<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 14, 1994)
U.S. $500,000,000
DEERE & COMPANY
MEDIUM-TERM NOTES, SERIES C
DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
-------------------
Deere & Company (the "Company") may offer from time to time its Medium-Term
Notes, Series C (the "Notes") at an aggregate initial offering price of up to
U.S. $500,000,000, or the equivalent in one or more Currencies, subject to
reduction as a result of the sale of other Debt Securities (including the sale
of Debt Securities having substantially similar terms to the Notes outside the
United States or the sale of Debt Securities pursuant to another prospectus
supplement) or Debt Warrants. Unless otherwise specified in the applicable
pricing supplement, the Notes will bear interest at either fixed or floating
rates or a combination thereof and will have a Maturity Date from 9 months to 30
years from the date of issue. The principal amount, Currency of denomination,
Maturity Date, redemption and repayment provisions, if any, and price to public
of a Note, together with the interest rate or the interest rate basis, as
adjusted by any Spread, Spread Multiplier or other formula, as the case may be,
will be established by the Company and set forth in the applicable pricing
supplement.
Interest on each Fixed Rate Note will be payable on March 15 and September
15 of each year, unless otherwise specified in the applicable pricing
supplement, and on the date of Maturity. Interest on each Floating Rate Note
will be payable on the dates set forth in the applicable pricing supplement and
on the date of Maturity.
The Notes may be issued as Senior Securities or Subordinated Securities.
Subordinated Securities will be subordinated to all Senior Indebtedness of the
Company. See "Description of Debt Securities -- Subordinated Indenture
Provisions" in the accompanying prospectus.
Each Note will be represented by a Global Note registered in the name of a
nominee of The Depository Trust Company unless otherwise specified in the
applicable pricing supplement. A beneficial interest in a Global Note will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its participants. A beneficial interest in a
Global Note may be exchanged for Notes in definitive form only under the limited
circumstances described herein. See "Description of Notes -- General" herein and
"Description of Debt Securities -- Provisions Applicable to Both the Senior and
Subordinated Indentures -- Book-Entry Debt Securities" in the accompanying
prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO THE
PUBLIC (1) AND COMMISSIONS (2) COMPANY (2)(3)
<S> <C> <C> <C>
Per Note............... 100% .125%--.675% 99.875%--99.325%
Total (4).............. $500,000,000 $625,000--$3,375,000 $499,375,000--$496,625,000
<FN>
(1) Unless otherwise specified in the applicable pricing supplement, each Note
will be issued at 100% of its principal amount.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated or Goldman, Sachs & Co. (each, an
"Agent"), in the form of a discount or otherwise, ranging from .125% to
.675% of the price to public of any Senior Note sold through either of them
as Agent depending upon the maturity of such Senior Note. The schedule of
commissions payable in connection with sales of Senior Notes will also
apply to sales of Subordinated Notes unless otherwise agreed to by the
Company and the Agents. The Company also may sell the Notes to an Agent, as
principal, for resale to investors and other purchasers at varying prices
relating to prevailing market prices at the time of resale as determined by
the applicable Agent or, if so specified in the applicable pricing
supplement, for resale at a fixed public offering price. None of the
proceeds from such resale of Notes will be received by the Company. Unless
otherwise specified in the applicable pricing supplement, any Note sold to
an Agent as principal will be purchased by such Agent at a price equal to
100% of the price to the public of such Note less a percentage of such
price equal to the commission applicable to an agency sale of a Note of
identical maturity and rank.
(3) Before deduction of estimated expenses of $490,000.
(4) Or the equivalent thereof in one or more Currencies.
</TABLE>
------------------------
The Notes are being offered on a continuing basis by the Company through the
Agents, who have agreed to use their best efforts to solicit purchases of such
Notes, and also may be sold to an Agent or other person, as principal, for
resale. The Company reserves the right to sell the Notes directly to investors
on its own behalf. The Notes may be sold at the price to the public set forth
above to dealers who later resell such Notes to investors. Such dealers may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended. There can be no assurance that the Notes offered hereby will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice. The
Company or the applicable Agent, if it solicited such offer, may reject any
offer in whole or in part.
------------------------
MERRILL LYNCH & CO. GOLDMAN, SACHS & CO.
------------
The date of this prospectus supplement is July 14, 1994.
<PAGE>
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby should be read in conjunction with, supplements and, to the extent
inconsistent therewith, replaces the description of the general terms and
provisions of the Debt Securities set forth under the heading "Description of
Debt Securities" in the accompanying prospectus. The following description will
apply to each Note unless otherwise specified in the applicable pricing
supplement. Capitalized terms used herein without further definition have the
meanings ascribed thereto in the accompanying prospectus or in the Indentures.
The following summaries of certain provisions of the Indentures do not
purport to be complete, are subject to, and are qualified in their entirety by
reference to, all of the provisions of the Indentures, including the definitions
therein of certain terms.
CERTAIN DEFINED TERMS
Unless otherwise specified in the applicable pricing supplement, as used
herein, the following terms will have the meanings ascribed thereto below:
"Business Day": with respect to any Note, any day that is not a Saturday or
Sunday and that is not a day on which banking institutions are generally
authorized or obligated by law or executive order to close in The City of New
York; PROVIDED that, with respect to Notes denominated in or indexed to a
Currency other than U.S. dollars, such day is also not a day on which banking
institutions are generally authorized or obligated by law or executive order to
close in the city which is the principal financial center of the country or
countries of such Currency (or, in the case of Notes denominated in or indexed
to ECU, Brussels); and PROVIDED FURTHER that, with respect to LIBOR Notes, such
day is also a London Banking Day.
"ECU": European Currency Units.
"Exchange Rate Agent": the agent of the Company specified as such in an
applicable pricing supplement.
"Fixed Rate Note": a Note that bears interest at a fixed rate, as more fully
described herein.
"Floating Rate Note": a Note that bears interest at a floating rate, as more
fully described herein.
"Foreign Currency Note": any Note denominated or payable in one or more
Currencies other than the U.S. dollar.
"Indexed Note": a Note as to which all or certain interest payments and/or
the principal (and premium, if any) payable at Maturity are determined by
reference to prices, changes in prices, or differences between prices, of
securities, Currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures as are specified in the
applicable pricing supplement.
"Interest Payment Date": each date on which interest is payable on a Note.
"LIBOR": London interbank offered rate for deposits in a specific Currency,
calculated as provided herein or as provided in the applicable pricing
supplement.
"London Banking Day": any day on which dealings in deposits in a specific
Currency are transacted in the London interbank market.
"Maturity": the date on which the principal of a Note or an installment
thereof becomes due and payable, whether on the Maturity Date or by declaration
of acceleration, call for redemption, exercise of an option for repayment or
otherwise.
"Maturity Date": the date on which a Note will mature, as specified in the
applicable pricing supplement.
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"Original Issue Discount Note": a Note, including any zero-coupon note, that
is issued at an issue price lower than the principal amount thereof and that
provides that upon acceleration of the Maturity thereof an amount less than the
principal amount thereof shall become due and payable.
"Senior Note": a Note issued under the Senior Indenture.
"Specified Currency": the Currency in which a Note is denominated.
"Subordinated Note": a Note issued under the Subordinated Indenture.
"U.S. $", "$" and "U.S. dollar": the lawful currency of the United States.
GENERAL
Unless otherwise specified in the applicable pricing supplement, the Notes
will have the following terms and provisions.
The Notes will be offered on a continuous basis and may be issued as Senior
Notes or Subordinated Notes.
The Notes offered by this prospectus supplement will be limited to an
aggregate initial offering price of U.S. $500,000,000, or the equivalent thereof
in one or more Specified Currencies other than U.S. dollars, less an amount
equal to the aggregate principal face amount of any other Debt Securities issued
at their principal face amount, the aggregate issue price rather than the
principal face amount of any other Debt Securities issued at original issue
discount, the aggregate issue price of any Debt Warrants and the aggregate
exercise price of any Debt Securities issuable upon exercise of Debt Warrants,
in any such case that are covered by the registration statement of which this
prospectus supplement is a part and are sold by the Company. The U.S. dollar
equivalent of Notes denominated in a Specified Currency other than U.S. dollars
will be determined on the applicable trade date by the Exchange Rate Agent on
the basis of the noon buying rate for cable transfers in The City of New York,
as determined by the Federal Reserve Bank of New York, for such Currency on the
applicable trade date.
The Medium-Term Notes, Series C issued under the Senior Indenture, of which
the Senior Notes offered by this prospectus supplement will form a part,
constitute one series of Indenture Securities, unlimited as to principal amount,
established by the Company pursuant to the Senior Indenture. At the date of this
prospectus supplement, no Medium-Term Notes, Series C were outstanding under the
Senior Indenture.
The Medium-Term Notes, Series C issued under the Subordinated Indenture, of
which the Subordinated Notes offered by this prospectus supplement will form a
part, constitute one series of Indenture Securities, unlimited as to principal
amount, established by the Company, pursuant to the Subordinated Indenture. At
the date of this prospectus supplement, no Medium-Term Notes, Series C, were
outstanding under the Subordinated Indenture.
The Notes will be direct unsecured obligations of the Company. The Senior
Notes will rank equally with all other unsecured and unsubordinated indebtedness
of the Company. The Subordinated Notes will be subordinated in right of payment
to the prior payment in full of the Senior Indebtedness of the Company as
described under "Description of Debt Securities -- Subordinated Indenture
Provisions" in the accompanying prospectus. At April 30, 1994, total
consolidated Senior Indebtedness and Subordinated Indebtedness of the Company
were $4.6 billion and $301 million, respectively. At that date, John Deere
Capital Corporation, a wholly-owned subsidiary of the Company, had total senior
indebtedness and subordinated indebtedness of $2.9 billion and $300 million,
respectively.
The defeasance and covenant defeasance provisions of the Indentures
described under "Description of Debt Securities -- Provisions Applicable to Both
the Senior and Subordinated Indentures" in the accompanying prospectus will
apply to the Notes, with only such modifications thereto respecting any
particular issuance of Notes as shall be set forth in the applicable pricing
supplement.
The Notes will be denominated in U.S. dollars and payments of principal of
(and premium, if any) and interest, if any, on the Notes will be made in U.S.
dollars unless the pricing supplement indicates otherwise.
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For information regarding Foreign Currency Notes see "Special Provisions
Relating To Foreign Currency Notes", "Important Currency Exchange Information"
and "Foreign Currency Risks". Payment of the purchase price of the Notes must be
made in immediately available funds.
A Note may be issued as a Fixed Rate Note or a Floating Rate Note or as a
Note that is a Floating Rate Note for a specified portion of its term and a
Fixed Rate Note for the remainder of its term, all as specified in the
applicable pricing supplement.
The Notes also may be issued (a) as Currency Indexed Notes (as defined
below), the principal amount of which payable on the date of Maturity, and/or
the interest on which payable on each Interest Payment Date and on the date of
Maturity, will be determined by reference to the rate of exchange between the
Specified Currency and another Currency (the "Indexed Currency") set forth in
the applicable pricing supplement or (b) as other Indexed Notes the principal
amount of which payable on the date of Maturity, and/or the interest on which
payable on each Interest Payment Date and on the date of Maturity, will be
determined by reference to prices, changes in prices, or differences between
prices, of securities, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures as are specified in the
applicable pricing supplement. See "Currency Indexed Notes" and "Other Indexed
Notes and Certain Terms Applicable to All Indexed Notes".
Each Note will be issued in fully registered form and will be represented by
either one or more Global Securities ("Global Notes") registered in the name of
a nominee of DTC or another depository (DTC or such other depository as is
specified in the applicable pricing supplement is herein referred to as the
"Depository"), or a certificate issued in definitive form (a "Certificated
Note"), as set forth in the applicable pricing supplement. A single Global Note
will represent all Notes issued on the same day and having the same terms,
including, but not limited to, rank, Interest Payment Dates, interest rate or
formula, Maturity Date and redemption and repayment provisions, if any; PROVIDED
that one Global Note will be issued with respect to each $150 million principal
amount of such Notes and an additional Global Note will be issued with respect
to any remaining principal amount of such Notes. A beneficial interest in a
Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and its participants. See
"Description of Debt Securities -- Provisions Applicable to Both Senior and
Subordinated Indentures" in the accompanying prospectus for a description of the
Depository's procedures with respect to Book-Entry Debt Securities. Except as
set forth under "Description of Debt Securities -- Provisions Applicable to Both
Senior and Subordinated Indentures" in the accompanying prospectus, Global Notes
will not be issuable in certificated form.
The authorized denominations of Notes denominated in U.S. dollars will be
$1,000 and any integral multiple thereof. The authorized denominations of
Foreign Currency Notes will be set forth in the applicable pricing supplement.
