<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
COMMERCIAL METALS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-0725338
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
(214) 689-4300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID M. SUDBURY
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
(214) 689-4300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
WILLIAM R. HAYS, III J. KENNETH MENGES, JR., P.C.
ROBERT R. KIBBY AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
HAYNES AND BOONE, L.L.P. 1700 PACIFIC AVENUE
3100 NATIONSBANK PLAZA SUITE 4100
901 MAIN STREET DALLAS, TEXAS 75201
DALLAS, TEXAS 75202-3789 (214) 969-2800
(214) 651-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities............... $150,000,000 100% $150,000,000 $51,725.00
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
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* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION, DATED JUNE 30, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
[LOGO] COMMERCIAL METALS COMPANY
% NOTES DUE $100,000,000 , 2005
------------------------
Interest on the Notes is payable on and of each
year, commencing , 1995. The Notes are not redeemable prior to
maturity and do not provide for a sinking fund. The Notes are unsecured
obligations of the Company and will rank on a parity with all other unsecured
and unsubordinated debt of the Company. See "Description of Notes." The
indenture pursuant to which the Notes will be issued contains no restrictions on
the Company's ability to incur indebtedness. See "Description of Debt
Securities" in the Prospectus accompanying this Prospectus Supplement.
The Notes will be issued only in fully registered form and will be
represented by Book-Entry Notes registered in the name of a nominee of The
Depository Trust Company, as Depositary. Settlement for the Notes will be made
in immediately available funds. Interests in Book-Entry Notes will be shown on
and transfers thereof will be effected only through records maintained by the
Depositary and its participants. Except as described herein under "Description
of Notes -- Book-Entry Notes," owners of beneficial interests in Book-Entry
Notes will not be considered holders thereof and will not be entitled to receive
physical delivery of Notes in definitive form. So long as the Notes are
represented by Book-Entry Notes registered in the name of the Depositary or its
nominee, the Notes will trade in the Depositary's Same-Day Funds Settlement
System, and secondary market trading activity in the Notes will settle in
immediately available funds. So long as the Notes are represented by Book-Entry
Notes, all payments of principal and interest will be made by the Company in
immediately available funds. See "Description of Notes -- Same-Day Settlement
and Payment."
------------------------
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 TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Note.................................... % % %
Total....................................... $ $ $
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from , 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $240,000 payable by the Company.
------------------------
The Notes are offered severally by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the Notes will be
made on or about , 1995 through the facilities of the Depositary
against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus Supplement is , 1995.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
THE COMPANY
The following summary is qualified in its entirety by the more detailed
information and financial statements incorporated by reference in the
Prospectus.
Commercial Metals Company ("CMC" or the "Company") manufactures, recycles
and markets steel and metal products. Steel and steel-related products represent
over 75% of the Company's business. During fiscal 1994, CMC derived
approximately 65% of its operating profit from the Manufacturing segment,
approximately 9% from its Recycling segment, approximately 23% from its
Marketing and Trading segment, and approximately 3% from its Financial Services
segment.
The Company's Manufacturing segment includes four steel minimills, 19 steel
fabrication plants, three steel joist plants, three fence post manufacturing
plants, two railcar rebuilding facilities, seven concrete related product
warehouses, an industrial products supplier and a copper tube mill. Steel
manufacturing capacity of over 1.7 million tons includes reinforcing bars, light
and mid-size structurals, angles, channels, beams, special bar quality rounds
and flats, squares and special sections used in the construction, manufacturing,
steel fabrication and warehousing, and original equipment manufacturing
industries. Steel fabrication capacity is over 500,000 tons. The Company's
copper tube mill with 45 million pounds of capacity manufactures copper water
tube and air conditioning and refrigeration tubing.
The Company's Recycling segment is one of the largest processors of scrap
nonferrous metals and one of the largest regional processors of ferrous metals
in the United States. CMC's recycling plants processed and shipped 1.2 million
tons of scrap metal in fiscal 1994. Recycled metals provide substantial savings
in energy compared to producing metal from virgin raw materials.
The Company's Marketing and Trading segment buys and sells steel, primary
and secondary metals and industrial raw materials through a global network of
offices which provide technical information, financing, chartering, storage,
insurance and hedging. The Company does not, as a matter of policy, speculate on
changes in the commodities markets. This segment sold over 1.7 million tons of
steel products in 1994.
The Company's Financial Services segment provides international commercial
banking services to its Marketing and Trading segment and to other unaffiliated
businesses.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to repay an
aggregate of approximately $60 million of outstanding long-term notes with final
maturities in 1997 that bear interest at rates equal to LIBOR or the offshore
interbank market rate plus .40% (presently approximately 6% to 6.5%) and were
issued in connection with the Company's acquisition in November 1994 of Owen
Steel Company, Inc. and related entities (see "Business -- The Manufacturing
Segment"). The remaining net proceeds will be used to repay short-term
commercial paper and bank borrowings utilized for working capital purposes that
bear interest at rates ranging from 6% to 6.25%, which at May 31, 1995 were $39
million. The Company intends to utilize the remaining net proceeds, if any, for
general corporate purposes.
S-2
<PAGE> 4
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of May 31, 1995 and as adjusted to give effect to the sale of the
Notes offered hereby and the application of the net proceeds to repay
outstanding borrowings as described under "Use of Proceeds." This table should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto which are incorporated by reference in the Prospectus.
<TABLE>
<CAPTION>
AS OF MAY 31, 1995
---------------------
AS
ACTUAL ADJUSTED
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Short-term debt
Commercial paper................................................... $ 10,000 $ 0
Notes payable...................................................... 29,000 0
Financial services notes payable................................... 20,460 20,460
Current maturities of long-term debt............................... 14,303 13,303
-------- --------
Total short-term debt........................................... $ 73,763 $ 33,763
======== ========
Long-term debt(1)
8.49% notes due 2001............................................... $ 42,857 $ 42,857
8.75% note due 1999................................................ 14,999 14,999
Notes due 1997..................................................... 60,000 0
Other.............................................................. 213 213
Notes offered hereby(2)............................................ -0- 100,000
-------- --------
Total long-term debt............................................ $118,069 $158,069
======== ========
Stockholders' equity
Common stock(3).................................................... $ 66,374 $ 66,374
Additional paid-in capital......................................... 11,961 11,961
Retained earnings.................................................. 215,645 215,645
-------- --------
Total stockholders' equity...................................... $293,980 $293,980
======== ========
Total capitalization............................................ $485,812 $485,812
======== ========
</TABLE>
- ---------------
(1) See notes to the Company's consolidated financial statements for additional
information concerning long-term debt.
(2) Does not include expenses in connection with the issuance of the Notes
offered hereby.
(3) Does not include approximately 1,486,630 shares subject to options at May
31, 1995.
S-3
<PAGE> 5
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data presented below for, and as of the end of, each
of the years in the five year period ended August 31, 1994, are derived from the
consolidated financial statements of the Company. This summary should be read in
conjunction with the Company's Annual Report on Form 10-K including the selected
financial data and consolidated financial statements and notes thereto which are
incorporated by reference in the Prospectus. The information presented below
for, and as of the end of, each of the fiscal years in the three-year period
ended August 31, 1994 is derived from the Annual Report on Form 10-K.
The balance sheet and income statement information as of May 31, 1995 and
1994 and for the nine months then ended has been derived from the Company's
unaudited financial statements which, in the opinion of management, include all
adjustments (consisting of normally recurring accruals except for the accrual of
$6.7 million in the first quarter of fiscal 1995 in connection with litigation
concerning CMC Oil Company, a subsidiary of the Company) that the Company
considers necessary for a fair presentation of the financial position and
results of operations at those dates and for those periods. The results of
operations for the first nine months of fiscal 1995 are not necessarily
indicative of the results to be expected for the full fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED AUGUST 31, ENDED MAY 31,
---------------------------------------------------------------- -----------------------
1994 1993 1992 1991 1990 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues.................... $1,666,234 $1,568,506 $1,165,792 $1,161,302 $1,137,236 $1,520,857 $1,216,803
Cost of goods sold.......... 1,476,347 1,399,137 1,019,591 1,022,233 979,902 1,324,285 1,079,249
Selling, general and
administrative expenses... 109,566 97,550 90,325 88,542 86,751 114,326 81,481
Depreciation and
amortization.............. 30,143 27,361 25,628 23,618 22,212 27,940 22,374
Interest expense............ 9,271 9,397 9,951 8,565 8,551 11,394 6,524
Earnings before income
taxes..................... 40,907 35,061 20,297 18,344 39,820 42,912 27,175
Net earnings................ 26,170 21,661 12,510 12,015 25,920 28,020 17,140
FINANCIAL DATA
Working capital............. $ 175,119 $ 183,465 $ 174,342 $ 120,014 $ 140,275 $ 229,345 $ 163,989
Property, plant and
equipment -- net.......... 156,808 139,323 130,690 132,722 114,643 198,224 154,161
Total assets................ 604,877 541,961 515,738 460,757 415,746 744,118 588,403
Total debt(1)............... 168,825 122,564 146,370 109,713 73,780 191,832 181,889
Stockholders' equity........ 242,773 235,421 212,104 203,563 200,426 293,980 233,419
Capital expenditures........ 48,152 37,613 24,503 42,659 43,709 22,412(4) 37,212
FINANCIAL RATIOS
Total debt as % of total
capitalization(2)......... 50.6% 37.5% 46.9% 41.9% 27.7% 44.5% 56.8%
Ratio of earnings to fixed
charges(3)................ 4.2 4.0 2.7 2.5 4.7 4.2 3.8
</TABLE>
- ---------------
(1) Total debt includes short-term debt, current portion of long-term
obligations and long-term obligations.
(2) Total capitalization includes stockholders' equity, long-term debt and
non-current deferred income taxes.
(3) For a description of the computation of the ratio of earnings to fixed
charges, see "Ratio of Earnings to Fixed Charges" in the Prospectus.
(4) Excludes acquisition of Owen Steel Company, Inc. in November 1994. See
"Business -- The Manufacturing Segment."
S-4
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT FINANCIAL RESULTS
The following discussion of financial results is qualified in its entirety
by and should be read together with the more detailed information and financial
statements incorporated by reference in the Prospectus.
SEGMENT OPERATING DATA
The Company considers its businesses to be organized into four segments:
(i) Manufacturing, (ii) Recycling, (iii) Marketing and Trading, and (iv)
Financial Services. Revenues and operating profit by business segment are shown
in the following table (in millions):
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
AUGUST 31, ENDED MAY 31,
-------------- ---------------
1994 1993 1995 1994
----- ----- ----- ------
<S> <C> <C> <C> <C>
Revenues:
Manufacturing.......................................... $598 $487 $654 $421
Recycling.............................................. 342 290 373 239
Marketing and Trading.................................. 758 818 530 580
Financial Services..................................... 2.7 3.7 1.2 2.1
Operating profit:
Manufacturing.......................................... 37.7 32.5 41.5 24.5
Recycling.............................................. 5.0 .6 11.0 3.8
Marketing and Trading.................................. 13.5 14.3 9.9 10.3
Financial Services..................................... 1.7 1.8 .9 1.3
</TABLE>
The LIFO method of inventory valuation reduced net earnings for the nine
months ended May 31, 1995 $3.2 million (21 cents per share) compared to a
decrease of $3.1 million (21 cents per share) last year.
NINE MONTHS ENDED MAY 31, 1995 COMPARED TO NINE MONTHS ENDED MAY 31, 1994
MANUFACTURING
The Manufacturing segment includes the CMC Steel Group and Howell Metal
Company.
On November 15, 1994, the Company completed its acquisition of Owen Steel
Company, Inc. and related entities ("SMI Owen") headquartered in Columbia, South
Carolina. SMI Owen is operated as a part of the CMC Steel Group. The purchase
price was approximately $50 million (payable one half each in cash and common
stock), subject to adjustments based upon the net worth of SMI Owen at closing.
The Company also retired $32 million of Owen Steel Company, Inc. debt at
closing. The acquisition was accounted for under the purchase method of
accounting.
SMI Owen operates a minimill and associated steel fabrication, joist and
recycling plants in the southeast United States. The SMI Owen minimill ("SMI
South Carolina") has 350,000 tons per year melting capacity and 250,000 tons
rolling capacity. The SMI Owen fabrication operations include six rebar
fabrication shops, five structural fabrication shops, two joist plants and one
construction supply company. SMI Owen also processes approximately 155,000 tons
per year of scrap metals at three locations.
Propelled by nonresidential private construction and public construction,
particularly highway work, the Manufacturing segment (including the SMI Owen
companies) achieved record nine month results by posting a 55% increase in
revenues and a 69% increase in operating profit over the same period last year.
The CMC Steel Group (excluding the SMI Owen companies) sales for the nine
months were up 11% over the comparable period last year. The three mills
(excluding SMI South Carolina) produced record shipments of 956,000 tons, a 7%
increase over last year. The steel fabrication companies, led by SMI Joist and
the three fence post manufacturing plants, shipped 294,000 tons
S-5
<PAGE> 7
representing a 19% increase over last year. Combined with stronger pricing and
excellent performance from SMI Birmingham's new melt shop, operating profits
rose 64% over the prior year.
The SMI Owen companies shipped 267,000 tons (154,000 from SMI South
Carolina). Coupled with better pricing, this group was profitable through May
31, 1995.
Howell Metal Company, the Company's copper tube subsidiary, had operating
profit 22% above last year although demand for plumbing tube weakened late in
the period and spreads were under pressure. Shipments were 17% higher than the
same period last year.
RECYCLING
The Recycling segment, buoyed by a resounding second quarter, reported a
191% increase in operating profit compared to the same period last year. During
the second quarter many product prices were at their highest levels since the
robust period of the late 1980s. Volume shipped rose 15% over the prior year.
Steel scrap and aluminum scrap prices declined during the third quarter, while
copper and stainless steel prices were relatively flat.
MARKETING AND TRADING
Operating profit for the period was down slightly from the same period last
year on 9% lower revenue. Demand for nonferrous semis, primary metals, secondary
metals and industrial raw materials remained buoyant, offsetting lower steel
sales volume mainly due to the continued weak Chinese import market. Inter-Asia
trading was active including exports from China. The weak U.S. dollar and
strengthening local demand made sourcing in parts of Europe difficult and caused
an increase in local general and administrative expenses. The operations of
Enterprise Metal Corporation were consolidated into Commonwealth Metal
Corporation.
FINANCIAL SERVICES
Revenues and operating profit were lower this nine months than the
comparable period last year due to the reduction of domestic temporary
investments and lower trade financing activity.
OTHER
Interest expense for the nine months ended May 31, 1995 was $11.4 million,
an increase of 75% over the prior year's nine months. The increase was
attributable to higher interest rates and increased borrowings due to working
capital needs for a higher level of business volume and the SMI Owen
acquisition.
The May 31, 1995 balance sheet reflects the initial detailed allocation of
the acquisition cost of Owen Steel Company to the fair values of identifiable
assets acquired and liabilities assumed under the purchase method of accounting.
The allocation is based on a cost of approximately $50 million for Owen Steel
Company's equity (as adjusted) and is subject to possible material change as
more information becomes available with which to resolve outstanding
contingencies. Approximately $9 million of the acquisition price is presently
maintained in an escrow account, subject to final determination of the net worth
of Owen Steel Company at the closing date and certain other post-closing
adjustments.
FISCAL 1994 COMPARED TO FISCAL 1993
MANUFACTURING
Steel Group revenues for fiscal 1994 were a record $545 million, 27% higher
than fiscal 1993. Tons shipped were up 15%. The record revenues were fueled by
strong demand and a 10% increase in selling prices. Operating profits for fiscal
1994 were $34 million, up 33% over fiscal 1993 despite the Birmingham melt shop
startup (costs of $3 million pre-tax), higher raw material inventory costs and a
pre-tax LIFO charge of $6.1 million.
Steel mill shipments were 1.25 million tons in fiscal 1994, an increase of
nearly 10% over fiscal 1993. Operating profits were up 28% over fiscal 1993 due
to the strong performance of SMI Texas and SMI Arkansas. SMI-Birmingham
operating profits were lower because of the startup of the new melt shop.
S-6
<PAGE> 8
Steel fabrication revenues and shipments were up over fiscal 1993 by 48%
and 23%, respectively. Operating profits increased 70% compared to a fiscal
1993. In September 1993, CMC acquired the assets of Shepler's, gaining
additional locations to complement the Company's concrete related product
warehouse business. In June 1994, the division purchased substantially all the
assets of CS&W of Utah, Inc. in Brigham City, Utah, a small steel fence post
manufacturing and marketing operation.
Copper Tube Division shipments during fiscal 1994 were 4% higher than in
fiscal 1993; however, operating profit was lower than during fiscal 1993
primarily as a result of a 9% decline in selling prices caused by slower
residential housing starts and some overproduction in the copper water tube
industry.
RECYCLING
Operations in the Recycling segment during fiscal 1994 improved
significantly over fiscal 1993's modest results. Revenues for fiscal 1994 were
up 18% over fiscal 1993 and tonnage processed and shipped was up 15% from fiscal
1993. Operating profits for fiscal 1994 were $5 million despite a LIFO charge of
$2.4 million (pre-tax). Fiscal 1993's operating profits were $600,000.
Demand for steel scrap was strong during most of fiscal 1994. Prices were
strong during the first half of fiscal 1994, but fell dramatically during the
third quarter before rebounding in the fourth quarter to close near the year's
high. Tonnage processed and shipped was up 17% over fiscal 1993.
Nonferrous prices were weak during the first half of fiscal 1994, but moved
steadily higher during the last half due to brisk demand and generally tight
supplies. Tonnage processed and shipped was 9% higher than in fiscal 1993.
In April 1994, the Secondary Metals Processing Division purchased
substantially all the operating assets of Proler International Corp.'s scrap
processing facility at Vinton, Texas near El Paso. The Vinton facility shredder
is the fifth shredder CMC operates in its thirty recycling facilities. In August
1994, the Secondary Metals Processing Division purchased the working assets of
Tri-State Recycling Corp.'s scrap metal processing facility in Jacksonville,
Florida. These transactions, either individually or in the aggregate were not
significant to the consolidated company.
MARKETING AND TRADING
Operating profit in fiscal 1994 for the Marketing and Trading segment was
6% lower than in fiscal 1993, primarily attributable to a 24% decline in the
Company's global steel shipments. Revenues from steel products were 19% lower in
fiscal 1994 than in fiscal 1993. The International Division's record steel
shipments in fiscal 1993, the major portion of which went to China, was not
sustained in fiscal 1994 due to weaker steel markets overseas. Shipments and
revenues from nonferrous semis improved significantly, however, including
imports into North America. Industrial raw materials shipments and revenues were
relatively unchanged.
FINANCIAL SERVICES
Revenues in fiscal 1994 were 25% lower than in fiscal 1993, but operating
profit was only 3% lower. There was a further shift in emphasis toward
bolstering intercompany transaction financing and away from third party
financings. Profits were aided by increasing U.S. dollar interest rates. Letter
of credit commission income declined, reflecting lower business volume in the
Marketing and Trading segment, as well as a decrease in fee income from the
closure of CMC's portfolio management department. Operating expenses were lower
in fiscal 1994 due to a reduction in personnel.
CORPORATE
The increase in corporate administrative expenses during fiscal 1994 was
due primarily to increased legal expenses and to lower inter-division
allocations. In addition, there was a $1.3 million credit for interest income
last year which did not recur in fiscal 1994.
S-7
<PAGE> 9
BUSINESS
The following description of the Company's business is qualified in its
entirety by and should be read together with the more detailed information and
financial statements incorporated by reference in the Prospectus.
The Company considers its businesses to be organized into four segments:
(i) Manufacturing, (ii) Recycling, (iii) Marketing and Trading, and (iv)
Financial Services. With the exception of the Financial Services segment, the
Company's activities are primarily concerned with metals related activities. See
the Consolidated Financial Statements incorporated by reference in the
Prospectus for additional information concerning these segments.
CMC was incorporated in 1946 in Delaware as a successor to a secondary
metals recycling business that had been in existence since approximately 1915.
The Company maintains executive offices at 7800 Stemmons Freeway, Dallas, Texas
75247 (telephone 214/689-4300). The terms "Company" or "CMC" as used herein
include Commercial Metals Company and its consolidated subsidiaries.
THE MANUFACTURING SEGMENT
The manufacturing segment is the Company's dominant and most rapidly
expanding segment in terms of assets employed, capital expenditures, operating
profit and number of employees. It consists of two entities, the CMC Steel Group
and the Howell Metal Company subsidiary, a manufacturer of copper tubing. The
Steel Group is by far the more significant entity in this segment, with
subsidiaries operating four steel minimills, 19 steel fabricating plants, three
steel joist manufacturing plants, three fence post manufacturing plants, six
metals recycling plants, two railcar rebuilding facilities and seven warehouse
stores which sell supplies and equipment to the concrete installation trade.
The Company endeavors to operate all of its minimills at full capacity in
order to minimize product costs. Increases in capacity and productivity are
continuously emphasized through both operating and capital improvements. The
steel minimill business is capital intensive, with substantial capital
expenditures required on a regular basis to remain competitive as a low cost
producer. Over the past three fiscal years, approximately $70.5 million, or 64%,
of the Company's total capital expenditures have been for minimill projects.
This emphasis on productivity improvements is reflected in increases in
thousands of tons of steel melted, rolled and shipped from the minimills during
each of the last five years and nine months ended May 31, 1995 as follows:
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED MAY 31, ENDED MAY 31, FISCAL FISCAL FISCAL FISCAL FISCAL
1995(1) 1994 1994 1993 1992 1991 1990
------------- ------------- ------ ------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Tons Melted................ 1,145 834 1,122 1,001 935 879 880
Tons Rolled................ 1,101 889 1,207 1,009 953 917 899
Tons Shipped............... 1,110 896 1,247 1,138 1,033 917 962
</TABLE>
- ---------------
(1) Includes SMI South Carolina, which was acquired in November 1994.
The Company's largest steel minimill, Structural Metals, Inc. ("SMI
Texas"), is located at Seguin, Texas, near San Antonio. SMI Texas manufactures
steel reinforcing bars, angles, rounds, channels, flats, and special sections
used primarily in highways, reinforced concrete structures and manufacturing.
SMI Steel, Inc. ("SMI Alabama"), a subsidiary of CMC that owns and operates
a steel minimill in Birmingham, Alabama, was acquired in 1983. A substantial
program to modernize and improve productivity at SMI Alabama was implemented,
with over $105 million of capital expenditures from acquisition through 1994.
Installation and start up of a new direct current electric furnace melt shop
S-8
<PAGE> 10
was substantially complete by late fiscal 1994. This project was the largest
single capital investment in the Company's history, with a cost of approximately
$30 million. SMI Alabama manufactures primarily larger size products than SMI
Texas, such as mid-size structural including angles, channels, up to eight inch
wide flange beams and special bar quality rounds and flats.
SMI South Carolina has an annual melting capacity of approximately 350,000
tons and rolling capacity of approximately 250,000 tons. Reinforcing bar is SMI
South Carolina's primary product line. SMI South Carolina expands the Steel
Group's manufacturing and fabrication network into the southeastern United
States and increased the Company's annual steel production capacity to
approximately 1.7 million tons and steel fabrication capacity to over 500,000
tons. SMI Owen's related scrap metal processing operations which operate as a
part of the Steel Group are expected to process approximately 155,000 tons per
year of scrap metal, primarily for melting at SMI South Carolina.
The primary raw material for SMI Texas, SMI Alabama and SMI South Carolina
is secondary (scrap) ferrous metal purchased primarily from suppliers generally
within a 300 mile radius of each mill. A portion of the ferrous raw material,
generally less than half, is supplied from Company owned recycling plants. The
supply of scrap is believed to be adequate to meet future needs but has
historically been subject to significant price fluctuations. All three of these
mills consume large amounts of electricity and natural gas, both of which are
believed to be readily available at competitive prices.
The SMI Texas, SMI Alabama and SMI South Carolina mills consist of melt
shops with electric arc furnaces that melt the steel scrap, continuous casting
facilities to shape the molten metal into billets, reheating furnaces, rolling
mills, mechanical cooling beds, finishing facilities and supporting facilities.
The mills utilize both a Company-owned fleet of trucks and private haulers to
transport finished products to customers and Company-owned fabricating shops.
Mill capacity at SMI Texas and SMI Alabama is approximately 750,000 and 500,000
tons per year, respectively.
Operations began in 1987 at a fourth, much smaller mill located near
Magnolia, Arkansas, ("SMI Arkansas"). No melting facilities are located at SMI
Arkansas since this mill utilizes as its raw material rail salvaged from
abandoned railroads for rerolling and, on occasion, billets from Company
minimills or other suppliers. The rail or billets are heated in a reheat furnace
and processed on a rolling mill and finished at facilities similar to, but on a
smaller scale, than the other mills. SMI Arkansas' finished product is primarily
metal fence post stock, small diameter reinforcing bar and sign posts with some
high quality round and flat products being rolled. Fence post stock is
fabricated into metal fence posts at Company owned facilities at the Magnolia
mill site, San Marcos, Texas, and a third location acquired in fiscal 1994 at
Brigham City, Utah. Because of this mill's lack of melting capacity, it is
dependent on an adequate supply of competitively priced billets or used rail,
the availability of which fluctuates with the pace of railroad abandonments,
rate of rail replacement by railroads and demand for used rail from domestic and
foreign rail rerolling mills. Capacity at SMI Arkansas is approximately 150,000
tons per year.
The Steel Group's processing facilities are engaged in the fabrication of
reinforcing and structural steel, steel warehousing, joist manufacturing, fence
post manufacturing and railcar repair and rebuilding. Steel for fabrication may
be obtained from unrelated vendors or Company owned mills such as SMI Texas.
Activities are conducted at various locations in Texas in the cities of
Beaumont, Buda (near Austin), Corpus Christi, Dallas, Houston, San Marcos,
Seguin, Victoria, and Waco, Baton Rouge and Slidell, Louisiana, and Magnolia and
Hope, Arkansas and Brigham City, Utah. The SMI Owen acquisition significantly
expanded the Company's steel fabrication operations into the Southeast with
facilities at Cayce, Columbia and Taylor, South Carolina, Jacksonville and
Starke, Florida, Lawrenceville, Georgia, Gastonia, North Carolina and
Fredricksburg, Virginia. Fabricated products are used primarily in the
construction of commercial and non-commercial buildings, industrial plants,
power plants, highways and dams. Safety Railway Service, a CMC
S-9
<PAGE> 11
subsidiary with locations in Victoria, Texas and Tulsa, Oklahoma, repairs,
rebuilds and provides custom maintenance and manufacturing of railroad freight
cars owned by railroad companies and private industry. That work is obtained
primarily on a bid and contract basis and may include maintenance of the cars.
Secondary metals recycling plants in Austin, Texas with smaller feeder
facilities in nearby Round Rock and Seguin, and Lexington, South Carolina with
smaller feeder facilities in Cayce and North Augusta, South Carolina operate as
part of the Steel Group due to the predominance of secondary ferrous metals
sales to the nearby SMI Texas or SMI South Carolina minimills. SMI Joist
Company, located in Hope, Arkansas, Cayce, South Carolina and Starke, Florida,
manufactures steel joists and decking for roof supports, using steel obtained
primarily from the Steel Group's minimills.
The copper tube minimill operated by Howell Metal Company is located in New
Market, Virginia and has capacity of approximately 45 million pounds per year.
It manufactures copper water, air conditioning and refrigeration tubing in
straight lengths and coils for use in commercial, industrial and residential
construction. High quality copper scrap supplemented occasionally by virgin
copper ingot is the raw material used in the melting and casting of billets. The
scrap is readily available subject to rapid price fluctuations generally related
to the price or supply of virgin copper. A small portion of the scrap is
supplied by the Company's metal recycling yards.
THE RECYCLING SEGMENT
The recycling segment is engaged in processing secondary (scrap) metals for
further recycling into new metal products. This segment consists of the
Company's 27 metal recycling plants (excluding six such facilities operated by
the CMC Steel Group as a part of the manufacturing segment) and Commercial
Metals Railroad Salvage Company, which dismantles and recovers steel rail, track
components and other materials from obsolete or abandoned railroads.
The Company's metal recycling plants purchase ferrous and nonferrous
secondary or scrap metals, that may or may not have been processed, in a variety
of forms. Sources of metals for recycling include manufacturing and industrial
plants, metal fabrication plants, electric utilities, machine shops, factories,
railroads, refineries, shipyards, ordinance depots, demolition businesses,
automobile salvage and wrecking firms. Numerous small secondary metals
collection firms are also, in the aggregate, major suppliers.
These plants processed and shipped approximately 1,160,000 tons of scrap
metal during fiscal 1994. Ferrous metals comprised the largest tonnage of metals
recycled at just over 1,000,000 tons, an increase from 919,000 the prior year,
followed by approximately 158,000 tons of non-ferrous metals, primarily
aluminum, copper and stainless steel, up from 145,000 the prior year. The
Company also purchased and sold an additional 200,000 tons of metals processed
by other metal recycling facilities. With the exception of precious metals,
practically all metals capable of being recycled are processed by these plants.
THE MARKETING AND TRADING SEGMENT
The marketing and trading segment buys and sells primary and secondary
metals and other commodities and products through a network of trading offices
located around the globe. Steel, nonferrous metals, specialty metals, chemicals,
industrial minerals, ores, concentrates, ferroalloys, and other basic industrial
materials are purchased primarily from producers in domestic and foreign
markets. On occasion, these materials are purchased from trading companies or
industrial consumers with surplus supplies. Long-term contracts, spot market
purchases and trading or barter transactions are all utilized to obtain
materials. A large portion of these transactions involve fabricated semifinished
or finished product. Customers for these materials include industrial concerns
such as the steel, nonferrous metals, metal fabrication, chemical, refractory
and transportation sectors.
S-10
<PAGE> 12
The Company's ten foreign marketing and trading offices form a network for
the exchange of information on the materials marketed by the Company, as well as
servicing sources of supply and purchasers. In most transactions, the Company
acts as principal and often as a marketing representative. The Company utilizes
agents when appropriate and occasionally acts as broker. The Company
participates in transactions in practically all major markets of the world where
trade by American-owned companies is permitted. The Company attempts to limit
its exposure to price fluctuations by offsetting purchases with concurrent sales
and entering into foreign exchange contracts as hedges of trade receivables and
payables denominated in foreign currencies. The Company does not, as a matter of
policy, speculate on changes in the commodity markets and hedges only firm
commitments and not with respect to anticipated transactions.
THE FINANCIAL SERVICES SEGMENT
This segment is comprised of CMC Finanz AG ("Finanz"), a wholly owned
foreign financial services subsidiary located in Zug, Switzerland, organized to
facilitate international marketing and trading transactions and provide other
financial services for the Company and third parties. Finanz is permitted to
conduct most activities customarily carried on by commercial banks in
Switzerland except that it cannot solicit and accept deposits from individuals,
with limited exceptions. Finanz emphasizes commercial banking services related
to financing international transactions, particularly those activities of CMC
Trading AG, a subsidiary of CMC. Import and export financing, trade and project
financing of commodity-related transactions, discounting of trade receivables
and drafts, opening letters of credit and providing direct loans are typical
activities.
S-11
<PAGE> 13
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 description reference is hereby made. Certain terms
not defined in this description are defined in the Prospectus.
GENERAL
The % Notes due , 2005 (the "Notes") will be
limited to aggregate principal amount and will mature on
, 2005. The Notes will be issued only in the form of one or
more Global Securities (as defined below) in minimum denominations of $100,000
and integral multiples of $1,000 in excess thereof. See "Book-Entry Notes"
below. The Notes are not redeemable prior to maturity and are not entitled to
any sinking fund. The Notes will be unsecured and unsubordinated obligations of
the Company and will rank on a parity with all other unsecured and
unsubordinated debt of the Company.
INTEREST
The Notes will bear interest at the rate set forth on the cover page of
this Prospectus Supplement from , 1995, or the most recent
interest payment date to which interest has been paid or provided for, payable
semi-annually on and of each year,
beginning , 1995, to the person in whose name a Note (or any
predecessor Note) is registered at the close of business on the
or , as the case may be, next preceding
such interest payment date.
BOOK-ENTRY NOTES
The Notes will be issued in whole or in part in the form of one or more
permanent Global Securities deposited with, or on behalf of, the Depositary, and
registered in the name of a nominee of the Depositary. Except under the limited
circumstances described in the Prospectus under "Description of Debt
Securities -- Book-Entry Debt Securities," owners of beneficial interests in
Global Securities will not be entitled to physical delivery of Notes in
certificated form. Global Securities may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or to a successor of the
Depositary of its nominee.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. The Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions, such as
transfers and pledges, among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movements of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Underwriters), 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
Securities and Exchange Commission.
S-12
<PAGE> 14
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Notes are in the form of Book-Entry Notes, all
payments of principal and interest will be made by the Company in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
are expected to trade in the Depositary's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Notes will therefore be
required by the Depositary to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Notes.
S-13
<PAGE> 15
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase from the
Company, the respective principal amounts of the Notes set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
------------------------------------------------------------- ----------------
<S> <C>
Goldman, Sachs & Co.......................................... $
Lehman Brothers..............................................
Morgan Stanley & Co. Incorporated............................
----------
Total.............................................. $
==========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to retail
purchasers at the initial public offering price set forth on the cover page of
this Prospectus Supplement and in part to certain securities dealers at such
price less a concession of % of the principal amount of such Notes. The
Underwriters may allow, and such dealers may reallow, to certain brokers and
dealers, a concession not to exceed % of the principal amount of such
Notes. After the Notes are released for sale to the public, the offering prices
and other selling terms may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making with respect to the Notes at any time without notice. No assurance
can be given as to the liquidity of the trading markets for the Notes.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
This offering is being made pursuant to Article III, Section 44(c)(8) of
the Rules of Fair Practice of the National Association of Securities Dealers.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged and may in the future engage in commercial banking
and investment banking transactions with the Company.
S-14
<PAGE> 16
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION, DATED JUNE 30, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
[LOGO] COMMERCIAL METAL COMPANY
$50,000,000
MEDIUM-TERM NOTES, SERIES A
DUE FROM MONTHS TO YEARS FROM DATE OF ISSUE
------------------------
Commercial Metals Company (the "Company") may offer from time to time its
Medium-Term Notes, Series A, due from months to years from the date of
issue, as selected by the purchaser and agreed to by the Company, at an
aggregate initial public offering price not to exceed $50,000,000, or its
equivalent in another currency or composite currency.
The Notes may be denominated in U.S. dollars or in such foreign currencies
or composite currencies as may be designated by the Company at the time of
offering. The specific currency or composite currency, interest rate (if any),
issue price and maturity date of any Note will be set forth in the applicable
Pricing Supplement to this Prospectus Supplement. Unless otherwise specified in
the applicable Pricing Supplement, Notes denominated in other than U.S. dollars
or ECUs will not be sold in, or to residents of, the country issuing the
Specified Currency. See "Description of Notes."
Interest on the Fixed Rate Notes, unless otherwise specified in the
applicable Pricing Supplement, will be payable each and and at
maturity. Interest on the Floating Rate Notes or Indexed Notes will be payable
on the dates specified therein and in the applicable Pricing Supplement.
Floating Rate Notes will bear interest at a rate determined by reference to the
Commercial Paper Rate, Prime Rate, LIBOR, Treasury Rate, CD Rate or Federal
Funds Rate, as adjusted by a Spread and/or Spread Multiplier, if any, applicable
to such Notes. Zero Coupon Notes will not bear interest.
Unless a Redemption Commencement Date or Repayment Date is specified in the
applicable Pricing Supplement, the Notes will not be redeemable or repayable
prior to their Stated Maturity. If a Redemption Commencement Date or Repayment
Date is so specified, the Notes will be redeemable at the option of the Company
or repayable at the option of the Holder as described herein.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
offered hereby will be issued in global or definitive form in a minimum
denomination of $100,000 or, in the case of Notes denominated in foreign
currencies or composite currencies, the appropriate equivalent of $100,000 in
the Specified Currency, as specified in the applicable Pricing Supplement. A
global Note representing Book-Entry Notes will be registered in the name of The
Depository Trust Company, or its nominee, which will act as Depositary.
Interests in Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to
participants' interests) and its participants. Except as described herein,
owners of beneficial interests in a global Note will not be considered the
Holders thereof and will not be entitled to receive physical delivery of Notes
in definitive form, and no global Note will be exchangeable except for another
global Note of the denomination and terms to be registered in the name of the
Depositary or its nominee. See "Description of Notes."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
------------ ------------------ -------------------------
<S> <C> <C> <C>
Per Note.......................... 100% .125% - 1% 99.875% - 99%
Total(4).......................... $50,000,000 $62,500 - $500,000 $49,937,500 - $49,500,000
</TABLE>
- ---------------
(1) Notes will be issued at 100% of their principal amount, unless otherwise
specified in the applicable Pricing Supplement.
(2) The Company will pay the Agents a commission of from .125% to 1%, depending
on maturity, of the principal amount of any Notes sold through them as
Agents (or sold to such Agents as principal in circumstances in which no
other discount is agreed). The Company may sell Notes to any Agent at a
discount or premium for resale to one or more investors at varying prices
related to prevailing market prices at the time of resale, as determined by
such Agent, or at a fixed public offering price. The Company has agreed to
indemnify the Agents against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
(3) Before deducting estimated expenses of $120,000 payable by the Company,
including approximately $40,000 of estimated expenses of the Agents to be
reimbursed by the Company.
(4) Or the equivalent thereof in foreign currencies or composite currencies.
------------------------
Offers to purchase the Notes are being solicited, on a reasonable efforts
basis, from time to time by the Agents on behalf of the Company. Notes may be
sold to the Agents on their own behalf at negotiated discounts. The Company
reserves the right to sell the Notes directly on its own behalf. No commission
will be payable on any sales made directly by the Company. The Company also
reserves the right to withdraw, cancel or modify the offering contemplated
hereby without notice. No termination date for the offering of the Notes has
been established. The Company or the soliciting Agent may reject any order in
whole or in part. See "Supplemental Plan of Distribution."
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus Supplement is , 1995.
<PAGE> 17
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING
THE MARKET PRICE OF THE NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
Unless otherwise indicated, currency amounts in this Prospectus Supplement
or any Pricing Supplement hereto are stated in United States dollars ("$,"
"dollars" or "U.S. $").
S-2
<PAGE> 18
DESCRIPTION OF NOTES
GENERAL
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 accompanying Prospectus, to which description reference is hereby made.
