<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES
UNDER THE TRUST INDENTURE ACT OF 1939
---------------------
THE DOW CHEMICAL COMPANY
(Name of Applicant)
2030 Dow Center
Midland, Michigan 48674
(Address of principal executive offices)
---------------------
SECURITIES TO BE ISSUED UNDER THE INDENTURE
TO BE QUALIFIED
Title of Class Amount
-------------- ------
Debentures due January 15, 2009 Up to $505,000,000
Approximate date of proposed Exchange:
February 2, 1999
Name and address of agent for service: with a copy to:
John G. Scriven, Esq. Edward S. Best
Vice President, General Counsel and Secretary Mayer, Brown & Platt
The Dow Chemical Company 190 South LaSalle Street
2030 Dow Center Chicago, Illinois 60603
Midland, Michigan 48673 (312) 782-0600
(517) 636-1000
================================================================================
The obligor hereby amends this application for qualification on such date or
dates as may be necessary to delay its effectiveness until (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this amendment, or (ii) such date as the Commission, acting pursuant
to Section 307(c) of the Act, may determine upon the written request of the
obligor.
<PAGE>
GENERAL
-------
1. General Information. Furnish the following information as to the
-------------------
applicant:
a. Form of organization. A corporation.
b. State or other sovereign power under the laws of which organized.
Delaware.
2. Securities Act exemption applicable. State briefly the facts relied
-----------------------------------
upon by the applicant as a basis for the claim that registration of the
indenture securities under the Securities Act of 1933 is not required.
The Dow Chemical Company (the "Company"), a Delaware corporation, will
offer, upon the terms and subject to the conditions set forth in the Exchange
Circular (the "Exchange Circular") and the accompanying Letter of Transmittal
(the "Letter of Transmittal," which, together with this Exchange Circular,
constitute the "Exchange Offer"), to exchange its Debentures due 2009 (the "New
Debentures") in an aggregate principal amount to be determined in the manner set
forth in the Exchange Circular, for any and all of its $218,640,000 aggregate
principal amount of outstanding 9% Debentures due April 1, 2021 (the "9%
Debentures") and for any and all of its $183,976,000 aggregate principal amount
of outstanding 8.85% Debentures due September 15, 2021 (the "8.85% Debentures"
and, together with the 9% Debentures, the "Old Debentures") from the registered
holders thereof.
The Exchange Offer will be made exclusively to holders of the Company's Old
Debentures and the Company will not pay any commission or other remuneration,
directly or indirectly, to any person for soliciting such exchange. Accordingly,
the issuance of the New Debentures pursuant to the Exchange Offer will be exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "1933 Act"), by virtue of the exemption provided by Section 3(a)(9)
thereunder.
There has not been nor will there be any sales of New Debentures by the
Company or by or through an underwriter at or about the same time as the
Exchange Offer.
The Company has retained Merrill Lynch & Co. ("Merrill Lynch"), an
investment banking firm, as its financial adviser in connection with the
Exchange Offer. Merrill Lynch has not been retained to solicit any tenders
pursuant to the Exchange Offer or to render any opinion as to the fairness of
the Exchange Offer to the Company or to the holders of Old Debentures. For its
services as financial adviser, Merrill Lynch is entitled to receive a fixed fee,
regardless of whether or not the Exchange Offer is consummated. In addition,
Merrill Lynch is to be reimbursed for certain out-of-pocket expenses.
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Company
will, however, pay The Chase Manhattan Bank as Exchange Agent and Georgeson &
Company Inc. as Information Agent reasonable and customary fees for their
services and will reimburse them for their reasonable out-of-pocket expenses in
connection therewith. The Company will also reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in forwarding copies of the Exchange Circular and related
documents to the beneficial owners of Old Debentures and in handling or
forwarding tenders on behalf of their customers.
Officers, directors and employees of the Company may engage in the
solicitation of holders of Old Debentures in connection with the Exchange Offer,
but such employees will receive no additional compensation for such activities.
A participation fee equal to 1.5% of the principal amount of Old Debentures
tendered will be paid to tendering holders. No cash payment has been nor will be
made by any holder of Old Debentures in connection with the issuance of the New
Debentures pursuant to the Exchange Offer other than payment of any applicable
taxes in accordance with the terms of the Exchange Circular and the Letter of
Transmittal provided to holders of Old Debentures in connection with the
Exchange Offer.
AFFILIATIONS
------------
3. Affiliates. Furnish a list or diagram of all affiliates of the
----------
applicant and indicate the respective percentages of voting securities or other
bases of control.
<PAGE>
SUBSIDIARIES OF THE DOW CHEMICAL COMPANY
At December 31, 1996
<TABLE>
<CAPTION>
Location of
Incorporation Percent
or Organization* Ownership
<S> <C> <C>
The Dow Chemical Company Delaware
Arabian Chemical Company Limited Saudi Arabia 50
Arabian Chemical Company (Latex) Limited Saudi Arabia 50
DC Partnership Management Inc. Delaware 100
DowBrands L.P. (6) Delaware 1
DCOMCO, Inc. Delaware 100
DCU/LB Trust California 50
Derivados Petroquimicos Soc. De Inversion S.A. Argentina 50
Dexco Polymers Texas 50
Diamond Capital Management Inc. Delaware 100
Diamond Technology Partnership Company (7) Delaware 88
Chemtech Royalty Associates, L.P. (8) Delaware 81
Chemtech Portfolio Inc. Texas 100
Ifco Inc. Delaware 100
Dofinco, Inc. Delaware 100
Dow Quimica Latin America SA Uruguay 100
Dow Austria Ges. mbH Austria 100
Dow Centroamerica S./A. Costa Rica 100
Dow Centroamerica S/A Guatemala 100
Dow Chemical (Australia) Limited Australia 100
Dow Australia Superannuation Fund A Pty Ltd Australia 100
Dow Australia Superannuation Fund B Pty Ltd Australia 100
Dow Chemical Canada Inc. Canada 100
Dow Capital B.V. Netherlands 100
Dow International Financial Services Ireland 100
Dow Capital Public Limited Company Ireland 100
Dow International Service Center, NV Belgium 100
Dow Pipeline Ltd. Canada 100
DowBrands Canada Inc. Canada 100
Fort Saskatchewan Ethylene Storage Canada 50
Limited Partnership
H-D Tech Inc. Canada 50
1069284 Ontario Inc. Canada 100
Dow Chemical (China) Ltd. Delaware 100
Dow Chemical Company Limited United Kingdom 100
Cromarty Petroleum Company Limited United Kingdom 50
Dow Chemical Delaware Corp. Delaware 100
Dow Chemical (Hong Kong) Limited Hong Kong 100
Dow Chemical International Inc. (Panama) Panama 100
Dow Chemical International Ltd. Delaware 100
Dow Chemical Thailand Limited Thailand 100
Petroquimica-Dow S.A. (Petrodow) Chile 70
Dow Chemical Japan Limited (10) Japan 88
Dow Chemical Korea Limited Korea 100
Dow Chemical (NZ) Limited New Zealand 100
Dow Chemical Pacific Limited Hong Kong 100
Ulsan Pacific Chemical Corporation Korea 80
Dow Chemical (Singapore) Private Limited Singapore 100
Dow Chemical Taiwan Ltd. Taiwan 100
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Dow Credit Corporation Delaware 100
Dow Deutschland Inc. Delaware/German 100
Dow Chemical Inter-American Limited Delaware 100
Dow Quimica de Colombia S.A. (5) Colombia 10
Dow Deutschland Anlagengesellschaft GmbH Germany 100
Dow Hungary Chemicals Hungary 100
Limited Liability Company
Dow Portugal Produtos Quimicos S.A. Portugal 100
Dow Turkiye A.S. (3) Turkey 40
DowBrands GmbH Germany 100
Epoxital S.R.L. Italy 50
Safechem Umwelt Service GmbH Germany 51
Dow Engineering Company Delaware 100
Dow Engineering, Inc. Michigan 100
Dow Environmental Inc. Delaware 100
Dow Europe Holding N.V. Netherlands 100
DowBrands Holding GmbH Germany 100
Dow Belgium Belgium 100
Dow Benelux N.V. Netherlands 100
C&P Botlek International BV Netherlands 100
C&P Botlek International CV (4) Netherlands 10
C&P Botlek International CV (4) Netherlands 90
Polyol Belgium N.V. (11) Belgium 1
Rofan Automation and Information Netherlands 100
Systems B.V.
Dow Chemical Iberica S.A. Spain 99
DowBrands Espanola S.A. Spain 100
Transformadora De Estileno S.A. Spain 50
Dow Danmark A/S Denmark 100
Dow France S.A. France 100
DowBrands SA France 100
Dow Italia S.p.A. Italy 100
First Chemical Factoring SpA Italy 100
Dow Mideast Systems (2) Egypt 1
Dow Norge A/S Norway 100
Dow Polska Sp.z.o.o. Poland 100
Dow Southern Africa (Pty) Ltd. South Africa 100
Dow Suomi OY Finland 100
Dow Sverige AB Sweden 100
Polyol International B.V. Netherlands 100
Polyol Belgium N.V. (30) Belgium 99
Dow Europe S.A. Switzerland 100
Chemtech Royalty Associates, L.P. (8) Delaware 1
Dow Export S.A. Switzerland 100
Dow Mideast Systems (2) Egypt 1
Dow Turkiye A.S. (3) Turkey 1
Dow Factoring Company S.A. Switzerland 100
Dow Financial Holdings Inc. Delaware 100
Dow Financial Services Inc. Delaware 100
DowBrands L.P. (6) Delaware 38
Dow Holdings Inc. Delaware 100
Dow Corning Corporation Michigan 50
Dow Hydrocarbons and Resources Inc. Delaware 100
Cayuse Pipeline, Inc. Texas 100
Dow Intrastate Gas Company Louisiana 100
Dow Pipeline Company Texas 100
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Midland Pipeline Corp. Delaware 100
Fort Saskatchewan Ethylene Canada 50
Storage Corporation
Promix L.L.C. Texas 50
Dow Hellas A.E. Greece 100
Dow International B.V. Netherlands 100
Dow Kakoh Kabushiki Kaisha Japan 65
Dow MidEast Systems (2) Egypt 98
Dow Mitsubishi Chemical Ltd Japan 50
Dow Quimica Argentina S.A. (9) Argentina 55
Dow Quimica Chilena S.A. Chile 100
Anticorrosivos Industriales Limitada Chile 50
Dow Quimica de Colombia S.A. (5) Colombia 90
Dow Quimica Mexicana S.A. de C.V. Mexico 100
Dow Environmental de Mexico, S.A. de C.V. Mexico 100
Dow Quimica S.A. Brazil 100
Dow Quimica do Nordeste LTDA Brazil 100
EDN-Estireno Do Nordeste S A Brazil 68
EDN-Distribuidora Do Nordeste Ltda. Brazil 100
EDN-Poliestireno Do Sul Ltda. Brazil 100
Primera-Industria e Comercio Ltda. Brazil 100
Keytil Sociedad Anonima Uruguay 100
Dow Services Singapore Pte Ltd. Singapore 100
Dow Financial Holdings Singapore Pte Ltd. Singapore 100
S.H.A. Holdings Pte Ltd. Singapore 100
G.Z. Holdings Pte Ltd. Singapore 100
Dow Trading S.A. Switzerland 100
Dow Turkiye A.S. (3) Turkey 59
Dow Venezuela, C.A. Venezuela 100
CV Services Ltd. Cayman Islands 100
Dow-United Technologies Composite Products, Inc. Delaware 50
DowBrands Inc. Delaware 100
DowBrands L.P. (6) Delaware 31
El Dorado Terminals Company New Jersey 50
Ensign Equipment Company, Inc. Japan 100
Essex Chemical Corporation New Jersey 100
Pioneer Pharmaceuticals, Inc. New Jersey 100
Essex Specialty Products, Inc. New Jersey 100
Diamond Technology Partnership Company (7) Delaware 12
Essex Specialty Products, Inc., Canada Canada 100
Expandite-Essex Pty. Limited Australia 50
Gurit-Essex A.G. Switzerland 50
Etoxilados del Plata S.A. Argentina 100
FilmTec Corporation Delaware 100
Great Western Pipeline Company, Inc. California 100
HD Polyurethane Company Korea 50
INCA International SpA Italy 80
Joliet Marine Terminal Trust Estate Illinois 50
Latin American Pharmaceuticals, Inc. Delaware 100
Dow Quimica Argentina S.A. (9) Argentina 45
Lepetit International Inc. Panama 100
Liana Limited Delaware 100
Dorinco Insurance (Ireland) Ltd. Ireland 100
Dorinco Reinsurance Company Michigan 100
Dorintal Reinsurance Limited Bermuda 100
Timber Insurance Limited Bermuda 100
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
P.T. Dow Polymers Indonesia Indonesia 80
P.T. Pacific Indomas Plastic Indonesia Indonesia 50
Petroquimica Bahia Blanca S.A.I.C. Argentina 63
Petrochemical Investment Co. Cayman Islands 50
Polisur S.A. Argentina 70
Productos Quimicos Peruanos S/A Peru 100
Raven Group Ltd. Delaware 100
Generon Systems Canada Canada 100
Rofan Services Inc. Delaware 100
Airco Generon Systems LP Delaware 50
DH Compounding Company Delaware 50
DowAgroSciences LLC Indiana 60
DERe Insurance Company Indiana 100
Dintec Agrichemicals Indiana 66
DowAgroSciences LLC Agricultural Products Limited Mauritius 100
DowAgroSciences LLC (Barbados) Limited Barbados 100
DowAgroSciences LLC China Ltd. Delaware 100
DowAgroSciences LLC International Ltd. Delaware 100
DowAgroSciences LLC (Thailand) Ltd. Thailand 100
Mycogen Corporation Indiana 100
DowAgroSciences LLC B.V. Netherlands 60
Dintec Agroquimica Produtos Quimicos Lda Portugal 66
Dow Chemical Japan Limited (10) Japan 12
DowAgroSciences LLC Argentina S.A. Argentina 100
DowAgroSciences LLC Asia Pacific Sdn Bhd Malaysia 100
DowAgroSciences LLC Australia Limited Australia 100
DowAgroSciences LLC Canada Inc. Canada 100
DowAgroSciences LLC Chile S.A. Chile 100
DowAgroSciences LLC Costa Rica S/A Costa Rica 100
DowAgroSciences LLC Danmark A/S Denmark 100
DowAgroSciences LLC de Colombia S.A. Colombia 100
DowAgroSciences LLC Export S.A. France 100
DowAgroSciences LLC GmbH Germany 100
DowAgroSciences LLC Guatemala S/A Guatemala 100
DowAgroSciences LLC Iberica S.A. Spain 100
DowAgroSciences LLC Industrial Ltda. Brazil 100
DowAgroSciences LLC Italia S.r.L. Italy 100
DowAgroSciences LLC Limited United Kingdom 100
DowAgroSciences LLC (Malaysia) Sdn Bhd Malaysia 100
DowAgroSciences LLC Mexicana, S.A. de C.V. Mexico 100
DowAgroSciences LLC (NZ) Limited New Zealand 100
DowAgroSciences LLC Pacific Limited Hong Kong 100
DowAgroSciences LLC Paraguaya S.A. Paraguay 100
DowAgroSciences LLC Pfanzenschutzmittel Vertriebs G.m.b.H. Austria 100
DowAgroSciences LLC S.A. France 100
DowAgroSciences LLC Southern Africa (Pty) Ltd. South Africa 100
DowAgroSciences LLC Sverige AB Sweden 100
DowAgroSciences LLC Taiwan Ltd. Taiwan 100
DowAgroSciences LLC Tarim A.S. Turkey 100
DowAgroSciences LLC Uruguay SA Uruguay 100
DowAgroSciences LLC Venezuela, C.A. Venezuela 100
P.T. Pacific Chemicals Indonesia Indonesia 100
Wenben, Inc. Delaware 100
DuPont Dow Elastomers L.L.C. Delaware 50
Styron Asia Limited Hong Kong 50
Sumitomo Dow Limited Japan 50
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Zhejiang Pacific Chemical Corporation China 50
</TABLE>
(1) This number intentially left blank.
(2) The Dow Chemical Company effective ownership of this company is 100% of
which The Dow Chemical Company owns 98%, Dow Europe Holding N.V. owns 1%
and Dow (Europe) S.A. owns 1%.
(3) The Dow Chemical Company effective ownership of this company is 100% of
which The Dow Chemical Company owns 59%, Dow Deutschland Inc. owns 40% and
Dow (Europe) S.A. owns 1%.
(4) The Dow Chemical Company effective ownership of this company is 100% of
which Dow Benelux N.V. owns 90% and C&P Botlek International BV owns 10%.
(5) The Dow Chemical Company effective ownership of this company is 100% of
which The Dow Chemical Company owns 90% and Dow Chemical Inter-American
Limited owns 10%.
(6) The Dow Chemical Company effective ownership of this company is 68.98% of
which DowBrands Inc. owns 31.02%, Dow Financial Holdings Inc. owns 37.92%
and DC Partnership Management Inc. owns .04%
(7) The Dow Chemical Company effective ownership of this company is 100% of
which The Dow Chemical Company owns 88.4848% and Essex Specialty Products
owns 11.5152%.
(8) The Dow Chemical Company effective ownership of this company is 82.1627% of
which Diamond Technology Partnership Company owns 81.0972%, and Dow
(Europe) S.A. owns 1.0655%.
(9) The Dow Chemical Company effective ownership of this company is 100% of
which The Dow Chemical Company owns 54.75% and Latin American
Pharmaceuticals, Inc. owns 45.25%
(10) The Dow Chemical Company effective ownership of this company is 95% of
which The Dow Chemical Company owns 87.5% and DowElanco B.V. (whose
effective ownership by The Dow Chemical Company is 60%) owns 12.5%.
(11) The Dow Chemical Company effective ownership of this company is 100% of
which Dow Benelux NV owns .5% and Polyol International BV owns 99.5%.
-7-
<PAGE>
MANAGEMENT AND CONTROL
----------------------
4. Directors and Executive Officers. List the names and complete mailing
--------------------------------
addresses of all directors and executive officers of the applicant and all
persons chosen to become directors or executive officers. Indicate all offices
with the applicant held or to be held by each person named.
Directors. Listed below is the name of each director of the Company and
---------
all offices with the Company held by each such person. The mailing address of
each such person is c/o The Dow Chemical Company, 2030 Dow Center, Midland,
Michigan 48674.