Payments of principal of (and premium, if any) and interest, if any, on
Notes represented by a Global Note will be made to the Depository in accordance
with arrangements then in effect between the applicable Trustee and the
Depository.
Certificated Notes may be presented for registration of transfer or exchange
at the corporate trust office of the relevant Trustee in The City of New York.
Payments in U.S. dollars of interest on Certificated Notes (other than
interest payable on the Maturity Date or upon earlier redemption or repayment)
will be made by mailing a check to the holder at the address of such holder
appearing on the security register for the Notes on the applicable Regular
Record Date. Notwithstanding the foregoing, upon receipt of appropriate
instructions in writing from a holder of $10,000,000 or more in aggregate
principal amount of Certificated Notes issued under one of the Indentures
(whether having identical or different terms and provisions) by the applicable
Trustee on or prior to a Regular Record Date, such Trustee will make such
payments of interest commencing with the next succeeding Interest Payment Date
by transfer of immediately available funds to an account at a bank in The City
of New York (or another bank consented to by the Company) designated by such
holder, but only if such bank has the appropriate facilities therefor.
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Payments of principal of (and premium, if any) and interest, if any, on
Notes payable on the Maturity Date or upon earlier redemption or repayment on
Certificated Notes will be made to the holder in immediately available funds
upon surrender of the applicable Notes at the corporate trust office of the
relevant Trustee in The City of New York.
Notes may be issued in the form of zero-coupon notes that will be offered at
a discount from the principal amount thereof due on the Maturity Date of such
Notes. There will be no periodic payments of interest on zero-coupon notes. In
the event of an acceleration of the maturity of an Original Issue Discount Note,
the amount payable to the holder of such Note upon such acceleration will be
determined in accordance with the terms of the Note, but generally will be an
amount less than the amount payable on the Maturity Date of the principal of
such Note. In addition, a Note issued at a discount may, for federal income tax
purposes, be considered an original issue discount note, regardless of the
amount payable upon acceleration of the maturity of such Note. See "United
States Taxation -- United States Persons -- Discount Notes".
For a description of the rights attaching to Debt Securities under the
applicable Indenture, see "Description of Debt Securities" in the accompanying
prospectus. Unless otherwise specified in the applicable pricing supplement, the
Notes will have the terms described below, except that references to interest
payments and interest-related information do not apply to zero-coupon notes.
INTEREST AND INTEREST RATES
Each Note, other than an Original Issue Discount Note, will bear interest
from its date of issue at the annual rate, or at a rate determined pursuant to
an interest rate formula, stated in the applicable pricing supplement, until the
principal thereof is paid or duly made available for payment. Interest will be
payable on each Interest Payment Date and at Maturity. Any interest other than
at Maturity will be payable to the person in whose name a Note (or any
predecessor Note) is registered at the close of business on the Regular Record
Date next preceding the relevant Interest Payment Date, subject to certain
exceptions; PROVIDED, HOWEVER, if a Note is issued between a Regular Record Date
and the Interest Payment Date pertaining thereto, the initial interest payment
will be made on the Interest Payment Date following the next succeeding Regular
Record Date to the holder on such Regular Record Date. Interest payable at
Maturity will be paid to the person to whom the principal of the Note will be
paid.
All percentages resulting from any calculation in respect of the Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
7.123455% (or 0.07123455) being rounded to 7.12346% (or 0.0712346) and 7.123454%
(or 0.07123454) being rounded to 7.12345% (or 0.0712345)), and all currency
amounts used in or resulting from any such calculation will be rounded to the
nearest one-hundredth of a unit (with five one-thousandths of a unit being
rounded upwards).
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by New York law as the same may be modified by United States law
of general application. Under present New York law, the maximum rate of interest
is 25% per annum on a simple interest basis. This limit may not apply to Notes
in which $2,500,000 or more has been invested.
FIXED RATE NOTES
The "Interest Payment Dates" for Fixed Rate Notes will be March 15 and
September 15 of each year and the "Regular Record Dates" for Fixed Rate Notes
will be the March 1 and September 1, respectively, immediately preceding an
Interest Payment Date. Interest on Fixed Rate Notes will accrue from and
including the date of issue or from and including the next preceding Interest
Payment Date to which interest has been duly paid or provided for, as the case
may be, to but excluding the relevant Interest Payment Date or date of Maturity,
as the case may be. Any payment of principal of (or premium, if any) or
interest, if any, on a Fixed Rate Note required to be made on a day that is not
a Business Day need not be made on such day, but will be made on the next
succeeding Business Day with the same force and effect as if made on such day
and no interest will accrue as a result of such delayed payment. Interest on
Fixed Rate Notes will be computed and paid on the basis of a 360-day year of
twelve 30-day months.
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AMORTIZING NOTES
The Company may from time to time offer Fixed Rate Notes (the "Amortizing
Notes") that pay certain amounts in respect of both principal and interest over
the life of such Fixed Rate Notes. Payments with respect to Amortizing Notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. Further information concerning
additional terms and conditions of any issue of Amortizing Notes will be
provided in the applicable pricing supplement, including a table setting forth
repayment information for each payment date.
FLOATING RATE NOTES
The applicable pricing supplement will designate one or more of the
following interest rate bases as applicable to each Floating Rate Note: (a) the
CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a "Commercial Paper
Rate Note"), (c) the Federal Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR
(a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"), (f) the Treasury
Rate (a "Treasury Rate Note"), (g) the Constant Maturity Treasury Rate (a "CMT
Rate Note") or (h) such other interest rate basis as is set forth in such
pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
interest rate on each Floating Rate Note will be equal to (i) in the case of the
period, if any, commencing on the date of issue up to the first Interest Reset
Date (as defined below), an interest rate established by the Company as
described in the applicable pricing supplement and (ii) in the case of each
period commencing on an Interest Reset Date, an interest rate (the "Floating
Interest Rate") equal to (a) the interest rate determined by reference to the
specified interest rate basis plus or minus the Spread, if any, (b) the interest
rate calculated by reference to the specified interest rate basis multiplied by
the Spread Multiplier, if any, or (c) the interest rate calculated by reference
to the specified interest rate basis determined under such other formula or
adjusted in such other manner as may be specified in the applicable pricing
supplement; PROVIDED, HOWEVER, that the interest rate in effect for the ten days
immediately prior to the date of Maturity of such Note will be that in effect on
the 10th day preceding such date.
The "Spread" is the number of basis points specified in the applicable
pricing supplement as being applicable to a Floating Rate Note and the "Spread
Multiplier" is the percentage specified in the applicable pricing supplement as
being applicable to a Floating Rate Note. The specified interest rate basis will
be based on the Index Maturity. The "Index Maturity" is the period to maturity
of the instrument or obligation on which the interest rate formula is based. Any
Floating Rate Note may also have either or both of the following: (i) a maximum
numerical interest rate limitation, or ceiling, on the rate at which interest
may accrue during any Interest Period, as defined below, and (ii) a minimum
numerical interest rate limitation, or floor, on the rate at which interest may
accrue during any Interest Period.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually or at another interval, as
specified in the applicable pricing supplement. The date or dates on which the
interest rate will reset (each, an "Interest Reset Date") will be, in the case
of Floating Rate Notes that reset (a) daily, each Business Day, (b) weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate Notes),
(c) monthly, the third Wednesday of each month, (d) quarterly, the third
Wednesday of March, June, September and December of each year, (e) semi-
annually, the third Wednesday of the two months specified in the applicable
pricing supplement and (f) annually, the third Wednesday of the month specified
in the applicable pricing supplement. In the case of a Treasury Rate Note that
resets weekly, the Interest Reset Date will be the Tuesday of each week except
that if a Treasury auction falls on any Interest Reset Date for such Treasury
Rate Note, then such Interest Reset Date will instead be the first Business Day
immediately following such Treasury auction. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day for such
Floating Rate Note, the Interest Reset Date for such Floating Rate Note will be
postponed to the next succeeding Business Day, except that, in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business Day.
The "Interest Determination Date" pertaining to an Interest Reset Date for a
CD Rate Note, a CMT Rate Note, a Commercial Paper Rate Note, a Federal Funds
Rate Note and a Prime Rate Note will be the second Business Day preceding the
Interest Reset Date; the "Interest Determination Date" pertaining to an
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Interest Reset Date for a LIBOR Note will be the second London Banking Day
preceding such Interest Reset Date; and the "Interest Determination Date"
pertaining to an Interest Reset Date for a Treasury Rate Note will be the day of
the week in which such Interest Reset Date falls on which Treasury bills (as
defined below) would normally be auctioned. Treasury bills are usually sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be the
Interest Determination Date pertaining to the Interest Reset Date occurring in
the next succeeding week.
Interest will be payable in the case of Floating Rate Notes that reset (a)
daily, weekly or monthly, the third Wednesday of each month or the third
Wednesday of March, June, September and December of each year, as specified in
the applicable pricing supplement, (b) quarterly, the third Wednesday of March,
June, September and December of each year, (c) semi-annually, the third
Wednesday of the two months of each year specified in the applicable pricing
supplement and (d) annually, the third Wednesday of the two months or the month
specified in the applicable pricing supplement (each of the foregoing dates, an
"Interest Payment Date"); and, in each case, on the date of Maturity. Unless
otherwise specified in the applicable pricing supplement, each Regular Record
Date for a Floating Rate Note will be the 15th day (whether or not a Business
Day) next preceding each Interest Payment Date. If the date of Maturity of a
Floating Rate Note falls on a day that is not a Business Day, the principal of
(and premium, if any) and interest on such Note required to be paid on such date
will be paid on the next succeeding Business Day with the same force and effect
as if made on such date, and no interest shall accrue as a result of such
delayed payment. If any Interest Payment Date other than the date of Maturity
for a Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date will be postponed to the next day that is a Business
Day and interest will accrue for the period of such postponement, except that,
in the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Payment Date will be the immediately preceding
Business Day.
Interest on Floating Rate Notes will accrue from and including the date of
issue or from and including the next preceding Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, to but
excluding the next succeeding Interest Payment Date or date of Maturity, as the
case may be; PROVIDED, HOWEVER, that in the case of Floating Rate Notes on which
the interest rate is reset daily or weekly, the interest payments will include,
unless otherwise specified in the applicable pricing supplement, interest
accrued only from but excluding the last Regular Record Date through which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to such Notes) through and including the Regular
Record Date next preceding the applicable Interest Payment Date, except that the
interest payment on the date of Maturity will include interest accrued to but
excluding such date. An "Interest Period" pertaining to a Note means a period of
time during which interest accrues on such Note.
Accrued interest with respect to a Floating Rate Note will be calculated by
multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factor calculated for each day in the Interest Period or from the date
from which accrued interest is being calculated. The interest factor for each
such day is computed by dividing the interest rate in effect on such day by 360,
in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate
Notes, Prime Rate Notes and LIBOR Notes, or by the actual number of days in the
year, in the case of Treasury Rate Notes and CMT Rate Notes.
Unless otherwise specified in the applicable pricing supplement, the
calculation agent (the "Calculation Agent") for purposes of determining the rate
of interest payable on Floating Rate Notes will be The Chase Manhattan Bank
(National Association) for Senior Notes and Chemical Bank for Subordinated
Notes. If the applicable Calculation Agent is unwilling or unable to so act,
such other institution as may be selected by the Company. Upon the request of
the holder of a Floating Rate Note, the Calculation Agent will provide the
interest rate then in effect and, if determined, the interest rate that will
become effective on the next Interest Reset Date with respect to such Floating
Rate Note. The "Calculation Date", where applicable, pertaining to any Interest
Determination Date is the date by which the applicable interest rate is
calculated and is the
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earlier of (i) the tenth calendar day after such Interest Determination Date or,
if any such day is not a Business Day, the next succeeding Business Day and (ii)
the Business Day preceding the applicable Interest Payment Date or date of
Maturity, as the case may be.
The applicable pricing supplement will specify the particular terms of each
Floating Rate Note, including, but not limited to, the interest rate basis and
the Spread, Spread Multiplier or other formula, if any, the maximum or minimum
interest rate limitation, if any, the Index Maturity, the initial interest rate,
the Interest Payment Dates, the Regular Record Dates, the Maturity Date,
redemption and repayment provisions, if any, and any other applicable terms with
respect to such Note.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread, Spread Multiplier or other formula, if
any) specified in the applicable pricing supplement.
