<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 13, 1995)
$200,000,000
DEAN FOODS COMPANY [logo]
SENIOR MEDIUM-TERM NOTES, SERIES A
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Due From Nine Months to 30 Years From Date of Issue
------------------------
Dean Foods Company (the "Company") may offer from time to time its Senior
Medium-Term Notes, Series A which are issuable in one or more series and may be
offered and sold in the United States. The Senior Medium-Term Notes offered by
this Prospectus Supplement are offered in the United States at an aggregate
initial public offering price of up to U.S. $200,000,000, or the equivalent
thereof in other currencies, including composite currencies such as the European
Currency Unit (the "Specified Currency"). See "Foreign Currency Risks --
Important Currency Exchange Information." Such aggregate offering price is
subject to reduction as a result of the sale by the Company of certain other
Debt Securities. See "Description of Notes." The Notes will be issued as Senior
Indebtedness. See "Description of Debt Securities -- Provisions Applicable
Solely to Senior Debt Securities" in the accompanying Prospectus. The interest
rate on each Note will be either a fixed rate established by the Company at the
date of issue of such Note, which may be zero in the case of certain Original
Issue Discount Notes, or a floating rate as set forth therein and specified in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, interest on
each Fixed Rate Note is payable on such dates as set forth in the applicable
Pricing Supplement and at maturity or upon earlier redemption or repayment.
Interest on each Floating Rate Note is payable on the dates set forth herein and
in the applicable Pricing Supplement. Each Note will mature on any day from nine
months to thirty (30) years from the date of issue, as set forth in the
applicable Pricing Supplement. See "Description of Notes." Unless otherwise
specified in the applicable Pricing Supplement, the Notes may not be redeemed by
the Company or the holder prior to maturity and will be issued in fully
registered form in denominations of $1,000 (or, in the case of Notes not
denominated in U.S. dollars, the equivalent thereof in the Specified Currency,
rounded to the nearest 1,000 units of the Specified Currency) or any amount in
excess thereof which is an integral multiple of $1,000 (or, in the case of Notes
not denominated in U.S. dollars, 1,000 units of the Specified Currency). Any
terms relating to Notes being denominated in foreign currencies or composite
currencies will be as set forth in the applicable Pricing Supplement. Each Note
will be represented either by a Global Security registered in the name of a
nominee of The Depository Trust Company, as Depositary (a "Global Note"), or by
a certificate issued in definitive form (a "Definitive Note"), as set forth in
the applicable Pricing Supplement. Interests in Global Securities representing
Global Notes will be shown on, and transfer thereof will be affected only
through records maintained by the Depositary (with respect to participants'
interests) and its participants. Global Notes will not be issuable as Definitive
Notes except under the circumstances described in the Prospectus.
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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, ANY PRICING
SUPPLEMENT HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
------------- --------------------- -----------------------------
<S> <C> <C> <C>
Per Note....................... 100.000% .125%-.750% 99.875%-99.125%
Total(4)....................... $ 200,000,000 $250,000-$1,500,000 $199,750,000-$198,500,000
</TABLE>
- ------------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold at 100% of their principal amount. If the Company issues
any Note at a discount from or at a premium over its principal amount,
the Price to Public of any Note issued at a discount or premium will be
set forth in the applicable Pricing Supplement.
(2) The commission payable to an Agent for each Note sold through such Agent
shall range from .125% to .750% of the principal amount of such Note.
The Company may also sell Notes to an Agent, as principal, at negotiated
discounts, for resale to investors and other purchasers.
(3) Before deducting expenses payable by the Company estimated at $70,000.
(4) Or the equivalent thereof in other currencies including composite
currencies.
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Offers to purchase the Notes are being solicited from time to time by Morgan
Stanley & Co. Incorporated and J.P. Morgan Securities Inc. (individually, an
"Agent" and collectively, the "Agents"), on behalf of the Company. The Agents
have agreed to use reasonable efforts to solicit purchases of such Notes. The
Company may also sell Notes to an Agent acting as principal for its own account
or otherwise, to be determined by such Agent. The Company reserves the right to
sell Notes directly on its own behalf. No termination date for the offering of
the Notes has been established. The Company or an Agent may reject any order in
whole or in part. The Notes will not be listed on any securities exchange, and
there can be no assurance that the Notes offered hereby will be sold or that
there will be a secondary market for the Notes. See "Plan of Distribution."
------------------------
MORGAN STANLEY & CO. J.P. MORGAN SECURITIES INC.
Incorporated
April 20, 1995
<PAGE> 2
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
under the caption "Description of Debt Securities" in the Prospectus, to which
reference is hereby made. The particular terms of the Notes sold pursuant to any
pricing supplement (a "Pricing Supplement") will be described therein. The terms
and conditions set forth in "Description of Notes" will apply to each Note
unless otherwise specified in the applicable Pricing Supplement and in such
Note. Reference herein to "U.S. dollars" or "U.S. $" or "$" are to the currency
of the United States of America.
If any Note is not to be denominated in U.S. dollars, the applicable
Pricing Supplement will specify the currency or currencies, including composite
currencies such as the European Currency Unit ("ECU"), in which the principal,
premium, if any, and interest, if any, with respect to such Note are to be paid,
along with any other terms relating to the non-U.S. dollar denomination,
including exchange rates for the Specified Currency as against the U.S. dollar
at selected times during the last five years, and any exchange controls
affecting such Specified Currency. See "Foreign Currency Risks."
GENERAL
The Notes will be issued under the Senior Indenture dated as of January 15,
1995 (the "Senior Indenture") between the Company and Bank of America Illinois,
as trustee (the "Senior Trustee"). The Notes issued under the Senior Indenture
will constitute one or more series under such Indenture. The Notes issued under
the Senior Indenture will rank pari passu with all other unsecured indebtedness
of the Company. At February 26, 1995, the aggregate principal amount of Senior
Indebtedness outstanding was approximately $140 million and no subordinated
indebtedness was outstanding. The Notes may be issued from time to time in an
aggregate principal amount of up to $200,000,000 or the equivalent thereof in
one or more foreign or composite currencies, subject to reduction as a result of
the sale by the Company of other Debt Securities referred to in the accompanying
Prospectus. For the purpose of this Prospectus Supplement, (i) the principal
amount of any Original Issue Discount Note (as defined below) means the Issue
Price (as defined below) of such Note and (ii) the principal amount of any Note
issued in a foreign currency or composite currency means the U.S. dollar
equivalent on the date of issue of the Issue Price of such Note.
The Notes will mature on any day from nine months to 30 years from the date
of issue, as set forth in the applicable Pricing Supplement. Except as may be
provided in the applicable Pricing Supplement, the Notes will be issued only in
fully registered form. Unless otherwise provided in the applicable Pricing
Supplement, Notes will be denominated in Authorized Denominations (as defined
below). Unless otherwise provided in the applicable Pricing Supplement, the
Notes will not be subject to any sinking fund.
The Notes will be offered on a continuing basis, and each Note will be
issued initially as either a Global Note or a Definitive Note. Except as set
forth in "Book Entry Notes", Global Notes will not be issuable as Definitive
Notes. The laws of some states may require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
such laws may impair the ability to own, transfer or pledge beneficial interests
in Global Securities. See "Book-Entry Notes" below.
The Notes may be presented for payment of principal and interest, transfer
of the Notes will be registrable and the Notes will be exchangeable at the
agency in The City of New York, maintained by the Company for such purpose;
provided that Global Notes will be exchangeable only in the manner and to the
extent set forth under "Book-Entry Notes". On the date hereof, the agent for the
payment, transfer and exchange of the Notes (the "Paying Agent") is Bank of
America Illinois, acting through its agent, Mellon Securities Transfer Services,
Inc., 120 Broadway, 33rd Floor, NY, NY 10271.
The applicable Pricing Supplement will specify the price (the "Issue
Price") of each Note to be sold pursuant thereto (unless such Note is to be sold
at 100% of its principal amount), the interest rate or interest rate formula,
maturity, currency or composite currency and principal amount and any other
terms on which each Note will be issued.
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As used herein, the following terms shall have the meanings set forth
below:
"Authorized Denominations" means, unless otherwise provided in the
applicable Pricing Supplement, (i) with respect to Notes denominated in
U.S. dollars, $1,000 or any amount in excess thereof which is an integral
multiple of $1,000 and (ii) with respect to Notes denominated in foreign or
composite currencies, the equivalent of $1,000 (rounded to an integral
multiple of 1,000 units of such Specified Currency), or any amount in
excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying
rate in New York City for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange
Rate") on the Business Day (as defined below) immediately preceding the
date of issuance; provided, however, that in the case of ECU's, the Market
Exchange Rate shall be the rate of exchange determined by the Commission of
the European Communities (or any successor thereto) as published in the
Official Journal of the European Communities, or any successor publication,
on the Business Day immediately preceding the date of issuance.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in the City of New
York and (i) with respect to LIBOR Notes (as defined below), is also a
London Banking Day, (ii) with respect to Notes denominated in a Specified
Currency other than U.S. dollars, Australian dollars or ECUs, in the
principal financial center of the country of the Specified Currency, (iii)
with respect to Notes denominated in Australian dollars, in Sydney and (iv)
with respect to Notes denominated in ECUs, that is not a non-ECU clearing
day, as determined by the ECU Banking Association in Paris.
An "Interest Payment Date" with respect to any Note shall be a date on
which, under the terms of such Note, regularly scheduled interest shall be
payable.
"London Banking Day" means any day on which dealings in deposits in
the Index Currency are transacted in the London interbank market.
"Original Issue Discount Note" means any Note that is issued at a
price lower than the principal amount thereof and provides for an amount
less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the Senior
Indenture.
The "Record Date" with respect to any Interest Payment Date shall be
the date 15 calendar days prior to such Interest Payment Date, whether or
not such date shall be a Business Day.
INTEREST AND PRINCIPAL PAYMENTS
Interest will be payable to the person in whose name the Note is registered
at the close of business on the applicable Record Date; provided that the
interest payable upon maturity, redemption or repayment (whether or not the date
of maturity, redemption or repayment is an Interest Payment Date) will be
payable to the person to whom principal is payable. The initial interest payment
on a Note will be made on the first Interest Payment Date falling after the date
the Note is issued; provided, however, that payments of interest on a Note
issued less than 15 calendar days before an Interest Payment Date will be paid
on the next succeeding Interest Payment Date to the holder of record on the
Record Date with respect to such succeeding Interest Payment Date, unless
otherwise specified in the applicable Pricing Supplement.
U.S. dollar payments of interest, other than interest payable at maturity
(or on the date of redemption or repayment, if a Note is redeemed or repaid by
the Company prior to maturity), will be made by check mailed to the address of
the person entitled thereto as shown on the Note register. U.S. dollar payment
of principal, premium, if any, and interest upon maturity, redemption or
repayment will be made in immediately available funds against presentation and
surrender of the Note. Notwithstanding the foregoing, (a) the Depositary, as
holder of Global Notes, shall be entitled to receive payments of interest by
wire transfer of immediately available funds and (b) a holder of U.S.
$10,000,000 (or the equivalent) or more in aggregate principal amount of
Definitive Notes having the same Interest Payment Date shall be entitled to
receive payments of
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interest by wire transfer of immediately available funds upon written request to
the Paying Agent, provided such request is received not later than 25 calendar
days prior to the applicable Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement, a
beneficial owner of Global Notes denominated in a Specified Currency 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 maturity, in the case of principal
or premium, of such beneficial owner's election to receive all or a portion of
such payment in a Specified Currency. Such participant must notify the
Depositary (as defined below) of such election on or prior to the third Business
Day after such Record Date. The Depositary will notify the Paying Agent of such
election on or prior to the fifth Business Day after such Record Date. If
complete instructions are received by the participant and forwarded by the
participant to the Depositary, and by the Depositary to the Paying Agent, on or
prior to such dates, the beneficial owner will receive payments of principal and
any premium at maturity, repayment or redemption, in the Specified Currency by
wire transfer of immediately available funds to an account maintained by the
payee with a bank located outside the United States; otherwise the beneficial
owner will receive payments in U.S. dollars. Interest on a Note payable in a
Specified Currency other than U.S. dollars will be paid by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register. All checks payable in a Specified Currency other than U.S.
dollars will be drawn on a bank office located outside the United States.
