a "Book-Entry Note") will be limited to persons that
have accounts with the Depositary ("Participants") or persons that may hold
interests through Participants. Upon the issue of a Book-Entry Note, the
Depositary will credit, on its book-entry registration and transfer system, the
Participants' accounts with the respective principal amounts of the Book-Entry
Notes beneficially owned by such Participants. The accounts to be credited
shall be designated by any dealers, underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by the Depositary
v
<PAGE>
(with respect to interests of Participants) and on the records of Participants
(with respect to interests of persons holding through Participants).
So long as the Depositary, or its nominee, is the registered owner of a
Registered Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Book-Entry Notes
represented by such Registered Global Security for all purposes under the
Indenture or a Registered Global Security. Except as provided below, owners of
beneficial interests in a Registered Global Security will not be entitled to
have the Book-Entry Notes represented by such Registered Global Securities
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Notes exchanged for Book-Entry Notes and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
Person owning a beneficial interest in a Registered Global Security must rely
on the procedures of the Depositary and, if such Person is not a Participant,
on the procedures of the Participant through which such Person owns its
interest, to exercise any rights of a holder under the Indenture or a
Registered Global Security. The Company understands that under existing policy
of the Depositary and industry practices, in the event that the Company
requests any action of holders or that an owner of a beneficial interest in
such a Registered Global Security desires to give any notice or take any action
(including, without limitation, any action pursuant to Section 5.7 of the
Indenture) which a holder is entitled to give or take under the Indenture or a
Registered Global Security, the Depositary would authorize the Participants
holding the relevant beneficial interests to give such notice or take such
action. Any beneficial owner that is not a Participant must rely on the
contractual arrangements it has directly, or indirectly through its financial
intermediary, with a Participant to give such notice or take such action.
Payment of principal of and premium, if any, and interest on Notes registered
in the name of the Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the registered owner of the Registered
Global Security representing such Book-Entry Notes. None of the Company, the
Trustee or any other agent of the Company or agent of the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. The Company expects that the Depositary, upon receipt of any payment
of principal and premium, if any, and interest in respect of a Registered
Global Security, will immediately credit the accounts of the Participants with
payment in amounts proportionate to their respective beneficial interests in
such Registered Global Security as shown on the records of the Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in a Registered Global Security will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name",
and will be the responsibility of such Participants.
If (x) the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depositary registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, (y) the Company executes
and delivers to the Trustee or its agent a Company Order to the effect that the
Registered Global Securities shall be transferable and exchangeable for
Certificated Notes or (z) an Event of Default has occurred and is continuing
with respect to the Notes, the Registered Global Securities will be
transferable or exchangeable for Certificated Notes of like tenor and of an
equal aggregate principal amount. Such Certificated Notes shall be registered
in such name or names as the Depositary shall instruct the Trustee. It is
expected that such instructions may be based upon directions received by the
Depositary from Participants with respect to ownership of beneficial interests
in such Registered Global Securities.
CERTAIN RESTRICTIONS
The following restrictions apply to the Offered Debt Securities unless the
Prospectus Supplement provides otherwise.
Limitation on Liens. The Indenture states that, unless the terms of any
series of Debt Securities provide otherwise, if the Company or any Subsidiary
shall issue, assume or guarantee any indebtedness for money
vi
<PAGE>
borrowed ("Debt") secured by a mortgage, pledge, security interest or other
lien ("Mortgage") upon or with respect to any timber or timberlands of the
Company or such Subsidiary located in the States of Washington, Oregon,
California, Arkansas or Oklahoma or any principal manufacturing plant of the
Company or such Subsidiary located anywhere in the United States, the Company
will secure or cause such Subsidiary to secure the Debt Securities equally and
ratably with such Debt, unless the aggregate amount of all such Debt, together
with all Attributable Debt (as defined) in respect of Sale and Lease-Back
Transactions existing at such time (with the exception of transactions which
are excluded as described in "Limitation on Sale and Lease-Back Transactions,"
below), would not exceed 5% of the shareholders' interest in the Company and
its consolidated Subsidiaries, as shown on the audited consolidated balance
sheet contained in the latest annual report to shareholders of the Company. The
term "principal manufacturing plant" shall not include any manufacturing plant
which in the opinion of the Board of Directors is not a principal manufacturing
plant of the Company and its Subsidiaries. The exercise of the Board of
Directors' discretion in determining which of the Company's plants are
"principal manufacturing plants" could have the effect of limiting the
application of the limitation on liens. The following types of transactions
shall not be deemed to create Debt secured by a Mortgage: (a) the sale,
Mortgage or other transfer of timber in connection with an arrangement under
which the Company or a Subsidiary is obligated to cut such timber or a portion
thereof in order to provide the transferee with a specified amount of money
however determined; and (b) the Mortgage of any property of the Company or any
Subsidiary in favor of the United States, or any State, or any department, or
agency or instrumentality of either, to secure partial, progress, advance or
other payments to the Company or any Subsidiary pursuant to the provisions of
any contract or statute.