"CD Rate" means, with respect to any Interest Determination Date for a CD
Rate Note, the rate on such date for negotiable certificates of deposit having
the Index Maturity designated in the applicable pricing supplement as published
in "Statistical Release H.15(519), Selected Interest Rates", or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the caption "CDs (secondary market)" or, if not yet
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the rate on such Interest Determination
Date for negotiable certificates of deposit having the Index Maturity designated
in the applicable pricing supplement as published in the daily statistical
release entitled "Composite 3:30 P.M. Quotations for U.S. Government
Securities", or any successor publication, published by the Federal Reserve Bank
of New York ("Composite Quotations") under the caption "Certificates of
Deposit". If by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date such rate is not yet published in
either H.15(519) or Composite Quotations, the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York
City time, on such Interest Determination Date, of three leading non-bank
dealers in negotiable U.S. dollar certificates of deposit in The City of New
York (which may include the Agents) selected by the Calculation Agent (after
consultation with the Company) for negotiable certificates of deposit of major
United States money market banks of the highest credit standing (in the market
for negotiable certificates of deposit) having a remaining maturity closest to
the Index Maturity designated in the applicable pricing supplement in a
denomination of $5,000,000; PROVIDED, HOWEVER, that, if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the interest rate for the period commencing on the Interest Reset Date
following such Interest Determination Date will be the interest rate in effect
on such Interest Determination Date.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread, Spread
Multiplier or other formula, if any) specified in the applicable pricing
supplement.
"Commercial Paper Rate" means, with respect to any Interest Determination
Date for a Commercial Paper Rate Note, the Money Market Yield (calculated as
described below) of the rate on such date for commercial paper having the Index
Maturity designated in the applicable pricing supplement as published in
H.15(519) under the caption "Commercial paper" or, if not yet published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Money Market Yield of the rate on such Interest
Determination Date for commercial paper having the Index Maturity designated in
the applicable pricing supplement as published in Composite Quotations under the
caption "Commercial Paper". If by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date such rate is not
yet published in either H.15(519) or Composite Quotations, the Commercial Paper
Rate on such Interest Determination Date will be calculated by the Calculation
Agent and will be the Money Market Yield of the arithmetic mean of the offered
rates as of 11:00 A.M., New York City time, on such Interest Determination Date,
of three leading dealers in commercial paper in The City of New York selected by
the Calculation Agent (after consultation with the Company) for commercial paper
having the Index Maturity designated in the applicable pricing supplement placed
for an industrial issuer whose bond rating is
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"AA", or the equivalent, from a nationally recognized securities rating agency;
PROVIDED, HOWEVER, that, if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date will be the interest rate in effect on such Interest
Determination Date.
"Money Market Yield" will be a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = ----------------- X 100
360 - (D X M)
where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the Interest Period for which interest is being calculated.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread, Spread
Multiplier or other formula, if any) specified in the applicable pricing
supplement.
"Federal Funds Rate" means, with respect to any Interest Determination Date
for a Federal Funds Rate Note, the rate on such date for federal funds as
published in H.15(519) under the caption "Federal funds (effective)" or, if not
yet published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the rate on such Interest
Determination Date as published in Composite Quotations under the caption
"Federal Funds/Effective Rate". If, by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date such rate is not
yet published in either H.15(519) or Composite Quotations, the Federal Funds
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight federal funds arranged by three leading dealers of federal funds
transactions in The City of New York, which dealers have been selected by the
Calculation Agent (after consultation with the Company), as of 9:00 A.M., New
York City time, on such Interest Determination Date; PROVIDED, HOWEVER, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the interest rate for the period commencing on the
Interest Reset Date following such Interest Determination Date will be the
interest rate in effect on such Interest Determination Date.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread, Spread Multiplier or other formula, if any)
specified in the applicable pricing supplement.
LIBOR with respect to LIBOR Notes indexed to the offered rate for U.S.
dollar deposits will be determined by the Calculation Agent in accordance with
the following provisions under USD-LIBOR-Reuters or under USD-LIBOR-Telerate, as
specified in the applicable pricing supplement:
(i) If USD-LIBOR-Reuters is specified in the applicable pricing
supplement for a LIBOR Note as the method for determining LIBOR with respect
to an Interest Determination Date for such LIBOR Note, LIBOR will be
determined on the basis of the offered rates for deposits in U.S. dollars
having the Index Maturity specified in the applicable pricing supplement,
commencing on the second London Banking Day immediately following such
Interest Determination Date, which appear on the Reuters Screen LIBO Page as
of 11:00 A.M., London time, on such Interest Determination Date. "Reuters
Screen LIBO Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO page
on that service for the purpose of displaying London interbank offered rates
of major banks). If at least two such offered rates appear on the Reuters
Screen LIBO Page, LIBOR for such Interest Determination Date will be the
arithmetic mean of such offered rates as determined by the Calculation
Agent. If fewer than two offered rates appear, LIBOR in respect of such
Interest Determination Date will be determined as described in (iii) below.
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(ii) If USD-LIBOR-Telerate is specified in the applicable pricing
supplement for a LIBOR Note as the method for determining LIBOR or if no
other method is specified in the applicable pricing supplement for a LIBOR
Note as the method for determining LIBOR with respect to an Interest
Determination Date for such LIBOR Note, LIBOR will be the rate for deposits
in U.S. dollars having the Index Maturity designated in the applicable
pricing supplement, commencing on the second London Banking Day immediately
following such Interest Determination Date, which appears on Telerate Page
3750 as of 11:00 A.M., London time, on such Interest Determination Date.
"Telerate Page 3750" means the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that
service, or such other service as may be nominated as the information
vendor, for the purpose of displaying London interbank offered rates of
major banks). If such rate does not appear on Telerate Page 3750, LIBOR for
such Interest Determination Date will be determined as described in (iii)
below.
(iii) With respect to an Interest Determination Date, if
USD-LIBOR-Reuters is the applicable interest rate basis for determining
LIBOR and fewer than two offered rates appear on the Reuters Screen LIBO
Page as specified in (i) above or if USD-LIBOR-Telerate is the applicable
interest rate basis for determining LIBOR and no rate appears on Telerate
Page 3750 as specified in (ii) above, then LIBOR will be determined on the
basis of the rate at which deposits in U.S. dollars are offered by four
major banks in the London interbank market, which banks have been selected
by the Calculation Agent (after consultation with the Company) (the
"Reference Banks"), at approximately 11:00 A.M., London time, on such
Interest Determination Date commencing on the second London Banking Day
immediately following such Interest Determination Date to prime banks in the
London interbank market having the Index Maturity designated in the
applicable pricing supplement and in a principal amount equal to an amount
of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time. The Calculation Agent will request
the principal London office of each of such Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, LIBOR
in respect of such Interest Determination Date will be the arithmetic mean
of such quotations. If fewer than two quotations are provided, LIBOR in
respect of such Interest Determination Date will be the arithmetic mean of
the rates quoted by three major banks in The City of New York selected by
the Calculation Agent (after consultation with the Company) at approximately
11:00 A.M., New York City time, on such Interest Determination Date for
loans in U.S. dollars to leading European banks, having the Index Maturity
designated in the applicable pricing supplement commencing on the second
London Banking Day immediately following such Interest Determination Date
and in a principal amount equal to an amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market at
such time; PROVIDED, HOWEVER, that, if the banks in The City of New York
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, the interest rate for the period commencing on the
Interest Reset Date following such Interest Determination Date will be the
interest rate in effect on such Interest Determination Date.
If any LIBOR Note is indexed to the offered rates in a Currency other than
U.S. dollars, the applicable pricing supplement will set forth the method for
determining such rate.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread, Spread Multiplier or other formula,
if any) specified in the applicable pricing supplement.
"Prime Rate" means, with respect to any Interest Determination Date for a
Prime Rate Note, the rate on such date as published in H.15(519) under the
caption "Bank prime loan" or, if not yet published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced by each bank named
on the "Reuters Screen NYMF Page" as such bank's prime rate or base lending rate
as in effect for such Interest Determination Date. "Reuters Screen NYMF Page"
means the display designated as page "NYMF" on the Reuters Monitor Money Rates
Service (such term to include such other page as may replace the NYMF page on
that service for the purpose of displaying prime rates or base lending rates of
major United States banks). If fewer than four such rates appear on the Reuters
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Screen NYMF Page for such Interest Determination Date, the Prime Rate will be
determined by the Calculation Agent and will be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by
360 as of the close of business on such Interest Determination Date by four
major money center banks in The City of New York selected by the Calculation
Agent (after consultation with the Company). If fewer than four major money
center banks provide such quotations, such Prime Rate will be calculated by the
Calculation Agent and will be the arithmetic mean of four prime rates quoted on
the basis of the actual number of days in the year divided by 360 as of the
close of business on such Interest Determination Date as furnished in The City
of New York by the major money center banks that have provided quotations and by
as many substitute banks or trust companies as necessary, which are organized
and doing business under the laws of the United States, or any state thereof, in
each case having total equity capital of at least U.S. $500,000,000 and being
subject to supervision or examination by federal or state authority, selected by
the Calculation Agent (after consultation with the Company) to provide such rate
or rates; PROVIDED, HOWEVER, that, if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the interest rate for the period commencing on the Interest Reset Date
following such Interest Determination Date will be the interest rate in effect
on such Interest Determination Date.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rate (calculated with
reference to the Treasury Rate and the Spread, Spread Multiplier or other
formula, if any) specified in the applicable pricing supplement.
"Treasury Rate" means, with respect to any Interest Determination Date for a
Treasury Rate Note, the rate for the auction of direct obligations of the United
States ("Treasury bills") held on such Interest Determination Date having the
Index Maturity designated in the applicable pricing supplement as published in
H.15(519) under the caption "Treasury bills-Auction average (investment)" or, if
not yet published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the auction average rate for
such Interest Determination Date (expressed as a bond equivalent, on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury bills having the Index
Maturity designated in the applicable pricing supplement are not otherwise
reported as provided above by 3:00 P.M., New York City time, on such Calculation
Date or no such auction is held in a particular week, the Treasury Rate will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of 3:30 P.M., New York City time, on such Interest Determination Date,
of three leading primary United States government securities dealers selected by
the Calculation Agent (after consultation with the Company) for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity specified
in the applicable pricing supplement; PROVIDED, HOWEVER, that, if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the interest rate for the period commencing on the Interest Reset
Date following such Interest Determination Date will be the interest rate in
effect on such Interest Determination Date.
CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the Constant Maturity Treasury Rate and the Spread, Spread
Multiplier or other formula, if any) specified in the applicable pricing
supplement.
"CMT Rate" means, with respect to any Interest Determination Date for a CMT
Rate Note, the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption " . . . Treasury Constant Maturities . . . Federal
Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.", under the
column for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, the rate on such Interest Determination
Date and (ii) if the Designated CMT Telerate Page is 7052, the rate for the week
or the month, as applicable, ended immediately preceding the week in which the
related Interest Determination Date occurs. If such rate is no longer displayed
on the relevant page, or if not
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displayed by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the interest rate for such Interest
Determination Date will be the rate for the Designated CMT Maturity Index as
published in H.15(519) under the caption "U.S. government securities/Treasury
constant maturities." If such rate is no longer published, or if not published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the interest rate for such Interest
Determination Date will be the rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) as may
then be published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation Agent
determines (with the concurrence of the Company) to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in
H.15(519). If such information is not provided by 3:00 P.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, then the
interest rate for such Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30 P.M.,
New York City time, on such Interest Determination Date, reported by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in The City of New York, for the most recently issued direct
noncallable fixed rate obligations of the United States ("U.S. Treasury Notes")
with an original maturity of approximately the Designated CMT Maturity Index and
a remaining term to maturity of not less than such Designated CMT Maturity index
minus one year. The three Reference Dealers will be determined by (i) the
selection of five Reference Dealers by the Calculation Agent (after consultation
with the Company) and (ii) the elimination of the Reference Dealers providing
the highest (or, in the event of equality, one of the highest) and the lowest
(or, in the event of equality, one of the lowest) quotations for such Interest
Determination Date. If the Calculation Agent cannot obtain three such U.S.
Treasury Note quotations, the interest rate for such Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest Determination Date,
reported by three Reference Dealers in The City of New York, selected in the
manner described above, for U.S. Treasury Notes with an original maturity of the
number of years that is the next highest to the Designated CMT Maturity Index
and a remaining term to maturity closest to the Designated CMT Maturity index
and in an amount of at least $100 million. If only three or four such Reference
Dealers are quoting as described above, then the interest rate will be based on
the arithmetic mean of the offer side prices so obtained from all such Reference
Dealers, without eliminating the Reference Dealers providing the highest and the
lowest of such quotes. If fewer than three such Reference Dealers are quoting as
described above, then the interest rate will be the CMT Rate in effect on such
Interest Determination Date. If two such U.S. Treasury Notes have remaining
terms to maturity equally close to the Designated CMT Maturity Index, the quotes
for the U.S. Treasury Note with the shorter remaining term to maturity will be
used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable pricing supplement (or any
other page as may replace such page on that service for the purpose of
displaying treasury constant maturities as reported in H.15(519)). If no such
page is so specified, the Designated CMT Telerate Page shall be 7052 for the
most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities specified in the applicable pricing supplement with
respect to which the CMT Rate will be calculated. If no such maturity is so
specified, the Designated CMT Maturity Index shall be 2 years.