Unless different terms or additional terms are specified in the applicable
Pricing Supplement, the Notes will have the terms described below. References to
interest payments and interest-related information do not apply to Zero Coupon
Notes (as defined below).
The Notes will be issued pursuant to the Indenture dated as of ,
1995 (the "Indenture") between the Company and The Chase Manhattan Bank, N.A.,
as Trustee (the "Trustee"). The Notes are issuable by the Company from time to
time up to an aggregate initial offering price of $50,000,000 (or the equivalent
thereof in any other currency or currencies or currency units). The Notes will
represent unsecured, unsubordinated debt of the Company and will rank equally
with all other unsecured and unsubordinated debt of the Company. The Notes
constitute a separate series for purposes of the Indenture. The Indenture does
not limit the aggregate principal amount of Debt Securities that may be issued
thereunder. The following summary of certain provisions of the Indenture does
not purport to be complete and is subject to and is qualified in its entirety by
reference to, all of the provisions of the Indenture, including the definitions
therein of certain terms.
The applicable Pricing Supplement will specify any redemption or repayment
terms applicable to the Notes. See "-- Redemption and Repayment" below.
Unless otherwise specified in the applicable Pricing Supplement and unless
previously redeemed, a Note will mature on the date ("Stated Maturity") that is
specified on the face thereof and in the applicable Pricing Supplement. Unless
otherwise specified in the applicable Pricing Supplement, the term "Market Day"
means (a) with respect to any Note (other than any LIBOR Note), any Business
Day, and (b) with respect to any LIBOR Note, any Business Day which is also a
London Market Day. Unless otherwise specified in the applicable Pricing
Supplement, the term "Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday that is (i) not a day on which banking institutions in The
City of New York generally are authorized or obligated by law or executive order
to close and (ii) if the Note is denominated in a Specified Currency (as defined
below) other than U.S. dollars, not a day on which banking institutions are
authorized or obligated by law or executive order to close in the financial
center of the country issuing the Specified Currency (or, in the case of
European Currency Units ("ECUs"), is not a day designated as an ECU
Non-Settlement Day by the ECU Banking Association or otherwise generally
regarded in the ECU interbank market as a day on which payment in ECUs shall not
be made). Unless otherwise specified in the applicable Pricing Supplement, the
term "London Market Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
Each Note will be denominated in a currency, composite currency or basket
of currencies (each a "Specified Currency") as specified on the face thereof and
in the applicable Pricing Supplement, which may include U.S. dollars or any
other currency, composite currency or basket of currencies set forth in the
applicable Pricing Supplement. Purchasers of the Notes are required to pay for
them by delivery of the requisite amount of the Specified Currency to the
applicable agent, unless other arrangements have been made. Unless otherwise
specified in the applicable Pricing Supplement, payments on the Notes will be
made in the applicable Specified Currency; provided that, at the election of the
Holder thereof and in certain circumstances at the option of the Company,
payments on Notes denominated in other than U.S. dollars may be made in U.S.
dollars. See "Payment of Principal and Interest." The term "Holder" means, with
respect to any Note as of any time, the person in whose name such Note is
registered at such time in the security register for the Notes maintained by the
Company and does not include the owner of a beneficial interest in a Book-Entry
Note as described under "Book-Entry Notes" below.
S-3
<PAGE> 19
Notes denominated in U.S. dollars will be initially issued in denominations
of $100,000 and integral multiples of $1,000 in excess thereof, and Notes
denominated in other than U.S. dollars will be initially issued in denominations
of the amount of the Specified Currency for such Note equivalent, at the noon
buying rate for cable transfers in The City of New York for such Specified
Currency (the "Exchange Rate") on the first Business Day next preceding the date
on which the Company accepts the offer to purchase such Note, to $100,000 and
integral multiples of $1,000 in excess thereof. Unless otherwise agreed by the
Company, Notes issued upon transfer of or in exchange for other Notes will be
issued only in denominations of $100,000 and integral multiples of $1,000 in
excess thereof (or the equivalent thereof in the Specified Currency for each
Note).
Notes will be sold in individual issues of Notes, each of which will have
such interest rate or interest rate formula, if any, Stated Maturity and date of
original issuance as may be specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, each Note will
bear interest at either (i) a fixed rate (a "Fixed Rate Note"), which may be
zero in the case of Notes issued at a discount from the principal amount payable
at maturity thereof (a "Zero Coupon Note") or (ii) a floating rate (a "Floating
Rate Note") determined by reference to the interest rate formula, which may be
adjusted by adding or subtracting the Spread or multiplying by the Spread
Multiplier (each term as defined below under "Floating Rate Notes").
The Notes may be issued as Original Issue Discount Notes. An Original Issue
Discount Note is a Note, including any Zero Coupon Note, which is issued at a
price lower than the principal amount thereof and which provides that upon
redemption or acceleration of the maturity thereof an amount less than the
principal thereof shall become due and payable. In the event of redemption or
acceleration of the maturity of an Original Issue Discount Note, the amount
payable to the Holder of such Note upon such redemption or acceleration will be
determined in accordance with the terms of the Note, but will be an amount less
than the amount payable at the Stated Maturity of such Note. In addition, a Note
issued at a discount may, for United States federal income tax purposes, be
considered an original issue discount note, regardless of the amount payable
upon redemption or acceleration of maturity of such Note. See "United States
Taxation -- United States Holders -- Original Issue Discount" below.
Certain Notes ("Indexed Notes") may be issued with the principal amount
payable at maturity, and/or the amount of interest payable on an interest
payment date, to be determined by reference to one or more currencies (including
baskets of currencies), one or more commodities (including baskets of
commodities), one or more securities (including baskets of securities) and/or
any other index as set forth 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 (but not less than zero) of such Notes depending upon
the value at maturity of the applicable index. With respect to any Indexed Note,
information as to the methods for determining the principal amount payable at
maturity and/or the amount of interest payable on an interest payment date, as
the case may be, as to any one or more currencies (including baskets of
currencies), commodities (including baskets of commodities), securities
(including baskets of securities) or other indices to which principal or
interest is indexed, as to any additional foreign exchange or other risks or as
to any additional tax considerations may be set forth in the applicable Pricing
Supplement. See "Risks Relating to Indexed Notes."
The Pricing Supplement relating to each Note will describe one or more of
the following terms: (i) the Specified Currency with respect to such Note (and,
if such Specified Currency is other than U.S. dollars, certain other terms
relating to such Note, including the authorized denominations); (ii) the price
(expressed as a percentage of the aggregate principal amount thereof) at which
such Note will be issued; (iii) the date on which such Note will be issued; (iv)
the date on which such Note will mature; (v) whether such Note is a Fixed Rate
Note or a Floating Rate Note; (vi) if such Note is a Fixed Rate Note, the rate
per annum at which such Note will bear interest, if any, and the interest
payment date or dates, if different from those set forth below under "Fixed Rate
Notes"; (vii) if such Note is a Floating Rate Note, the interest rate basis (the
"Interest Rate Basis") for
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each such Floating Rate Note, which will be (a) the Commercial Paper Rate, in
which case such Note will be a Commercial Paper Rate Note, (b) the Prime Rate,
in which case such Note will be a Prime Rate Note, (c) the London Inter-Bank
Offered Rate ("LIBOR"), in which case such Note will be a LIBOR Note, (d) the
Treasury Rate, in which case such Note will be a Treasury Rate Note, (e) the
Constant Maturity Treasury ("CMT") Rate, in which case such Note will be a CMT
Rate Note, (f) the CD Rate, in which case such Note will be a CD Rate Note, (g)
the Federal Funds Rate, in which case such Note will be a Federal Funds Rate
Note, or (h) such other interest rate formula as is set forth in such Pricing
Supplement, and, if applicable, the Calculation Agent, the Index Maturity, the
Spread or Spread Multiplier, the Maximum Rate, the Minimum Rate, the Initial
Interest Rate, the Interest Payment Dates, the Regular Record Dates, the
Calculation Date, the Interest Determination Date and the Interest Reset Date
with respect to such Floating Rate Note; (viii) whether such Note is an Original
Issue Discount Note and, if so, the yield to maturity; (ix) whether such Note is
an Indexed Note and, if so, the principal amount (or formula to calculate such
principal amount) thereof payable at maturity, or the amount of interest payable
on an interest payment date, as determined by reference to any applicable index,
in addition to certain other information relating to the Indexed Note; (x)
whether such Note may be redeemed at the option of the Company (other than as
described below in the first paragraph under "Redemption"), or repaid at the
option of the Holder, prior to Stated Maturity and, if so, the Redemption
Commencement Date, Repayment Date, Redemption Prices, Redemption Period and
other provisions relating to such redemption or repayment (all as described
below under "Redemption"); (xi) whether such Note will be represented by a
Certificated Note or a Book-Entry Note (each as defined below); and (xii) any
other terms of such Note not inconsistent with the provisions of the Indenture.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Notes may be issued in certificated registered form without coupons
("Certificated Notes"). Notes also may be issued in the form of one or more
master or global Notes registered in the name of a depositary or its nominee
("Book-Entry Notes") and as such may be subject to the special restrictions and
Procedures referred to below under "Book-Entry Notes."
Each Certificated Note will be exchangeable for a like aggregate principal
amount of Certificated Notes of authorized denominations and of like tenor and
form. If any Certificated Note is subject to partial redemption, the unredeemed
portion of such Note redeemed in part will be exchangeable for Certificated
Notes of authorized denominations and of like tenor and form. Each Certificated
Note authenticated and delivered upon any transfer or exchange of the whole or
any part of any other Note will carry all the rights, if any, to interest
accrued and unpaid and to accrue that were carried by the whole or such part of
such other Note.
Each Certificated Note may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed) or exchange at the
corporate trust office of the Trustee or at the office of any transfer agent
that is designated by the Company for such purpose with respect to the Notes and
referred to in the applicable Pricing Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
Indenture. Unless otherwise specified in an applicable Pricing Supplement, such
transfer or exchange will be effected upon the Trustee or such transfer agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request, and subject to such reasonable regulations as the
Company may from time to time agree upon with the Trustee and any transfer
agent.
The Company has initially appointed as security registrar and transfer
agent the Trustee acting through its corporate trust office in the Borough of
Manhattan, The City of New York. Any additional transfer agents initially
designated by the Company for any Notes will be named in the applicable Pricing
Supplement. The Company reserves the right to vary or terminate the appointment
of the Trustee as security registrar or of any transfer agent or to appoint
additional or other registrars or transfer agents or to approve any change in
the office through which any registrar or any transfer
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agent acts, provided that there will be at ali times a registrar and transfer
agent in the Borough of Manhattan, The City of New York.
Unless otherwise indicated in the applicable Pricing Supplement, in the
event of a redemption of the Notes in part, the Company will not be required (i)
to register the transfer of or exchange any Notes during a period beginning at
the opening of business 15 days before, and continuing until, the date notice is
given identifying the Notes to be redeemed, or (ii) to register the transfer of
or exchange any Notes, or any portion thereof, called for redemption.
BOOK-ENTRY NOTES
Upon issuance, Book-Entry Notes may be represented by a single master
security (the "Master Security") or by individual global securities each
representing Book-Entry Notes having the same terms ("Global Securities"). The
Master Security and any Global Security will be deposited with, or on behalf of,
the depositary and registered in the name of the depositary or its nominee.
Book-Entry Notes will not be exchangeable for Certificated Notes at the option
of the Holder and, except as set forth below, will not otherwise be issuable in
definitive form. Unless otherwise specified in the applicable Pricing
Supplement, The Depository Trust Company ("DTC") will be the depositary.
With respect to any Book-Entry Note denominated in a Specified Currency
other than U.S dollars, DTC currently has elected to have payments of principal
(and premium, if any) and interest on such Note made in U.S. dollars unless
notified by any of its Participants (as defined below) through which an interest
in such Note is held that it elects to receive such payment of principal (or
premium, if any) or interest in such Specified Currency. Unless otherwise
specified in the applicable Pricing Supplement, a Beneficial Owner of Book-Entry
Notes denominated in a Specified Currency other than U.S. dollars electing to
receive payments of principal or any premium or interest in a currency other
than U.S. dollars must notify the Participant through which its interest is held
on or prior to the applicable Record Date, in the case of a payment of interest,
and on or prior to the sixteenth day prior to the maturity date, in the case of
principal or premium, of such Beneficial Owner's election to receive all or a
portion of such payment in such Specified Currency. Such Participant must notify
DTC of such election on or prior to the third Business Day after such Record
Date or after such sixteenth day. DTC will notify the Trustee of such election
on or prior to the fifth Business Day after such Record Date or after such
sixteenth day. If complete instructions are received by the Participant and
forwarded by the Participant to DTC, and by DTC to the Trustee, on or prior to
such dates, the Beneficial Owner will receive payments in the Specified
Currency.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC holds securities that
its participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. Access to the DTC system is also available to others, such
as securities brokers and dealers, banks and trust companies, that clear through
or maintain a custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the DTC system must be made by or
through Direct Participants. Upon the issuance by the Company of Book-Entry
Notes represented by the Master Security or by any Global Security, the
depositary will credit, on its book-entry system, the respective principal
amounts of the Book-Entry Notes represented by the Master Security or such
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Global Security to the accounts of Participants. The accounts to be credited
shall be designated by the agent of the Company with respect to such Book-Entry
Notes, by certain other agents of the Company or by the Company if such
Book-Entry Notes are offered and sold directly by the Company. The ownership
interest of each actual purchaser of each Book-Entry Note (a "Beneficial Owner")
will be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in Book-Entry
Notes are expected to be effected by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Book Entry Notes, except
as set forth below. To facilitate subsequent transfers, all Book-Entry Notes
deposited by Participants with DTC will be registered in the name of DTC's
partnership nominee, Cede & Co. The deposit of Book-Entry Notes with DTC and
their registration in the name of Cede & Co. will not effect any change in
beneficial ownership. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in Book-Entry Notes
represented by the Master Security or by any Global Security.
So long as the depositary for the Master Security or any Global Security,
or its nominee, is the registered owner of the Master Security or such Global
Security, the depositary or its nominee, as the case may be, will be considered
the sole owner or Holder of the Book-Entry Notes represented by such Master
Security or such Global Security for all purposes of such Notes and for all
purposes under the Indenture.
With respect to any Book-Entry Note, unless the depositary therefor has
notified the Company that it is unwilling or unable to continue as depositary
therefor, the depositary has ceased to be a clearing agency registered under the
Securities Exchange Act of 1934, the Company has delivered to the Trustee a
written notice that all Book-Entry Notes shall be exchangeable, an Event of
Default (as defined below under "Events of Default") has occurred and is
continuing with respect to the Notes represented thereby or as otherwise set
forth in the applicable Pricing Supplement, owners of beneficial interests in
such Book-Entry Note will not be entitled to have the Notes represented thereby
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Notes in exchange therefor and will not be considered
to be the owners or Holders of any Notes represented thereby under the Indenture
or such Book-Entry Note. Unless and until it is exchanged in whole or in part
for individual certificates evidencing the Book-Entry Notes represented thereby,
the Master Security or any Global Security may not be transferred except as a
whole by the depositary for the Master Security or such 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 the depositary or any nominee to a
successor depositary or any nominee of such successor.
The Company expects that conveyance of notices and other communications by
DTC to Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. In addition, neither DTC nor
Cede & Co. will consent or vote with respect to Notes. The Company has been
advised that DTC's usual procedure is to mail an omnibus proxy to the Company as
soon as possible after the record date with respect to such consent or vote. The
omnibus proxy would assign Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Notes are credited on such record date
(identified in a listing attached to the omnibus proxy).
Settlement for Book-Entry Notes will be made by the purchasers thereof in
immediately available funds. As long as the depositary continues to make its
same-day funds settlement system available to the Company, all payments of
principal of (and premium, if any) and interest on a Book-
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Entry Note held by the depositary or its nominee will be made by the Company in
immediately available funds.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, Book-Entry Notes will
trade in the depositary's same-day funds settlement system, and secondary market
trading activity in those securities will therefore be required by the
depositary to settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in Book-Entry Notes.
Payments of principal of (and premium, if any) and interest, if any, on the
Book-Entry Notes represented by a Master Security or by a Global Security
registered in the name of the depositary or its nominee will be made by the
Company through the Trustee to the depositary or its nominee, as the case may
be, as the registered owner of such Master Security or such Global Security.
Neither the Company nor 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 in any Master Security or any Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company has been advised that DTC will credit the accounts of Direct
Participants with payment in amounts proportionate to their respective holdings
in any Master Security or Global Security as shown on the records of DTC. The
Company has been advised that DTC's practice is to credit Direct Participants'
accounts on the applicable payment date unless DTC has reason to believe that it
will not receive payment on such date. The Company expects that payments by
Participants to Beneficial Owners will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers. Such payments will be the responsibility of such
Participants.
FIXED RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, each Fixed
Rate Note (except any Zero Coupon Note) will bear interest from its date of
issue or from the most recent Interest Payment Date to which interest on such
Note has been paid or duly provided for, at the fixed rate per annum stated on
the face thereof and in the applicable Pricing Supplement until the principal
thereof is paid or made available for payment. Unless otherwise provided in the
applicable Pricing Supplement, interest on a Fixed Rate Note will be payable
semiannually each and (each an "Interest Payment Date") and
at maturity or upon earlier redemption or repayment. Each payment of interest in
respect of an Interest Payment Date will include interest accrued to but
excluding such Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months. Interest will be payable on
each Interest Payment Date and at maturity as specified below under "Payment of
Principal and Interest."
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its date of issue or from
the most recent Interest Payment Date to which interest on such Note has been
paid or duly provided for or if the applicable Interest Reset Dates are weekly,
from the day following the most recent Regular Record Date, at the rate per
annum determined pursuant to the interest rate formula stated therein and in the
applicable Pricing Supplement until the principal thereof is paid or made
available for payment. Interest will be payable on each Interest Payment Date
and at maturity as specified below under "Payment of Principal and Interest."
The interest rate for each Floating Rate Note will be determined by
reference to an interest rate formula which may be adjusted by adding or
subtracting the Spread and/or multiplying by the Spread Multiplier. A Floating
Rate Note may also have either or both of the following: (a) a
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maximum numerical interest rate limitation, or ceiling, on the rate of interest
which may accrue during any interest period (a "Maximum Rate") and (b) a minimum
numerical interest rate limitation, or floor, on the rate of interest which may
accrue during any interest period (a "Minimum Rate"). The "Spread" is the number
of basis points specified in the applicable Pricing Supplement as being
applicable to the interest rate for such Note and the "Spread Multiplier" is the
percentage specified in the applicable Pricing Supplement as being applicable to
the interest rate for such Note. "Index Maturity" means, with respect to a
Floating Rate Note, the period to maturity of the instrument or obligation on
which the interest rate formula is based, as specified in the applicable Pricing
Supplement. The calculation agent (the "Calculation Agent") will be specified in
the applicable Pricing Supplement with respect to the Floating Rate Notes.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually, annually or otherwise as specified in
the applicable Pricing Supplement (each an "Interest Reset Date"). Unless
otherwise specified in the applicable Pricing Supplement, the Interest Reset
Date will be, in the case of Floating Rate Notes which reset daily, each Market
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 (except as otherwise provided in the next succeeding
paragraph), the Tuesday of each week; 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 (as set forth in the applicable
Pricing Supplement) and (b) except as otherwise specified in the applicable
Pricing Supplement, with respect to Floating Rate Notes that reset daily or
weekly, the interest rate in effect for each day following the second Market Day
prior to an Interest Payment Date to, but excluding, such Interest Payment Date,
and for each day following the second Market Day prior to the maturity date,
shall be the rate in effect on such second Market Day. If any Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Market
Day with respect to such Floating Rate Note, the Interest Reset Date for such
Floating Rate Note shall be postponed to the next day that is a Market Day with
respect to such Floating Rate Note, except that, in the case of a LIBOR Note, if
such Market Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Market Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date"),
for a Prime Rate Note (the "Prime Rate Interest Determination Date"), for a CD
Rate Note (the "CD Rate Interest Determination Date"), for a CMT Rate Note (the
"CMT Rate Interest Determination Date") and for a Federal Funds Rate Note (the
"Federal Funds Rate Interest Determination Date") will be the Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date for a
LIBOR Note (the "LIBOR Interest Determination Date") will be the second London
Market Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a Treasury Rate Note (the "Treasury
Interest Determination Date") 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 usually sold at auction on the Monday of each week, unless that day is
a legal holiday, in which case the auction is usually held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week, and the Interest
Reset Date in such next succeeding week will be the Monday in such week. If an
auction date shall fall on any Interest Reset Date for a Treasury Rate Note,
then such Interest Reset Date shall instead be the first Market Day
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immediately following such auction date. The Interest Determination Date for any
other Floating Rate Note will be as specified in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date" pertaining to any Interest Determination Date will be the
earlier of (i) the tenth calendar day after such Interest Determination Date,
or, if such day is not a Market Day, the next succeeding Market Day or (ii) the
Market Day immediately preceding the applicable Interest Payment Date or the
maturity date, as the case may be.
All percentages resulting from any calculations referred to in this
Prospectus Supplement will be rounded upwards, if necessary, to the next higher
one hundred-thousandth of a percentage point (e.g., 9.876541% (or .09876541)
being rounded to 9.87655% (or .0987655)), and all U.S. dollar amounts used in or
resulting from such calculations will be rounded to the nearest cent (with one-
half cent or more being rounded upwards).
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 the
Floating Rate Notes 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 present New York law, the maximum rate of interest is 25% per
annum on a simple interest basis, with certain exceptions. The limit does not
apply to Floating Rate Notes in which $2,500,000 or more has been invested.
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 Calculation Agent's determination of any
interest rate will be final and binding in the absence of manifest error.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any), and will be payable on the dates, specified on the face of
the Commercial Paper Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Reset Date, the
Money Market Yield (calculated as described below) of the per annum rate for the
relevant Commercial Paper Interest Determination Date for commercial paper
having the specified Index Maturity 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 "Commercial Paper." In the event
that such rate is not so published prior to 3:00 P.M., New York City time, on
the relevant Calculation Date, then the Commercial Paper Rate with respect to
such Interest Reset Date shall be the Money Market Yield of such rate on such
Commercial Paper Interest Determination Date for commercial paper having the
specified Index Maturity as published by the Federal Reserve Bank of New York in
its daily statistical release, Composite 3:30 P.M. Quotations for U.S.
Government Securities," or any successor publication published by the Federal
Reserve Bank of New York ("Composite Quotations"), under the heading "Commercial
Paper" (with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If by 3:00
P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, the Commercial Paper Rate
with respect to such Interest Reset Date shall be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
per annum rates, as of 11:00 A.M., New York City time, on such Commercial Paper
Interest Determination Date, of three leading dealers of U.S. dollar commercial
paper in The City of New York selected by the Calculation Agent for U.S. dollar
commercial paper of the specified Index Maturity placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a
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nationally recognized rating agency; provided, however, that if fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the Commercial Paper Rate with respect to such Interest Reset
Date will be the Commercial Paper Rate in effect on the day prior to such
Commercial Paper Interest Determination Date (or, if the Initial Interest Rate
is then in effect, the Commercial Paper Rate will be the Initial Interest Rate
and will not be adjusted by any Spread and/or Spread Multiplier).
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
360 X D
Money Market Yield = 100 X ------------
360 - (D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to, if the Index
Maturity approximately corresponds to the length of the period for which such
rate is being determined, the actual number of days in such period and,
otherwise, the actual number of days in the period from, and including, the
Interest Reset Date to, but excluding, the day that numerically corresponds to
such Interest Reset Date (or, if there is not any such numerically corresponding
day, the last day) in the calendar month that is the number of months
corresponding to the specified Index Maturity after the month in which such
Interest Reset Date falls.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any), and
will be payable on the dates, specified on the face of the Prime Rate Note and
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Reset Date, the rate set forth for the
relevant Prime Rate Interest Determination Date in H.15(519) under the heading
"Bank Prime Loan." In the event that such rate is not published prior to 3:00
P.M., New York City time, on the relevant Calculation Date, then the Prime Rate
with respect to such Interest Reset Date will be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on 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)
("Reuters Screen NYMF Page") as such bank's prime rate or base lending rate as
in effect for such Prime Rate Interest Determination Date. If fewer than four
such rates appear on the Reuters Screen NYMF Page on such Prime Rate Interest
Determination Date, the Prime Rate with respect to such Interest Reset Date will
be the arithmetic mean of the prime rates or base lending rates (quoted on the
basis of the actual number of days in the year divided by a 360-day year) as of
the close of business on such Prime Rate Interest Determination Date of three
major banks in The City of New York selected by the Calculation Agent; provided,
however, that if fewer than three banks selected as aforesaid by the Calculation
Agent are quoting as mentioned in this sentence, the Prime Rate with respect to
such Interest Reset Date will be the Prime Rate in effect on the day prior to
such Prime Rate Interest Determination Date (or, if the Initial Interest Rate is
then in effect, the Prime Rate will be the Initial Interest Rate and will not be
adjusted by any Spread or Spread Multiplier).
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any), and will be
payable on the dates, specified on the face of the LIBOR Note and in the
applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, LIBOR,
with respect to any Interest Reset Date, will be determined by the Calculation
Agent in accordance with the following provisions:
(i) On the relevant LIBOR Interest Determination Date, LIBOR will be
determined on the basis of the offered rate for deposits in U.S. dollars
having the specified Index Maturity, commencing on the second London Market
Day immediately following such LIBOR Interest Determination Date, which
appears on the display designated as Page 3750 on the Dow Jones Telerate
Service (or such other page as may replace Page 3750 on that service for
the purpose of displaying London interbank offered rates of major banks)
("Telerate Page 3750") as of 11:00 A.M., London time. If no such offered
rate appears, LIBOR with respect to such Interest Reset Date will be
determined as described in (ii) below.
(ii) With respect to any LIBOR Interest Determination Date on which no
such offered rate for the applicable index Maturity appears on Telerate
Page 3750 as described in (i) above, LIBOR will be determined on the basis
of the rates at approximately 11:00 A.M., London time, on such LIBOR
Interest Determination Date at which deposits in U.S. dollars having the
specified Index Maturity are offered to prime banks in the London interbank
market by four major banks in the London interbank market selected by the
Calculation Agent commencing on the second London Market Day immediately
following such LIBOR Interest Determination Date and in a principal amount
equal to an amount that in the Calculation Agent's judgment is
representative for a single transaction in such market at such time (a
"Representative Amount"). The Calculation Agent will request the principal
London office of each of such banks to provide a quotation of its rate. If
at least two such quotations are provided, LIBOR with respect to such
Interest Reset Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR with respect to such Interest
Reset Date will be the arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such Interest Reset Date by three major
banks in The City of New York, selected by the Calculation Agent, for loans
in U.S. dollars to leading European banks having the specified Index
Maturity commencing on the Interest Reset Date and in a Representative
Amount; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as mentioned in this
sentence, LIBOR with respect to such Interest Reset Date will be the LIBOR
in effect on such LIBOR Interest Determination Date (or, if the Initial
Interest Rate is then in effect, LIBOR will be the Initial Interest Rate
and will not be adjusted by any Spread or Spread Multiplier).
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any), and will be payable on the dates, specified on the face of the Treasury
Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Reset Date, the rate for the auction
on the relevant Treasury Interest Determination Date of direct obligations of
the United States ("Treasury bills") having the specified Index Maturity as
published in H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Auction Average (investment)" or, if not so published by 3:00 P.M., New
York City time, on the relevant Calculation Date, the Bond Equivalent Yield (as
defined below) of the auction average rate for such auction as otherwise
announced by the United States Department of the Treasury. In the event that the
results of such auction of Treasury bills having the specified Index Maturity
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 for such week,
then the Treasury Rate shall be the rate set forth in H.15(519) for the relevant
Treasury Interest Determination Date for the specified Index Maturity under the
heading "U.S. Government Securities/Treasury Bills/Secondary Market." In the
event
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such rate is not so published by 3:00 P.M., New York City time, on the relevant
Calculation Date, the Treasury Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be the Bond Equivalent
Yield of the arithmetic mean of the secondary market bid rates as of
approximately 3:30 P.M., New York City time, on such Treasury Interest
Determination Date, of three primary United States government securities dealers
in The City of New York selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if fewer than three such dealers selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
the Treasury Rate with respect to such Interest Reset Date will be the Treasury
Rate in effect on such Treasury Interest Determination Date (or, if the Initial
Interest Rate is then in effect, the Treasury Rate will be the Initial Interest
Rate and will not be adjusted by any Spread or Spread Multiplier).
"Bond Equivalent Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
D X N
Bond Equivalent Yield = 100 X ---------------
360 - (D X M)
where "D" refers to the per annum rate for Treasury bills (or, in the case of a
CMT Rate Note, Treasury Notes), quoted on a bank discount basis and expressed as
a decimal; "N" refers to 365 or 366, as the case may be; and "M" refers to, if
the Index Maturity approximately corresponds to the length of the period for
which such rate is being determined, the actual number of days in such period
and, otherwise, the actual number of days in the period from, and including, the
Interest Reset Date to, but excluding, the day that numerically corresponds to
that Interest Reset Date (or, if there is not any such numerically corresponding
day, the last day) in the calendar month that is the number of months
corresponding to the specified Index Maturity after the month in which that
Interest Reset Date occurs.
CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rates (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any), and will
be payable on the dates, specified on the face of the CMT Rate Note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Reset Date, the treasury constant maturity
rate for direct obligations of the United States ("Treasury Notes") on the
relevant CMT Rate Interest Determination Date for the relevant Index Maturity as
published in H.15(519) under the heading "U.S. Government Securities/Treasury
Constant Maturities." In the event that such rate is not published by 3:00 P.M.,
New York City time, on the relevant Calculation Date, the CMT Rate will be the
Bond Equivalent Yield of the arithmetic mean of the secondary market bid rates
as of approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date of three primary United States government securities dealers
in The City of New York selected by the Calculation Agent for the issue of
Treasury Notes with a remaining maturity closest to the Index Maturity;
provided, however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the CMT Rate with
respect to such Interest Reset Date will be the CMT Rate in effect on the day
prior to such CMT Rate Interest Determination Date (or, if the Initial Interest
Rate is then in effect, the CMT Rate will be the Initial Interest Rate and will
not be adjusted by any Spread or Spread Multiplier).
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any), and will
be payable on the dates, specified on the face of the CD Rate Note and in the
applicable Pricing Supplement.
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<PAGE> 29
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Reset Date, the rate for the relevant CD
Rate Interest Determination Date for negotiable certificates of deposit having
the specified Index Maturity as published in H.15(519) under the heading "CDs
(Secondary Market)." In the event that such rate is not published prior to 3:00
P.M., New York City time, on the relevant Calculation Date, then the CD Rate
with respect to such Interest Reset Date shall be the rate on such CD Rate
Interest Determination Date for negotiable certificates of deposit having the
specified Index Maturity as published in Composite Quotations under the heading
"Certificates of Deposit." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not published in either H.15(519) or Composite
Quotations, the CD Rate with respect to such Interest Reset Date shall be
calculated by the Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates, as of 10:00 A.M., New York City time, on such CD
Rate Interest Determination Date, 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 U.S. dollar certificates of deposit of major
United States money market banks with a remaining maturity closest to the
specified Index Maturity and in a Representative Amount; provided, however, that
if fewer than three dealers selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, the CD Rate with respect to such Interest
Reset Date will be the CD Rate in effect on the day prior to such CD Rate
Interest Determination Date (or, if the Initial Interest Rate is then in effect,
the CD Rate will be the Initial Interest Rate and will not be adjusted by any
Spread or Spread Multiplier).
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any), and will be payable on the dates, specified on the face of
the Federal Funds Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Reset Date, the rate on the
relevant Federal Funds Rate Interest Determination Date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)." In the
event that such rate is not published prior to 3:00 P.M., New York City time, on
the relevant Calculation Date, then the Federal Funds Rate with respect to such
Interest Reset Date will be the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, the Federal Funds Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be the arithmetic mean of
the rates, as of 9:00 A.M., New York City time, on such Federal Funds Rate
Interest Determination Date, for the last transaction in overnight U.S. dollar
Federal Funds arranged by three leading brokers of U.S. dollar Federal Funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if fewer than three brokers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the Federal Funds
Rate with respect to such Interest Reset Date will be the Federal Funds Rate in
effect on the day prior to such Federal Funds Rate Interest Determination Date
(or, if the Initial Interest Rate is then in effect, the Federal Funds Rate will
be the Initial Interest Rate and will not be adjusted by any Spread or Spread
Multiplier).
PAYMENT OF PRINCIPAL AND INTEREST
Payments of principal of (and premium, if any) and interest on all
Book-Entry Notes will be payable in accordance with the procedures of the
depositary and its Participants in effect from time to time as described under
"Book-Entry Notes" above. Unless otherwise specified in the applicable Pricing
Supplement, payments of principal of (and premium, if any) and interest on all
Fixed Rate
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Notes and Floating Rate Notes which are Certificated Notes will be made in the
applicable Specified Currency. Notwithstanding the foregoing, payments of
principal of (and premium, if any) and interest on Notes denominated in other
than U.S. dollars will nevertheless be made in U.S. dollars (i) with respect to
any Certificated Notes, at the option of the Holders thereof under the
procedures described in the two following paragraphs and (ii) with respect to
any Notes, at the option of the Company in the case of imposition of exchange
controls or other circumstances beyond the control of the Company as described
in the last paragraph under this heading. In the case of an Indexed Note, the
amount of principal payable on such Note may be determined by reference to an
index or formula described in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, and except
as provided in the next paragraph, payments of principal (and premium, if any)
and interest with respect to any Certificated Note denominated in other than
U.S. dollars will be made in U.S. dollars if the registered Holder of such Note
on the relevant Regular Record Date or at maturity, as the case may be, has
transmitted a written request for such payment in U.S. dollars to the Trustee at
its Corporate Trust Office in The City of New York on or prior to such Regular
Record Date or the date 15 days prior to maturity, as the case may be. Such
request may be in writing (mailed or hand delivered) or by telecopier. Any such
request made with respect to any Certificated Note by a registered Holder will
remain in effect with respect to any further payments of principal (and premium,
if any) and interest with respect to such Note payable to such Holder, unless
such request is revoked on or prior to the relevant Regular Record Date or the
date 15 days prior to maturity, as the case may be. Holders of Certificated
Notes denominated in other than U.S. dollars whose Notes are registered in the
name of a broker or nominee should contact such broker or nominee to determine
whether and how an election to receive payments in U.S. dollars may be made.
Unless otherwise specified in the applicable Pricing Supplement, the U.S.
dollar amount to be received by a Holder of a Note (including a Book-Entry Note)
denominated in other than U.S. dollars who elects to receive payment in U.S.
dollars will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent (as defined below) as of 11:00 A.M., New
York City time, on the second Business Day next 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 all Holders of Notes electing to
receive U.S. dollar payments and at which the applicable dealer commits to
execute a contract. If three such bid quotations are not available on the second
Business Day preceding the date of payment of principal (and premium, if any) or
interest with respect to any Note, such payment will be made in the Specified
Currency. All currency exchange costs associated with any payment in U.S.
dollars on any such Note will be borne by the Holder thereof by deductions from
such payment. Unless otherwise provided in the applicable Pricing Supplement,
Goldman, Sachs & Co. will be the Exchange Rate Agent (the "Exchange Rate Agent")
with respect to the Notes.
Interest will be payable to the person in whose name a Note is registered
at the close of business on the Regular Record Date next preceding each Interest
Payment Date; provided, however, that interest payable at maturity will be
payable to the person to whom principal shall be payable. The first payment of
interest on any Note originally issued between a Regular Record Date and an
Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date to the registered owner on such next
succeeding Regular Record Date. Unless otherwise indicated in the applicable
Pricing Supplement, the "Regular Record Date" with respect to any Floating Rate
Note or Fixed Rate Note shall be the date 15 calendar days prior to each
Interest Payment Date, whether or not such date shall be a Market or Business
Day.
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
which reset daily, on the dates specified in the applicable Pricing Supplement;
in the case of Floating Rate Notes which reset weekly, on the third Wednesday of
March, June, September and December of each year; in the case of Floating Rate
Notes which reset monthly, on the third Wednesday of each month or on the third
Wednesday
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of March, June, September and December of each year (as indicated in the
applicable Pricing Supplement); in the case of Floating Rate Notes which reset
quarterly, on the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes which reset semi-annually, on the third
Wednesday of the two months of each year specified in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which reset annually, on the
third Wednesday of the month specified in the applicable Pricing Supplement
(each an "Interest Payment Date"); and, in each case, at maturity.
Payments of interest on any Fixed Rate Note or Floating Rate Note with
respect to any Interest Payment Date or at maturity will include interest
accrued to but excluding such Interest Payment Date and such maturity date, as
the case may be.
With respect to a Floating Rate Note, accrued interest from the date of
issue or from the last date to which interest has been paid or duly provided for
is calculated by multiplying the face amount of such Floating Rate Note by an
accrued interest factor. Such accrued interest factor is computed by adding the
interest factor calculated for each day from the date of issue, or from the last
date to which interest has been paid or duly provided for, to but excluding the
date for which accrued interest is being calculated. The interest factor
(expressed as a decimal) for each such day is computed by dividing the interest
rate (expressed as a decimal) applicable to such date by 360, in the case of
Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate Notes or
Federal Funds Rate Notes, or by the actual number of days in the year, in the
case of Treasury Rate Notes or CMT Rate Notes.
Except as set forth above in the third paragraph under "Floating Rate
Notes" or in the applicable Pricing Supplement, the interest rate with respect
to a Floating Rate Note in effect on each day shall be (i) if such day is an
Interest Reset Date, the interest rate determined with respect to such Interest
Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate
determined with respect to the most recent Interest Reset Date.
If any Interest Payment Date for any Fixed Rate Note would fall on a day
that is not a Market Day, the interest payment shall be postponed to the next
day that is a Market Day, and no interest on such payment shall accrue for the
period from and after the Interest Payment Date. If the maturity date or any
earlier redemption or repayment date of a Fixed Rate Note would fall on a day
that is not a Market Day, the payment of principal, premium, if any, and
interest otherwise due on such day will be made on the next succeeding Market
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.