Certain Notes, including Original Issue Discount Notes, may be considered
to be issued with original issue discount, which must be included in income for
United States federal income tax purposes at a constant rate. See "United States
Taxation -- Tax Consequences to Holders -- Original Issue Discount Notes" below.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described under "Description of Debt Securities -- Events of
Default" in the Prospectus, the amount of principal due and payable with respect
to such Note shall be limited to the aggregate principal amount of such Note
multiplied by the sum of its Issue Price (expressed as a percentage of the
aggregate principal amount) plus the original issue discount amortized from the
date of issue to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration) which may be less
than the amount payable at Stated Maturity. Special considerations applicable to
any such Notes will be set forth in the applicable Pricing Supplement.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issuance at the
annual rate stated on the face thereof, until the principal thereof is paid or
made available for payment. Unless otherwise specified in the applicable Pricing
Supplement, such interest will be computed on the basis of a 360-day year of
twelve 30-day months. Unless otherwise specified in the applicable Pricing
Supplement, payments of interest on Fixed Rate Notes will be made semiannually
on such dates as set forth in the applicable Pricing Supplement and at maturity
or upon any earlier redemption or repayment.
If any Interest Payment Date for any Fixed Rate Note falls on a day that is
not a Business Day, the interest payment shall be made on the next day that is a
Business Day, and no interest on such payment shall accrue for the period from
and after the Interest Payment Date. If the maturity (or date of redemption or
repayment) of any Fixed Rate Note falls on a day that is not a Business Day, the
payment of interest and principal (and premium, if any) will be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after the maturity date (or date of redemption or repayment) and
such Business Day shall be considered to be the day such payments are due for
all purposes of the Notes.
Interest payments for Fixed Rate Notes will include accrued interest from
and including the date of issue or from and including the last date in respect
of which interest has been paid, as the case may be, to, but excluding, the
Interest Payment Date or the date of maturity or earlier redemption or
repayment, as the case may be. The interest rates the Company will agree to pay
on newly issued Fixed Rate Notes are subject to
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change without notice by the Company from time to time, but no such change will
affect any Fixed Rate Notes theretofore issued or that the Company has agreed to
issue.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from the date of issuance until
the principal thereof is paid or made available for payment at a rate determined
by reference to an interest rate basis or formula (the "Base Rate"), which may
be adjusted by a Spread and/or Spread Multiplier (each as defined below). The
applicable Pricing Supplement will designate one or more of the following Base
Rates as applicable to each Floating Rate Note: (a) the CD Rate (a "CD Rate
Note"), (b) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (c) the
Federal Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR (a "LIBOR Note"),
(e) the Prime Rate (a "Prime Rate Note"), (f) the Treasury Rate (a "Treasury
Rate Note"), (g) the CMT Rate (a "CMT Rate Note") or (h) such other Base Rate or
interest rate formula as is set forth in such Pricing Supplement and in such
Floating Rate Note. The "Index Maturity" for any Floating Rate Note is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated and will be specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, and/or (ii) multiplied
by the Spread Multiplier, if any. The "Spread" is the number of basis points
(one one-hundredth of a percentage point) specified in the applicable Pricing
Supplement to be added to or subtracted from the Base Rate for such Floating
Rate Note, and the "Spread Multiplier" is the percentage specified in the
applicable Pricing Supplement to be applied to the Base Rate (as adjusted by the
Spread, if any) for such Floating Rate Note.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or ceiling,
on the rate of interest which may accrue during any interest period ("Maximum
Interest Rate"); and (ii) a minimum limitation, or floor, on the rate of
interest which may accrue during any interest period ("Minimum Interest Rate").
In addition to any Maximum Interest Rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on a Floating Rate
Note will in no event be higher than the maximum rate permitted by New York law,
as the same may be modified by United States law of general application. Under
current New York law, the maximum rate of interest, subject to certain
exceptions, for any loan in an amount less than $250,000 is 16% and for any loan
in the amount of $250,000 or more but less than $2,500,000 is 25% per annum on a
simple interest basis. These limits do not apply to loans of $2,500,000 or more.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" for such Note, and the first day of each Interest Reset Period being an
"Interest Reset Date"), as specified in the applicable Pricing Supplement.
Unless otherwise specified in the Pricing Supplement, the Interest Reset Date
will be, in the case of Floating Rate Notes which reset daily, each Business
Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which
reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes
which reset weekly, the Tuesday of each week, except as provided below, when the
normally scheduled Treasury auction is not on a Monday; 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
semiannually, the third Wednesday of two months of each year, as specified in
the applicable Pricing Supplement; and in the case of Floating Rate Notes which
reset annually, the third Wednesday of one month of each year, as specified in
the applicable Pricing Supplement; provided, however, that (a) the interest rate
in effect from the date of issue to the first Interest Reset Date with respect
to a Floating Rate Note will be the initial interest rate set forth in the
applicable Pricing Supplement (the "Initial Interest Rate") and (b) unless
otherwise specified in the applicable Pricing Supplement, the interest rate in
effect for the ten calendar days immediately prior to maturity, redemption or
repayment will be that in effect on the tenth calendar day preceding such
maturity, redemption or repayment date. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date shall
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be postponed to the next succeeding Business Day, except that in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day.
Except as provided below, unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the
case of Floating Rate Notes with a daily, weekly or monthly Interest Reset Date,
on the third Wednesday of each month or on the third Wednesday of March, June,
September and December, as specified in the applicable Pricing Supplement; (ii)
in the case of Floating Rate Notes with a quarterly Interest Reset Date, on the
third Wednesday of March, June, September and December; (iii) in the case of
Floating Rate Notes with a semiannual Interest Reset Date, on the third
Wednesday of the two months specified in the applicable Pricing Supplement; and
(iv) in the case of Floating Rate Notes with an annual Interest Reset Date, on
the third Wednesday of the month specified in the applicable Pricing Supplement.
If any Interest Payment Date for any Floating Rate Note would fall on a day that
is not a Business Day with respect to such Floating Rate Note, such Interest
Payment Date will be postponed to the next succeeding day that is a Business Day
with respect to such Floating Rate Note, except that, in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar month, such
Interest Payment Date shall be the immediately preceding day that is a Business
Day with respect to such LIBOR Note. If the maturity date or any earlier
redemption or repayment date of a Floating Rate Note would fall on a day that is
not a Business Day, the payment of principal, premium, if any, and interest will
be made on the next succeeding Business Day, and no interest on such payment
shall accrue for the period from and after such maturity, redemption or
repayment date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments for Floating Rate Notes (except Floating Rate Notes on which interest
is reset daily or weekly) shall be the amount of interest accrued from and
including the date of issue or from and including the last date to which
interest has been paid to, but excluding, the Interest Payment Date or maturity
date or date of redemption or repayment. In the case of a Floating Rate Note on
which interest is reset daily or weekly, interest payments shall be, unless
otherwise specified in the applicable Pricing Supplement, the amount of interest
accrued from and including the date of issue or from, but excluding, the last
Record Date to which interest has been paid, as the case may be, to and
including the Record Date immediately preceding such Interest Payment Date,
except that at maturity or earlier redemption or repayment, the interest payable
will include interest accrued to, but excluding, the maturity, redemption or
repayment date, as the case may be.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable Pricing Supplement, the
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes or by the
actual number of days in the year, in the case of Treasury Rate Notes and CMT
Rate Notes. All percentages used in or resulting from any calculation of the
rate of interest on a Floating Rate Note will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point, with five one-millionths
of a percentage point rounded upward, and all dollar amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded to the
nearest cent, with one-half cent rounded upward. The interest rate in effect on
any Interest Reset Date will be the applicable rate as reset on such date. The
interest rate applicable to any other day is the interest rate from the
immediately preceding Interest Reset Date (or, if none, the Initial Interest
Rate).
Unless otherwise stated in the applicable Pricing Supplement, the
calculation agent (the "Calculation Agent") with respect to any issue of
Floating Rate Notes shall be Bank of America Illinois. 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 that will
become effective on the next Interest Reset Date with respect to such Floating
Rate Note.
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The "Interest Determination Date" pertaining to an Interest Reset Date for
CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate
Notes and Prime Rate Notes will be the second Business Day next preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a LIBOR Note will be the second London Banking Day preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a Treasury Rate Note will be the day of the week in which such
Interest Reset Date falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, but such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Interest Determination Date pertaining to the Interest
Reset Date occurring in the next succeeding week. If an auction falls on a day
that is an Interest Reset Date, such Interest Reset Date will be the next
following Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date," where applicable, pertaining to an 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 Business Day, the next succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or maturity date, as the case may be.
Interest rates will be determined by the Calculation Agent as follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)," or, if
not so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published by
the Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" (the "Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate on such Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such
Interest Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in the City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money center banks; provided, however, that if the dealers selected as aforesaid
by the Calculation Agent are not quoting as set forth above, the CD Rate in
effect for the applicable period will be the same as the CD Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the CD Rate Notes for which such
CD Rate is being determined shall be the Initial Interest Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes and
in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below) of the rate on such date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement, as such rate shall be published in H.15(519), under the heading
"Commercial Paper." In the event that such rate is not published by 9:00 A.M.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Commercial Paper Rate shall be the Money Market
Yield of the rate on such Interest Determination Date for commercial paper of
the specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet available in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate shall be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 A.M., New York City time,
on such Interest Determination Date of three leading dealers of commercial paper
in the City of New York selected by the Calculation Agent for commercial paper
of the specified Index Maturity, placed for an industrial issuer whose bond
rating is "AA," or the equivalent, from a nationally recognized rating agency;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting offered rates as mentioned in this sentence, the
Commercial Paper Rate in effect for the applicable period will be the same as
the Commercial Paper Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the Commercial Paper Rate Notes for which such Commercial Paper Rate is being
determined shall be the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ------------ X 100
360 - (DXM)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Federal Funds Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date, the
rate on such date for Federal funds, as published in H.15(519) under the heading
"Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Federal Funds Rate will be the rate on such Interest Determination Date as
published in the Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not yet published in either H.15(519) or the Composite
Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal
funds, as of 9:00 A.M., New York City time, on such Interest Determination Date,
arranged by three leading brokers of Federal funds transactions in The City of
New York selected by the Calculation Agent; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as set
forth above, the Federal Funds Rate in effect for the applicable period will be
the same as the Federal Funds Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on the Federal Funds Rate Notes for which such Federal Funds Rate is
being determined shall be the Initial Interest Rate).
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LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject
to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in
the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
for each Interest Determination Date will be determined by the Calculation Agent
as follows:
(i) As of the Interest Determination Date, LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the specified Designated LIBOR
Page (as defined below) by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in the Index
Currency having the Index Maturity designated in the applicable Pricing
Supplement, commencing on such Interest Determination Date, that appear on
the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest
Determination Date, if at least two such offered rates appear (unless, as
aforesaid, only a single rate is required) on such Designated LIBOR Page,
or (b) if "LIBOR Telerate" is specified in the applicable Pricing
Supplement, the rate for deposits in the Index Currency having the Index
Maturity designated in the applicable Pricing Supplement, commencing on
such Interest Determination Date, that appears on the Designated LIBOR Page
as of 11:00 A.M., London time, on that Interest Determination Date. If
fewer than two offered rates appear (if "LIBOR Reuters" is specified in the
applicable Pricing Supplement) or no rate appears (if "LIBOR Telerate" is
specified in the applicable Pricing Supplement), LIBOR in respect of the
related Interest Determination Date will be determined as if the parties
had specified the rate described in clause (ii) below.