INVERSE FLOATING RATE NOTES
Any Floating Rate Note may be designated in the applicable pricing
supplement as an "Inverse Floating Rate Note", in which event the interest rate
on such Floating Rate Note will be equal to (i) in the case of the period
commencing on the date of issue up to the first Interest Reset Date, a fixed
rate of interest established by the Company as described in the applicable
pricing supplement and (ii) in the case of each period commencing on an Interest
Reset Date, a fixed rate of interest specified in the applicable pricing
supplement minus the interest rate determined by reference to the Floating
Interest Rate; PROVIDED, HOWEVER, that the interest rate thereon will not be
less than zero and the interest rate in effect for the ten days immediately
prior to the date of Maturity of such Inverse Floating Rate Note will be that in
effect on the 10th day preceding such date.
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FLOATING RATE/FIXED RATE NOTES
The applicable pricing supplement may provide that a Note will be a Floating
Rate Note for a specified portion of its term and a Fixed Rate Note for the
remainder of its term, in which event the interest rate on such Note will be
determined as herein provided as if it were a Floating Rate Note and a Fixed
Rate Note hereunder for each such respective period, all as specified in such
applicable pricing supplement.
CURRENCY INDEXED NOTES
The Company may from time to time offer Indexed Notes the principal amount
of which payable on the date of Maturity and/or the interest payable on each
Interest Payment Date and on the date of Maturity will be determined by
reference to the rate of exchange between the Specified Currency and the other
Currency specified as the Indexed Currency in the applicable pricing supplement,
or determined in such other manner as may be specified in the applicable pricing
supplement ("Currency Indexed Notes"). Unless otherwise specified in the
applicable pricing supplement, and subject to the limitations set forth under
"Payment of Principal and Interest" below, holders of Currency Indexed Notes
will be entitled to receive (i) a principal amount exceeding the amount
designated as the face amount (the "Face Amount") of such Currency Indexed Note
and/or an amount of interest at an interest rate exceeding the stated rate of
interest, if, on the date of Maturity or the relevant Interest Payment Date, the
rate at which the Specified Currency can be exchanged for the Indexed Currency
is greater than the rate of such exchange designated as the Base Exchange Rate,
expressed in units of the Indexed Currency per one unit of the Specified
Currency, in the applicable pricing supplement (the "Base Exchange Rate"), or
(ii) a principal amount less than the Face Amount of such Currency Indexed Note
and/or an amount of interest at an interest rate less than the stated rate of
interest if, on the date of Maturity or the relevant Interest Payment Date, the
rate at which the Specified Currency can be exchanged for the Indexed Currency
is less than such Base Exchange Rate, in each case determined as described below
under "Payment of Principal and Interest". Information as to the relative
historical value (which is not necessarily predictive of future value) of the
applicable Specified Currency against the applicable Indexed Currency, any
exchange controls applicable to such Specified Currency or Indexed Currency and
certain tax consequences to holders will be set forth in the applicable pricing
supplement. See "Foreign Currency Risks" below.
The term "Exchange Rate Day" means any day that is a Business Day in The
City of New York and, if the Specified Currency or Indexed Currency is a
Currency other than the U.S. dollar, in the principal financial center of the
country of such Specified Currency or Indexed Currency.
PAYMENT OF PRINCIPAL AND INTEREST
Interest on a Currency Indexed Note, if indexed, will be payable by the
Company and calculated in the manner set forth herein and in the applicable
pricing supplement.
Principal on a Currency Indexed Note, if indexed, will be payable by the
Company in the Specified Currency on the date of Maturity in an amount equal to
the Face Amount of such Currency Indexed Note, plus or minus an amount of the
Specified Currency determined by the determination agent specified in the
applicable pricing supplement (the "Determination Agent") by reference to the
difference between the Base Exchange Rate and the rate at which the Specified
Currency can be exchanged for the Indexed Currency as determined on the second
Exchange Rate Day (the "Determination Date") prior to the date of Maturity of
such Currency Indexed Note by the Determination Agent based upon the arithmetic
mean of the open market spot offer quotations for the Indexed Currency (spot bid
quotations for the Specified Currency) obtained by the Determination Agent from
the Reference Dealers (as defined below) in The City of New York at 11:00 A.M.,
New York City time, on the Determination Date, for an amount of Indexed Currency
equal to the Face Amount of such Currency Indexed Note multiplied by the Base
Exchange Rate, in terms of the Specified Currency for settlement on the date of
Maturity (such rate of exchange, as so determined and expressed in units of the
Indexed Currency per one unit of the Specified Currency, is hereinafter referred
to as the "Spot Rate"). If such quotations from the Reference Dealers are not
available on the Determination Date due to circumstances beyond the control of
the Company or the Determination Agent, the Spot Rate will be determined on the
basis of the most recently available quotations from the Reference Dealers. The
principal amount of the Currency Indexed Notes determined by the Determination
Agent to be payable on the date of Maturity will be payable to the holders
thereof in the manner set forth herein and in the
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applicable pricing supplement. As used herein, the term "Reference Dealers"
shall mean the three banks or firms specified as such in the applicable pricing
supplement or, if any of them shall be unwilling or unable to provide the
requested quotations, such other major money center bank or banks in The City of
New York, selected by the Company, in consultation with the Determination Agent,
to act as Reference Dealer or Dealers in replacement therefor. In the absence of
manifest error, the determination by the Determination Agent of the Spot Rate
and the principal amount of Currency Indexed Notes payable on the date of
Maturity thereof will be final and binding on the Company and the holders of
such Currency Indexed Notes.
On the basis of the aforesaid determination by the Determination Agent and
the formulas and limitations set forth below, (i) if the Base Exchange Rate
equals the Spot Rate for any Currency Indexed Note, then the principal amount of
such Currency Indexed Note payable on the date of Maturity will be equal to the
Face Amount of such Currency Indexed Note; (ii) if the Spot Rate exceeds the
Base Exchange Rate (I.E., the Specified Currency has appreciated against the
Indexed Currency during the term of the Currency Indexed Note), then the
principal amount so payable will be greater than the Face Amount of such
Currency Indexed Note up to an amount equal to twice the Face Amount of such
Currency Indexed Note; (iii) if the Spot Rate is less than the Base Exchange
Rate (I.E., the Specified Currency has depreciated against the Indexed Currency
during the term of the Currency Indexed Note) but is greater than one-half of
the Base Exchange Rate, then the principal amount so payable will be less than
the Face Amount of such Currency Indexed Note; and (iv) if the Spot Rate is less
than or equal to one-half of the Base Exchange Rate, then the Spot Rate will be
deemed to be one-half of the Base Exchange Rate and no principal amount of the
Currency Indexed Note will be payable on the date of Maturity.
Unless otherwise specified in the applicable pricing supplement, the
formulas to be used by the Determination Agent to determine the principal amount
of a Currency Indexed Note payable on the date of Maturity will be as follows:
If the Spot Rate exceeds or equals the Base Exchange Rate, the principal
amount of a Currency Indexed Note payable on the date of Maturity will
equal:
Spot Rate - Base Exchange Rate
Face Amount + ( Face Amount X -------------------------------- )
Spot Rate
If the Base Exchange Rate exceeds the Spot Rate, the principal amount of
a Currency Indexed Note payable on the date of Maturity (which will, in no
event, be less than zero) will equal:
Base Exchange Rate - Spot Rate
Face Amount - ( Face Amount X -------------------------------- )
Spot Rate
If the formulas set forth above are applicable to a Currency Indexed Note,
the maximum principal amount payable on the date of Maturity in respect of such
a Currency Indexed Note will be an amount equal to twice the Face Amount and the
minimum principal amount payable will be zero.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS
AS TO THE RISKS ENTAILED BY AN INVESTMENT IN CURRENCY INDEXED NOTES. CURRENCY
INDEXED NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY MATTERS.
OTHER INDEXED NOTES AND CERTAIN TERMS APPLICABLE TO ALL INDEXED NOTES
The Company may from time to time offer Indexed Notes, other than Currency
Indexed Notes, the principal amount (or premium, if any) of which payable on the
date of Maturity and/or the interest on which payable on each Interest Payment
Date and on the date of Maturity will be determined by reference to prices,
changes in prices, or differences between prices, of securities, intangibles,
goods, articles or commodities or by such other objective price, economic or
other measures. The pricing supplement relating to such an Indexed Note will
describe, as applicable, the method by which the amount of interest, premium and
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principal payable in respect of such Indexed Note will be determined, certain
special tax consequences to holders of such Notes, certain risks associated with
an investment in such Notes and other information relating to such Notes.
Unless otherwise specified in the applicable pricing supplement, (i) for the
purpose of determining whether holders of the requisite principal amount of Debt
Securities outstanding under the applicable Indenture have made a demand or
given a notice or waiver or taken any other action, the outstanding principal
amount of Indexed Notes will be deemed to be the Face Amount thereof, and (ii)
in the event of an acceleration of the maturity of an Indexed Note, the
principal amount payable to the holder of such Note upon acceleration will be
the principal amount determined by reference to the formula by which the
principal amount of such Note would be determined on the Maturity Date thereof,
as if the date of acceleration were the Maturity Date.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS
AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. INDEXED NOTES ARE
NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT
TO FOREIGN CURRENCY TRANSACTIONS, COMMODITY PRICES AND COMMODITY AND FINANCIAL
OR NON-FINANCIAL INDICES.
SUBSEQUENT INTEREST PERIODS
The pricing supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate, in
the case of a Fixed Rate Note, or to reset the Spread, Spread Multiplier or
other formula by which the interest rate basis is adjusted (collectively, the
"Floating Rate Formula"), in the case of a Floating Rate Note, and, if so, the
date or dates on which such interest rate or such Floating Rate Formula, as the
case may be, may be reset (each, an "Optional Reset Date"). If the Company has
such option with respect to any Note, the following procedures will apply.
The Company may exercise such option with respect to a Note by notifying the
applicable Trustee of such exercise at least 45 but not more than 60 days prior
to an Optional Reset Date for such Note. Not later than 40 days prior to such
Optional Reset Date, the applicable Trustee will mail to the holder of such Note
a notice (the "Reset Notice") setting forth (i) the election of the Company to
reset the interest rate, in the case of a Fixed Rate Note, or the Floating Rate
Formula, in the case of a Floating Rate Note, (ii) such new interest rate or
such new Floating Rate Formula, as the case may be, and (iii) the provisions, if
any, for redemption during the period from such Optional Reset Date to the next
Optional Reset Date or, if there is no such next Optional Reset Date, to the
Maturity Date of such Note (each such period, a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, if provided in the applicable pricing
supplement, at its option, revoke the interest rate, in the case of a Fixed Rate
Note, or the Floating Rate Formula, in the case of a Floating Rate Note,
provided for in the Reset Notice and establish a higher interest rate, in the
case of a Fixed Rate Note, or a Floating Rate Formula providing for higher
interest rates, in the case of a Floating Rate Note, for the Subsequent Interest
Period commencing on such Optional Reset Date by causing the applicable Trustee
to transmit notice of such interest rate or higher Floating Rate Formula, as the
case may be, to the holder of such Note. Such notice will be irrevocable. All
Notes with respect to which the interest rate or Floating Rate Formula is reset
on an Optional Reset Date will bear such higher interest rate, in the case of a
Fixed Rate Note, or Floating Rate Formula providing for higher interest rates,
in the case of a Floating Rate Note.
If the Company elects to reset the interest rate of a Fixed Rate Note or the
Floating Rate Formula of a Floating Rate Note, as described above, the holder of
such Note may, if provided for in the applicable pricing supplement, have the
option to elect repayment of such Note by the Company on any Optional Reset Date
at a price equal to the principal amount thereof plus any accrued interest to
such Optional Reset Date. In order for a Note to be so repaid on an Optional
Reset Date, the holder thereof must follow the procedures set forth below under
"Repayment and Repurchase" for optional repayment, except that the period for
delivery of such Note or notification to the applicable Trustee will be at least
25 but not more than 35 days prior to
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such Optional Reset Date and except that a holder who has tendered a Note for
repayment pursuant to a Reset Notice may, by written notice to such Trustee,
revoke any such tender for repayment until the close of business on the tenth
day prior to such Optional Reset Date.
EXTENSION OF MATURITY
The pricing supplement relating to each Note will indicate whether the
Company has the option to extend the Maturity Date of such Note for one or more
periods (each an "Extension Period") up to but not beyond the date (the "Final
Maturity Date") specified in such pricing supplement. If the Company has such
option with respect to any Note, the following procedures will apply.
