<PAGE>
FILED PURSUANT TO RULE 424(b)(2) OF THE
SECURITIES EXCHANGE ACT OF 1933
REGISTRATION NO. 333-36753
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 3, 1997)
$300,000,000
WEYERHAEUSER COMPANY
6.95% DEBENTURES DUE OCTOBER 1, 2027
---------------
Interest payable April 1 and October 1
---------------
THE DEBENTURES WILL BEAR INTEREST FROM OCTOBER 8, 1997. THE DEBENTURES
ARE NOT REDEEMABLE PRIOR TO MATURITY. THE DEBENTURES WILL BE REPRESENTED BY
ONE OR MORE GLOBAL SECURITIES (THE "GLOBAL SECURITIES") REGISTERED
IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR
ITS NOMINEE. BENEFICIAL INTERESTS IN THE DEBENTURES WILL BE
SHOWN ON, AND TRANSFERS WILL BE EFFECTED ONLY THROUGH,
RECORDS MAINTAINED BY DTC AND ITS PARTICIPANTS. EXCEPT AS
DESCRIBED HEREIN, DEBENTURES IN DEFINITIVE FORM WILL
NOT BE ISSUED. SEE "DESCRIPTION OF DEBENTURES."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
PRICE 99.441% AND ACCRUED INTEREST, IF ANY
---------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND COMPANY
PUBLIC(1) COMMISSIONS(2) (1)(3)
--------- -------------- -----------
<S> <C> <C> <C>
Per Debenture ......................... 99.441% .875% 98.556%
Total ................................. $298,323,000 $2,625,000 $295,698,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from October 8, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of estimated expenses of $150,000 payable by the Company.
---------------
The Debentures are offered, subject to prior sale, when, as and if issued by
the Company and accepted by the Underwriters, and subject to approval of
certain legal matters by Davis Polk & Wardwell, counsel for the Underwriters.
It is expected that delivery of such Debentures will be made on or about
October 8, 1997 through the book-entry facilities of the Depositary against
payment therefor in immediately available funds.
---------------
MORGAN STANLEY DEAN WITTER GOLDMAN, SACHS & CO.
October 3, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH ANY OFFERING
OF THE DEBENTURES AND MAY BID FOR, AND PURCHASE, THE DEBENTURES IN THE OPEN
MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
----------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS
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 THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS 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. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
----------------
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
Debentures 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.
DESCRIPTION OF DEBENTURES
The Debentures will be limited to $300,000,000 aggregate principal amount,
will be unsecured obligations of the Company and will mature on October 1,
2027. Each Debenture will bear interest at the rate per annum stated on the
cover page hereof payable on April 1 and October 1 of each year, commencing
April 1, 1998, to the person in whose name the Debenture is registered at the
close of business on March 15 or September 15, as the case may be, next
preceding such interest payment date.
The Debentures are not redeemable prior to maturity. There are no covenants
or provisions relating to the Debentures that may afford debt holders
protection in the event of a highly leveraged transaction.
The Debentures will be issued in the form of one or more global securities
registered in the name of Cede & Co., nominee for The Depository Trust Company
(the "Depositary"). See "Description of Debt Securities--Global Securities" in
the accompanying Prospectus for a description of the provisions applicable to
the depository arrangements.
The Chase Manhattan Bank is Trustee under the Indenture.
UNDERWRITERS
Under the terms of and subject to the conditions contained in an
Underwriting Agreement dated October 3, 1997 (the "Underwriting Agreement")
and the Underwriting Agreement Standard Provisions (Debt) incorporated
therein, the Underwriters named below have severally agreed to purchase, and
the Company has agreed to sell to them, severally, the respective amounts of
the Debentures set forth opposite their names below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME DEBENTURES
---- ------------
<S> <C>
Morgan Stanley & Co. Incorporated............................. $150,000,000
Goldman, Sachs & Co. ......................................... 150,000,000
------------
Total....................................................... $300,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the Debentures is subject to the approval of
certain legal matters by their counsel and to certain other conditions. The
Underwriters are committed to take and pay for all of the Debentures if any
are taken.
The Underwriters initially propose to offer part of the Debentures directly
to the public at the public offering price set forth on the cover page hereof
and part to certain dealers at a price which represents a concession not in
excess of .50% of the principal amount of the Debentures. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of .25% of the
principal amount of the Debentures to certain other dealers. After the initial
offering of the Debentures, the offering price and other selling terms may
from time to time be varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
S-3
<PAGE>
The Company does not intend to apply for listing of the Debentures on a
national securities exchange, but has been advised by the Underwriters that
they presently intend to make a market in the Debentures, as permitted by
applicable laws and regulations. The Underwriters are not obligated, however,
to make a market in the Debentures and any such market making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of the trading
market for the Debentures.