Name Position with the Company
---- -------------------------
Arnold A. Allemang Vice President, Operations; Director
Jacqueline K. Barton Director
David T. Buzzelli Senior Consultant; Director
Anthony J. Carbone Executive Vice President; Director
John C. Danforth Director
Willie D. Davis Director
Joseph L. Downey Senior Consultant; Director
Enrique C. Falla Senior Consultant; Director
Barbara Hackman Franklin Director
Allan D. Gilmour Director
Michael D. Parker Executive Vice President; Director
Frank P. Popoff Chairman of the Board; Director
J. Pedro Reinhard Executive Vice President and Chief Financial
Officer; Director
Harold T. Shapiro Director
William S. Stavropoulos President and Chief Executive Officer; Director
Paul G. Stern Director
Executive Officers. Listed below is the name of each executive officer of
------------------
the Company and all offices with the Company held by each such person. The
mailing address of each such person is c/o The Dow Chemical Company, 2030 Dow
Center, Midland, Michigan 48674.
Name Position with the Company
---- -------------------------
Frank P. Popoff Chairman of the Board
William S. Stavropoulos President and Chief Executive Officer
J. Pedro Reinhard Executive Vice President and Chief Financial
Officer
Anthony J. Carbone Executive Vice President
Michael D. Parker Executive Vice President
-8-
<PAGE>
5. Principal owners of voting securities. Furnish the following
-------------------------------------
information as to each person owning 10 percent or more of the voting securities
of the applicant.
As of December 31, 1998
None.
UNDERWRITERS
------------
6. Underwriters. Give the name and complete mailing address of (a) each
------------
person who, within three years prior to the date of filing the application,
acted as an underwriter of any securities of the obligor which were outstanding
on the date of filing the application, and (b) each proposed principal
underwriter of the securities proposed to be offered. As to each person
specified in (a), give the title of each class of securities underwritten.
(a)
<TABLE>
<CAPTION>
Name and Address Date Securities
---------------- ---- ----------
<S> <C> <C>
Merrill Lynch International July 1997 $200,000,000 of 6 5/8% Notes due 2002
As Lead Manager
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
</TABLE>
(b) The New Debentures are offered by the Company exclusively to its
current noteholders in exchange for Old Debentures pursuant to Section 3(a)(9)
under the 1933 Act. Accordingly, the Company has not and will not retain an
underwriter with respect to the issuance of the New Debentures.
CAPITAL SECURITIES
------------------
7. Capitalization. (a) Furnish the following information as to each
--------------
authorized class of securities of the applicant.
As of December 31, 1998/1-/
<TABLE>
<CAPTION>
Amount Amount
Title of Class Authorized Outstanding
- -------------- ---------- -----------
<S> <C> <C>
Common Stock, $2.50 par value 500,000,000 shares 221,340,159
Preferred Stock, $1.00 par value 250,000,000 shares 1,372,846
4.63% Notes due 2000 CHF150,000,000 CHF150,000,000
5.00% Notes due 1999 DEM300,000,000 DEM150,000,000
7.80% Notes due 1999 US$40,000,000 US$40,000,000
9.42% Guaranteed Amortizing ESOP Notes due 2004 US$138,000,000 US$84,300,268
6.38% Notes due 2001 Y25,000,000,000 Y25,000,000,000
5% Notes due 2003 EURO150,000,000 EURO150,000,000
9.04% Notes due 2000 US$10,000,000 US$10,000,000
7.75% Notes due 2000 US$50,000,000 US$50,000,000
6.63% Notes due 2002 US$200,000,000 US$200,000,000
7 3/8% Guaranteed Notes due July 15, 2002 US$150,000,000 US$145,500,000
9.35% Notes due 2002 US$200,000,000 US$193,720,000
7 1/8% Guaranteed Notes due 2003 US$150,000,000 US$147,500,000
9.35% Notes due 2005 US$21,000,000 US$21,000,000
9.20% Notes due 2005 US$10,000,000 US$10,000,000
9.20% Notes due 2005 US$24,340,000 US$24,340,000
8.63% Debentures due 2006 US$200,000,000 US$187,500,000
8.55% Debentures due 2009 US$150,000,000 US$138,525,000
8.90% Notes due 2010 US$20,000,000 US$16,400,000
8.50% Notes due 2010 US$50,000,000 US$50,000,000
9% Guaranteed Debentures due 2010 US$150,000,000 US$90,950,000
9.20% Guaranteed Debentures due 2010 US$200,000,000 US$181,400,000
6.85% Debentures due 2013 US$150,000,000 US$137,750,000
8.85% Debentures due 2021 US$200,000,000 US$183,976,000
9% Debentures due 2021 US$250,000,000 US$218,640,000
8.64% Notes due 2022 US$150,000,000 US$120,750,000
8.70% Guaranteed Sinking Fund Debentures due 2022 US$150,000,000 US$94,750,000
7.38% Debentures due 2023 US$150,000,000 US$150,000,000
</TABLE>
(b) All shares of common stock are identical and have one vote.
- -------------------------
/1/
/1/ In addition, the Company grants stock options, stock appreciation rights and
- restricted stock awards under employee benefit plans of the Company and its
subsidiaries.
-9-
<PAGE>
(b) All shares of common stock are identical and have one vote.
INDENTURE SECURITIES
--------------------
8. Analysis of indenture provisions. Insert at this point the analysis
--------------------------------
of indenture provisions required under Section 305(a)(2) of the Act.
The New Debentures will be issued under the Indenture dated as of January
15, 1990, between the Company and The Chase Manhattan Bank, as Trustee. The
following summaries of certain provisions of the New Debentures and the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Indenture, including
the definition therein of certain terms. Certain defined terms in the Indenture
are capitalized herein. Section numbers below refer to provisions of the
Indenture.
(a) Default under the Indenture.
---------------------------
An Event of Default with respect to the New Debentures is defined in the
Indenture as being: (a) default by the Company for 30 days in the payment of any
installment of interest on the New Debentures; (b) default by the Company in the
payment of any principal on the New Debentures; (c) default by the Company in
the performance of any of the covenants or warranties in the Indenture contained
therein for the benefit of the New Debentures which shall not have been remedied
within a period of 90 days after receipt of written notice by the Company from
the Trustee or by the Company and the Trustee for the Holders of not less than
25% in principal amount of the New Debentures then outstanding; or (d) certain
events of bankruptcy, insolvency or reorganization of the Company. No Event of
Default described in (a), (b) or (c) above with respect to a particular series
of Debt Securities issued under the Indenture necessarily constitutes an Event
of Default with respect to any other series of Debt Securities issued under the
Indenture.
The Indenture provides that if an Event of Default under clause (a), (b) or
(c) above (but only if the Event of Default under clause (c) is with respect to
less than all series of Debt Securities then outstanding) shall have occurred
and be continuing, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of the then outstanding New Debentures may declare
the principal of all the New Debentures, together with accrued interest thereon,
to be due and payable immediately. If an Event of Default under clause (c) (if
the Event of Default under clause (c) is with respect to all of the series of
Debt Securities then outstanding) above shall have occurred and be continuing,
either the Trustee or the Holders of not less than 25% in the aggregate
principal amount of all the Debt Securities then outstanding (treated as one
class), may declare the principal of all the Debt Securities then outstanding,
together with accrued interest, to be due and payable immediately. Upon certain
conditions thereon, such declaration (including a declaration caused by a
default in the payment of principal or interest, the payment for which has
subsequently been provided) may be annulled by the Holders of a majority in
principal amount of the New Debentures then outstanding or all Debt Securities
treated as one class, as the case may be, as were entitled to declare such
default. In addition, past defaults may be waived by the Holders of a majority
in principal amount of the New Debentures or all Debt Securities treated as one
class, as the case may be, as were entitled to declare such default, except a
default in the payment of the principal of or interest on the New Debentures or
in respect of a covenant or provision of the Indenture which cannot be modified
or amended without the approval of the Holder of each New Debenture so affected.
The Trustee is required to transmit to Securityholders notice in the manner
and to the extent provided in the Indenture, of all defaults which have occurred
with respect to the New Debentures, such notice to be transmitted within 90 days
after the occurrence thereof, unless such defaults shall have been cured before
the giving of such notice (the term "default" or "defaults" for the purposes of
this Section being hereby defined to mean any event or condition which is, or
with notice or lapse of time or both would become, an Event of Default);
provided that, except in the case of default in the payment of the principal of
or interest on any of the New Debentures, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors or trustees or responsible officers
of the Trustee in good faith determines that the withholding of such notice is
in the interests of the Securityholders.
(b) Authentication and Delivery
---------------------------
-10-
<PAGE>
The Trustee will authenticate and deliver the aggregate principal amount of
New Debentures calculated as provided in the Exchange Circular upon delivery to
the Trustee by the Company of the orders, certificates and opinions described in
the Indenture. Only New Debentures authenticated by the Trustee will be
entitled to the benefits of the Indenture or be valid or obligatory for any
purpose. The Trustee's certificate of authentication shall be conclusive
evidence of due authentication and delivery.
The Company will not receive any proceeds from the issuance and
authentication of the New Debentures.
(c) Release or Substitution of Property.
-----------------------------------
Not Applicable. The Indenture securities are unsecured obligations of the
Company.
(d) Satisfaction and Discharge
--------------------------
The Indenture (except for certain specified surviving obligations
including, among other things, the Company's obligation to pay the principal of
and interest on the New Debentures) will be discharged and canceled upon the
satisfaction of certain conditions, including the payment of all the New
Debentures or the deposit with the Trustee of cash or U.S. Government
Obligations or a combination thereof sufficient for such payment or redemption
in accordance with the Indenture and the terms of the New Debentures.
(e) Evidence of Compliance
----------------------
The Company is required to deliver to the Trustee on or before July 1 in
each year an officer's certificate, stating that in the course of the
performance of their duties as officers of the Company they would normally have
knowledge of any default by the Company in the performance or fulfillment of any
covenant, agreement or condition contained in the Indenture, stating whether or
not they have knowledge of any such default and, if so, specifying each such
default of which the signers have knowledge and the nature thereof.
9. Other obligors. Give the name and complete mailing address of any
--------------
person, other than the applicant, who is an obligor upon the indenture
securities.
NONE
Contents of application for qualification. This application for
-----------------------------------------
qualification comprises:
(a) Pages numbered 1 to 13, consecutively.
(b) The statement of eligibility and qualification on Form T-1 of The
Chase Manhattan Bank, as Trustee under the Indenture to be qualified
with respect to the New Debentures.
(c) The following exhibits in addition to those filed as a part of the
statement of eligibility and qualification of each trustee:
Exhibit T3A. A copy of the Restated Certificate of Incorporation of the
Company, as amended to date (Incorporated by reference to
Exhibit 3(a) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992)
Exhibit T3B. A copy of the Bylaws of the Company as currently in effect
(Incorporated by reference to Exhibit 3(ii) to the Company's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1998)
Exhibit T3C. Indenture, dated as of December 15, 1989, between the Company
and The Chase Manhattan Bank (Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form
S-3 (No. 33-32714))
Exhibit T3D. Not applicable.
-11-
<PAGE>
Exhibit T3E. Exchange Circular dated January 5, 1999 and the related
Letter of Transmittal.
Exhibit T3F. See the Cross-Reference Table contained in the Indenture
attached as Exhibit T3C.
-12-
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, The Dow Chemical Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Form T-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the City of Midland, State of Michigan, on the 5th
day of January, 1999.
[SEAL] THE DOW CHEMICAL COMPANY
By: /s/ J. P. Reinhard
---------------------------------------
Title: Executive Vice President and
Chief Financial Officer
ATTEST:
By: /s/ J. G. Scriven
--------------------
Title: Vice President, General
Counsel and Secretary
-13-
<PAGE>
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
____________________________________________
THE DOW CHEMICAL COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 38-1285128
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2030 DOW CENTER
MIDLAND, MICHIGAN 48674
(Address of principal executive offices) (Zip Code)
____________________________________________
DEBENTURES DUE JANUARY 15, 2009
(Title of the indenture securities)
___________________________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 4TH DAY of JANUARY, 1999.
THE CHASE MANHATTAN BANK
BY /s/ JOANNE ADAMIS
-------------------------------------------
JOANNE ADAMIS
SECOND VICE PRESIDENT
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 4TH day of JANUARY, 1999.
THE CHASE MANHATTAN BANK
BY /s/ JOANNE ADAMIS
------------------------------
/s/ JOANNE ADAMIS
SECOND VICE PRESIDENT
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin................................ $ 12,546
Interest-bearing balances........................ 6,610
Securities:........................................
Held to maturity securities........................ 2,014
Available for sale securities...................... 46,342
Federal funds sold and securities purchased under
agreements to resell............................. 27,489
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,281
Less: Allowance for loan and lease losses 2,796
Less: Allocated transfer risk reserve............ 0
--------
Loans and leases, net of unearned income,
allowance, and reserve........................... 126,485
Trading Assets..................................... 58,015
Premises and fixed assets (including capitalized
leases).......................................... 3,001
Other real estate owned............................ 260
Investments in unconsolidated subsidiaries and
associated companies............................. 255
Customers' liability to this bank on acceptances
outstanding...................................... 1,245
Intangible assets.................................. 1,492
Other assets....................................... 16,408
--------
TOTAL ASSETS....................................... $302,162
========
</TABLE>
-4-
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Deposits
In domestic offices..................................................... $ 99,347
Noninterest-bearing ..................................... $41,566
Interest-bearing ........................................ 57,781
In foreign offices, Edge and Agreement,
subsidiaries and IBF's.................................................. 80,602
Noninterest-bearing ....................................... $ 4,109
Interest-bearing ........................................ 76,493
Federal funds purchased and securities sold under agree-
ments to repurchase....................................................... 37,760
Demand notes issued to the U.S. Treasury.................................. 1,000
Trading liabilities....................................................... 42,941
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less........................... 4,162
With a remaining maturity of more than one year.
through three years................................................ 213
With a remaining maturity of more than three years...................... 106
Bank's liability on acceptances executed and outstanding 1,245
Subordinated notes and debentures......................................... 5,408
Other liabilities......................................................... 11,796
TOTAL LIABILITIES......................................................... 284,580
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock.............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)................. 10,441
Undivided profits and capital reserves.................................... 5,916
Net unrealized holding gains (losses)
on available-for-sale securities.......................................... (2)
Cumulative foreign currency translation adjustments....................... 16
TOTAL EQUITY CAPITAL...................................................... 17,582
--------
TOTAL LIABILITIES AND EQUITY CAPITAL...................................... $302,162
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
EXCHANGE CIRCULAR
[LOGO OF DOW CHEMICAL COMPANY]
THE DOW CHEMICAL COMPANY
OFFER TO EXCHANGE
DEBENTURES DUE JANUARY 15, 2009
FOR ANY AND ALL OF ITS OUTSTANDING
$218,640,000 $183,976,000
9% DEBENTURES DUE APRIL 1, 2021 8.85% DEBENTURES DUE SEPTEMBER 15,
(CUSIP NO. 260543 BA 0) 2021
(CUSIP NO. 260543 BC 6)
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, FEBRUARY 2, 1999 UNLESS EXTENDED (THE "EXPIRATION
DATE").
The Dow Chemical Company (the "Company"), a Delaware corporation, hereby
offers, upon the terms and subject to the conditions set forth in this
Exchange Circular (the "Exchange Circular") and the accompanying Letter of
Transmittal (the "Letter of Transmittal," which, together with this Exchange
Circular, constitute the "Exchange Offer"), to exchange its Debentures due
January 15, 2009 (the "New Debentures") in an aggregate principal amount to be
determined in the manner set forth herein, for any and all of its $218,640,000
aggregate principal amount of outstanding 9% Debentures due April 1, 2021 (the
"9% Debentures") and for any and all of its $183,976,000 aggregate principal
amount of outstanding 8.85% Debentures due September 15, 2021 (the "8.85%
Debentures" and, together with the 9% Debentures, the "Old Debentures") from
the registered holders thereof. Registered holders of Old Debentures or New
Debentures are referred to herein individually as a "Holder" and collectively
as the "Holders." The terms of the New Debentures are discussed in "Exchange
Circular Summary Comparison of Old Debentures and New Debentures" and
"Description of New Debentures." The Old Debentures were, and the New
Debentures will be, issued pursuant to, and are entitled to the benefits of,
an Indenture (the "Indenture"), dated as of January 15, 1990, as supplemented
by the Supplemental Indenture to be dated the Expiration Date, between the
Company and The Chase Manhattan Bank, as trustee (the "Trustee").
The Company will accept for exchange any and all Old Debentures validly
tendered and not withdrawn prior to the Expiration Date. Old Debentures may be
tendered only in multiples of $1,000 of principal amount. See "The Exchange
Offer--Procedures for Tendering Old Debentures." The Exchange Offer is subject
to certain customary conditions. See "The Exchange Offer--Conditions to the
Exchange Offer." Holders that tender and do not withdraw their Old Debentures
will receive upon acceptance of the Old Debentures by the Company, in addition
to the New Debentures and accrued interest on the Old Debentures accepted for
exchange, a participation fee equal to 1.5% of the principal amount tendered
(the "Participation Fee"). Holders that do not tender Old Debentures are not
eligible to receive the Participation Fee.
The New Debentures will constitute, and the Old Debentures constitute,
general unsecured obligations of the Company, and the Old Debentures rank, and
the New Debentures will rank, pari passu with all existing and future
unsecured and unsubordinated senior indebtedness of the Company.
Based on an interpretation by the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission"), the
Company believes that the New Debentures issued pursuant to the Exchange
Offer, like the Old Debentures, may be offered for resale, resold, and
otherwise transferred by any Holder thereof without compliance with the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act").
The New Debentures will bear interest at a rate that will be different from
the interest rate on the Old Debentures, as described herein. For the New
Debentures, the per annum interest rate (the "New Debenture Coupon") will be
equal to the sum of: (i) the yield to maturity on the 4 3/4% U.S. Treasury
Note Due November 15, 2008 (the "New Debenture Benchmark Treasury Yield");
plus (ii) 130 basis points (the "New Debenture Coupon Spread").
Each Holder exchanging Old Debentures for New Debentures pursuant hereto
will receive, in exchange for each $1,000 in aggregate principal amount of Old
Debentures exchanged, New Debentures in a principal amount (rounded to the
nearest cent) equal to: (i) the principal amount tendered times (ii) the Old
Debenture Exchange Price (as defined herein) divided by (iii) $1,000. New
Debentures will only be issued in denominations of $1,000 or integral
multiples thereof, any fractional portion of New Debentures will be paid in
cash on the Exchange Date to all holders exchanging Old Debentures. All
(cover continued on next page)
SEE "RISK FACTORS" ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN EVALUATING THE EXCHANGE OFFER.