If any Interest Payment Date for any Floating Rate Note (other than an
Interest Payment Date which is the maturity date or earlier redemption or
repayment date for such Note) would fall on a day that is not a Market Day with
respect to such Floating Rate Note, such Interest Payment Date will be the
following day that is a Market Day with respect to such Floating Rate Note,
except that, in the case of a LIBOR Note, if such Market Day is in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding day that is a Market Day with respect to such LIBOR Note (and interest
shall accrue to, but excluding, such Interest Payment Date as rescheduled). 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 Market Day, the payment of principal,
premium, if any, and interest otherwise due on such day will be made on the next
succeeding Market 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.
Payment of the principal of (and premium, if any) and any interest due with
respect to any Certificated Note at maturity to be made in U.S. dollars will be
made in immediately available funds upon surrender of such Note at the Corporate
Trust Office of the Trustee in the Borough of Manhattan, The City of New York,
provided that the Certificated Note is presented to the Paying Agent in time for
the Paying Agent to make such payments in such funds in accordance with its
normal procedures. Payments of interest with respect to any Certificated Note to
be made in U.S.
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dollars other than at maturity will be made by check mailed to the address of
the person entitled thereto as it appears in the Security Register or by wire
transfer to such account as may have been appropriately designated by such
person as provided in such Note.
Unless otherwise specified in the applicable Pricing Supplement, payments
of interest and principal (and premium, if any) with respect to any Certificated
Note to be made in a Specified Currency other than U.S. dollars will be made by
wire transfer of immediately available funds to such account with a bank located
in the country issuing the Specified Currency (or, with respect to Certificated
Notes denominated in ECU, to an ECU account) or other jurisdiction acceptable to
the Company and the Trustee as shall have been designated at least five Business
Days prior to the Interest Payment Date or Stated Maturity, as the case may be,
by the registered Holder of such Note on the relevant Regular Record Date or
maturity, provided that, in the case of payment of principal (and premium, if
any) and any interest due at maturity, the Note is presented to the Paying Agent
in time for the Paying Agent to make such payments in such funds in accordance
with its normal procedures. Such designation shall be made by filing the
appropriate information with the Trustee at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, and, unless revoked, any such
designation made with respect to any Certificated Note by a registered Holder
will remain in effect with respect to any further payments with respect to such
Note payable to such Holder. If a payment with respect to any such Note cannot
be made by wire transfer because the required designation has not been received
by the Trustee on or before the requisite date or for any other reason, a notice
will be mailed to the Holder at its registered address requesting a designation
pursuant to which such wire transfer can be made and, upon the Trustee's receipt
of such a designation, such payment will be made within five Business Days of
such receipt. The Company will pay any administrative costs imposed by banks in
connection with making payments by wire transfer, but any tax, assessment or
governmental charge imposed upon payments will be borne by the Holders of the
Certificated Notes in respect of which payments are made.
If the principal of (and premium, if any) or interest on any Note is
payable in other than U.S. dollars and such Specified Currency (other than ECUs)
is not available due to the imposition of exchange controls or other
circumstances beyond the control of the Company, the Company will be entitled to
satisfy its obligations to the Holder of such Note by making such payment
(including any such payment at maturity) in U.S. dollars on the basis of the
most recently available Exchange Rate. If the principal of (and premium, if any)
and interest on any Note is payable in ECUs, and the ECU is not available due to
the imposition of exchange controls or other circumstances beyond the control of
the Company or the ECU is used neither as the unit of account of the European
Communities nor as the currency of the European Union, the Company will be
entitled to satisfy its obligations to the Holder of such Note by making such
payment (including any such payment at maturity) as described under "Foreign
Currency Risks -- Notes Denominated in ECUs." Any payment made under such
circumstances in such a manner will not constitute an Event of Default under any
Note or the Indenture.
REDEMPTION AND REPAYMENT
The Notes will not be subject to any sinking fund and, unless an initial
date on which a Note may be redeemed by the Company (a "Redemption Commencement
Date") or a date on which a Note may be repayable at the option of a holder
thereof (a "Repayment Date") is specified in the applicable Pricing Supplement,
will not be redeemable or repayable prior to their stated maturity. If a
Redemption Commencement Date or Repayment Date is so specified with respect to
any Note, the applicable Pricing Supplement will also specify one or more
redemption or repayment prices (expressed as a percentage of the principal
amount of such Note) ("Redemption Prices" or "Repayment Prices," respectively)
and the redemption or repayment period or periods ("Redemption Periods" or
"Repayment Periods," respectively) during which such Redemption Prices or
Repayment Prices shall apply. Unless otherwise specified in the Pricing
Supplement, any such Note
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<PAGE> 33
shall be redeemable at the option of the Company or repayable at the option of
the holder thereof (as specified in such Pricing Supplement) at any time on or
after such specified Redemption Commencement Date or Repayment Date, as the case
may be, at the specified Redemption Price or Repayment Price applicable to the
Redemption Period or Repayment Period during which such Note is to be redeemed
or repaid, together with interest accrued to the redemption or repayment date.
With respect to the redemption of Global Securities, the Depositary advises that
if less than all of the Notes with like tenor or terms are to be redeemed, the
particular interests (in integral multiples of $1,000) in the Book-Entry Notes
representing the Notes to be redeemed shall be selected by the Depository's
impartial lottery procedures.
In the event that the option of the holder to elect repayment described
above is deemed to be a "tender offer" within the meaning of Rule 14e-1 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Company will comply with Rule 14e-1 as then in effect to the extent applicable.
RISKS RELATING TO INDEXED NOTES
IN ADDITION TO POTENTIAL FOREIGN CURRENCY RISKS AS DESCRIBED BELOW UNDER
"FOREIGN CURRENCY RISKS," AN INVESTMENT IN INDEXED NOTES PRESENTS CERTAIN
SIGNIFICANT RISKS NOT ASSOCIATED WITH OTHER TYPES OF SECURITIES. CERTAIN RISKS
ASSOCIATED WITH A PARTICULAR INDEXED NOTE MAY BE SET FORTH MORE FULLY IN THE
APPLICABLE PRICING SUPPLEMENT. INDEXED NOTES MAY PRESENT A HIGH LEVEL OF RISK,
AND INVESTORS IN CERTAIN INDEXED NOTES MAY LOSE THEIR ENTIRE INVESTMENT.
The treatment of Indexed Notes for United States federal income tax
purposes is often unclear due to the absence of any authority specifically
addressing the issues presented by any particular Indexed Note. Accordingly,
investors in Indexed Notes should, in general, be capable of independently
evaluating the federal income tax consequences applicable in their particular
circumstances of purchasing an Indexed Note.
LOSS OF PRINCIPAL OR INTEREST
The principal amount of an Indexed Note payable at maturity, and/or the
amount of interest payable on an interest payment date, will be determined by
reference to one or more currencies (including baskets of currencies), one or
more commodities (including baskets of commodities), one or more securities
(including baskets of securities) and/or any other index (each an "Index"). The
direction and magnitude of the change in the value of the relevant Index will
determine either or both the principal amount of an Indexed Note payable at
maturity or the amount of interest payable on an interest payment date. The
terms of a particular Indexed Note may or may not include a guaranteed return of
a percentage of the face amount at maturity or a minimum interest rate.
Accordingly, the Holder of an Indexed Note may lose all or a portion of the
principal invested in an Indexed Note and may receive no interest thereon.
VOLATILITY
Certain Indices are highly volatile. The expected principal amount payable
at maturity of, or the interest rate on, an Indexed Note based on a volatile
Index may vary substantially from time to time. Because the principal amount
payable at the maturity of, or interest payable on, an Indexed Note is generally
calculated based on the value of the relevant Index on a specified date or over
a limited period of time, volatility in the Index increases the risk that the
return on the Indexed Notes may be adversely affected by a fluctuation in the
level of the relevant Index.
The volatility of an Index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets, any of which could adversely affect the value of an Indexed
Note.
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AVAILABILITY AND COMPOSITION OF INDICES
Certain Indices reference several different currencies, commodities,
securities or other financial instruments. The compiler of such an Index
typically reserves the right to alter the composition of the Index and the
manner in which the value of the Index is calculated. Such an alteration may
result in a decrease in the value of or return on an indexed Note which is
linked to such Index.
An Index may become unavailable due to such factors as war, natural
disasters, cessation of publication of the Index, or suspension of or disruption
in trading in the currency or currencies, commodity or commodities, security or
securities or other financial instrument or instruments comprising or underlying
such Index. If an Index becomes unavailable, the determination of principal of
or interest on an Indexed Note may be delayed or an alternative method may be
used to determine the value of the unavailable Index. Alternative methods of
valuation are generally intended to produce a value similar to the value
resulting from reference to the relevant Index. However, it is unlikely that
such alternative methods of valuation will produce values identical to those
which would be produced were the relevant Index to be used. An alternative
method of valuation may result in a decrease in the value of or return on an
Indexed Note.
Certain Indexed Notes are linked to Indices which are not commonly utilized
or have been recently developed. The lack of a trading history may make it
difficult to anticipate the volatility or other risks to which such a Note is
subject. In addition, there may be less trading in such Indices or instruments
underlying such Indices, which could increase the volatility of such Indices and
decrease the value of or return on Indexed Notes relating thereto.
FOREIGN CURRENCY RISKS
GENERAL
THIS PROSPECTUS SUPPLEMENT AND THE APPLICABLE PRICING SUPPLEMENT DO NOT
DESCRIBE ALL THE RISKS OF AN INVESTMENT IN THE NOTES DENOMINATED IN OTHER THAN
U.S. DOLLARS. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN THE NOTES DENOMINATED IN A
CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER THAN U.S. DOLLARS. SUCH NOTES
ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
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 (AND
PREMIUM, IT ANY) AND INTEREST ON THE NOTES. SUCH PERSONS SHOULD CONSULT THEIR
OWN FINANCIAL AND LEGAL ADVISORS WITH REGARD TO SUCH MATTERS.
The information set forth below is by necessity incomplete and prospective
purchasers of Foreign Currency Notes should consult their own financial and
legal advisors with respect to any matters that may affect the purchase or
holding of a Foreign Currency Note in a Specified Currency (as defined below).
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in 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, without limitation,
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 foreign exchange controls by
either the U.S. or foreign governments. Such risks generally depend on factors
over which the Company has no control, such as economic and political events and
the supply of and demand for the relevant currencies. In recent years, rates
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of exchange between the U.S. dollar and certain foreign currencies have been
highly volatile and such volatility may be expected in the future. Fluctuations
in any particular exchange rate that have occurred in the past are not
necessarily indicative, however, of fluctuations in the rate that may occur
during the term of any Note. Depreciation of the Specified Currency in which a
Note is denominated against the U.S. dollar could result in a decrease in the
effective yield of such Note and, in certain circumstances, could result in a
loss to the investor on a U.S. dollar basis.
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 the Specified Currency at a Note's maturity or on any other payment date in
respect thereof. Even if there are no actual exchange controls, it is possible
that the Specified Currency for any particular Note would not be available on
any one or more days on which payment is due in respect of such Note. In that
event, the Company will be entitled to make all payments due in respect of such
Note on any such payment date (including maturity) in U.S. dollars on the basis
of the most recently available Exchange Rate. See "Description of
Notes -- Payment of Principal and Interest" above.
Unless otherwise indicated in the applicable Pricing Supplement, payments
on Notes made in a Specified Currency other than U.S. dollars may be made, at
the Company's option, from an account with a bank located in the country issuing
the Specified Currency (or, with respect to Notes denominated in ECUs, from an
ECU account). See "Description of Notes -- Payment of Principal and Interest."
Except as otherwise indicated in the applicable Pricing Supplement or as
permitted by applicable law, Notes denominated in other than U.S. dollars or
ECUs will not be sold in, or to residents of, the country issuing the Specified
Currency in which particular Notes are denominated.
GOVERNING LAW AND JUDGMENTS
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York. A judgment for money in an action based
on a Note denominated in a foreign currency or currency unit in a federal or
state court in the United States ordinarily would be enforced in the United
States only in United States dollars. The date used to determine the rate of
conversion of the currency or currency unit in which any particular Note is
denominated into United States dollars will depend upon various factors,
including which court renders the judgment. Under Section 27 of the New York
Judiciary Law, a state court in the State of New York rendering a judgment on a
Note denominated in a foreign currency would be required to render such judgment
in the specified currency, and such judgment would be converted into United
States dollars at the exchange rate prevailing on the date of entry of the
judgment.
NOTES DENOMINATED IN ECUS
VALUE OF THE ECU
Except as otherwise provided below, the value of the ECU for the purpose of
any Notes denominated in ECUs, as referred to in Article 109G and 109L.4 of the
Treaty establishing the European Community, as amended (the "EC Treaty"), is
equal to the value of the ECU that is at present used as the unit of account of
the European Communities and which is from time to time valued on the basis of
specified amounts of the currencies of the member states of the European
Community as shown below.
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Pursuant to Council Regulation (EEC) No. 1971/89 of 19th June, 1989, the
ECU is at present defined as the sum of the following components:
<TABLE>
<S> <C>
0.6242 German mark 0.130 Luxembourg franc
0.08784 Pound sterling 0.1976 Danish krone
1.332 French Francs 0.008552 Irish Pound
1.8 Italian Lire 1.440 Greek drachmas
0.2198 Dutch guilder 6.885 Spanish pesetas
3.301 Belgian francs 1.393 Portuguese escudos
</TABLE>
Article 109G of the EC Treaty, as amended by the Treaty on European Union,
is applicable from November 1, 1993. This Article provides: "The currency
composition of the ECU shall not be changed. From the start of the third stage,
the value of the ECU shall be irrevocably fixed in accordance with Article
109L.4." Changes as to the nature or composition of the ECU may be made by the
European Community in conformity with the provisions of the EC Treaty.
References herein to the ECU shall be deemed to be references to the ECU as so
changed.
CHOICE OF COMPONENT CURRENCIES FOR FUTURE PAYMENTS
With respect to any payment date in respect of Notes denominated in ECUs on
which the ECU is not available due to the imposition of exchange controls or
other circumstances beyond the control of the Company or the ECU is used neither
as the unit of account of the European Communities nor as the currency of the
European Union, the Exchange Rate Agent shall, without liability on its part,
choose a component currency of the ECU (the "chosen currency") in which all
payments due on that payment date with respect to such Notes shall be made.
Notice of the chosen currency selected by the Exchange Rate Agent shall, where
practicable, be given to Holders of Notes as set forth above under "Description
of Notes -- Notices." The amount of each payment in the chosen currency shall be
computed on the basis of the equivalent of the ECU in that currency, determined
as set forth herein as of the fourth Business Day prior to the date on which
such payment is due.
CHOICE OF COMPONENT CURRENCY FOR PAYMENTS ALREADY DUE
On the first Business Day on which the ECU is not available due to the
imposition of exchange controls or other circumstances beyond the control of the
Company or the ECU is used neither as the unit of account of the European
Communities nor as the currency of the European Union, the Exchange Rate Agent
shall, without liability on its part, choose a component currency of the ECU
(the "chosen currency") in which all payments of principal, interest or other
amounts in respect of Notes denominated in ECU having a payment date prior
thereto but not yet presented for payment are to be made. The amount of each
payment in the chosen currency shall be computed on the basis of the equivalent
of the ECU in that currency, determined as set forth herein as of such first
Business Day.
DETERMINATION OF EQUIVALENT IN COMPONENT CURRENCY
The equivalent of the ECU in the relevant chosen currency as of any date
(the "Day of Valuation") shall be determined on the following basis by the
Exchange Rate Agent. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts which were components of the ECU
when the ECU was most recently used as the unit of account of the European
Communities. The equivalent of the ECU in the chosen currency shall be
calculated by first aggregating the U.S. dollar equivalents of the Components
and then, using the rate used for determining the U.S. dollar equivalent of the
Component in the chosen currency as set forth below, calculating the equivalent
in the chosen currency of such aggregate amount in U.S. dollars.
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U.S. DOLLAR EQUIVALENT OF COMPONENT CURRENCIES
The U.S. dollar equivalent of each of the Components shall be determined by
the Exchange Rate Agent, on the basis of the middle spot delivery quotations
prevailing at 2.30 p.m. (Luxembourg time) on the Day of Valuation of one or more
leading banks, as selected by the Exchange Rate Agent (following consultation,
if practicable, with the Company), in the country of issue of the Component in
question.
NO DIRECT QUOTATION FOR COMPONENT CURRENCY
If no direct quotations are available for a Component as of a Day of
Valuation from any of the banks selected by the Exchange Rate Agent for this
purpose because foreign exchange markets are closed in the country of issue of
that currency or for any other reason, the most recent direct quotations for
that currency obtained by the Exchange Rate Agent shall be used in computing the
equivalents of the ECU on such Day of Valuation; provided, however, that such
most recent quotations may be used only if they were prevailing in the country
of issue not more than two Business Days before such Day of Valuation. Beyond
such period of two Business Days, the Exchange Rate Agent shall determine the
U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such component currency and for the
U.S. dollar prevailing at 2.30 p.m. (Luxembourg time) on such Day of Valuation
of one or more leading banks, as selected by the Exchange Rate Agent (following
consultation, if practicable, with the Company), in a country other than the
country of issue of such Component. Within such period of two Business Days, the
Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component
on the basis of such cross rates if the Exchange Rate Agent judges that the
equivalent so calculated is more representative than the U.S. dollar equivalent
calculated on the basis of such most recent direct quotations. Unless otherwise
specified by the Exchange Rate Agent, if there is more than one market for
dealing in any Component by reason of foreign exchange regulations or for any
other reason, the market to be referred to in respect of such currency shall be
that upon which a non-resident issuer of securities denominated in such currency
would purchase such currency in order to make payments in respect of such
securities.
EXCHANGE RATE AGENT
All determinations made by the Exchange Rate Agent shall be at its sole
discretion (except to the extent expressly provided herein or in the applicable
Pricing Supplement that any determination is subject to approval by the Company)
and, in the absence of manifest error, shall be conclusive for all purposes and
binding on Holders of the Notes and the Company, and the Exchange Rate Agent
shall have no liability therefor.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of the ownership of Notes deals only with Notes held as capital
assets by initial purchasers, and not with Notes held by special classes of
investors, such as dealers in securities or currencies, banks, tax-exempt
organizations, life insurance companies, investors that hold Notes that are a
hedge or that are hedged against currency risks or that are part of a straddle
or conversion transaction, or investors whose functional currency is not the
U.S. dollar. Moreover, the summary deals only with Notes that are due to mature
30 years or less from the date on which they are issued. The United States
federal income tax consequences of ownership of Notes that are due to mature
more than 30 years from their date of issue will be discussed in the applicable
Pricing Supplement.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), its legislative history, existing and proposed regulations thereunder,
published rulings and court decisions, all as currently in effect and all
subject to change at any time, perhaps with retroactive effect. Prospective
purchasers of Notes should consult their own tax advisors concerning the
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<PAGE> 38
consequences. in their particular circumstances, under the Code and the laws of
any other taxing jurisdiction, of the ownership of Notes.
UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest on a Note, whether payable in U.S. dollars or a currency,
composite currency or basket of currencies other than U.S. dollars (a "foreign
currency"), other than interest on a "Discount Note" that is not "qualified
stated interest" (each as defined below under "Original Issue
Discount -- General"), will be taxable to a United States Holder as ordinary
income at the time it is received or accrued, depending on the United States
Holder's method of accounting for tax purposes. A United States Holder is a
beneficial owner who or that is (i) a citizen or resident of the United States,
(ii) a domestic corporation or (iii) otherwise subject to United States federal
income taxation on a net income basis in respect of a Note.
If an interest payment is denominated in, or determined by reference to, a
foreign currency, the amount of income recognized by a cash basis United States
Holder will be the U.S. dollar value of the interest payment, based on the
exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars.
An accrual basis United States Holder may determine the amount of income
recognized with respect to an interest payment denominated in, or determined by
reference to, a foreign currency in accordance with either of two methods. Under
the first method, the amount of income accrued will be based on the average
exchange rate in effect during the interest accrual period (or, with respect to
an accrual period that spans two taxable years, the part of the period within
the taxable year). Upon receipt of the interest payment (including a payment
attributable to accrued but unpaid interest upon the sale or retirement of a
Note) denominated in, or determined by reference to, a foreign currency, the
United States Holder will recognize ordinary income or loss measured by the
difference between the average exchange rate used to accrue interest income and
the exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars.
Under the second method, the United States Holder may elect to determine
the amount of income accrued on the basis of the exchange rate in effect on the
last day of the accrual period (or, in the case of an accrual period that spans
two taxable years, the exchange rate in effect on the last day of the part of
the period within the taxable year). Additionally, if a payment of interest is
actually received within five business days of the last day of the accrual
period or taxable year, an electing accrual basis United States Holder may
instead translate such accrued interest into U.S. dollars at the exchange rate
in effect on the day of actual receipt. Any such election will apply to all debt
instruments held by the United States Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the United
States Holder, and will be irrevocable without the consent of the Internal
Revenue Service (the "Service").
ORIGINAL ISSUE DISCOUNT
General. A Note, other than a Note with a term of one year or less (a
"short-term Note"), will be treated as issued at an original issue discount (a
"Discount Note") if the excess of the Note's "stated redemption price at
maturity" over its issue price is more than a "de minimis amount" (as defined
below). Generally, the issue price of a Note will be the first price at which a
substantial amount of Notes included in the issue of which the Note is a part is
sold to other than bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers. The
stated redemption price at maturity of a Note is the total of all payments
provided by the Note that are not payments of "qualified stated interest." A
qualified stated interest payment is generally any one of a series of stated
interest payments on a Note that are unconditionally payable at least annually
at a single fixed rate (with certain exceptions for lower
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<PAGE> 39
rates paid during some periods) applied to the outstanding principal amount of
the Note. Special rules for "Variable Rate Notes" (as defined below under
"Original Issue Discount -- Variable Rate Notes") are described below under
"Original Issue Discount -- Variable Rate Notes."
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is less than 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years to its
maturity (the "de minimis amount"), then such excess, if any, constitutes "de
minimis original issue discount" and the Note is not a Discount Note. Unless the
election described below under "Election to Treat All Interest as Original Issue
Discount" is made, a United States Holder of a Note with de minimis original
issue discount must include such de minimis original issue discount in income as
stated principal payments on the Note are made. The includible amount with
respect to each such payment will equal the product of the total amount of the
Note's de minimis original issue discount and a fraction, the numerator of which
is the amount of the principal payment made and the denominator of which is the
stated principal amount of the Note.
United States Holders of Discount Notes having a maturity of more than one
year from their date of issue must include original issue discount ("OID") in
income calculated on a constant-yield method before the receipt of cash
attributable to such income, and generally will have to include in income
increasingly greater amounts of OID over the life of the Note. The amount of OID
includible in income by a United States Holder of a Discount Note is the sum of
the daily portions of OID with respect to the Discount Note for each day during
the taxable year or portion of the taxable year on which the United States
Holder holds such Discount Note ("accrued OID"). The daily portion is determined
by allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. Accrual periods with respect to a Note may be
of any length selected by the United States Holder and may vary in length over
the term of the Note as long as (i) no accrual period is longer than one year
and (ii) each scheduled payment of interest or principal on the Note occurs on
either the final or first day of an accrual period. The amount of OID allocable
to an accrual period equals the excess of (a) the product of the Discount Note's
adjusted issue price at the beginning of the accrual period and such Note's
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the sum of the payments of qualified stated interest on the Note allocable
to the accrual period. The "adjusted issue price" of a Discount Note at the
beginning of any accrual period is the issue price of the Note increased by (x)
the amount of accrued OID for each prior accrual period and decreased by (y) the
amount of any payments previously made on the Note that were not qualified
stated interest payments. For purposes of determining the amount of OID
allocable to an accrual period, if an interval between payments of qualified
stated interest on the Note contains more than one accrual period, the amount of
qualified stated interest payable at the end of the interval (including any
qualified stated interest that is payable on the first day of the accrual period
immediately following the interval) is allocated pro rata on the basis of
relative lengths to each accrual period in the interval, and the adjusted issue
price at the beginning of each accrual period in the interval must be increased
by the amount of any qualified stated interest that has accrued prior to the
first day of the accrual period but that is not payable until the end of the
interval. The amount of OID allocable to an initial short accrual period may be
computed using any reasonable method if all other accrual periods other than a
final short accrual period are of equal length. The amount of OID allocable to
the final accrual period is the difference between (x) the amount payable at the
maturity of the Note (other than any payment of qualified stated interest) and
(y) the Note's adjusted issue price as of the beginning of the final accrual
period.
Acquisition Premium. A United States Holder that purchases a Note for an
amount less than or equal to the sum of all amounts payable on the Note after
the purchase date, other than payments of qualified stated interest, but in
excess of its adjusted issue price (as determined above under "Original Issue
Discount -- General") (any such excess being "acquisition premium") and that
does not make the election described below under "Election to Treat All Interest
as Original Issue Discount" is permitted to reduce the daily portions of OID by
a fraction, the numerator of which is
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<PAGE> 40
the excess of the United States Holder's adjusted basis in the Note immediately
after its purchase over the adjusted issue price of the Note, and the
denominator of which is the excess of the sum of all amounts payable on the Note
after the purchase date, other than payments of qualified stated interest, over
the Note's adjusted issue price.
Market Discount. A Note, other than a short-term Note, will be treated as
purchased at a market discount (a "Market Discount Note") if (i) the amount for
which a United States Holder purchased the Note is less than the Note's issue
price (as determined above under "Original Issue Discount -- General") and (ii)
the Note's stated redemption price at maturity or, in the case of a Discount
Note, the Note's "revised issue price," exceeds the amount for which the United
States Holder purchased the Note by at least 1/4 of 1 percent of such Note's
stated redemption price at maturity or revised issue price, respectively,
multiplied by the number of complete years to the Note's maturity. If such
excess is not sufficient to cause the Note to be a Market Discount Note, then
such excess constitutes "de minimis market discount" and such Note is not
subject to the rules discussed in the following paragraphs. The Code provides
that, for these purposes, the "revised issue price" of a Note generally equals
its issue price, increased by the amount of any OID that has accrued on the
Note.
Any gain recognized on the maturity or disposition of a Market Discount
Note will be treated as ordinary income to the extent that such gain does not
exceed the accrued market discount on such Note. Alternatively, a United States
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Note. Such an election shall apply to all debt
instruments with market discount acquired by the electing United States Holder
on or after the first day of the first taxable year to which the election
applies. This election may not be revoked without the consent of the Service.
Market discount on a Market Discount Note will accrue on a straight-line
basis unless the United States Holder elects to accrue such market discount on a
constant-yield method. Such an election shall apply only to the Note with
respect to which it is made and may not be revoked without the consent of the
Service. A United States Holder of a Market Discount Note that does not elect to
include market discount in income currently generally will be required to defer
deductions for interest on borrowings allocable to such Note in an amount not
exceeding the accrued market discount on such Note until the maturity or
disposition of such Note.
Pre-Issuance Accrued Interest. If (i) a portion of the initial purchase
price of a Note is attributable to pre-issuance accrued interest, (ii) the first
stated interest payment on the Note is to be made within one year of the Note's
issue date and (iii) the payment will equal or exceed the amount of preissuance
accrued interest, then the United States Holder may elect to decrease the issue
price of the Note by the amount of pre-issuance accrued interest. In that event,
a portion of the first stated interest payment will be treated as a return of
the excluded pre-issuance accrued interest and not as an amount payable on the
Note.
Notes Subject to Contingencies Including Optional Redemption. In general,
if a Note provides for an alternative payment schedule or schedules applicable
upon the occurrence of a contingency or contingencies and the timing and amounts
of the payments that comprise each payment schedule are known as of the issue
date, the yield and maturity of the Note are determined by assuming that the
payments will be made according to the Note's stated payment schedule. If,
however, based on all the facts and circumstances as of the issue date, it is
more likely than not that the Note's stated payment schedule will not occur,
then, in general, the yield and maturity of the Note are computed based on the
payment schedule most likely to occur. The Company's determination of the
applicable payment schedule is binding on all holders of a Note unless such
holder explicitly discloses to the Service that its determination differs from
that of the Company.
Notwithstanding the general rules for determining yield and maturity in the
case of Notes subject to contingencies, if the Company has an unconditional
option or options to redeem a Note, or the holder has an unconditional option or
options to cause a Note to be repurchased, prior to the
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<PAGE> 41
Note's stated maturity, then (i) in the case of an option or options of the
Company, the Company will be deemed to exercise or not exercise an option or
combination of options in the manner that minimizes the yield on the Note and
(ii) in the case of an option or options of the holder, the holder will be
deemed to exercise or not exercise an option or combination of options in the
manner that maximizes the yield on the Note. For purposes of those calculations,
the yield on the Note is determined by using (i) any date on which the Note may
be redeemed or repurchased as the maturity date and (ii) the amount payable on
such date in accordance with the terms of the Note as the principal amount
payable at maturity.
If a contingency (including the exercise of an option) actually occurs or
does not occur contrary to an assumption made according to the above rules (a
"change in circumstances") then, except to the extent that a portion of the Note
is repaid as a result of a change in circumstances and solely for purposes of
the accrual of OID, the yield and maturity of the Note are redetermined by
treating the Note as reissued on the date of the change in circumstances for an
amount equal to the Note's adjusted issue price on that date.
Election to Treat All Interest as Original Issue Discount. A United States
Holder may elect to include in gross income all interest that accrues on a Note
using the constant-yield method described above under the heading "Original
Issue Discount -- General," with the modifications described below. For purposes
of this election, interest includes stated interest, OID, de minimis original
issue discount, market discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium (described below under
"Notes Purchased at a Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal its cost to the
electing United States Holder, the issue date of the Note will be the date of
its acquisition by the electing United States Holder, and no payments on the
Note will be treated as payments of qualified stated interest. This election
will generally apply only to the Note with respect to which it is made and may
not be revoked without the consent of the Service. If this election is made with
respect to a Note with amortizable bond premium, then the electing United States
Holder will be deemed to have elected to apply amortizable bond premium against
interest with respect to all debt instruments with amortizable bond premium
(other than debt instruments the interest on which is excludible from gross
income) held by the electing United States Holder as of the beginning of the
taxable year in which the Note with respect to which the election is made is
acquired or thereafter acquired. The deemed election with respect to amortizable
bond premium may not be revoked without the consent of the Service.
If the election to apply the constant-yield method to all interest on a
Note is made with respect to a Market Discount Note, then the electing United
States Holder will be treated as having made the election discussed above under
"Original Issue Discount -- Market Discount" to include market discount in
income currently over the life of all debt instruments held or thereafter
acquired by such United States Holder.
Variable Rate Notes. A "Variable Rate Note" is a Note that: (i) has an
issue price that does not exceed the total noncontingent principal payments by
more than the lesser of (1) the product of (x) the total noncontingent principal
payments, (y) the number of complete years to maturity from the issue date and
(z) .015, or (2) 15 percent of the total noncontingent principal payments, and
(ii) provides for stated interest compounded or paid at least annually at (1)
one or more "qualified floating rates," (2) a single fixed rate and one or more
qualified floating rates, (3) a single "objective rate" or (4) a single fixed
rate and a single objective rate that is a "qualified inverse floating rate."
A qualified floating rate or objective rate in effect at any time during
the term of the instrument must be set at a "current value" of that rate. A
"current value" of a rate is the value of the rate on any day that is no earlier
than 3 months prior to the first day on which that value is in effect and no
later than 1 year following that first day.
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<PAGE> 42
A variable rate is a "qualified floating rate" if (i) variations in the
value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the Note
is denominated or (ii) it is equal to the product of such a rate and either (a)
a fixed multiple that is greater than zero but not more than 1.35, or (b) a
fixed multiple greater than zero but not more than 1.35, increased or decreased
by a fixed rate. If a Note provides for two or more qualified floating rates
that (i) are within .25 percent of each other on the issue date or (ii) can
reasonably be expected to have approximately the same values throughout the term
of the Notes, the qualified floating rates together constitute a single
qualified floating rate. A rate is not a qualified floating rate, however, if
the rate is subject to certain restrictions (including caps, floors, governors,
or other similar restrictions) unless such restrictions are fixed throughout the
term of the Note or are not reasonably expected to affect the yield on the Note
significantly.
An "objective rate" is a rate, other than a qualified floating rate, that
is determined using a single, fixed formula and that is based on (i) one or more
qualified floating rates, (ii) one or more rates each of which would be a
qualified floating rate for a debt instrument denominated in a currency other
than the currency in which the debt instrument is denominated, (iii) the yield
or changes in the price of one or more actively traded items of personal
property other than stock or debt of the issuer or a related party, or (iv) a
combination of the rates described in clauses (i)-(iii) above. A variable rate
is not an objective rate, however, if it is reasonably expected, as of the
Note's issue date, 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 the rate during the final half of the Note's term. An
objective rate is a "qualified inverse floating rate" if (i) the rate is equal
to a fixed rate minus a qualified floating rate and (ii) the variations in the
rate can reasonably be expected to inversely reflect contemporaneous variations
in the cost of newly borrowed funds.
If interest on a Note is stated at a fixed rate for an initial period of
less than one year followed by either a qualified floating rate or an objective
rate for a subsequent period and (i) the fixed rate and the qualified floating
rate or objective rate have values on the issue date of the Note that do not
differ by more than .25 percent or (ii) the value of the qualified floating rate
or objective rate is intended to approximate the fixed rate, the fixed rate and
the qualified floating rate or the objective rate constitute a single qualified
floating rate or objective rate.
Under these rules, Commercial Paper Rate Notes, Prime Rate Notes, LIBOR
Notes, Treasury Rate Notes, CMT Rate Notes, CD Rate Notes, and Federal Funds
Rate Notes will generally be treated as Variable Rate Notes.
In general, if a Variable Rate Note provides for stated interest at a
single qualified floating rate or objective rate, all stated interest on the
Note is qualified stated interest and the amount of OID, if any, is determined
by using, in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date of the qualified floating rate or qualified
inverse floating rate, or, in the case of any other objective rate, a fixed rate
that reflects the yield reasonably expected for the Note.
If a Variable Rate Note does not provide for stated interest at a single
qualified floating rate or a single objective rate, and also does not provide
for interest payable at a fixed rate (other than at an initial fixed rate
described in the third preceding paragraph), the amount of interest and OID
accruals on the Note are generally determined by (i) determining a fixed rate
substitute for each variable rate provided under the Variable Rate Note
(generally, the value of each variable rate as of the issue date or, in the case
of an objective rate that is not a qualified inverse floating rate, a rate that
reflects the reasonably expected yield on the Note), (ii) constructing the
equivalent fixed rate debt instrument (using the fixed rate substitutes
described above), (iii) determining the amount of qualified stated interest and
OID with respect to the equivalent fixed rate debt instrument, and (iv) making
the appropriate adjustments for actual variable rates during the applicable
accrual period.
If a Variable Rate Note provides for stated interest either at one or more
qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate
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(other than at an initial fixed rate described in the fourth preceding
paragraph), the amount of interest and OID accruals are determined as in the
immediately preceding paragraph with the modification that the Variable Rate
Note is treated, for purposes of the first three steps of the determination, as
if it provided for a qualified floating rate (or a qualified inverse floating
rate, as the case may be) rather than the fixed rate. The qualified floating
rate (or qualified inverse floating rate) replacing the fixed rate must be such
that the fair market value of the Variable Rate Note as of the issue date would
be approximately the same as the fair market value of an otherwise identical
debt instrument that provides for the qualified floating rate (or qualified
inverse floating rate) rather than the fixed rate.
Short-Term Notes. In general, an individual or other cash basis United
States Holder of a short-term Note is not required to accrue OID (as specially
defined below for the purposes of this paragraph) for United States federal
income tax purposes unless it elects to do so (but may be required to include
any stated interest in income as the interest is received). Accrual basis United
States Holders and certain other United States Holders, including banks,
regulated investment companies, dealers in securities, common trust funds,
United States Holders who hold Notes as part of certain identified hedging
transactions, certain pass-through entities and cash basis United States Holders
who so elect, are required to accrue OID on short-term Notes on either a
straight-line basis or under the constant-yield method (based on daily
compounding), at the election of the United States Holder. In the case of a
United States Holder not required and not electing to include OID in income
currently, any gain realized on the sale or retirement of the short-term Note
will be ordinary income to the extent of the OID accrued on a straight-line
basis (unless an election is made to accrue the OID under the constant-yield
method) through the date of sale or retirement. United States Holders who are
not required and do not elect to accrue OID on short-term Notes will be required
to defer deductions for interest on borrowings allocable to short-term Notes in
an amount not exceeding the deferred income until the deferred income is
realized.
For purposes of determining the amount of OID subject to these rules, all
interest payments on a short-term Note, including stated interest, are included
in the short-term Note's stated redemption price at maturity.
Foreign Currency Discount Notes. OID for any accrual period on a Discount
Note that is denominated in, or determined by reference to, a foreign currency
will be determined in the foreign currency and then translated into U.S. dollars
in the same manner as stated interest accrued by an accrual basis United States
Holder, as described above under "Payments of Interest." Upon receipt of an
amount attributable to OID (whether in connection with a payment of interest or
the sale or retirement of a Note), a United States Holder may recognize ordinary
income or loss.
NOTES PURCHASED AT A PREMIUM
A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond premium,"
in which case the amount required to be included in the United States Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to such year. In the case of a Note that is denominated in, or
determined by reference to, a foreign currency, amortizable bond premium will be
computed in units of foreign currency, and amortizable bond premium will reduce
interest income in units of the foreign currency. At the time amortized bond
premium offsets interest income, exchange gain or loss (taxable as ordinary
income or loss) is realized measured by the difference between exchange rates at
that time and at the time of the acquisition of the Note. Any election to
amortize bond premium shall apply to all bonds (other than bonds the interest on
which is excludible from gross income) held by the United States Holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the United States Holder, and is irrevocable without the consent of
the Service. See also "Original Issue Discount - Election to Treat All Interest
as Original Issue Discount."