Such limitation will not apply to (a) Mortgages upon or with respect to any
property of a Subsidiary securing Debt of such Subsidiary to the Company or
another Subsidiary; (b) Mortgages upon or with respect to any property
acquired, constructed or improved by the Company or any Subsidiary which are
created, incurred or assumed contemporaneously with, or within 90 days after,
such acquisition or improvement or secure or provide for the payment of any
part of the purchase price of such property or the cost of such construction or
improvement, provided that in the case of construction or improvement, the
Mortgage shall not apply to any property theretofore owned by the Company or
any Subsidiary other than unimproved real property on which the property so
constructed, or the improvement, is located; (c) Mortgages upon or with respect
to any property existing at the time of acquisition thereof; or (d) any
extension, renewal or replacement of any of the Mortgages described in (b) and
(c), not in excess of the principal amount of such Debt and limited to all or
part of the same property secured by the Mortgage so extended, renewed or
replaced. (Section 3.6)
Limitation on Sale and Lease-Back Transactions. The Indenture states that,
unless the terms of any series of Debt Securities provide otherwise, neither
the Company nor any Subsidiary may enter into any arrangement with any person
providing for the leasing by the Company or Subsidiary of any real property in
the United States (except for temporary leases for a term of not more than
three years), which property has been or is to be sold or transferred by the
Company or Subsidiary to such person (herein referred to as a "Sale and Lease-
Back Transaction"), unless the aggregate amount of all Attributable Debt with
respect to such transactions together with all Debt upon property described
under "Limitation on Liens," above (with the exception of Debt which is
excluded as described therein) would not exceed 5% of the shareholders'
interest in the Company and its consolidated Subsidiaries, as shown on the
audited consolidated balance sheet contained in the latest annual report to
shareholders of the Company. (Sections 3.6 and 3.7)
Such limitation will not apply to any Sale and Lease-Back Transaction if (a)
the Company or such Subsidiary would be entitled to incur Debt secured by a
Mortgage on the property to be leased without equally and ratably securing the
Debt Securities as described in "Limitation on Liens," above or (b) the
Company, within 90 days of the effective date of any such Sale and Lease-Back
Transaction, applies an amount equal to the fair value (as determined by the
Board of Directors of the Company) of the property so leased to the retirement
of Debt incurred or assumed by the Company which by its terms matures at, or is
extendable or renewable at the option of the obligor to, a date more than 12
months after the date of the creation of such Debt. (Section 3.7)
vii
<PAGE>
Other than the above-described restrictions, there are no covenants or
provisions within the Indenture that may afford debt holders protection in the
event of a highly leveraged transaction. Any such covenant or provision
relating to a particular series of Debt Securities will be described in the
Prospectus Supplement relating thereto.