(ii) With respect to an Interest Determination Date on which fewer
than two offered rates appear (if "LIBOR Reuters" is specified in the
applicable Pricing Supplement) or no rate appears (if "LIBOR Telerate" is
specified in the applicable Pricing Supplement), the Calculation Agent will
request the principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation Agent, to
provide the Calculation Agent with its offered quotation for deposits in
the Index Currency for the period of the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Banking Day
immediately following such Interest Determination Date, to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on
such Interest Determination Date and in a principal amount of not less than
$1,000,000 (or the equivalent in the Index Currency, if the Index Currency
is not the U.S. dollar) that is representative for a single transaction in
such Index Currency in such market at such time. If at least two such
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
A.M. (or such other time specified in the applicable Pricing Supplement),
in the applicable principal financial center for the country of the Index
Currency on such Interest Determination Date, by three major banks in such
principal financial center selected by the Calculation Agent for loans in
the Index Currency to leading European banks, having the Index Maturity
designated in the applicable Pricing Supplement and in a principal amount
of not less than $1,000,000 commencing on the second London Banking Day
immediately following such Interest Determination Date (or the equivalent
in the Index Currency, if the Index Currency is not the U.S. dollar) that
is representative for a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
in effect for the applicable period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the LIBOR Notes for
which LIBOR is being determined shall be the Initial Interest Rate).
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
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"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated
in the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, Page 3750) had been specified.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the rate set forth
in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the arithmetic mean of the rates of interest publicly
announced by each bank named on the Reuters Screen NYMF Page (as defined below)
as such bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen NYMF Page on such Interest
Determination Date, or, if fewer than four such rates appear on the Reuters
Screen NYMF Page for such Interest Determination Rate, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Interest
Determination Date by at least two of the three major money center banks in the
City of New York selected by the Calculation Agent from which quotations are
requested. If fewer than two quotations are provided, the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean on the basis of the prime rates in the City of New York by the appropriate
number of substitute banks or trust companies organized and doing business under
the laws of the United States, or any State thereof, in each case having total
equity capital of at least U.S. $500 million and being subject to supervision or
examination by federal or state authority, selected by the Calculation Agent to
quote such rate or rates; provided, however, that if the banks or trust
companies selected as aforesaid by the Calculation Agent are not quoting as set
forth above, the "Prime Rate" in effect for the applicable period will be the
same as the Prime Rate for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the rate of interest payable on the
Prime Rate Notes for which such Prime Rate is being determined shall be the
Initial Interest Rate). "Reuters Screen NYMF Page" means the display designated
as Page "NYMF" on the Reuters Monitor Money Rates Services (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).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if
any) specified in the Treasury Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
for the auction held on such date of direct obligations of the United States
("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement, as published in H.15(519) under the heading "Treasury Bills
- -- auction average (investment)" or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the auction average rate on such Interest Determination Date (expressed as
a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States Department
of the Treasury. In the event that the results of the auction of
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Treasury Bills having the Index Maturity designated in the applicable Pricing
Supplement are not published or reported as provided above by 3:00 P.M., New
York City time, on such Calculation Date or if no such auction is held on such
Interest Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) calculated using the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City time, on such
Interest Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement; provided, however, that if the dealers selected
as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in
this sentence, the Treasury Rate for such Interest Reset Date will be the same
as the Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the rate of interest payable on the
Treasury Rate Notes for which the Treasury Rate is being determined shall be the
Initial Interest Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption "...
Treasury Constant Maturities ... Federal Reserve Board Release H.15 ... Mondays
Approximately 3:45 p.m.," under the column for the Designated CMT Maturity Index
(as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate
on such Interest Determination Date and (ii) if the Designated CMT Telerate Page
is 7052, the week or the month, as applicable, ended immediately preceding the
week in which the related Interest Determination Date occurs. If such rate is no
longer displayed on the relevant page, or if not displayed by 3:00 p.m., New
York City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or, if not published by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with respect
to such Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 p.m., New York City time, on the
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include the Agents or
their affiliates) selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent, after consultation with the Company,
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury notes") with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury note quotations, the CMT
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date of three Reference Dealers in The City
of New York (from five such Reference Dealers selected by the Calculation Agent
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury notes with
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an original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100,000,000. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting as described herein, the CMT Rate
for such Interest Reset Date will be the same as the CMT Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the CMT Rate Notes for which the
CMT Rate is being determined shall be the Initial Interest Rate). If two
Treasury notes with an original maturity as described in the third preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury note with the shorter remaining term
to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in an applicable Pricing Supplement (or any other
page as may replace such page on that service for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in an applicable Pricing Supplement with respect to which the CMT Rate
will be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be two years.
BOOK-ENTRY NOTES
Upon issuance, all Fixed Rate Global Notes having the same Issue Date,
interest rate, if any, amortization schedule, if any, maturity date and other
terms, if any, will be represented by one or more Global Securities, and all
Floating Rate Global Notes having the same Issue Date, Initial Interest Rate,
Base Rate, Interest Reset Period, Interest Payment Dates, Index Maturity, Spread
and/or Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum
Interest Rate, if any, maturity date and other terms, if any, will be
represented by one or more Global Securities. Each Global Security representing
Global Notes will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York (the "Depositary"), and registered in the name of a
nominee of the Depositary. Currently, the Depositary will only accept the
deposit of a Registered Global Security denominated in U.S. dollars.
Ownership of beneficial interests in a Registered Global Security
representing Book-Entry Notes will be limited to institutions that have accounts
with the Depositary or its nominee ("participants") or persons that may hold
interests through participants. In addition, ownership of beneficial interests
by participants in such a Registered Global Security will only be evidenced by,
and the transfer of that ownership interest will only be effected through,
records maintained by the Depositary or its nominee for such Registered Global
Security. Ownership of beneficial interests in such a Registered Global Security
by persons that hold through participants will only be evidenced by, and the
transfer of that ownership interest within such participant will only be
effected through, records maintained by such participant. The laws of some
jurisdictions 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 such a Registered Global Security.
The Company understands that upon the issuance of a Registered Global
Security representing Book-Entry Notes, and the deposit of such Registered
Global Security with the Depositary, the Depositary will immediately credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Book-Entry Notes represented by such Registered Global Security
to the accounts of participants. The accounts to be credited shall be designated
by the soliciting Agent or, to the extent that the Book-Entry Notes are offered
and sold directly by the Company, by the Company.
Payment of principal of and any premium and interest on Book-Entry Notes
represented by any Registered Global Security registered in the name of or held
by the Depositary or its nominee will be made to
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the Depositary or its nominee, as the case may be, as the registered Holder of
the Registered Global Security representing such Book-Entry Notes. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's records or any
participant's records relating to, or payments made on account of, beneficial
ownership interests in a Registered Global Security representing such Book-Entry
Notes or for maintaining, supervising or reviewing any of the Depositary's
records or any participant's records relating to such beneficial ownership
interests.
The Company understands that upon receipt of any payment of principal of or
any premium or interest in respect of a Registered Global Security, the
Depositary will immediately credit, on its book-entry registration and transfer
system, accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Registered
Global Security as shown on the records of the Depositary. Payments by
participants to owners of beneficial interests in a Registered 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 sole responsibility of
such participants.
No Registered Global Security described above may be transferred except as
a whole by the Depositary for such Registered Global Security to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by such Depositary or any such nominee to a
successor Depositary or a nominee of such successor.
A Registered Global Security representing Book-Entry Notes is exchangeable
for Notes registered in the name of a Holder other than the Depositary only if
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary or the Depositary shall no longer be eligible to serve as
Depositary and a successor depositary is not appointed by the Company within
ninety (90) calendar days, (ii) an Event of Default with respect to the Notes
has occurred and is continuing or (iii) the Company in its sole discretion
instructs the Trustee that such Registered Global Security shall be so
exchangeable. Notes issued in exchange for a Registered Global Security shall be
registered in the name or names of such person or persons as the Company shall
instruct the Trustee. It is expected that such instructions may be based upon
directions from the Depositary which are received by the Depositary from its
participants with respect to ownership of beneficial interests in such
Registered Global Security.
Except as provided above, owners of beneficial interests in such Registered
Global Security will not be entitled to receive physical delivery of Notes in
certificated form and will not be considered the Holders thereof for any purpose
under the Senior Indenture, and no Registered Global Security representing Book-
Entry Notes shall be exchangeable, except for another Registered Global Security
of like denominations and tenor to be registered in the name of the Depositary
or its nominee. Accordingly, each person owning interest in such Registered
Global Security must rely on the procedures of the Depositary and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a Holder under the
Senior Indenture. The Company understands that under existing industry
practices, in the event that the Company requests any action of Holders or an
owner of a beneficial interest in such Registered Global Security desires to
give or take any action that a Holder is entitled to give or take under the
Senior Indenture, the Depositary 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 owning through them.
The Company understands that the Depositary is a limited-purpose trust
company organized under the laws of the State of New York, 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 under the
Exchange Act. The Depositary was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers (including the Agents), banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
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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 ("indirect participants"). Persons
who are not participants may beneficially own securities held by the Depositary
only through participants or indirect participants. The Depositary has confirmed
to the Company, each Agent and the Trustee that it intends to follow such
procedures.
OPTIONAL REDEMPTIONS
The Pricing Supplement will indicate that the Notes cannot be redeemed
prior to maturity or will indicate the terms on which the Notes will be
redeemable at the option of the Company. Notice of redemption will be provided
by mailing a notice of such redemption to each holder by first class mail,
postage prepaid, at least 30 days and not more than 60 days prior to the date
fixed for redemption to the respective address of each holder as that address
appears upon the books maintained by the Trustee.
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASE
If applicable, the Pricing Supplement relating to each Note will indicate
that the Note will be repayable at the option of the holder on a date or dates
specified prior to its maturity date and, unless otherwise specified in such
Pricing Supplement, at a price equal to 100% of the principal amount thereof,
together with accrued interest to the date of repayment, unless such Note is an
Original Issue Discount Note, in which case the Pricing Supplement will specify
the amount payable upon such repayment.
In order for such a Note to be repaid, the Paying Agent must receive at
least 30 days but not more than 60 days prior to the repayment date (i) the Note
with the form entitled "Option to Elect Repayment" on the reverse of the Note
duly completed or (ii) a telegram, facsimile transmission or a letter from a
member of a national securities exchange, or the National Association of
Securities Dealers, Inc. (the "NASD") or a commercial bank or trust company in
the United States setting forth the name of the holder of the Note, the
principal amount of the Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of the Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that the Note to be repaid, together with the duly completed form
entitled "Option to Elect Repayment" on the reverse of the Note, will be
received by the Paying Agent not later than the fifth Business Day after the
date of such telegram, facsimile transmission or letter, provided, however, that
such telegram, facsimile transmission or letter shall only be effective if such
Note and form duly completed are received by the Paying Agent by such fifth
Business Day. Unless otherwise specified in the applicable Pricing Supplement,
exercise of the repayment option by the holder of a Note will be irrevocable.
Unless otherwise specified in the applicable Pricing Supplement, the repayment
option may be exercised by the holder of a Note for less than the entire
principal amount of the Note but, in that event, the principal amount of the
Note remaining outstanding after repayment must be an Authorized Denomination.
If a Note is represented by a Global Security, the Depositary's nominee
will be the holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different deadlines for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other direct or
indirect participant through which it holds an interest in a Note in order to
ascertain the deadline by which such an instruction must be given in order for
timely notice to be delivered to the Depositary.
The Company may purchase Notes at any price in the open market or
otherwise. Notes so purchased by the Company may, at the discretion of the
Company, be held or resold or surrendered to the Trustee for cancellation.
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FOREIGN CURRENCY RISKS
PAYMENT CURRENCY
If the applicable Pricing Supplement provides for payments of interest and
principal on a non-U.S. dollar denominated Note to be made, at the option of the
holder of such Note, in U.S. dollars, conversion of the Specified Currency into
U.S. dollars will be based on the highest bid quotation in the City of New York
received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to the holders of Notes and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency. All currency exchange costs
will be borne by the holders of Notes by deductions from such payments.
Except as set forth below, if the principal of, premium, if any, or
interest on, any Note is payable in a Specified Currency other than U.S. dollars
and such Specified Currency is not available to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Company or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Company will
be entitled to satisfy its obligations to holders of the Notes by making such
payments in U.S. dollars on the basis of the Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date, as
of the most recent practicable date. Any payment made under such circumstances
in U.S. dollars where the required payment is in a Specified Currency other than
U.S. dollars will not constitute an Event of Default.