THE OFFER OF THE SECURITIES CONTEMPLATED IN THE EXCHANGE OFFER IS MADE
PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF
THE SECURITIES ACT OF 1933, AS AMENDED, PROVIDED BY SECTION 3(A)(9) THEREOF
AND, ACCORDINGLY, THE OFFER OF SUCH SECURITIES HAS NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS EXCHANGE CIRCULAR. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Exchange Circular is January 5, 1999.
<PAGE>
(Continued from cover page)
calculations, including calculations of the 9% Debenture Exchange Price (as
defined herein) and the 8.85% Debenture Exchange Price (as defined herein),
will be made in accordance with standard market practice and in a manner
consistent with the methodology set forth in Schedule A attached hereto, and
consistent with the hypothetical calculations set forth in Schedules B through
D attached hereto. See "The Exchange Offer--Calculations and Payment."
The "9% Debenture Exchange Price" will be a price per $1,000 principal
amount of the 9% Debentures (calculated as described herein and rounded to the
nearest cent) intended to result in a yield to maturity on the Exchange Date
equal to the sum of: (i) the yield to maturity on the 5 1/4% U.S. Treasury
Note Due November 15, 2028 (the "Old Debenture Benchmark Treasury Yield"); and
(ii) 140 basis points (the "9% Exchange Spread").
The "8.85% Debenture Exchange Price" will be a price per $1,000 principal
amount of the 8.85% Debentures (calculated as described herein and rounded to
the nearest cent) intended to result in a yield to maturity on the Exchange
Date equal to the sum of: (i) the Old Debenture Benchmark Treasury Yield; and
(ii) 140 basis points (the "8.85% Exchange Spread").
The 9% Debenture Exchange Price and the 8.85% Debenture Exchange Price are
referred to collectively herein as the "Old Debenture Exchange Prices" and
individually as an "Old Debenture Exchange Price." The Old Debenture Benchmark
Treasury Yield and the New Debenture Benchmark Treasury Yield are referred to
as the "Benchmark Treasury Yields."
The Benchmark Treasury Yields will be calculated by the Financial Advisor in
accordance with standard market practice, based upon the bid side yield for
the 4 3/4% U.S. Treasury Note Due November 15, 2008 (the "New Debenture
Benchmark Treasury") and the 5 1/4% U.S. Treasury Note Due November 15, 2028
(the "Old Debenture Benchmark Treasury" and together with the New Debenture
Benchmark Treasury, the "Benchmark Treasuries") as of 2:00 p.m., New York City
time, on the second business day prior to the Expiration Date as displayed on
the Bloomberg Government Pricing Monitor, Page PX7 for the New Debenture
Benchmark Treasury Yield and Page PX8 for the Old Debenture Benchmark Treasury
Yield (or any recognized quotation source selected by the Financial Advisor in
its discretion if the Bloomberg Pricing Monitor is not available or is
manifestly erroneous).
The New Debenture Coupon, the Benchmark Treasury Yields, and the Old
Debenture Exchange Prices, will be determined as of 2:00 p.m., New York City
time, on Friday, January 29, 1999, unless the Exchange Offer is extended by
more than three business days, in which case they may be determined at such
time on the second business day prior to the Expiration Date (the "Price
Determination Date").
Holders of Old Debentures accepted for exchange will receive, on the
Exchange Date, the amount of interest accrued on the Old Debentures to, but
not including, the Exchange Date. Interest on the New Debentures will accrue
from, and including, the Exchange Date. The first interest payment date on the
New Debentures will be July 15, 1999. The Exchange Date will be the third
business day following the Expiration Date.
Any Old Debentures not tendered and not accepted for exchange will remain
outstanding.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Debentures to be received in the Exchange Offer
and, to the best of the Company's information and belief, each person
participating in the Exchange Offer is acquiring the New Debentures in the
ordinary course of business and has no arrangement or understanding with any
person to participate in the distribution of the New Debentures.
The Company has made no arrangements for, and has no understanding with any
dealer, salesman, or other person regarding, the solicitation of tenders
hereunder, and no person has been authorized by the Company to give any
information or to make any representations in connection with, the Exchange
Offer other than those contained or incorporated by reference in this Exchange
Circular and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Company. Neither the
delivery of this Exchange Circular nor the exchange of New Debentures for Old
Debentures shall, under any circumstances, create any implication that the
information contained herein is true, accurate, or complete as of any time
subsequent to the date hereof.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay all reasonable and customary expenses associated
with the Exchange Offer (other than any fees, commissions or concessions of
any brokers, dealers or Custodians (as defined herein)).
The Exchange Agent (as defined herein) and The Depository Trust Company
("DTC") have confirmed that the Exchange Offer is eligible for the DTC
Automated Tender Offer Program ("ATOP"). Accordingly, DTC participants may
electronically transmit their acceptance of the Exchange Offer by causing DTC
to transfer Old Debentures to the Exchange Agent in accordance with the DTC's
ATOP procedures for such a transfer. DTC will then send an Agent's Message (as
defined herein) to the Exchange Agent.
---------------
NONE OF THE COMPANY, THE BOARD OF DIRECTORS OF THE COMPANY, EXECUTIVE
OFFICERS OF THE COMPANY, THE FINANCIAL ADVISOR, THE INFORMATION AGENT OR THE
EXCHANGE AGENT MAKES ANY RECOMMENDATION TO HOLDERS OF OLD DEBENTURES AS TO
WHETHER TO EXCHANGE OR REFRAIN FROM EXCHANGING THEIR OLD DEBENTURES. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF OLD DEBENTURES MUST MAKE THEIR OWN DECISION WHETHER TO EXCHANGE OLD
DEBENTURES PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE PRINCIPAL
AMOUNT OF OLD DEBENTURES TO EXCHANGE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT TENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD DEBENTURES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements, and other information
with the Commission. Such reports, proxy statements, and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at its Regional Offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. 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. The Commission also maintains a site on the World Wide Web
at http://www.sec.gov that contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
Commission. Such reports, proxy statements and other information can also be
inspected at the offices of the New York Stock Exchange, Inc. (the "NYSE"),
the Pacific Exchange and the Philadelphia Stock Exchange, Inc.
The Company has instructed the Financial Advisor, the Exchange Agent, and
the Information Agent not to solicit exchanges in connection with the Exchange
Offer or to make any recommendation with respect to acceptance or rejection of
the Exchange Offer. Solicitations will be made solely by employees of the
Company. The Financial Advisor, the Exchange Agent and the Information Agent
will answer any questions from Holders of the Old Debentures with respect to
the Exchange Offer solely by reference to the terms of this Exchange Circular,
and Holders may contact the Financial Advisor, the Exchange Agent and the
Information Agent at the addresses and telephone numbers listed below. Holders
of the Old Debentures who have any questions regarding the mechanics of the
Exchange Offer should contact either the Exchange Agent or the Information
Agent. In addition, all questions with respect to the Exchange Offer may be
directed to the Company (Attn: Stefan Koch, Finance Manager, telephone number
(517) 636-2765).
FINANCIAL ADVISOR: INFORMATION AGENT:
MERRILL LYNCH & CO. GEORGESON & COMPANY INC.
World Financial Center North Tower Wall Street Plaza, 30th Floor
New York, NY 10281-1307 New York, NY 10005
(888) 654-8637 (toll free) (800) 223-2064 (toll free)
(212) 449-4914 (call collect) (212) 440-9800 (collect)
Attn: David Parsons Attn: Keith Haynes
EXCHANGE AGENT:
THE CHASE MANHATTAN BANK
By Hand: By Registered Mail: By Overnight Delivery:
Corporate Trust The Chase Manhattan Bank The Chase Manhattan Bank
Securities Window Money Market Operations Money Market Operations
55 Water Street 55 Water Street 55 Water Street
Room 234 Room 234 Room 234
North Building North Building North Building
New York, NY 10041 New York, NY 10041 New York, NY 10041
Attn: Carlos Esteves Attn: Joseph Buthorn Attn: Joseph Buthorn
By Facsimile:
(212) 638-7380 or (212) 638-7381
Confirm by Telephone:
(212) 638-0828
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
Section 13 of the Exchange Act are incorporated herein by reference: (1) the
Company's Annual Report on Form 10-K for the year ended December 31, 1997; and
(2) the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act subsequent to the date of this Exchange Circular and
prior to the Expiration Date are deemed to be incorporated by reference herein
and shall be a part hereof from their respective filing dates. Information
contained in this Exchange Circular modifies or supersedes similar information
contained in the document incorporated by reference above. Further,
information contained in any subsequently filed document, which is deemed to
be incorporated by reference in this Exchange Circular, will modify and
supersede similar information contained in this Exchange Circular or the
document incorporated by reference above.
The Company will provide, without charge, to each person to whom a copy of
this Exchange Circular is delivered, upon written or oral request, a copy of
any and all of the documents incorporated by reference in this Exchange
Circular, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into the documents that this Exchange
Circular incorporates. Requests for copies of such documents, should be
directed to Stefan Koch, The Dow Chemical Company, 2030 Dow Center, Midland,
Michigan 48674, telephone number (517) 636-2765.
2
<PAGE>
EXCHANGE CIRCULAR SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere, or incorporated by reference, in this Exchange
Circular. See "Risk Factors" for a discussion of certain factors that should be
considered in connection with the Exchange Offer and the New Debentures offered
hereby.
THE COMPANY
The Dow Chemical Company is engaged in the manufacture and sale of chemicals,
plastic materials, agricultural products and other specialized products and
services.
The Company was incorporated in 1947 under Delaware law and is the successor
to a Michigan corporation organized in 1897. Its principal executive offices
are located at 2030 Dow Center, Midland, Michigan 48674, telephone number (517)
636-1000.
THE EXCHANGE OFFER
Old Debentures:............... 9% Debentures due April 1, 2021 (CUSIP No.
260543 BA 0) with an aggregate principal amount
outstanding of $218,640,000.
8.85% Debentures due September 15, 2021 (CUSIP
No. 260543 BC 6) with an aggregate principal
amount outstanding of $183,976,000.
Exchange Price:............... The 9% Debenture Exchange Price will be equal
to the price per $1,000 principal amount of the
9% Debentures (as calculated herein and rounded
to the nearest cent) intended to result in a
yield to maturity on the Exchange Date equal to
the sum of: (i) the Old Debenture Benchmark
Treasury Yield; and (ii) the 9% Exchange
Spread.
The 8.85% Debenture Exchange Price will be
equal to the price per $1,000 principal amount
of the 8.85% Debentures (as calculated herein
and rounded to the nearest cent) intended to
result in a yield to maturity on the Exchange
Date equal to the sum of: (i) the Old Debenture
Benchmark Treasury Yield; and (ii) the 8.85%
Exchange Spread.
9% Exchange Spread:........... 140 basis points
8.85% Exchange Spread:........ 140 basis points
Old Debenture Benchmark
Treasury Yield:............... The yield to maturity on the 5 1/4% U.S.
Treasury Note Due November 15, 2028, based upon
the bid side yield as of 2:00 p.m., New York
City time, on the Price Determination Date as
displayed on the Bloomberg Government Pricing
Monitor, Page PX8 (or any recognized quotation
source selected by the Financial Advisor if the
Bloomberg Pricing Monitor is not available or
is manifestly erroneous).
3
<PAGE>
Exchange Ratio:............... Each holder exchanging Old Debentures for New
Debentures will receive a principal amount of
New Debentures equal to: (i) the principal
amount tendered times (ii) the Old Debenture
Exchange Price divided by (iii) $1,000. New
Debentures will only be issued in denominations
of $1,000 or integral multiples thereof and any
fractional portions of New Debentures will be
paid in cash on the Exchange Date to all
holders exchanging Old Debentures.
New Debenture Coupon:......... The New Debentures will have a coupon equal to
the sum of: (i) the New Debenture Benchmark
Treasury Yield; plus (ii) the New Debenture
Coupon Spread.
New Debenture Coupon
Spread:....................... 130 basis points
New Debenture Benchmark
Treasury Yield:............... The yield to maturity on the 4 3/4% U.S.
Treasury Note Due November 15, 2008, based upon
the bid side yield as of 2:00 p.m., New York
City time, on the Price Determination Date as
displayed on the Bloomberg Government Pricing
Monitor, Page PX7 (or any recognized quotation
source selected by the Financial Advisor if the
Bloomberg Pricing Monitor is not available or
is manifestly erroneous).
Accrued Interest:............. Holders of Old Debentures accepted for exchange
will receive, on the Exchange Date, the amount
of interest accrued on the Old Debentures to,
but not including, the Exchange Date. Interest
on the New Debentures will accrue from, and
including, the Exchange Date.
Participation Fee:............ Holders that tender their Old Debentures will
receive upon acceptance of the Old Debentures
by the Company a Participation Fee equal to
1.5% of the principal amount exchanged.
Price Determination Date:..... 2:00 p.m., New York City time, on Friday,
January 29, 1999, unless the Exchange Offer is
extended, in which case such date may be
determined on the second business day prior to
the Expiration Date.
Expiration Date:.............. 12:00 midnight, New York City time, on Tuesday,
February 2, 1999 unless the Company extends the
Exchange Offer in accordance with procedures
described herein. See "The Exchange Offer--
Expiration Date; Extensions; Terminations;
Amendments."
Extensions:................... If the Exchange Offer is extended, then a new
Price Determination Date may be established.
Conditions to the Exchange
Offer:........................ The Exchange Offer is conditioned upon certain
customary conditions, as described herein. The
Company may waive any condition with respect to
the Exchange Offer and accept for exchange any
Old Debentures tendered.
Certain U.S. Federal Income
Tax Consequences:............. According to the Company's special tax counsel,
the exchange of Old Debentures pursuant to the
Exchange Offer will constitute a
recapitalization for U.S. Federal income tax
purposes. Holders of
4
<PAGE>
Old Debentures that tender pursuant to the
Exchange Offer generally will not recognize
loss on the exchange but will recognize
realized gain, if any, to the extent of the sum
of: (i) the Participation Fee received; (ii)
the amount of cash received in lieu of a
fractional New Debenture; and (iii) the fair
market value of any excess of the principal
amount of the New Debentures received over the
principal amount of the Old Debentures
surrendered. See "Certain U.S. Federal Income
Tax Consequences."
Certain Consequences of the
Exchange Offer:............... Each Holder should consider carefully all the
information contained in this Exchange
Circular, in particular the information under
the captions "Description of New Debentures"
and "Risk Factors," in deciding whether to
participate in the Exchange Offer.
Exchange of Old Debentures:... Old Debentures may be tendered for exchange
only in multiples of $1,000 of principal
amount. To tender Old Debentures, Holders must
deliver their Old Debentures together with a
properly completed and duly executed Letter of
Transmittal to the Exchange Agent or follow the
book-entry transfer procedures. If Old
Debentures are held by a broker, dealer,
commercial bank, trust company, or other
nominee (individually, a "Custodian" and
collectively, the "Custodians"), the beneficial
owner thereof must instruct such Custodian to
tender such Old Debentures on its behalf. The
DTC Participants (as defined herein) may
electronically transmit their acceptance of the
Exchange Offer by causing DTC to transfer Old
Debentures in accordance with DTC's ATOP
procedures. All tenders must be made on or
prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering Old
Debentures."
NEW DEBENTURES WILL BE DELIVERED ONLY IN BOOK-
ENTRY FORM THROUGH DTC. Accordingly, Holders
who anticipate tendering and whose Old
Debentures are not held through DTC are urged
to contact promptly a Custodian that has the
capability to hold securities through DTC, to
arrange for receipt of any New Debentures to be
delivered pursuant to the Exchange Offer and to
obtain the information necessary to provide the
required DTC Participant and account
information in the Letter of Transmittal. See
"The Exchange Offer--Proper Execution and
Delivery of Letter of Transmittal."
Guaranteed Delivery:.......... Holders who wish to tender their Old Debentures
and who cannot deliver their Old Debentures or
the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date, or cannot
complete the procedures for book-entry transfer
on a timely basis, must tender their Old
Debentures according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
5
<PAGE>
Acceptance of Old The Company will exchange any and all Old
Debentures:................... Debentures properly tendered and not withdrawn
prior to the Expiration Date if all the
conditions of the Exchange Offer have been
satisfied or waived and notice of acceptance
has been given to the Exchange Agent.
Delivery of New Debentures:... New Debentures will be delivered only in book-
entry form through DTC. On the Exchange Date,
New Debentures will be delivered, along with
payment of: (i) any fractional portion of New
Debentures in cash; (ii) the Participation Fee;
and (iii) any accrued interest on the Old
Debentures.
Exchange Date:................ The third business day following the Expiration
Date.
Withdrawal Rights:............ Tenders of Old Debentures may be withdrawn at
any time prior to the Expiration Date and such
withdrawal will constitute a rejection of the
Exchange Offer. See "The Exchange Offer--
Withdrawal Rights."
Additional Information:....... The Company will publicly announce by press
release to the Dow Jones News Service, no later
than 9:00 a.m. the business day following the
Price Determination Date, the New Debenture
Coupon, the Benchmark Treasury Yields, and the
Old Debenture Exchange Prices.
Holders of the Old Debentures can obtain
information regarding the Benchmark Treasury
Yields, the Old Debenture Exchange Prices, the
New Debenture Coupon and other information
regarding the terms of the Exchange Offer from
the Financial Advisor at (888) 654-8637 (toll-
free) or (212) 449-4914 (call collect),
attention David Parsons.
In addition, the Company intends to publish
information about the Exchange Offer, including
the information described in the preceding
paragraph when available, on MCM "Corporate-
Watch" Service on Telerate page 64170 and
Bloomberg page MCM 7895.
Exchange Agent:............... The Chase Manhattan Bank.
Information Agent:............ Georgeson & Company Inc.
THE NEW DEBENTURES
Issuer:....................... The Dow Chemical Company.
Indenture:.................... The New Debentures will be issued under the
Indenture, dated as of January 15, 1990, as
supplemented by the Supplemental Indenture, to
be dated the Expiration Date, between the
Company and The Chase Manhattan Bank, as
Trustee.
Maturity:..................... January 15, 2009.
Interest:..................... Interest will be paid each January 15 and July
15. The first interest payment on the New
Debentures will be made on July 15, 1999 and
will consist of interest accrued on the New
Debentures during the period from, and
including, the Exchange Date to, and excluding,
July 15, 1999.
6
<PAGE>
Rating:....................... As of the date hereof, the Company's senior
debt securities, including the Old Debentures,
are rated A1 by Moody's Investors Service, Inc.