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture with respect to Debt
Securities of any series if (a) the Company shall fail to pay when due any
installment of interest on any of the Debt Securities of such series and such
default shall continue for 30 days, (b) the Company shall fail to pay when due
all or any part of the principal of (and premium, if any, on) any of the Debt
Securities of such series (whether at maturity, upon redemption, upon
acceleration or otherwise), (c) the Company shall fail to deposit any sinking
fund payment when due on any of the Debt Securities of such series, (d) the
Company shall fail to perform or observe any other term, covenant or agreement
contained in the Indenture (other than a covenant included in the Indenture
solely for the benefit of a series of Debt Securities other than such series)
for a period of 90 days after written notice thereof, as provided in the
Indenture, (e) certain events of bankruptcy, insolvency or reorganization shall
have occurred, or (f) the Company has not complied with any other covenant the
noncompliance with which would specifically constitute an Event of Default with
respect to Debt Securities of such series. (Section 5.1)
The Indenture provides that, (a) if an Event of Default due to the default in
payment of principal of, or interest on, any series of Debt Securities, or due
to the default in the performance or breach of any other covenant or warranty
of the Company applicable to the Debt Securities of such series but not
applicable to all outstanding Debt Securities, shall have occurred and be
continuing, either the Trustee or the holder or holders of 25% in principal
amount of the Debt Securities of such series then may declare the principal of
all Debt Securities of such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to default in the
performance of any other of the covenants or agreements in the Indenture
applicable to all outstanding Debt Securities or due to certain events of
bankruptcy, insolvency and reorganization of the Company, shall have occurred
and be continuing, either the Trustee or the holder or holders of 25% in
principal amount of all Debt Securities then outstanding (treated as one class)
may declare the principal of all Debt Securities and interest accrued thereon
to be due and payable immediately. Such declarations may be annulled provided
that, if prior to the obtention or entry of a judgment or decree with respect
to such acceleration, the Company shall pay or deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon the outstanding
Debt Securities and all the principal of the Debt Securities which shall have
become due otherwise than by acceleration and such sum covers certain other
expenses and if all other Events of Default under the Indenture should have
been cured, waived or otherwise remedied as permitted by the Indenture or prior
to a declaration of the acceleration of the maturity of the Debt Securities
past defaults may be waived (except a continuing default in payment of
principal of (or premium, if any) or interest on the Debt Securities) by the
holders of a majority in principal amount of the Debt Securities of such series
(or of all series, as the case may be) then outstanding. (Sections 5.1 and
5.10)
The holder or holders of a majority in principal amount of the outstanding
Debt Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that such direction shall
not be in conflict with any rule of law or the Indenture. (Section 5.9) Before
proceeding to exercise any right or power under the Indenture at the direction
of such holder or holders, the Trustee shall be entitled to receive from such
holder or holders reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with any such
direction. (Section 5.6)
The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company to the effect that, to the best of their
knowledge, the Company is not in default in the performance of the terms of the
Indenture or, if they have knowledge that the Company is in default, specifying
such default. (Section 3.5)
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The Indenture requires the Trustee to give to all holders of outstanding Debt
Securities of any series notice of any default by the Company with respect to
that series, unless such default shall have been cured or waived; however,
except in the case of a default in the payment of principal of (and premium, if
any) or interest on any outstanding Debt Securities of that series or in the
payment of any sinking fund installment, the Trustee is entitled to withhold
such notice in the event that the board of directors, the executive committee
or a trust committee of directors or certain officers of the Trustee in good
faith determine that withholding such notice is in the interest of the holder
or holders of the outstanding Debt Securities of that series.
DEFEASANCE AND DISCHARGE
The following defeasance provision will apply to the Offered Debt Securities
unless the Prospectus Supplement provides otherwise.
The Indenture provides that, unless the terms of any series of Debt
Securities provide otherwise, the Company will be discharged from obligations
in respect of the Indenture and the outstanding Debt Securities of such series
(including its obligation to comply with the provisions referred to under
"Certain Restrictions," if applicable, but excluding certain other obligations,
such as the obligation to pay principal of (and premium, if any) and interest
on the Debt Securities of such series then outstanding, obligations of the
Company in the event of acceleration following default under clause (a)
referred to above under "Events of Default" and obligations to register the
transfer or exchange of such outstanding Debt Securities and to replace stolen,
lost or mutilated certificates), upon the irrevocable deposit, in trust, of
cash or U.S. Government obligations (as defined) which through the payment of
interest and principal thereof in accordance with their terms will provide cash
in an amount sufficient to pay any installment of principal of (and premium, if
any) and interest on and mandatory sinking fund payments in respect of such
outstanding Debt Securities on the stated maturity of such payments in
accordance with the terms of the Indenture and such outstanding Debt
Securities, provided that the Company has received an opinion of counsel to the
effect that such a discharge will not be deemed, or result in, a taxable event
with respect to holders of the outstanding Debt Securities of such series and
that certain other conditions are met. (Section 10.1)