If payment in respect of a Note is required to be made in ECUs and ECUs are
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or are no longer used in the European Monetary
System, then all payments in respect of such Note shall be made in U.S. dollars
until ECUs are again available or so used. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars, determined as described below, as of the second Business Day prior to
the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date shall be
determined by the Company or the Exchange Rate Agent on the following basis. The
component currencies of the ECU for this purpose (the "Components") shall be the
currency amounts that were components of the ECU as of the last date on which
the ECU was used in the European Monetary System. The equivalent of the ECU in
U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of
the Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or the Exchange Rate Agent on the basis of the most
recently available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of combination or
subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more Components are
consolidated into a single currency, the amounts of those currencies as
Components shall be replaced by an amount in such single currency equal to the
sum of the appropriate amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or more
currencies, the amount of the original component currency shall be replaced by
the appropriate amounts of such two or more currencies, the sum of which shall
be equal to the amount of the original component currency.
All determinations referred to above made by the Company or its agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on holders of Notes.
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Notes in U.S. dollars, and payments
of principal, premium, if any, and interest on the Notes will also be made in
U.S. dollars, unless the applicable Pricing Supplement provides
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that purchasers are instead required to pay for the Notes in a Specified
Currency, and/or that payments of principal, premium, if any, and interest on
such Notes will be made in a Specified Currency. Currently, there are limited
facilities in the United States for the conversion of U.S. dollars into foreign
currencies and vice versa. In addition, most banks do not currently offer
non-U.S. dollar denominated checking or savings account facilities in the United
States. Accordingly, unless otherwise specified in a Pricing Supplement or
unless alternative arrangements are made, payment of principal, premium, if any,
and interest on Notes in a Specified Currency other than U.S. dollars will be
made to an account at a bank outside the United States. See "Description of
Notes" and "Foreign Currency Risks."
If the applicable Pricing Supplement provides for payments of principal of
and interest on a non-U.S. dollar denominated Note to be made in U.S. dollars or
for payments of principal of and interest on a U.S. dollar denominated Note to
be made in a Specified Currency other than U.S. dollars, the conversion of the
Specified Currency into U.S. dollars or U.S. dollars into the Specified
Currency, as the case may be, will be handled by the Exchange Rate Agent
identified in the Pricing Supplement. Any Agent may act, from time to time, as
Exchange Rate Agent. The costs of such conversion will be borne by the holder of
a Note through deductions from such payments.
EXCHANGE RATES AND EXCHANGE CONTROLS
Any investment in Notes that are denominated in, or the payment of which is
related to the value of, a specified Currency other than U.S. dollars entails
significant risks that are not associated with a similar investment in a
security denominated in U.S. dollars. Such risks include, 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 exchange controls by either the
U.S. or a foreign government. Such risks generally depend on economic and
political events over which the Company has no control. In recent years, rates
of exchange between U.S. dollars and certain foreign currencies have been highly
volatile and such volatility may be expected to continue in the future.
Fluctuations in any particular exchange rate that have occurred in the past are
not necessarily indicative, however, of fluctuations in such rate that may occur
during the term of any Note. Depreciation against the U.S. dollar of the
currency in which a Note is payable could result in a decrease in the effective
yield of such Note below its coupon rate and, in certain circumstances, could
result in a loss to the investor on a U.S. dollar basis. In addition, depending
on the specific terms of a currency-linked Note, changes in exchange rates
relating to any of the currencies involved may result in a decrease in its
effective yield and, in certain circumstances, could result in a loss of all or
a substantial portion of the principal of a Note to the investor.
THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND ANY PRICING
SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED
IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, A FOREIGN CURRENCY OR A
COMPOSITE CURRENCY AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE
PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS
PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE
INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS
RELATED TO THE VALUE OF, SPECIFIED CURRENCIES 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, premium, if
any, and interest on the Notes. Such persons should consult their own counsel
with regard to such matters.
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Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at the time of payment of principal of, premium,
if any, or interest on a Note. Even if there are no actual exchange controls, it
is possible that the Specified Currency for any particular Note not denominated
in U.S. dollars would not be available when payments on such Note are due. In
that event, the Company would make required payments in U.S. dollars on the
basis of the Market Exchange Rate on the date of such payment, or if such rate
of exchange is not then available, on the basis of the Market Exchange Rate as
of the most recent practicable date. See "Payment Currency" above.
With respect to any Note denominated in, or the payment of which is related
to the value of, a foreign currency or currency unit, the applicable Pricing
Supplement will include information with respect to applicable current exchange
controls, if any, and historic exchange rate information on such currency or
currency unit. The information contained therein shall constitute a part of this
Prospectus Supplement and is furnished as a matter of information only and
should not be regarded as indicative of the range of or trends in fluctuations
in currency exchange rates that may occur in the future.
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. In the event an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a court in the
United States, it is likely that such court would grant judgment relating to the
Notes only in U.S. dollars. It is not clear, however, whether, in granting such
judgment, the rate of conversion into U.S. dollars would be determined with
reference to the date of default, the date judgment is rendered or some other
date. Holders of Notes payable in a Specified Currency other than U.S. dollars
would bear the risk of exchange rate fluctuations between the time the amount of
the judgment is calculated and the time the Trustee converts U.S. dollars to the
Specified Currency for payment of the judgment.
UNITED STATES TAXATION
The following is a summary of the principal United States federal income
tax consequences of the ownership and disposition of the Notes to initial
holders purchasing Notes at the "issue price" (as defined below). This summary
is based on the Internal Revenue Code of 1986, as amended to the date hereof
(the "Code"), administrative pronouncements, judicial decisions and existing and
proposed Treasury Regulations, including regulations concerning the treatment of
debt instruments issued with original issue discount (the "OID Regulations"),
changes to any of which subsequent to the date of this Prospectus Supplement may
affect the tax consequences described herein. The OID Regulations are effective
for Notes issued on or after April 4, 1994. This summary discusses only Notes
held as capital assets within the meaning of Section 1221 of the Code. It does
not discuss all of the tax consequences that may be relevant to a holder in
light of his particular circumstances or to holders subject to special rules,
such as certain financial institutions, insurance companies, dealers in
securities or foreign currencies, persons holding Notes as a hedge against, or
which are hedged against, currency risks, or holders whose functional currency
(as defined in Code Section 985) is not the U.S. dollar. Finally, this summary
does not discuss Original Issue Discount Notes (as defined below) which qualify
as "applicable high yield discount obligations" under Section 163(i) of the
Code. Holders of Original Issue Discount Notes which are "applicable high yield
discount obligations" may be subject to special rules. Persons considering the
purchase of Notes should consult their tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign taxing jurisdiction.
As used herein, the term "Holder" means (i) an individual who is, for
United States federal income tax purposes, a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision thereof,
or (iii) an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
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TAX CONSEQUENCES TO HOLDERS
Payments of Interest
Interest paid on a Note, to the extent considered "qualified stated
interest" (as defined below), will generally be taxable to a Holder as ordinary
interest income at the time it accrues or is received in accordance with the
Holder's method of accounting for federal income tax purposes. Under the OID
Regulations, all payments of interest on a Note that matures within one year or
less from its date of issuance will be included in the stated redemption price
at maturity of the Note and will be taxed in the manner described below under
"Original Issue Discount Notes." Special rules governing the treatment of
interest paid with respect to Original Issue Discount Notes and Foreign Currency
Notes are discussed below.
Original Issue Discount Notes
A Note which is issued for an amount less than its stated redemption price
at maturity will generally be considered to have been issued at an original
issue discount for federal income tax purposes (an "Original Issue Discount
Note"). The "issue price" of a Note will equal the first price to the public
(not including bond houses, brokers or similar persons or organizations acting
in the capacity of underwriters, placement agents or wholesalers) at which a
substantial amount of the Notes is sold. The stated redemption price at maturity
of a Note will equal the sum of all payments required under the Note other than
payments of "qualified stated interest." "Qualified stated interest" is stated
interest unconditionally payable as a series of payments in cash or property
(other than debt instruments of the issuer) at least annually during the entire
term of the Note and equal to the outstanding principal balance of the Note
multiplied by a single fixed rate or certain variable rates of interest, or
certain combinations thereof. Special tax considerations (including possible
original issue discount) may arise with respect to Floating Rate Notes providing
for (i) one Base Rate followed by one or more Base Rates, (ii) a single fixed
rate followed by a floating rate or (iii) a Spread Multiplier. Purchasers of
Floating Rate Notes with any of such features should carefully examine the
applicable Pricing Supplement and should consult their tax advisors with respect
to such a feature since the tax consequences will depend, in part, on the
particular terms of the purchased Note. Special rules may also apply if a
Floating Rate Note is subject to a cap, floor, governor or similar restriction
that is not fixed throughout the term of the Note and is reasonably expected as
of the issue date to cause the yield on the Note to be significantly less or
more than the expected yield determined without the restriction.
If the difference between a Note's stated redemption price at maturity and
its issue price is less than a de minimis amount, i.e., 1/4 of 1 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity, then the Note will not be considered to have original issue
discount. Holders of Notes with a de minimis amount of original issue discount
will generally include such original issue discount in income, as capital gain,
on a pro rata basis as principal payments are made on the Note.
A Holder of Original Issue Discount Notes will be required to include any
qualified stated interest payments in income in accordance with the Holder's
method of accounting for federal income tax purposes. Holders of Original Issue
Discount Notes that mature more than one year from their date of issuance will
be required to include original issue discount in income for federal income tax
purposes as it accrues, in accordance with a constant yield method based on a
compounding of interest, before the receipt of cash payments attributable to
such income. Under this method, Holders of Original Issue Discount Notes
generally will be required to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
Neither the OID Regulations nor any other currently effective Treasury
Regulations address the treatment of Notes that provide for contingent payments
and do not qualify as variable rate debt instruments ("contingent payment debt
instruments"). Although Proposed Regulations were published on December 16,
1994, which provide rules for contingent payment debt instruments, these
regulations by their terms apply only to debt instruments issued sixty days or
more after such regulations are finalized. The applicable Pricing Supplement
will summarize the rules applicable at the time of issuance to any Notes that
are contingent payment debt instruments.
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Under the OID Regulations, a Note that matures within one year or less from
its date of issuance will be treated as a "short-term Original Issue Discount
Note". In general, a cash method Holder of a short-term Original Issue Discount
Note is not required to accrue original issue discount for federal income tax
purposes unless it elects to do so. Holders who make such an election, Holders
who report income for federal income tax purposes on the accrual method and
certain other Holders, including banks and dealers in securities, are required
to include original issue discount in income on such short-term Original Issue
Discount Notes as it accrues on a straight-line basis, unless an election is
made to accrue the original issue discount according to a constant yield method
based on daily compounding. In the case of a Holder who is not required and who
does not elect to include original issue discount in income currently, any gain
realized on the sale, exchange, retirement, or other disposition of the
short-term Original Issue Discount Note will be ordinary income to the extent of
the original issue discount accrued on a straight-line basis (or, if elected,
according to a constant yield method based on daily compounding) through the
date of sale, exchange, retirement or other disposition. In addition, such
Holders will be required to defer deductions for any interest paid on
indebtedness incurred to purchase or carry short-term Original Issue Discount
Notes in an amount not exceeding the deferred interest income, until such
deferred interest income is recognized.
Under the OID Regulations, a Holder may make an election (the "Constant
Yield Election") to include in gross income all interest that accrues on a Note
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) in accordance with a constant yield method based on the
compounding of interest.
Certain of the Original Issue Discount Notes may be redeemed prior to
maturity. Original Issue Discount Notes containing such a feature may be subject
to rules that differ from the general rules discussed above. Purchasers of
Original Issue Discount Notes with such a feature should carefully examine the
applicable Pricing Supplement and should consult their tax advisors with respect
to such a feature since the tax consequences with respect to original issue
discount will depend, in part, on the particular terms and features of the
purchased Note.
The OID Regulations contain aggregation rules stating that in certain
circumstances if more than one type of Note is issued as part of the same
issuance of securities to a single holder, some or all of such Notes may be
treated together as a single debt instrument with a single issue price, maturity
date, yield to maturity and stated redemption price at maturity for purposes of
calculating and accruing any original issue discount. Unless otherwise provided
in the related Pricing Supplement, the Company does not expect to treat any of
the Notes as being subject to the aggregation rules for purposes of computing
original issue discount.