("Moody's") and A by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies
("S&P"). The Company expects that the New
Debentures will receive ratings equivalent to
those assigned from time to time to the Old
Debentures. A security rating is not a
recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at
any time by the assigning rating agency.
Ranking:...................... The New Debentures will be unsecured
obligations of the Company, will rank pari
passu with all existing and future unsecured
and unsubordinated indebtedness of the Company,
and will have an equal claim in bankruptcy to
that of the Old Debentures. See "Description of
New Debentures--Events of Default."
Form:......................... The New Debentures will be available only in
book-entry form through DTC. See "Description
of the New Debentures--Book-Entry, Delivery and
Form."
Listing:...................... None.
7
<PAGE>
COMPARISON OF OLD DEBENTURES AND NEW DEBENTURES
The following is a brief comparison of the principal features of the Old
Debentures and the New Debentures. The following descriptions are brief
summaries, do not purport to be complete and are qualified in their entirety by
reference, with respect to the Old Debentures, to the Old Debentures and the
Indenture and, with respect to the New Debentures, to the New Debentures and
the Indenture. For further information regarding the New Debentures and for
definitions of capitalized terms used with respect to the New Debentures but
not otherwise defined herein, see "Description of New Debentures."
<TABLE>
<CAPTION>
8.85% DEBENTURES 9% DEBENTURES NEW DEBENTURES
---------------- ------------- --------------
<C> <S> <C> <C>
Obligor:..................... The Dow Chemical Same. Same.
Company.
Trustee:..................... The Chase Manhattan Same. Same.
Bank.
Aggregate Principal Amount:.. $183,976,000 $218,640,000 outstanding. To Be Determined.
outstanding.
Maturity:.................... September 15, 2021. April 1, 2021. January 15, 2009.
Interest Rate:............... 8.85% per annum. 9% per annum. 130 basis points over the New
Debenture Benchmark
Treasury Yield on the Price
Determination Date.
Interest Payment Dates:...... March 15 and September April 1 and October 1 annually. January 15 and July 15 annually.
15 annually.
Rating:...................... As of the date hereof, As of the date hereof, the 9% The Company expects that the
the 8.85% Debentures are Debentures are rated A1 by New Debentures will receive
rated A1 by Moody's and Moody's and A by S&P. ratings equivalent to those
A by S&P. assigned from time to time to
the Old Debentures.
Ranking:..................... The 8.85% Debentures are Same. Same.
unsecured obligations of
the Company, and rank
pari passu with all
existing and future
unsecured and
unsubordinated
indebtedness of the
Company.
Optional Redemption:......... The 8.85% Debentures are Same. Same.
not redeemable prior to
their maturity.
Certain Covenants............ The Indenture restricts, Same. Same.
among other things, the
ability of the Company
to: (i) create or permit
liens on property in
certain situations; and
(ii) engage in sale and
lease-back transactions
under certain
circumstances.
Compliance with such
covenants may be waived
by the Holders of at
least a majority of the
outstanding principal
amount of the Old
Debentures. The Holders
of a majority of the
outstanding principal
amount of the Old
Debentures may waive
compliance by the
Company with certain
restrictive provisions
of the Indenture by
means of supplemental
indentures.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
8.85% DEBENTURES 9% DEBENTURES NEW DEBENTURES
---------------- ------------- --------------
<C> <S> <C> <C>
Consolidations, The Company may not Same. Same.
Mergers and Asset consolidate, merge, or
Sales:............. sell substantially all
its assets as an
entirety, unless: (i)
the successor
corporation assumes the
Company's obligations on
the 8.85% Debentures and
the Indenture; and (ii)
after giving effect
thereto, no Event of
Default (as defined in
the Indenture) has
occurred and is
continuing.
Events of Default:.. Failure to pay interest Same. Same.
for 30 days; failure to
pay principal when due;
failure to perform, or
breach of, any other
covenant or warranty of
the Indenture continued
for 90 days after notice
by Holders; and certain
events of bankruptcy,
insolvency or
reorganization.
Acceleration:....... The Trustee or the Same. Same.
Holders of 25% of the
outstanding principal
amount of the Old
Debentures may declare
the principal of all the
unsecured debt
securities, together
with accrued interest
thereon, to be due and
payable immediately in
the case of an Event of
Default, which includes
a default in the payment
of principal or interest
of the Old Debentures.
Defeasance:......... The Indenture is subject Same. Same.
to defeasance under
certain circumstances.
Change of Control:.. The Company is not Same. Same.
required to repurchase
the Old Debentures upon
a change of control of
the Company.
Sinking Fund:....... None. None. None.
Security:........... None. None. None.
</TABLE>
9
<PAGE>
RISK FACTORS
In deciding whether to participate in the Exchange Offer, each Holder of Old
Debentures should consider carefully, in addition to the other information
contained in this Exchange Circular, the factors listed below.
CERTAIN CONSIDERATIONS FOR TENDERING AND NON-TENDERING HOLDERS
A debt security with a smaller outstanding aggregate principal amount may
command a lower price than would an otherwise identical debt security with a
larger outstanding aggregate principal amount. Depending upon, among other
things, the aggregate principal amount of the 8.85% Debentures, the 9%
Debentures and the New Debentures outstanding after the Exchange Offer, the
trading market for all or any of such series of Debentures may be limited,
which may, therefore, adversely affect the liquidity and market price of such
series of Debentures. The trading market for all three series of Debentures
will depend upon, among other things, the aggregate principal amount of each
such series outstanding after the consummation of the Exchange Offer, the
number of Holders and the degree to which securities firms maintain a market
in the securities.
THE COMPANY
The Dow Chemical Company is engaged in the manufacture and sale of
chemicals, plastic materials, agricultural products and other specialized
products and services.
The Company was incorporated in 1947 under Delaware law and is the successor
to a Michigan corporation organized in 1897. Its principal executive offices
are located at 2030 Dow Center, Midland, Michigan 48674, telephone number
(517) 636-1000.
10
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain selected financial information of the
Company for, and as of the end of, each of the periods presented. The selected
historical financial information should be read in conjunction with the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 and the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998. The selected historical financial information provided
below is not necessarily indicative of future results of operations or
financial performance for the Company.
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................ $14,000 $15,215 $20,018 $20,053 $20,200
Cost of sales.................... 10,451 10,981 14,679 14,108 13,337
Operating income................. 1,090 2,247 2,726 3,087 3,891
Investment and sundry income
(expense)....................... 986 399 499 409 (217)
Interest expense--net............ (271) (192) (277) (208) (145)
Income before provision for taxes
on income and minority
interests....................... 1,805 2,454 2,948 3,288 3,529
Provisions for taxes on income... 632 895 1,041 1,187 1,442
Income from continuing
operations...................... 1,160 1,445 1,802 1,900 1,884
Net income available for common
stockholders.................... 1,160 1,445 1,802 1,900 2,071
BALANCE SHEET DATA:
Total assets..................... 23,369 22,745 24,040 24,673 23,582
Long-term debt (excluding current
maturities)..................... 4,259 4,318 4,196 4,196 4,705
Net stockholders' equity......... 7,549 7,696 7,626 7,954 7,361
</TABLE>
11
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1998. This table should be read in conjunction
with the Company's Quarterly Report on Form 10-Q for the fiscal period ended
September 30, 1998. Since September 30, 1998, there has been no material
change in the consolidated capitalization of the Company.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1998
------------------
(IN MILLIONS)
<S> <C>
Short-Term Debt............................................ $ 1,263
=======
Long-Term Debt (including current maturities of $249)...... $ 4,508
Stockholders' Equity:
Common stock............................................. 818
Additional paid-in capital............................. 685
Retained earnings...................................... 12,932
Accumulated other comprehensive income................. (349)
Treasury stock, at cost................................ (6,537)
-------
Total Long-Term Debt (including current maturities) and Net
Stockholders' Equity...................................... $12,057
=======
</TABLE>
12
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Exchange
Circular and the accompanying Letter of Transmittal, the Company is offering
to exchange a principal amount of the New Debentures, determined as described
herein, for each $1,000 principal amount of the Old Debentures properly
tendered for exchange. Holders that tender and do not withdraw their Old
Debentures will receive upon acceptance of the Old Debentures by the Company,
in addition to the New Debentures and accrued interest on the Old Debentures
accepted for exchange, the Participation Fee in the amount of 1.5% of the
principal amount of the Old Debentures tendered.
The New Debentures will bear interest at a rate that will be different than
the interest rate on the Old Debentures, as described herein. For the New
Debentures, the New Debenture Coupon will be equal to the sum of: (i) the New
Debenture Benchmark Treasury Yield; plus (ii) the New Debenture Coupon Spread.
Each Holder exchanging Old Debentures for New Debentures pursuant hereto will
receive, in exchange for each $1,000 in aggregate principal amount of Old
Debentures exchanged, New Debentures in a principal amount (rounded to the
nearest cent) equal to: (i) the principal amount tendered times (ii) the Old
Debenture Exchange Price divided by (iii) $1,000. New Debentures will be
issued only in denominations of $1,000 or integral multiples thereof and any
fractional portion of New Debentures will be paid in cash on the Exchange
Date. See "Calculations and Payment."
INFORMATION
The Benchmark Treasury Yields means the yield to maturity as calculated by
the Financial Advisor in accordance with standard market practice based on the
bid side price for the Benchmark Treasury Securities, as of the Price
Determination Date, as such bid side price is displayed on the Bloomberg
Government Pricing Monitor, Page PX7 for the New Debenture Benchmark Treasury
Yield and PX8 for the Old Debenture Benchmark Treasury Yield (or any
recognized quotation source selected by the Financial Advisor in its
discretion if the Bloomberg Pricing Monitor is not available or is manifestly
erroneous). Although the Benchmark Treasury Yields will be determined based
solely on the source described above, information regarding the price of the
Benchmark Treasury Securities also may be found in The Wall Street Journal.
After the Price Determination Date, the New Debenture Coupon that will be
received by a Holder pursuant to the Exchange Offer will be known, and Holders
will be able to ascertain the Old Debenture Exchange Prices and the exchange
ratio in the manner described above, unless the Exchange Offer is extended for
a period longer than three business days. In the event the Exchange Offer is
extended for a period longer than three business days from the previously
scheduled Expiration Date, then a new Price Determination Date, which will be
two business days prior to the new Expiration Date, may be established. If the
extension is for three business days or less, no new Price Determination Date
may be established and the New Debenture Coupon will remain as determined on
the Price Determination Date prior to the extension of the Exchange Offer.
As soon as practicable after the Price Determination Date, but in any event
before 9:00 a.m., New York City time, on the following business day, the
Company will publicly announce by press release to the Dow Jones News Service
the New Debenture Coupon, the Benchmark Treasury Yields, and the Old Debenture
Exchange Prices. During the term of the Exchange Offer, Holders of the Old
Debentures can obtain current information regarding the Benchmark Treasury
Yields and other information regarding the terms of the Exchange Offer from
the Financial Advisor at (888) 654-8637 (toll free) or (212) 449-4914 (call
collect), attention David Parsons. In addition, the Company intends to publish
information about the Exchange Offer, including the information described in
the preceding paragraph when available, on the MCM "CorporateWatch" Service on
Telerate page 64170 and Bloomberg page MCM 7895.
In the event any dispute arises with respect to the New Debenture Coupon,
the Benchmark Treasury Yields, the Old Debenture Exchange Prices, or any
quotation or calculation with respect to the Exchange Offer, the Company's
determination shall be conclusive and binding absent manifest error.
13
<PAGE>
CALCULATIONS AND PAYMENT
The New Debenture Coupon on the New Debentures will be equal to the sum of:
(i) the New Debenture Benchmark Treasury Yield; plus (ii) the New Debenture
Coupon Spread.
Each Holder exchanging Old Debentures for New Debentures pursuant to
accepted Exchange Offers will receive, in exchange for each $1,000 in
principal amount of Old Debentures exchanged, New Debentures in a principal
amount (rounded to the nearest cent) equal to: (i) the principal amount
tendered times (ii) the Old Debenture Exchange Price divided by (iii) $1,000;
provided that New Debentures will be issued only in denominations of $1,000 or
integral multiples thereof and any fractional portion of New Debentures will
be paid in cash on the Exchange Date.
The Old Debenture Exchange Price will be a price per $1,000 principal amount
of Old Debentures (calculated as described in the next sentence and rounded to
the nearest cent) intended to result in a yield to maturity of the Old
Debentures on the Exchange Date equal to: (i) the Old Debenture Benchmark
Treasury Yield; plus (ii) either (a) the 9% Exchange Spread or (b) the 8.85%
Exchange Spread, as the case may be. Specifically, the Old Debenture Exchange
Price will be a price (rounded as described in the preceding sentence) equal
to the value per $1,000 principal amount of Old Debenture, assuming the Old
Debenture will be repaid on the maturity date thereof at the principal amount
thereof plus accrued but unpaid interest thereon to, but excluding, such
maturity date, of all remaining payments of principal thereof and interest
thereon to be made through such maturity date, discounted to the Exchange Date
(in accordance with standard market practice and in a manner consistent with
the methodology set forth in Schedule A attached hereto, and consistent with
the hypothetical calculations set forth in Schedules B (in the case of the 9%
Debentures) and C attached hereto (in the case of the 8.85% Debentures) at a
discount rate equal to: (i) the Old Debenture Benchmark Treasury Yield; plus
(ii) either (a) the 9% Exchange Spread or (b) the 8.85% Exchange Spread, as
the case may be).
ILLUSTRATIVE EXAMPLE AND FORMULAS
Schedule A attached hereto sets forth the formulas for determining the Old
Debenture Exchange Prices and the exchange ratio of Old Debentures and New
Debentures. Hypothetical illustrations of the calculation of the 9% Debenture
Exchange Price, the 8.85% Debenture Exchange Price and the exchange ratio of
Old Debentures and New Debentures are set forth in Schedules B, C and D,
respectively, attached hereto, and are to be used solely for the purpose of
obtaining an understanding of the calculation of the Old Debenture Exchange
Prices based on a hypothetical Old Debenture Benchmark Treasury Yield obtained
at 2:00 p.m., New York City time, on Monday, January 4, 1999. The information
in Schedules B, C and D is provided for illustrative purposes only. In the
event of any discrepancy between the information in Schedules B, C and D and
results obtained by the Company through the application of calculations
described and outlined herein, such results will supersede the information in
Schedules B, C and D.
EFFECT OF TENDER
A tendering Holder of Old Debentures that are exchanged in the Exchange
Offer will not be obligated to pay transfer taxes or any fees or commissions
with respect to the acquisition of their Old Debentures by the Company
pursuant to the Exchange Offer. See "Transfer Taxes." However, if the
beneficial owner tenders through a Custodian, such beneficial owner may be
required to pay fees or commissions to such institution.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 12:00 midnight, New York City time, on
Tuesday, February 2, 1999, unless extended by the Company as provided herein.
In the event that the Exchange Offer is extended, the term "Expiration Date"
with respect to such extended Exchange Offer shall mean the time and date on
which the Exchange Offer, as so extended, shall expire.
14
<PAGE>
The Company expressly reserves the right, in its sole discretion, subject to
applicable law, to: (i) extend or terminate the Exchange Offer and not accept
for exchange any tendered Old Debentures if any of the conditions specified in
"Conditions to the Exchange Offer" are not satisfied or waived; (ii) waive any
condition to the Exchange Offer and accept all Old Debentures tendered
pursuant to the Exchange Offer; (iii) extend the Exchange Offer and retain all
the Old Debentures tendered pursuant to the Exchange Offer until the
expiration of the Exchange Offer, subject, however, to the withdrawal rights
of Holders as provided in "Withdrawal Rights;" (iv) amend the terms of the
Exchange Offer; and (v) modify the form of the consideration to be paid
pursuant to the Exchange Offer.
Any extension, termination or amendment will be followed as promptly as
practicable by a public announcement and written notification to the Exchange
Agent. In the case of any extension, a public announcement will be issued
prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date of the Exchange Offer. Without limiting
the manner in which the Company may choose to make any public announcement,
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by release to the Dow
Jones News Service or otherwise as required by law. In the event of any
extension of the Exchange Offer, all Old Debentures tendered pursuant to the
Exchange Offer and not subsequently withdrawn, will remain subject to, and
Holders will continue to have withdrawal rights until the expiration of, the
Exchange Offer.
ABSENCE OF DISSENTERS' RIGHTS
Holders of Old Debentures do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the Old Debentures in connection
with the Exchange Offer.
ACCEPTANCE OF OLD DEBENTURES TENDERED FOR EXCHANGE; DELIVERY OF NEW
DEBENTURES; PAYMENT OF PARTICIPATION FEE; ACCRUED INTEREST ON OLD DEBENTURES
AND CASH PAYMENT OF ANY FRACTIONAL PORTION OF NEW DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange Old Debentures by accepting such Old Debentures for
exchange and in consideration thereof will issue New Debentures in an amount
determined in the manner described herein. New Debentures will be delivered on
the Exchange Date. The Exchange Agent will act as agent for the tendering
Holders for the purpose of receiving Old Debentures and delivering New
Debentures to such Holders. In all cases, Old Debentures will be accepted for
exchange pursuant to the Exchange Offer only after timely receipt by the
Exchange Agent of certificates representing Old Debentures (or confirmation of
a book-entry transfer), a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof or satisfaction of DTC's
ATOP procedures) and any other documents required thereby.
New Debentures will be delivered only in book-entry form through DTC and
only to the DTC account of the tendering Holder or the tendering Holder's
Custodian. Accordingly, a Holder who tenders Old Debentures must specify on
the Letter of Transmittal the DTC Participant to which New Debentures should
be delivered and all necessary account information to effect such delivery.
Failure to provide such information will render such Holder's tender defective
and the Company will have the right, which it may waive, to reject such
tender. The Company and the Exchange Agent shall not incur any liability for
delivering New Debentures in accordance with any instructions provided by a
tendering Holder.
The Company will be deemed to have accepted for exchange tendered Old
Debentures as, if, and when the Company gives written notice to the Exchange
Agent of the Company's acceptance of such Old Debentures for exchange. Old
Debentures accepted for exchange by the Company will be canceled. Upon
acceptance of Old Debentures for exchange, the Company will pay a
Participation Fee to tendering Holders in cash in the amount of 1.5% of the
principal amount tendered. The Company will not pay any Participation Fee to
Holders for any Old Debentures not tendered in the Exchange Offer.