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (a) secure any Debt Securities, (b) evidence the assumption by a successor
corporation of the obligations of the Company, (c) add covenants for the
protection of the holders of Debt Securities, (d) cure any ambiguity or correct
any inconsistency in the Indenture, (e) establish the form or terms of Debt
Securities of any series, and (f) evidence the acceptance of appointment by a
successor trustee. (Section 8.1)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holder or holders of not less than a majority
in principal amount of Debt Securities of each series then outstanding and
affected, to add any provisions to, or change in any manner or eliminate any of
the provisions of, the Indenture or modify in any manner the rights of the
holder or holders of the Debt Securities of each series so affected, provided
that the Company and the Trustee may not, without the consent of the holder of
each outstanding Debt Security affected thereby, (a) extend the stated maturity
of the principal of any Debt Security, or reduce the principal amount thereof
or reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on redemption thereof, or impair the right to institute suit
for the enforcement of any such payment when due, or (b) reduce the aforesaid
percentage in principal amount of Debt Securities of any series the consent of
the holder or holders of which is required for any such modification. (Section
8.2)
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Company may, without the consent of the Trustee or the holders of Debt
Securities, consolidate or merge with, or convey, transfer or lease its
properties and assets substantially as an entirety to any other
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corporation, provided that any successor corporation is a corporation organized
under the laws of the United States of America or any state thereof and that
such successor corporation expressly assumes all obligations of the Company
under the Debt Securities and that certain other conditions are met, and,
thereafter, except in the case of a lease, the Company shall be relieved of all
obligations thereunder. (Article Nine)
APPLICABLE LAW
The Debt Securities and the Indenture will be governed by and construed in
accordance with the laws of the State of New York. (Section 11.8)
CONCERNING THE TRUSTEE
Chemical Bank is the Trustee under the Indenture.
DESCRIPTION OF PREFERRED SHARES
The following is a description of certain general terms and provisions of the
preferred shares of the Company. The particular terms of any series of
preferred shares will be set forth in the related Prospectus Supplement. If so
indicated in a Prospectus Supplement, the terms of any such series may differ
from the terms set forth below. The summary of the terms of the Company's
preferred shares contained in this Prospectus and the relevant Prospectus
Supplement does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Restated Articles of
Incorporation and the statement regarding amendment of articles of
incorporation relating to the applicable series of preferred shares (the
"Statement"), which will be filed as an exhibit to or incorporated by reference
in the Registration Statement of which this Prospectus is a part at the time of
issuance of such series of preferred shares.
The Company's Restated Articles of Incorporation authorizes the issuance of
7,000,000 preferred shares having a par value of $1.00 per share. The Board of
Directors has the authority to divide the preferred shares into series, to
designate for each series established such rights and preferences as voting
rights, dividend rate, terms and conditions of redemption, amount payable upon
liquidation, sinking fund provisions and terms and conditions of conversion,
and to issue the shares so designated in such amounts and to such persons as
they lawfully determine without further action by the Company's shareholders.
Thus, the Board of Directors, without shareholder approval, could authorize the
issuance of preferred shares with voting, conversion, and other rights that
could adversely affect the voting power and other rights of holders of common
shares or other series of preferred shares or that could have the effect of
delaying, deferring or preventing a change in control of the Company. The
aggregate amount payable upon liquidation shall not exceed $350,000,000 with
respect to all series of preferred shares. All preferred shares rank senior to
common and preference share with respect to accrued dividends and assets
available on liquidation. There are currently no series of preferred shares
outstanding.
GENERAL
Reference is made to the Prospectus Supplement for the following terms of and
information relating to the preferred shares of any series (to the extent such
terms are applicable to such preferred shares): (i) the specific designation,
number of shares and purchase price; (ii) any liquidation preference per share;
(iii) any date of maturity; (iv) any redemption, payment or sinking fund
provisions; (v) any dividend rate or rates and the dates on which any such
dividends will be payable (or the method by which such rates or dates will be
determined); (vi) any voting rights; (vii) the currency or units based on or
relating to currencies in which such preferred shares are denominated and/or
payment will or may be payable; (viii) the methods by which amounts payable in
respect in respect of such preferred shares may be calculated and any
commodities, currencies or indices, or value, rate or price, relevant to such
calculation; (ix) the place or places where dividends and other payments on the
preferred shares will be payable; (x) and any additional voting, dividend,
liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions.
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The preferred shares offered hereby will be issued in one or more series. The
preferred shares offered hereby will not be convertible or exchangeable into
common shares of the Company or into securities convertible or exchangeable
into common shares of the Company. The holders of preferred shares will have no
preemptive rights. Preferred shares, upon issuance against full payment of the
purchase price therefor, will be fully paid and nonassessable. Neither the par
value nor the liquidation preference is indicative of the price at which the
preferred shares will actually trade on or after the date of issuance. All
preferred shares shall be of equal rank with each other, regardless of series.