Sale, Exchange, Retirement or Other Disposition of the Notes
Upon the sale, exchange, retirement or other disposition of a Note, a
Holder will recognize taxable gain or loss equal to the difference between the
amount realized on the sale, exchange, retirement or other disposition and such
Holder's adjusted tax basis in the Note. For these purposes, the amount realized
does not include any amount attributable to accrued but unpaid interest on the
Note. Amounts attributable to accrued but unpaid interest are treated as
interest as described under "Payments of Interest" above, in accordance with the
Holder's method of accounting for federal income tax purposes as described
therein. A Holder's adjusted tax basis in a Note will equal the cost of the Note
to such Holder, increased by the amount of any original issue discount
previously included in income by the Holder with respect to such Note, and
reduced by any amortized bond premium and any principal payments received by the
Holder and, in the case of an Original Issue Discount Note by the amount of any
other payments received that do not constitute qualified stated interest.
Subject to the discussion under "Foreign Currency Notes" below, gain or
loss realized on the sale, exchange, retirement or other disposition of a Note
will be capital gain or loss (except, in the case of a short-term Original Issue
Discount Note, to the extent of any original issue discount not previously
included in the Holder's taxable income), and will be long-term capital gain or
loss if at the time of sale, exchange, retirement or other disposition the Note
has been held for more than one year. See "Original Issue Discount Notes"
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above. The excess of net long-term capital gains over net short-term capital
losses is taxed at a lower rate than ordinary income for certain non-corporate
taxpayers. The distinction between capital gain or loss and ordinary income or
loss is also relevant for purposes of, among other things, limitations on the
deductibility of capital losses.
If a Holder purchases a Note for an amount that is greater than the amount
payable at maturity, such Holder will be considered to have purchased such Note
with "amortizable bond premium" equal in amount to such excess, and may elect
(in accordance with applicable Code provisions) to amortize such premium, using
a constant yield method, over the remaining term of the Note (where such Note is
not optionally redeemable prior to its maturity date). If such Note may be
redeemed prior to maturity after the Holder has acquired it, the amount of
amortizable bond premium is determined with reference to the amount payable on
maturity or, if it results in a smaller premium attributable to the period
ending upon the earlier redemption date, with reference to the amount payable on
the earlier redemption date. A Holder who elects to amortize bond premium must
reduce his tax basis in the Note by the amount of the premium amortized in any
year. An election to amortize bond premium applies to all taxable debt
obligations then owned and thereafter acquired by the taxpayer and may be
revoked only with the consent of the Internal Revenue Service.
If a Holder makes a Constant Yield Election for a Note with amortizable
bond premium, such election will result in a deemed election to amortize bond
premium for all of the Holder's debt instruments with amortizable bond premium
and may be revoked only with the permission of the Internal Revenue Service with
respect to debt instruments acquired after such revocation.
Foreign Currency Notes
The following summary relates to Notes that are denominated in a currency
or currency unit other than the U.S. dollar ("Foreign Currency Notes").
A Holder who uses the cash method of accounting and who receives a payment
of qualified stated interest in a foreign currency with respect to a Foreign
Currency Note will be required to include in income the U.S. dollar value of the
foreign currency payment (determined on the date such payment is received)
regardless of whether the payment is in fact converted to U.S. dollars at that
time, and such U.S. dollar value will be the Holder's tax basis in the foreign
currency. A cash method Holder who receives such a payment in U.S. dollars
pursuant to an option available under such Note will be required to include the
amount of such payment in income upon receipt.
In the case of accrual method taxpayers and Holders of Original Issue
Discount Notes, a Holder will be required to include in income the U.S. dollar
value of the amount of interest income (including original issue discount, but
reduced by amortizable bond premium to the extent applicable) that has accrued
and is otherwise required to be taken into account with respect to a Foreign
Currency Note during an accrual period. The U.S. dollar value of such accrued
income will be determined by translating such income at the average rate of
exchange for the accrual period or, with respect to an accrual period that spans
two taxable years, at the average rate for the partial period within each
taxable year. Such Holder will recognize ordinary income or loss with respect to
accrued interest income on the date such income is actually received. The amount
of ordinary income or loss recognized will equal the difference between the U.S.
dollar value of the foreign currency payment received (determined on the date
such payment is received) in respect of such accrual period (or, where a Holder
receives U.S. dollars, the amount of such payment in respect of such accrual
period) and the U.S. dollar value of interest income that has accrued during
such accrual period (as determined above). A Holder may elect to translate
interest income (including original issue discount) into U.S. dollars at the
spot rate on the last day of the interest accrual period (or, in the case of a
partial accrual period, at the spot rate on the last day of the taxable year)
or, if the date of receipt is within five business days of the last day of the
interest accrual period, at the spot rate on the date of receipt. A Holder that
makes such an election must apply it consistently to all debt instruments from
year to year and cannot change the election without the consent of the Internal
Revenue Service.
Original issue discount and amortizable bond premium on a Foreign Currency
Note are to be determined in the relevant foreign currency.
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A Holder's tax basis in a Foreign Currency Note, and the amount of any
subsequent adjustment to such Holder's tax basis, will be the U.S. dollar value
of the foreign currency amount paid for such Foreign Currency Note, or of the
foreign currency amount of the adjustment, determined on the date of such
purchase or adjustment. A Holder who purchases a Foreign Currency Note with
previously owned foreign currency will recognize ordinary income or loss in an
amount equal to the difference, if any, between such Holder's tax basis in the
foreign currency and the U.S. dollar fair market value of the Foreign Currency
Note on date of purchase.
Gain or loss realized upon the sale, exchange, retirement or other
disposition of a Foreign Currency Note that is attributable to fluctuations in
currency exchange rates will be ordinary income or loss which will not be
treated as interest income or expense. Gain or loss attributable to fluctuations
in exchange rates will equal the difference between (i) the U.S. dollar value of
the foreign currency principal amount of such Note, and any payment with respect
to accrued interest, determined on the date such payment is received or such
Note is disposed of, and (ii) the U.S. dollar value of the foreign currency
principal amount of such Note, determined on the date such Holder acquired such
Note, and the U.S. dollar value of the accrued interest received, determined by
translating such interest at the average exchange rate for the accrual period.
Such foreign currency gain or loss will be recognized only to the extent of the
total gain or loss realized by a Holder on the sale, exchange, retirement or
other disposition of the Foreign Currency Note. The source of such foreign
currency gain or loss will be determined by reference to the residence of the
Holder or the "qualified business unit" of the Holder on whose books the Note is
properly reflected. Any gain or loss realized by such a Holder in excess of such
foreign currency gain or loss will be capital gain or loss (except, in the case
of a short-term Original Issue Discount Note, to the extent of any original
issue discount not previously included in the Holder's income).
Any loss realized on the sale, exchange, retirement or other disposition of
a Foreign Currency Note with amortizable bond premium by a Holder who has not
elected to amortize such premium under Section 171 of the Code will be a capital
loss to the extent of such bond premium. If such an election is made,
amortizable bond premium taken into account on a current basis shall reduce
interest income in units of the relevant foreign currency. Exchange gain or loss
is realized on such amortized bond premium with respect to any period by
treating the bond premium amortized in such period as a return of principal.
A Holder will have a tax basis in any foreign currency received on the
sale, exchange, retirement or other disposition of a Foreign Currency Note equal
to the U.S. dollar value of such foreign currency, determined at the time of
such sale, exchange, retirement or other disposition. Regulations issued under
Section 988 of the Code provide a special rule for purchases and sales of
publicly traded Foreign Currency Notes by a cash method taxpayer under which
units of foreign currency paid or received are translated into U.S. dollars at
the spot rate on the settlement date of the purchase or sale. Accordingly, no
exchange gain or loss will result from currency fluctuations between the trade
date and the settlement of such a purchase or sale. An accrual method taxpayer
may elect the same treatment required of cash method taxpayers with respect to
the purchases and sale of publicly traded Foreign Currency Notes provided the
election is applied consistently. Such election cannot be changed without the
consent of the Internal Revenue Service. Any gain or loss realized by a Holder
on a sale or other disposition of foreign currency (including its exchange for
U.S. dollars or its use to purchase Foreign Currency Notes) will be ordinary
income or loss.
Backup Withholding and Information Reporting
Certain noncorporate Holders may be subject to backup withholding at a rate
of 31% on payments of principal, premium and interest (including the accrual of
original issue discount, if any) on, and the proceeds of disposition of, a Note.
Backup withholding will apply only if the Holder (i) fails to furnish its
Taxpayer Identification Number ("TIN") which, for an individual, would be his
Social Security number, (ii) furnishes an incorrect TIN, (iii) is notified by
the Internal Revenue Service that it has failed to properly report payments of
interest and dividends or (iv) under certain circumstances, fails to certify,
under penalty of perjury, that it has furnished a correct TIN and has not been
notified by the Internal Revenue Service that it is subject to backup
withholding for failure to report interest and dividend payments. Holders should
consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption if
applicable.
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The amount of any backup withholding from a payment to a Holder will be
allowed as a credit against such Holder's United States federal income tax
liability and may entitle such Holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
the Agents, who have agreed to use reasonable efforts to solicit offers to
purchase Notes. The Company will have the sole right to accept offers to
purchase Notes and may reject any offer to purchase Notes in whole or in part.
An Agent will have the right to reject any offer to purchase Notes solicited by
it in whole or in part. Payment of the purchase price of the Notes will be
required to be made in funds immediately available in the City of New York. The
Company will pay an Agent, in connection with sales of Notes resulting from a
solicitation made or an offer to purchase received by such Agent, a commission
ranging from .125% to .750% of the principal amount of Notes to be sold.
The Company may also sell Notes to an Agent as principal for its own
account at discounts to be agreed upon at the time of sale. Such Notes may be
resold to investors and other purchasers at prevailing market prices, or prices
related thereto at the time of such resale, as determined by the Agent or, if so
agreed, at a fixed public offering price. 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 will not be
in excess of the discount to be received by such Agent from the Company. After
the initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed public offering price) concession and discount may be changed.
The Company has reserved the right to sell the Notes directly to investors
in which event no commission would be paid, and may solicit and accept offers to
purchase Notes directly from investors from time to time on its own behalf. The
Company may accept offers to purchase Notes through additional agents and may
appoint additional agents for the purpose of soliciting offers to purchase
Notes, in either case on terms substantially identical to the terms contained in
the Distribution Agreement. Such other agents, if any, will be named in the
applicable Pricing Supplement.
An Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933 (the "Securities Act"). The Company and the Agents have
agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments made in
respect thereof. The Company has also agreed to reimburse the Agents for certain
expenses.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange. The Company has been advised by the Agents that
the Agents intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Agents are not obligated to do so, however, and the Agents
may discontinue making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Debt Securities pursuant to the Indenture
referred to herein.
The Agents and/or certain of their affiliates may engage in transactions
with and perform services for the Company and certain of its affiliates in the
ordinary course of business.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Kirkland &
Ellis, counsel for the Company, or such other attorney of the Company as the
Company may designate, and for the Agents by Sidley & Austin, Chicago, Illinois.
The opinions of Kirkland & Ellis and Sidley & Austin will be conditioned upon,
and subject to, certain assumptions regarding future action required to be taken
by the Company and the Trustee in connection with the issuance and sale of any
particular Note, the specific terms of Notes and other matters which may affect
the validity of Notes but which cannot be ascertained on the date of such
opinions.
S-22
<PAGE> 23
PROSPECTUS
$300,000,000
DEAN FOODS COMPANY
DEBT SECURITIES
------------------------------
Dean Foods Company (the "Company") intends to issue from time to time
senior debt securities (the "Senior Securities") and/or subordinated debt
securities (the "Subordinated Securities") each of which will be a direct,
unsecured obligation of the Company for aggregate proceeds not to exceed the
equivalent of $300,000,000 and offered to the public on terms determined by
market conditions at the time of sale (the Senior Securities and the
Subordinated Securities being herein referred to collectively as the "Debt
Securities"). The Debt Securities may be denominated in U.S. dollars or in any
other currency, including composite currencies such as the European Currency
Unit, as may be designated by the Company (the "Specified Currency"). Debt
Securities may be sold for U.S. dollars or any other currency, including
composite currencies and the principal of and any interest on Debt Securities
may be payable in U.S. dollars, or in any other currency, including composite
currencies, in each case, as the Company specifically designates.