15
<PAGE>
If Old Debentures in a principal amount in excess of the principal amount
indicated as being tendered on the Letter of Transmittal are submitted, an Old
Debenture in a principal amount equal to the excess principal amount over the
amount indicated as tendered in the Letter of Transmittal will be issued to
the tendering Holder or the tendering Holder's Custodian, at the Company's
expense, in the same form in which such security was tendered, as promptly as
practicable following the expiration or termination of the Exchange Offer. If
any tendered Old Debentures are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, such Old Debentures will be returned, at the Company's expense, to
the tendering Holder or the tendering Holder's Custodian thereof, as promptly
as practicable following the expiration or termination of the Exchange Offer.
Accrued interest on Old Debentures exchanged pursuant to the Exchange Offer,
the amount of the Participation Fee and any amount in cash resulting from any
fractional portion of New Debentures will be paid by the Company to DTC's
nominee on the Exchange Date. DTC has advised the Company that, upon receipt
of such payments, it will credit immediately the accounts of its participating
organizations ("Participants") with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the global
securities ("Global Securities") representing New Debentures issued upon
exchange of Old Debentures as shown on the records of DTC. Payments by
Participants and 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") to owners of
beneficial interests in the Global Securities will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of such Participants or indirect participants.
PROCEDURES FOR TENDERING OLD DEBENTURES
Minimum Denominations. A Holder may tender less than all Old Debentures held
by such Holder. However, Old Debentures may be tendered only in multiples of
$1,000 of principal amount.
Tender of Old Debentures Held in Physical Form. To tender Old Debentures
held in physical form, a Holder must: (i) complete (including the required
information regarding delivery of New Debentures through DTC) and sign the
Letter of Transmittal in accordance with the instructions set forth therein;
and (ii) deliver the properly completed and executed Letter of Transmittal (or
a manually signed facsimile thereof) together with any other documents
required by the Letter of Transmittal, and the Old Debentures in physical form
to the Exchange Agent at the address set forth herein under "Available
Information" prior to the Expiration Date.
Tender of Old Debentures Held Through a Custodian. To tender Old Debentures
held by a Custodian, the beneficial owner of the Old Debentures must contact
the Custodian and direct the Custodian to tender such Old Debentures in
accordance with the procedures set forth herein and in the Letter of
Transmittal. If the Custodian holds such Old Debentures in physical form, the
Custodian must follow the procedure set forth above under "Procedures for
Tendering Old Debentures--Tender of Old Debentures Held in Physical Form." If
the Custodian holds such Old Debentures in book-entry form through DTC (the
"Book-Entry Transfer Facility"), to tender such Old Debentures the Custodian
must effect a book-entry transfer (a "Book-Entry Confirmation") of all Old
Debentures to be tendered to the Exchange Agent's account at the Book-Entry
Transfer Facility prior to the Expiration Date.
Tender of Old Debentures Held Through DTC. The Exchange Agent and DTC have
confirmed that the Exchange Offer is eligible for ATOP. Accordingly, DTC
Participants may electronically transmit their acceptance of the Exchange
Offer by causing DTC to transfer Old Debentures to the Exchange Agent in
accordance with DTC's ATOP procedures for such a transfer. DTC will then send
an Agent's Message (as defined below) to the Exchange Agent.
The term "Agent's Message" means a message transmitted by DTC, received by
the Exchange Agent and forming part of a Book-Entry Confirmation, which states
that DTC has received an express acknowledgment from the DTC Participant
tendering Old Debentures which are the subject of such Book-Entry
Confirmation,
16
<PAGE>
that such DTC Participant has received and agrees to be bound by the terms of
the Letter of Transmittal and that the Company may enforce such agreement
against such DTC Participant. In the case of an Agent's Message relating to a
guaranteed delivery, the term means a message transmitted by DTC and received
by the Exchange Agent, which states that DTC has received an express
acknowledgment from the DTC Participant tendering Old Debentures that such DTC
Participant has received and agrees to be bound by the Notice of Guaranteed
Delivery (as described below under "--Guaranteed Delivery Procedures").
Holders desiring to tender Old Debentures on the Expiration Date should note
that such Holders must allow sufficient time for completion of the ATOP
procedures during the normal business hours of DTC on that date.
Book-Entry Delivery Procedures. The Exchange Agent will make available its
general participant account for the Old Debentures at the Book-Entry Transfer
Facility for purposes of the Exchange Offer. Any financial institution that is
a participant in the Book-Entry Transfer Facility may make a book-entry
delivery of Old Debentures by causing the Book-Entry Transfer Facility to
transfer Old Debentures to the Exchange Agent's account prior to the
Expiration Date. Delivery of a Letter of Transmittal to a Book-Entry Transfer
Facility will not constitute valid delivery to the Exchange Agent.
LETTERS OF TRANSMITTAL AND OLD DEBENTURES MUST BE SENT ONLY TO THE EXCHANGE
AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OLD DEBENTURES TO THE COMPANY,
THE TRUSTEE, THE INFORMATION AGENT, OR THE FINANCIAL ADVISOR. THE METHOD OF
DELIVERY OF OLD DEBENTURES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION
AND RISK OF THE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED AND ENOUGH TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Any Holder whose Old Debentures have been mutilated, lost, stolen or
destroyed will be responsible for obtaining replacement securities or for
arranging for indemnification with The Chase Manhattan Bank, as trustee for
the Old Debentures. Holders may contact the Information Agent for assistance
with such matters. In order for a tendering Holder to be assured of
participating in an Exchange Offer, such Holder must tender Old Debentures in
accordance with the procedures set forth herein and in the Letter of
Transmittal prior to the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
If a Holder of Old Debentures wishes to tender such Old Debentures and time
will not permit such Holder's Old Debentures or other required documents to
reach the Exchange Agent prior to the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if: (i) the tender is made through an Eligible Institution (as such
term is defined in the Letter of Transmittal); (ii) on or prior to 12:00
midnight, New York City time, on the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Company (by facsimile transmission, mail or hand delivery), setting forth the
name and address of the Holder of Old Debentures and the amount of Old
Debentures tendered, stating that the tender is being made thereby and
guaranteeing that within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery, the certificates for all physically
tendered Old Debentures, in proper form for transfer or a Book-Entry
Confirmation, as the case may be, together with a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) with any
required signature guarantees and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and (iii) the certificates for all physically tendered Old Debentures,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) with any required signature guarantees, and
any other documents required by the Letter of Transmittal are deposited by the
Eligible Institution within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
PROPER EXECUTION AND DELIVERY OF LETTER OF TRANSMITTAL
In general, all signatures on a Letter of Transmittal or a notice of
withdrawal must be guaranteed by a Medallion Signature Guarantor (as defined
in the Letter of Transmittal). Such signatures, however, need not be
17
<PAGE>
guaranteed if: (a) the Letter of Transmittal is signed by the Holder of the
Old Debentures tendered thereby or by a participant in a Book-Entry Transfer
Facility whose name appears on a security position listing as the Holder of
the Old Debentures tendered thereby and such Holder has not completed the
portion entitled "Special Delivery Instructions" on the Letter of Transmittal;
or (b) such Old Debentures tendered are for the account of an Eligible
Institution.
If the Letter of Transmittal is signed by the Holder of the Old Debentures
tendered thereby or a participant in the Book-Entry Transfer Facility whose
name appears on a security position listing with respect to the Old Debentures
tendered thereby, the signature must correspond with the name as written on
the face of the Old Debentures or on the security position listing,
respectively, without any change whatsoever. If any of the Old Debentures
tendered thereby are held by two or more holders, all such Holders must sign
the Letter of Transmittal. If any of the Old Debentures tendered thereby are
registered in different names on different Old Debentures, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations.
If the Letter of Transmittal is signed by a person other than the Holder of
the Old Debentures tendered thereby or a participant in a Book-Entry Transfer
Facility whose name appears on a security position listing with respect to the
Old Debentures tendered thereby, the Old Debentures must be endorsed or
accompanied by appropriate instruments of transfer, in either case, signed
exactly as the name of the Holder appears on the face of the Old Debentures or
on the security position listing with respect thereto. If the Letter of
Transmittal or any Old Debentures, proxy or instrument of transfer is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person must so indicate when signing, and proper evidence
satisfactory to the Exchange Agent of the authority of such person so to act
must be submitted.
New Debentures will be delivered only in book-entry form through DTC and
only to the DTC account of the Holder or the Holder's Custodian. If Old
Debentures not tendered or not exchanged are to be delivered to a person other
than the Holder of the Old Debentures tendered, or to an address other than
that of the Holder of the Old Debentures tendered, such Holder should indicate
in the portion of the Letter of Transmittal entitled "Special Delivery
Instructions" the person and/or address to which such Old Debentures are to be
delivered. If Old Debentures not tendered or not exchanged are to be issued to
a person other than the Holder of the Old Debentures tendered, the employer
identification or social security number of the person to whom issuance is to
be made must be indicated on the Letter of Transmittal. If Old Debentures not
tendered or not exchanged are to be issued to a person other than the Holder
of the Old Debentures tendered, the Old Debentures must be endorsed or
accompanied by appropriate instruments of transfer signed exactly as the name
of the Holder appears on the face of the Old Debentures or the security
position listing with respect thereto, with the signature on the certificates
or instruments of transfer guaranteed by an Eligible Institution. If no such
instructions are given, any Old Debentures not tendered or exchanged will be
delivered to the Holder of the Old Debentures tendered.
Because New Debentures, the Participation Fee, accrued interest on the Old
Debentures and any fractional portion of New Debentures paid in cash will be
delivered only in book-entry form through DTC, a Holder who tenders Old
Debentures must specify on the Letter of Transmittal the DTC Participant to
which New Debentures, the Participation Fee, accrued interest on the Old
Debentures and any fractional portion of New Debentures paid in cash should be
delivered and all necessary account information to effect such delivery. Such
DTC Participant must be either the Holder or a Custodian for the Holder.
Failure to provide such information will render such Holder's tender defective
and the Company will have the right, which it may waive, to reject such
tender. Holders who anticipate tendering other than through DTC are urged to
contact promptly a Custodian (that has the capability to hold securities
through DTC) to arrange for receipt of any New Debentures, the Participation
Fee and accrued interest on the Old Debentures to be delivered pursuant to the
Exchange Offer and to obtain the information necessary to complete the account
information table in the Letter of Transmittal.
NO ALTERNATIVE, CONDITIONAL, IRREGULAR, OR CONTINGENT TENDERS WILL BE
ACCEPTED. By executing the Letter of Transmittal, the Holder of Old Debentures
waives any right to receive any notice of the acceptance for exchange of such
Holder's Old Debentures, except as otherwise provided herein.
18
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of tendered Old Debentures will be determined by the
Company, whose determination shall be conclusive and binding. The Company
reserves the absolute right, in its sole discretion, to reject any or all
tenders that are not in proper form or the acceptance of which may be, in the
opinion of counsel for the Company, unlawful. The Company also reserves the
absolute right, in its sole discretion, to waive any condition of the Exchange
Offer as set forth under "--Conditions to the Exchange Offer" and any
irregularities or conditions of tender as to particular Old Debentures. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letters of Transmittal) shall be conclusive
and binding.
Unless waived, any irregularities in connection with tenders must be cured
within such time as the Company may determine. The Company, the Exchange Agent
and the Information Agent shall not be under any duty to give notification of
defects in such tenders and shall not incur liability for any failure to give
such notification. Tenders of Old Debentures will not be deemed to have been
made until such irregularities have been cured or waived. Any Old Debentures
received by the Exchange Agent that are not properly tendered and as to which
the irregularities have not been cured or waived will be returned by the
Exchange Agent to the Holder, unless otherwise provided in the Letter of
Transmittal, promptly following the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer or any extension
of the Exchange Offer, the Company will not be required to issue New
Debentures and may terminate the Exchange Offer by written notice to the
Exchange Agent, or, at its option, modify or otherwise amend the Exchange
Offer with respect to such Old Debentures, if any of the following conditions
has not been satisfied on or prior to the Expiration Date:
(a) there shall not have been any action taken or threatened, or any
statute, rule, regulation, judgment, order, stay, decree or injunction
promulgated, enacted, entered, enforced or deemed applicable to the
Exchange Offer or the exchange of Old Debentures for New Debentures (the
"Exchange") pursuant to the Exchange Offer, by or before any court or
governmental regulatory or administrative agency or authority or tribunal,
domestic or foreign, that: (i) challenges the making of the Exchange Offer
or the Exchange, or might, directly or indirectly, prohibit, prevent,
restrict or delay consummation of the Exchange Offer or the Exchange, or
might otherwise adversely affect in any material manner the Exchange Offer
or the Exchange; or (ii) in the sole judgment of the Company, could
materially adversely affect the business, condition (financial or
otherwise), income, operations, properties, assets, liabilities, or
prospects of the Company and its subsidiaries, taken as a whole, or
materially impair the contemplated benefits of the Exchange Offer or the
Exchange to the Company or might be material to Holders of Old Debentures
in deciding whether to accept such Exchange Offer;
(b) there shall not have occurred or be likely to occur any event
affecting the business or financial affairs of the Company that, in the
sole judgment of the Company, would or might prohibit, prevent, restrict or
delay the Exchange Offer or the Exchange or that would, or is reasonably
likely to, materially impair the contemplated benefits of the Exchange
Offer or the Exchange to the Company or might be material to Holders of Old
Debentures in deciding whether to accept such Exchange Offer;
(c) there shall not have occurred: (i) any material adverse change in the
market price of the Old Debentures, the Benchmark Treasuries, or the
corporate credit spreads; (ii) a material impairment in the general trading
market for debt securities; (iii) a declaration of a banking moratorium or
any suspension of payments in respect of banks by federal or state
authorities in the United States (whether or not mandatory); (iv) a
commencement or escalation of a war, armed hostilities or other national or
international crisis directly or indirectly relating to the United States;
(v) any limitation (whether or not mandatory) by any governmental authority
on, or other event having a reasonable likelihood of affecting, the
extension of credit by banks or other lending institutions in the United
States; (vi) any material adverse change in United States securities or
financial markets generally, or in the case of any of the foregoing
existing at the time of the commencement of the Exchange Offer, a material
acceleration or worsening thereof; or (vii) any general suspension of or
limitation on trading in securities on the NYSE or on the over-the-counter
market (whether or not mandatory); and
19
<PAGE>
(d) the Trustee shall not have objected in any respect to, or taken any
action that could, in the sole judgment of the Company, adversely affect
the consummation of the Exchange Offer or the Exchange nor shall the
Trustee have taken any action that challenges the validity or effectiveness
of the procedures used by the Company or in making the Exchange Offer or
the Exchange.
If any of the foregoing conditions are not satisfied, the Company may: (i)
terminate the Exchange Offer and return such Old Debentures to the Holders who
tendered them; (ii) amend or modify the Exchange Offer at its option; (iii)
extend the Exchange Offer and retain all tendered Old Debentures until the
expiration of the Exchange Offer, as extended, subject, however, to the
withdrawal rights of Holders, see "--Withdrawal Rights" and "Expiration Date;
Extensions; Termination; Amendments;" or (iv) waive any of the conditions with
respect to such Exchange Offer and accept all Old Debentures tendered therein.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole or in part, in its sole discretion. Any
determination made by the Company concerning an event, development or
circumstance described or referred to above shall be conclusive and binding.
WITHDRAWAL RIGHTS
Tendered Old Debentures may be withdrawn by the Holder prior to the
Expiration Date. A tendering Holder of Old Debentures may withdraw the Old
Debentures tendered by providing a written notice of withdrawal (or facsimile
thereof) to the Exchange Agent, at one of its addresses set forth herein under
"Available Information," prior to the Expiration Date, which notice must
specify the name of the person who tendered the Old Debentures to be withdrawn
(the "Depositor"), the name in which the Old Debentures are registered (or, if
tendered by book-entry transfer, the name of the participant in the Book-Entry
Transfer Facility whose name appears on the security position listing as the
owner of such Old Debentures), if different from that of the Depositor, and
the principal amount of Old Debentures to be withdrawn. If certificates have
been delivered or otherwise identified (through confirmation of book-entry
transfer of such Old Debentures) to the Exchange Agent, then the name of the
Holder and the certificate number or numbers relating to such Old Debentures
must also be furnished to the Exchange Agent as aforesaid prior to the
physical release of the certificates for the withdrawn Old Debentures (or, in
the case of Old Debentures transferred by book-entry transfer, the name and
number of the account at the Book-Entry Transfer Facility to be credited with
withdrawn Old Debentures). The notice of withdrawal must be signed by the
Holder in the same manner as the Letter of Transmittal (including any required
signature guarantees), or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of such Old Debentures.
A purported notice of withdrawal that lacks any of the required information
will not be an effective withdrawal of a tender previously made. Tenders may
not be withdrawn after the Expiration Date. Holders who have tendered in the
Exchange Offer will continue to have withdrawal rights following any extension
of the Expiration Date until the rescheduled Expiration Date.
Any permitted withdrawals of tenders of Old Debentures may not be rescinded,
any Old Debentures so withdrawn will thereafter be deemed not validly tendered
for purposes of the Exchange Offer, and the Holder of Old Debentures will be
deemed to have rejected the Exchange Offer. However, withdrawn Old Debentures
may be re-tendered prior to the Expiration Date by following the procedures
for tendering described above.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Company in its sole
discretion, whose determination will be conclusive and binding. None of the
Company, the Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the transfer
and sale of Old Debentures pursuant to the Exchange Offer. If, however,
substitute Old Debentures for amounts not tendered or not exchanged are to be
delivered to, or are to be registered in the name of, any person other than
the Holder of Old
20
<PAGE>
Debentures tendered, or if tendered Old Debentures are registered in the name
of any person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the transfer or sale of Old
Debentures to the Company pursuant to the Exchange Offer, the amount of any
such transfer taxes (whether imposed on the Holder or any other persons) shall
be payable by the Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such Holder and/or
withheld from any payments due with respect to the Old Debentures tendered by
such Holder.
FINANCIAL ADVISOR
The Company has engaged Merrill Lynch & Co. to act as Financial Advisor in
connection with the Exchange Offer. Any Holder who has questions concerning
the terms of the Exchange Offer or who would like current information
regarding the Benchmark Treasury Yields may contact the Financial Advisor at
(888) 654-8637 (toll free) or (212) 449-4914 (call collect), attention David
Parsons, or at the address set forth herein under "Available Information."
The Company has agreed to pay the Financial Advisor a fee for its services
and to reimburse the Financial Advisor for its reasonable out-of-pocket
expenses, including certain reasonable fees and expenses of legal counsel and
the Company has agreed to indemnify the Financial Advisor against certain
liabilities, including certain liabilities under the Federal securities laws,
in connection with the Exchange Offer.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed Exchange Agent for the Exchange
Offer. The Company will pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket
expenses, including reasonable legal fees and expenses, in connection
therewith. The Company has agreed to indemnify the Exchange Agent against
certain liabilities, including certain liabilities under the Federal
securities laws, in connection with the Exchange Offer. Letters of Transmittal
and all correspondence in connection with the Exchange Offer must be sent or
delivered to the Exchange Agent at the address set forth herein under
"Available Information."