S-28
<PAGE> 44
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A United States Holder's tax basis in a Note will generally be its U.S.
dollar cost, increased by the amount of any OID or market discount included in
the United States Holder's income with respect to the Note and the amount, if
any, of income attributable to de minimis original issue discount and de minimis
market discount included in the United States Holder's income with respect to
the Note, and reduced by (i) the amount of any payments that are not qualified
stated interest payments, and (ii) the amount of any amortizable bond premium
applied to reduce interest on the Note. The U.S. dollar cost of a Note purchased
with a foreign currency will generally be the U.S. dollar value of the purchase
price on the date of purchase or, in the case of Notes traded on an "established
securities market," as defined in the applicable Treasury Regulations, that are
purchased by a cash basis United States Holder (or an accrual basis United
States Holder that so elects), on the settlement date of the purchase.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on the
sale or retirement and the tax basis of the Note. The amount realized on a sale
or retirement for an amount in foreign currency will be the U.S. dollar value of
such amount on the date of sale or retirement or, in the case of Notes traded on
an established securities market sold by a cash basis United States Holder (or
an accrual basis United States Holder that so elects), on the settlement date of
the sale. Except to the extent described above under "Original Issue
Discount -- Short-Term Notes" or "Original Issue Discount -- Market Discount" or
described in the next succeeding paragraph or attributable to accrued but unpaid
interest, gain or loss recognized on the sale or retirement of a Note will be
capital gain or loss and will be long-term capital gain or loss if the Note was
held for more than one year.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Note that is attributable to changes in exchange rates will be treated as
ordinary income or loss. However, exchange rate gain or loss is taken into
account only to the extent of total gain or loss realized on the transaction.
EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS
Foreign currency received as interest on a Note or on the sale or
retirement of a Note will have a tax basis equal to its U.S. dollar value at the
time such interest is received or at the time of such sale or retirement.
Foreign currency that is purchased will generally have a tax basis equal to the
U.S. dollar value of the foreign currency on the date of purchase. Any gain or
loss recognized on a sale or other disposition of a foreign currency (including
its use to purchase Notes or upon exchange for U.S. dollars) will be ordinary
income or loss.
INDEXED NOTES
The applicable Pricing Supplement will contain a discussion of any special
United States federal income tax rules with respect to Indexed Notes that are
not subject to the rules governing Variable Rate Notes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or that is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership, estate or trust, in either case not subject to United
States federal income tax on a net income basis in respect of a Note. Under
present United States federal income and estate tax law and subject to the
discussion of backup withholding below:
(i) payments of principal, premium and interest (including OID) by the
Company or any of its paying agents to any holder of a Note who or which is
a United States Alien Holder will not be subject to United States federal
withholding tax if, in the case of interest or OID, (a) the
S-29
<PAGE> 45
beneficial owner of the Note does not actually or constructively own 10% or
more of the voting stock of the Company, (b) the beneficial owner of the
Note is not a controlled foreign corporation that is related to the Company
through stock ownership, (c) either (A) the beneficial owner of the Note
certifies to the Company or its agent, under penalties of perjury, that it
is not a United States Holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business
(a "financial institution") and holds the Note on behalf of the beneficial
owner certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof, and (d) the Note is not subject to the rules of
Section 871(h)(4) of the Code dealing with payments contingent upon certain
factors relating to the Company or a person related to the Company;
(ii) a United States Alien Holder of a Note will not be subject to
United States federal withholding tax on any gain realized on the sale or
exchange of a Note; and
(iii) a Note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's
gross estate for purposes of the United States federal estate tax as a
result of the individual's death if (a) the individual did not actually or
constructively own 10% or more of the voting stock of the Company, and (b)
the income on the Note would not have been effectively connected with a
United States trade or business of the individual at the individual's
death, provided that if the Note is subject to the rules of Section
871(h)(4) of the Code dealing with payments contingent upon certain factors
relating to the Company or a person related to the Company, an appropriate
portion (as determined in a manner to be prescribed by the Internal Revenue
Service) of the value of such Note will be included in the individual's
gross estate, and provided that the Note was issued with an initial term of
184 days or more.
BACKUP WITHHOLDING AND INFORMATION REPORTING
United States Holders. In general, information reporting requirements will
apply to payments of principal, premium and interest on a Note and the proceeds
of the sale of a Note before maturity within the United States to, and to the
accrual of OID on a Discount Note with respect to, non-corporate United States
Holders, and "backup withholding" at a rate of 31% will apply to such payments
and to payments of OID if the United States Holder fails to provide an accurate
taxpayer identification number or to report all interest and dividends required
to be shown on its federal income tax returns.
United States Alien Holders. Information reporting and backup withholding
will not apply to payments of principal, premium and interest (including OID)
made by the Company or a paying agent to a United States Alien Holder on a Note
if the certification described in clause (i)(c) under "United States Alien
Holders" above is received, provided that the payor does not have actual
knowledge that the holder is a United States person.
Payments of the proceeds from the sale by a United States Alien Holder of a
Note made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Note to or through the United States office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
S-30
<PAGE> 46
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Distribution Agreement
dated as of , 1995, the Notes are being offered on a continuing basis
by the Company through Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers
Inc. (including its affiliate Lehman Government Securities Inc.) and Morgan
Stanley & Co. Incorporated (the "Agents"), who have agreed to use their
reasonable efforts to solicit purchases of the Notes. The Company will have the
sole right to accept offers to purchase Notes and may reject any proposed
purchase of Notes in whole or in part. The Agents will have the right, in their
discretion reasonably exercised, to reject any proposed offer to purchase Notes
in whole or in part. The Company will pay the Agents commissions of from .125%
to 1% of the principal amount of Notes, depending upon maturity, for sales made
through them as Agents.
The Company may also sell Notes to each of the Agents as principals for
their own accounts at a discount to be agreed upon at the time of sale, or the
purchasing Agents may receive from the Company a commission or discount
equivalent to that set forth on the cover page hereof in the case of any such
principal transaction in which no other discount is agreed. Such Notes may be
resold at prevailing market prices, or at prices related thereto, at the time of
such resale, as determined by the Agents. The Company reserves the right to sell
Notes directly to persons other than the Agents on its own behalf. No commission
will be payable on any Notes sold directly by the Company.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer may include all or part of the discount to
be received from the Company. Unless otherwise indicated in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to any agency sale of a Note of
identical maturity. After the initial public offering of Notes to be resold to
investors and other purchasers on a fixed public offering price basis, the
public offering price, concession and discount may be changed.
The Agents, as agents or principals, may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Act"). The
Company has agreed to indemnify each of the Agents against certain liabilities,
including liabilities under the Act. The Company has agreed to reimburse the
Agents for certain expenses.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in immediately available
funds in The City of New York.
Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers Inc. (including its
affiliate Lehman Government Securities Inc.) and Morgan Stanley & Co.
Incorporated may be customers of, engage in transactions with and perform
services for the Company in the ordinary course of business.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given as
to the liquidity of the trading market for the Notes.
S-31
<PAGE> 47
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION, DATED JUNE 30, 1995
[LOGO] COMMERCIAL METALS COMPANY
Debt Securities
------------------------
Commercial Metals Company ("CMC" or the "Company") may from time to time
offer unsecured debt securities consisting of debentures, notes and/or other
unsecured evidences of indebtedness (the "Debt Securities") in one or more
series in an aggregate principal amount not to exceed $150,000,000 (or the
equivalent in foreign denominated currency or units based on or relating to
currencies). The Debt Securities may be offered as a separate series in amounts,
at prices and on terms to be determined at the time of sale. An accompanying
Prospectus Supplement will set forth, with regard to the series of Debt
Securities in respect of which this Prospectus is being delivered, the title and
the terms of the Debt Securities, including the aggregate principal amount,
authorized denominations (which may be in United States dollars, in any other
currency or in units based on or relating to currencies), maturity, rate (which
may be fixed or variable), if any, and time of payment of any interest, any
redemption, extension or early repayment terms, any provision for sinking fund
payments, any index, formula or other method used to determine the amount of
principal, premium, if any, or interest, the net proceeds to the Company and
other specific terms relating to the offering and sale of such series of Debt
Securities.
The Company may sell the Debt Securities to or through underwriters and may
also sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co., Lehman Brothers, Morgan Stanley &
Co. Incorporated or may be a group of underwriters represented by firms
including Goldman, Sachs & Co., Lehman Brothers, or Morgan Stanley & Co.
Incorporated. Goldman, Sachs & Co., Lehman Brothers and Morgan Stanley & Co.
Incorporated may also act as agents. The accompanying Prospectus Supplement sets
forth the names of any underwriters or agents involved in the sale of the Debt
Securities in respect to which this Prospectus is being delivered, the principal
amounts, if any, to be purchased by underwriters or agents and the compensation,
if any, of such underwriters or agents.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of
the Debt Securities unless accompanied by a Prospectus Supplement.
------------------------
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus is , 1995.
<PAGE> 48
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Copies of such
material can be obtained by mail from the Public Reference Section of the
Commission, at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549,
at prescribed rates. In addition, such reports, proxy and information statements
and other information can be inspected and copied at the public reference
facility referenced above and at the Commission's regional offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60621-2511 and 7 World Trade Center, New York, New York 10048. Such
reports, proxy statements and other information concerning the Company can also
be inspected and copied at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1994;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1994;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1995;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended May
31, 1995;
5. The Company's Current Report on Form 8-K dated November 30, 1994; and
6. The Company's Current Report on Form 8-K dated January 27, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(e), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and shall be deemed a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for all purposes to the extent that
a statement contained in this Prospectus, or in any other subsequently filed
document which is also, or is deemed to be, incorporated by reference, modifies
or replaces such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Prospectus, except as so modified or
superseded. The Company will provide without charge to each person to whom this
Prospectus has been delivered, on written or oral request of such person, a copy
(without exhibits, unless such exhibits are specifically incorporated by
reference into such documents) of any or all documents incorporated by reference
in this Prospectus. Requests for such copies should be addressed to Secretary,
Commercial Metals Company, 7800 Stemmons Freeway, Dallas, Texas 75247, telephone
number (214) 689-4300.
2
<PAGE> 49
THE COMPANY
Commercial Metals Company ("CMC" or the "Company") manufactures, recycles
and markets steel and metal products. Steel and steel-related products represent
over 75% of the Company's business. During fiscal 1994, CMC derived
approximately 65% of its operating profit from the Manufacturing segment,
approximately 9% from its Recycling segment, approximately 23% from its
Marketing and Trading segment, and approximately 3% from its Financial Services
segment.
The Company's Manufacturing segment includes four steel minimills, 19 steel
fabrication plants, three steel joist plants, three fence post manufacturing
plants, two railcar rebuilding facilities, seven concrete related product
warehouses, an industrial products supplier and a copper tube mill. Steel
manufacturing capacity of over 1.7 million tons includes reinforcing bars, light
and mid-size structurals, angles, channels, beams, special bar quality rounds
and flats, squares and special sections used in the construction, manufacturing,
steel fabrication and warehousing, and original equipment manufacturing
industries. Steel fabrication capacity is over 500,000 tons. The Company's
copper tube mill with 45 million pounds of capacity manufactures copper water
tube and air conditioning and refrigeration tubing.
The Company's Recycling segment is one of the largest processors of scrap
nonferrous metals and one of the largest regional processors of ferrous metals
in the United States. CMC's recycling plants processed and shipped 1.2 million
tons of scrap metal in fiscal 1994. Recycled metals provide substantial savings
in energy compared to producing metal from virgin raw materials.
The Company's Marketing and Trading segment buys and sells steel, primary
and secondary metals and industrial raw materials through a global network of
offices which provide technical information, financing, chartering, storage,
insurance and hedging. The Company does not, as a matter of policy, speculate on
changes in the commodities markets. This segment sold over 1.7 million tons of
steel products in 1994.
The Company's Financial Services segment provides international commercial
banking services to its Marketing and Trading segment and to other unaffiliated
businesses.
The Company's principal executive offices are located at 7800 Stemmons
Freeway, Dallas, Texas 75247, and its telephone number is (214) 689-4300.
USE OF PROCEEDS
Except as may be set forth in an applicable Prospectus Supplement
accompanying this Prospectus, the net proceeds from the sale of the Debt
Securities offered hereby will be used to refinance certain debt and for other
general corporate purposes. Pending such applications, the funds may be used to
reduce short-term borrowings or may be invested in short-term marketable
securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED AUGUST 31, ENDED MAY 31,
---------------------------------------- -------------
1994 1993 1992 1991 1990 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
4.2 4.0 2.7 2.5 4.7 4.2 3.8
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
are divided by fixed charges. For this purpose, earnings consist of net earnings
plus income taxes, interest expense, such portion of rent expense as is
representative of the interest factor and amortization expense of capitalized
interest. Fixed charges consist of interest expense, such portion of rent
expense and
3
<PAGE> 50
capitalized interest. Such portion of rent expense, capitalized interest and
amortization of capitalized interest amounted to $2.0, $1.2 and $0.4 million in
fiscal 1994, $2.0, $0.4 and $0.4 million in fiscal 1993, $1.9, $0.1 and $0.4
million in fiscal 1992, $2.0, $1.0 and $0.3 million in fiscal 1991 and $1.8,
$0.3 and $0.1 million in fiscal 1990, and amounted to $1.8, $0.1 and $0.4
million and $1.5, $1.2 and $0.3 million in the first nine months of fiscal 1995
and 1994, respectively.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, dated as of
, 1995 (the "Indenture"), between the Company and The Chase Manhattan
Bank, N.A., as Trustee (the "Trustee"). A copy of such Indenture is filed as an
exhibit to the Registration Statement. The following statements relating to the
Debt Securities and the Indenture are summaries of provisions contained therein
and do not purport to be complete. The provisions of the Indenture referred to
in the following summaries are incorporated herein by reference and the
summaries are qualified in their entirety thereby. Capitalized terms not
otherwise defined herein shall have the respective meanings given to them in the
Indenture. Section numbers set forth below refer to provisions of the Indenture.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement will be described in such Prospectus Supplement
relating to the Debt Securities offered thereby.
GENERAL
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated debt of the
Company.
The Indenture does not limit the amount of the Debt Securities that may be
issued thereunder and provides that Debt Securities may be issued thereunder
from time to time in one or more series. The Prospectus Supplement will describe
the following terms, as applicable, of each series of Debt Securities: (1) the
title of the Debt Securities; (2) any limit on the aggregate principal amount of
the Debt Securities; (3) the date or dates on which the Debt Securities will
mature; (4) the rate or rates (which may be fixed or variable) at which the Debt
Securities will bear interest, if any, and the date or dates from which such
interest will accrue; (5) the dates on which such interest, if any, will be
payable and the Regular Record Dates for such Interest Payment Dates; (6) any
mandatory or optional sinking fund or analogous provisions; (7) the price at
which, the periods within which, and the terms and conditions upon which the
Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed at the option of the Company; (8) the terms and
conditions upon which the Debt Securities may be repayable prior to final
maturity at the option of the Holder thereof (which option may be conditional);
(9) the portion of the principal amount of the Debt Securities, if other than
the principal amount thereof, payable upon acceleration of maturity thereof;
(10) certain Events of Default under the Indenture; (11) if other than in United
States dollars, the currency or currencies, including composite currencies, of
payment of principal of and premium, if any, and interest on the Debt Securities
(and federal income tax consequences and other special considerations applicable
to any such Debt Securities denominated in a currency or currencies other than
United States dollars); (12) any index used to determine the amount of payments
of principal of and premium, if any, and interest, if any on the Debt
Securities; (13) if the Debt Securities will be issuable only in the form of a
Global Security as described under "Book-Entry Debt Securities," the Depositary
or its nominee with respect to the Debt Securities and the circumstances under
which the Global Security may be registered for transfer or exchange in the name
of a Person other than the Depositary or its nominee; and (14) any other
specific terms of the Debt Securities. (Section 301)
4
<PAGE> 51
Unless otherwise indicated in the Prospectus Supplement relating to Debt
Securities, principal of and premium, if any, and interest, if any, on the Debt
Securities will be payable, and transfers thereof will be registrable, at the
office or agency of the Trustee in New York City, New York provided that, at the
option of the Company, payment of interest may be made by check mailed to the
address of the Person entitled thereto as it appears in the Security Register.
(Sections 301, 305 and 1002) Any payment of principal and premium, if any, and
interest, if any, required to be made on an Interest Payment Date, Redemption
Date or at Stated Maturity which is not a Business Day at any Place of Payment
need not be made at such Place of Payment on such day, but may be made on the
next succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date or at Stated Maturity, as the case may
be, and no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity. (Section 113)
Unless otherwise indicated in the Prospectus Supplement relating to the
Debt Securities of any series, the Debt Securities will be issued only in
registered form, without coupons, in denominations of $100,000 or any integral
multiple thereof. (Section 302) No service charge will be made for any transfer
or exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount from their
stated principal amount. In addition, under proposed Treasury Regulations it is
possible that Debt Securities which are offered and sold at their stated
principal amount would, under certain circumstances, be treated as issued at an
original issue discount for federal income tax purposes. Federal income tax
consequences and other special considerations applicable to any such Original
Issue Discount Securities (or other Debt Securities treated as issued at an
original issue discount) will be described in the Prospectus Supplement relating
thereto. "Original Issue Discount Security" means any security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof upon the occurrence of an
Event of Default and the continuation thereof. (Section 101)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more registered global securities (the "Global Securities"). The
specific terms of the depositary arrangement with respect to any Debt Securities
of any series will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to all
depositary arrangements.
Each Global Security will be deposited with, or on behalf of, a Depositary
identified in the Prospectus Supplement (the "Depositary") and registered in the
name of the Depositary or a nominee thereof. Unless and until it is exchanged in
whole or in part for Debt Securities in certificated form, no Global Security
may be transferred except as a whole by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary. Debt
Securities in certificated form will not be issued in exchange for Global
Securities except under the circumstances described herein.
Upon the issuance of a Global Security and the deposit of such Global
Security with the Depositary, the Depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by such Global Security to the accounts of institutions
that have accounts with such Depositary or its nominee ("participants"). The
account to be credited will be designated by any dealers, underwriters or agents
participating in the distribution of such Debt Securities. Ownership of
beneficial interests in a Global Security will be limited to participants or
persons that may hold such interests through participants. Ownership of
5
<PAGE> 52
beneficial interests in a Global Security will be shown on, and the transfer of
such ownership will be effected only through, records maintained by the
Depositary (with respect to interests of participants) and by participants or
persons that hold through participants (with respect to interests of persons
other than participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and laws may impair the ability to own or
transfer beneficial interests in a Global Security.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Debt Securities represented by such
Global Security for all purposes under the Indenture referred to in the
Prospectus. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of such Debt Securities in certificated form and will
not be considered the owners or holders thereof under the Indenture.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of the Depositary for such Global Security 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. The Company understands that under existing industry practices, if
the Company requests any action of holders or if an owner of a beneficial
interest in a Global Security desires to give or take any action which a holder
is entitled to give or take under the Indenture, the Depositary for such Global
Security would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Principal and interest payments on Debt Securities represented by a Global
Security 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 or
holder of such Global Security. None of the Company, the Trustee or any other
agent of the Company or 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 in such Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal or interest in
respect of such Global Security, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Global Security as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as depositary, or if at any time
the Depositary ceases to be a clearing agency registered under the Exchange Act,
and a successor depositary is not appointed by the Company within 90 days or if
there shall have occurred and be continuing an Event of Default (as defined in
the Indenture) or an event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default with respect to such Debt Securities,
then the Company will issue such Debt Securities in certificated form in
exchange for the Global Security representing the Debt Securities. In addition,
the Company may at any time and in its sole discretion determine not to have any
Debt Securities represented by one or more Global Securities and, in such event,
will issue such Debt Securities in certificated form in exchange for the Global
Security representing the Debt Securities. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of such Debt Securities in certificated form equal in principal amount to such
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beneficial interest and to have such Debt Securities registered in its name.
Unless otherwise specified in the Prospectus Supplement, Debt Securities issued
in certificated form will be issued as registered securities in integral
multiples of $100,000.
LIMITATION ON LIENS
The Indenture provides that the Company may not, and may not permit any
Principal Subsidiary of the Company to, incur or suffer to exist any Lien upon
any Principal Property, or upon any shares of stock of any Principal Subsidiary
of the Company (whether such Principal Property or shares were owned as of the
date of such Indenture or thereafter acquired), to secure any Debt without
making, or causing such Principal Subsidiary to make, effective provision for
securing the Debt Securities issued under such Indenture equally and ratably
with (or prior to) such Debt, unless after giving effect thereto, the sum of (A)
the principal amount of Debt secured by all Liens incurred after the date of
such Indenture and otherwise prohibited by such Indenture and (B) the
Attributable Debt of all Sale and Leaseback Transactions entered into after the
date of such Indenture and otherwise prohibited by such indenture does not
exceed 10% of Consolidated Net Tangible Assets. The foregoing restrictions will
not apply to Liens existing at the date of such Indenture or to (i) Liens
securing only the Debt Securities issued under such Indenture; (ii) Liens in
favor of only the Company; (iii) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Principal Subsidiary of the Company (but only to the extent such Liens cover
such property); (iv) Liens on property existing immediately prior to the time of
acquisition thereof (and not in anticipation of the financing of such
acquisition); (v) any Lien upon a Principal Property (including any property
that becomes a Principal Property after acquisition thereof) to secure Debt
incurred for the purpose of financing all or any part of the purchase price or
the cost of construction or improvement thereof incurred within 270 days after
the later of the purchase thereof and the completion of construction or
improvements thereon; (vi) Liens to secure Debt incurred to extend, renew,
refinance or refund Debt secured by any Lien referred to in the foregoing
clauses (i) to (v); and (vii) any Lien securing Debt owing by the Company to a
wholly owned Principal Subsidiary of the Company. (Section 1007)
"Attributable Debt" means the present value (discounted at the per annum
rate of interest publicly announced by Bank of America National Trust & Savings
Association as its "Reference Rate" or "Prime Rate", provided, that if Bank of
America National Trust & Savings Association is no longer announcing a Reference
Rate or Prime Rate, the per annum rate of interest shall be the Prime Rate most
recently published in The Wall Street Journal, in either case compounded
monthly) of the obligations for rental payments required to be paid during the
remaining term of any lease of more than 12 months. (Section 101)
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other indebtedness arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation, as of any date
(the "measurement date"), shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date after the measurement
date upon which such lease may be terminated by the lessee, at its sole option,
without payment of a penalty. (Section 101)
"Consolidated Net Tangible Assets" means the net book value of all assets
of the Company and its Consolidated Subsidiaries, excluding any amounts carried
as assets for shares of capital stock held in treasury, debt discount and
expense, goodwill, patents, trademarks and other intangible assets, less all
liabilities of the Company and its Consolidated Subsidiaries (except Funded
Debt, minority interests in Consolidated Subsidiaries, deferred taxes and
general contingency reserves of the Company and its Consolidated Subsidiaries),
which in each case would be included on a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of the date of determination, all
as determined on a consolidated basis in accordance with generally accepted
accounting principles. (Section 101)
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"Debt" means (without duplication), with respect to any Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
every reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such Person
and (iv) every obligation of the type referred to in clauses (i) through (iii)
of another Person the payment of which such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise (but only, in the case of clause (iv), to the extent such Person has
guaranteed or is responsible or liable for such obligations). (Section 101)
"Funded Debt" means (a) all Debt of the Company and each Principal
Subsidiary of the Company maturing on, or renewable or extendible at the option
of the obligor to, a date more than one year from the date of the determination
thereof (but not including indebtedness under any revolving credit arrangement
with banks except for any Debt converted pursuant to any such arrangement into a
term loan which meets the requirements of this clause (a)), (b) Capital Lease
Obligations payable on a date more than one year from the date of the
determination thereof, (c) guarantees, direct or indirect, and other contingent
obligations of the Company and each Principal Subsidiary of the Company in
respect of, or to purchase or otherwise acquire or be responsible or liable for
(through the investment of funds or otherwise), any obligations of the type
described in or liable for (through the investment of funds or otherwise), any
obligations of the type described in the foregoing clauses (a) or (b) of others
(but not including contingent liabilities on customers' receivables sold with
recourse), and (d) amendments, renewals, extensions and refundings of any
obligations of the type described in the foregoing clauses (a), (b) or (c).
(Section 101)
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, security interest, lien,
encumbrance, or other security arrangement of any kind or nature whatsoever on
or with respect to such property or assets (including any conditional sale or
other title retention agreement having substantially the same economic effect as
any of the foregoing). (Section 101)
"Principal Property" means any facility (together with the land on which it
is erected and fixtures comprising a part thereof) used primarily for
manufacturing, processing, research, warehousing or distribution, owned or
leased by the Company or a Subsidiary of the Company and having a net book value
in excess of 3% of Consolidated Net Tangible Assets, other than any such
facility or portion thereof which is a pollution control facility financed by
state or local government obligations or is not of material importance to the
total business conducted or assets owned by the Company and its Subsidiaries as
an entirety, or any assets or properties acquired with Net Available Proceeds
(defined below) from a Sale and Leaseback Transaction that are irrevocably
designated by the Company or a Subsidiary as a Principal Property, which
designation shall be made in writing to the Trustee. (Section 101)
"Principal Subsidiary of the Company" means any Subsidiary of the Company
that owns a Principal Property.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any Principal Property that within 12 months
of the start of such lease and after the Reference Date, has been or is being
sold, conveyed, transferred or otherwise disposed of by such Person to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property. The term
of such arrangement, as of any date (the "measurement date"), shall end on the
date of the last payment of rent or any other amount due under such arrangement
on or prior to the first date after the measurement date on which such
arrangement may be terminated by the lessee, at its sole option, without payment
of a penalty. "Sale Transaction" means any such sale, conveyance, transfer or
other disposition. The "Reference Date" means, for any property that becomes a
Principal Property, the 270th day after the date of the
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acquisition, completion of construction and commencement of operation of such
property. (Section 101)
"Subsidiary of the Company" means any corporation of which the Company
directly or indirectly owns or controls stock which under ordinary circumstances
(not dependent upon the happening of a contingency) has the voting power to
elect a majority of the board of directors of such corporation.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Restrictions on Sales and Leasebacks. Unless otherwise provided in the
Prospectus Supplement with respect to any series of the Securities, neither the
Company nor any Principal Subsidiary of the Company may enter into any Sale and
Leaseback Transaction, the completion of construction and commencement of full
operation of which has occurred more than 270 days prior thereto, unless (a) the
Company or such Principal Subsidiary of the Company could incur a mortgage on
such property under the restrictions described above under "Limitations on
Liens" in an amount equal to the Attributable Debt with respect to the Sale and
Leaseback Transaction without equally and ratably securing the Securities or (b)
the Company or a Principal Subsidiary of the Company, within 270 days, applies
the Net Available Proceeds from the Sale and Leaseback Transaction to any
combination of the following: (i) the retirement of its Funded Debt, (ii) the
purchase of other property or assets which will (a) constitute Principal
Property and (b) have an aggregate value of at least the consideration paid for
such property or assets or (iii) Capital Expenditures with respect to any
existing Principal Property (subject to credits for certain voluntary
retirements of Funded Debt). This restriction will not apply to any Sale and
Leaseback Transaction (a) between the Company and Principal Subsidiaries of the
Company or (b) involving the taking back of a lease for a period of less than
three years. (Section 1008)
"Net Available Proceeds" from any Sale and Leaseback Transaction by any
Person means cash or readily marketable cash equivalents received (including by
way of sale or discounting of a note, installment receivable or other
receivable, but excluding any other consideration received in the form of
assumption by the acquiree of indebtedness or obligations relating to the
properties or assets that are the subject of such Sale and Leaseback Transaction
or received in any other noncash form) therefrom by such Person, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred and all federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Sale and Leaseback
Transaction, (ii) all payments made by such Person or its subsidiaries on any
indebtedness which is secured in whole or in part by any such properties and
assets in accordance with the terms of any Lien upon or with respect to any such
properties and assets or which must, by the terms of such Lien or in order to
obtain a necessary consent to such Sale and Leaseback Transaction or by
applicable law, be repaid out of the proceeds from such Sale and Leaseback
Transaction, and (iii) all distributions and other payments made to minority
interest holders in subsidiaries of such Person or joint ventures as a result of
such Sale Transaction. (Section 101)
RESTRICTIONS ON MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and the Company may not permit any
Person to consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless: (i) the Person (if other than the Company) formed by such consolidation
or into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall expressly assume the due and punctual payment
of the principal of and interest on all the Debt Securities issued under the
Indenture and the performance or observance of every covenant of the Indenture
on the part of the Company to be performed or observed; (ii) immediately after
giving effect to such transaction and treating any indebtedness which becomes an
obligation of the Company or any
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Principal Subsidiary of the Company as a result of such transaction as having
been incurred by the Company or such Principal Subsidiary of the Company at the
time of such transaction, no Event of Default under the Indenture, and no event
which, after notice or lapse of time or both, would become an Event of Default
under the Indenture, shall have happened and be continuing; and (iii) if, as a
result of any such transaction, property or assets of the Company or any
Principal Subsidiary of the Company would become subject to a Lien which would
not be permitted by the limitations on Liens contained in the Indenture, the
Company or, if applicable, the successor to the Company, as the case may be,
shall take such steps as shall be necessary effectively to secure the Debt
Securities issued under the Indenture equally and ratably with (or prior to)
Debt secured by such Lien. (Section 801)
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of, or premium, if
any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment, when due, in respect to any
Debt Securities of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant the performance of which is
dealt with specifically elsewhere in the Indenture or which has been included in
the Indenture solely for the benefit of series of Debt Securities other than
that series), continued for 60 days after written notice as provided in the
Indenture; (e) failure to pay when due (after applicable grace periods as
provided in the Indenture) the principal of, or the acceleration of, any
indebtedness for money borrowed by the Company or any Principal Subsidiary of
the Company having an aggregate principal amount outstanding in excess of an
amount equal to 3% of Consolidated Net Tangible Assets, if such indebtedness is
not discharged, or such acceleration is not annulled, within 10 days after
written notice as provided in the Indenture; (f) certain events in bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect to Debt Securities of that series. No Event of Default with respect to a
particular series of Debt Securities issued under the Indenture (except as to
such events in bankruptcy, insolvency or reorganization or the failure to pay
when due indebtedness having an aggregate principal amount outstanding in excess
of an amount equal to 3% of Consolidated Net Tangible Assets) necessarily
constitutes an Event of Default with respect to any other series of Debt
Securities issued thereunder. (Section 501) The notice referred to in clauses
(d) and (e) may be given by the Trustee under the Indenture or by the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series. (Section 501) In case an Event of Default under the Indenture shall
occur and be continuing, then, subject to the provisions of the Indenture and
the Trust Indenture Act of 1939, as amended, (the "Trust Indenture Act"),
relating to the duties of the Trustee under the Indenture, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable indemnity. (Section 603) The Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of any
series shall have the right, subject to such provisions for indemnification of
the Trustee to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee under the Indenture or exercising any
trust or power conferred on the Trustee with respect to Debt Securities of that
series. (Section 512)
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding shall occur and be continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of that series may, by a notice in writing to the
Company (and to the Trustee if given by Holders), declare to be due and payable
immediately the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all Debt Securities of that series.
However, at any time after such a declaration of acceleration with respect to
Debt Securities of any series has been made, but before a judgment or decree for
payment of the
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money due has been obtained by the Trustee, the Holders of a majority in the
principal amount of Outstanding Debt Securities of that series may, subject to
certain conditions, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, with respect to
Debt Securities of that series have been cured or waived as provided in the
indenture. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver" herein. Reference is made to the Prospectus Supplement
relating to any series of Debt Securities which are Original Issue Discount
Securities for the particular provisions relating to acceleration of a portion
of the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to Debt Securities
of that series and unless also the Holders of at least 25% in aggregate
principal amount of the Outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of any
Debt Security for enforcement of payment of the principal of (and premium, if
any) and any interest on such Debt Security on or after the respective due dates
expressed in such Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
as to whether the Company is in default in the performance and observance of any
of the terms, provisions and conditions of the Indenture. (Section 1009) The
Indenture provides that the Trustee may withhold notice to the Holders of Debt
Securities of any series of any default (except in payment of principal, any
premium, interest or any sinking fund payments) with respect to Debt Securities
of such series if it considers it in the interest of the Holders of Debt
Securities of such series to do so. (Section 602)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of each series affected by
such modifications or amendments; provided, however, that no such modification
or amendment may, without the consent of the Holder of each such Outstanding
Debt Security affected thereby, (a) change the Stated Maturity of the principal
of, or any installment of interest on any Debt Security, (b) reduce the
principal amount of or the premium (if any) or interest on, any Debt Security or
reduce the amount of principal an Original Issue Discount Security that would be
due and payable upon acceleration, (c) change the place or currency of payment
of principal of, or the premium (if any) or interest on, any Debt Security, (d)
impair the right to institute suit for the enforcement of any payment with
respect to any Debt Security on or after the Stated Maturity thereof, (e) reduce
the above-stated percentage of Outstanding Debt Securities of any series
necessary to modify or amend the Indenture or (f) reduce the percentage of
aggregate principal amount of Outstanding Debt Securities of any series
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults thereunder. (Section 902)
The Company may, in the circumstances permitted by the Trust Indenture Act,
set any day as the record date for the purpose of determining the Holders of
Debt Securities of any series issued under the Indenture entitled to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action as provided or permitted by the Indenture. (Section 104)
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of any series may on behalf of the Holders of all Debt
Securities of that series waive, insofar as that
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series is concerned, compliance by the Company with the covenants limiting Liens
and Sale and Leaseback Transactions contained in the Indenture. (Section 1010)
The Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive any past default under the Indenture with respect to that
series except a default in the payment of the principal of (or premium, if any)
or any interest on any Debt Security of that series or in respect of a provision
which under the Indenture cannot be modified or amended without the consent of
the Holder of each Outstanding Debt Security of that series affected. (Section
513)
For purposes of the Indenture, the Debt Securities of any series
"Outstanding" thereunder are deemed to exclude those held by Persons that
control, are controlled by or are under common control with the Company,
provided that any Person who does not own, directly or indirectly, more than 5%
of the outstanding voting securities of the Company will not be deemed to
control the Company. (Section 101)
DEFEASANCE
Defeasance and Discharge. The Indenture provides that the Company may
elect to deposit or cause to be deposited with the Trustee as trust funds in
trust, for the benefit of the Holders of Outstanding Debt Securities of any
series, money and/or U.S. Government Obligations sufficient to pay and discharge
the principal of (and premium, if any) and any interest on and any mandatory
sinking fund payments in respect of the Debt Securities of such series on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and such Debt Securities, and thereby be discharged from its obligations with
respect to Outstanding Debt Securities of that series (hereinafter called
"Defeasance" ) on and after the date that (among other things) the Company
provides to the Trustee certain evidence that (A) the Company has received from,
or there has been published by, the Internal Revenue Service a ruling, or (B)
there has been a change in the applicable Federal income tax law, in each case
to the effect that the Holders of such Outstanding Debt Securities of that
series will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect to
such Debt Securities and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would be the case if such
deposit, Defeasance and discharge were not to occur. For this purpose, such
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by such Outstanding Debt Securities of such
series and to have satisfied all its other obligations under the Debt Securities
of that series and the Indenture insofar as the Debt Securities of that series
are concerned, except for certain continuing administrative responsibilities. In
the event of any such Defeasance, Holders of Debt Securities of such series
would be able to look only to such trust for payment of principal of (and
premium, if any) and any interest on and any mandatory sinking fund payments in
respect of the Debt Securities of that series. (Section 403)
Covenant Defeasance. The Indenture provides that the Company may elect to
deposit or cause to be deposited with the Trustee as trust funds in trust, for
the benefit of the Holders of Outstanding Debt Securities of any series, money
and/or U.S. Government Obligations sufficient to pay and discharge the principal
(and premium, if any) of and any interest on and any mandatory sinking fund
payments in respect of the Debt Securities of such series on the stated maturity
of such payments in accordance with the terms of the Indenture and such Debt
Securities, and thereby (i) be released from its obligations with respect to the
Debt Securities of such series under Section 1005 (Maintenance of Properties),
Section 1006 (Payment of Taxes and Other Claims), Section 1007 (Limitation on
Liens), Section 1008 (Limitation on Sale and Leaseback Transactions) and Section
801 (Consolidation, Merger, Conveyance, Transfer or Lease) of the Indenture and
(ii) have the occurrence of any event specified in (A) Section 501(4) (defaults
in performance, or breach, of covenants and warranties under the Indenture) with
respect to any of Sections 1005 through 1008, inclusive, and Section 801, and
(B) Section 501(5) (defaults under other obligations of the
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Company) not be deemed to be or result in an Event of Default, in each case with
respect to the Outstanding Debt Securities of such series (hereinafter called
"Covenant Defeasance"), on and after the date that (among other things) the
Company provides to the Trustee certain evidence that the Holders of Outstanding
Debt Securities of such series will not recognize gain or loss for Federal
income tax purposes as a result of the deposit and Covenant Defeasance to be
effected with respect to such Debt Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as would
be the case if such deposit and Covenant Defeasance were not to occur. For this
purpose, such Covenant Defeasance means that the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section (to the extent so specified in the case of
Section 501(4)), whether directly or indirectly by reason of any reference
elsewhere in the Indenture to any such Section or by reason of any reference in
any such Section to any other provision of the Indenture or in any other
document, but the remainder of the Indenture and such Debt Securities of that
series shall be unaffected thereby. The obligations of the Company under the
Indenture and the Debt Securities of that series other than with respect to the
covenants referred to above and the Events of Default other than the Events of
Default referred to above shall remain in full force and effect. (Section 404)
The term "U.S. Government Obligations" means any security that is a direct
obligation, or is subject to an unconditional guarantee, of the United States of
America for the payment of which full faith and credit of the United States of
America is pledged. (Section 101)
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co., Lehman Brothers Inc., Morgan
Stanley & Co. Incorporated or a group of underwriters represented by firms
including Goldman, Sachs & Co., Lehman Brothers Inc., and Morgan Stanley & Co.
Incorporated, and such firms may also act as agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on the
resale of Debt Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933 (the "Act"). Any such underwriter
or agent will be identified, and any such compensation received from the Company
will be described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of
13
<PAGE> 60
any purchaser under any such contract will be subject to the condition that the
purchase of the offered Debt Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject. The underwriters and such other agents will not have any responsibility
in respect to the validity or performance of such contracts.