DIVIDENDS
Holders of preferred shares of each series will be entitled to receive, when
and as declared by the Board of Directors of the Company out of funds legally
available therefor, cumulative dividends at the rate determined by the Board of
Directors for such series, and no more. Dividends on the preferred shares shall
accrue on a daily basis from such date as may be fixed by the Board of
Directors for any series. Unless dividends at the rate prescribed for each
series of preferred shares shall have been declared and paid or set apart for
payment in full on all outstanding preferred shares for all past dividend
periods and the current dividend period, no dividends shall be declared or paid
upon any class of shares ranking as to dividends subordinate to the preferred
shares, and no sum or sums shall be set aside for the redemption of preferred
shares of any series (including any sinking fund payment therefor) or for the
purchase, redemption (including any sinking fund payment therefor) or other
acquisition for value of any class or series of shares ranking as to dividends
or assets on a parity with or subordinated to any such series of preferred
shares. Accrued and unpaid dividends on the preferred shares will not bear
interest.
REDEMPTION
The terms, if any, on which preferred shares of any series may be redeemed
will be set forth in the related Prospectus Supplement.
If fewer than all of the outstanding preferred shares of any series are to be
redeemed, the number of shares of such series and the method of effecting such
redemption, whether by lot or pro rata, will be as determined by the Company
(with adjustment to avoid redemption of fractional shares).
LIQUIDATION
In the event of voluntary or involuntary liquidation of the Company, before
any distribution of assets shall be made to the holders of any class of shares
ranking as to assets subordinate to the preferred shares, the holders of the
preferred shares of each series shall be entitled to receive out of the assets
of the Company available for distribution to its shareholders the sum of the
liquidation preference for such series and the amount per share equal to all
accrued and unpaid dividends thereon. Neither the consolidation nor merger of
the Company with or into any other corporation or corporations, the sale or
lease of all or substantially all of the assets of the Company, nor the merger
or consolidation of any other corporation into and with the Company, shall be
deemed to be a voluntary or involuntary liquidation.
VOTING
The preferred shares of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement and as required by
applicable law. Unless otherwise indicated in the Prospectus Supplement
relating to a series of preferred shares, each series of shares will be
entitled to one vote on matters which holders of such series are entitled to
vote. Notwithstanding the foregoing, the Company may not alter certain rights
and preferences of a series of preferred shares without the affirmative vote of
the holders of at least two-thirds of the shares of such affected series and
whenever dividends on the preferred shares shall be in arrears in an aggregate
amount equal to six quarterly dividend periods, then the holders of preferred
shares, voting as a class, shall be entitled to elect two additional directors
beyond the number specified in the bylaws to be elected by all shareholders and
beyond the number that may be elected by the holders of the preference shares.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the preferred shares is Chemical Bank.
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DESCRIPTION OF PREFERENCE SHARES
The following is a description of certain general terms and provisions of the
preference shares of the Company. The particular terms of any series of
preference shares will be set forth in the related Prospectus Supplement. If so
indicated in a Prospectus Supplement, the terms of any such series may differ
from the terms set forth below. The summary of the terms of the Company's
preference shares contained in this Prospectus and the relevant Prospectus
Supplement does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Restated Articles of
Incorporation and the statement regarding amendment of articles of
incorporation relating to the applicable series of preference shares (the
"Statement"), which will be filed as an exhibit to or incorporated by reference
in the Registration Statement of which this Prospectus is a part at the time of
issuance of such series of preference shares.
The Company's Restated Articles of Incorporation authorizes the issuance of
40,000,000 preference shares having a par value of $1.00 per share. The Board
of Directors has the authority to divide the preference shares into series, to
designate for each series established such rights and preferences as voting
rights, dividend rate, terms and conditions of redemption, amount payable upon
liquidation, sinking fund provisions and terms and conditions of conversions,
and to issue the shares so designated in such amounts and to such persons as
they lawfully determine without further action by the Company's shareholders.
Thus, the Board of Directors, without shareholder approval, could authorize the
issuance of preference shares with voting, conversion, and other rights that
could adversely affect the voting power and other rights of holders of common
shares or other series of preferred or preference shares or that could have the
effect of delaying, deferring or preventing a change in control of the Company.