INFORMATION AGENT
Georgeson & Company Inc. has been appointed Information Agent for the
Exchange Offer. The Company will pay the Information Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection therewith.
Any questions concerning the tender procedures or requests for assistance or
additional copies of this Exchange Circular or the Letters of Transmittal may
be directed to the Information Agent at the address and telephone number set
forth herein under "Available Information." Holders of Old Debentures may also
contact the Financial Advisor or their broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning the Exchange Offer.
DESCRIPTION OF NEW DEBENTURES
The following description of the terms of the New Debentures sets forth
certain general terms and provisions of the New Debentures. The New Debentures
will be issued under the Indenture, a copy of which has been filed with the
Commission by the Company. The following summaries of certain provisions of
the New Debentures and the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definition therein of certain
terms. Wherever particular sections, articles or defined terms of the
Indenture are referred to herein, such sections, articles or defined terms
shall be as specified in the Indenture. Certain defined terms in the Indenture
are capitalized herein. Section numbers below refer to provisions of the
Indenture.
21
<PAGE>
GENERAL
The New Debentures will be issued under the Indenture dated as of January
15, 1990, as supplemented by the Supplemental Indenture to be dated the
Expiration Date, between the Company and The Chase Manhattan Bank, as Trustee.
The Indenture does not limit the amount of debt securities ("Debt Securities")
which can be issued thereunder and provides for the issuance of debt
securities from time to time in one or more series. The New Debentures will
constitute a series of Debt Securities under the Indenture.
The New Debentures are unsecured and unsubordinated obligations of the
Company and will rank pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Company. The New Debentures will mature
on January 15, 2009. The New Debentures will be issued as a single series of
Debt Securities under the Indenture and will be issued only in fully
registered form, without coupons, in multiples of $1,000 of principal amount.
The New Debentures will not be entitled to any sinking fund.
The New Debentures will have a New Debenture Coupon equal to the sum of: (a)
the New Debenture Benchmark Treasury Yield, as calculated by the Financial
Advisor in accordance with standard market practice, based upon the bid side
yield for the 4 3/4% U.S. Treasury Note Due November 15, 2008 as of 2:00 p.m.,
New York City time, on the Price Determination Date as displayed on the
Bloomberg Government Pricing Monitor, Page PX7 (or any recognized quotation
source selected by the Financial Advisor in its discretion if the Bloomberg
Pricing Monitor is not available or is manifestly erroneous); plus (b) the New
Debenture Coupon Spread.
Interest on the New Debentures will accrue from, and including, the Exchange
Date and will be payable on each January 15 and July 15 to the holders of
record on the preceding January 1 and July 1, respectively. The first interest
payment date on the New Debentures will be July 15 1999. Holders of New
Debentures on July 1, 1999 will receive, on July 15, 1999, the amount of
interest accrued on the New Debentures during the period from, and including,
the Exchange Date to, and excluding, July 15, 1999. The Exchange Date will be
the third business day following the Expiration Date.
If the date on which the principal of and interest on the New Debentures is
payable is not a Business Day at any Place of Payment for the New Debentures,
then (notwithstanding any other provision of the Indenture or of the New
Debentures) payment of such principal or interest need not be made at such
Place of Payment, but may be made on the next succeeding Business Day at such
Place of Payment, provided that no interest shall accrue for the period from
and after the date on which such principal or interest is payable.
BOOK-ENTRY, DELIVERY, AND FORM
The New Debentures will be in the form of one or more fully registered
Global Securities. The Global Securities will be deposited with, or on behalf
of, DTC and registered in the name of DTC's nominee. Except as set forth
below, the Global Securities may be transferred, in whole and not in part,
only to another nominee of DTC or to a successor of DTC or its nominee.
DTC has advised the Company that it is a limited-purpose trust company which
was created to hold securities for its Participants and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's book-entry system is also available to indirect participants. Persons
who are not Participants may beneficially own securities held by DTC only
through Participants or indirect participants.
DTC has also advised the Company that pursuant to procedures established by
it: (i) upon the issuance by the Company of the New Debentures, DTC will
credit the accounts of Participants whose Old Debentures were exchanged
pursuant to the Exchange Offer with the principal amount of the New Debentures
so exchanged; and (ii) ownership of beneficial interests in the Global
Securities will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC (with respect to
Participants' interests), the
22
<PAGE>
Participants and the indirect participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
which they own. Consequently, the ability to transfer beneficial interests in
the Global Securities is limited to such extent.
So long as a nominee of DTC is the registered owner of the Global
Securities, such nominee will be considered the sole owner or Holder of the
Debentures for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in the Global Securities will not be entitled
to have New Debentures registered in their names, will not receive or be
entitled to receive physical delivery of New Debentures in definitive form and
will not be considered the owners or Holders thereof under the Indenture.
Neither the Company, the Trustee, any Paying Agent nor the registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Securities, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Principal and interest payments on the Global Securities registered in the
name of DTC's nominee will be made by the Company through the Paying Agent to
DTC's nominee as the registered owner of the Global Securities. Under the
terms of the Indenture, the Company and the Trustee will treat the persons in
whose names the New Debentures are registered as the owners of such New
Debentures for the purpose of receiving payments of principal and interest on
such New Debentures and for all other purposes whatsoever. Therefore, neither
the Company, the Trustee nor any Paying Agent has any direct responsibility or
liability for the payment of principal or interest on the New Debentures to
owners of beneficial interests in the Global Securities. DTC has advised the
Company and the Trustee that its present practice is, upon receipt of any
payment of principal or interest, to credit immediately the accounts of the
Participants with payment in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Securities
as shown on the records of DTC. Payments by Participants and indirect
participants to owners of beneficial interests in the Global Securities will
be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such
Participants or indirect participants.
If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days, the
Company will issue New Debentures in definitive form in exchange for the
Global Securities. In addition, the Company may at any time determine not to
have the New Debentures represented by Global Securities and, in such event,
will issue New Debentures in definitive form in exchange for the Global
Securities. In either instance, an owner of a beneficial interest in the
Global Securities will be entitled to have New Debentures equal in principal
amount to such beneficial interest registered in its name and will be entitled
to physical delivery of such New Debentures in definitive form. New Debentures
so issued in definitive form will be issued in multiples of $1,000 of
principal amount and will be issued in registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
All payments of principal and interest will be made by the Company in
immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the New
Debentures will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the New Debentures will
therefore be required by DTC to settle in immediately available funds on
trading activity in the New Debentures.
All moneys paid by the Company to a Paying Agent for the payment of
principal of and interest on any New Debenture that remains unclaimed at the
end of two years after such principal or interest shall have become due and
payable will be repaid to the Company upon its request and thereafter the
Holder of such New Debenture will look only to the Company for payment
thereof.
23
<PAGE>
REGISTRATION AND TRANSFER
New Debentures in certificated form may be presented for registration of
transfer (with the form of transfer duly executed), at the office of the
security registrar designated by the Company or at the office of any transfer
agent designated by the Company for such purpose, without service charge and
upon payment of any taxes and other governmental charges as described in the
Indenture. Such transfer or exchange will be effected upon the security
registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has initially appointed the Trustee as the security registrar under the
Indenture. (Section 2.8). The Company may at any time designate additional
transfer agents with respect to the New Debentures. (Section 3.2).
PAYMENTS AND PAYING AGENTS
Payment of principal of and any premium and interest on the New Debentures
in certificated form will be made at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made by check mailed to
the address of the payee entitled thereto as such address shall appear in the
Security Register. (Sections 2.7 and 3.2). Payment of any installment of
interest on New Debentures will be made to the person in whose name such New
Debenture is registered at the close of business on the Record Date for such
interest payment. (Section 2.7).
The principal office of the Trustee in The City of New York will be
designated as the Company's sole Paying Agent for payments with respect to New
Debentures which are issuable in certificated form. The Company may at any
time designate additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any Paying Agent
acts, except that the Company will be required to maintain a Paying Agent in
the Borough of Manhattan, The City of New York. (Section 3.2).
All moneys paid by the Company to a Paying Agent for the payment of
principal of and any premium and interest on any New Debenture that remains
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and thereafter
the Holder of such New Debenture will look only to the Company for payment
thereof. (Section 10.4).
CERTAIN DEFINITIONS
"Consolidated Net Tangible Assets" means the total assets of the Company and
its consolidated subsidiaries as shown on or reflected in its balance sheet
less: (a) all current liabilities (excluding current liabilities which could
be classified as long-term debt in conformity with generally accepted
accounting principles and current liabilities which are by their terms
extendible or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being
computed); (b) advances to entities accounted for on the equity method of
accounting; and (c) intangible assets.
"Intangible assets" means the aggregate value (net of any applicable
reserves), as shown on or reflected in such balance sheet, of: (i) all trade
names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organizational and development costs; (iii) deferred charges (other than
prepaid items such as insurance, taxes, interest, commissions, rents and
similar items and tangible assets being amortized); and (iv) unamortized debt
discount and expense, less unamortized premium.
"Principal Property" means any manufacturing facility having a gross book
value in excess of 1% of Consolidated Net Tangible Assets at the time of
determination thereof and owned by the Company or any Restricted Subsidiary
and located within the United States of America (excluding its territories and
possessions and the Commonwealth of Puerto Rico) other than any such facility
or portion thereof which the Board of Directors reasonably determines is not
material to the business conducted by the Company and its Subsidiaries as a
whole.
"Restricted Subsidiary" means any Subsidiary: (i) substantially all of the
property of which is located, and substantially all of the business of which
is carried on, within the United States of America (excluding its territories
and possessions and the Commonwealth of Puerto Rico); and (ii) which owns or
operates one or more
24
<PAGE>
Principal Properties, provided, however, Restricted Subsidiary shall not
include a Subsidiary which is primarily engaged in the business of a finance
or insurance company, including branches thereof.
"Subsidiary" means each corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or one or more
Subsidiaries, or by the Company and one or more other Subsidiaries.
CERTAIN COVENANTS OF THE COMPANY
Limitations on Liens
Subject to the exceptions set forth below and those set forth under
"Exempted Indebtedness," the Company will covenant that it will not, nor will
it permit any Restricted Subsidiary to create or permit to exist any lien on
any Principal Property or additions thereto or shares of capital stock of any
Restricted Subsidiary without equally and ratably securing the New Debentures.
This restriction will not apply to certain permitted liens, including: (a)
liens on Principal Property existing at the time of acquisition thereof and
certain purchase money mortgages; (b) liens existing on the date of the
Indenture; (c) liens on property or shares of capital stock, or arising out of
any indebtedness of any corporation existing at the time such corporation
becomes or is merged into the Company or a Restricted Subsidiary; (d) liens
which secure debt owing to the Company or a Subsidiary by a Restricted
Subsidiary; (e) liens in connection with the issuance of tax-exempt industrial
development or pollution control bonds or other similar bonds issued pursuant
to Section 103(b) of the Internal Revenue Code of 1986, as amended, or as
hereafter amended, to finance all of any part of the purchase price of or the
cost of construction, equipping or improving property; provided that such
liens shall be limited to such property acquired (including personal property)
or constructed or such improvement and to theretofore substantially unimproved
real property on which such construction or improvement is located; provided
further, that the Company and Restricted Subsidiaries may further secure all
or any part of such purchase price or the cost of construction of such
improvements and personal property by an interest on additional property of
the Company and Restricted Subsidiaries only to the extent necessary for the
construction, maintenance and operation of, and access to, such property so
acquired or constructed or such improvement; (f) liens arising from
assignments of money due under contracts with the United States of America or
any State, or any department, agency or political subdivision thereof; (g)
liens in favor of any customer arising in respect of certain payments made by
or on behalf of such customer for goods produced for or services rendered to
such customers in the ordinary course of business not exceeding the amount of
such payments; (h) any extension, renewal or replacement of any lien referred
to in the foregoing clauses (a) to (g), inclusive; and (i) certain statutory
liens, liens for taxes and certain other liens. (Section 3.6).
Limitation on Sale and Lease-Back Transactions
Subject to the exceptions set forth below under "Exempted Indebtedness,"
sale and lease-back transactions by the Company or any Restricted Subsidiary
of any Principal Property are prohibited (except for temporary leases for a
term, including any renewal thereof, of not more than three years and except
for leases between the Company and a Subsidiary or between Subsidiaries)
unless the net proceeds of such sale are at least equal to the fair value of
such property. (Section 3.7).
Exempted Indebtedness
The Company or any Restricted Subsidiary may create or assume liens or enter
into sale and lease-back transactions, not otherwise permitted under the
limitations on liens and sale and lease-back transactions outlined above,
provided that at the time of such event, and after giving effect thereto, the
sum of: (i) the aggregate outstanding indebtedness of the Company and its
consolidated subsidiaries incurred after the date of the Indenture and secured
by such liens relating to Principal Property; plus (ii) the aggregate
discounted value of the obligations for rental payments in respect to such
sale and lease-back transactions relating to Principal Property does not
exceed 10% of Consolidated Net Tangible Assets. (Sections 3.6 and 3.7).
25
<PAGE>
There are no covenants or provisions contained in the Indenture which may
afford Holders of New Debentures protection in the event of a highly leveraged
transaction.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Company covenants that it will not merge or consolidate or sell or
convey all or substantially all of its assets unless the successor corporation
is the Company or is a domestic corporation which assumes the Company's
obligations on the New Debentures and under the Indenture, and after giving
effect to such transaction the Company or the successor corporation would not
be in default under the Indenture. (Section 9.1).
EVENTS OF DEFAULT
An Event of Default with respect to the New Debentures is defined in the
Indenture as being: (a) default by the Company for 30 days in the payment of
any installment of interest on the New Debentures; (b) default by the Company
in the payment of any principal on the New Debentures; (c) default by the
Company in the performance of any of the covenants or warranties in the
Indenture contained therein for the benefit of the New Debentures which shall
not have been remedied within a period of 90 days after receipt of written
notice by the Company from the Trustee or by the Company and the Trustee for
the Holders of not less than 25% in principal amount of the New Debentures
then outstanding; or (d) certain events of bankruptcy, insolvency or
reorganization of the Company. (Section 5.1). No Event of Default described in
(a), (b), or (c) above with respect to a particular series of Debt Securities
issued under the Indenture necessarily constitutes an Event of Default with
respect to any other series of Debt Securities issued under the Indenture.
The Indenture provides that if an Event of Default under clause (a), (b) or
(c) above (but only if the Event of Default under clause (c) is with respect
to less than all series of Debt Securities then outstanding) shall have
occurred and be continuing, either the Trustee or the Holders of not less than
25% in aggregate principal amount of the then outstanding New Debentures may
declare the principal of all the New Debentures, together with accrued
interest thereon, to be due and payable immediately. If an Event of Default
under clause (c) (if the Event of Default under clause (c) is with respect to
all of the series of Debt Securities then outstanding) above shall have
occurred and be continuing, either the Trustee or the Holders of not less than
25% in the aggregate principal amount of all the Debt Securities then
outstanding (treated as one class), may declare the principal of all the Debt
Securities then outstanding, together with accrued interest, to be due and
payable immediately. Upon certain conditions thereon, such declaration
(including a declaration caused by a default in the payment of principal or
interest, the payment for which has subsequently been provided) may be
annulled by the Holders of a majority in principal amount of the New
Debentures then outstanding or all Debt Securities treated as one class, as
the case may be, as were entitled to declare such default. In addition, past
defaults may be waived by the Holders of a majority in principal amount of the
New Debentures or all Debt Securities treated as one class, as the case may
be, as were entitled to declare such default, except a default in the payment
of the principal of or interest on the New Debentures or in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the approval of the Holder of each New Debenture so affected.
(Sections 5.1 and 5.10).
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care,
to be indemnified by the Holders of New Debentures before proceeding to
exercise any right or power under the Indenture at the request of the Holders
of such New Debentures. (Section 6.2). The Indenture also provides that the
Holders of a majority in principal amount of the outstanding New Debentures
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the New Debentures. (Section 5.9).
The Indenture contains a covenant that the Company will file annually with
the Trustee a certificate as to the absence of any default or specifying any
default that exists. (Section 4.3).
26
<PAGE>
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture (except for certain specified surviving obligations including,
among other things, the Company's obligation to pay the principal of and
interest on the New Debentures) will be discharged and canceled upon the
satisfaction of certain conditions, including the payment of all the New
Debentures or the deposit with the Trustee of cash or U.S. Government
Obligations or a combination thereof sufficient for such payment or redemption
in accordance with the Indenture and the terms of the New Debentures. (Section
10.1).
MODIFICATION OF THE INDENTURE AND WAIVER
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of more than 50% of the principal amount of
the New Debentures, to execute supplemental indentures adding any provisions
to or changing or eliminating any of the provisions of the Indenture or
modifying the rights of the Holders of New Debentures, except that no such
supplemental indenture may, among other things: (i) extend the final maturity
of any New Debentures, or reduce the rate or extend the time of payment of
interest thereon, or reduce the principal amount thereof, or reduce any amount
payable upon any redemption thereof without the consent of the Holder of each
New Debenture so affected; or (ii) reduce the aforesaid percentage of New
Debentures, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of all outstanding
New Debentures. (Section 8.2).
GOVERNING LAW
The Indenture and the New Debentures are governed by, and construed in
accordance with, the laws of the State of New York, excluding the conflicts of
law principles thereof.
INFORMATION CONCERNING THE TRUSTEE
The Company maintains banking relationships in the ordinary course of
business with the Trustee. The Trustee's principal corporate trust office is
located at 450 West 33rd Street, 15th Floor, New York, New York 10001-2697.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain U.S. Federal income tax
consequences of the Exchange Offer to holders of Old Debentures and of the
ownership and disposition of New Debentures acquired pursuant to the Exchange
Offer. The statements of law and legal conclusions set forth in this summary
are based on the opinion of Brown & Wood LLP, special tax counsel to the
Company for the Exchange. This summary is based on the Internal Revenue Code
of 1986, as amended ("Code"), existing and proposed Treasury Regulations,
Internal Revenue Service ("IRS") rulings, official pronouncements and judicial
decisions, all as of the date hereof and all of which are subject to change,
possibly with retroactive effect, or different interpretations. This summary
is applicable only to persons who hold Old Debentures (and who will hold New
Debentures) as capital assets. This summary does not discuss all the U.S.