The expected time of delivery of the Debt Securities in respect of which
this Prospectus is delivered is set forth in the accompanying Prospectus
Supplement.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the Debt Securities
offered hereby will be passed upon for the Company by Haynes and Boone, L.L.P.,
Dallas, Texas. Certain legal matters will be passed upon for Goldman, Sachs &
Co., Lehman Brothers and Morgan Stanley & Co. Incorporated by Akin, Gump,
Strauss, Hauer & Feld, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries incorporated by reference in this
Prospectus, and elsewhere in the Registration Statement from the Company's
Annual Report on Form 10-K, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated herein in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
14
<PAGE> 61
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR ANY OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company.............................. S-2
Use of Proceeds.......................... S-2
Capitalization........................... S-3
Selected Consolidated Financial Data..... S-4
Management's Discussion and
Analysis of Recent Financial
Results................................ S-5
Business................................. S-8
Description of Notes..................... S-12
Underwriting............................. S-14
PROSPECTUS
Available Information.................... 2
Incorporation of Certain Information
by Reference........................... 2
The Company.............................. 3
Use of Proceeds.......................... 3
Ratio of Earnings to Fixed Charges....... 3
Description of Debt Securities........... 4
Plan of Distribution..................... 13
Legal Matters............................ 14
Experts.................................. 14
</TABLE>
================================================================================
================================================================================
$100,000,000
% NOTES
DUE , 2005
[LOGO]
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
================================================================================
<PAGE> 62
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR ANY OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes..................... S-3
Risks Relating to Indexed Notes.......... S-18
Foreign Currency Risks................... S-19
United States Taxation................... S-22
Supplemental Plan of Distribution........ S-31
PROSPECTUS
Available Information.................... 2
Incorporation of Certain Information
by Reference........................... 2
The Company.............................. 3
Use of Proceeds.......................... 3
Ratio of Earnings to Fixed Charges....... 3
Description of Debt Securities........... 4
Plan of Distribution..................... 13
Legal Matters............................ 14
Experts.................................. 14
</TABLE>
================================================================================
================================================================================
$50,000,000
MEDIUM-TERM NOTES, SERIES A
[LOGO]
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
================================================================================
<PAGE> 63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee...................... $ 51,725
Rating Agency Fees....................................................... 92,500
Fees and Expenses of Trustee............................................. 5,500
Legal Fees and Expenses.................................................. 100,000
Blue Sky Fees and Expenses (including legal fees)........................ 20,000
Accounting Fees and Expenses............................................. 35,000
Printing Expenses........................................................ 50,000
Miscellaneous Expenses................................................... 5,275
---------
TOTAL.......................................................... $ 360,000
=========
</TABLE>
All of the above expenses except the registration fees are estimated. All
of such expenses will be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Delaware corporation. Section 145 of the Delaware General
Corporation Law generally provides that a corporation is empowered to indemnify
any person who is made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that he is or was a director, officer,
employee or agent of the Company or is or was serving, at the request of the
Company, in any of such capacities of another corporation or other enterprise,
if such director, officer, employee or agent acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 describes in
detail the right of the Company to indemnify any such person. The Certificate of
Incorporation of the Company and indemnification agreements between the Company
and each of its officers and directors provide generally for indemnification of
all such directors, officers and agents to the fullest extent permitted under
law. The Company's Certificate of Incorporation eliminates the liability of
directors to the fullest extent permitted under law. The Company's directors and
officers currently are covered by directors' and officers' liability insurance.
Reference is also made to the indemnification provisions contained in the
Underwriting Agreement and the Distribution Agreement (forms of which are being
filed as Exhibits 1.1 and 1.2 hereto, respectively) with respect to undertakings
to indemnify the Company, its directors, officers and controlling persons within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
against certain liabilities, including liabilities under the Securities Act or
otherwise.
For the undertaking with respect to indemnification, see Item 17 herein.
II-1
<PAGE> 64
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
1.2 Form of Distribution Agreement.
4.1 Form of Indenture (the "Indenture") between the Company and The Chase Manhattan
Bank, N.A. (the "Trustee").
5.1 Opinion of Haynes and Boone, L.L.P. as to the validity of Debt Securities to be
offered.
12.1 Statement regarding computation of ratios of earnings to fixed charges.
23.1 Consent of Haynes and Boone, L.L.P., contained in the opinion filed as Exhibit
5.1.
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney appears on the signature page hereof.
25.1 Form T-1 Statement of Eligibility and Qualification of the Trustee.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-2
<PAGE> 65
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 30th day of June,
1995.
COMMERCIAL METALS COMPANY
By: /s/ STANLEY A. RABIN
Stanley A. Rabin
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Lawrence A. Engels and David M. Sudbury,
his or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign, execute and file with the
Securities and Exchange Commission and any state securities regulatory board or
commission any documents relating to the proposed issuance and registration of
the securities offered pursuant to this Registration Statement on Form S-3 under
the Securities Act of 1933, including any amendment or amendments relating
thereto, with all exhibits and any and all documents required to be filed with
respect thereto with any regulatory authority, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as he or she might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons on
behalf of the Registrant in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- --------------
<C> <S> <C>
/s/ ALBERT A. EISENSTAT Director June 30, 1995
Albert A. Eisenstat
/s/ MOSES FELDMAN Director June 30, 1995
Moses Feldman
/s/ LAURENCE E. HIRSCH Director June 30, 1995
Laurence E. Hirsch
/s/ A. LEO HOWELL Vice President and Director June 30, 1995
A. Leo Howell
/s/ WALTER F. KAMMANN Director June 30, 1995
Walter F. Kammann
/s/ RALPH E. LOEWENBERG Director June 30, 1995
Ralph E. Loewenberg
/s/ DOROTHY G. OWEN Director June 30, 1995
Dorothy G. Owen
/s/ CHARLES B. PETERSON Director June 30, 1995
Charles B. Peterson
/s/ STANLEY A. RABIN President, Chief Executive June 30, 1995
Stanley A. Rabin Officer and Director
/s/ MARVIN SELIG President -- Steel Group and June 30, 1995
Marvin Selig Director
/s/ LAWRENCE A. ENGELS Vice President and Chief June 30, 1995
Lawrence A. Engels Financial Officer
(Principal Financial
Officer)
/s/ WILLIAM B. LARSON Controller (Principal June 30, 1995
William B. Larson Accounting Officer)
</TABLE>
II-3
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
1.2 Form of Distribution Agreement.
4.1 Form of Indenture (the "Indenture") between the Company and The Chase Manhattan
Bank, N.A. (the "Trustee").
5.1 Opinion of Haynes and Boone, L.L.P. as to the validity of Debt Securities to be
offered.
12.1 Statement regarding computation of ratios of earnings to fixed charges.
23.1 Consent of Haynes and Boone, L.L.P., contained in the opinion filed as Exhibit
5.1.
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney appears on the signature page hereof.
25.1 Form T-1 Statement of Eligibility and Qualification of the Trustee.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
Draft of June 12, 1995
COMMERCIAL METALS COMPANY
DEBT SECURITIES
--------------------
UNDERWRITING AGREEMENT
, 1995
Goldman, Sachs & Co.,
Morgan Stanley & Co., Inc.,
Lehman Brothers
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
From time to time Commercial Metals Company, a Delaware corporation (the
"Company"), proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of its debt securities (the "Securities") specified
in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities").
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial
public offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture
<PAGE> 2
and the registration statement and prospectus with respect thereto) the terms
of such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 33-.... in respect
of the Securities has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered or
to be delivered to the Representatives and, excluding exhibits to such
registration statement, but including all documents incorporated by
reference in the prospectus contained therein, to the Representatives for
each of the other Underwriters, have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act of 1933, as amended
(the "Act"), each in the form heretofore delivered to the Representatives);
and no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the Commission
pursuant to Rule 424(a) under the Act, is hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement, including
all exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of
the registration statement became effective but excluding Form T-1, each as
amended at the time such part of the registration statement became
effective, are hereinafter collectively called the "Registration
Statement"; the prospectus relating to the Securities, in the form in which
it has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, being hereinafter
called the "Prospectus"; any reference herein to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to
Sections 13(a) or 15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the applicable Designated Securities in the
form in which it is filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof, including any documents
incorporated by reference therein as of the date of such filing);
2
<PAGE> 3
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating to
such Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus;
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
3
<PAGE> 4
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable;
(g) The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Securities, such
Designated Securities will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture, which will
be substantially in the form filed as an exhibit to the Registration
Statement; the Indenture has been duly authorized and duly qualified under
the Trust Indenture Act and, at the Time of Delivery for such Designated
Securities (as defined in Section 4 hereof), the Indenture will constitute
a valid and legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture conforms, and the Designated Securities will conform, to the
descriptions thereof contained in the Prospectus as amended or supplemented
with respect to such Designated Securities;
(h) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Pricing Agreement, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the property or assets
of the Company is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this
Agreement or any Pricing Agreement or the Indenture, except such as have
been, or will have been prior to the Time of Delivery, obtained under the
Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
(i) The statements set forth in the Prospects under the captions
"Description of Securities" and "Description of Notes", insofar as they
purport to constitute a summary of the terms of the Securities, and under
the captions "Plan of Distribution" and "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;
(j) Neither the Company nor any of its subsidiaries is in violation of
its Certificate of Incorporation or By- laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound;
4
<PAGE> 5
(k) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries; and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(l) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(m) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(n) Deloitte Touche, who have certified certain financial statements
of the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder; and
(o) Other than as set forth in the Registration Statement, the Company
and its subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release
of such Designated Securities, the several Underwriters propose to offer such
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant to
the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice
to the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by certified or
official bank check or checks, payable to the order of the Company in the funds
specified in such Pricing Agreement, all in the manner and at the place and
time and date specified in such Pricing Agreement or at such other place and
time and date as the Representatives and the Company may agree upon in writing,
such time and date being herein called the "Time of Delivery" for such
Securities.
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<PAGE> 6
5. The Company agrees with each of the Underwriters of any Designated
Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating to
such Securities and prior to the Time of Delivery for such Securities which
shall be disapproved by the Representatives for such Securities promptly
after reasonable notice thereof; to advise the Representatives promptly of
any such amendment or supplement after such Time of Delivery and furnish
the Representatives with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act for so long as the delivery of a prospectus is required
in connection with the offering or sale of such Securities, and during such
same period to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the Commission, of
the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of such Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any such stop order or of
any such order preventing or suspending the use of any prospectus relating
to the Securities or suspending any such qualification, to promptly use its
best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of such Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City as
amended or supplemented in such quantities as the Representatives may
reasonably request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Act,
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<PAGE> 7
the Exchange Act or the Trust Indenture Act, to notify the Representatives
and upon their request to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as the Representatives may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158); and
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing to and including the later of
(i) the termination of trading restrictions for such Designated Securities,
as notified to the Company by the Representatives and (ii) the Time of
Delivery for such Designated Securities, not to offer, sell, contract to
sell or otherwise dispose of any debt securities of the Company which
mature more than one year after such Time of Delivery and which are
substantially similar to such Designated Securities, without the prior
written consent of the Representatives.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Pricing Agreement, any
Indenture, any Blue Sky and Legal Investment Memoranda, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all expenses
in connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(b) hereof, including the
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and Legal Investment Surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) any filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of any Trustee and any agent of any Trustee and the fees and
disbursements of counsel for any Trustee in connection with any Indenture and
the Securities; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements
7
<PAGE> 8
of the Company in or incorporated by reference in the Pricing Agreement
relating to such Designated Securities are, at and as of the Time of Delivery
for such Designated Securities, true and correct, the condition that the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the Representatives' reasonable
satisfaction;
(b) Counsel for the Underwriters shall have furnished to the
Representatives such opinion or opinions (a draft of each such opinion in
attached as Annex II(a) hereto), dated the Time of Delivery for such
Designated Securities, with respect to the matters covered in paragraphs
(i), (ii), (iv), (v), (vi), (x), (xi), (xiii) and (xiv) of subsection (c)
below as well as such other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Counsel for the Company satisfactory to the Representatives shall
have furnished to the Representatives their written opinion (a draft of
such opinion is attached as Annex II(b) hereto), dated the Time of Delivery
for such Designated Securities, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(iv) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Company;
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<PAGE> 9
(v) The Designated Securities have been duly authorized,
executed, authenticated, issued and delivered and constitute valid
and legally binding obligations of the Company entitled to the
benefits provided by the Indenture; and the Designated Securities and
the Indenture conform to the descriptions thereof in the Prospectus
as amended or supplemented;
(vi) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture has been
duly qualified under the Trust Indenture Act;
(vii) The issue and sale of the Designated Securities and the
compliance by the Company with all of the provisions of the Designated
Securities, the Indenture, this Agreement and the Pricing Agreement
with respect to the Designated Securities and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound or to
which any of the property or assets of the Company is subject, nor
will such actions result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any statute
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Designated Securities
or the consummation by the Company of the transactions contemplated by
this Agreement or such Pricing Agreement or the Indenture, except such
as have been obtained under the Act and the Trust Indenture Act and
such consents, approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Designated Securities by the Underwriters;
(ix) Neither the Company nor any of its subsidiaries is in
violation of its By-laws or Certificate of Incorporation or in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or any of its properties may be bound;
(x) The statements set forth in the Prospectus under the
captions "Description of Securities", and "Description of Notes"
insofar as they purport to constitute a summary of the terms of the
Stock, under the caption "Taxation", and under the captions "Plan of
Distribution" and "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are
accurate, complete and fair;
(xi) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act;
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<PAGE> 10
(xii) Other than as set forth in the Registration Statement, the
Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(xiii) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and they have no reason to believe that any of such
documents, when they became effective or were so filed, as the case
may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or, in the
case of other documents which were filed under the Act or the Exchange
Act with the Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading; and
(xiv) The Registration Statement and the Prospectus as amended
or supplemented and any further amendments and supplements thereto
made by the Company prior to the Time of Delivery for the Designated
Securities (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Act and
the Trust Indenture Act and the rules and regulations thereunder;
although they do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to
in the opinion in subsection (x) of this Section 7(c), they have no
reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date,
the Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Company prior to the Time of Delivery
(other than the financial statements and related schedules therein, as
to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as
of the Time of Delivery, either the Registration
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<PAGE> 11
Statement or the Prospectus as amended or supplemented or any further
amendment or supplement thereto made by the Company prior to the Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed or any contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Registration Statement
or the Prospectus as amended or supplemented which are not filed or
incorporated by reference or described as required;
(d) On the date of the Pricing Agreement for such Designated
Securities at a time prior to the execution of the Pricing Agreement with
respect to such Designated Securities and at the Time of Delivery for such
Designated Securities, the independent accountants of the Company who have
certified the financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement shall
have furnished to the Representatives a letter, dated the effective date of
the Registration Statement or the date of the most recent report filed with
the Commission containing financial statements and incorporated by
reference in the Registration Statement, if the date of such report is
later than such effective date, and a letter dated such Time of Delivery,
respectively, to the effect set forth in Annex II hereto, and with respect
to such letter dated such Time of Delivery, as to such other matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives (the executed copy of the letter
delivered prior to the execution of this Agreement is attached as Annex
I(a) hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of delivery is attached as Annex I(b)
hereto);
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended prior to
the date of the Pricing Agreement relating to the Designated Securities any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities, and (ii) since the
respective dates as of which information is given in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the
Designated Securities there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus as amended prior to the
date of the Pricing Agreement relating to the Designated Securities, the
effect of which, in any such case described in Clause (i) or (ii), is in
the judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Designated Securities on the terms and in the manner
contemplated in the Prospectus as first amended or supplemented relating to
the Designated Securities;
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(f) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities or preferred stock ;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities declared by either
Federal or New York State authorities; or (iv) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Designated Securities on the terms and in the manner
contemplated in the Prospectus as first amended or supplemented relating to
the Designated Securities;
(h) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(i) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Securities a
certificate or certificates of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the
performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (e) of this Section and as to such other matters as
the Representatives may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any such amendment or supplement in reliance
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<PAGE> 13
upon and in conformity with written information furnished to the Company by any
Underwriter of Designated Securities through the Representatives expressly for
use in the Prospectus as amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through
the Representatives expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party.
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(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters of the Designated Securities on the other
from the offering of the Designated Securities to which such loss, claim,
damage or liability (or action in respect thereof) relates. If, however,
the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and the
Underwriters of the Designated Securities on the other in connection with
the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and such Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from such offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by such Underwriters. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or such Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the applicable Designated
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Underwriters of
Designated Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to
such Securities and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend,
14
<PAGE> 15
upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the
meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Designated Securities on such terms. In the event that, within
the respective prescribed period, the Representatives notify the Company that
they have so arranged for the purchase of such Designated Securities, or the
Company notifies the Representatives that it has so arranged for the purchase
of such Designated Securities, the Representatives or the Company shall have
the right to postpone the Time of Delivery for such Designated Securities for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus as
amended or supplemented, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term "Underwriter" as used
in this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to the Pricing
Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by
the Representatives and the Company as provided in subsection (a) above,
the aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount
of the Designated Securities, then the Company shall have the right to
require each non-defaulting Underwriter to purchase the principal amount of
Designated Securities which such Underwriter agreed to purchase under the
Pricing Agreement relating to such Designated Securities and, in addition,
to require each non-defaulting Underwriter to purchase its pro rata share
(based on the principal amount of Designated Securities which such
Underwriter agreed to purchase under such Pricing Agreement) of the
Designated Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by
the Representatives and the Company as provided in subsection (a) above,
the aggregate principal amount of Designated Securities which remains
unpurchased exceeds one-eleventh of the aggregate principal amount of the
Designated Securities, as referred to in subsection (b) above, or if the
Company shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Designated Securities of a
defaulting Underwriter or Underwriters, then the Pricing Agreement relating
to such Designated Securities shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company, except for
the expenses to be borne by the Company and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
15
<PAGE> 16
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in Sections 6 and 8 hereof; but, if for any other reason
Designated Securities are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Company shall then be under no
further liability to any Underwriter with respect to such Designated Securities
except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Representatives as set forth in
the Pricing Agreement; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement: Attention: Secretary; provided, however, that
any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered
or sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors of the
Company and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of the Securities
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16
<PAGE> 17
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each
of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
IF THE FOREGOING IS IN ACCORDANCE WITH YOUR UNDERSTANDING, PLEASE SIGN AND
RETURN TO US SIX COUNTERPARTS HEREOF.
Very truly yours,
COMMERCIAL METALS COMPANY
By: . . . . . . . . . . . . . . . . .
Name:
Title:
17
<PAGE> 18
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
By: . . . . . . . . . . . . . . . . . . . . . . .
Goldman, Sachs & Co.
MORGAN STANLEY & CO., INC.
By: . . . . . . . . . . . . . . . . . . . . . . .
Morgan Stanley & Co., Inc.
LEHMAN BROTHERS
By: . . . . . . . . . . . . . . . . . . . . . . .
Lehman Brothers
18
<PAGE> 19
ANNEX I
PRICING AGREEMENT
Goldman, Sachs & Co.,
Morgan Stanley & Co., Inc.,
Lehman Brothers
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
, 19..
Ladies and Gentlemen:
Commercial Metals Company, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated . . . . . . . . . . . ., 19 . . (the
"Underwriting Agreement"), between the Company on the one hand and Goldman,
Sachs & Co., Morgan Stanley & Co., Inc., and Lehman Brothers on the other hand,
to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives
herein and in the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and on
behalf of each of the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the Representatives
referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time
and place and at the purchase price to the Underwriters set forth in Schedule
II hereto, the principal amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto.
<PAGE> 20
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination upon request, but
without warranty on the part of the Representatives as to the authority of the
signers thereof
Very truly yours,
COMMERCIAL METALS COMPANY
By: . . . . . . . . . . . . . . . . .
Name:
Title:
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
By: . . . . . . . . . . . . . . . .
Goldman, Sachs & Co.
MORGAN STANLEY & CO., INC.
By: . . . . . . . . . . . . . . . .
Morgan Stanley & Co., Inc.
LEHMAN BROTHERS
By: . . . . . . . . . . . . . . . .
Lehman Brothers
2
<PAGE> 21
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of
Designated Securities
to be Purchased
---------------------
Underwriter
-----------
<S> <C>
Goldman, Sachs & Co. $
Morgan Stanley & Co. $
Lehman Brothers $
[NAMES OF OTHER UNDERWRITERS] $
Total $
</TABLE>
3
<PAGE> 22
SCHEDULE II:
TITLE OF DESIGNATED SECURITIES:
AGGREGATE PRINCIPAL AMOUNT:
[$]
PRICE TO PUBLIC:
% of the principal amount of the Designated Securities, plus accrued
interest[, if any,] from to land accrued amortization[, if
any,] from to ]
PURCHASE PRICE BY UNDERWRITERS:
% of the principal amount of the Designated Securities, plus accrued
interest from to [and accrued amortization[, if any,]
from to ]
FORM OF DESIGNATED SECURITIES:
Book-entry only form represented by one or more global securities deposited
with The Depository Trust Company ("DTC") or its designated custodian, to
be made available for checking by the Representatives at least twenty-four
hours prior to the Time of Delivery at the office of DTC.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
New York Clearing House (next day) funds
TIME OF DELIVERY:
a.m. (New York City time), , 1995
INDENTURE:
Indenture dated , 1995, between the Company and , as Trustee
MATURITY:
INTEREST RATE:
4
<PAGE> 23
INTEREST PAYMENT DATES:
[months and dates, commencing .............., 19..]
REDEMPTION PROVISIONS:
[No provisions for redemption]
SINKING FUND PROVISIONS:
[No sinking fund provisions]
DEFEASANCE PROVISIONS:
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
ADDITIONAL CLOSING CONDITIONS:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
5
<PAGE> 24
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been separately furnished to the representative or
representatives of the Underwriters (the "Representatives~) such term to
include an Underwriter or Underwriters who act without any firm being
designated as its or their representatives and are attached hereto;
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus and/or
included in the Company's quarterly report on Form 10-(1 incorporated by
reference into the Prospectus as indicated in their reports thereon copies
of which have been separately furnished to the Representatives; and on the
basis of specified procedures including inquiries of officials of the
Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came
to their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 1 O-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for five such fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 1 O-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
6
<PAGE> 25
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus or
included in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 1 0-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Representatives,
or any increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
7
<PAGE> 26
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s) included
or incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives which are derived
from the general accounting records of the Company and its subsidiaries,
which appear in the Prospectus (excluding documents incorporated by
reference), or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives or in documents
incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
All references in this Annex II to the Prospectus shall be deemed to refer to
the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Securities for
purposes of the letter delivered at the Time of Delivery for such Designated
Securities.
8
<PAGE> 1
EXHIBIT 1.2
Draft of June 12, 1995
COMMERCIAL METALS COMPANY
$50,000,000
MEDIUM-TERM NOTES[, SERIES .....]
DISTRIBUTION AGREEMENT
...................., 1995
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Commercial Metals Company, a Delaware corporation (the "Company"), proposes
to issue and sell from time to time its Medium-Term Notes (the "Securities") in
an aggregate amount up to $50,000,000 and agrees with you (the "Agent") as set
forth in this Agreement.
Subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell Securities directly on its own behalf, the
Company hereby (i) appoints each Agent as an agent of the Company for the
purpose of soliciting and receiving offers to purchase Securities from the
Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent as principal, it will enter into a separate agreement
(each, a "Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof. This
Distribution Agreement shall not be construed to create either an obligation on
the part of the Company to sell any Securities or an obligation of the Agents
to purchase Securities as principal.
The Securities will be issued under an indenture, dated as of
....................., 1995 (the "Indenture"), between the Company and [NAME OF
TRUSTEE], as Trustee (the "Trustee"). The Securities shall have the maturity
ranges, interest rates, if any, redemption provisions and other terms set forth
in the Prospectus referred to below as it may be amended or supplemented from
time to time. The Securities will be issued, and the terms and rights thereof
established, from time to time by the Company in accordance with the Indenture.
I-1
<PAGE> 2
1. The Company represents and warrants to, and agrees with, each Agent
that:
(a) A registration statement on Form S-3 (File No. 33-......) in
respect of the Securities has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered or
to be delivered to such Agent, excluding exhibits to such registration
statement, but including all documents incorporated by reference in the
prospectus included therein, have been declared effective by the Commission
in such form; no other document with respect to such registration statement
or document incorporated by reference therein has heretofore been filed or
transmitted for filing with the Commission (other than the prospectuses
filed pursuant to Rule 424(b) of the rules and regulations of the
Commission under the Act, each in the form heretofore delivered to the
Agents); and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act, are hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement, including
all exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of
the registration statement became effective but excluding Form T-1, each as
amended at the time such part of the registration statement became
effective, is hereinafter collectively called the "Registration Statement";
the prospectus (including, if applicable, any prospectus supplement)
relating to the Securities, in the form in which it has most recently been
filed, or transmitted for filing, with the Commission on or prior to the
date of this Agreement, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to the applicable form under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus, including any supplement to the Prospectus that sets forth
only the terms of a particular issue of the Securities (a "Pricing
Supplement"), shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated therein by reference; any reference to
any amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement;
and any reference to the Prospectus as amended or supplemented shall be
deemed to refer to and include the Prospectus as amended or supplemented
(including by the applicable Pricing Supplement filed in accordance with
Section 4(a) hereof) in relation to Securities to be sold pursuant to this
Agreement, in the form filed or transmitted for filing with the Commission
pursuant to Rule 424(b) under the Act and in accordance with Section 4(a)
hereof, including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform
I-2
<PAGE> 3
in all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by any Agent expressly for use in the Prospectus as amended or supplemented
to relate to a particular issuance of Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus;
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable;
(g) The Securities have been duly authorized, and, when issued and
delivered pursuant to this Agreement and any Terms Agreement, will have
been duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture, which will be substantially in the form
filed as an exhibit to the Registration Statement; the Indenture has been
duly authorized and duly qualified under the Trust Indenture Act and
constitutes a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; and the
Indenture conforms and the Securities of any particular issuance of
Securities will conform to the descriptions thereof contained in the
Prospectus as amended or supplemented to relate to such issuance of
Securities;
I-3
<PAGE> 4
(h) The issue and sale of the Securities, the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Terms Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the property or assets of the
Company is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation, as amended, or the By-laws
of the Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
of its properties; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body is required for the solicitation of offers to purchase Securities,
the issue and sale of the Securities or the consummation by the Company of
the other transactions contemplated by this Agreement, any Terms Agreement
or the Indenture, except such as have been, or will have been prior to the
Commencement Date (as defined in Section 3 hereof), obtained under the Act
or the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the solicitation by such Agent of
offers to purchase Securities from the Company and with purchases of
Securities by such Agent as principal, as the case may be, in each case in
the manner contemplated hereby;
(i) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By- laws or in default in the
performance or observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(j) The statements set forth in the Prospectus under the caption
"Description of Debt Securities" and "Description of Notes", insofar as
they purport to constitute a summary of the terms of the Securities, under
the caption "Taxation", and under the caption "Plan of Distribution",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(k) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or to which any property of the Company or any of
its subsidiaries is subject, which, if determined adversely to the Company
or any of its subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(l) The Company is not, and after giving effect to each offering and
sale of the Securities will not be, an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(m) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
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<PAGE> 5
(n) Immediately after any sale of Securities by the Company hereunder
or under any Terms Agreement, the aggregate amount of Securities which
shall have been issued and sold by the Company hereunder or under any Terms
Agreement and of any debt securities of the Company (other than such
Securities) that shall have been issued and sold pursuant to the
Registration Statement will not exceed the amount of debt securities
registered under the Registration Statement;
(o) Deloitte Touche who have certified certain financial statements
of the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder; and
(p) Other than as set forth in the Registration Statement, the
Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
2. (a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Agent hereby agrees, as agent of the Company, to use its reasonable efforts
to solicit and receive offers to purchase the Securities from the Company
upon the terms and conditions set forth in the Prospectus as amended or
supplemented from time to time. So long as this Agreement shall remain in
effect with respect to any Agent, the Company shall not, without the
consent of such Agent, solicit or accept offers to purchase, or sell, any
debt securities with a maturity at the time of original issuance of 9
months to [ ] years except pursuant to this Agreement, any Terms
Agreement, or except pursuant to a private placement not constituting a
public offering under the Act or except in connection with a firm
commitment underwriting pursuant to an underwriting agreement that does not
provide for a continuous offering of medium-term debt securities. However,
the Company reserves the right to sell, and may solicit and accept offers
to purchase, Securities directly on its own behalf in transactions with
persons other than broker-dealers, and, in the case of any such sale not
resulting from a solicitation made by any Agent, no commission will be
payable with respect to such sale. These provisions shall not limit
Section 4(f) hereof or any similar provision included in any Terms
Agreement.
Procedural details relating to the issue and delivery of Securities,
the solicitation of offers to purchase Securities and the payment in each
case therefor shall be as set forth in the Administrative Procedure
attached hereto as Annex II as it may be amended from time to time by
written agreement between the Agent and the Company (the "Administrative
Procedure"). The provisions of the Administrative Procedure shall apply to
all transactions contemplated hereunder other than those made pursuant to a
Terms Agreement. Each Agent and the Company agree to perform the
respective duties and obligations specifically provided to be performed by
each of them in the Administrative Procedure. The Company will furnish to
the Trustee a copy of the Administrative Procedure as from time to time in
effect.
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<PAGE> 6
The Company reserves the right, in its sole discretion, to instruct
the Agent to suspend at any time, for any period of time or permanently,
the solicitation of offers to purchase the Securities. As soon as
practicable, but in any event not later than one business day in New York
City, after receipt of notice from the Company, the Agent will suspend
solicitation of offers to purchase Securities from the Company until such
time as the Company has advised the Agent that such solicitation may be
resumed. During such period, the Company shall not be required to comply
with the provisions of Sections 4(h), 4(i), 4(j) and 4(k). Upon advising
the Agent that such solicitation may be resumed, however, the Company shall
simultaneously provide the documents required to be delivered by Sections
4(h), 4(i), 4(j) and 4(k), and the Agent shall have no obligation to
solicit offers to purchase the Securities until such documents have been
received by the Agent. In addition, any failure by the Company to comply
with its obligations hereunder, including without limitation its
obligations to deliver the documents required by Sections 4(h), 4(i), 4(j)
and 4(k), shall automatically terminate the Agent obligations hereunder,
including without limitation its obligations to solicit offers to purchase
the Securities hereunder as agent or to purchase Securities hereunder as
principal.
The Company agrees to pay each Agent a commission, at the time of
settlement of any sale of a Security by the Company as a result of a
solicitation made by such Agent, in an amount equal to the following
applicable percentage of the principal amount of such Security sold:
<TABLE>
<CAPTION>
Commission
(percentage of
aggregate
principal amount
Range of Maturities of Securities sold)
------------------- -------------------
<S> <C>
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .675%
From 20 years to 30 years .750%
From more than 30 years to less than 50 years .875%
50 years and more 1.000%
</TABLE>
(b) Each sale of Securities to any Agent as principal shall be made
in accordance with the terms of this Agreement and (unless the Company and
such Agent shall otherwise agree) a Terms Agreement which will provide for
the sale of such Securities to, and the purchase thereof by,
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<PAGE> 7
such Agent; a Terms Agreement may also specify certain provisions relating
to the reoffering of such Securities by such Agent; the commitment of any
Agent to purchase Securities as principal, whether pursuant to any Terms
Agreement or otherwise, shall be deemed to have been made on the basis of
the representations and warranties of the Company herein contained and
shall be subject to the terms and conditions herein set forth; each Terms
Agreement shall specify the principal amount of Securities to be purchased
by any Agent pursuant thereto, the price to be paid to the Company for such
Securities, any provisions relating to rights of, and default by,
underwriters acting together with such Agent in the reoffering of the
Securities and the time and date and place of delivery of and payment for
such Securities; and such Terms Agreement shall also specify any
requirements for opinions of counsel, accountants' letters and officers'
certificates pursuant to Section 4 hereof. Each Agent proposes to offer
Securities purchased by it as principal for sale at prevailing market
prices or prices related thereto at the time of sale, which may be equal
to, greater than or less than the price at which such Securities are
purchased by such Agent from the Company.
For each sale of Securities to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the issue
and delivery of such Securities and payment therefor shall be as set forth
in the Administrative Procedure. For each such sale of Securities to an
Agent as principal that is not made pursuant to a Terms Agreement, the
Company agrees to pay such Agent a commission (or grant an equivalent
discount) as provided in Section 2(a) hereof and in accordance with the
schedule set forth therein.
Each time and date of delivery of and payment for Securities to be
purchased by an Agent as principal, whether set forth in a Terms Agreement
or in accordance with the Administrative Procedure, is referred to herein
as a "Time of Delivery".
(c) Each Agent agrees, with respect to any Security denominated in a
currency other than U.S. dollars, as agent, directly or indirectly, not to
solicit offers to purchase, and as principal under any Terms Agreement or
otherwise, directly or indirectly, not to offer, sell or deliver, such
Security in, or to residents of, the country issuing such currency, except
as permitted by applicable law.
3. The documents required to be delivered pursuant to Section 6 hereof on
the Commencement Date (as defined below) shall be delivered to the Agents at
the offices of New York, New York, at 11:00 a.m., New York City time, on the
date of this Agreement, which date and time of such delivery may be postponed
by agreement between the Agents and the Company but in no event shall be later
than the day prior to the date on which solicitation of offers to purchase
Securities is commenced or on which any Terms Agreement is executed (such time
and date being referred to herein as the "Commencement Date").
4. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus (A) prior to the Commencement Date which shall
be disapproved by any Agent promptly after reasonable notice thereof or (B)
after the date of any Terms Agreement or other agreement by an Agent to
purchase Securities as principal and prior to the related Time of Delivery
which shall be disapproved by any Agent party to such Terms Agreement or so
purchasing as principal promptly after reasonable notice thereof; (ii) to
prepare, with respect to any Securities to be sold through or to such Agent
pursuant to this Agreement, a Pricing Supplement with respect to such
Securities in a form previously approved by such Agent and to file such
Pricing Supplement
I-7
<PAGE> 8
pursuant to Rule 424(b)(3) under the Act not later than the close of
business of the Commission on the fifth business day after the date on
which such Pricing Supplement is first used; (iii) to make no amendment or
supplement to the Registration Statement or Prospectus, other than any
Pricing Supplement, at any time prior to having afforded each Agent a
reasonable opportunity to review and comment thereon; (iv) to file promptly
all reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Securities, and during such same period to advise such Agent, promptly
after the Company receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or has become effective or any
supplement to the Prospectus or any amended Prospectus has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission
for the amendment or supplement of the Registration Statement or Prospectus
or for additional information; and (v) in the event of the issuance of any
such stop order or of any such order preventing or suspending the use of
any such prospectus or suspending any such qualification, to use promptly
its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as such Agent may
reasonably request to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as such Agent may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein for as long as may be necessary to complete the distribution or
sale of the Securities; provided, however, that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish such Agent with copies of the Registration Statement and each
amendment thereto, with copies of the Prospectus as each time amended or
supplemented, other than any Pricing Supplement (except as provided in the
Administrative Procedure), in the form in which it is filed with the
Commission pursuant to Rule 424 under the Act, and with copies of the
documents incorporated by reference therein, the copies of each of the
above-referenced documents to be delivered in New York City and in such
quantities as such Agent may reasonably request; and, if the delivery of a
prospectus is required at any time in connection with the offering or sale
of the Securities (including Securities purchased from the Company by such
Agent as principal) and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or the
Trust Indenture Act, to notify such Agent and request such Agent, in its
capacity as agent of the Company, to suspend solicitation of offers to
purchase Securities from the Company (and, if so notified, such Agent shall
cease such solicitations as soon as practicable, but in any event not later
than one business day later); and if the Company shall decide to amend or
supplement the Registration Statement or the Prospectus as then amended or
supplemented, to so advise such Agent promptly by telephone (with
confirmation in writing)
I-8
<PAGE> 9
and to prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or the Prospectus as
then amended or supplemented that will correct such statement or omission
or effect such compliance; provided, however, that if during such same
period such Agent continues to own Securities purchased from the Company by
such Agent as principal or such Agent is otherwise required to deliver a
prospectus in respect of transactions in the Securities, the Company shall
promptly prepare and file with the Commission such an amendment or
supplement;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) So long as any Securities are outstanding, to furnish to such
Agent copies of all reports or other communications (financial or other)
furnished to stockholders, and deliver to such Agent (i) as soon as they
are available, copies of any reports and financial statements furnished to
or filed with the Commission or any national securities exchange on which
any class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company
as such Agent may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(f) That, from the date of any Terms Agreement with such Agent or
other agreement by such Agent to purchase Securities as principal and
continuing to and including the later of (i) the termination of the trading
restrictions for the Securities purchased thereunder, as notified to the
Company by such Agent and (ii) the related Time of Delivery, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of the
Company which both mature more than 9 months after such Time of Delivery
and are substantially similar to the Securities, without the prior written
consent of such Agent;
(g) That each acceptance by the Company of an offer to purchase
Securities hereunder (including any purchase by such Agent as principal not
pursuant to a Terms Agreement), and each execution and delivery by the
Company of a Terms Agreement with such Agent, shall be deemed to be an
affirmation to such Agent that the representations and warranties of the
Company contained in or made pursuant to this Agreement are true and
correct as of the date of such acceptance or of such Terms Agreement, as
the case may be, as though made at and as of such date, and an undertaking
that such representations and warranties will be true and correct as of the
settlement date for the Securities relating to such acceptance or as of the
Time of Delivery relating to such sale, as the case may be, as though made
at and as of such date (except that such representations and warranties
shall be deemed to relate to the Registration Statement and the Prospectus
as amended and supplemented relating to such Securities);
(h) That reasonably in advance of each time the Registration
Statement or the Prospectus shall be amended or supplemented (other than by
a Pricing Supplement), each time a document filed under the Act or the
Exchange Act is incorporated by reference into the Prospectus, and each
time the Company sells Securities to such Agent as principal pursuant to a
Terms Agreement and such Terms Agreement specifies the delivery of an
opinion or opinions by Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel
to the Agents, as a condition to the purchase of
I-9
<PAGE> 10
Securities pursuant to such Terms Agreement, the Company shall furnish to
such counsel such papers and information as they may reasonably request to
enable them to furnish to such Agent the opinion or opinions referred to in
Section 6(b) hereof;
(i) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time
a document filed under the Act or the Exchange Act is incorporated by
reference into the Prospectus and each time the Company sells Securities to
such Agent as principal pursuant to a Terms Agreement and such Terms
Agreement specifies the delivery of an opinion under this Section 4(i) as a
condition to the purchase of Securities pursuant to such Terms Agreement,
the Company shall furnish or cause to be furnished forthwith to such Agent
a written opinion of Haynes and Boone, L.L.P., counsel for the Company, or
other counsel for the Company satisfactory to such Agent, dated the date of
such amendment, supplement, incorporation or Time of Delivery relating to
such sale, as the case may be, in form satisfactory to such Agent, to the
effect that such Agent may rely on the opinion of such counsel referred to
in Section 6(c) hereof which was last furnished to such Agent to the same
extent as though it were dated the date of such letter authorizing reliance
(except that the statements in such last opinion shall be deemed to relate
to the Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such opinion, an opinion of the
same tenor as the opinion of such counsel referred to in Section 6(c)
hereof but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date;
(j) That each time the Registration Statement or the Prospectus shall
be amended or supplemented and each time that a document filed under the
Act or the Exchange Act is incorporated by reference into the Prospectus,
in either case to set forth financial information included in or derived
from the Company's consolidated financial statements or accounting records,
and each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement and such Terms Agreement specifies the
delivery of a letter under this Section 4(j) as a condition to the purchase
of Securities pursuant to such Terms Agreement, the Company shall cause the
independent certified public accountants who have certified the financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement forthwith to furnish such Agent a
letter, dated the date of such amendment, supplement, incorporation or Time
of Delivery relating to such sale, as the case may be, in form satisfactory
to such Agent, of the same tenor as the letter referred to in Section 6(d)
hereof but modified to relate to the Registration Statement and the
Prospectus as amended or supplemented to the date of such letter, with such
changes as may be necessary to reflect changes in the financial statements
and other information derived from the accounting records of the Company,
to the extent such financial statements and other information are available
as of a date not more than five business days prior to the date of such
letter; provided, however, that, with respect to any financial information
or other matter, such letter may reconfirm as true and correct at such date
as though made at and as of such date, rather than repeat, statements with
respect to such financial information or other matter made in the letter
referred to in Section 6(d) hereof which was last furnished to such Agent;
(k) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time
a document filed under the Act or the Exchange Act is incorporated by
reference into the Prospectus and each time the Company sells Securities to
such Agent as principal and the applicable Terms Agreement specifies the
delivery of a certificate under this Section 4(k) as a condition to the
purchase of Securities pursuant to such Terms Agreement, the Company shall
furnish or cause to be furnished forthwith
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<PAGE> 11
to such Agent a certificate, dated the date of such supplement, amendment,
incorporation or Time of Delivery relating to such sale, as the case may
be, in such form and executed by such officers of the Company as shall be
satisfactory to such Agent, to the effect that the statements contained in
the certificates referred to in Section 6(i) hereof which were last
furnished to such Agent are true and correct at such date as though made at
and as of such date (except that such statements shall be deemed to relate
to the Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such certificate, certificates of
the same tenor as the certificates referred to in said Section 6(i) but
modified to relate to the Registration Statement and the Prospectus as
amended and supplemented to such date; and
(l) To offer to any person who has agreed to purchase Securities from
the Company as the result of an offer to purchase solicited by such Agent
the right to refuse to purchase and pay for such Securities if, on the
related settlement date fixed pursuant to the Administrative Procedure, any
condition set forth in Section 6(a), 6(e), 6(f) or 6(g) hereof shall not
have been satisfied (it being understood that the judgment of such person
with respect to the impracticability or inadvisability of such purchase of
Securities shall be substituted, for purposes of this Section 4(l), for the
respective judgments of an Agent with respect to certain matters referred
to in such Sections 6(e) and 6(g), and that such Agent shall have no duty
or obligation whatsoever to exercise the judgment permitted under such
Sections 6(e) and 6(g) on behalf of any such person).
5. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the registration of
the Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus, the Prospectus and any Pricing Supplements and all other amendments
and supplements thereto and the mailing and delivering of copies thereof to
such Agent; (ii) the fees, disbursements and expenses of counsel for the Agents
in connection with the establishment of the program contemplated hereby, any
opinions to be rendered by such counsel hereunder and under any Terms Agreement
and the transactions contemplated hereunder and under any Terms Agreement;
(iii) the cost of printing, producing or reproducing this Agreement, any Terms
Agreement, any Indenture, any Blue Sky and Legal Investment Memoranda, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iv) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 4(b)
hereof, including the fees and disbursements of counsel for the Agents in
connection with such qualification and in connection with the Blue Sky and
legal investment surveys; (v) any fees charged by securities rating services
for rating the Securities; (vi) any filing fees incident to, and the fees and
disbursements of counsel for the Agents in connection with, any required review
by the National Association of Securities Dealers, Inc. of the terms of the
sale of the Securities; (vii) the cost of preparing the Securities; (viii) the
fees and expenses of any Trustee and any agent of any Trustee and any transfer
or paying agent of the Company and the fees and disbursements of counsel for
any Trustee or such agent in connection with any Indenture and the Securities;
(ix) any advertising expenses connected with the solicitation of offers to
purchase and the sale of Securities so long as such advertising expenses have
been approved by the Company; and (x) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. Except as provided in Sections 7
and 8 hereof, each Agent shall pay all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, at any time
("Solicitation Time") to solicit offers to purchase the Securities and the
obligation of any Agent to purchase Securities as principal, pursuant to any
Terms Agreement or otherwise, shall in each case be subject, in such
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<PAGE> 12
Agent's discretion, to the condition that all representations and warranties
and other statements of the Company herein (and, in the case of an obligation
of an Agent under a Terms Agreement, in or incorporated by reference in such
Terms Agreement) are true and correct at and as of the Commencement Date and
any applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of
such Solicitation Time or Time of Delivery, as the case may be, the condition
that prior to such Solicitation Time or Time of Delivery, as the case may be,
the Company shall have performed all of its obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to
such Solicitation Time or Time of Delivery, as the case may be, the
Prospectus as amended or supplemented (including the Pricing Supplement)
with respect to such Securities shall have been filed with the Commission
pursuant to Rule 424(b) under the Act within the applicable time period
prescribed for such filing by the rules and regulations under the Act and
in accordance with Section 4(a) hereof; (ii) no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and (iii) all requests for additional information on the part
of the Commission shall have been complied with to the reasonable
satisfaction of such Agent;
(b) Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the
Agents, shall have furnished to such Agent (i) such opinion or opinions (a
draft of each such opinion is attached as Annex II(a) hereto), dated the
Commencement Date, with respect to the matters covered in paragraphs (i),
(ii), (iv), (vi), (x), (xi), (xiii) and (xiv) of subsection (c) below, as
well as such other related matters as such Agent may reasonably request,
and (ii) if and to the extent requested by such Agent, with respect to each
applicable date referred to in Section 4(h) hereof that is on or prior to
such Solicitation Time or Time of Delivery, as the case may be, an opinion
or opinions, dated such applicable date, to the effect that such Agent may
rely on the opinion or opinions which were last furnished to such Agent
pursuant to this Section 6(b) to the same extent as though it or they were
dated the date of such letter authorizing reliance (except that the
statements in such last opinion or opinions shall be deemed to relate to
the Registration Statement and the Prospectus as amended and supplemented
to such date) or, in any case, in lieu of such an opinion or opinions, an
opinion or opinions of the same tenor as the opinion or opinions referred
to in clause (i) but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date; and in each case
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Haynes and Boone, L.L.P., counsel for the Company, or
other counsel for the Company satisfactory to such Agent, shall have
furnished to such Agent their written opinions (a draft of each such
opinion is attached as Annex II(b) hereto), dated the Commencement Date and
each applicable date referred to in Section 4(i) hereof that is on or prior
to such Solicitation Time or Time of Delivery, as the case may be, in form
and substance satisfactory to such Agent, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus as amended or supplemented;
I-12
<PAGE> 13
(ii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or to which any property of the Company or any of its
subsidiaries is subject which, if determined adversely to the Company
or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries; and to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(iv) This Agreement and any applicable Terms Agreement have
been duly authorized, executed and delivered by the Company;
(v) The Securities have been duly authorized and, when duly
executed, authenticated, issued and delivered by the Company, will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture; and the Indenture
conforms and the Securities will conform to the descriptions thereof
in the Prospectus as amended or supplemented;
(vi) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture has been
duly qualified under the Trust Indenture Act;
(vii) The issue and sale of the Securities, the compliance by
the Company with all of the provisions of the Securities, the
Indenture, this Agreement and any applicable Terms Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company is a party or by
which the Company is bound or to which any of the property or assets
of the Company is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation, as
amended, of the Company or the By-laws of the Company or any statute
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body
is required for the solicitation of offers to purchase Securities, the
issue and sale of the Securities or the consummation by the Company of
the other transactions contemplated by this Agreement, any applicable
Terms Agreement, or the Indenture, except such as have been obtained
under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the solicitation by the Agents of offers to purchase Securities from
the Company and with purchases of Securities by an Agent as principal,
as the case may be, in each case in the manner contemplated hereby;
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<PAGE> 14
(ix) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(x) The statements set forth in the Prospectus under the
caption "Description of Debt Securities" and "Description of Notes",
insofar as they purport to constitute a summary of the terms of the
Securities, under the caption "Taxation", and under the caption "Plan
of Distribution", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate, complete
and fair;
(xi) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act;
(xii) Other than as set forth in the Registration Statement, the
Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(xiii) The documents incorporated by reference in the Prospectus
(other than the financial statements and related schedules therein, as
to which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and they have no reason to
believe that any of such documents, when they became effective or were
so filed, as the case may be, contained, in the case of a registration
statement which became effective under the Act, an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and, in the case of other documents which were filed under
the Act or the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed, not misleading; and
(xiv) The Registration Statement and the Prospectus as amended
and supplemented and any further amendments and supplements thereto
made by the Company prior to the date of such opinion (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Trust Indenture Act
and the rules and regulations thereunder; although they do not assume
any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus,
except for those referred to in the opinion in subsection (x) of this
Section 6(c), they have no reason to believe
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<PAGE> 15
that, as of its effective date, the Registration Statement or any
further amendment or supplement thereto made by the Company prior to
the date of such opinion (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of the date of
such opinion, the Prospectus as amended or supplemented or any further
amendment or supplement thereto made by the Company prior to the date
of such opinion (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed or any contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Registration Statement
or the Prospectus as amended or supplemented which are not filed or
incorporated by reference or described as required;
(d) Not later than 10:00 a.m., New York City time, on the
Commencement Date and on each applicable date referred to in Section 4(j)
hereof that is on or prior to such Solicitation Time or Time of Delivery,
as the case may be, the independent certified public accountants who have
certified the financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement shall
have furnished to such Agent a letter, dated the Commencement Date or such
applicable date, as the case may be, in form and substance satisfactory to
such Agent, to the effect set forth in Annex III hereto; (the executed copy
of the letter delivered prior to the execution of this Agreement is
attached as Annex I(a) hereto and a draft of the form of the letter to be
delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of delivery is attached as Annex
I(b) hereto)
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended or
supplemented prior to the date of the Pricing Supplement relating to the
Securities to be delivered at the relevant Time of Delivery any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus as amended or supplemented prior to the
date of the Pricing Supplement relating to the Securities to be delivered
at the relevant Time of Delivery and (ii) since the respective dates as of
which information is given in the Prospectus as amended or supplemented
prior to the date of the Pricing Supplement relating to the Securities to
be delivered at the relevant Time of Delivery there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented prior to the date of the Pricing
Supplement relating to the Securities to be delivered at the relevant Time
of Delivery, the effect of which, in any such case described in Clause (i)
or (ii), is in the judgment of such Agent so material and adverse as to
make it impracticable or inadvisable to proceed with the solicitation by
such Agent of offers to purchase Securities from the Company or the
purchase by such Agent of Securities from the Company as principal, as the
case may be, on the terms and
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<PAGE> 16
in the manner contemplated in the Prospectus as amended or supplemented
prior to the date of the Pricing Supplement relating to the Securities to
be delivered at the relevant Time of Delivery;
(f) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension or
material limitation in trading in the Company's securities on the New York
Stock Exchange; (iii) a general moratorium on commercial banking activities
in New York declared by either Federal or New York State authorities; or
(iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, if
the effect of any such event specified in this Clause (iv) in the judgment
of such Agent makes it impracticable or inadvisable to proceed with the
solicitation of offers to purchase Securities or the purchase of the
Securities from the Company as principal pursuant to the applicable Terms
Agreement or otherwise, as the case may be, on the terms and in the manner
contemplated in the Prospectus;
(h) The Company shall have complied with the provisions of Section
4(c) hereof with respect to the furnishing of the documents described
therein on the New York Business Day next succeeding the date of this
Agreement; and
(i) The Company shall have furnished or caused to be furnished to
such Agent certificates of officers of the Company dated the Commencement
Date and each applicable date referred to in Section 4(k) hereof that is on
or prior to such Solicitation Time or Time of Delivery, as the case may be,
in such form and executed by such officers of the Company as shall be
satisfactory to such Agent, as to the accuracy of the representations and
warranties of the Company herein at and as of the Commencement Date or such
applicable date, as the case may be, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to the
Commencement Date or such applicable date, as the case may be, as to the
matters set forth in subsections (a) and (e) of this Section 6, and as to
such other matters as such Agent may reasonably request.
7. (a) The Company will indemnify and hold harmless each Agent
against any losses, claims, damages or liabilities, joint or several, to
which such Agent may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse such Agent for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement,
the Prospectus, the Prospectus
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<PAGE> 17
as amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein.
(b) Each Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement,
the Prospectus, the Prospectus as amended or supplemented or any other
prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Prospectus as
amended or supplemented or any other prospectus relating to the Securities,
or any such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by such Agent expressly
for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such
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<PAGE> 18
proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and each Agent on the other from the offering
of the Securities to which such loss, claim, damage or liability (or action
in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and each Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and each Agent on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of Securities (before
deducting expenses) received by the Company bear to the total commissions
or discounts received by such Agent in respect thereof. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading relates to
information supplied by the Company on the one hand or by any Agent on the
other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Company and each Agent agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by per capita
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d).
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), an Agent shall not
be required to contribute any amount in excess of the amount by which the
total public offering price at which the Securities purchased by or through
it were sold exceeds the amount of any damages which such Agent has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any,
who controls any Agent within the meaning of the Act; and the obligations
of each Agent under this Section 7 shall be in addition to any liability
which such Agent may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
8. Each Agent, in soliciting offers to purchase Securities from the
Company and in performing the other obligations of such Agent hereunder (other
than in respect of any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), is acting solely as agent for the Company and not as
principal. Each Agent will make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Securities from
the Company was solicited by such Agent and has been accepted by the Company,
but such Agent shall not have any liability to the Company in the event such
purchase is not consummated for any reason. If the Company shall default on
its obligation to deliver Securities to a purchaser whose offer it has
accepted, the Company shall (i) hold each Agent harmless against any loss,
claim or damage arising from or as a
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<PAGE> 19
result of such default by the Company and (ii) notwithstanding such default,
pay to the Agent that solicited such offer any commission to which it would be
entitled in connection with such sale.
9. The respective indemnities, agreements, representations, warranties
and other statements by any Agent and the Company set forth in or made pursuant
to this Agreement shall remain in full force and effect regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Agent or any controlling person of any Agent, or the Company, or any
officer or director or any controlling person of the Company, and shall survive
each delivery of and payment for any of the Securities.
10. The provisions of this Agreement relating to the solicitation of
offers to purchase Securities from the Company may be suspended or terminated
at any time by the Company or by any Agent upon the giving of written notice of
such suspension or termination to such Agent or the Company, as the case may
be. In the event of such suspension or termination this Agreement shall remain
in full force and effect with respect to the rights and obligations of any
party which have previously accrued or which relate to Securities which are
already issued, agreed to be issued or the subject of a pending offer at the
time of such suspension or termination and in any event, this Agreement shall
remain in full force and effect insofar as the fourth paragraph of Section
2(a), and Sections 4(d), 4(e), 5, 7, 8 and 9 hereof are concerned.
11. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in
writing, and if to Goldman, Sachs & Co. shall be sufficient in all respects
when delivered or sent by facsimile transmission or registered mail to 85 Broad
Street, New York, New York 10004, Facsimile Transmission No. (212) 357-8680,
Attention: Credit Department, Credit Control--Medium-Term Notes and if to the
Company shall be sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to 7800 Stemmons Freeway, Dallas, Texas 75247,
Facsimile Transmission No. (214) 689-4326.
12. This Agreement and any Terms Agreement shall be binding upon, and
inure solely to the benefit of, each Agent and the Company, and to the extent
provided in Sections 7, 8 and 9 hereof, the officers and directors of the
Company and any person who controls any Agent or the Company, and their
respective personal representatives, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement or
any Terms Agreement. No purchaser of any of the Securities through or from any
Agent hereunder shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence in this Agreement and any Terms
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
14. This Agreement and any Terms Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. This Agreement and any Terms Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be an original, but all of such respective counterparts shall
together constitute one and the same instrument.
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<PAGE> 20
If the foregoing is in accordance with your understanding, please sign and
return to us ...... counterparts hereof, whereupon this letter and the
acceptance by you thereof shall constitute a binding agreement between the
Company and you in accordance with its terms.
Very truly yours,
Commercial Metals Company
By: . . . . . . . . . . . . . . . . .
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
. . . . . . . . . . . . . . . .
(Goldman, Sachs & Co.)
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<PAGE> 21
ANNEX I
COMMERCIAL METALS COMPANY
[Title of Security]
Terms Agreement
. . . . . . . . . . . . . . . . , 19..
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Commercial Metals Company (the "Company") proposes, subject to the terms
and conditions stated herein and in the Distribution Agreement, dated
......................., 19.. (the "Distribution Agreement"), between the
Company on the one hand and Goldman, Sachs & Co. (the "Agents") on the other,
to issue and sell to Goldman, Sachs & Co. the securities specified in the
Schedule hereto (the "Purchased Securities"). Each of the provisions of the
Distribution Agreement not specifically related to the solicitation by the
Agents, as agents of the Company, of offers to purchase Securities is
incorporated herein by reference in its entirety, and shall be deemed to be
part of this Terms Agreement to the same extent as if such provisions had been
set forth in full herein. Nothing contained herein or in the Distribution
Agreement shall make any party hereto an agent of the Company or make such
party subject to the provisions therein relating to the solicitation of offers
to purchase Securities from the Company, solely by virtue of its execution of
this Terms Agreement. Each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Terms
Agreement, except that each representation and warranty in Section 1 of the
Distribution Agreement which makes reference to the Prospectus shall be deemed
to be a representation and warranty as of the date of the Distribution
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Terms Agreement in relation
to the Prospectus as amended and supplemented to relate to the Purchased
Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
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<PAGE> 22
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to Goldman, Sachs & Co. and Goldman, Sachs & Co. agrees to
purchase from the Company the Purchased Securities, at the time and place, in
the principal amount and at the purchase price set forth in the Schedule
hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us ...... counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
Commercial Metals Company
By: . . . . . . . . . . . . . . . . .
Name:
Title:
Accepted:
. . . . . . . . . . . . . . . .
(Goldman, Sachs & Co.)
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<PAGE> 23
SCHEDULE TO ANNEX I
Title of Purchased Securities:
[ %] Medium-Term Notes[, SERIES ....]
Aggregate Principal Amount:
$....................
[PRICE TO PUBLIC:]
Purchase Price by Goldman, Sachs & Co.
% of the principal amount of the Purchased Securities[, PLUS ACCRUED
INTEREST FROM ............... TO ...............] [AND ACCRUED AMORTIZATION, IF
ANY, FROM ................. TO ................]
Method of and Specified Funds for Payment of Purchase Price:
[BY CERTIFIED OR OFFICIAL BANK CHECK OR CHECKS, PAYABLE TO THE ORDER OF THE
COMPANY, IN NEW YORK CLEARING HOUSE FUNDS]
[BY WIRE TRANSFER TO A BANK ACCOUNT SPECIFIED BY THE COMPANY IN [NEXT DAY]
[IMMEDIATELY AVAILABLE] FUNDS]
Indenture:
Indenture, dated as of ....................., 19.., between the Company and
..................., as Trustee
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate:
[ %]
Interest Payment Dates:
[MONTHS AND DATES]
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<PAGE> 24
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
(1) The opinion or opinions of counsel to the Agents referred to in
Section 4(h).
(2) The opinion of counsel to the Company referred to in Section 4(i).
(3) The accountants' letter referred to in Section 4(j).
(4) The officers' certificate referred to in Section 4(k).
Other Provisions (including Syndicate Provisions, if applicable):
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<PAGE> 25
ANNEX II
COMMERCIAL METALS COMPANY
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated ......................, 19.. (the "Distribution
Agreement"), between Commercial Metals Company (the "Company") and Goldman,
Sachs & Co. the "Agents"), to which this Administrative Procedure is attached
as Annex II. Defined terms used herein and not defined herein shall have the
meanings given such terms in the Distribution Agreement, the Prospectus as
amended or supplemented or the Indenture.
The procedures to be followed with respect to the settlement of sales of
Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in
relation to a purchase of a Security by a purchaser solicited by such Agent, is
referred to herein as the "Selling Agent" and, in relation to a purchase of a
Security by such Agent as principal other than pursuant to a Terms Agreement,
as the "Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Securities and the
related settlement details.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "Global Security") delivered to the
Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security") or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Book-Entry Securities will be issued in accordance with the Administrative
Procedure set forth in Part I hereof, and Certificated Securities will be
issued in accordance with the Administrative Procedure set forth in Part II
hereof.
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<PAGE> 26
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter
of Representation from the Company and the Trustee to the Depositary, dated the
date hereof, and a Medium-Term Note Certificate Agreement between the Trustee
and the Depositary, dated as of .................., 19.. (the "Certificate
Agreement"), and its obligations as a participant in the Depositary, including
the Depositary's Same-Day Funds Settlement System ("SDFS").
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part.
Each Agent also may make offers to the Company to purchase Book-Entry
Securities as a Purchasing Agent. The Company will have the sole right to
accept offers to purchase Book-Entry Securities and may reject any such offer
in whole or in part.
The Company will promptly notify the Agent or Purchasing Agent, as the case
may be, of its acceptance or rejection of an offer to purchase Book-Entry
Securities. If the Company accepts an offer to purchase Book-Entry Securities,
it will confirm such acceptance in writing to the Selling Agent or Purchasing
Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company by Agent and Settlement
Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate promptly, but in no
event later than the time set forth under "Settlement Procedure Timetable"
below, the following details of the terms of such offer (the "Sale
Information") to the Company by telephone (confirmed in writing) or by
facsimile transmission or other acceptable written means:
(1) Principal Amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other
than U.S. dollars, the applicable Exchange Rate for such
Specified Currency (it being understood that
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<PAGE> 27
currently the Depositary accepts deposits of Global
Securities denominated in U.S. dollars only);
(7) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount,
as the case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Book-Entry Security, such of the following
as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price
shall decline (but not below par) on each
anniversary of the Redemption Commencement Date;
1 If a Floating Rate Book-Entry Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
2 Name, address and taxpayer identification number of the
registered owner(s);
3 Denomination of certificates to be delivered at settlement;
4 Book-Entry Security or Certificated Security; and
5 Selling Agent or Purchasing Agent.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable
written means. The Trustee will assign a CUSIP number to the Global Security
from a list of CUSIP numbers previously delivered to the Trustee by the Company
representing such Book-Entry Security and then advise the Company and the
Selling Agent or Purchasing Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such
information to such Agent and Standard & Poor's Corporation:
1 The applicable Sale Information;
2 CUSIP number of the Global Security representing such
Book-Entry Security;
3 Whether such Global Security will represent any other
Book-Entry Security (to the extent known at such time);
4 Number of the participant account maintained by the Depositary
on behalf of the Selling Agent or Purchasing Agent, as the
case may be;
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<PAGE> 28
5 The interest payment period; and
6 Initial Interest Payment Date for such Book-Entry Security,
number of days by which such date succeeds the record date for
the Depositary's purposes (or, in the case of Floating Rate
Securities which reset daily or weekly, the date five calendar
days immediately preceding the applicable Interest Payment
Date and, in the case of all other Book-Entry Securities, the
Regular Record Date, as defined in the Security) and, if
calculable at that time, the amount of interest payable on
such Interest Payment Date.
D. The Trustee will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such
Book-Entry Security to the Trustee's participant account and credit such
Book-Entry Security to such Agent's participant account and (ii) debit such
Agent's settlement account and credit the Trustee's settlement account for an
amount equal to the price of such Book-Entry Security less such Agent's
commission. The entry of such a deliver order shall constitute a
representation and warranty by the Trustee to the Depositary that (a) the
Global Security representing such Book-Entry Security has been issued and
authenticated and (b) the Trustee is holding such Global Security pursuant to
the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such
Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the Participants with
respect to such Book-Entry Security and (ii) to debit the settlement accounts
of such Participants and credit the settlement account of such Agent for an
amount equal to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to
the account of the Company maintained at [NAME OF BANK], New York, New York, or
such other account as the Company may have previously specified to the Trustee,
in funds available for immediate use in the amount transferred to the Trustee
in accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to
the purchaser either by transmitting to the Participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
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<PAGE> 29
L. The Depositary will, at any time, upon request of the Company or the
Trustee, promptly furnish to the Company or the Trustee a list of the names and
addresses of the participants for whom the Depositary has credited Book-Entry
Securities.
Preparation of Pricing Supplement:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Book-Entry Security
and arrange to have delivered to the Selling Agent or Purchasing Agent, as the
case may be, at least ten copies of such Pricing Supplement, not later than
5:00 p.m., New York City time, on the Business Day following the Trade Date (as
defined below), or if the Company and the purchaser agree to settlement on the
Business Day following the date of acceptance of such offer, not later than
noon, New York City time, on such date. The Company will arrange to have ten
Pricing Supplements filed with the Commission not later than the close of
business of the Commission on the fifth Business Day following the date on
which such Pricing Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry Security a
written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Book-Entry Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment for a
Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with
respect to such Book-Entry Security. All orders of Book-Entry Securities
solicited by a Selling Agent or made by a Purchasing Agent and accepted by the
Company on a particular date (the "Trade Date") will be settled on a date (the
"Settlement Date") which is the fifth Business Day after the Trade Date
pursuant to the "Settlement Procedure Timetable" set forth below, unless the
Company and the purchaser agree to settlement on another Business Day which
shall be no earlier than the next Business Day after the Trade Date.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent and
accepted by the Company for settlement on the fifth Business Day after the
Trade Date, Settlement Procedures "A" through "I" set forth above shall be
completed as soon as possible but not later than the respective times (New York
City time) set forth below:
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<PAGE> 30
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME
--------- ----
<S> <C> <C>
A 5:00 p.m. on the Business Day following the Trade Date or 10:00 a.m. on the Business
Day prior to the Settlement Date, whichever is earlier
B 12:00 noon on the second Business Day immediately preceding the Settlement Date
C 2:00 p.m. on the second Business Day immediately preceding the Settlement Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:00 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
</TABLE>
If the initial interest rate for a Floating Rate Book-Entry Security has
not been determined at the time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be completed as soon as such rate has
been determined but no later than 2:00 p.m. on the second Business Day
immediately preceding the Settlement Date. Settlement Procedure "H" is subject
to extension in accordance with any extension of Fedwire closing deadlines and
in the other events specified in the SDFS operating procedures in effect on the
Settlement Date.
If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participant Terminal System, a cancellation message to
such effect by no later than 2:00 p.m. on the Business Day immediately
preceding the scheduled Settlement Date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "F", the Trustee may
deliver to the Depositary, through the Depositary's Participant Terminal
System, as soon as practicable a withdrawal message instructing the Depositary
to debit such Book-Entry Security to the Trustee's participant account,
provided that the Trustee's participant account contains a principal amount of
the Global Security representing such Book-Entry Security that is at least
equal to the principal amount to be debited. If a withdrawal message is
processed with respect to all the Book-Entry Securities represented by a Global
Security, the Trustee will mark such Global Security "canceled", make
appropriate entries in the Trustee's records and send such canceled Global
Security to the Company. The CUSIP number assigned to such Global Security
shall, in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is processed with respect to
one or more, but not all, of the Book-Entry Securities represented by a Global
Security, the Trustee will exchange such Global Security for two Global
Securities, one of which shall represent such Book-Entry Security or Securities
and shall be canceled immediately after issuance and the other of which shall
represent the remaining Book-Entry Securities previously represented by the
surrendered Global Security and shall bear the CUSIP number of the surrendered
Global Security.
If the purchase price for any Book-Entry Security is not timely paid to the
participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in
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<PAGE> 31
turn, the Agent for such Book-Entry Security may enter deliver orders through
the Depositary's Participant Terminal System debiting such Book-Entry Security
to such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security to the Trustee's
participant account and shall notify the Company and the Trustee thereof.
Thereafter, the Trustee will (i) immediately notify the Company of such order
and the Company shall transfer to such Agent funds available for immediate use
in an amount equal to the price of such Book-Entry Security which was credited
to the account of the Company maintained at the Trustee in accordance with
Settlement Procedure I, and (ii) deliver the withdrawal message and take the
related actions described in the preceding paragraph. If such failure shall
have occurred for any reason other than default by the applicable Agent to
perform its obligations hereunder or under the Distribution Agreement, the
Company will reimburse such Agent on an equitable basis for the loss of its use
of funds during the period when the funds were credited to the account of the
Company.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Security, the Depositary may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Securities to have
been represented by a Global Security, the Trustee will provide, in accordance
with Settlement Procedure "D", for the authentication and issuance of a Global
Security representing the other Book-Entry Securities to have been represented
by such Global Security and will make appropriate entries in its records. The
Company will, from time to time, furnish the Trustee with a sufficient quantity
of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part.
Each Agent also may make offers to the Company to purchase Certificated
Securities as a Purchasing Agent. The Company will have the sole right to
accept offers to purchase Certificated Securities and may reject any such offer
in whole or in part.
The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
II-7
<PAGE> 32
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
1 Principal Amount of Certificated Securities to be purchased;
2 If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
3 Trade Date;
4 Settlement Date;
5 Maturity Date;
6 Specified Currency and, if the Specified Currency is other
than U.S. dollars, the applicable Exchange Rate for such
Specified Currency;
7 Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
8 Issue Price;
9 Selling Agent's commission or Purchasing Agent's discount, as
the case may be;
10 Net Proceeds to the Company;
11 If a redeemable Certificated Security, such of the following
as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of
the Redemption Commencement Date;
12 If a Floating Rate Certificated Security, such of the
following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
13 Name, address and taxpayer identification number of the
registered owner(s);
14 Denomination of certificates to be delivered at settlement;
15 Book-Entry Security or Certificated Security; and
16 Selling Agent or Purchasing Agent.
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing
Agent, as the case may be, at least ten copies of such Pricing Supplement, not
later than 5:00 p.m., New York City time, on the Business Day following the
Trade Date, or if the Company and the purchaser agree to settlement on the date
of acceptance of such
II-8
<PAGE> 33
offer, not later than noon, New York City time, on such date. The Company will
arrange to have ten Pricing Supplements filed with the Commission not later
than the close of business of the Commission on the fifth Business Day
following the date on which such Pricing Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated Security
a written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Certificated Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Certificated Security.
Date of Settlement:
All offers of Certificated Securities solicited by a Selling Agent or made
by a Purchasing Agent and accepted by the Company will be settled on a date
(the "Settlement Date") which is the fifth Business Day after the date of
acceptance of such offer, unless the Company and the purchaser agree to
settlement (a) on another Business Day after the acceptance of such offer or
(b) with respect to an offer accepted by the Company prior to 10:00 a.m., New
York City time, on the date of such acceptance.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or Purchasing
Agent, as the case may be, the Company will communicate such Sale Information
to the Trustee by telephone (confirmed in writing) or by facsimile transmission
or other acceptable written means.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated
Securities no later than 2:15 p.m., New York City time, on the Settlement Date.
Such instruction will be given by the Company prior to 3:00 p.m., New York City
time, on the Business Day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Company of the offer to
purchase Certificated Securities in which case such instruction will be given
by the Company by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of
Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited
by a Selling Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, deliver the Certificated Securities to the Selling Agent for
the benefit of the purchaser of such Certificated Securities against delivery
by the Selling Agent of a receipt therefor. On the Settlement Date the Selling
Agent will deliver payment for such Certificated Securities in immediately
available funds to the Company in an amount equal to the issue price of the
Certificated Securities less the Selling Agent's commission; provided that the
Selling Agent reserves the right to withhold payment for which it has not
received funds from the purchaser. The Company shall not use any proceeds
advanced by a Selling Agent to acquire securities.
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<PAGE> 34
In the case of a sale of Certificated Securities to a Purchasing Agent, the
Trustee will, by 2:15 p.m., New York City time, on the Settlement Date, deliver
the Certificated Securities to the Purchasing Agent against delivery of payment
for such Certificated Securities in immediately available funds to the Company
in an amount equal to the issue price of the Certificated Securities less the
Purchasing Agent's discount.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make payment to the
Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent will immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds during the period when they were credited to the account of
the Company.
The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Certificated Security.
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<PAGE> 35
ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Sections 4(j) and 6(d), as the case may be, of the Distribution
Agreement, the Company's independent certified public accountants shall furnish
letters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial
information) examined by them and included or incorporated by
reference in the Registration Statement or the Prospectus comply as to
form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the
related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been
furnished to the Agents;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been
separately furnished to the Agents; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to
in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of
the Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the
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<PAGE> 36
corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for five such fiscal years
which were included or incorporated by reference in the Company's
Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus
or included in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included
in the Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for
the audited financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus
do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published
rules
III-2
<PAGE> 37
and regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the compilation
of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on the
date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Agents, or any increases in
any items specified by the Agents, in each case as compared with
amounts shown in the latest balance sheet included or incorporated
by reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus
to the specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other
items specified by the Agents, or any increases in any items
specified by the Agents, in each case as compared with the
comparable period of the preceding year and with any other period
of corresponding length specified by the Agents, except in each
case for increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter;
and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by
the Agents which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by
the Agents or in documents incorporated by reference in the Prospectus
specified by the Agents, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and its subsidiaries and have found them to be in
agreement.
All references in this Annex III to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein)
as defined in the Distribution Agreement as of the Commencement Date referred
to in Section 6(d) thereof and to the Prospectus as amended or supplemented
(including the documents incorporated by reference therein) as of the date of
the amendment, supplement, incorporation or the Time of Delivery relating to
the Terms Agreement requiring the delivery of such letter under Section 4(j)
thereof.
III-3
<PAGE> 1
EXHIBIT 4.1
________________________________________________________________________________
COMMERCIAL METALS COMPANY
TO
THE CHASE MANHATTAN BANK, NA.
AS TRUSTEE
_____________________________
INDENTURE
DATED AS OF _______________, 1995
_____________________________
________________________________________________________________________________
<PAGE> 2
COMMERCIAL METALS COMPANY
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- --------------------- -----------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
1009
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
- ------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Attributable Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Authenticating Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board Resolution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Capital Lease Obligation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Commission" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company Request"; "Company Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Consolidated Net Tangible Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Consolidated Subsidiaries" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Corporate Trust Office" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Depositary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Funded Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Holder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"indebtedness" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Interest Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Lien" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Maturity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Net Available Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Officers' Certificate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Opinion of Counsel" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Original Issue Discount Security" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Outstanding" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
- ---------------
Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
"pari passu" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---- -----
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Place of Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Predecessor Security" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Principal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Principal Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Regular Record Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Sale and Leaseback Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Security Register" and "Security Registrar" . . . . . . . . . . . . . . . . . . . . . . . 8
"Special Record Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Stated Maturity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Subsidiary of the Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"U.S. Government Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Vice President" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 102 Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 103 Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 104 Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 105 Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 106 Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 107 Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 108 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 109 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 110 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 111 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 112 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 113 Legal Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE TWO
SECURITY FORMS
Section 201 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 202 Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 203 Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 204 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
- ------------
Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE THREE
THE SECURITIES
Section 301 Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 302 Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 303 Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . 22
Section 304 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 305 Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . 24
Section 306 Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 26
Section 307 Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . 26
Section 308 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 309 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 310 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 402 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 403 Defeasance and Discharge of Securities of any Series . . . . . . . . . . . . . . . . . . . 30
Section 404 Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 405 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE FIVE
REMEDIES
Section 501 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 502 Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . 35
Section 503 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . 36
Section 504 Trustee May File Proof of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 505 Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . 37
Section 506 Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 507 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 508 Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 509 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 510 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 511 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 512 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 513 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 514 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 515 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
- -----------
Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
ARTICLE SIX
THE TRUSTEE
Section 601 Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 602 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 603 Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 604 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . 42
Section 605 May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 606 Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 607 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 608 Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 609 Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 610 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 43
Section 611 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 612 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . 46
Section 613 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 46
Section 614 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701 Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . 48
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801 Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . 49
Section 802 Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . 51
Section 902 Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 52
Section 903 Execution of Supplement Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 904 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 905 Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 906 Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
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Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
iv
<PAGE> 7
<TABLE>
<S> <C> <C>
ARTICLE TEN
COVENANTS
Section 1001 Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 1002 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 1003 Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . 54
Section 1004 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 1005 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 1006 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 1007 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 1008 Limitation on Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . 58
Section 1009 Statement of Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 1010 Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 1011 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 1102 Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 1103 Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . 59
Section 1104 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 1105 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 1106 Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 1107 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE TWELVE
SINKING FUNDS
Section 1201 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 1202 Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . . . . . . . . . 62
Section 1203 Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
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Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
v
<PAGE> 8
INDENTURE, dated as of _______________, 1995, between COMMERCIAL
METALS COMPANY, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
7800 Stemmons Freeway, Dallas, Texas 75247 and THE CHASE MANHATTAN BANK, N.A.,
a national banking association duly organized and existing under the laws of the
United States, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101 Definitions
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as
well as the singular;
(2) all other terms used herein which are defined
in the Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
<PAGE> 9
(4) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Act", when used with respect to any Holder, has the
meaning specified in Section 104.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, provided, that any Person who does not own, directly or indirectly,
more than 5% of the outstanding voting securities of the Company shall not be
deemed to "control" the Company; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Attributable Debt" means the present value
(discounted at the per annum rate of interest publicly announced by Bank of
America National Trust and Savings Association as its "Reference Rate" or
"Prime Rate" on the date of any calculation made hereunder, provided, that if
Bank of America National Trust and Savings Association is no longer announcing
a Reference Rate or a Prime Rate, the per annum rate of interest shall be the
Prime Rate most recently published in the Wall Street Journal, in either case,
compounded monthly) of the obligations for rental payments required to be paid
during the remaining term of any lease of more than 12 months under which any
Person is at the time liable.
"Authenticating Agent" means any Person authorized by
the Trustee pursuant to Section 614 to act on behalf of the Trustee to
authenticate Securities of one or more series.
"Board of Directors" means either the board of
directors of the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place
of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
a day on which banking institutions in that Place of Payment are authorized or
obligated by law or executive order to open.
"Capital Expenditures" means, for any period, any
expenditures of the Company or its Subsidiaries (whether payable in cash or
other Property or accrued as a liability (but without duplication)) during such
period that, in conformity with generally accepted accounting principles
consistantly applied, are required to be included in fixed asset accounts as
reflected in the consolidated balance sheets of the Company or its
Subsidiaries.