The Company may exercise such option with respect to a Note by notifying the
applicable Trustee of such exercise at least 45 but not more than 60 days prior
to the Maturity Date of such Note in effect prior to the exercise of such option
(the "Original Maturity Date"). No later than 40 days prior to the Original
Maturity Date, the applicable Trustee will mail to the holder of such Note a
notice (the "Extension Notice") relating to such Extension Period, setting forth
(i) the election of the Company to extend the Maturity Date of such Note, (ii)
the new Maturity Date, (iii) in the case of a Fixed Rate Note, the interest rate
applicable to the Extension Period or, in the case of a Floating Rate Note, the
Floating Rate Formula applicable to the Extension Period, and (iv) the
provisions, if any, for redemption during the Extension Period, including the
date or dates on which or the period or periods during which and the price or
prices at which such redemption may occur. Upon the transmittal by the
applicable Trustee of an Extension Notice to the holder of a Note, the Maturity
Date of such Note will be extended automatically, and, except as modified by the
Extension Notice and as described in the next paragraph, such Note will have the
same terms as prior to the transmittal of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Maturity Date for a Note, the Company may, if provided in the applicable pricing
supplement, at its option, reset the interest rate, in the case of a Fixed Rate
Note, or the Floating Rate Formula, in the case of a Floating Rate Note,
provided for in the Extension Notice and establish a higher interest rate, in
the case of a Fixed Rate Note, or a Floating Rate Formula providing for higher
interest rates, in the case of a Floating Rate Note, for the Extension Period by
causing the applicable Trustee to transmit notice of such higher interest rate
or Floating Rate Formula, as the case may be, to the holder of such Note. Such
notice will be irrevocable. All Notes with respect to which the Maturity Date is
extended will bear such higher interest rate, in the case of a Fixed Rate Note,
or Floating Rate Formula providing for higher interest rates, in the case of a
Floating Rate Note, for the Extension Period.
If the Company elects to reset the interest rate or the Floating Rate
Formula of a Note, as provided in the preceding paragraph, the holder of such
Note may, if provided in the applicable pricing supplement, have the option to
elect repayment of such Note by the Company on the Original Maturity Date at a
price equal to the principal amount thereof plus any accrued interest to such
date. In order for a Note to be so repaid on the Original Maturity Date, the
holder thereof must follow the procedures set forth below under "Repayment and
Repurchase" for optional repayment, except that the period for delivery of such
Note or notification to the applicable Trustee will be at least 25 but not more
than 35 days prior to the Original Maturity Date and except that a holder who
has tendered a Note for repayment pursuant to an Extension Notice may, by
written notice to the applicable Trustee, revoke any such tender for repayment
until the close of business on the tenth day prior to the Original Maturity
Date.
REDEMPTION
The pricing supplement relating to each Note will indicate whether such Note
will be subject to redemption by the Company and, if so, the initial redemption
date applicable to such Note (the "Initial Redemption Date"). If no Initial
Redemption Date is indicated with respect to a Note, such Note will not be
redeemable prior to the Maturity Date. On and after the Initial Redemption Date
with respect to any Note, such Note will be redeemable at any time in whole or
in part in increments of $1,000 (provided that any remaining principal amount of
such Note will not be less than the minimum authorized denomination of such
Note) at the option of the Company at a redemption price (the "Redemption
Price") determined in accordance with the following paragraph, together with
interest accrued to the date of redemption, on notice given not more than 60 nor
less than 30 days prior to the date of redemption.
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The Redemption Price for each Note subject to redemption will be (i) in the
case of Notes other than Original Issue Discount Notes, the unpaid principal
amount of such Note or the portion thereof redeemed or (ii) in the case of
Original Issue Discount Notes, an amount equal to the issue price of such
Original Issue Discount Note plus accrued original issue discount to the date of
redemption, in either case multiplied by a certain percentage not less than
100%, which will initially be the percentage (the "Initial Redemption
Percentage") specified in the applicable pricing supplement and which will
decline at each anniversary of the Initial Redemption Date with respect to such
Note by a percentage (the "Annual Redemption Percentage Reduction") of the
principal amount (or, in the case of Original Issue Discount Notes, of the issue
price plus accrued original issue discount) to be redeemed until the Redemption
Price is 100% of such amount. The Initial Redemption Percentage and any Annual
Redemption Percentage Reduction with respect to each Note subject to redemption
prior to the Maturity Date will be fixed at the time of sale and specified in
the applicable pricing supplement.
The Notes will not be subject to any sinking fund.
REPAYMENT AND REPURCHASE
The pricing supplement relating to each Note will indicate whether such Note
will be subject to repayment at the option of the holders thereof and, if so,
the terms of such repayment option and the optional repayment dates applicable
to such Note (the "Optional Repayment Dates"). If no Optional Repayment Date is
specified with respect to a Note, such Note will not be repayable at the option
of the holder prior to the Maturity Date. On any Optional Repayment Date with
respect to any Note, such Note will be repayable in whole or in part in
increments of $1,000 (provided that any remaining principal amount of such Note
will not be less than the minimum authorized denomination of such Note) at the
option of the holder thereof at a repayment price specified in the applicable
pricing supplement, together with interest accrued thereon to the date of
repayment.
In order for a Note to be repaid at the option of the holder, the applicable
Trustee must receive the Note, at least 30 days but not more than 45 days prior
to the repayment date, with the section entitled "Option to Elect Repayment" on
the reverse of the Note duly completed.
With respect to a Global Note, the Depository's nominee that is the
registered holder of such Global Note will be the only entity that can exercise
a right to repayment. In order to ensure the timely exercise of a right to
repayment, the owner of a beneficial interest in a Global Note must instruct the
broker or other direct or indirect participant through which it holds a
beneficial interest in such Global Note to notify the Depository of its desire
to exercise such right. Each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Global
Note in order to ascertain the deadline by which such an instruction must be
given in order for timely notice to be delivered by the applicable broker or
participant to the Depository.
The Company may purchase Notes at any price in the open market or otherwise.
Notes so purchased by the Company may, at the discretion of the Company, be
held, resold or surrendered to the applicable Trustee for cancellation.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
Unless otherwise specified in the applicable pricing supplement, the
principal of (and premium, if any) and interest, if any, on Foreign Currency
Notes will be paid in U.S. dollars (converted from such Specified Currency in
the manner described in the next paragraph), unless such holder elects to be
paid in such Specified Currency.
Unless otherwise specified in the applicable pricing supplement, the amount
of U.S. dollar payments to be received by a holder of a Foreign Currency Note
will be based on the bid quotation in The City of New York at approximately
11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date by the Exchange Rate Agent for the purchase by the
Exchange Rate Agent of the Specified Currency for U.S. dollars for settlement on
such payment date in the aggregate amount of the Specified Currency payable to
all holders of Foreign Currency Notes scheduled to receive U.S. dollar payments
and at which the Exchange Rate Agent commits to execute a contract. If such bid
quotation is not available, payments will be made in the Specified Currency.
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Unless otherwise specified in the applicable pricing supplement, a holder of
Foreign Currency Notes may elect to receive payment of principal of (and
premium, if any) and interest, if any, on the Foreign Currency Notes in the
Specified Currency (subject to certain conditions, see "Foreign Currency Risks
- -- Payment Currency" below) by transmitting a written request for such payment
to the corporate trust office of the applicable Trustee in The City of New York
on or prior to the Regular Record Date or at least 16 days prior to the date of
Maturity, as the case may be. Such request may be in writing (mailed or hand
delivered) or by cable, telex or other form of facsimile transmission. A holder
of a Foreign Currency Note may elect to receive payment in the Specified
Currency for all principal (premium, if any) and interest, if any, payments and
need not file a separate election for each payment. Such election will remain in
effect until revoked by written notice to the applicable Trustee, but written
notice of any such revocation must be received by such Trustee on or prior to
the Regular Record Date or at least 16 days prior to the date of Maturity, as
the case may be. Holders of Foreign Currency Notes whose Notes are to be held in
the name of a broker or nominee should contact such broker or nominee to
determine whether and how an election to receive payments in the Specified
Currency may be made.
All currency exchange costs will be borne by the Company unless a holder of
a Note has made the election to receive payments in the Specified Currency
referred to in the preceding paragraph. In that case, such holder will bear its
pro rata portion of currency exchange costs, if any, by deductions from payments
otherwise due to such holder.
Principal of (and premium, if any) and interest, if any, on Foreign Currency
Notes paid in U.S. dollars will be paid in the manner specified above for Notes
denominated in U.S. dollars. Interest on Foreign Currency Notes paid in the
Specified Currency, other than interest payable at Maturity, will be paid by the
applicable Trustee on the relevant Interest Payment Date to the holders thereof
by transfer of immediately available funds to an account at a bank designated by
such holders, but only if such bank has the appropriate facilities therefor.
Unless otherwise specified in the applicable pricing supplement, the principal
of (and premium, if any) on Foreign Currency Notes paid in the Specified
Currency, together with interest accrued and unpaid thereon, due at Maturity
will be paid in immediately available funds upon surrender of such Notes at the
corporate trust office of the relevant Trustee in The City of New York.
The pricing supplement relating to a Note denominated in a Specified
Currency other than U.S. dollars will set forth specific information relating to
such Specified Currency, including a description of such Currency, historical
exchange rates and any exchange controls relating thereto and, in the case of a
composite Currency, a description of provisions for payment in the event such
composite Currency is no longer used for the purposes for which it was
established. See "Foreign Currency Risks" below.
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IMPORTANT CURRENCY EXCHANGE INFORMATION
PAYMENT FOR NOTES
Purchasers are required to pay for Notes in the Specified Currency.
Currently, there are limited facilities in the United States for conversion of
U.S. dollars into foreign currencies and VICE VERSA and banks do not generally
offer non-U.S. dollar checking or savings account facilities in the United
States. However, if requested by a prospective purchaser of Notes denominated in
a Currency other than U.S. dollars, the Agent soliciting the offer to purchase
will arrange for the conversion of U.S. dollars into such Specified Currency to
enable the purchaser to pay for such Notes. Such request must be made on or
before the fifth Business Day preceding the date of delivery of the Notes, or by
such other date as is determined by the Agent that presents such offer to the
Company. Each such conversion will be made by the relevant Agent on such terms
and subject to such conditions, limitations and charges as such Agent may from
time to time establish in accordance with its regular foreign exchange practice.
All costs of exchange will be borne by the purchasers of the Notes.
GOVERNING LAW AND JUDGMENTS
The Indentures and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York. An action based upon an
obligation denominated in a Specified Currency other than U.S. dollars can be
brought in courts in the United States. However, courts in the United States
have not customarily rendered judgments for money damages denominated in any
currency other than U.S. dollars. The Judiciary Law of the State of New York
provides, however, that an action based upon an obligation denominated in a
currency other than U.S. dollars will be rendered in the foreign currency of the
underlying obligation and converted into U.S. dollars at a rate of exchange
prevailing on the date of the entry of the judgment or decree.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes and Currency Indexed Notes entails
significant risks that are not associated with investments in debt instruments
denominated in U.S. dollars. Such risks include, without limitation, the
possibility of significant changes in the rate of exchange between the U.S.
dollar and the Specified Currency or Indexed Currency and the rate of exchange
between the Specified Currency in which a Currency Indexed Note is denominated
and the Indexed Currency and the possibility of the imposition or modification
of foreign exchange controls by either the United States or foreign governments,
which risks generally depend on economic and political events. In recent years,
rates of exchange between the U.S. dollar and certain foreign currencies have
been volatile and such volatility may continue in the future. Fluctuations in
any particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in the rate that may occur during the term
of any Foreign Currency Note or Currency Indexed Note. Fluctuations in exchange
rates against the U.S. dollar could result in a decrease in the U.S.
dollar-equivalent yield of Foreign Currency Notes or Currency Indexed Notes, in
the U.S. dollar-equivalent value of the principal repayable at Maturity of such
Notes and, generally, in the U.S. dollar-equivalent market value of such Notes.
The currency risks with respect to Foreign Currency Notes or Currency Indexed
Notes will be further described in the applicable pricing supplement.
Foreign exchange rates can either float or be fixed by sovereign
governments. Exchange rates of most economically developed nations are permitted
to fluctuate in value relative to the U.S. dollar. Governments, however, often
do not voluntarily allow their currencies to float freely in response to
economic forces. Instead, governments use a variety of techniques, such as
intervention by that country's central bank, or the imposition of regulatory
controls or taxes, to affect the exchange rate of their currencies. Governments
may also issue a new currency to replace an existing currency or alter the
exchange rate or relative exchange characteristics by the devaluation or
revaluation of a currency. Thus, a special risk in purchasing Foreign Currency
Notes or Currency Indexed Notes is that their U.S. dollar-equivalent yields
could be affected by governmental actions that could change or interfere with
theretofore freely determined currency valuation, fluctuations in response to
other market forces and the movement of currencies across borders. There will be
no adjustment or change in the terms of the Foreign Currency Notes or Currency
Indexed Notes in the event
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that exchange rates should become fixed, or in the event of any devaluation or
revaluation or imposition of exchange or other regulatory controls or taxes, or
in the event of other developments, affecting the U.S. dollar or any applicable
Currency.