The aggregate amount payable upon liquidation of all series of preference
shares is unlimited. All preference shares rank senior to common shares but
subordinate to the preferred shares with respect to accrued dividends and
assets available on liquidation. The Company has reserved but not issued
2,000,000 shares of cumulative preference shares, fourth series, for the
exercise of certain rights relating to the Company's common shares.
GENERAL
Reference is made to the Prospectus Supplement for the following terms of and
information relating to the preference shares of any series (to the extent such
terms are applicable to such preference shares): (i) the specific designation,
number of shares and purchase price; (ii) any liquidation preference per share;
(iii) any date of maturity; (iv) any redemption, payment or sinking fund
provisions; (v) any dividend rate or rates and the dates on which any such
dividends will be payable (or the method by which such rates or dates will be
determined); (vi) any voting rights; (vii) the currency or units based on or
relating to currencies in which such preference shares are denominated and/or
payments will or may be payable; (viii) the methods by which amounts payable in
respect of such preference shares may be calculated and any commodities,
currencies or indices, or value, rate or price, relevant to such calculation;
(ix) the place or places where dividends and other payments on the preference
shares will be payable; (x) and any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges, limitations
and restrictions.
The preference shares offered hereby will be issued in one or more series.
The preference shares offered hereby will not be convertible or exchangeable
into common shares of the Company or into securities convertible or
exchangeable into common shares of the Company. The holders of preference
shares will have no preemptive rights. Preference shares, upon issuance against
full payment of the purchase price therefor, will be fully paid and
nonassessable. Neither the par value nor the liquidation preference is
indicative of the price at which the preference shares will actually trade on
or after the date of issuance. All preference shares shall be of equal rank
with each other, regardless of series.
DIVIDENDS
Holders of preference shares of each series will be entitled to receive, when
and as declared by the Board of Directors of the Company out of funds legally
available therefor, cumulative dividends at the rate
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determined by the Board of Directors for such series, and no more. Dividends on
the preference shares shall accrue on a daily basis from such date as may be
fixed by the Board of Directors for any series. Unless dividends at the rate
prescribed for each series of preferred shares shall have been declared and
paid or set apart for payment in full on all outstanding preferred shares for
all past dividend periods and the current dividend period, no dividends shall
be declared or paid upon any class of shares ranking as to dividends
subordinate to the preferred shares, and no sum or sums shall be set aside for
the redemption of preferred shares of any series (including any sinking fund
payment therefor) or for the purchase, redemption (including any sinking fund
payment therefor) or other acquisition for value of any class or series of
shares ranking as to dividends or assets on a parity with or subordinate to any
such series of preferred shares. Unless dividends at the rate prescribed for
each series of preference shares shall have been declared and paid or set apart
for the payment in full on all outstanding preference shares for all past
dividend periods and the current dividend period, no dividends shall be
declared or paid upon any class of shares ranking as to dividends subordinate
to the preference shares, and no sum or sums shall be set aside for the
redemption of preference shares of any series (including any sinking fund
payment therefor) or for the purchase, redemption (including any sinking fund
payment therefor) or other acquisition for value of any class or series of
shares ranking as to dividends or assets on a parity with or subordinate to any
series of preference shares. Accrued and unpaid dividends on the preference
shares will not bear interest.
REDEMPTION
The terms, if any, on which preference shares of any series may be redeemed
will be set forth in the related Prospectus Supplement.
If fewer than all of the outstanding preference shares of any series are to
be redeemed, the number of shares of such series and the method of effecting
such redemption, whether by lot or pro rata, will be as determined by the
Company (with adjustment to avoid redemption of fractional shares).
LIQUIDATION
In the event of voluntary or involuntary liquidation of the Company, before
any distribution of assets shall be made to the holders of any class of shares
ranking as to assets subordinate to the preference shares, the holders of the
preference shares of each series shall be entitled to receive out of the assets
of the Company available for distribution to its shareholders the sum of the
liquidation preference for such series and the amount per share equal to all
accrued and unpaid dividends thereon, but the holders of the preference shares
will not be entitled to receive the liquidation price of such shares until the
liquidation price of the preferred shares at the time outstanding shall have
been paid in full. The holders of all series of preference shares are entitled
to share ratably, in accordance with the respective amounts payable thereon, in
any such distribution which is not sufficient to pay in full the aggregate
amounts payable thereon. After payment in full of the liquidation price of the
preference shares the holders of such shares are not entitled to any further
participation in any distribution of assets by the Company. Neither the
consolidation nor merger of the Company with or into any other corporation or
corporations, the sale or lease of all or substantially all of the assets of
the Company, nor the merger or consolidation of any other corporation into and
with the Company, shall be deemed to be a voluntary or involuntary liquidation.