Federal income tax consequences that may be relevant to a holder of New
Debentures in light of the holder's particular circumstances. In particular,
this summary does not address any special rules that may be applicable to
insurance companies, tax-exempt persons, financial institutions, regulated
investment companies, dealers in securities or currencies, pass-through
entities, persons that hold Old Debentures or New Debentures as part of an
integrated investment (including a "straddle") consisting of Old Debentures or
New Debentures and one or more other positions, foreign corporations, persons
who are not citizens or residents of the United States, foreign estates,
foreign trusts or persons whose functional currency is other than the United
States dollar. In addition, this summary does not address any state or local
tax considerations that may be relevant to a holder's decision to exchange Old
Debentures for New Debentures pursuant to the Exchange Offer.
THE FOLLOWING IS NOT TAX ADVICE TO ANY HOLDER OF OLD DEBENTURES. ALL HOLDERS
OF OLD DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS
27
<PAGE>
REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE
EXCHANGE OF OLD DEBENTURES FOR NEW DEBENTURES AND OF THE OWNERSHIP AND
DISPOSITION OF NEW DEBENTURES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR
OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF OLD DEBENTURES FOR NEW DEBENTURES
An exchange of Old Debentures for New Debentures pursuant to the Exchange
Offer (an "Exchange") will constitute a recapitalization under Section
368(a)(1)(E) of the Code. A Holder of the Old Debentures who exchanges Old
Debentures for New Debentures will not recognize loss on the Exchange. A
Holder will recognize realized gain, if any, only to the extent of "boot"
(which term does not include amounts attributable to accrued but unpaid
interest which will be taxable as such) that is received in the Exchange. A
Holder's realized gain on the Exchange will equal the excess, if any, of: (a)
the amount realized on the Exchange by the Holder (which includes the: (i)
Participation Fee received; (ii) fair market value of the New Debentures
received; and (iii) cash received in lieu of fractional New Debentures) over
(b) the Holder's tax basis in the Old Debentures. In the case of the Exchange
Offer: (i) the Participation Fee; (ii) the amount of money received in lieu of
a fractional New Debenture; and (iii) the fair market value of any excess of
the principal amount of the New Debentures received over the principal amount
of the Old Debentures (the "Excess Principal Amount") surrendered will
constitute "boot." Any gain recognized will generally be treated as capital
gain, but may be subject to ordinary income treatment if the holder acquired
the Old Debenture at a market discount, as discussed below.
A Holder who acquires New Debentures will have: (i) a fair market value tax
basis in a portion of the New Debentures corresponding to the Excess Principal
Amount; and (ii) a tax basis in the remaining portion of the New Debentures
equal to the Holder's adjusted tax basis in the Old Debentures surrendered in
the exchange, decreased by the amount of "boot" (including the fair market
value of the Excess Principal Amount) received and increased by the amount of
gain, if any, recognized as a result of the receipt of such "boot." The
holding period of that portion of the New Debentures corresponding to the
Excess Principal Amount will commence on the day following the Exchange Date
and the holding period of the remainder of the New Debentures will include the
period during which the holder held the Old Debentures.
Some Holders of Old Debentures may have acquired them at a "market
discount." For this purpose, "market discount" is the excess (if any) of the
principal amount over the Holder's acquisition price, subject to a statutory
de minimis exception. Gain recognized on the exchange of such Old Debentures
for New Debentures (as discussed above) will be treated as ordinary income to
the extent of the portion of such market discount which has accrued from the
acquisition date of such Old Debentures to the Exchange Date. In addition, any
unrecognized accrued market discount on such Old Debentures will carry over to
the New Debentures, and any unaccrued market discount on such Old Debentures
will carry over to the New Debentures and will accrue over the term of the New
Debentures.
NEW DEBENTURES
Stated Interest on New Debentures. In general, interest at the New Coupon
from and after the Exchange Date will be ordinary income, includible in gross
income when accrued, in the case of a holder utilizing the accrual method of
accounting, or when received, in the case of a holder utilizing the cash
method of accounting.
Bond Premium. If a holder's tax basis in New Debentures immediately after
the Exchange (determined in the manner discussed above) exceeds the principal
amount of such New Debentures, such excess will constitute amortizable bond
premium which the holder may elect to amortize under a constant yield method
under Section 171 of the Code. A holder that elects to amortize bond premium
must reduce the tax basis in the New Debentures by the amount so amortized.
The amortizable bond premium will be treated as an offset to interest income
rather than as a separate deduction item. An election to amortize bond premium
under Section 171 of the Code by a holder will apply to all obligations owned
or acquired by the holder in the current and all subsequent taxable years and
may not be revoked without the permission of the IRS. If an election to
amortize bond premium is not
28
<PAGE>
made, a holder must include the full amount of each interest payment in income
in accordance with its regular method of accounting and will receive a tax
benefit from the premium only in computing gain or loss upon the redemption,
sale or other disposition of the New Debentures.
Sale or Redemption of the New Debentures. In general, upon a sale,
redemption or other disposition of the New Debentures, a holder will recognize
gain or loss equal to the difference between: (i) the amount realized on the
disposition (other than amounts attributable to accrued but unpaid interest
which will be taxable as such); and (ii) the holder's tax basis in the New
Debentures. Such gain or loss will generally be capital gain or loss (subject
to the market discount rules).
BACKUP WITHHOLDING
A holder of New Debentures may be subject to backup withholding at a rate of
31 percent with respect to interest paid or the proceeds of a redemption, sale
or other disposition of the New Debentures, unless the holder provides its
taxpayer identification number and certain required certifications to the
payor or otherwise establishes an exemption. Any amounts so withheld would be
allowed as a credit against the holder's U.S. Federal income tax liability.
PLAN OF DISTRIBUTION
The Company will exchange New Debentures for Old Debentures. Accordingly,
the Company will not receive any proceeds from the exchange of New Debentures
for Old Debentures.
Based on an interpretation by the staff of the Division of Corporation
Finance of the Commission, the Company believes that the New Debentures issued
pursuant to the Exchange Offer, like the Old Debentures, may be offered for
resale, resold and otherwise transferred by any Holder thereof without
compliance with the registration requirements of the Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Debentures to be received in the Exchange Offer
and, to the best of the Company's information and belief, each person
participating in the Exchange Offer is acquiring the New Debentures in the
ordinary course of business and has no arrangement or understanding with any
person to participate in the distribution of the New Debentures.
The Company has agreed to pay all reasonable and customary expenses
associated with the Exchange Offer (other than fees, commissions or
concessions of any brokers, dealers or Custodians).
VALIDITY OF NEW DEBENTURES
The validity of the offered New Debentures will be passed upon for the
Company by John G. Scriven, the Company's Vice President and General Counsel.
INDEPENDENT AUDITORS
The consolidated financial statements as of December 31, 1997 and 1996, and
the related consolidated statements of income for each of the three years in
the period ended December 31, 1997, incorporated by reference in this Exchange
Circular from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report incorporated by reference herein.
29
<PAGE>
SCHEDULE A
FORMULA TO DETERMINE OLD DEBENTURE EXCHANGE PRICES
R = $1,000 (the redemption price per $1,000 principal amount of Old
Debentures).
YLD = The yield to the maturity date of the Old Debentures equal to the sum
of the Old Debenture Benchmark Treasury Yield at the Price
Determination Date and the applicable Exchange Spread, expressed as a
decimal number.
N = The number of regular semi-annual interest payments from (but
excluding) the Exchange Date to (and including) the Maturity Date.
S = The number of days from and including the most recent date to which
interest has been paid to (but excluding) the Exchange Date. The
number of days is computed using the 30/360 day count method.
CPN = the nominal rate of interest payment on the Old Debentures expressed
as a decimal number.
/ = Divide. The term immediately to the left of the division symbol is
divided by the term immediately to the right of the division symbol
before any other addition or subtraction operations are performed.
exp = Exponentiate. The term to the left of the exponentiation symbol is
raised to the power indicated by the term to the right of the
exponentiation symbol.
N
+ (SUM) = Summate. The term to the right of the summation symbol is separately
K=1 calculated "N" times (substituting for the "K" in that term each
whole number between 1 and N, inclusive), and the separate
calculations are then added together.
PRICE = The Old Debenture Exchange Price.
R
PRICE = -------------------------
(1+YLD/2) exp (N - S/180)
N 1,000 (CPN/2)
+ (SUM) ------------------------- - 1,000 (CPN/2)(S/180)
K=1 (1+YLD/2) exp (K - S/180)
FORMULA TO DETERMINE EXCHANGE RATIO OF OLD DEBENTURES AND NEW DEBENTURES
(Principal amount of Old Debentures tendered X Old Debenture Exchange Price)
/ $1,000 =
Principal amount of New Debentures to be issued for each $1,000 principal
amount of Old Debentures tendered. Any fractional amounts of New Debentures
under $1,000 will be paid in cash.
<PAGE>
SCHEDULE B
HYPOTHETICAL EXAMPLE FOR THE 9% DEBENTURE EXCHANGE PRICE
This Schedule B provides a hypothetical illustration of the calculation of
the 9% Debenture Exchange Price based on hypothetical data, and should,
therefore, be used solely for the purpose of obtaining an understanding of the
calculation of the 9% Debenture Exchange Price, as quoted at a hypothetical
Old Debenture Benchmark Treasury Yield, and should not be used or relied upon
for any other purpose.
Example:
<TABLE>
<S> <C>
Hypothetical Price Determination Date 2:00 p.m., New York City time, on
Monday, January 4, 1999
Estimated Exchange Date Friday, February 5, 1999
Hypothetical Old Debenture Benchmark 5.17%
Treasury Yield on the Price Determination
Date
R $1,000
YLD .0657
CPN .09
N 45
S 124
PRICE $1,281.39
</TABLE>
1,000
PRICE = ------------------------------
(1+.0657/2) exp (45 - 124/180)
45 1,000 (.09/2)
+ (SUM) ----------------------------- - 1,000 (.09/2)(124/180)
K=1 (1+.0657/2) exp (K - 124/180)
<PAGE>
SCHEDULE C
HYPOTHETICAL EXAMPLE FOR THE 8.85% DEBENTURE EXCHANGE PRICE
This Schedule C provides a hypothetical illustration of the calculation of
the 8.85% Debenture Exchange Price based on hypothetical data, and should,
therefore, be used solely for the purpose of obtaining an understanding of the
calculation of the 8.85% Debenture Exchange Price, as quoted at a hypothetical
Old Debenture Benchmark Treasury Yield, and should not be used or relied upon
for any other purpose.
Example:
<TABLE>
<S> <C>
Hypothetical Price Determination Date 2:00 p.m., New York City time, on
Monday, January 4, 1999
Estimated Exchange Date Friday, February 5, 1999
Hypothetical Old Debenture Benchmark 5.17%
Treasury Yield on the Price Determination
Date
R $1,000
YLD .0657
CPN .0885
N 46
S 140
PRICE $1,266.45
</TABLE>
1,000
PRICE = ------------------------------
(1+.0657/2) exp (46 - 140/180)
46 1,000 (140/2)
+ (SUM) ----------------------------- - 1,000 (.0885/2)(140/180)
K=1 (1+.0657/2) exp (K - 140/180)
<PAGE>
SCHEDULE D
HYPOTHETICAL EXAMPLE FOR THE EXCHANGE RATIO OF OLD DEBENTURES AND NEW
DEBENTURES
<TABLE>
<S> <C>
Hypothetical Principal Amount Exchanged = $1,000,000
9% Old Exchange Price = $1,281.39
Exchange Ratio = $1,000,000 x $1,281.39 / 1,000 = $1,281,390
Principal Amount of New Debentures = $1,281,000
Cash Amount of Fractional Portion of New Debentures = $390
Hypothetical Principal Amount Exchanged = $1,000,000
8.85% Old Exchange Price = $1,266.45
Exchange Ratio = $1,000,000 x $1,266.45 / 1,000 = $1,266,450
Principal Amount of New Debentures = $1,266,000
Cash Amount of Fractional Portion of New Debentures = $450
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
DEBENTURES DUE JANUARY 15, 2009
FOR ANY AND ALL OF THE OUTSTANDING
$218,640,000 $183,976,000
9% DEBENTURES DUE APRIL 1, 2021 8.85% DEBENTURES DUE SEPTEMBER 15,
(CUSIP 260543 BA 0) 2021
(CUSIP 260543 BC 6)
OF
THE DOW CHEMICAL COMPANY
PURSUANT TO THE EXCHANGE CIRCULAR
DATED JANUARY 5, 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 2, 1999 UNLESS EXTENDED (THE
"EXPIRATION DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should
be completed,
signed, and submitted to the Exchange Agent:
THE CHASE MANHATTAN BANK
By Hand: By Registered Mail: By Overnight
Corporate Trust The Chase Manhattan Bank Delivery:
Securities Window Money Market Operations The Chase
55 Water Street 55 Water Street Manhattan Bank
Room 234 Room 234 Money Market
North Building North Building Operations
New York, NY 10041 New York, NY 10041 55 Water Street
Attn: Carlos Esteves Attn: Joseph Buthorn Room 234
North Building
By Facsimile: New York, NY 10041
(212) 638-7380 or (212) 638-7381 Attn: Joseph
Buthorn
Confirm by Telephone:
(212) 638-0828
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The Information Agent:
GEORGESON & COMPANY
Wall Street Plaza, 30th Floor
New York, NY 10005
(800) 440-9800 (toll free)
(212) 223-2064 (call collect)
Attn: Keith Haynes
For any questions regarding this Letter of Transmittal or for any additional
information you may contact the Exchange Agent or the Information Agent.
<PAGE>
The undersigned hereby acknowledges receipt of the Exchange Circular dated
January 5, 1999 (as it may be supplemented and amended from time to time, the
"Exchange Circular") of The Dow Chemical Company, a Delaware corporation (the
"Company"), and this Letter of Transmittal (the "Letter of Transmittal,"
which, together with this Exchange Circular, constitute the "Exchange Offer")
to exchange its Debentures due January 15, 2009 (the "New Debentures") in an
aggregate principal amount to be determined in the manner set forth in the
Exchange Circular, for any and all of its issued and outstanding 9% Debentures
due April 1, 2021 (the "9% Debentures") and 8.85% Debentures due September 15,
2021 (the "8.85% Debentures" and, together with the 9% Debentures, the "Old
Debentures") from the registered holders (individually, a "Holder" and
collectively, the "Holders") thereof. Capitalized terms used but not defined
herein have the meanings ascribed to them in the Exchange Circular.
The undersigned hereby tenders for exchange the Old Debentures described in
Box 1 and/or Box 2 below, upon the terms and subject to the conditions
described in the Exchange Circular and this Letter of Transmittal. The
undersigned is the Holder of all the Old Debentures and the undersigned
represents that it has received from each beneficial owner of the tendered Old
Debentures (the "Beneficial Owner") valid instructions which authorize and
instruct the undersigned to take the action described in this Letter of
Transmittal.
Subject to, and effective upon, the acceptance for exchange of the tendered
Old Debentures, the undersigned hereby exchanges, assigns, and transfers to,
or upon the order of, the Company all right, title, and interest in, to, and
under the tendered Old Debentures. Holders that tender and do not withdraw
their Old Debentures will receive upon acceptance of the Old Debentures by the
Company, in addition to the New Debentures and accrued interest on the Old
Debentures accepted for exchange, a participation fee equal to 1.5% of the
principal amount tendered (the "Participation Fee").
If Old Debentures not tendered or not exchanged are to be delivered to a
person other than to the Holder of the Old Debentures tendered or to an
address other than that of the Holder of such Old Debentures, such Holder
should so indicate in the section of this Letter of Transmittal entitled
"Special Delivery Instructions" below (Box 3).
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned
with respect to the tendered Old Debentures, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with
an interest), to: (i) deliver the tendered Old Debentures to the Company or
cause ownership of the tendered Old Debentures to be transferred to, or upon
the order of, the Company, on the books of the registrar for the Old
Debentures and deliver all accompanying evidences of transfer and authenticity
to, or upon the order of, the Company upon receipt by the Exchange Agent, as
the undersigned's agent, of the New Debentures to which the undersigned is
entitled upon acceptance by the Company of the tendered Old Debentures
pursuant to the Exchange Offer; and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the tendered Old Debentures,
all in accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Old Debentures pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering Old Debentures" in the Exchange Circular and in the instructions
hereto will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Exchange Offer,
subject only to withdrawal of such tenders on the terms set forth in the
Exchange Circular under the caption "The Exchange Offer--Withdrawal Rights."
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and any Beneficial Owner(s), and every
obligation of the undersigned or any Beneficial Owner(s) hereunder shall be
binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign, and transfer the tendered Old
Debentures, and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances, and
adverse claims when the tendered Old Debentures are acquired by the Company as
contemplated herein. The undersigned and
2
<PAGE>
each Beneficial Owner will, upon request, execute and deliver any additional
documents reasonably determined by the Company or the Exchange Agent to be
necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 1 and/or Box 2 is true, accurate, and complete.
Holders of Old Debentures that are tendering their Old Debentures by book-
entry transfer to the Exchange Agent's account at The Depository Trust Company
("DTC") can execute the tender through the DTC Automated Tender Offer Program
("ATOP"), for which the transaction will be eligible. DTC participants that
are accepting the Exchange Offer must transmit their acceptance to DTC, which
will verify the acceptance and execute a book-entry delivery to the Exchange
Agent's DTC account. DTC will then send an Agent's Message (as defined in the
Exchange Circular) to the Exchange Agent for its acceptance. DTC participants
may also accept the Exchange Offer prior to the Expiration Date by submitting
a Notice of Guaranteed Delivery through ATOP.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
DESCRIPTION OF 9% DEBENTURES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S),
EXACTLY AS
NAME(S)
APPEAR(S)
ON OLD
DEBENTURE AGGREGATE AGGREGATE
CERTIFICATE(S) CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL
(PLEASE FILL NUMBER(S) OF 9% REPRESENTED BY AMOUNT
IN, IF BLANK) DEBENTURES* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL:
- -------------------------------------------------------------------------------
</TABLE>
*Need not be completed by persons tendering by book-entry transfer.
**All tenders must be in multiples of $1,000 of principal amount. Unless
otherwise indicated in this column, the principal amount of all Old
Debentures identified in this Box 1 or delivered to the Exchange Agent
herewith shall be deemed tendered. See Instruction 4.
[_]CHECK HERE IF OLD DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
[_]CHECK HERE IF OLD DEBENTURES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"USE OF GUARANTEED DELIVERY" BELOW (Box 4).
[_]CHECK HERE IF OLD DEBENTURES ARE BEING DELIVERED HEREWITH.