Unless otherwise specified in the applicable pricing supplement, Notes
denominated in a Specified Currency other than U.S. dollars will not be sold in,
or to residents of, the country of such Specified Currency in which such Notes
are denominated. The information set forth in this prospectus supplement is
directed to prospective purchasers who are residents of the United States and is
not directed at persons who are residents of countries other than the United
States. Persons who are not residents of the United States should consult their
own legal advisors with regard to such matters.
AS INDICATED ABOVE, AN INVESTMENT IN FOREIGN CURRENCY NOTES OR CURRENCY
INDEXED NOTES INVOLVES SUBSTANTIAL RISKS, AND THE EXTENT AND NATURE OF SUCH
RISKS CHANGE CONTINUOUSLY. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED IN AN INVESTMENT IN
FOREIGN CURRENCY NOTES OR CURRENCY INDEXED NOTES. SUCH NOTES ARE NOT AN
APPROPRIATE INVESTMENT FOR PROSPECTIVE PURCHASERS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY MATTERS.
PAYMENT CURRENCY
Except as set forth below, if an applicable Specified Currency other than
U.S. dollars is not available for the payment of principal (premium, if any) or
interest, if any, with respect to Foreign Currency Notes or Currency Indexed
Notes, as the case may be, due to the imposition of exchange controls or other
circumstances beyond the control of the Company, or is no longer used by the
government of the country issuing such Currency or for the settlement of
transactions by public institutions of or within the international banking
community, the Company will be entitled to satisfy its obligations to holders of
such Notes by making such payment in U.S. dollars on the basis of the Market
Exchange Rate on the second Business Day prior to such payment or, if such
Market Exchange Rate is then not available, on the basis of the most recently
available Market Exchange Rate or as otherwise indicated in an applicable
pricing supplement. The "Market Exchange Rate" will be the noon buying rate in
The City of New York for cable transfers of such Specified Currency as certified
for customs purposes by the Federal Reserve Bank of New York.
If payment on a Foreign Currency Note or Currency Indexed Note is required
to be made in ECU and ECU is unavailable due to the imposition of exchange
controls or other circumstances beyond the control of the Company, or is no
longer used in the European Monetary System, all payments due on that due date
with respect to such Notes shall be made in U.S. dollars. The amount so payable
on any date in ECU will be converted into U.S. dollars at a rate determined by
the Exchange Rate Agent as of the second Business Day prior to the date on which
such payment is due on the following basis. The component currencies of the ECU
for this purpose (the "Components") will be the currency amounts which were
components of the ECU as of the last date on which the ECU was used in the
European Monetary System. The equivalent of the ECU in U.S. dollars will be
calculated by aggregating the U.S. dollar equivalents of the Components. The
U.S. dollar equivalent of each of the Components will be determined by the
Exchange Rate Agent on the basis of the most recently available Market Exchange
Rate, or as otherwise specified in the applicable pricing supplement.
If the official unit of any component currency of the ECU is altered by way
of combination or subdivision, the number of units of that currency as a
Component will be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components will be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
will be replaced by amounts of such two or more currencies, each of which will
have a value on the date of division equal to the amount of the former component
currency divided by the number of currencies into which that currency was
divided.
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All determinations referred to above made by the Exchange Rate Agent will be
at its sole discretion (except to the extent expressly provided that any
determination is subject to approval by the Company) and, in the absence of
manifest error, will be conclusive for all purposes and binding on holders of
the Foreign Currency Notes and Currency Indexed Notes, as the case may be, and
the Exchange Rate Agent will have no liability therefor.
Any payment made in U.S. dollars under the circumstances described above
where the required payment is in a Currency other than U.S. dollars will not
constitute a default under either Indenture.
UNITED STATES TAXATION
In the opinion of Shearman & Sterling, special tax counsel to the Company,
the following summary accurately describes the material United States federal
income tax consequences of the purchase, ownership, and disposition of a Note.
Such opinion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations (including proposed Regulations and temporary
Regulations) promulgated thereunder, rulings, official pronouncements and
judicial decisions, all as in effect on the date of this prospectus supplement
and all of which are subject to change, possibly with retroactive effect, or to
different interpretations. This summary provides general information only and
does not purport to address all of the federal income tax consequences that may
be applicable to a holder of a Note. It does not address all of the tax
consequences that may be relevant to certain types of holders subject to special
treatment under the federal income tax law, such as individual retirement and
other tax-deferred accounts, dealers in securities or currencies, life insurance
companies, tax-exempt organizations, persons holding Notes as a hedge or hedged
against currency risk, as a position in a straddle for tax purposes, as part of
a "synthetic security" or other integrated investment comprised of a Note and
one or more other investments or United States persons (as defined below) whose
functional currency is other than the U.S. dollar. It also does not discuss the
tax consequences to subsequent purchasers of Notes and is limited to investors
who hold Notes as a capital asset. The federal income tax consequences of
purchasing, holding or disposing of a particular Note will depend, in part, on
the particular terms of such Note as set forth in the applicable pricing
supplement. The federal income tax consequences of purchasing, holding or
disposing of Foreign Currency Notes (other than Single Foreign Currency Notes),
Amortizing Notes, Floating Rate/Fixed Rate Notes, Inverse Floating Rate Notes,
Currency Indexed Notes or any other Indexed Notes will be set out in the
applicable pricing supplement. Persons considering the purchase of Notes and
making any election under the Code or the Treasury Regulations with respect to
such Notes should consult their own tax advisors concerning the application of
the United States federal income tax law to their particular situations as well
as any tax consequences arising under the law of any state, local or foreign tax
jurisdiction.
"Single Foreign Currency Note" shall mean a Note on which all payments a
holder is entitled to receive are denominated in or determined by reference to
the value of a single Foreign Currency. "Foreign Currency" shall mean a currency
or currency unit, other than a hyperinflationary currency or the U.S. dollar.
UNITED STATES PERSONS
For purposes of the following discussion, "United States person" means an
individual who is a citizen or resident of the United States, an estate or trust
subject to United States federal income taxation without regard to the source of
its income, or a corporation, partnership or other entity created or organized
in or under the law of the United States or any state or the District of
Columbia. The following discussion pertains only to a holder of a Note who is a
beneficial owner of such Note and who is a "United States person".
PAYMENTS OF INTEREST ON NOTES THAT ARE NOT DISCOUNT NOTES
Except as discussed below under "Discount Notes" and "Short-Term Notes",
payments of interest on a Note will be taxable to a holder as ordinary interest
income at the time it is accrued or received in accordance with the holder's
method of tax accounting. If the payment is denominated in or determined with
reference to a single Foreign Currency, the amount required to be included in
income by a cash basis holder will be the U.S. dollar value of the amount paid
(determined on the basis of the "spot rate" on the date such payment is
received) regardless of whether the payment is in fact converted into U.S.
dollars. No exchange gain or loss will be recognized with respect to the receipt
of such payment.
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Except in the case of a Spot Rate Convention Election (as defined below), a
holder of a Single Foreign Currency Note who is required to accrue interest
income prior to receipt will be required to include in income for each taxable
year the U.S. dollar value of the interest that has accrued during such year,
determined by translating such interest at the average rate of exchange for the
period or periods during which such interest has accrued. The average rate of
exchange for an interest accrual period (or partial period) is the simple
average of the spot exchange rates for each business day of such period (or such
other average that is reasonably derived and consistently applied by the
holder). Upon receipt of an interest payment, such holder will recognize
ordinary gain or loss in an amount equal to the difference between the U.S.
dollar value of the Foreign Currency received (determined on the basis of the
"spot rate" on the date such payment is received) or, in the case of interest
received in U.S. dollars rather than in Foreign Currency, the amount so received
and the U.S. dollar value of the interest income that such holder has previously
included in income with respect to such payment. Any such gain or loss generally
will not be treated as interest income or expense, except to the extent provided
by administrative pronouncements of the Internal Revenue Service (the
"Service").
A holder may elect (a "Spot Rate Convention Election") to translate accrued
interest into U.S. dollars at the "spot rate" on the last day of an accrual
period for the interest, or, in the case of an accrual period that spans two
taxable years, at the "spot rate" on the last day of the taxable year.
Additionally, if a payment of interest is received within five business days of
the last day of the accrual period, an electing holder may instead translate
such accrued interest into U.S. dollars at the "spot rate" on the day of
receipt.
For purposes of this discussion, the "spot rate" generally means a rate that
reflects a fair market rate of exchange available to the public for currency
under a "spot contract" in a free market and involving representative amounts. A
"spot contract" is a contract to buy or sell a currency on or before two
business days following the date of the execution of the contract. If such a
spot rate cannot be demonstrated, the Service has the authority to determine the
spot rate.
PURCHASE, SALE, EXCHANGE OR RETIREMENT OF NOTES
A holder's tax basis in a Note generally will be the U.S. dollar cost of the
Note to such holder (which in the case of a Note purchased with Foreign Currency
will be determined by translating the purchase price at the spot rate on the
date of purchase), increased by any original issue discount, market discount or
acquisition discount (all as defined below) previously included in the holder's
gross income (as described below), and reduced by any amortized premium (as
described below) and any principal payments and payments of stated interest that
are not payments of fixed periodic interest (as defined below).
Upon the sale, exchange or retirement of a Note, a holder generally will
recognize gain or loss equal to the difference between the amount realized on
the sale, exchange or retirement (or the U.S. dollar value at the spot rate on
the date of the sale, exchange or retirement of the amount realized in Foreign
Currency), except to the extent such amount is attributable to accrued interest,
and the holder's tax basis in the Note. Except with respect to (i) gains or
losses attributable to changes in exchange rates (as described in the next
paragraph), (ii) gain attributable to market discount (as described below) and
(iii) gain on the disposition of a Short-Term Note (as described below), gain or
loss so recognized will be capital gain or loss and will be long-term capital
gain or loss, if, at the time of the sale, exchange or retirement, the Note was
held for more than one year. Under current law, long-term capital gains of
individuals are, under certain circumstances, taxed at lower rates than items of
ordinary income.
Gain or loss recognized by a holder on the sale, exchange or retirement of a
Single Foreign Currency Note that is attributable to changes in exchange rates
will be treated as ordinary income or loss and generally will not be treated as
interest income or expense except to the extent provided by administrative
pronouncements of the Service. Gain or loss attributable to changes in exchange
rates is recognized on the sale, exchange or retirement of a Single Foreign
Currency Note only to the extent of the total gain or loss recognized on such
sale, exchange or retirement.
EXCHANGE OF FOREIGN CURRENCY
A holder's tax basis in Foreign Currency purchased by the holder generally
will be the U.S. dollar value thereof at the spot rate on the date such Foreign
Currency is purchased. A holder's tax basis in Foreign
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Currency received as interest on, or on the sale, exchange or retirement of, a
Single Foreign Currency Note will be the U.S. dollar value thereof at the spot
rate at the time such Foreign Currency is received. The amount of gain or loss
recognized by a holder on a sale, exchange or other disposition of Foreign
Currency will be equal to the difference between (i) the amount of U.S. dollars,
the U.S. dollar value at the spot rate of the Foreign Currency, or the fair
market value in U.S. dollars of the property received by the holder in the sale,
exchange or other disposition, and (ii) the holder's tax basis in the Foreign
Currency.
Accordingly, a holder that purchases a Note with Foreign Currency will
recognize gain or loss in an amount equal to the difference, if any, between
such holder's tax basis in the Foreign Currency and the U.S. dollar value at the
spot rate of the Foreign Currency on the date of purchase. Generally, any such
gain or loss will be ordinary income or loss and will not be treated as interest
income or expense, except to the extent provided by administrative
pronouncements of the Service.
SUBSEQUENT INTEREST PERIODS AND EXTENSION OF MATURITY
If so specified in the pricing supplement relating to a Note, the Company
may have the option (a) to reset the interest rate, in the case of a Fixed Rate
Note, or to reset the Spread, the Spread Multiplier or other formula by which
the interest rate basis is adjusted, in the case of a Floating Rate Note, and/or
(b) to extend the Maturity of such Note. See "Description of Notes -- Subsequent
Interest Periods" and "Description of Notes -- Extension of Maturity". The
treatment of a holder of Notes with respect to which such an option has been
exercised who does not elect to have the Company repay such Notes on the
applicable Optional Reset Date or Original Maturity Date will depend on the
terms established for such Notes by the Company pursuant to the exercise of such
option (the "revised terms"). Depending on the particular circumstances, such
holder may be treated as having surrendered such Notes for new Notes with the
revised terms in either a taxable exchange or a recapitalization qualifying for
nonrecognition of gain or loss.