VOTING
The preference shares of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement and as required by
applicable law. Unless otherwise indicated in the Prospectus Supplement
relating to a series of preference shares, each series of shares will be
entitled to one vote on matters which holders of such series are entitled to
vote. Notwithstanding the foregoing, the Company may not alter certain rights
and preferences of a series of preference shares without the affirmative vote
of the holders of at least two-thirds of the shares of such affected series and
whenever dividends on the preference
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shares shall be in arrears in an aggregate amount equal to six quarterly
dividend periods, then the holders of preference shares, voting as a class,
shall be entitled to elect two additional directors beyond the number specified
in the bylaws to be elected by all shareholders and beyond the number that may
be elected by the holders of the preferred shares.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the preference shares is Chemical Bank.
PLAN OF DISTRIBUTION
The Company may sell Offered Securities (i) through agents, (ii) through
underwriters, (iii) through dealers or (iv) directly to purchasers (through a
specific bidding or auction process or otherwise).
Securities may be offered and sold through agents designated by the Company
from time to time. Any such agent involved in the offer or sale of the Offered
Securities will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Any such agent may be deemed
to be an underwriter, as that term is defined in the Securities Act of 1933, as
amended (the "1933 Act") of the Securities so offered and sold. Agents may be
entitled under agreements which may be entered into with the Company to
indemnification by the Company against certain liabilities, including
liabilities under the 1933 Act, and may be customers of, engage in transactions
with or perform services for the Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale of Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transaction, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales
of Offered Securities. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the 1933 Act. Morgan Stanley & Co.
Incorporated and/or Goldman, Sachs & Co. and/or other underwriters named in the
Prospectus Supplement may act as managing underwriter with respect to an
offering of Securities effected through underwriters. Only underwriters named
in the Prospectus Supplement are deemed to be underwriters in connection with
the Offered Securities and if Morgan Stanley & Co. Incorporated or Goldman,
Sachs & Co. is not named in the Prospectus Supplement, it will not be a party
to the underwriting agreement relating to such Securities, will not be
purchasing any such Securities from the Company in connection with such
offering and will have no direct or indirect participation in the underwriting
of such Securities, although it may participate in the distribution of such
Securities under circumstances where it may be entitled to a dealer's
commission.
If a dealer is utilized in the sale of Offered Securities, the Company will
sell such Securities to the dealer, as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such dealer
at the time of resale. Dealers may be entitled, under agreements which may be
entered into with the Company, to indemnification by the Company against
certain liabilities, including liabilities under the 1933 Act. The name of the
dealer and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company and
sales thereof may be made by the Company directly to institutional investors or
others. The terms of any such sales, including the terms of any bidding or
auction process, if utilized, will be described in the Prospectus Supplement
relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set
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forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date stated in the
Prospectus Supplement. Each Contract will be for an amount not less than, and
unless the Company otherwise agrees the aggregate principal amount of
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in the Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions but shall in all cases be
subject to the approval of the Company. Contracts will not be subject to any
conditions except that any related sale of Securities covered by its Contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the Prospectus Supplement will be paid to underwriters
and agents soliciting purchases of Securities pursuant to Contracts accepted by
the Company.
The place and time of delivery of Offered Securities are set forth in the
accompanying Prospectus Supplement.
LEGAL OPINIONS
The validity of the Offered Securities will be passed upon for the Company by
Sandy D. McDade, Esq., Secretary and Senior Legal Counsel of the Company. Mr.
McDade beneficially owns 2,265 common shares of the Company.
Certain legal matters relating to Offered Securities will be passed upon for
underwriters and certain other purchasers by Davis Polk & Wardwell, New York,
New York.
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the
year ended December 26, 1993 have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports. Reference is
made to said reports, which call attention to the Company's changes in
accounting principles with respect to accounting for income taxes and
postretirement benefits other than pensions.
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