"Capital Lease Obligation" of any Person means the
obligation to pay rent or other payment amounts under a lease of (or other
indebtedness arrangements conveying the right to use) real or personal property
of such Person which is required to be classified and accounted for as a
capital lease or a liability on the face of a balance sheet of such Person in
2
<PAGE> 10
accordance with generally accepted accounting principles. The stated maturity
of such obligation, as of any date (the "measurement date"), shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date after the measurement date upon which such lease may be
terminated by the lessee, at its sole option, without payment of a penalty.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the Securities
Exchange Act of 1934 (the "Exchange Act"), or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request"; "Company Order" means a written
request or order signed in the name of the Company by its Chairman of the
Board, its Vice Chairman of the Board, its President or a Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means the net book
value of all assets of the Company and its Consolidated Subsidiaries, excluding
any amounts carried as assets for shares of capital stock held in treasury,
debt discount and expense, goodwill, patents, trademarks and other intangible
assets, less all liabilities of the Company and its Consolidated Subsidiaries
(except Funded Debt, minority interests in Consolidated Subsidiaries, deferred
taxes and general contingency reserves of the Company and its Consolidated
Subsidiaries), which in each case would be included on a consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of the date of
determination, all as determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Subsidiaries" of any Person means all
other Persons that would be accounted for as consolidated Persons in such
Person's financial statements in accordance with generally accepted accounting
principles.
"Corporate Trust Office" means the principal office
of the Trustee in Dallas, Texas or the Borough of Manhattan, The City of New
York, as the case may be, at which at any particular time its corporate trust
business shall be administered.
"corporation" means a corporation, association,
company, joint-stock company or business trust.
"Debt" means (without duplication), with respect to
any Person, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person and (iv) every obligation of the type referred
to in clauses (i) through
3
<PAGE> 11
(iii) of another Person the payment of which such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise (but only, in the case of this clause (iv), to the extent such Person
has guaranteed or is responsible or liable for such obligations).
"Defaulted Interest" has the meaning specified in
Section 307.
"Depositary" means, unless otherwise specified by the
Company pursuant to Section 301, with respect to Securities of any series
issuable or issued as a Global Security, The Depository Trust Company, New
York, New York, or any successor thereto registered under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation.
"Event of Default" has the meaning specified in
Section 501.
"Funded Debt" means (a) all Debt of the Company and
each Principal Subsidiary of the Company maturing on, or renewable or
extendible at the option of the obligor to, a date more than one year from the
date of the determination thereof (but not including indebtedness under any
revolving credit arrangement with banks except for any Debt converted pursuant
to any such arrangement into a term loan which meets the requirements of this
clause (a)), (b) Capital Lease Obligations payable on a date more than one year
from the date of the determination thereof, (c) guarantees, direct or indirect,
and other contingent obligations of the Company and each Principal Subsidiary
of the Company in respect of, or to purchase or otherwise acquire or be
responsible or liable for (through the investment of funds or otherwise), any
obligations of the type described in or liable for (through the investment of
funds or otherwise), any obligations of the type described in the foregoing
clauses (a) or (b) of others (but not including contingent liabilities on
customers' receivables sold with recourse), and (d) amendments, renewals,
extensions and refundings of any obligations of the type described in the
foregoing clauses (a), (b) or (c).
"Global Security" means a Security issued to evidence
all or a part of any series of Securities which is executed by the Company and
authenticated and delivered by the Trustee to the Depositary (or its nominee or
other representative) or pursuant to the Depositary's instruction, all in
accordance with this Indenture and pursuant to a Company Order, which shall be
registered as to principal and interest in the name of the Depositary or its
nominee.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"indebtedness", with respect to any Person, includes
all indebtedness of another Person the payment of which such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor,
guarantor or otherwise (but only to the extent such Person has guaranteed or is
responsible or liable for such obligations).
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument, and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed
4
<PAGE> 12
to be a part of and govern this instrument and any such supplemental indenture,
respective. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"interest", when used with respect to an Original
Issue Discount Security which by its terms bears interest only after Maturity,
means interest payable after Maturity.
"Interest Payment Date", when used with respect to
any Security, means the Stated Maturity of an installment of interest on such
Security.
"Lien" means, with respect to any property or assets,
any mortgage or deed of trust, pledge, hypothecation, assignment, security
interest, lien, encumbrance or other security arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Maturity" when used with respect to any Security,
means the date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Net Available Proceeds" from any Sale Transaction by
any Person means cash or readily marketable cash equivalents received
(including by way of sale or discounting of a note, installment receivable or
other receivable, but excluding any other consideration received in the form of
assumption by the acquiree of indebtedness or obligations relating to the
properties or assets that are the subject of such Sale Transaction or received
in any other noncash form) therefrom by such Person, net of (i) all legal,
title and recording tax expenses, commissions and other fees and expenses
incurred and all federal, state, provincial, foreign and local taxes required
to be accrued as a liability as a consequence of such Sale Transaction, (ii)
all payments made by such Person or its Principal Subsidiaries on any
indebtedness which is secured in whole or in part by any such properties and
assets in accordance with the terms of any Lien upon or with respect to any
such properties and assets or which must, by the terms of such Lien, or in
order to obtain a necessary consent to such Sale Transaction or by applicable
law, be repaid out of the proceeds from such Sale Transaction, and (iii) all
distributions and other payments made to minority interest holders in Principal
Subsidiaries of such Person or joint ventures as a result of such Sale
Transaction.
"Officers' Certificate" means a certificate signed by
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 1009 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of
counsel, who may be David M. Sudbury, general counsel for the Company and who
may be Haynes and Boone, L.L.P., and who shall be reasonably acceptable to the
Trustee.
5
<PAGE> 13
"Original Issue Discount Security" means any Security
which 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 Section 502.
"Outstanding" when used with respect to Securities,
means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities in accordance
with Section 401; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities for whose payment or redemption money or
U.S. Government Obligations in the necessary amount has been
theretofore deposited with the Trustee (or another trustee satisfying
the requirements of Section 609) in trust for the Holders of such
Securities in accordance with Section 403; and
(iv) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (i) the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding shall be the amount upon acceleration of the Maturity thereof
pursuant to Section 502, (ii) the principal amount of Security denominated in
one or more foreign currencies or currency units shall be the U.S. dollar
equivalent, determined in the manner provided as contemplated by Section 301 on
the date of original issuance of such Security, of the principal amount (or, in
the case of an Original Issue Discount Security, the U.S. dollar equivalent on
the date of original issuance of such Security of the amount determined as
provided in (i) above) of such Security, and (iii) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Securities
and that pledgee is not the Company or any obligor upon the Securities or any
Affiliate of the Company or of such other obligor
6
<PAGE> 14
to such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
"pari passu", when used with respect to the ranking
of any indebtedness of any Person in relation to other indebtedness of such
Person, means that each such indebtedness (a) either (i) is not subordinate in
right of payment to any other indebtedness of such Person or (ii) is
subordinate in right of payment to the same indebtedness of such person as is
the other and is so subordinate to the same extent and (b) is not subordinate
in right of payment to the other or to any indebtedness of such Person as to
which the other is not so subordinate.
"Paying Agent" means any Person authorized by the
Company to pay the principal of or any premium or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation,
partnership, joint venture, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Place of Payment" when used with respect to the
Securities of any series, means New York, New York.
"Predecessor Security" of any particular Security
means every previous Security evidencing all or a portion of the same debt as
that evidenced by such particular Security; and, for the purposes of this
definition, any Securities authenticated and delivered under Section 306 in
exchange for or in lieu of mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Principal Property" means any facility (together
with the land on which it is erected and fixtures comprising a part thereof)
used primarily for manufacturing, processing, research, warehousing or
distribution, owned or leased by the Company or a Subsidiary of the Company and
(i) having a net book value in excess of 3% of Consolidated Net Tangible
Assets, other than any such facility or portion thereof which is a pollution
control facility financed by state or local government obligations or is not
of material importance to the total business conducted or assets owned by the
Company and its Subsidiaries as an entirety, or (ii) any assets or properties
acquired with Net Available Proceeds from a Sale and Leaseback Transaction
that are irrevocably designated by the Company as a Principal Property, which
designation shall be made in writing to the Trustee.
"Principal Subsidiary" means any Subsidiary of the
Company that owns or leases a Principal Property.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", means used with respect to any
Security to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the date specified
for that purpose as contemplated by Section 301.
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<PAGE> 15
"Sale and Leaseback Transaction" of any Person means
an arrangement with any lender or investor or to which such lender or investor
is a party providing for the leasing by such Person of any Principal Property
that, within 12 months of the start of such lease and after the Reference Date,
has been and is being sold, conveyed, transferred or otherwise disposed of by
such Person to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor on the security of such
property. The term of such arrangement, as of any date (the "measurement
date"), shall end on the date of the last payment of rent or any other amount
due under each arrangement on or prior to the first date after the measurement
date on which such arrangement may be terminated by the lessee, as its sale
option, without payment of a penalty. "Sale Transaction" means any such sale,
conveyances, transfer or other disposition. The "Reference Date" means, for
any property that becomes a Principal Property, the last day of the sixth month
after the date of the acquisition, completion of construction and commencement
of operation of such property.
"Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Special Record Date" for the payment of any Default
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any
Security or any installment of principal thereof or interest thereon, means the
date specified in such Security as the fixed date on which the principal of
such Security or such installment of principal or interest is due and payable.
"Subsidiary of the Company" means any corporation of
which the Company directly or indirectly owns or controls stock which under
ordinary circumstances (not dependent upon the happening of a contingency) has
the voting power to elect a majority of the board of directors of such
corporation.
"Trustee" means the Person named as the "Trustee" in
the first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of the Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee" as
used with respect to the Securities of any series shall mean the Trustee with
respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act
of 1939 as in force at the date as of which this instrument was executed,
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after such date, "Trust Indenture Act" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
"U.S. Government Obligations" means securities which
are (i) direct obligations of the United States of America for the payment of
which its full faith and credit is
8
<PAGE> 16
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
U.S. Government Obligation held by such custodian for the account of the holder
of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian
in respect of the U.S. Government Obligation or the specific payment of
interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"Vice President", when used with respect to the
Company or the Trustee, means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president".
Section 102 Compliance Certificates and Opinions
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirements set
forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definition herein relating thereto;
(2) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, such individual has made such examination or investigation
as is necessary to enable such individual to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been complied
with.
Section 103 Form of Documents Delivered to Trustee
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<PAGE> 17
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate or opinion
of counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 104 Acts of Holders; Record Dates
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Holders in person or by agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and
(subject to Section 601) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgements of deeds,
certifying that the individual signing such instrument or writing
acknowledged to such officer the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and
date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
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<PAGE> 18
(c) The Company may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the
purpose of determining the Holders of Securities of any series
entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action, or to vote on any
action, authorized or permitted to be given or taken by Holders of
Securities of such series. If not set by the Company prior to the
first solicitation of a Holder of Securities of such series made by
any person in respect of any such action, or, in the case of any such
vote, prior to such vote, the record date for any such action or vote
shall be the 30th day (or, if later, the date of the most recent list
of Holders required to be provided pursuant to Section 701) prior to
such first solicitation or vote, as the case may be. With regard to
any record date for action to be taken by the Holders of one or more
series of Securities, only the Holders of Securities of such series on
such date (or their duly designated proxies) shall be entitled to give
or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Security
shall bind every future Holder of the same Security and the Holder of
every Securities issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon
such Security.
Section 105 Notices, Etc., to Trustee and Company
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee
by the Company, to the attention of the Treasurer with a copy to the
Secretary.
Section 106 Notice to Holders; Waiver
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at such Holder's address as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to
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<PAGE> 19
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Section 107 Conflict with Trust Indenture Act
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the Trust Indenture Act shall control. If
any provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
Section 108 Effect of Headings and Table of Contents
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 109 Successors and Assigns
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 110 Separability Clause
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 111 Benefits of Indenture
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person other than the parties hereto and their
successors hereunder and the Holders, any benefit or legal or equitable right,
remedy or claim under this Indenture.
Section 112 Governing Law
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, but without
regard to principles of conflicts of laws.
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<PAGE> 20
Section 113 Legal Holdings
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities (other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
Section 201 Forms Generally
The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 202 Form of Face of Security
[if the Security is a Global Security, insert - Unless this
certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (the "Depositary"), to the Company or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of the Depositary, ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
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<PAGE> 21
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]
[if the Security is an Original Issue Discount Security,
insert - FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT ON THIS SECURITY IS _____% OF ITS PRINCIPAL AMOUNT, THE ISSUE DATE IS
____________, 19___[,] [AND] THE YIELD TO MATURITY IS ______%[, THE METHOD USED
TO DETERMINE THE YIELD IS __________________ AND THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF _____________, 19___ TO
______________, 19____ IS ______% OF THE PRINCIPAL AMOUNT OF THIS SECURITY].
COMMERCIAL METALS COMPANY
______________________________
No. ____________ $__________
Commercial Metals Company, a corporation duly organized and
existing under the laws of the Delaware (herein called the "Company"), which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to_________________________ or
registered assigns, the principal sum of ___________________________________
Dollars on ______________________________ [if the Security is to bear interest
prior to Maturity, insert - and to pay interest thereon from
______________________ or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on
_____________________ and _____________ in each year, commencing
_____________________, at the rate of ______% per annum, until the principal
hereof is paid or made available for payment [if applicable, insert -, and (to
the extent that the payment of such interest shall be legally enforceable) at
the rate of _____% per annum on any overdue principal and premium and on any
overdue installment of interest]. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the _______________ or
________________ (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements
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<PAGE> 22
of any securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity,
insert - The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon redemption or
at Stated Maturity and in such case the overdue principal of this Security
shall bear interest at the rate of ______% per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall accrue from
the date of such default in payment to the date payment of such principal has
been paid or duly provided for. Interest on any overdue principal shall be
payable on demand. Any such interest on any overdue principal that is not so
paid on demand shall bear interest at the rate of _____% per annum (to the
extent that the payment of such interest shall be legally enforceable), which
shall accrue from the date of such demand for payment to the date payment of
such interest has been made or duly provided for, and such interest shall also
be payable on demand.]
Payment of the principal of (and premium if any) and [if
applicable, insert - any such] interest on this Security will be made at the
office or agency of the Company maintained for that purpose in
_______________________, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert -; provided however that at the option of
the Company payment of interest may be made by check mailed on or prior to an
Interest Payment Date to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: COMMERCIAL METALS COMPANY
By:_________________________________
ATTEST:
__________________________
Section 203 Form of Reverse of Security
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<PAGE> 23
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated _______________, 1995 (herein called
the "Indenture"), between the Company and ______________________, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof [, limited in aggregate principal amount to
$_____________].
[If applicable, insert - The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, [if
applicable, insert - (1) on ____________ in any year commencing with the year
______ and ending with the year ____ through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and
(2)] at any time [on or after ____________, 19____], as a whole or in part, at
the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [on or before
________________, ____%, and if redeemed] during the 12-month period beginning
_____________ of the year indicated,
<TABLE>
<CAPTION>
Year Redemption Price Year Redemption Price
- ---- ---------------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ______% of the principal amount,
together in the case of any such redemption [if applicable, insert- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates as referred to on the face hereof, all as
provided in the Indenture].
[if applicable, insert-The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, (1) on
________________ in any year commencing with the year _______ and ending with
the year ______ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time [on or after _______________], as a whole or in
part, at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below. If redeemed during the
12-month period beginning ____________________ of the years indicated,
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<PAGE> 24
<TABLE>
<CAPTION>
Redemption Price For
Redemption Price For Redemption Otherwise Than
Redemption Through Operation Through Operation
Year of the Sinking Fund of the Sinking Fund
- ---- ---------------------------- -------------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to __________% of the principal
amount, together in the case of any such redemption (whether through operation
of the sinking fund or otherwise) with accrued interest to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
_______________, redeem any Securities of this series as contemplated by
[Clause (2) of] the preceding paragraph as a part of, or in anticipation of,
any refunding operation by the application, directly or indirectly, of moneys
borrowed having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than _____% per annum.]
[The sinking fund for this series provides for redemption on
______________ in each year beginning with the year _______ and ending with the
year _______ of [not less than $________ ("mandatory sinking fund") and not
more than] $________ aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Company otherwise than
through [mandatory] sinking fund payments may be credited against subsequent
[mandatory] sinking fund payments otherwise required to be made [in the inverse
order in which they become due].]
[If the Security is subject to redemption, insert - In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If the Security is not an Original Issue Discount Security,
insert - If an Event of Default with respect to Securities to this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. ]
[If the Security is an Original Issue Discount Security,
insert - If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture. Such amount shall be equal to - insert formula for
determining the amount. Upon payment (i) of the amount of principal so
declared due and payable and (ii) of interest on any overdue principal and
overdue interest (in each case to the
17
<PAGE> 25
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount
of the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a receiver
or trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, the Holders of not less than 25%
in principal amount of the Securities of this series at the time Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a
majority in principal amount of Securities of this series at the time
Outstanding a direction inconsistent with such request, and shall have failed
to institute any such proceeding, for 60 days after receipt of such notice,
request and offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Security for the enforcement of any payment of
principal hereof or any interest hereof on or after the respective due dates
expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more Securities of this Series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
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<PAGE> 26
The Securities of this series are issuable only in registered
form without coupons in denominations of $100,000 and any integral multiple of
$1,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
Section 204 Form of Trustee's Certificate of Authentication
The Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, N.A.,
as Trustee
By:__________________________
ARTICLE THREE
THE SECURITIES
Section 301 Amount Unlimited; Issuable in Series
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and subject to
Section 303, set forth, or determined in the
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<PAGE> 27
manner provided, in an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1) the title of the Securities of the series
(which shall distinguish the Securities of the series from Securities
of any other series);
(2) any limit upon the aggregate principal amount
of the Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the series pursuant to Section 304,
305, 306, 906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and delivered
hereunder);
(3) the Person to whom any interest on a Security
of the series shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of
the Securities of the series is payable;
(5) the rate or rates at which the Securities of
the series shall bear interest, or the method or methods by which such
rate or rates shall be determined, if any, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the Regular Record Date for any
interest payable on any Interest Payment Date;
(6) the period or periods within which, the price
or prices at which and the terms and conditions upon which Series of
the series may be redeemed, in whole or in part, at the option of the
Company;
(7) the obligation, if any, of the Company to
redeem or purchase Securities of the series pursuant to any sinking
fund or analogous provisions or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $100,000 and
any integral multiple of $1,000 in excess thereof, the denominations
in which Securities of the series shall be issuable;
(9) the currency, currencies or currency units in
which payment of the principal of and any premium and interest on any
Securities of the series shall be payable if other than the currency
of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America for
purposes of the definition of "Outstanding" in Section 101;
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<PAGE> 28
(10) if the amount of payments of principal of or
any premium or interest on any Securities of the series may be
determined with reference to an index, the manner in which such
amounts shall be determined;
(11) whether the Securities of the series shall be
issued in whole or in part in the form of a Global Security and, in
such case, the Depositary with respect to such Global Security or
Securities and the circumstances under which any such Global Security
may be registered for transfer for exchange, or authenticated and
delivered, in the name of a Person other than such Depositary or its
nominee, if other than as set forth in Section 305;
(12) if other than the principal of or any premium
or interest on any Securities of the series is to be payable, at the
election of the Company or a Holder thereof, in one more currencies or
currency units other than that or those in which the Securities are
stated to be payable, the currency, currencies or currency units in
which the payment of the principal of and any premium and interest on
Securities of such series as to which such election is made shall be
payable, and the periods within which and the terms and conditions
upon which such election is to be made;
(13) if other than the entire principal amount
thereof, the portion of the principal amount of Securities of the
series which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 502; and
(14) any other terms of the series (which terms
shall not be inconsistent with the provisions of this Indenture,
except as permitted by Section 901(5)).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to the Board Resolution referred to above and (subject to Section
303) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto.
The terms of the Securities of any series may provide, without limitation, that
the Securities shall be authenticated and delivered by the Trustee on original
issue from time to time upon telephonic or written order of persons designated
in the Officers' Certificate or supplemental indenture (telephonic instructions
to be promptly confirmed in writing by such person) and that such persons are
authorized to determine, consistent with such Officers' Certificate or any
applicable supplemental indenture, such terms and conditions of the Securities
of such series as are specified in such Officers' Certificate or supplemental
indenture.
Except as otherwise provided with respect to any series of
Securities, at the option of the Company, interest on the Securities of any
series that bears interest may be paid by mailing a check, on or before the
applicable Interest Payment Date, to the address of the person entitled thereto
as such address shall appear in the Securities Register.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to delivery of the Officers'
Certificate setting forth the terms of the series.
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Section 302 Denominations
The Securities of each series shall be issuable in registered
form without coupons in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such provisions with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $100,000 and any integral multiple of $1,000 in
excess thereof.
Section 303 Execution, Authentication, Delivery and Dating
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents, under its corporate seal reproduced thereon attested by
its Treasurer or Secretary or one of its Assistant Treasurers or Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver
such Securities. If the form or terms of the Securities of the series have
been established in or pursuant to one or more Board Resolutions as permitted
by Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating:
(a) if the form of such Securities has been established
by or pursuant to Board Resolution as permitted by Section 201, that
such form has been established in conformity with the provisions of
this Indenture;
(b) if the terms of such Securities have been established
by or pursuant to Board Resolution as permitted by Section 301, that
such terms have been established in conformity with the provisions of
this Indenture; and
(c) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's
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own rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officers'
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to such preceding paragraph at
or prior to the time of authentication upon original issuance of the first
Security of such series to be issued.
Each security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered but never issued and sold by the Company and the
Company shall deliver such Security to the Trustee for cancellation as provided
in Section 309, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and shall never
be entitled to the benefits of this Indenture.
Section 304 Temporary Securities
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company
will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities
of such series at the office or agency of the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and
of a like aggregate principal amount and tenor. Until so exchanged the
temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series and
tenor.
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Section 305 Registration, Registration of Transfer and Exchange
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of
any series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, the name
of the designated transferee or transferees, one or more new Securities of the
same series, of any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906 or 1107 not
involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
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Notwithstanding the foregoing, no Global Security shall be
registered for transfer or exchange, or authenticated and delivered, whether
pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, in the
name of a Person other than the Depositary for such Global Security or its
nominee until (i) the Depositary with respect to a Global Security notifies the
Company that it is unwilling or unable to continue as Depositary for such
Global Security or the Depositary ceases to be a clearing agency registered
under the Exchange Act, (ii) the Company executes and delivers to the Trustee a
Company Order that such Global Security shall be so transferable and
exchangeable, or (iii) there shall have occurred and be continuing an Event of
Default with respect to the Securities of such series. Upon the occurrence in
respect of any Global Security of any series of any one or more of the
conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or
such other conditions as may be specified as contemplated by Section 301 for
such series, such Global Security may be registered for transfer or exchange
for Securities registered in the names of, or authenticated and delivered to,
such Persons as the Depositary with respect to such series shall direct.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security, whether pursuant to this Section,
Section 304, 306, 906 or 1107 or otherwise, shall also be a Global Security and
bear the legend specified in Section 202.
Section 306 Mutilated, Destroyed, Lost and Stolen Securities
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time
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enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307 Payment of Interest; Interest Rights Preserved
Except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Securities of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect to such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for
the payment for such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first class postage prepaid, to each Holder of Securities of
such series at such Holder's address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
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(2) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful manner
not inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 4 Persons Deemed Owners
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and any
premium and (subject to Section 307) any interest on such Security and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 401 Cancellation
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be disposed of as directed by a
Company Order.
Section 310 Computation of Interest
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401 Satisfaction and Discharge of Indenture
This Indenture shall upon Company request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore
authenticated and delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306 and (ii) Securities for whose payment money
has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore
delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) are to be called for redemption
within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal and any premium and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money or U.S.
Government Obligations shall have been deposited with the Trustee in accordance
with Section 403 or 404, the obligations of the Company to the Trustee under
Section 402(b), and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of Clause (1) of this Section, the obligations of the
Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
Section 402 Application of Trust Money
(a) Subject to the provisions of the last paragraph in
Section 1003, all money deposited with the Trustee pursuant to Section
401, all money and U.S. Government Obligations deposited with the
Trustee pursuant to Section 403 or 404 and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the
Trustee pursuant to Section 403 or 404, shall be held in trust and
applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying
Agent (including Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such
money has been deposited with or received by the Trustee or to make
mandatory sinking fund payments or analogous payments as contemplated
by Section 403 or 404.
(b) The Company shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against
U.S. Government Obligations deposited pursuant to Section 403 or 404
or the interest and principal received in respect of such obligations
other than any payable by or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from
time to time upon Company Request any money or U.S. Government
Obligations held by it as provided in Section 403 or 404 which, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, are then in excess of the amount thereof which then would
have been required to be deposited for the purpose for which such
money or U.S. Government Obligations were deposited or received.
Section 403 Defeasance and Discharge of Securities of any Series
The Company may elect, at its option by Board Resolution at any time,
to have this Section 403 be applicable to Securities of any series. Upon the
Company's exercise of the option to have this Section 403 applied to Securities
of any series, then notwithstanding Section 401, the Company shall be deemed to
have paid and discharged the entire indebtedness on all the Outstanding
Securities of that series, the provisions of this Indenture as it relates to
such Outstanding Securities (except as to the rights of Holders of Securities
to receive, from the trust funds described in subparagraph (1) below, payment
of the principal of (and premium, if any) or interest on such Securities on the
Stated Maturity of such principal or installment of principal or interest or
any mandatory sinking fund payments or analogous payments applicable to the
Securities of that series on the day on which such payments are due and payable
in accordance
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with the terms of the Indenture and of such Securities, the Company's
obligations with respect to such Securities under Sections 304, 306, 1002 and
1003 and the rights, powers, trusts, duties and immunities of the Trustee
hereunder) shall no longer be in effect, and the Trustee, at the expense of the
Company, shall, upon Company Request, execute proper instruments acknowledging
the same, provided that the following conditions have been satisfied:
(1) the Company has deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 609), irrevocably (irrespective of whether the
conditions in subparagraphs (2), (3), (4), (5), (6), (7) and (8) below
have been satisfied, but subject to the provisions of Section 402(c)
and the last paragraph of Section 1003), as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Securities of that series, with
reference to this Section 403, (A) money in an amount, or (B) U.S.
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide not later than the opening of business on the due date of any
payment referred to in clause (i) or (ii) of this subparagraph (1)
money in an amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge (i) the principal of (and premium,
if any) and each installment of principal (and premium, if any) and
interest on such Outstanding Securities on the Stated Maturity of such
principal or installment of principal or interest and (ii) any
mandatory sinking fund payments or analogous payments applicable to
Securities of such series on the day on which such payments are due
and payable in accordance with the terms of this Indenture and of such
Securities;
(2) such deposit will not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound,
which breach, violation or default is material to the interests of the
Holders of the Securities of that series;
(3) no Event of Default or event which with the
giving of notice or lapse of time, or both, would become an Event of
Default with respect to the Securities of that series (other than an
Event of Default under Section 501(4) with respect to any of Sections
1005 through 1008, inclusive, and Section 801) shall have occurred and
be continuing on the date of such deposit and no Event of Default
under Section 501(6) or Section 501(7) or event which with the giving
of notice or lapse of tine or both, would become an Event of Default
under Section 501(6) or Section 501(7) shall have occurred and be
continuing on the 91st day after such date;
(4) the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Company has received from,
or there has been published by, the Internal Revenue Service a ruling,
or there has been a change in the applicable federal income tax law,
in either case to the effect that Holders of the Securities of that
series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge and
will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;
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(5) if the Securities of that series are then
listed on the New York Stock Exchange, Inc., the Company shall have
delivered to the Trustee an Officers' Certificate to the effect that
such deposit, defeasance and discharge will not cause such Securities
to be delisted;
(6) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance and
discharge of the entire indebtedness on all Outstanding Securities of
any such series as contemplated by this Section have been complied
with;
(7) such deposit, defeasance and discharge shall
not cause the Trustee to have a conflicting interest within the
meaning of the Trust Indenture Act; and
(8) such deposit, defeasance and discharge shall
not result in the trust arising from such deposit constituting an
investment company within the meaning of the Investment Company Act of
1940, as amended, unless such trust shall be qualified under such Act
or exempt from regulation thereunder.
Section 404 Defeasance of Certain Obligations
The Company may elect, at its option by Board Resolution at any time,
to have this Section 404 be applicable to Securities of any series. Upon the
Company's exercise of the option to have this Section 404 applied to the
Securities of any series, the Company may omit to comply with and shall have no
liability in respect of any term, provision or condition set forth in Sections
1005 through 1008, inclusive (whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or by reason of any reference in
any such Section to any other provision herein), and Section 501(4) (with
respect to any term, provision or condition set forth in Sections 1005 through
1008, inclusive and Section 801) and 501(5) shall be deemed not to be an Event
of Default, in each case with respect to the Securities of that series,
provided that the following conditions have been satisfied:
(1) the Company has deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 609), irrevocably (irrespective of whether the
conditions in subparagraphs (2), (3), (4), (5), (6), (7) and (8) below
have been satisfied, but subject to the provisions of Section 402(c)
and the last paragraph of Section 1003), as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Securities of that series, with
reference to this Section 404, (A) money in an amount, or (B) U.S.
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide not later than the opening of business on the due date of any
payment referred to in clause (i) or (ii) of this subparagraph (1)
money in an amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge (i) the principal of (and premium,
if any) and each installment of principal (and premium, if any) and
interest on such Outstanding Securities on the Stated Maturity of such
principal or installment of principal or interest and (ii) any
mandatory sinking fund payments or analogous payments applicable to
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Securities of such series on the day on which such payments are due
and payable in accordance with the terms of this Indenture and of such
Securities;
(2) such deposit will not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound,
which breach, violation or default is material to the interests of the
Holders of the Securities of that series;
(3) no Event of Default or event which with the
giving of notice or lapse of time, or both, would become an Event of
Default with respect to the Securities of that series (other than an
Event of Default under Section 501(4) with respect to any of Sections
1005 through 1008, inclusive, and Section 801) shall have occurred and
be continuing on the date of such deposit and no Event of Default
under Section 501(6) or Section 501(7) or event which with the giving
of notice or lapse of tine or both, would become an Event of Default
under Section 501(6) or Section 501(7) shall have occurred and be
continuing on the 91st day after such date;
(4) the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the Securities of
that series will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit or the elimination of the
Company's obligations to comply with the terms and provisions as
contemplated above and will be subject to federal income tax on the
same amount and in the same manner and at the same times, as would
have been the case if such deposit and elimination of the Company's
obligations to comply as contemplated above had not occurred;
(5) if the Securities of that series are then
listed on the New York Stock Exchange, Inc., the Company shall have
delivered to the Trustee an Officers' Certificate to the effect that
such deposit and elimination of the Company's obligations to comply as
contemplated above will not cause such Securities to be delisted;
(6) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance and
elimination of the Company's obligations to comply as contemplated
above have been complied with;
(7) such deposit and defeasance shall not cause
the Trustee to have a conflicting interest within the meaning of the
Trust Indenture Act; and
(8) such deposit and defeasance shall not result
in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act of 1940, as
amended, unless such trust shall be qualified under such Act or exempt
from regulation thereunder.
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Section 405 Reinstatement
If the Trustee or any Paying Agent is unable to apply any money from
any deposit under Section 403 or 404 in accordance with Section 402(a) with
respect to the Securities of the series entitled thereto by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and such Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 403 or 404 with respect to such
Securities until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 402(a) with respect to such
Securities in accordance with Section 402(a); provided, however, that if the
Company makes any payment of principal of or any interest on any such Security
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from
the money so held in trust.
ARTICLE FIVE
REMEDIES
Section 501 Events of Default
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest upon
any Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of
(or premium, if any) on any Security of that series at its Maturity;
or
(3) default in the deposit of any sinking fund
payment, when and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of
series of Securities other than that series), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default"
hereunder; or
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(5) a default under any bond, debenture, note or
other evidence of indebtedness for money borrowed by the Company or
any Principal Subsidiary of the Company having an aggregate principal
amount outstanding in excess of an amount equal to 3% of Consolidated
Net Tangible Assets or under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any
Principal Subsidiary of the Company having an aggregate principal
amount outstanding in excess of an amount equal to 3% of Consolidated
Net Tangible Assets, whether such indebtedness now exists or shall
hereafter be created, which default shall constitute a failure to pay
any portion of the principal of such indebtedness when due and payable
after the expiration of any applicable grace period with respect
thereto (which grace period, if such portion of the principal is less
than an amount equal to 1% of Consolidated Net Tangible Assets in the
aggregate, shall be deemed to be no less than 5 days) or shall have
resulted in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 10
days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in
the premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of
its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in
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writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance
of any such action; or
(8) any other Event of Default provided with
respect to Securities of that series.
Section 502 Acceleration of Maturity; Rescission and Annulment
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all
Securities of that series,
(B) the principal of (and premium, if
any, on) any Securities of that series which have become due
otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in
such Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate
or rates prescribed therefor in such Securities, and
(D) all sums paid or advanced by the
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to
Securities of that series, other than the non- payment of the
principal of Securities of that series which have become due solely by
such declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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Section 503 Collection of Indebtedness and Suits for Enforcement by
Trustee
The Company covenants that if
(1) default is made in the payment of any
interest on any Security when such interest becomes due and payable
and such default continues for a period of 30 days, or
(2) default is made in the payment of the
principal of (or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 504 Trustee May File Proof of Claim
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
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No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
Section 505 Trustee May Enforce Claims Without Possession of Securities
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506 Application of Money Collected
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 607; and
SECOND: To the payment of the amounts then due and
unpaid for principal of and any premium and interest on the Securities
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal and any premium and interest, respectively.
Section 507 Limitation on Suits
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default with respect to
the Securities of that series;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series shall have made
written request to the Trustee to
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institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or any availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or seek to obtain priority or preference
over any other of such Holders, or to obtain or seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
Section 508 Unconditional Right of Holders to Receive Principal, Premium
and Interest
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section
307) any interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
Section 509 Restoration of Rights and Remedies
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holder shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holder shall continue
as though no such proceeding had been instituted.
Section 510 Rights and Remedies Cumulative
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter
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existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511 Delay or Omission Not Waiver
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 512 Control by Holders
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to 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, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
Section 513 Waiver of Past Defaults
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any
premium or interest on any Security of such series, or
(2) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such series
affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
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Section 514 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess cost
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act, provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Company.
Section 515 Waiver of Stay or Extension Laws
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601 Certain Duties and Responsibilities
The duties and responsibilities of the Trustee shall be provided by
the Trust Indenture Act and this Indenture. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 602 Notice of Defaults
If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give the Holders of Securities of such series notice
of such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified
in Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.
For the purpose of this Section, the term "default" means any event which is,
or after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
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Section 603 Certain Rights of Trustee
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
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Section 604 Not Responsible for Recitals or Issuance of Securities
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. The
Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
Section 605 May Hold Securities
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Section 606 Money Held in Trust
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 607 Compensation and Reimbursement
The Company agrees
(1) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided
herein, to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
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Section 608 Disqualification; Conflicting Interests
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 609 Corporate Trustee Required; Eligibility
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $25,000,000 and its Corporate
Trust Office, or an office or agency thereof, in Dallas, Texas or in the
Borough of Manhattan, The City of New York. If such Person publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 610 Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice thereof
to the Company. If the instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect
to the Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
608 after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request therefor by
the Company or by any such Holder, or
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(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by a Board Resolution may
remove the Trustee with respect to all securities, or (ii) subject to
Section 514, any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Securities of one or more
series, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of that
or those series (it being understood that any such successor Trustee
may be appointed with respect to the Securities of one or more or all
of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 611. If, within
one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the
Securities of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall forthwith upon its acceptance of
such appointment in accordance with the applicable requirements of
Section 611, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed
by the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide Holder of
a Security of such series for at least six months may, on behalf of
itself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series
in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee with respect to the Securities of such
series and the address of its Corporate Trust Office.
Section 611 Acceptance of Appointment by Successor
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee
so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall
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become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all)
series, the Company, the retiring Trustee and each successor Trustee
with respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm
to, and to vest in, each successor Trustee all the right, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring
with respect to all Securities, shall contain such provisions as shall
be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, it being understood
that nothing herein or in such supplemental indenture shall constitute
such Trustees co-trustees of the same trust and that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in paragraphs (a) and (b) of
this Section, as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
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Section 612 Merger, Conversion, Consolidation or Succession to Business
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613 Preferential Collection of Claims Against Company
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614 Appointment of Authenticating Agent
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 306, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$25,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to
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be an Authenticating Agent, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, N.A.,
As Trustee
By______________________________________
As Authenticating Agent
By______________________________________
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701 Company to Furnish Trustee Names and Addresses of Holders
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after each
Regular Record Date for each series of Securities at the time
Outstanding, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date (or a date to be determined pursuant to Section 301 for
Original Issue Discount Securities); and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 702 Preservation of Information; Communications to Holders
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as provided
in Section 701 and the names and addresses of Holders received by the
Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the
Trustee, shall be as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding
same, agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to names and
addresses of Holders made pursuant to the Trust Indenture Act.
Section 703 Reports by Trustee
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock
exchange upon which any Securities are
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listed, with the Commission and with the Company. The Company will
notify the Trustee when any Securities are listed on any stock
exchange.
Section 704 Reports by Company
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801 Company May Consolidate, Etc., Only on Certain Terms
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or
merge into another Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, the Person
formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an entirety
(for purposes of this Article Eight, a "Successor Company") shall be a
corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the principal of and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(2) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation
of the Company or a Principal Subsidiary of the Company as a result of
such transaction as having been incurred by the Company or such
Principal Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be
continuing;
(3) if, as a result of any such consolidation or
merger of such conveyance, transfer or lease, properties or assets of
the Company or any Principal Subsidiary of the Company would become
subject to a Lien which would not be
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permitted by this Indenture, the Company or if applicable the
Successor Company, as the case may be, shall take such steps as shall
be necessary effectively to secure the Securities equally and ratably
with (or prior to) all Debt secured by such Lien; and
(4) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 802 Successor Substituted
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901 Supplemental Indentures Without Consent of Holders
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person
to the Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for
the benefit of the Holders of all of or any series of Securities (and
if such covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included
solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of
this Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Securities in bearer
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form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of
Securities in uncertificated form; or
(5) to add to, change or eliminate any of the
provisions of this Indenture in respect of one or more series of
Securities, provided that any such addition, change or elimination (i)
shall neither (A) apply to any Security of any series created prior to
the execution of such supplemental indenture and entitled to the
benefit of such provision nor (B) modify the rights of the Holder of
any such Security with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding; or
(6) to secure the Securities pursuant to the
requirements of Section 1007 or otherwise; or
(7) to establish the form or terms of Securities
of any series as permitted by Section 201 and 301; or
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 611(b); or
(9) to cure any ambiguity, to correct or
supplement any provision herein which may be inconsistent with any
other provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture, provided that
such action pursuant to this clause (9) shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.