DISCOUNT NOTES
The following summary is a general description of U.S. federal income tax
consequences to holders of Notes issued with original issue discount ("Discount
Notes") and is based on the provisions of the Code as in effect on the date
hereof and on certain Treasury Regulations promulgated thereunder and published
in the Federal Register on February 2, 1994 (the "OID Regulations").
For U.S. federal income tax purposes, original issue discount is the excess
of the stated redemption price at maturity of each Discount Note over its issue
price if such excess is greater than or equal to a DE MINIMIS amount (generally
1/4 of 1% of the Discount Note's stated redemption price at maturity multiplied
by the number of complete years to maturity from the issue date). The issue
price of an issue of Discount Notes that are issued for cash will be equal to
the first price at which a substantial amount of such Notes are sold to the
public. The stated redemption price at maturity of a Discount Note is the sum of
all payments provided by the Discount Note other than payments of "qualified
stated interest". Under the OID Regulations, "qualified stated interest"
includes stated interest that is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually at a single fixed
rate of interest. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
Except as described below with respect to Short-Term Notes, a holder of a
Discount Note will be required to include original issue discount in taxable
income as it accrues before the receipt of cash attributable to such income,
regardless of such holder's method of accounting for tax purposes.
The amount of original issue discount includable in taxable income by the
initial holder of a Discount Note is the sum of the daily portions of original
issue discount with respect to such Note for each day during the taxable year on
which such holder held such Note ("accrued original issue discount"). Generally,
the daily portion of the original issue discount is determined by allocating to
each day in any "accrual period" a ratable portion of the original issue
discount allocable to such accrual period. Under the OID Regulations, the
"accrual periods" for a Discount Note may be selected by each holder, may be of
any length, and may vary in length over the term of the Discount Note, provided
that each accrual period is no longer than one year and each scheduled payment
of principal or interest occurs either on the first day or on the final day of
an accrual period. The amount of original issue discount allocable to each
accrual period is equal to the excess (if any) of (a) the product of a Discount
Note's adjusted issue price at the beginning of such accrual period and its
yield to maturity (determined on the basis of compounding at the close of each
accrual period
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and adjusted for the length of such accrual period) over (b) the amount of the
qualified stated interest, if any, payable on such Discount Note and allocable
to such accrual period. The "adjusted issue price" of a Discount Note at the
beginning of any accrual period generally is the sum of the issue price of a
Discount Note plus the accrued original issue discount allocable for all prior
accrual periods reduced by any prior payment on the Discount Note other than a
payment of qualified stated interest. Under these rules, a holder of a Discount
Note generally will have to include in taxable income increasingly greater
amounts of original issue discount in successive accrual periods.
Original issue discount on a Discount Note that is also a Single Foreign
Currency Note will be determined for any accrual period in the applicable
Foreign Currency and then translated into U.S. dollars in the same manner as
interest income accrued by a holder on the accrual basis, including the
application of a Spot Rate Convention Election. See "Payments of Interest on
Notes that are not Discount Notes". Likewise, upon receipt of payment
attributable to original issue discount (whether in connection with a payment of
interest or the sale, exchange or retirement of a Discount Note), a holder will
recognize exchange gain or loss to the extent of the difference between such
holder's basis in the accrued original issue discount (determined in the same
manner as for accrued interest) and the U.S. dollar value of such payment
(determined by translating any Foreign Currency received at the spot rate on the
date of payment). Generally, any such exchange gain or loss will be ordinary
income or loss and will not be treated as interest income or expense, except to
the extent provided in administrative pronouncements of the Service. For this
purpose, all payments on a Note will be viewed first as the payment of qualified
stated interest (determined under the original issue discount rules), second as
payments of previously accrued original issue discount (to the extent thereof),
with payments considered made for the earliest accrual periods first, and
thereafter as the payment of principal.
If a holder's tax basis in a Discount Note immediately after its purchase
exceeds the adjusted issue price of the Discount Note (the amount of such excess
is considered "acquisition premium") but is not greater than the stated
redemption price at maturity of such Discount Note, the amount includible in
income in each taxable year as original issue discount is reduced (but not below
zero) by that portion of the excess properly allocable to such year.
If a holder purchases a Discount Note for an amount in excess of the stated
redemption price at maturity, the holder does not include any original issue
discount in income and generally may be subject to the "bond premium" rules
discussed below. See "Amortizable Bond Premium". If a holder has a tax basis in
a Discount Note that is less than the adjusted issue price of such Discount
Note, the difference will be subject to the market discount provisions discussed
below. See "Market Discount".
Under the OID Regulations, a holder of a Note may elect to include in gross
income all interest that accrues on such Note using the constant yield method.
For this purpose, interest includes stated interest, acquisition discount,
original issue discount, DE MINIMIS original issue discount, market discount, DE
MINIMIS market discount, and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. Special rules apply with respect to
elections made with respect to Notes issued with amortizable bond premium or
market discount. Once made with respect to a Note, the election cannot be
revoked without the consent of the Service. A holder considering an election
under these rules should consult a tax advisor.
MARKET DISCOUNT
If a holder purchases a Note (other than a Discount Note) for an amount that
is less than its stated redemption price at maturity or purchases a Discount
Note for less than its "revised issue price" (as defined under the Code) as of
the purchase date, the amount of the difference will be treated as "market
discount" unless such difference is less than a specified DE MINIMIS amount.
Under the market discount rules of the Code, a holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange or retirement of, a Note as ordinary income to the extent of
the market discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. Further, a disposition of a Note by gift (and in certain other
circumstances) could result in the recognition of market discount income,
computed as if such Note had been sold at its then fair market value. In
addition, a
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holder who purchases a Note with market discount may be required to defer the
deduction of all or a portion of the interest paid or accrued on any
indebtedness incurred or maintained to purchase or carry such Note until the
maturity of the Note or its earlier disposition in a taxable transaction.
Market discount is considered to accrue ratably during the period from the
date of acquisition to the maturity date of a Note, unless the holder elects to
accrue market discount under the rules applicable to original issue discount. A
holder may elect to include market discount in income currently as it accrues,
in which case the rules described above regarding the deferral of interest
deductions will not apply.
With respect to a Single Foreign Currency Note, market discount is
determined in the applicable Foreign Currency. In the case of a holder who does
not elect current inclusion, accrued market discount is translated into U.S.
dollars at the spot rate on the date of disposition. No part of such accrued
market discount is treated as exchange gain or loss. In the case of a holder who
elects current inclusion, the amount currently includible in income for a
taxable year is the U.S. dollar value of the market discount that has accrued
during such year, determined by translating such market discount at the average
rate of exchange for the period or periods during which it accrued. Such an
electing holder will recognize exchange gain or loss with respect to accrued
market discount under the same rules as apply to accrued interest on a Single
Foreign Currency Note received by a holder on the accrual basis. See "Payments
of Interest on Notes that are not Discount Notes".
AMORTIZABLE BOND PREMIUM
Generally, if a holder's tax basis in a Note held as a capital asset exceeds
the stated redemption price at maturity of such Note, such excess may constitute
amortizable bond premium that the holder may elect to amortize under the
constant interest rate method over the period from his acquisition date to the
Note's maturity date. Under certain circumstances, amortizable bond premium may
be determined by reference to an early call date. Special rules apply with
respect to Single Foreign Currency Notes.
SHORT-TERM NOTES
In general, an individual or other cash method holder of a Note that matures
one year or less from the date of its issuance (a "Short-Term Note") is not
required to accrue original issue discount on such Note unless it has elected to
do so. Holders who report income for federal income tax purposes under the
accrual method, however, and certain other holders, including banks, dealers in
securities and electing holders, are required to accrue original issue discount
(unless the holder elects to accrue "acquisition discount" in lieu of original
issue discount) on such Note. "Acquisition discount" is the excess of the
remaining stated redemption price at maturity of the Short-Term Note over the
holder's tax basis in the Short-Term Note at the time of the acquisition. In the
case of a holder who is not required and does not elect to accrue original issue
discount on a Short-Term Note, any gain realized on the sale, exchange or
retirement of such Short-Term Note will be ordinary income to the extent of the
original issue discount accrued through the date of sale, exchange or
retirement. Such a holder will be required to defer, until such Short-Term Note
is sold or otherwise disposed of, the deduction of a portion of the interest
expense on any indebtedness incurred or continued to purchase or carry such
Short-Term Note. Original issue discount or acquisition discount on a Short-Term
Note accrues on a straight-line basis unless an election is made to use the
constant yield method (based on daily compounding).
In the case of a Short-Term Note that is also a Single Foreign Currency
Note, the amount of original issue discount or acquisition discount subject to
current accrual and the amount of any exchange gain or loss on a sale, exchange
or retirement are determined under the same rules that apply to accrued interest
on a Single Foreign Currency Note held by a holder on the accrual basis. See
"Payments of Interest on Notes that are not Discount Notes".
The market discount rules will not apply to a Short-Term Note having market
discount.
NON-UNITED STATES PERSONS
Subject to the discussion of backup withholding below, payments of
principal, premium, if any, and interest (including original issue discount) by
the Company or its agent (in its capacity as such) to any holder who is a
beneficial owner of a Note but is not a United States person will not be subject
to United States federal withholding tax provided, in the case of premium, if
any, and interest (including original issue
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discount) that (i) such holder does not actually or constructively own 10% of
more of the total combined voting power of all classes of stock of the Company
entitled to vote, (ii) such holder is not a controlled foreign corporation for
United States tax purposes that is related to the Company through stock
ownership, and (iii) either (A) the beneficial owner of the Note certifies to
the Company or its agent, under penalties of perjury, that he is not a United
States person and provides his name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") certifies to the Company or its agent, under penalties of perjury,
that the certification described in clause (A) hereof has been received from the
beneficial owner by it or by another financial institution acting for the
beneficial owner.
If a holder of a Note who is not a United States person is engaged in a
trade or business in the United States and premium, if any, or interest
(including original issue discount) on the Note is effectively connected with
the conduct of such trade or business, such holder, although exempt from United
States withholding tax as discussed in the preceding paragraph (or by reason of
the delivery of properly completed Form 4224), will be subject to United States
federal income tax on such premium, if any, and interest (including original
issue discount) in the same manner as if it were a United States person.
Subject to the discussion of "backup" withholding below, any capital gain
realized upon the sale, exchange or retirement of a Note by a holder who is not
a United States person will not be subject to United States federal income or
withholding taxes unless (i) such gain is effectively connected with a United
States trade or business of the holder, or (ii) in the case of an individual,
such holder is present in the United States for 183 days or more in the taxable
year of the retirement or disposition and certain other conditions are met.
Notes held by an individual who is neither a citizen nor a resident of the
United States for United States federal income tax purposes at the time of such
individual's death will not be subject to United States federal estate tax,
provided that the income from the Notes was not or would not have been
effectively connected with a United States trade or business of such individual
and that such individual qualified for the exemption from United States federal
withholding tax (without regard to the certification requirements) that is
described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The "backup" withholding and information reporting requirements may apply to
certain payments of principal, premium, if any, and interest (including original
issue discount) on a Note and to certain payments of proceeds of the sale or
retirement of a Note. The Company, its agent, a broker, the Trustee or any
paying agent, as the case may be, will be required to withhold tax from any
payment that is subject to backup withholding at a rate of 31% of such payment
if the holder fails to furnish his taxpayer identification number (social
security number or employer identification number), to certify that such holder
is not subject to backup withholding, or to otherwise comply with the applicable
requirements of the backup withholding rules. Certain holders (including, among
others, all corporations) are not subject to the backup withholding and
reporting requirements.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a holder of a Note who has provided the required
certification under penalties of perjury that it is not a United States person
as set forth in clause (iii) in the first paragraph under "Non-United States
Persons" or has otherwise established an exemption (provided that neither the
Company nor such agent has actual knowledge that the holder is a United States
person or that the conditions of any other exemption are not in fact satisfied).
Any amounts withheld under the backup withholding rules from a payment to a
holder may be claimed as a credit against such holder's United States federal
income tax liability.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
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PLAN OF DISTRIBUTION
The Notes are offered on a continuing basis by the Company through the
Agents, who have agreed to use their best efforts to solicit purchases of the
Notes. The Company may also sell Notes directly to investors on its own behalf
or to an Agent as principal. Unless otherwise agreed by the Company and the
Agents, the Company will have the sole right to accept offers to purchase Notes
and may reject any proposed purchase of such Notes in whole or in part. Each
Agent will have the right, in its discretion reasonably exercised, to reject any
proposed purchase of Notes through it as Agent in whole or in part. The Company
will pay each Agent a commission, in the form of a discount or otherwise,
ranging from .125% to .675% of the price to the public of any Senior Notes sold
through such Agent, depending on the maturity of such Senior Notes. The schedule
of commissions payable in connection with sales of Senior Notes will also apply
to sales of Subordinated Notes unless otherwise agreed to by the Company and the
Agents.