In order to facilitate the offering of the Debentures, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the prices
of the Debentures. Specifically, the Underwriters may overallot in connection
with the offering, creating a short position in the Debentures for their own
account. In addition, to cover overallotments or to stabilize the price of the
Debentures, the Underwriters may bid for, and purchase, the Debentures in the
open market. Finally, the Underwriters may reclaim selling concessions allowed
to an underwriter or dealer for distributing the Debentures in the offering,
if the Underwriters repurchase previously distributed Debentures in
transactions to cover short positions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the market prices
of the Debentures above independent market levels. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.
EXPERTS
The financial statements and schedules incorporated herein by reference to
the Company's Annual Report on Form 10-K for the year ended December 29, 1996
have been audited by Arthur Andersen LLP, 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.
S-4
<PAGE>
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.
----------------
October 3, 1997
<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. Certain of such reports, proxy statements and other information are
also available from the Commission over the Internet at http://www.sec.gov.
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 following documents filed with the Commission by the Company pursuant to
Section 13 or 15(d) of the 1934 Act are incorporated by reference in this
Prospectus: (a) Annual Report on Form 10-K for the fiscal year ended
December 29, 1996; (b) Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 28, 1997 and June 29, 1997; and (c) Current Reports on Form 8-K
dated January 2, 1997, February 24, 1997, April 15, 1997, May 23, 1997, June
19, 1997, July 1, 1997, July 9, 1997, July 11, 1997, July 17, 1997 and
September 4, 1997.
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.
---------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING OF THE SECURITIES MAY ENGAGE
IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
SECURITIES OR OTHER SECURITIES OF THE COMPANY. SPECIFICALLY, THE AGENTS
SPECIFIED IN THE RELEVANT PROSPECTUS SUPPLEMENT MAY OVERALLOT IN CONNECTION
WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE SECURITIES OR IN THE
OPEN MARKET, FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION"
IN THIS PROSPECTUS AND "PLAN OF DISTRIBUTION" OR "UNDERWRITING" IN THE
RELEVANT PROSPECTUS SUPPLEMENT.
2
<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 and real estate and financial services. Its principal business
segments include timberlands and wood products, and pulp, paper and packaging.
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>
TWENTY-SIX WEEKS
-----------------
YEAR
JUNE 29, JUNE 30, ------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges(1)......................... 1.88 2.66 2.59 3.81 3.11 2.89 2.27
Ratio of Earnings to Fixed Charges
and preferred and preference share
dividends(1)....................... 1.88 2.66 2.59 3.81 3.11 2.89 2.27
</TABLE>
- --------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes, extraordinary item and
fixed charges. For the purpose of calculating the ratio of earnings to
fixed charges and preferred and preference share dividends, earnings
consist of earnings before income taxes, extraordinary item, 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 in 1985 and
dissolved in 1992. If such interest is included for the fiscal year ended
December 27, 1992, the ratio would be 2.25. 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 1.95 and
3.45 for the twenty-six weeks ended June 29, 1997 and June 30, 1996,
respectively, and 3.26, 6.21, 4.43, 4.02 and 3.32 for the fiscal years
ended December 29, 1996, December 31, 1995, December 25, 1994, December
26, 1993 and December 27, 1992, respectively.
3
<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 The Chase Manhattan Bank (formerly 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 income tax and other considerations applicable to such Original
Issue Discount Securities will be described in the Prospectus Supplement
relating thereto.
4
<PAGE>
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 and except in such
circumstances as may be described in the applicable Prospectus Supplement.
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 (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
persons holding through Participants).
5
<PAGE>
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
(as defined in the Indenture) issues, assumes or guarantees any indebtedness
for money borrowed ("Debt") secured by a mortgage, pledge, security interest
or other lien (collectively "Mortgage") on any timber or timberlands of the
Company or such Subsidiary located in the states of Washington, Oregon,
California, Arkansas or Oklahoma or on any principal manufacturing plant of
the
6
<PAGE>
Company or such Subsidiary located anywhere in the United States, the Company
must 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 the Indenture) in respect of Sale
and Lease-Back Transactions (as defined below) existing at such time (with the
exception of transactions that 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" does not include any manufacturing plant that 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 are not 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 some or all of such timber 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, agency or instrumentality of either, to secure any payments to
the Company or any Subsidiary pursuant to any contract or statute.