3
<PAGE>
BOX 2
DESCRIPTION OF 8.85% DEBENTURES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
<TABLE>
- --------------------------------------------------------
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S),
EXACTLY AS
NAME(S)
APPEAR(S) ON
OLD DEBENTURE CERTIFICATE AGGREGATE AGGREGATE
CERTIFICATE(S) NUMBER(S) OF PRINCIPAL AMOUNT PRINCIPAL
(PLEASE FILL 8.85% REPRESENTED BY AMOUNT
IN, IF BLANK) DEBENTURES* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
TOTAL:
- --------------------------------------------------------
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** All tenders must be in multiples of $1,000 of principal amount. Unless
otherwise indicated in this column, the principal amount of all Old
Debentures identified in this Box 2 or delivered to the Exchange Agent
herewith shall be deemed tendered. See Instruction 4.
[_]CHECK HERE IF OLD DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
[_]CHECK HERE IF OLD DEBENTURES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"USE OF GUARANTEED DELIVERY" BELOW (Box 4).
[_]CHECK HERE IF OLD DEBENTURES ARE BEING DELIVERED HEREWITH.
4
<PAGE>
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, AND 7)
TO BE COMPLETED ONLY IF UNTENDERED OLD DEBENTURES OR OLD DEBENTURES NOT
ACCEPTED FOR EXCHANGE ARE TO BE SENT TO SOMEONE OTHER THAN THE
UNDERSIGNED, OR TO THE UNDERSIGNED AT AN ADDRESS OTHER THAN THAT SHOWN
ABOVE.
Mail any Old Debentures not tendered hereby or not accepted for exchange
to:
Name(s):
---------------------------------------------------------------------------
(PLEASE PRINT)
Address:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Tax Identification or Social Security No.:
---------------------------------------------------------------------------
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF OLD DEBENTURES ARE BEING TENDERED BY MEANS OF A
NOTICE OF GUARANTEED DELIVERY.
Name(s) of Holder(s): _____________________________________________________
Window Ticket No. (if any): _______________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Eligible Institution that Guaranteed Delivery: ____________________
If Delivered by Book-Entry Transfer, complete the following: ______________
DTC Account Number: _____________________________________________________
VOI Number: _____________________________________________________________
5
<PAGE>
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF OLD DEBENTURES IS TO BE MADE BY BOOK-
ENTRY TRANSFER.
Name of Tendering Institution: ____________________________________________
Account Number: ___________________________________________________________
VOI Number: _______________________________________________________________
BOX 6
DTC PARTICIPANT INFORMATION
(SEE INSTRUCTION 1)
TO BE COMPLETED BY ALL HOLDERS DELIVERING OLD DEBENTURES. NEW DEBENTURES
WILL BE DELIVERED ONLY IN BOOK-ENTRY FORM.
Name of DTC Participant: __________________________________________________
DTC Participant Number: ___________________________________________________
Contact at DTC Participant: _______________________________________________
Name: _____________________________________________________________________
Telephone No.: ____________________________________________________________
6
<PAGE>
BOX 7
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
X _________________________________ Signature Guarantee
(If required by Instruction 5)
X _________________________________
(SIGNATURE OF HOLDER(S) OR Authorized Signature:
AUTHORIZED SIGNATORY)
X _________________________________
Note: The above lines must be
signed by the registered holder(s) Name: _____________________________
of Old Debentures as their name(s) (PLEASE PRINT)
appear(s) therein or by person(s)
authorized to become registered Title: ____________________________
holder(s) (evidence of such
authorization must be transmitted Name of Firm: _____________________
with this Letter of Transmittal). (MUST BE AN ELIGIBLE
If signature is by a trustee, INSTITUTION AS DEFINED
executor, administrator, guardian, IN INSTRUCTION 2)
attorney-in-fact, officer, or
other person acting in a fiduciary Address: __________________________
or representative capacity, such
person must set forth his or her -----------------------------------
full title below. See Instruction
5. -----------------------------------
(ZIP CODE)
Name(s): __________________________
Capacity: _________________________
Address: __________________________ Area Code and Telephone Number:
----------------------------------- -----------------------------------
(ZIP CODE)
Dated: _____________________ , 1999
Area Code and Telephone Number:
-----------------------------------
Tax Identification or Social
Security No.:
-----------------------------------
7
<PAGE>
PAYOR'S NAME: THE CHASE MANHATTAN BANK
Name: (If joint names, list first and circle the name of
SUBSTITUTE the person or entity whose number you enter in Part 1
below.) See instructions if your name has changed.
FORM W-9 ----------------------------------------------------------
DEPARTMENT OF THE ----------------------------------------------------------
TREASURY
INTERNAL REVENUE Address: _________________________________________________
SERVICE ----------------------------------------------------------
PAYER'S REQUEST City, State and Zip Code: ________________________________
FOR ----------------------------------------------------------
TAXPAYER List account number(s) (optional):
IDENTIFICATION ----------------------------------------------------------
NUMBER (TIN)
-------------------------------------------------------------
PART 1: PLEASE PROVIDE YOUR
TAXPAYER IDENTIFICATION Social Security Number
NUMBER IN THE BOX AT RIGHT OR ________________________
AND CERTIFY BY SIGNING AND Taxpayer Identification
DATING BELOW. Number
-------------------------------------------------------------
PART 2: Check the box if you are NOT subject to backup
withholding under the provisions of section 3406(a)(1)(C)
of the Internal Revenue Code because: (1) you have not
been notified that you are subject to backup withholding
as a result of failure to report all interest or
dividends; or (2) the Internal Revenue Service has
notified you that you are no longer subject to backup
withholding. [_]
-------------------------------------------------------------
PART 3: Awaiting TIN [_]
- -------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, ACCURATE, AND COMPLETE.
Signature _____________________________________ Date _____________, 1999
Name ________________________________________________________________________
(PLEASE PRINT)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either: (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office; or (b) I intend to mail or deliver an application
in the near future. I understand that, if I do not provide a taxpayer
identification number to the Exchange Agent, 31% of all reportable
payments made to me will be withheld until I provide a certified taxpayer
identification number.
----------------------------------- ____________________________ , 1999
SIGNATURE DATE
-----------------------------------
NAME (PLEASE PRINT)
8
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD DEBENTURES. This Letter of
Transmittal is to be completed by Holders of tendered Old Debentures if
physical certificates representing such tendered Old Debentures are to be
forwarded herewith pursuant to the procedures set forth in the Exchange
Circular under "The Exchange Offer--Procedures for Tendering Old Debentures."
For a Holder of physical certificates to properly tender Old Debentures
pursuant to the Exchange Offer, a properly completed and duly executed copy of
this Letter of Transmittal, including the Substitute Form W-9, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein, and certificates for tendered
Old Debentures must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. Any financial institution that is a
participant in DTC (the "Book-Entry Transfer Facility") may electronically
transmit its acceptance of the Exchange Offer by causing DTC to transfer Old
Debentures to the Exchange Agent in accordance with DTC's ATOP procedures for
such transfer prior to the Expiration Date. The Exchange Agent will make
available its general participant account for the Old Debentures at the Book-
Entry Transfer Facility for purposes of the Exchange Offer. Any financial
institution that is a participant in the Book-Entry Transfer Facility may make
a book-entry delivery of Old Debentures by causing the Book-Entry Transfer
Facility to transfer Old Debentures to the Exchange Agent's account prior to
the Expiration Date. Delivery of a Letter of Transmittal to a Book-Entry
Transfer Facility will not constitute valid delivery to the Exchange Agent.
The method of delivery of certificates for tendered Old Debentures, this
Letter of Transmittal and all other required documents to the Exchange Agent
is at the election and risk of the tendering Holder and the delivery will be
deemed made only when actually received by the Exchange Agent. If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. Instead of delivery by mail, it is recommended that the Holder
use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. No Letter of Transmittal or
tendered Old Debentures should be sent to the Company. Neither the Company nor
the Exchange Agent is under any obligation to notify any tendering Holder of
the Company's acceptance of tendered Old Debentures prior to the closing of
the Exchange Offer. NEW DEBENTURES WILL BE DELIVERED ONLY IN BOOK-ENTRY FORM
THROUGH DTC AND ONLY TO THE DTC ACCOUNT OF THE TENDERING HOLDER OR THE
TENDERING HOLDER'S CUSTODIAN. ACCORDINGLY, A HOLDER WHO TENDERS OLD DEBENTURES
MUST SPECIFY IN BOX 6 THE DTC PARTICIPANT NAME, NUMBER, AND CONTACT
INFORMATION TO WHICH THE NEW DEBENTURES SHOULD BE DELIVERED.
2. GUARANTEED DELIVERY PROCEDURES. If a Holder desires to tender Old
Debentures pursuant to the Exchange Offer and: (a) certificates representing
such tendered Old Debentures are not immediately available; (b) time will not
permit such Holder(s) Letter of Transmittal, certificates representing such
tendered Old Debentures and all other required documents to reach the Exchange
Agent on or prior to the Expiration Date; or (c) the procedures for book-entry
transfer cannot be completed on or prior to the Expiration Date, such Holder
may tender Old Debentures with the effect that such tender will be deemed to
have been received on or prior to the Expiration Date if the procedures set
forth below and in the Exchange Circular under "The Exchange Offer--Guaranteed
Delivery Procedures" (including the completion of Box 4 above) are followed.
Pursuant to such procedures: (i) the tender must be made by or through an
Eligible Institution (as defined herein); (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Company herewith, or an Agent's Message with respect to a guaranteed
delivery that is accepted by the Company, must be received by the Exchange
Agent on or prior to the Expiration Date; and (iii) the certificates for the
tendered Old Debentures, in proper form for transfer (or a Book-Entry
Confirmation of the transfer of such tendered Old Debentures to the Exchange
Agent's account at DTC as described in the Exchange Circular), together with a
Letter of Transmittal (or manually signed facsimile thereof) properly
completed and duly executed, with any required signature guarantees and any
other documents required by the Letter of Transmittal or a properly
transmitted Agent's Message, must be received by the Exchange Agent within
three New York Stock Exchange (the "NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery. Any Holder who wishes to
tender Old Debentures pursuant to the guaranteed delivery procedures described
above must ensure that the Exchange Agent receives the Notice of Guaranteed
Delivery relating to such tendered Old Debentures
9
<PAGE>
prior to the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed
by an Eligible Holder who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO HOLDERS. Only a Holder in whose name Old
Debentures are registered on the books of the registrar (or the legal
representative or attorney-in-fact of such registered holder) may execute and
deliver this Letter of Transmittal. Any Beneficial Owner of Old Debentures who
is not the Holder must arrange promptly with the Holder to exchange Old
Debentures on his or her behalf.
4. AMOUNT OF TENDERS. Tenders of Old Debentures will be accepted only in
multiples of $1,000 in principal amount. If less than the entire principal
amount of Old Debentures held by the Holder is tendered, the Holder should
fill in the principal amount tendered in the column labeled "Aggregate
Principal Amount Tendered" of the box entitled "Description of Old Debentures
Tendered" (Box 1 and/or Box 2) above. The entire principal amount of Old
Debentures delivered to the Exchange Agent will be deemed to have been
tendered for exchange unless otherwise indicated. If the entire principal
amount of all Old Debentures held by the Holder is not tendered for exchange,
then new certificates representing the Old Debentures for the principal amount
of Old Debentures not tendered for exchange will be sent to the Holder at its
registered address, unless a different address is provided in the box entitled
"Special Delivery Instructions" (Box 3) on this Letter of Transmittal, as soon
as practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
Holder(s) of the tendered Old Debentures, the signature must correspond with
the name(s) as written on the face of the tendered Old Debentures without
alteration, enlargement or any change whatsoever.
If any of the tendered Old Debentures are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
tendered Old Debentures are held in different names, it will be necessary to
complete, sign, and submit as many separate copies of the Letter of
Transmittal as there are different names in which such tendered Old Debentures
are held.
If this Letter of Transmittal is signed by the Holder(s) of Old Debentures,
then such Holder(s) need not and should not endorse any Old Debentures, nor
provide a separate bond power. In any other case, such Holder(s) must either
properly endorse the tendered Old Debentures or transmit a properly completed
separate bond power with this Letter of Transmittal with the signature(s) on
the endorsement or bond power guaranteed by a Medallion Signature Guarantor
(as defined below).
If this Letter of Transmittal is signed by a person other than the Holder(s)
of any tendered Old Debentures, such tendered Old Debentures must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the Holder(s) appear(s) on the tendered Old Debentures, with the
signature(s) on the endorsement or bond power guaranteed by a Medallion
Signature Guarantor.
If this Letter of Transmittal or any tendered Old Debentures or bond powers
are signed by trustees, executors, administrators, guardians, attorneys-in-
fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with this Letter of Transmittal.
Signatures on this Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program (each a
"Medallion Signature Guarantor"), unless the Old Debentures are tendered: (i)
by the Holder of the Old Debentures (or by a participant in DTC whose name
appears on a security position listing as the owner of such Old Debentures)
who has not completed Box 3 ("Special Delivery Instructions") on this Letter
of Transmittal; or (ii) for the account of a member firm of a registered
national securities exchange, a member of
10
<PAGE>
the National Association of Securities Dealers, Inc. ("NASD") or a commercial
bank or trust company having an office or correspondent in the United States
(each of the foregoing being referred to as an "Eligible Institution"). If the
tendered Old Debentures are registered in the name of a person other than the
signer of the Letter of Transmittal or if Old Debentures not tendered are to
be returned to a person other than the Holder, then the signature on this
Letter of Transmittal accompanying the tendered Old Debentures must be
guaranteed by a Medallion Signature Guarantor as described above. Beneficial
Owners whose tendered Old Debentures are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company, or other nominee if they
desire to tender such Old Debentures.
6. SPECIAL DELIVERY INSTRUCTIONS. Holders should indicate in Box 3 ("Special
Delivery Instructions") the name and address to which substitute Old
Debentures for principal amounts not tendered or not accepted for exchange are
to be sent, if different from the name and address of the person signing this
Letter of Transmittal. In the case of issuance in a different name, the
taxpayer identification or social security number of the person named must
also be indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Debentures pursuant to the Exchange Offer.
If, however, substitute Old Debentures for amounts not tendered or not
exchanged are to be delivered to, or are to be registered in the name of, any
person other than the Holder of Old Debentures tendered, or if tendered Old
Debentures are registered in the name of any person other than the person
signing this Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer and exchange of Old Debentures pursuant to the
Exchange Offer, then the amount of any such transfer tax (whether imposed on
the Holder or on any other person) will be payable by the Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such Holder and/or withheld from any payments due
with respect to the Old Debentures tendered by such Holder. It will not be
necessary for transfer tax stamps to be affixed to the tendered Old Debentures
listed in this Letter of Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
Holder(s) of any Old Debentures which are accepted for exchange must provide
the Exchange Agent (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a Holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the Holder may be subject to backup withholding on payments made in
exchange for any Old Debentures and a $50 penalty may be imposed by the
Internal Revenue Service ("IRS"). Backup withholding is not an additional
Federal income tax. Rather, the amount of tax withheld will be credited
against the Federal income tax liability of persons subject to backup
withholding. If backup withholding results in an over-payment of taxes, a
refund may be obtained from the IRS. Certain Holders (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. Each Holder should consult with
a tax advisor regarding qualification for exemption from backup withholding
and the procedure for obtaining such exemption. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9"
for additional instructions.
To prevent backup withholding, each Holder of tendered Old Debentures must
provide such Holder's correct TIN by completing the Substitute Form W-9 set
forth herein, certifying that the TIN provided is correct (or that such Holder
is awaiting a TIN), and that: (i) the Holder has not been notified by the IRS
that such Holder is subject to backup withholding as a result of failure to
report all interest or dividends; or (ii) if previously so notified, the IRS
has notified the Holder that such Holder is no longer subject to backup
withholding. If the tendered Old Debentures are registered in more than one
name or are not in the name of the actual owner, consult the "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
information on which TIN to report.
The Company reserves the right in its sole discretion to take all necessary
or appropriate measures to comply with the Company's obligation regarding
backup withholding.
11
<PAGE>
9. VALIDITY OF TENDERS. All questions concerning the validity, form,
eligibility (including time of receipt), acceptance, and withdrawal of
tendered Old Debentures will be determined by the Company in its sole
discretion, which determination will be final and binding. The Company
reserves the right to reject any and all Old Debentures not validly tendered
or any Old Debentures, the acceptance of which would, in the opinion of the
Company or its counsel, be unlawful. The Company also reserves the right to
waive any conditions of the Exchange Offer or defects or irregularities in
tenders of Old Debentures concerning any ineligibility of any Holder who seeks
to tender Old Debentures in the Exchange Offer. The interpretation of the
terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Debentures must be cured within such time as
the Company shall determine. Neither the Company, the Exchange Agent, nor any
other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Debentures, nor shall any of
them incur any liability for failure to give such notification. Tenders of Old
Debentures will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Debentures received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the Holders, unless otherwise provided in this Letter of Transmittal,
as soon as practicable following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend,
waive, or modify any of the conditions in the Exchange Offer concerning any
Old Debentures.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Old Debentures or transmittal of this Letter of
Transmittal will be accepted.
12. MUTILATED, LOST, STOLEN, OR DESTROYED DEBENTURES. Any Holder whose
tendered Old Debentures have been mutilated, lost, stolen, or destroyed should
contact the Exchange Agent at the address indicated herein for further
instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Exchange Circular or this
Letter of Transmittal may be directed to the Exchange Agent or the Information
Agent at the addresses and telephone numbers indicated herein. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED DEBENTURES AND ISSUANCE OF EXCHANGE DEBENTURES;
RETURN OF DEBENTURES. Subject to the terms and conditions of the Exchange
Offer, the Company will accept for exchange all validly tendered Old
Debentures as soon as practicable after the Expiration Date, and will issue
New Debentures therefor, along with payment of any fractional portion of New
Debentures in cash, payment of accrued interest on the Old Debentures accepted
for exchange, and payment of the Participation Fee, on the third business day
following the Expiration Date. For purposes of the Exchange Offer, the Company
shall be deemed to have accepted tendered Old Debentures when, as, and if the
Company has given written or oral notice (immediately followed in writing)
thereof to the Exchange Agent. If any tendered Old Debentures are not
exchanged pursuant to the Exchange Offer for any reason, such unexchanged Old
Debentures will be returned, without expense, to the undersigned at the
address shown in Box l and/or Box 2 or at a different address as may be
indicated herein under "Special Delivery Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures set
forth in the Exchange Circular under the caption "The Exchange Offer--
Withdrawal Rights."
12