The Debt Securities may be issued in one or more series with the same or
various maturities at or above par or with an original issue discount. The
specific designation, aggregate principal amount, authorized denominations,
purchase price, maturity, interest rate (or method of calculation) and time of
payment of any interest, any terms for redemption or repurchase, any listing on
a securities exchange or other specific terms of the Debt Securities in respect
of which this Prospectus is being delivered (the "Offered Securities") are set
forth in the accompanying supplement to the Prospectus (the "Prospectus
Supplement"), together with the terms of offering of the Offered Securities.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
The Debt Securities may be offered directly, through agents designated from
time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan of
Distribution." Any such agents, dealers or underwriters are set forth in the
Prospectus Supplement. If an agent of the Company or a dealer or underwriter is
involved in the offering of the Offered Securities, the agent's commission,
dealer's purchase price, underwriter's discount and net proceeds to the Company
will be set forth in, or may be calculated from, the Prospectus Supplement. Any
underwriters, dealers or agents participating in the offering may be deemed
"underwriters" within the meaning of the Securities Act of 1933.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
------------------------------
The date of this Prospectus is April 13, 1995.
------------------------------
<PAGE> 24
IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS FOR SUCH OFFERING MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE DEBT SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus or any Prospectus Supplement, and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company or by any underwriter, agent or dealer. This
Prospectus and any Prospectus Supplement shall not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus and
any Prospectus Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that the information therein is correct as
of any time subsequent to the date thereof.
-------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy material and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy material
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices, at 500
West Madison, 14th Floor, Chicago, Illinois 60661, and Seven World Trade Center,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy material and
other information concerning the Company also may be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Debt Securities. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits thereto as permitted by the rules and regulations of the
Commission. For information with respect to the Company and the Debt Securities,
reference is hereby made to the Registration Statement and the exhibits thereto.
The Registration Statement may be inspected without charge by anyone at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from the Commission upon
payment of the prescribed fees. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete, and
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement of which this Prospectus forms a part,
each such statement being qualified in all respects by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended May
29, 1994.
(2) The Company's Report on Form 8-K dated June 20, 1994.
(3) The Company's Quarterly Reports on Form 10-Q for the thirteen week
period ended August 28, 1994, the twenty-six week period ended
November 27, 1994, and the thirty-nine week period ended February
26, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of Debt Securities
2
<PAGE> 25
contemplated hereby shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated in this Prospectus by reference other than exhibits to
such documents. Requests for such copies should be directed to the Corporate
Secretary, Dean Foods Company, 3600 North River Road, Franklin Park, Illinois
60131, telephone number (708) 678-1680.
Unless the context indicates otherwise, as used in this Prospectus the term
"Company" refers to Dean Foods Company and its consolidated subsidiaries. The
Company's fiscal year ends on the last Sunday in May. Unless the context
indicates otherwise, references herein to years are for years ending on that
date.
3
<PAGE> 26
THE COMPANY
Dean Foods Company and its subsidiaries are engaged in the processing,
purchasing and distribution of dairy and specialty food products. The Company's
principal products are Dairy Products (fluid milk, specialty dairy products and
ice cream) and Specialty Food Products (canned and frozen vegetables; pickles,
relishes and specialty items; powdered products; and sauces, puddings and dips).
A significant portion of the Company's products are sold under private labels.
The Company also operates a trucking business hauling less-than-truckload
freight, concentrating primarily on refrigerated and frozen cartage.
Acquisitions have been an important factor in the Company's strategy. The
Company generally focuses on food companies having a well-established reputation
for quality products and service.
The predecessor to the Company was incorporated in Illinois in 1925. The
principal office of the Company is located at 3600 North River Road, Franklin
Park, Illinois 60131, and its telephone number is (708) 678-1680.
USE OF PROCEEDS
The Company intends to use the net proceeds of the offering of the Debt
Securities for general corporate purposes, which may include repaying existing
indebtedness or financing acquisitions. Further details relating to the use of
the net proceeds will be set forth in the applicable Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated.
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS FISCAL YEARS
ENDED ------------------------------------------------
FEBRUARY 26, 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
5.2x 6.2x 6.1x 5.3x 5.9x 5.8x
</TABLE>
For the purpose of computing the above ratio of earnings to fixed charges,
earnings consist of income before taxes, plus fixed charges. Fixed charges
consist of interest expense, net, including amortization of discount and
financing costs and one-third of the operating rental expenses which management
believes is representative of the interest component of rent expense.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Securities") and the extent,
if any, to which such general provisions may not apply thereto will be described
in the Prospectus Supplement relating to such Offered Securities.
The Senior Securities are to be issued in one or more series (each such
series a "Series") under an Indenture dated as of January 15, 1995, (the "Senior
Indenture") between the Company and Bank of America Illinois, as Trustee (the
"Senior Trustee"), and the Subordinated Securities are to be issued in one or
more Series under an Indenture dated as of January 15, 1995 (the "Subordinated
Indenture") between the Company and a trustee to be named prior to an offering
of Subordinated Securities, as Trustee (the "Subordinated Trustee"). The forms
of the Senior Indenture and the Subordinated Indenture (being sometimes referred
to herein collectively as the "Indentures" and individually as an "Indenture")
are filed as exhibits to the Registration Statement. The following summaries of
certain provisions of the Debt Securities and the Indentures do not purport to
be complete and are subject to, and are qualified in their entireties by
reference to, all of the provisions of the Indentures, including the definitions
therein of certain terms. Whenever particular provisions or defined terms in the
Indentures are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section references used herein are references
to sections in
4
<PAGE> 27
both Indentures unless otherwise indicated. The Indentures are substantially
identical, except for certain covenants of the Company and provisions relating
to subordination.
The Debt Securities will be obligations of the Company exclusively. Because
the Company conducts substantially all of its business through its subsidiaries,
the ability of the Company to meet its obligations under the Debt Securities and
its other indebtedness will be dependent on the earnings and cash flow of its
subsidiaries and the ability of its subsidiaries to pay dividends and to advance
funds to the Company. In addition, the Company's rights and the rights of its
creditors and securities holders, including the holders of the Debt Securities,
to participate in the assets of any subsidiary upon such subsidiary's
liquidation or recapitalization will be subject to prior claims of such
subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against any such subsidiary. Except with respect
to the covenants "Limitations on Liens" and "Limitations on Sale and Lease-Back
Transactions" contained in the Senior Indenture described below, neither the
Senior Indenture nor the Subordinated Indenture restricts or limits the ability
of any subsidiary of the Company to incur, create, assume or guarantee
indebtedness. At November 27, 1994, the Company's subsidiaries had approximately
$25 million of outstanding indebtedness, approximately $19 million of which was
guaranteed by the Company and would have constituted Senior Indebtedness.
As of November 27, 1994, the Company had approximately $142 million
aggregate principal amount of Senior Indebtedness outstanding and no
subordinated indebtedness outstanding.
The Prospectus Supplement will contain any additional or revised
information with respect to the senior and subordinated debt outstanding as of
the date of the Prospectus Supplement.
GENERAL
The Indentures do not limit the amount of Debt Securities which can be
issued thereunder and provide that debt securities of any Series may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company. Debt Securities may be denominated and payable in
foreign currencies or units based on or relating to foreign currencies,
including European Currency Units ("ECUs"). Special United States federal income
tax considerations applicable to any Debt Securities so denominated will be
described in the relevant Prospectus Supplement. The Indentures do not limit the
amount of other indebtedness or securities, other than in the case of the Senior
Indenture certain secured indebtedness as described below, which may be issued
by the Company. All Senior Securities will be unsecured and will rank pari passu
with all other unsecured and unsubordinated indebtedness of the Company. All
Subordinated Securities will be unsecured and will be subordinated in right of
payment to the prior payment in full of Senior Indebtedness (which term includes
the Senior Securities) of the Company described below under "Subordination." The
Trustee will authenticate and deliver Debt Securities executed and delivered to
it by the Company as set forth in the applicable Indenture.
Reference is made to the Prospectus Supplement for the following and other
possible terms of each Series of the Offered Securities in respect of which this
Prospectus is being delivered: (i) the title of the Offered Securities and
classification as Senior Securities or Subordinated Securities; (ii) any limit
upon the aggregate principal amount of the Offered Securities; (iii) the
currency or currency units based on or relating to currencies in which such
Offered Securities are denominated and/or in which principal (and premium, if
any) and/or any interest will or may be payable; (iv) if other than 100% of the
principal amount, the percentage of their principal amount at which the Offered
Securities will be offered; (v) the date or dates on which the principal of the
Offered Securities will be payable (or method of determination thereof); (vi)
the rate or rates (or method of determination thereof) at which the Offered
Securities will bear interest, if any, the date or dates from which any such
interest will accrue and on which such interest will be payable, and the record
dates for the determination of the holders to whom interest is payable; (vii) if
other than as set forth herein, the place or places where the principal of and
interest, if any, on the Offered Securities will be payable; (viii) the price or
prices at which, the period or periods within which and the terms and conditions
upon which Offered Securities may be redeemed, in whole or in part, at the
option of the Company; (ix) the obligation, if any, of the Company to redeem,
repurchase or repay Offered Securities, whether pursuant to any sinking fund
5
<PAGE> 28
or analogous provisions or pursuant to other provisions set forth therein or at
the option of a Holder thereof; (x) whether the Offered Securities will be
represented in whole or in part by one or more global notes registered in the
name of a depository or its nominee; (xi) whether the Offered Securities will be
issuable in registered form or bearer form and, if Offered Securities in bearer
form are issuable, restrictions applicable to the exchange of one form for
another and to the offer, sale and delivery of Offered Securities in bearer
form; (xii) whether and under what circumstances the Company will pay additional
amounts on Offered Securities held by a person which is not a U.S. person (as
defined in the Prospectus Supplement) in respect of any tax, assessment or
governmental charge withheld or deducted, and if so, whether the Company will
have the option to redeem such Debt Securities rather than pay such additional
amounts; and (xiii) any other terms or conditions not inconsistent with the
provisions of the Indenture upon which the Offered Securities will be offered.
(Section 2.3) "Principal" when used herein includes, when appropriate, the
premium, if any, on the Debt Securities.
Unless otherwise provided in the Prospectus Supplement relating to any
Offered Securities, principal and interest, if any, will be payable, and the
Debt Securities will be transferable and exchangeable, at the office or offices
or agency maintained by the Company for such purposes, provided that payment of
interest on the Debt Securities will be paid at such place of payment by check
mailed to the persons entitled thereto at the addresses of such persons
appearing on the Security Register. Interest on the Debt Securities will be
payable on any interest payment date to the persons in whose name the Debt
Securities are registered at the close of business on the record date with
respect to such interest payment date. (Section 2.7)
Debt Securities may be issued in fully registered form in minimum
denominations of $1,000 and any integral multiple thereof. (Section 2.7) Debt
Securities may be exchanged for an equal aggregate principal amount of Debt
Securities of the same Series and date of maturity in such authorized
denominations as may be requested upon surrender of the Debt Securities at an
agency of the Company maintained for such purpose and upon fulfillment of all
other requirements of such agent. (Section 2.8) 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 2.8) Debt Securities in bearer form
and the coupons, if any, appertaining thereto will be transferable by delivery.
(Section 2.8)
Debt Securities will bear interest at a fixed rate (a "Fixed Rate
Security") or a floating rate (a "Floating Rate Security"). Debt Securities
bearing no interest or interest at a rate which, at the time of issuance, is
below the prevailing market rate, will be sold at a discount below their stated
principal amount. Special United States federal income tax considerations
applicable to any such discounted Debt Securities or to certain Debt Securities
issued at par which are treated as having been issued at a discount for United
States federal income tax purposes will be described in the applicable
Prospectus Supplement.
Debt Securities may be issued, from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on any
interest payment date, to be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors. Holders of
such Debt Securities may receive a principal amount on any principal payment
date, or a payment of interest on any interest payment date, that is greater
than or less than the amount of principal or interest otherwise payable on such
dates, depending upon the value on such dates of the applicable currency,
commodity, equity index or other factor. Information as to the methods for
determining the amount of principal or interest payable on any date, the
currencies, commodities, equity indices or other factors to which the amount
payable on such date is linked and certain additional tax considerations will be
set forth in the applicable Prospectus Supplement.