Section 902 Supplemental Indentures with Consent of Holders
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal
of, or any installment of principal of or interest on, any Security,
or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or reduce the
amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502, or change any Place of
Payment where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, or impair the right to
institute suit
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for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in principal amount of
the Outstanding Securities of any series, the consent of whose Holders
is required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section,
Section 513 or Section 1010, except to increase any such percentage or
to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that this
clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant
changes in this Section and Section 1010, or the deletion of this
proviso, in accordance with the requirements of Sections 611(b) and
901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provisions, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 903 Execution of Supplement Indentures
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 904 Effect of Supplemental Indentures
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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Section 905 Conformity with Trust Indenture Act
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906 Reference in Securities to Supplemental Indentures
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
Section 1001 Payment of Principal, Premium and Interest
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.
Section 1002 Maintenance of Office or Agency
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
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Section 1003 Money for Securities Payments to Be Held in Trust
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (i) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
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Section 1004 Existence
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 1005 Maintenance of Properties
The Company will cause all properties used or useful in the conduct of
its business or the business of any Principal Subsidiary of the Company to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company desirable
in the conduct of its business or the business of any Principal Subsidiary of
the Company and not disadvantageous in any material respect to the Holders.
Section 1006 Payment of Taxes and Other Claims
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 1007 Limitation on Liens
(a) The Company shall not, and shall not permit any
Principal Subsidiary of the Company to, incur or suffer to exist any
Lien upon any Principal Property, or upon any shares of stock of any
Principal Subsidiary of the Company (whether such Principal Property
or shares are now owned or hereafter acquired), to secure any Debt
without making, or causing such Principal Subsidiary to make,
effective provision for securing the Securities (and no other
indebtedness of the Company or any Principal Subsidiary of the Company
except, if the Company shall so determine, any other indebtedness of
the Company which is not subordinate in right of payment to the
Securities or of such Principal Subsidiary) (x) equally and ratably
with such Debt as to such Principal Property or shares for as long as
such Debt shall be so secured unless (y) such Debt is Debt of the
Company which is subordinate in right of payment to the Securities, in
which case prior
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to such Debt as to such Principal Property or shares for as long as
such Debt shall be so secured.
The foregoing restrictions will not apply to Liens
existing at the date of this Indenture or to:
(i) Liens securing only the Securities;
(ii) Liens in favor of only the Company;
(iii) Liens on property of a Person
existing at the time such Person is merged into or
consolidated with the Company or any Principal Subsidiary of
the Company (but only to the extent such Liens cover such
property);
(iv) Liens on property existing
immediately prior to the time of acquisition thereof (and not
in anticipation of the financing of such acquisition);
(v) any Lien upon a Principal Property
(including any property that becomes a Principal Property
after acquisition thereof) to secure Debt incurred for the
purpose of financing all or any part of the purchase price or
the cost of construction or improvement of the property
subject to such Lien; provided, however, that (A) the
principal amount of any Debt secured by such Lien (1) does not
exceed 100% of such purchase price or cost and (2) is incurred
not later than six months after such purchase or the
completion of such construction or improvement, whichever is
later, and (B) such Lien does not extend to or cover any other
property other than such item of property and any improvements
on such item;
(vi) Liens to secure Debt incurred to
extend, renew, refinance or refund (or successive extensions,
renewals, refinancings or refundings), in whole or in part,
Debt secured by any Lien referred to in the foregoing Clauses
(i) to (v) as long as such Lien does not extend to any other
property and the original amount of the Debt so secured in not
increased; and
(vii) any Lien securing Debt owing by the
Company to a wholly owned Principal Subsidiary of the Company
(provided that such Debt is at all times held by a person
which is a wholly owned Principal Subsidiary of the Company);
provided, however, that for purposes of this Section 1007 and
1008 hereof,upon either (A) the transfer or other disposition
of a Debt secured by a Lien so permitted to a Person other
than the Company or another wholly owned Principal Subsidiary
of the Company or (B) the issuance, sale, lease, transfer or
other disposition of shares of capital stock of any such
wholly owned Principal Subsidiary to a Person other than the
Company or another wholly owned Principal Subsidiary of the
Company, the provisions of this Clause (vii) shall no longer
be applicable to such Lien and such Lien shall be subject (if
otherwise subject) to the requirements of this Section 1007
without regard to this Clause (vii).
56
<PAGE> 64
(b) In addition to the foregoing, the Company and its
Principal Subsidiaries may incur and suffer to exist a Lien to secure
any Debt or enter into a Sale and Leaseback Transaction without
equally and ratably securing the Securities if, after giving effect
thereto, the sum of (i) the principal amount of Debt secured by all
Liens incurred after the date of this Indenture and otherwise
prohibited by this Indenture and (ii) the Attributable Debt of all
Sale and Leaseback Transactions entered into after the date of this
Indenture and otherwise prohibited by this Indenture does not exceed
10% of the Consolidated Net Tangible Assets of the Company.
(c) If the Company shall hereafter be required under this
Section 1007 to make (or cause to be made) effective provision for
securing the Securities, then (i) the Company will promptly deliver to
the Trustee an Officers' Certificate and Opinion of Counsel stating
that this Section 1007 has been complied with and that any instruments
executed by the Company or any Principal Subsidiary of the Company in
the performance of this Section 1007 shall comply with the
requirements hereof, and (ii) the Trustee is hereby authorized to
enter into an indenture or agreement supplemental hereto and to take
such action, if any, as it may deem advisable to enable it to enforce
the rights of the Holders of the Securities as so secured.
Section 1008 Limitation on Sale and Leaseback Transactions
The Company shall not, and shall not permit any Principal Subsidiary
of the Company to, enter into any Sale and Leaseback Transaction (except for a
period not exceeding 36 months) unless:
(1) The Company or such Principal Subsidiary would be
entitled to enter into such Sale and Leaseback Transaction pursuant to
the provisions of Section 1007(b) hereof without equally and ratably
securing the Securities; or
(2) The Company or such Principal Subsidiary applies or
commits to apply, within 270 days before or after the Sale Transaction
pursuant to such Sale and Leaseback Transaction, an amount equal to
the Net Available Proceeds therefrom to any combination of the
following: (i) the repayment of Funded Debt, (ii) the purchase of
other property which will constitute Principal Property that has an
aggregate value of at least the consideration paid therefor or (iii)
Capital Expenditures with respect to any Principal Property; provided
that the amount to be applied or committed to the repayment of such
Funded Debt shall be reduced by (a) the principal amount of any
Securities delivered within six months before or after such Sale
Transaction to the Trustee for retirement and cancellation, and (b)
the principal amount of such Funded Debt as is voluntarily retired by
the Company within six months before or after such Sale Transaction
(it being understood that no amount so applied or committed and no
Securities so delivered or indebtedness so retired may be counted more
than once for such purpose); provided, further, that no repayment
or retirement referred to in this Clause (2) may be effected by
payment at maturity or pursuant to any mandatory sinking fund payment
or any mandatory prepayment provision.
57
<PAGE> 65
Section 1009 Statement of Officers as to Default
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 1010 Waiver of Certain Covenants
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1007 and 1008 with respect
to the Securities of any series if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
Section 1011 SEC Reports
The Company shall deliver to the Trustee within 15 days after it files
the same with the Commission, copies of all reports and information (or copies
of such portions of any of the foregoing as the Commission may by rules and
regulations prescribe), if any, which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101 Applicability of Article
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
Section 1102 Election to Redeem; Notice to Trustee
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or by action taken pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all the Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be
58
<PAGE> 66
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
Section 1103 Selection by Trustee of Securities to Be Redeemed
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. If less
than all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1104 Notice of Redemption
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities
of any series are to be redeemed, the identification (and, in the case
of partial redemption of any Securities, the principal amounts) of the
particular Securities to be redeemed,
59
<PAGE> 67
(4) that on the Redemption Date the Redemption
Price will become due and payable upon each such Security to be
redeemed and, if applicable, that interest thereon will cease to
accrue on and after said date,
(5) the place or places where such Securities are
to be surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if
such is the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1105 Deposit of Redemption Price
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 1106 Securities Payable on Redemption Date
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107 Securities Redeemed in Part
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities of the same
series and of like tenor, of any
60
<PAGE> 68
authorized denomination as required by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
Section 1201 Applicability of Article
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 1202 Satisfaction of Sinking Fund Payments with Securities
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 1203 Redemption of Securities for Sinking Fund
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 and not more than 60 days before each such
sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
1103 and cause notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section 1104. Such
notice having been duly given, the
61
<PAGE> 69
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
______________________________
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
COMMERCIAL METALS COMPANY
By: ________________________________
Name:
Title:
Attest:
_______________________________
THE CHASE MANHATTAN BANK, N.A.
By:________________________________
Name:
Title:
Attest:
_______________________________
62
<PAGE> 70
STATE OF __________ )
) SS:
COUNTY OF __________ )
On the ______ day of _______________, 1995, before me personally came
__________________________________, to me known, who, being by me duly sworn,
did depose and say that he is _______________ of Commercial Metals Company, one
of the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his name thereto by
like authority.
____________________________________________________
STATE OF __________ )
) SS:
COUNTY OF __________ )
On the ______ day of _______________, 1995, before me personally came
__________________________________, to me known, who, being by me duly sworn,
did depose and say that he is _______________ of ________________ _, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
____________________________________________________
63
<PAGE> 1
Exhibit 5.1
HAYNES AND BOONE, L.L.P.
ATTORNEYS AND COUNSELORS AT LAW
3100 NationsBank Plaza
Dallas, Texas 75202-3789
TELEPHONE 214/651-5000
TELEX 73-0187
FAX 214/651-5940
June 30, 1995
Commercial Metals Company
7800 Stemmons Freeway
Dallas, Texas 75247
Re: Registration of $150,000,000 in aggregate principal amount of
notes consisting of $100,000,000 of Notes Due 2005 and
$50,000,000 of Medium-Term Notes
Gentlemen:
We have acted as special counsel to Commercial Metals Company, a Delaware
corporation (the "Company"), in connection with the registration and sale under
the Securities Act of 1933, as amended (the "Securities Act"), of up to
$150,000,000 in aggregate principal amount of notes consisting of $100,000,000
of Notes Due 2005 (the "Notes Due 2005") and $50,000,000 of Medium-Term Notes
(the "Medium-Term Notes") pursuant to an Indenture (the "Indenture") to be
entered into between The Chase Manhattan Bank, N.A. (the "Trustee") and the
Company (the "Indenture"). For purposes of this opinion, the Notes Due 2005 and
the Medium-Term Notes shall be referred to collectively as the "Notes". The
Notes are being registered pursuant to a Registration Statement on Form S-3
filed with the Securities and Exchange Commission under the Securities Act of
1933, as subsequently amended or supplemented (the Registration Statement, as
amended or supplemented, is hereinafter referred to as the "Registration
Statement"). The Notes Due 2005 are being sold to Goldman, Sachs & Co., Lehman
Brothers and Morgan Stanley & Co. Incorporated (the "Underwriters") pursuant to
an Underwriting Agreement to be entered into between the Company and the
Underwriters (the "Underwriting Agreement"), and the Medium-Term Notes may be
sold by the Underwriters as agents of the Company pursuant to a Distribution
Agreement to be entered into between the Underwriters and the Company (the
"Distribution Agreement"). The Medium-Term Notes may be sold from time to time
to the Underwriters and/or other purchasers pursuant to the terms of the
Distribution Agreement.
<PAGE> 2
(page 2)
In connection therewith, we have examined and relied upon the
original, or copies certified to our satisfaction, of (i) the Certificate of
Incorporation and the Bylaws of the Company; (ii) minutes and records of the
corporate proceedings of the Company with respect to the issuance by the
Company of the Notes; (iii) the Registration Statement and all exhibits
thereto; (iv) the forms of Underwriting Agreement and Distribution Agreement;
(v) the form of Indenture; and (vi) such other documents and instruments
as we have deemed necessary for the expression of the opinions contained
herein.
In making the foregoing examinations, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies thereof and the authenticity of the
originals of such latter documents. As to various questions of fact material
to this opinion, where such facts have not been independently established, and
as to the content and form of the Certificate of Incorporation, the Bylaws,
certain minutes, records, resolutions and other documents or writings of the
Company, we have relied, to the extent we have deemed reasonably appropriate,
upon representations or certificates of officers, directors and agents of the
Company, upon documents, records and instruments furnished to us by the
Company, without independent check or verification of their accuracy, and upon
governmental officials. In rendering the opinions expressed below, we have
assumed (i) that the Indenture, the Underwriting Agreement and the Distribution
Agreement will be executed in substantially the same forms submitted to us,
(ii) the due execution and delivery of the Indenture by the Trustee, and
(iii) that the Indenture, when executed and delivered, will constitute the
legal, valid and binding obligation of the Trustee.
Based upon the foregoing, and having due regard for such legal
considerations as we deem relevant, we are of the opinion that when (a) the
Indenture has been duly executed by the parties thereto and (b) the Notes have
been duly executed and delivered by the Company, authenticated by the Trustee
and issued in accordance with the terms of the Indenture, the Notes will be
valid and legally binding obligations of the Company, enforceable in accordance
with their terms except as enforceability may be limited by (1) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the rights of creditors generally, (2) provisions
of applicable law pertaining to the voidability of preferential or fraudulent
transfers and conveyances and (3) the fact that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. In addition, certain other provisions of
the Notes may be unenforceable in whole or in part under the laws (including
judicial decisions) of the State of New York or the United States of America;
provided, however, that the inclusion of any such provisions and any
limitations imposed by such laws on the enforceability of the Notes will
<PAGE> 3
(page 3)
not affect the validity or enforceability as a whole of any of the Notes and
will not prevent the holders thereof from the ultimate realization of the
practical rights and benefits afforded by such documents, except for the
economic consequences of any judicial, administrative or other procedural delay
which may result from the application of any such law.
With respect to the Indenture, we advise you that when the Registration
Statement is declared effective under the Securities Act, the Indenture will be
deemed to have been qualified under the Trust Indenture Act of 1939, as
amended.
The opinions expressed above are specifically limited to the laws of the
State of New York, the General Corporation Laws, as amended, of the State of
Delaware, and the federal laws of the United States of America.
This opinion is (i) rendered solely for your benefit in connection with
the issuance of the Notes, (ii) may not be used or relied upon by any other
person and may not be disclosed, quoted, filed with a governmental agency or
otherwise referred to without our prior written consent, (iii) is rendered as
of the date hereof, and we undertake no, and hereby disclaim any kind of,
obligation to advise you of any change or any new developments that might
affect any matters or opinions set forth herein, and (iv) is limited to the
matters stated herein and no opinions may be inferred or implied beyond the
matters expressly stated herein.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and the
references to our firm under the caption "Legal Matters" in the Prospectus
forming a part of such Registration Statement.
Very truly yours,
Haynes and Boone, L.L.P.
<PAGE> 1
Exhibit 12.1
Summary of Fixed Charge Coverage Ratios (in thousands, except ratios)
<TABLE>
<CAPTION>
Nine Months
Fiscal Year Ended August 31, Ended May 31
----------------------------------------------------------- --------------------
1994 1993 1992 1991 1990 1995 1994
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Pretax income $40,907 $35,061 $20,297 $18,344 $39,820 $42,912 $27,175
Adjustments to earnings:
Interest expensed 9,271 9,397 9,951 8,565 8,551 11,394 6,524
Amortization of
capitalized interest 440 406 394 321 72 431 282
Rent expense 2,029 1,998 1,897 1,993 1,774 1,826 1,518
------- ------- ------- ------- ------- ------- -------
Total earnings $52,647 $46,862 $32,539 $29,223 $50,217 $56,563 $35,499
======= ======= ======= ======= ======= ======= =======
Fixed charges:
Interest expensed $ 9,271 $ 9,397 $ 9,951 $ 8,565 $ 8,551 $11,394 $ 6,524
Interest capitalized 1,176 411 113 1,036 298 94 1,229
Rent expense 2,029 1,998 1,897 1,993 1,774 1,826 1,518
------- ------- ------- ------- ------- ------- -------
Total fixed charges $12,476 $11,806 $11,961 $11,594 $10,623 $13,314 $ 9,271
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to
fixed charges 4.2x 4.0x 2.7x 2.5x 4.7x 4.2x 3.8x
</TABLE>
Pro forma information is not applicable as the ratio of earnings to fixed
charges varies by less than 10%.
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Commercial Metals Company on Form S-3 of our reports dated October 19, 1995,
appearing in the Annual Report on Form 10-K of Commercial Metals Company for the
year ended August 31, 1994 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Dallas, Texas
June 30, 1995
<PAGE> 1
EXHIBIT 25.1
Securities Act of 1933 File No. _________
(If application to determine eligibility of trustee
for delayed offering pursuant to Section 305 (b) (2))
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)___________
---------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
(Exact name of trustee as specified in its charter)
13-2633612
(I.R.S. Employer Identification Number)
1 CHASE MANHATTAN PLAZA, NEW YORK, NEW YORK
(Address of principal executive offices)
10081
(Zip Code)
---------------
COMMERCIAL METALS COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
75-0725338
(I.R.S. Employer Identification No.)
7800 STEMMONS FREEWAY
DALLAS, TEXAS
(Address of principal executive offices)
75247
(Zip Code)
----------------------------------
DEBT SECURITIES
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The Trustee is not the obligor, nor is the Trustee directly or
indirectly controlling, controlled by, or under common control
with the obligor.
(See Note on Page 2.)
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
*1. -- A copy of the articles of association of the trustee as now in
effect. (See Exhibit T-1 (Item 12), Registration No. 33-55626.)
*2. -- Copies of the respective authorizations of The Chase Manhattan Bank
(National Association) and The Chase Bank of New York (National
Association) to commence business and a copy of approval of
merger of said corporations, all of which documents are still in
effect. (See Exhibit T-1 (Item 12), Registration No. 2-67437.)
*3. -- Copies of authorizations of The Chase Manhattan Bank (National
Association) to exercise corporate trust powers, both of which
documents are still in effect. (See Exhibit T-1 (Item 12),
Registration No. 2-67437).
4. -- A copy of the existing by-laws of the trustee. (See Exhibit 4)
*5. -- A copy of each indenture referred to in Item 4, if the obligor is
in default. (Not applicable).
*6. -- The consents of United States institutional trustees required by
Section 321(b) of the Act. (See Exhibit T-1, (Item 12),
Registration No. 22-19019.)
7. -- A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority. (See Exhibit 7)
___________________
*The Exhibits thus designated are incorporated herein by reference.
Following the description of such Exhibits is a reference to the copy of the
Exhibit heretofore filed with the Securities and Exchange Commission, to which
there have been no amendments or changes.
___________________
1
<PAGE> 3
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base a responsive answer to Item 2 the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, The Chase Manhattan Bank (National Association), a corporation
organized and existing under the laws of the United States of America, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized , all in the City of New York, and the
State of New York, on the 28th day of June, 1995.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: /s/ Timothy E. Burke
-----------------------------
Timothy E. Burke
Second Vice President
_________________
2
<PAGE> 4
EXHIBIT 7
REPORT OF CONDITION
CONSOLIDATING DOMESTIC AND FOREIGN SUBSIDIARIES OF THE CHASE MANHATTAN BANK,
N.A. OF NEW YORK IN THE STATE OF NEW YORK, AT THE CLOSE OF BUSINESS ON MARCH
31, 1995, PUBLISHED IN RESPONSE TO CALL MADE BY COMPTROLLER OF THE CURRENCY,
UNDER TITLE 12, UNITED STATES CODE, SECTION 161. CHARTER NUMBER 02370
COMPTROLLER OF THE CURRENCY NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS
THOUSANDS
OF DOLLARS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . $ 4,264,000
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . 6,755,000
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . 1,571,000
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . 4,687,000
Federal funds sold and securities purchased under agreements to resell
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,502,000
Securities purchased under agreements to resell . . . . . . . . . . . . 35,000
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . . . . . . . $52,831,000
LESS: allowance for loan and lease losses . . . . . . . . . . 1,078,000
LESS: allocated transfer risk reserve . . . . . . . . . . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . 51,753,000
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . 17,278,000
Premises and fixed assets (including capitalized leases) . . . . . . . . . 1,785,000
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . 441,000
Investments in unconsolidated subsidiaries and associated companies . . . . 46,000
Customers' liability to this bank on acceptances outstanding . . . . . . . 1,077,000
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 809,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,346,000
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TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $99,349,000
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LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . $28,080,000
Noninterest-bearing. . . . . . . . . . . . . . . . . . $10,224,000
Interest-bearing . . . . . . . . . . . . . . . . . . . .17,856,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . 35,906,000
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,695,000
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . 33,211,000
Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . 2,086,000
Securities sold under agreements to repurchase . . . . . . . . . . . . 158,000
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . 194,000
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,545,000
Other borrowed money
With original maturity of one year or less . . . . . . . . . . . . . . . . 2,122,000
With original maturity of more than one year . . . . . . . . . . . . . . . 429,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . 40,000
Bank's liability on acceptances, executed and outstanding . . . . . . . . . 1,081,000
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . 2,360,000
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,300,000
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TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $92,301,000
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Limited-life preferred stock and related surplus . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 917,000
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,666,000
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . 1,552,000
LESS: net unrealized loss on marketable equity securities . . . . . . . . . (98,000)
Cumulative foreign currency translation adjustments . . . . . . . . . . . . 11,000
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,048,000
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND
EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . $99,349,000
===========
</TABLE>
I, Lester J. Stephens, Jr., Senior Vice President and Controller of the
above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.
(Signed) Lester J. Stephens, Jr.
We the undersigned directors, attest to the correctness of this statement of
resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
(Signed) Thomas G. Labrecque
(Signed) Richard J. Boyle Directors
(Signed) Donald H. Trautlein
<PAGE> 5
EXHIBIT 4
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
BY-LAWS
ARTICLE I
SHAREHOLDERS
Section l.l. Annual Meeting. The annual meeting of the shareholders of
the Bank for the election of Directors and the transaction of such other
business as may be brought before said meeting shall be held at the main office
of the Bank or such other place as the Board may designate, on the third
Tuesday in April in each year, at 2 P.M. If the third Tuesday in April falls on
a legal holiday in the State of New York such meeting shall be held, and the
Directors elected, on the next following banking day. If, from any cause, an
election of Directors is not made on the day fixed for the annual meeting of
shareholders, or in the event of a legal holiday, on the next following banking
day, an election may be held at any adjournment of the annual meeting of
shareholders or at any special meeting of the shareholders or adjournment
thereof, as designated by the Board, but within 60 days of the day fixed for
the annual meeting of shareholders. Notice of such adjournment or special
meeting shall be given in the manner provided in Section 1.3.
Section 1.2. Special Meetings. Special meetings of the shareholders shall
be held whenever called by the Chairman of the Board, the President, the Board
or any one or more shareholders holding in the aggregate not less than 25% of
the outstanding shares of capital stock of the Bank.
Section 1.3. Notice of Meetings and Waivers. Unless otherwise provided by
the laws of the United States, a notice of the time, place and purpose of every
annual and every special meeting of the shareholders shall be given by
first-class mail, postage prepaid, mailed at least 10 days prior to the date of
such meeting to each shareholder of record at his address as shown upon the
books of the Bank. Except as to any notice expressly required by the laws of
the United States, waiver of notice in writing by any shareholder of any
meeting of shareholders, whether prior or subsequent to such meeting, or
attendance at such meeting by any shareholder, shall be equivalent to notice to
such shareholder of such meeting.
Section 1.4. Quorum. Except as otherwise provided by the laws of the
United States, the presence in person or by proxy of the holders of one-third
of the outstanding shares of capital stock of the Bank entitled to vote shall
be necessary to constitute a quorum for the transaction of any business at any
meeting of shareholders. In the absence of a quorum the holders of a majority
of the shares of capital stock present in person or by proxy may adjourn any
meeting from time to time until a quorum is present and, except as may be
required by Section l.l, no notice of any adjourned meeting need be given. At
any such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
called.
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2
Section 1.5. Organization. At every meeting of shareholders the Chairman
of the Board, or in his absence the President, shall preside. In their absence
a Vice Chairman of the Board shall preside. In the absence of all said
officers, any other officer of the Bank present shall call such meeting to
order and preside. In the absence of the Secretary, the presiding officer may
appoint a secretary of the meeting.
Section 1.6. Voting. In deciding all matters at meetings of shareholders,
except in the election of Directors, each shareholder of record shall be
entitled to one vote on each share of capital stock of the Bank held by him;
and, except as otherwise provided by the laws of the United States, the
Articles of Association or these By-Laws, all such matters shall be decided by
a majority of the votes cast at a meeting at which a quorum is present. In all
elections of Directors, each shareholder shall have the right to vote the
number of shares of capital stock held by him for as many persons as there are
Directors to be elected, or to cumulate such shares and give one candidate as
many votes as the number of Directors multiplied by the number of his shares
shall equal, or to distribute them on the same principle among as many
candidates as he shall think fit. Any shareholder may vote in person or by
proxy duly authorized in writing and delivered to the Secretary of the meeting.
No officer or employee of the Bank shall act as proxy. Voting for the election
of Directors shall be by ballot and all other voting shall be by ballot or viva
voce as may be determined by the presiding officer.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. Number. The affairs of the Bank shall be managed by the
Board of Directors (herein referred to as the "Board"), which shall consist of
not less than five nor more than 25 shareholders, the exact number of Directors
within such minimum and maximum limits to be fixed and determined from time to
time by resolution of a majority of the full Board or by resolution of the
shareholders at any annual or special meeting thereof; provided, however, that
a majority of the full Board may not increase the number of Directors to a
number which exceeds the number of Directors last elected by shareholders by
more than (a) four, if the number of Directors so elected was 16 or more, or
(b) two, if the number of Directors so elected was 15 or less. To qualify as a
shareholder, a Director shall own stock of this Bank or of the bank holding
company controlling this Bank meeting the requirements of the Articles of
Association of this Bank.
Section 2.2. Annual Organization Meeting. An annual organization meeting
of the Board shall be held at the main office of the Bank immediately following
the annual meeting of shareholders, unless another place or time be fixed by
resolution of the Board. Notice of such meeting need not be given. Any business
may be transacted at such meeting.
Section 2.3. Regular Meetings. The Board may fix times for regular
meetings of the Board and no notice of such meetings need be given. Any
business may be transacted at any regular meeting.
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3
Section 2.4. Special Meetings. Special meetings of the Board shall be
held whenever called by the Chairman of the Board or the President or a Vice
Chairman of the Board or a Vice Chairman or any three Directors, provided,
however, that a Vice Chairman shall not call a special meeting unless one of
the purposes of the meeting is to appoint one or more officers or Directors to
fill vacancies resulting from disability, death or other cause. Notice of each
such special meeting shall be mailed postage prepaid to each Director,
addressed to him at his residence or usual place of business or other address
filed by him with the Secretary for such purpose, or shall be sent to him by
telegraph, cable or wireless, or shall be delivered or given to him personally
or by telephone, not later than the second day preceding the day on which the
meeting is to be held. Every such notice shall state the time and place but
need not state the purposes of the meeting. Any business may be transacted at
any special meeting. Members of the Board of Directors may participate in such
special meetings through use of conference telephone or similar communications
equipment, so long as all members participating in such meetings can hear one
another.
Section 2.5. Waiver of Notice of Special Meetings. Waiver of notice in
writing by any Director of any special meeting of the Board, whether prior or
subsequent to such meeting, or attendance at such meeting by any Director,
shall be equivalent to notice to such Director of such meeting.
Section 2.6. Quorum and Manner of Acting. Except as otherwise
required by the laws of the United States, the Articles of Association or these
By-Laws, one-third of the Directors then in office shall be necessary to
constitute a quorum for the transaction of any business at any meeting of the
Board and the act of a majority of the Directors present and voting at a
meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum a majority of the Directors present may adjourn any meeting
from time to time until a quorum is present and no notice of any adjourned
meeting need be given. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally called.
Section 2.7. Compensation of Directors. Directors who are not
officers of the Bank shall receive such compensation as may be fixed by the
Board for service on the Board or any Committee of the Board.
Section 2.8. Vacancies. In the event a majority of the full Board
increases the number of Directors to a number which exceeds the number of
Directors last elected by shareholders, as permitted by Section 2.1, Directors
may be appointed to fill the resulting vacancies by vote of such majority of
the full Board. In the event of a vacancy in the Board for any other cause a
Director may be appointed to fill such vacancy by vote of a majority of the
remaining Directors then in office.
ARTICLE III
COMMITTEES
Section 3.1. Executive Committee. There shall be an Executive
Committee, consisting of the Chairman of the Board, the President and each Vice
Chairman of the Board, who shall be ex-officio members, and such number of
additional Directors as may from time to time be appointed by the Board. The
Chairman of the Board shall preside at the meetings of the Executive Committee.
The
<PAGE> 8
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Chairman of the Board shall have the power to make temporary appointments to
the Executive Committee of members of the Board to act in place of members of
the Executive Committee who temporarily cannot attend a meeting or meetings.
The Board may designate one or more other Directors as alternate members of the
Executive Committee, who may replace any absent or disqualified member, other
than an ex-officio member, at any meeting of the Executive Committee.
The Executive Committee shall exercise such powers as may be assigned
to it by the Board and may consider and make recommendations to the Board in
respect of any matters relating to the affairs of the Bank.
Meetings of the Executive Committee shall be held at such times and
places as the Executive Committee shall determine or upon call of the Chairman
of the Board or the President. One-third of the members of the Executive
Committee, including at least one ex-officio member and three members who are
not officers of the Bank, shall constitute a quorum.
Section 3.2. Trust Committee. There shall be a Trust Committee
consisting of such Directors as shall be appointed from time to time by the
Board who shall serve at the pleasure of the Board. The Board may designate one
or more other Directors as alternate members of the Trust Committee, who may
replace any absent or disqualified member at any meeting of the Trust
Committee.
The Trust Committee shall have power to review the general conduct of
the trust, other fiduciary and investment advisory activities of the Bank and
its subsidiaries and to pass upon all such matters relating to the conduct of
those activities as may be submitted to the Trust Committee by the chief
executive officer of the Bank and shall from time to time exercise such other
powers as may be assigned to it by the Board.
Meetings of the Trust Committee shall be held at such times and places
as the Committee shall determine or upon call of any member authorized by the
Committee to call such meetings. A majority of the members of the Committee
shall constitute a quorum.
Section 3.3. Other Committees. The Board may also appoint or provide
for the appointment of other Committees from its members and, to the extent
permitted by law, may assign to any such Committee the exercise of such powers
as the Board may see fit. The Board may designate one or more Directors as
alternate members of any such Committee, who may replace any absent or
disqualified member at any meeting of such Committee.
Section 3.4. Committee Rules; Quorum; Manner of Acting. Each Committee
may adopt rules consistent with these By-Laws governing the method of calling
and time and place of holding its meetings. One-half of any Committee for which
a quorum is not otherwise set forth in these By-Laws shall constitute a quorum
for the transaction of business, unless the Board shall otherwise provide, and
the act of a majority of the members of such Committee present at a meeting at
which a quorum is present shall be the act of such Committee. Members of all
Committees of this Board, other than the Examining Committee, may participate
in meetings of such Committees through use of conference telephone or similar
communications equipment so long as all members participating in such meetings
can hear one another.
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ARTICLE IV
OFFICERS
Section 4.1. Titles. The officers of the Bank shall be a Chairman of
the Board, a President, one or more Vice Chairmen of the Board, one or more
Vice Chairmen, one or more Vice Presidents, a Secretary and such other officers
as may be appointed at any time or from time to time by the Board. The Board
may by resolution delegate to the Executive Committee of the Board and to such
officers as the Board may designate authority to appoint officers below the
Senior Vice President, or equivalent, level, assign powers and duties to any
officer below the Executive Vice President, or equivalent, level, rescind or
terminate the appointment of any officer below the Executive Vice President, or
equivalent, level, and accept the resignation of any officer. Any one or more
Vice Presidents may be designated Senior Executive Vice President, Executive
Vice President or Senior Vice President. One person may hold any two or more
offices, and perform the duties thereof, except that no person shall hold the
offices of both Chairman of the Board and Vice Chairman of the Board, both
Chairman of the Board and President or both President and Vice President.
Section 4.2. Qualification. Election and Term of Office of Officers.
The Chairman of the Board, the President and each Vice Chairman of the Board
shall be Directors of the Bank. The other officers need not be Directors. The
Chairman of the Board, the President, each Vice Chairman of the Board, and each
Vice Chairman shall be appointed by the Board to hold office until the next
annual organization meeting of the Board and until their successors are
appointed and qualified. The term of office of all other officers shall be at
the pleasure of the Board. The compensation of all officers of the Bank shall
be fixed by resolution of the Board, except that the Board may authorize the
Chairman of the Board, the President and each Vice Chairman of the Board each
to fix and to delegate to such other officers as the Board may designate
authority to fix any compensation of any person in any official position level
not above a level specified by the Board. Any officer of the Bank may be
dismissed at the pleasure of the Board.
Section 4.3. Chairman of the Board and President. The Chairman of the
Board shall be the chief executive officer of the Bank and shall have the
responsibility for carrying out the policies of the Board and, subject to the
direction of the Board, shall have general supervision over the business and
affairs of the Bank. The President shall be the chief operating officer of the
Bank and shall perform all duties incident to the office of President. The
President shall have general supervision over the operations of the Bank,
subject to the direction of the Board and of the Chairman of the Board. The
Chairman of the Board shall preside at all meetings of the Board and of the
shareholders. In the absence of the Chairman of the Board, the President shall
preside at meetings of the Board and of the Executive Committee and of the
shareholders. The Chairman of the Board and the President shall have such other
powers and perform such other duties as are prescribed by these By-Laws and as
usually pertain to their respective offices and as may be assigned to them at
any time or from time to time by the Board.
Section 4.4. Vice Chairmen of the Board and Vice Chairmen. Each Vice
Chairman of the Board and each Vice Chairman shall have such powers and perform
such duties as are prescribed by these By-Laws and as usually pertain to his
office and as may be assigned to him at any time or from time to time by the
Board. In the event of the absence or disability of the Chairman of the Board
and
<PAGE> 10
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the Presidents, the Vice Chairman of the Board designated by the Chairman of
the Board or the President shall act in their place and assume their duties,
including duties assigned to them in these By-Laws.
Section 4.5. Senior Executive Vice Presidents and Executive Vice
Presidents. Each Senior Executive Vice President and each Executive Vice
President shall, upon request, advise and assist the Chairman of the Board and
the President in managing the Bank and shall have such other powers and perform
such other duties as usually pertain to his office and as may be assigned to
him at any time or from time to time by the Board or the Chairman of the Board
or the President.
Section 4.6. Secretary. The Secretary shall act as Secretary of the
Board and as Secretary at meetings of the shareholders and, in general, shall
have charge of all records of the Bank relating to its organization and
corporate action and shall have power to certify the contents thereof, and
shall have such other powers and perform such duties as usually pertain to his
office and as may be assigned to him at any time or from time to time by the
Board or the Chairman of the Board or the President.
Section 4.7. Other Officers. Other officers appointed by the Board
shall have such powers and perform such duties as usually pertain to their
respective offices and as may be assigned to them at any time or from time to
time by the Board or the Chairman of the Board or the President.
ARTICLE V
SHARES OF CAPITAL STOCK
Section 5.1. Certificates for Shares of Capital Stock. Certificates
for shares of capital stock of the Bank shall be in such form permitted by the
laws of the United States as shall be approved by the Board. Said certificates
shall be signed by the Chairman of the Board, the President and the Secretary,
and sealed with the corporate seal of the Bank. The signatures of the Chairman
of the Board, the President and the Secretary thereon may be facsimiles,
engraved or printed. In case any such officer who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
before such certificate is issued, it may be issued by the Bank with the same
effect as if such officer had not ceased to be such at the time of its issue.
The corporate seal may be a facsimile, engraved or printed.
Section 5.2. Transfers of Shares of Capital Stock. Transfers of
shares of capital stock of the Bank shall be made only on the books of the Bank
by the registered holder thereof or by his attorney there unto authorized by
power of attorney duly executed, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a proper
instrument of transfer. The Board may make such additional rules and
regulations as it may deem expedient concerning the issue, registration and
transfer of certificates for shares of capital stock of the Bank and may
appoint one or more transfer agents, transfer clerks and/or registrars and
require all certificates to bear the signatures thereof. The Bank shall be
entitled to treat the holder of record of any share or shares of capital stock
as the owner thereof in fact.
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Section 5.3. Closing of Transfer Books. The transfer books may be
closed for the purposes of any meeting of shareholders or the payment of
dividends or for any other purpose, at such time and for such period not
exceeding 50 days as the Board may direct. In lieu of closing the transfer
books, the Board may, in its discretion, fix a day and hour not more than 50
days prior to the day designated for the holding of any meeting of the
shareholders or the day appointed for the payment of any dividend or for any
other purpose as the time as of which shareholders entitled to notice of and to
vote at such meeting or to receive such dividend or to be treated as
shareholders for such other purpose shall be determined, and only shareholders
of record at such time shall be entitled to notice of or to vote at such
meeting or to receive such dividends or to be treated as shareholders for such
other purpose.
ARTICLE VI
SEAL
Section 6.1. Seal. The corporate seal of the Bank shall be a device
bearing the name "The Chase Manhattan Bank (National Association)" and otherwise
in the form adopted and used by the Bank, imprinted or affixed by any process.
The Secretary and any other officers authorized by resolution of the Board shall
be empowered to use and attest the corporate seal on all documents.
ARTICLE VII
AMENDMENTS
Section 7.1. Amendments. These By-Laws or any of them may be altered,
amended or repealed, or new By-Laws may be adopted, by the Board at any regular
or special meeting thereof by vote of a majority of the Directors then in
office.