Such limitation will not apply to Mortgages (a) securing Debt of a
Subsidiary to the Company or another Subsidiary; (b) created, incurred or
assumed contemporaneously with, or within 90 days after, the acquisition or
improvement or construction of the mortgaged property or that 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 does not apply to any property
previously owned by the Company or any Subsidiary other than unimproved real
property on which the property so constructed, or the improvement, is located;
(c) existing at the time of acquisition of the mortgaged property; or (d) any
extension, renewal or replacement of any Mortgage 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 lease 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 lessor (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 that 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 leased property 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 leased property to the retirement of
Debt that 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)
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture with respect to any
series of Debt Securities if (a) the Company fails to pay when due any
installment of interest on any of such Debt Securities and such default
continues for 30 days, (b) the Company fails to pay when due all or any part
of the principal of (and premium, if any, on) any of such Debt Securities
(whether at maturity, upon redemption, upon acceleration or otherwise),
7
<PAGE>
(c) the Company fails to deposit any sinking fund payment when due on any of
such Debt Securities, (d) the Company fails 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 different series of Debt
Securities) for 90 days after written notice thereof, as provided in the
Indenture, (e) certain events of bankruptcy, insolvency or reorganization have
occurred, or (f) the Company has not complied with any of certain specified
covenants. (Section 5.1)
If an Event of Default due to failure to pay the principal of, or interest
on, any series of Debt Securities, or the breach of any other covenant or
warranty of the Company applicable solely to such Debt Securities has occurred
and is continuing, either the Trustee or the holder or holders of 25% in
principal amount of such Debt Securities may declare the principal of all such
Debt Securities and interest accrued thereon to be due and payable
immediately. If an Event of Default due to default in the performance of any
other covenant or agreement in the Indenture applicable to all outstanding
Debt Securities or due to certain events of bankruptcy, insolvency and
reorganization of the Company, has occurred and is 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. 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 may rescind such declaration if, prior to the entry of a judgment
or decree with respect to such acceleration, the Company pays or deposits with
the Trustee a sum sufficient to pay all matured installments of interest on
the outstanding Debt Securities and all the principal of the Debt Securities
that have become due otherwise than by acceleration and certain other expenses
and if all other Events of Default under the Indenture 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). (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 may not 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 is 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 is required to furnish to the Trustee annually a statement of
certain of its officers 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)
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 has 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
8
<PAGE>
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 in the Indenture) 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 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 corporation,
provided that any successor corporation must be a corporation organized under
the laws of the United States of America or any state and must expressly
assume all obligations of the Company under the Debt Securities and that
certain other conditions must be met. Thereafter, except in the case of a
lease, the Company will 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
The Chase Manhattan Bank is the Trustee under the Indenture.
9
<PAGE>
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 may 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.
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 will 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
accrue on a daily basis
10
<PAGE>
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
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 may be declared or paid upon any class of shares
ranking as to dividends subordinate to the preferred shares, and no sum or
sums may 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 may 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 will 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, will 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.
Whenever dividends on the preferred shares are in arrears in an aggregate
amount equal to six quarterly dividend periods, then the holders of preferred
shares, voting as a class, will 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 ChaseMellon
Shareholder Services.
11
<PAGE>
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.
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 will 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 determined by the
Board of Directors for such series, and no more. Dividends on the preference
shares 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 have been declared and paid or set apart for
payment in full on all
12
<PAGE>
outstanding preferred shares for all past dividend periods and the current
dividend period, no dividends may be declared or paid upon any class of shares
ranking as to dividends subordinate to the preferred shares, and no sum or
sums may 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 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 may be declared or paid upon any class of shares ranking as to
dividends subordinate to the preference shares, and no sum or sums may 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 may 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 will 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, will 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.
Whenever dividends on the preference shares are in arrears in an aggregate
amount equal to six quarterly dividend periods, then the holders of preference
shares, voting as a class, will 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 ChaseMellon
Shareholder Services.
13
<PAGE>
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 that 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.
In order to facilitate the offering of the Securities the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Securities, or any other securities the prices of which may be used to
determine payments on such Securities. Specifically, the underwriters may
overallot in connection with the offering, creating a short position in the
Securities for their own accounts. In addition, to cover overallotments or to
stabilize the price of the Securities or of any such other securities, the
underwriters may bid for, and purchase, the Securities or any such other
securities in the open market. Finally, in any offering of the Securities
through a syndicate of underwriters, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Securities in the offering if the syndicate repurchases previously distributed
Securities in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Securities above independent market
levels. The underwriters are not required to engage in these activities, and
may end any of these activities at any time.
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.
14
<PAGE>
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 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 will 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 in all cases must be approved by the
Company. Contracts will not be subject to any conditions except that any
related sale of Securities covered by its Contract may 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 Claire S. Grace, Esq., Senior Legal Counsel 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 herein by reference to
the Company's Annual Report on Form 10-K for the year ended December 29, 1996
have been audited by Arthur Andersen LLP, 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.
15