The Indenture requires the annual filing by the Company with the Trustee of
a certificate as to compliance with all conditions and covenants contained in
the Indenture. (Section 3.4)
The Company will comply with Section 14(e) under the Exchange Act, and any
other tender offer rules under the Exchange Act which may then be applicable, in
connection with any obligation of the Company to purchase Offered Securities at
the option of the holders thereof. Any such obligation applicable to a Series of
Debt Securities will be described in the Prospectus Supplement relating thereto.
6
<PAGE> 29
Unless otherwise described in a Prospectus Supplement relating to any
Offered Securities, there are no covenants or provisions contained in either
Indenture which may afford the holders of Offered Securities protection in the
event of a highly leveraged transaction involving the Company, except to the
limited extent described under "Limitations on Liens" and "Limitation on Sale
and Lease-Back Transactions" in the Senior Indenture and "Consolidation, Merger,
Sale or Conveyance" in the Indentures as described below. Such covenants or
provisions are not subject to waiver by the Company's Board of Directors without
the consent of the holders of not less than a majority in principal amount of
Senior Securities of each Series or Subordinated Securities of each Series, as
applicable, as described under "Modification of Indenture" below.
REGISTERED GLOBAL SECURITIES
The registered Debt Securities of a Series may be issued in the form of one
or more fully registered global Debt Securities (a "Registered Global Security")
that will be deposited with a depositary (the "Depositary"), or with a nominee
for a Depositary identified in the Prospectus Supplement relating to such
Series. In such cases, one or more Registered Global Securities will be issued
in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding registered Debt Securities of the
Series to be represented by such Registered Global Security or Securities.
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive registered form, a Registered Global Security may not be transferred
except as a whole by the Depositary for such Registered Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a Series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such Series.
The Company anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Registered Global Security to the accounts of persons that
have accounts with such Depositary ("participants"). The accounts to be credited
shall be designated by any underwriters or agents participating in the
distribution of such Debt Securities or by the Company if such Debt Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in a Registered Global Security will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests in
such Registered Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary
for such Registered Global Security (with respect to interests of participants)
or 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 definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Registered Global Security.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the Debt
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such Debt
Securities in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Principal and interest payments on Debt Securities represented by a
Registered Global Security registered in the name of a Depositary or its nominee
will be made to such Depositary or its nominee, as the case may be, as the
registered owner of such Registered Global Security. None of the Company, the
Trustee or any paying agent for such Debt Securities will have any
responsibility or liability for any aspect of the records to or payments made on
account of beneficial ownership interests in such Registered Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
7
<PAGE> 30
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Registered Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners of
beneficial interest in such Registered Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with the securities held for the accounts of customers
registered in "street names," and will be the responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary and
a successor Depositary is not appointed by the Company within ninety days or an
Event of Default has occurred and is continuing with respect to such Debt
Securities, the Company will issue such Debt Securities in definitive form in
exchange for such Registered Global Security. In addition, the Company may at
any time and in its sole discretion determine not to have the Debt Securities of
a Series represented by one or more Registered Global Securities and, in such
event, will issue Debt Securities of such Series in definitive form in exchange
for the Registered Global Securities or Securities representing such Debt
Securities. (Section 2.8)
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
Limitations on Liens
The Senior Indenture provides that, so long as any of the Senior Securities
of a Series remain outstanding, unless the terms of any Series of Senior
Securities provide otherwise, the Company will not and will not permit any
Consolidated Subsidiary to issue, assume or guarantee any indebtedness for money
borrowed ("Indebtedness") secured by a mortgage, pledge, security interest or
other lien (a "Lien") upon or with respect to any Principal Property or on the
capital stock of any Consolidated Subsidiary that owns a Principal Property
unless (a) the Company makes effective provision pursuant to which the Senior
Securities shall be secured by such Lien equally and ratably with any and all
other obligations and Indebtedness thereby secured, or (b) the aggregate amount
of all such Indebtedness secured by such a Lien on the Company and its
Consolidated Subsidiaries then outstanding, together with all Attributable Debt
in respect of sale and lease-back transactions existing at such time (with the
exception of transactions which are not subject to the limitation described in
"Limitation on Sale and Lease-Back Transactions" below), would not exceed 15% of
the Consolidated Net Tangible Assets of the Company.
Such limitation will not apply to, and there shall be excluded in computing
such Indebtedness for purposes of this restriction, certain permitted Liens
including (a) Liens existing as of the date of the issuance of Senior Securities
of any Series, (b) Liens on property or assets of, or any shares of stock or
securing Indebtedness of, any corporation existing at the time such corporation
becomes a Consolidated Subsidiary, (c) Liens on property or assets or shares of
stock or securing Indebtedness existing at the time of acquisition (including
acquisition through merger or consolidation) and certain Liens to secure
Indebtedness incurred prior to, at the time of or within 180 days after the
later of the completion of the acquisition of, or the completion of the
construction of and commencement of operation of, any such property, for the
purpose of financing all or any part of the purchase price or construction cost
thereof, (d) Liens to secure certain development, operation, construction,
alteration, repair or improvement costs, (e) Liens in favor of, or which secure
Indebtedness owing to, the Company or a Consolidated Subsidiary, (f) Liens in
connection with government contracts, including the assignment of moneys due or
to come due thereon, (g) certain Liens in connection with legal proceedings to
the extent such proceedings are being contested in good faith, (h) certain Liens
arising in the ordinary course of business and not in connection with the
borrowing of money such as mechanics', materialmans', carriers' or other similar
Liens, (i) Liens on property securing obligations issued by a domestic
governmental issuer to finance the cost of acquisition or construction of such
property, and (j) extensions, substitutions, replacements or renewals of the
foregoing if the principal amount of the indebtedness secured thereby is not
increased and is not secured by any additional assets. (Section 3.5 of the
Senior Indenture)
8
<PAGE> 31
Limitation on Sale and Lease-Back Transactions
The Senior Indenture provides that, so long as any of the Senior Securities
of a Series remain outstanding, unless the terms of any Series of Senior
Securities provide otherwise, neither the Company nor any Consolidated
Subsidiary may enter into any arrangement with any person (other than the
Company) providing for the leasing by the Company or a Consolidated Subsidiary
of any Principal Property (except for temporary leases for a term of not more
than three years), which Principal Property has been or is to be sold or
transferred more than 120 days after such Principal Property has been owned by
the Company or such Consolidated Subsidiary and completion of construction and
commencement of full operation thereof, by the Company or a Consolidated
Subsidiary to such person (herein referred as a "Sale and Lease-Back
Transaction"). (Sections 3.5 and 3.6 of the Senior Indenture)
Such limitation will not apply to any Sale and Lease-Back Transaction if
(a) the net proceeds to the Company or such Consolidated Subsidiary from the
sale or transfer equal or exceed the fair value (as determined by the Board of
Directors of the Company) of the Principal Property so leased, (b) the Company
or such Consolidated Subsidiary could incur Indebtedness secured by a Lien on
the Principal Property to be leased pursuant to "Limitation on Liens" above in
an amount equal to the Attributable Debt with respect to such Sale and
Lease-Back Transaction without equally and ratably securing the Senior
Securities or (c) the Company, within 120 days after the effective date of any
such Sale and Lease-Back Transaction, applies an amount equal to the fair value
(as determined by the Board of Directors of the Company) of the Principal
Property so leased to (x) the retirement of Funded Debt (including Debt
Securities) of the Company or (y) the acquisition of additional real property.
(Section 3.6 of the Senior Indenture)
Certain Definitions
The term "Attributable Debt," in respect of the Sale and Lease-Back
Transactions described above, is defined to mean as of any particular time, the
present value, discounted at the Composite Rate, of the obligation of a lessee
for rental payments during the remaining term of any lease (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended). Sale and Lease-Back Transactions with respect to facilities financed
with certain tax exempt securities are excepted from the definition. (Section
1.1 of the Senior Indenture)
The term "Consolidated Net Tangible Assets" is defined to mean the
aggregate amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom (a) all current liabilities
(excluding any thereof constituting Funded Debt by reason of being extendible or
renewable), and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, all as set forth on the
books and records of the Company and its Consolidated Subsidiaries and computed
in accordance with generally accepted accounting principles. (Section 1.1 of the
Senior Indenture)
The term "Consolidated Subsidiary" is defined to mean a subsidiary of the
Company the accounts of which are consolidated with those of the Company in
accordance with generally accepted accounting principles. (Section 1.1 of the
Senior Indenture)
The term "Funded Debt" is defined to mean all indebtedness for the
repayment of money borrowed, whether or not evidenced by a bond, debenture, note
or similar instrument or agreement, having a final maturity of more than 12
months after the date of its creation or having a final maturity of less than 12
months after the date of its creation but by its terms being renewable or
extendible beyond 12 months after such date at the option of the borrower
(excluding obligations under any capital leases). For the purpose of determining
"Funded Debt," there shall be excluded any particular indebtedness if, on or
prior to the final maturity thereof, there shall have been deposited with the
proper depositary in trust the necessary funds for the payment, redemption or
satisfaction of such indebtedness. (Section 1.1 of the Senior Indenture)
The term "Principal Property" is defined to mean, as of any date, any
building, structure or other facility together with the land upon which it is
erected and fixtures comprising a part thereof, used primarily for
manufacturing, processing or production (other than any pollution control
facility), in each case located in the United States, and owned or leased or to
be owned or leased by the Company or any Consolidated Subsidiary,
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and in each case the net book value of which as of such date exceeds 2% of the
Consolidated Net Tangible Assets of the Company as shown on the consolidated
balance sheet contained in the latest filing of the Company with the Commission,
other than any such land, building, structure or other facility or portion
thereof which, in the opinion of the Board of Directors of the Company, is not
of material importance to the total business conducted by the Company and its
Consolidated Subsidiaries, considered as one enterprise.
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Subordination. The Subordinated Securities will be subordinate and junior
in right of payment, to the extent set forth in the Subordinated Indenture, to
all Senior Indebtedness (as defined below) of the Company. If the Company should
default in the payment of any principal of or premium or interest on any Senior
Indebtedness when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration of acceleration or otherwise, then,
upon written notice of such default to the Company by the holders of such Senior
Indebtedness or any trustee therefor and subject to certain rights of the
Company to dispute such default and subject to proper notification of the
Trustee, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) will be made or agreed to be made for
principal of, premium, if any, or interest, if any, on the Subordinated
Securities, or in respect of any redemption, retirement, purchase or other
acquisition of the Subordinated Securities other than those made in capital
stock of the Company (or cash in lieu of fractional shares thereof). (Sections
14.1, 14.4 and 14.5 of the Subordinated Indenture)
The term "Senior Indebtedness" is defined to mean indebtedness or
obligations (other than the Subordinated Debt Securities) of, or guaranteed or
assumed by, the Company for borrowed money which is evidenced by (i) bonds,
debentures, notes, or other similar instruments, or (ii) capital leases, whether
outstanding at the date of the Subordinated Indenture or subsequently incurred,
unless the terms of such indebtedness provide that such indebtedness is not
senior in right of payment to the Subordinated Debt Securities, and amendments,
renewals, extensions, modifications and refinancings of any such indebtedness or
obligations. (Section 1.1 of the Subordinated Indenture)
If (i) without the consent of the Company a court shall enter an order for
relief with respect to the Company under the United States federal bankruptcy
laws or a judgment, order or decree adjudging the Company a bankrupt or
insolvent, or enter an order for relief for reorganization, arrangement,
adjustment or composition of or in respect of the Company under the United
States federal or state bankruptcy or insolvency laws or (ii) the Company shall
institute proceedings for the entry of an order for relief with respect to the
Company under the United States federal bankruptcy laws or for an adjudication
of insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or seek or consent to
reorganization, arrangement, composition or similar relief under any applicable
law, or shall consent to the filing of such petition or to the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator or similar
official in respect of the Company or of substantially all of its property, or
the Company shall make a general assignment for the benefit of creditors, then
all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) will first be paid in full before any
payment or distribution, whether in cash, securities or other property, is made
on account of the principal of, or interest, if any, on the Subordinated
Securities. In such event, any payment or distribution on account of the
principal of, or interest, if any, on the Subordinated Securities, whether in
cash, securities or other property (other than securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Subordinated Securities, to the
payment of all Senior Indebtedness then outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment), which
would otherwise (but for the subordination provisions) be payable or deliverable
in respect of the Subordinated Securities will be paid or delivered directly to
the holders of Senior Indebtedness in accordance with the priorities then
existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) has
been paid in full. If any payment or distribution on account of the principal
of, or interest, if any, on the Subordinated Securities of any character,
whether in cash, securities or other property (other than securities of the
Company or any other
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corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in the subordination
provisions with respect to the Subordinated Securities, to the payment of all
Senior Indebtedness then outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), shall be
received by a holder of any Subordinated Securities in contravention of any of
the terms of the Subordinated Indenture and before all the Senior Indebtedness
shall have been paid in full, such payment or distribution of securities will be
received in trust for the benefit of, and will be paid over or delivered and
transferred to, the holders of the Senior Indebtedness then outstanding in
accordance with the priorities then existing among such holders for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all such Senior Indebtedness in full. In the event of any such
proceeding, after payment in full of all sums owing with respect to Senior
Indebtedness, the holders of Subordinated Securities, together with the holders
of any obligations of the Company ranking on a parity with the Subordinated
Securities, will be entitled to be repaid from the remaining assets of the
Company the amounts at that time due and owing on account of unpaid principal of
or any interest on the Subordinated Securities and such other obligations before
any payment or other distribution, whether in cash, property or otherwise, shall
be made on account of any capital stock or obligations of the Company ranking
junior to the Subordinated Securities and such other obligations. (Section 14.1
of the Subordinated Indenture)
By reason of such subordination, in the event of the insolvency of the
Company, holders of Senior Indebtedness may receive more, ratably, than holders
of the Subordinated Securities. In addition, other creditors of the Company who
are not holders of Subordinated Securities or holders of Senior Indebtedness may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than holders of Subordinated Securities. Such subordination will not
prevent the occurrence of an Event of Default or limit the right of acceleration
in respect of the Subordinated Securities.
EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities of any Series is
defined in each Indenture as: (i) default in the payment of any installment of
interest upon any of the Debt Securities of such Series as and when the same
shall become due and payable, and continuance of such default for a period of 30
days; (ii) default in the payment of all or any part of the principal of any of
the Debt Securities of such Series as and when the same shall become due and
payable either at maturity, upon any redemption, by declaration or otherwise;
(iii) default in the performance, or breach, of any other covenant or warranty
of the Company contained in the Debt Securities of such Series or set forth in
the Indenture (other than a covenant or warranty included in the Indenture
solely for the benefit of a Series of Debt Securities other than that Series)
and continuance of such default or breach for a period of 90 days after due
notice by the applicable Trustee or by the holders of at least 25% in principal
amount of the Outstanding Securities of that Series; or (iv) certain events of
bankruptcy, insolvency or reorganization of the Company. (Section 5.1)
Additional Events of Default may be added for the benefit of holders of certain
Series of Debt Securities which, if added, will be described in the Prospectus
Supplement relating to such Debt Securities. The Indentures provide that the
Trustee shall notify the holders of Debt Securities of each Series of any
continuing default known to the Trustee which has occurred with respect to that
Series within 90 days after the occurrence thereof. The Indentures provide that
notwithstanding the foregoing, except in the case of default in the payment of
the principal of or interest on any of the Debt Securities of such Series the
Trustee may withhold such notice if the Trustee in good faith determines that
the withholding of such notice is in the interests of the holders of Debt
Securities of such Series. (Section 6.5)
The Indentures provide that if an Event of Default with respect to any
Series of Debt Securities shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in aggregate principal amount of
Debt Securities of that Series then outstanding may declare the principal amount
of all Debt Securities of that Series to be due and payable immediately, but
upon certain conditions such declaration may be annulled. (Section 5.1) Any past
defaults and the consequences thereof (except a default in the payment of
principal of or interest on Debt Securities of that Series) may be waived by the
holders of a majority in principal amount of the Debt Securities of that Series
then outstanding. (Section 5.9) The Senior Indenture
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also permits the Company to omit compliance with certain covenants in such
Indenture with respect to Senior Securities of any Series upon waiver by the
holders of a majority in principal amount of the Senior Securities of such
Series then outstanding. (Section 3.7)
Subject to the provisions of each Indenture relating to the duties of each
Trustee, in case an Event of Default with respect to any Series of Debt
Securities shall occur and be continuing, neither Trustee shall be under any
obligation to exercise any of the trusts or powers vested in it by either
Indenture at the request or direction of any of the holders of that Series,
unless such holders shall have offered to such Trustee reasonable security or
indemnity. (Section 6.1 and 6.2) The holders of a majority in aggregate
principal amount of the Debt Securities of each Series affected and then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee under the
applicable Indenture or exercising any trust or power conferred on the Trustee
with respect to the Debt Securities of that Series; provided that the Trustee
may refuse to follow any direction which is in conflict with any law or such
Indenture and subject to certain other limitations. (Section 5.8)
No holder of any Debt Security of any Series will have any right by virtue
or by availing of any provision of the applicable Indenture to institute any
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to such Indenture or for any remedy thereunder, unless such holder
shall have previously given the applicable Trustee written notice of an 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 applicable Trustee to institute such proceeding as
trustee and the applicable Trustee shall have failed to institute such
proceeding within 60 days after its receipt of such request, and the applicable
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. (Section 5.5) However, the right of a holder of
any Debt Security to receive payment of the principal of and any interest on
such Debt Security on or after the due dates expressed in such Debt Security, or
to institute suit for the enforcement of any such payment on or after such
dates, shall not be impaired or affected without the consent of such holder.
(Section 5.6)
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Each Indenture provides that the Company may consolidate with, or sell,
convey or lease all or substantially all of its assets to, or merge with or
into, any other corporation, if (i) either the Company is the continuing
corporation, or the successor corporation is a domestic corporation and
expressly assumes the due and punctual payment of the principal of and interest
on all the Debt Securities outstanding under the Indenture according to their
tenor and the due and punctual performance and observance of all of the
covenants and conditions of the Indenture to be performed or observed by the
Company and (ii) immediately after such merger or consolidation, or such sale,
conveyance or lease, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred and
be continuing. (Section 9.1)
SATISFACTION AND DISCHARGE OF INDENTURES
Each Indenture with respect to any Series (except for certain specified
surviving obligations including, among other things, the Company's obligation to
pay the principal of and interest on the Debt Securities of such Series) will be
discharged and cancelled upon the satisfaction of certain conditions, including
the payment of all principal of and interest on all the Debt Securities of such
Series or the deposit with the applicable Trustee of cash or appropriate
Government Obligations or a combination thereof sufficient for such payment or
redemption in accordance with the Indenture and the terms of the Debt Securities
of such Series. (Section 10.1)
MODIFICATION OF THE INDENTURES
Each Indenture contains provisions permitting the Company and the
applicable Trustee, with the consent of the holders of not less than a majority
in aggregate principal amount of the Debt Securities of each Series at
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the time outstanding under such Indenture, to execute supplemental indentures
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, such Indenture or any supplemental indenture with respect to the
Debt Securities of such Series or modifying in any manner the rights of the
holders of the Debt Securities of such Series; provided that no such
supplemental indenture may (i) extend the stated maturity of the principal of
any Debt Security, or reduce the principal amount thereof or any premium
thereon, or reduce the rate or extend the time of payment of any interest
thereon, or reduce any amount payable on redemption thereof or change the
currency in which the principal thereof (including any amount with respect to
original issue discount) or interest thereon is payable or reduce the amount of
original issue discount security payable upon acceleration or provable in
bankruptcy or alter certain provisions of the Indenture relating to Debt
Securities not denominated in U.S. dollars, or impair or affect the right of any
holder of Debt Securities to institute suit for payment thereof or, if the Debt
Securities provide therefor, any right of repayment at the option of the holders
of the Debt Securities, without the consent of the holder of each Debt Security
so affected, (ii) reduce the aforesaid percentage of Debt Securities of such
Series, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all Debt
Securities of such Series so affected or (iii) with respect to the Subordinated
Indenture, modify the provisions relating to the subordination of the
Subordinated Securities in a manner materially adverse to the Holders of the
Subordinated Securities. (Section 8.2) Additionally, in certain prescribed
instances, the Company and the Trustee may execute supplemental indentures
without the consent of the holders of Debt Securities. (Section 8.1)
The Subordinated Indenture may not be amended to alter the subordination of
any outstanding Subordinated Securities without the consent of each holder of
Senior Indebtedness then outstanding that would be materially adversely affected
thereby. (Section 8.6 of the Subordinated Indenture)
DEFEASANCE AND COVENANT DEFEASANCE
Each Indenture provides, if such provision is made applicable to the Debt
Securities of any Series, that the Company may elect either (a) to terminate
(and be deemed to have satisfied) all its obligations with respect to such Debt
Securities (except for the obligations to register the transfer or exchange of
such Debt Securities, to replace mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of the Debt Securities,
to compensate and indemnify the Trustee and to punctually pay or cause to be
paid the principal of, and interest on, all Debt Securities of such Series when
due) ("defeasance") or (b) with respect to the Senior Securities, to be released
from its obligations with respect to such Senior Securities under Section 3.5
and 3.6 of the Indenture (being the restrictions described above under
"Limitations on Liens" and "Limitations on Sale and Leaseback Transactions")
("covenant defeasance"), upon the deposit with the Trustee, in trust for such
purpose, of money and/or Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money, in an
amount sufficient (in the opinion of a nationally recognized firm of independent
public accountants) to pay the principal of and interest, if any, on the
outstanding Debt Securities of such Series, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor. Such a trust
may be established only if, among other things, the Company has delivered to the
Trustee an opinion of counsel (as specified in the Indenture) with regard to
certain matters, including an opinion to the effect that the Holders of such
Debt Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and discharge and will be subject to
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and defeasance or covenant
defeasance, as the case may be, had not occurred. The Prospectus Supplement may
further describe these or other provisions, if any, permitting defeasance or
covenant defeasance with respect to the Debt Securities of any Series. (Section
10.1)
APPLICABLE LAW
The Debt Securities and the Indentures will be governed by, and construed
in accordance with, the laws of the State of New York. (Section 11.8)
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CONCERNING THE TRUSTEE
The Senior Trustee may provide various commercial banking services to the
Company from time to time.
PLAN OF DISTRIBUTION
The Company may sell Offered Securities (i) through agents, (ii) through
underwriters, (iii) through dealers or (iv) directly to purchasers (through a
specific bidding or auction process or otherwise).
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent involved in the offer or sale of
the Offered Securities will be named, and any commissions payable by the Company
to such agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Any such agent may be deemed to
be an underwriter, as that term is defined in the Securities Act, of the Debt
Securities so offered and sold. Agents may be entitled under agreements which
may be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may be
customers of, engaged in transactions with or perform services for the Company
in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale of Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales of
Offered Securities. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and such
underwriters or their affiliates may be customers of, engage in transactions
with, or perform services for the Company in the ordinary course of business.
If a dealer is utilized in the sale of Offered Securities, the Company will
sell such Debt Securities to the dealer, as principal. The dealer may then
resell such Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. Dealers may be entitled, under agreements
which may be entered into with the Company, to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act, and
such dealers or their affiliates may be customers of, extend credit to or engage
in transactions with, or perform services for the Company in the ordinary course
of business. The name of any dealer and the terms of the transactions will be
set forth in the Prospectus Supplement relating thereto.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional investors
or others. The terms of any such sales, including the terms of any bidding or
auction process, if utilized, will be described in the Prospectus Supplement
relating thereto.
The place and time of delivery for the Debt Securities in respect of which
this Prospectus is delivered are set forth in the Prospectus Supplement.
LEGAL MATTERS
The validity of the issuance of the Debt Securities offered hereby will be
passed upon for the Company by Kirkland & Ellis, special counsel to the Company.
Certain legal matters in connection with the Debt Securities offered hereby will
be passed upon for the underwriters, if any, by Sidley & Austin, Chicago,
Illinois.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended May 29, 1994, have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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