In addition, the Agents may offer the Notes they have purchased as principal
to other brokers or dealers. The Agents may sell Notes to any broker or dealer
at a discount and, unless otherwise specified in the applicable pricing
supplement, such discount allowed to any broker or dealer will not be in excess
of 66 2/3% of the discount to be received by such Agent from the Company. Unless
otherwise indicated in the applicable pricing supplement, any Note sold to an
Agent as principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical maturity and rank, and may
be resold by the Agent to investors and other purchasers at varying prices
relating to prevailing market prices at the time of resale as determined by the
applicable Agent or, if so specified in the applicable pricing supplement, for
resale at a fixed public offering price. After the initial public offering of
Notes to be resold to investors and other purchasers, the public offering price
(in the case of Notes to be resold on a fixed public offering price basis), the
concession and the discount may be changed.
Unless otherwise specified in the applicable pricing supplement, payment of
the purchase price of the Notes acquired through an Agent acting as Agent is
required to be made in immediately available funds in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Securities Act. The Agents may engage in other
transactions with, or perform other services for, the Company in the ordinary
course of business.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. The Company has been advised
by the Agents that they may from time to time make a market in the Notes, but
they are not obligated to do so and may discontinue such market-making at any
time without notice. Further, each of the Agents may from time to time purchase
and sell Notes in the secondary market, but is not obligated to do so. No
assurance can be given as to the liquidity of any trading market for the Notes.
In addition to the offerings of Notes described herein, Debt Securities
having terms substantially similar to the terms of the Notes offered hereby (but
constituting a separate series of Debt Securities for purposes of the applicable
Indenture) may be offered outside the United States by the Company on a
continuing basis concurrently with the offering of the Notes hereby. The Company
may also sell Notes or other Debt Securities pursuant to another prospectus
supplement to the accompanying prospectus. Any such sales will reduce the
principal amount of Notes that may be offered by this prospectus supplement and
the accompanying prospectus.
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PROSPECTUS
DEERE & COMPANY
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
Deere & Company (the "Company") may offer and sell from time to time under
this prospectus, together or separately, (i) its unsecured debt securities (the
"Debt Securities"), which may be either senior (the "Senior Securities") or
subordinated (the "Subordinated Securities") and (ii) warrants to purchase Debt
Securities (the "Debt Warrants"), all on terms to be determined at the time of
the offering.
The Debt Securities or Debt Warrants, or a combination thereof, proposed to
be sold pursuant to this prospectus and the accompanying prospectus supplement
are referred to as the "Offered Securities", and the Offered Securities,
together with any Debt Securities issuable upon exercise of Debt Warrants, are
referred to as the "Securities". Securities with an aggregate initial offering
price of up to $500,000,000 (or the equivalent thereof if any of the Securities
are denominated in a currency, currency unit or composite currency ("Currency")
other than the U.S. dollar) may be issued under this prospectus.
The prospectus supplement accompanying this prospectus sets forth, with
respect to each series or issue of Securities for which this prospectus and the
prospectus supplement are being delivered: (i) the terms of the Debt Securities
offered, including, where applicable, their title, ranking, aggregate principal
amount, maturity, rate of any interest (or manner of calculation) and time of
payment thereof, any redemption or repayment terms, the Currency or Currencies
in which such Debt Securities will be denominated or payable, any index, formula
or other method pursuant to which principal, premium, if any, or interest, if
any, may be determined and the form of such Debt Securities (which may be in
registered, bearer or global form); (ii) the terms of any Debt Warrants offered,
including, the exercise price, detachability, expiration date and other terms
and (iii) any initial offering price, the purchase price and net proceeds to the
Company and the other specific terms related to the offering of such Securities.
The Company may sell Offered Securities to or through underwriters, dealers
or agents, and also may sell Offered Securities directly to other purchasers.
See "Plan of Distribution". No Offered Securities may be sold without delivery
of a prospectus supplement describing such Offered Securities and the method and
terms of offering thereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is July 14, 1994.
<PAGE>
AVAILABLE INFORMATION
Deere & Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 500 W. Madison
Street, Chicago, Illinois 60606; and Seven World Trade Center, New York, New
York 10048; and copies of such material may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Reports, proxy statements and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this prospectus by reference:
1. Annual report on Form 10-K for the fiscal year ended October 31, 1993;
2. Quarterly reports on Form 10-Q for the quarters ended January 31, 1994
and April 30, 1994; and
3. Current reports on Form 8-K dated December 7, 1993, January 13, 1994,
February 22, 1994 and May 24, 1994.
All documents subsequently filed by the Company pursuant to sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the
termination of any offering of the Securities made by this prospectus shall be
deemed to be incorporated by reference in this prospectus and to be a part of
this prospectus from the date of the filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein (or in the
accompanying prospectus supplement) or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
replaces such statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
The Company will provide without charge to each person to whom this
prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above that have been or may be
incorporated by reference in this prospectus, other than exhibits to such
documents. Such written or oral request should be directed to Deere & Company,
John Deere Road, Moline, Illinois 61265-8098, Attention: Corporate Secretary
(309/765-8000).
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THE COMPANY
The Company and its subsidiaries (collectively called "John Deere")
manufacture, distribute and finance a full range of agricultural equipment; a
broad range of industrial equipment for construction, forestry and public works;
and a variety of lawn and grounds care equipment. The Company also provides
credit, health care and insurance products for businesses and the general
public. The Company believes that its worldwide sales of agricultural equipment
during recent years have been greater than those of any other business
enterprise. It also believes that John Deere is an important provider of most of
the types of industrial equipment that it markets, and a leader in some size
ranges. The Company also believes it is the largest manufacturer of lawn and
garden tractors and provides the broadest line of grounds care equipment in
North America. John Deere's operations are categorized into five business
segments:
The Company's worldwide AGRICULTURAL EQUIPMENT segment manufactures and
distributes a full range of equipment used in commercial farming--including
tractors; tillage, soil preparation, planting and harvesting machinery; and
crop handling equipment.
The Company's worldwide INDUSTRIAL EQUIPMENT segment manufactures and
distributes a broad range of machines used in construction, earthmoving and
forestry--including backhoe loaders; crawler dozers and loaders;
four-wheel-drive loaders; scrapers; motor graders; excavators; and log
skidders. This segment also includes the manufacture and distribution of
engines and drivetrain components for the original equipment manufacturers
(OEM) market.
The Company's worldwide LAWN AND GROUNDS CARE EQUIPMENT segment
manufactures and distributes equipment for commercial and residential
uses--including small tractors for lawn, garden and utility purposes; riding
and walk-behind mowers; golf course equipment; utility transport vehicles;
snowblowers; and other outdoor power products.
The products produced by the equipment segments are marketed primarily
through independent retail dealer networks.
The Company's CREDIT segment, which operates in the United States and
Canada, purchases and finances retail notes from John Deere's equipment
sales branches in the United States and Canada. The notes are acquired by
the sales branches through John Deere retail dealers and originate in
connection with retail sales by dealers of new John Deere equipment and used
equipment. The credit segment also purchases and finances retail notes
unrelated to John Deere, representing primarily recreational vehicle and
recreational marine product notes acquired from independent dealers of that
equipment and from marine mortgage service companies. The credit
subsidiaries also lease John Deere equipment to retail customers, finance
and service unsecured revolving charge accounts acquired from merchants in
the agricultural, lawn and grounds care and marine retail markets, and
provide wholesale financing for recreational vehicles and John Deere engine
inventories held by dealers of those products.
The Company's INSURANCE AND HEALTH CARE segment issues policies in the
United States and Canada primarily for: a general line of property and
casualty insurance to John Deere and non-Deere dealers and to the general
public; group life and group accident and health insurance for employees of
participating John Deere dealers; group life and group accident and health
insurance for employees of John Deere; life and annuity products to the
general public and credit physical damage insurance in connection with
certain retail sales of John Deere products financed by the credit
subsidiaries. This segment also provides health management programs and
related administrative services in the United States to corporate customers
and employees of John Deere.
The John Deere enterprise has manufactured agricultural machinery since
1837. The present Company was incorporated under the laws of Delaware in 1958.
The address of the Company's principal office is John Deere Road, Moline,
Illinois 61265-8098. Its telephone number is (309) 765-8000.
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USE OF PROCEEDS
Except as may be described otherwise in a prospectus supplement, the net
proceeds from the sale of the Securities will be added to the general funds of
the Company and will be used for working capital and other general corporate
purposes. Such proceeds may be applied initially to the reduction of short-term
indebtedness.
DESCRIPTION OF DEBT SECURITIES
The Company may issue (either separately or together with other Offered
Securities) its Debt Securities from time to time. The Senior Securities will be
issued under an Indenture dated as of June 15, 1994, as it may be supplemented
from time to time (the "Senior Indenture"), between the Company and The Chase
Manhattan Bank (National Association), Trustee (the "Senior Trustee"), and the
Subordinated Securities will be issued under an Indenture dated as of June 15,
1994, as it may be supplemented from time to time (the "Subordinated
Indenture"), between the Company and Chemical Bank, Trustee (the "Subordinated
Trustee"). The term "Trustee" as used herein refers to either the Senior Trustee
or the Subordinated Trustee, as appropriate. The forms of the Senior Indenture
and the Subordinated Indenture (being sometimes referred to herein collectively
as the "Indentures" and individually as an "Indenture") have been filed as
exhibits to the registration statement. The Indentures are subject to and
governed by the Trust Indenture Act of 1939, as amended ("TIA"). The following
summary of certain provisions of the Indentures does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the
Indentures, including the definitions of certain terms therein. Parenthetical
references below are to the Indentures or to the TIA, as appropriate.
PROVISIONS APPLICABLE TO BOTH THE SENIOR AND SUBORDINATED INDENTURES
GENERAL
The Debt Securities will be unsecured obligations of the Company. The Senior
Securities will rank equally with all other unsecured and unsubordinated
indebtedness of the Company. The Subordinated Securities will be subordinated in
right of payment to the prior payment in full of the Senior Indebtedness of the
Company as described under "Subordinated Indenture Provisions -- Subordination."
Each Indenture provides that any Debt Securities proposed to be sold
pursuant to this prospectus and the accompanying prospectus supplement ("Offered
Debt Securities") and any Debt Securities issuable upon the exercise of Debt
Warrants ("Underlying Debt Securities"), as well as other unsecured debt
securities of the Company, may be issued under such Indenture in one or more
series, in each case as authorized from time to time by the Company. The
particular terms of the Offered Debt Securities and any Underlying Debt
Securities and any modifications of or additions to the general terms of the
Debt Securities as described herein that may be applicable in the case of the
Offered Debt Securities or Underlying Debt Securities are described in the
prospectus supplement. Accordingly, for a description of the terms of any
Offered Debt Securities and Underlying Debt Securities, reference must be made
to both the prospectus supplement relating thereto and the description of Debt
Securities set forth in this prospectus. The term "prospectus supplement" as
used herein includes pricing supplements relating to the particular Securities.
Reference is made to the prospectus supplement for the following terms of
the Offered Debt Securities, the Underlying Debt Securities or both, as the case
may be, being offered thereby:
(1) The title of such Debt Securities and whether such Debt Securities
will be Senior Securities or Subordinated Securities.
(2) The aggregate principal amount of such Debt Securities and any limit
on the aggregate principal amount of Debt Securities of such series.
(3) If other than the principal amount thereof, the portion of the
principal amount thereof payable upon declaration of acceleration of the
maturity thereof or the method by which such portion will be determined.
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(4) The date or dates, or the method by which such date or dates will be
determined or extended, on which the principal of such Debt Securities will
be payable.
(5) The rate or rates at which such Debt Securities will bear interest,
if any, or the method by which such rate or rates will be determined, the
date or dates from which any interest will accrue or the method by which
such date or dates will be determined, the date or dates on which such
interest, if any, will be payable and the Regular Record Date or Dates, if
any, for the interest payable on any Registered Security on any Interest
Payment Date, or the method by which any such date will be determined, and
the basis upon which interest will be calculated if other than that of a
360-day year of twelve 30-day months.
(6) The period or periods within which, the price or prices at which,
the Currency or Currencies in which, and the other terms and conditions upon
which, such Debt Securities may be redeemed in whole or in part at the
option of the Company, if the Company is to have that option.
(7) The obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities, in whole or in part, pursuant to any sinking fund or
analogous provision or at the option of a holder thereof and the period or
periods within which or the date or dates on which, the price or prices at
which, the Currency or Currencies in which and the other terms and
conditions upon which, such Debt Securities will be so redeemed, repaid or
purchased.
(8) Whether such Debt Securities are to be issuable as Registered
Securities, Bearer Securities or both, any restrictions applicable to the
offer, sale or delivery of Bearer Securities and the terms, if any, upon
which Bearer Securities of the series may be exchanged for Registered
Securities of the series and VICE VERSA (if permitted by applicable laws and
regulations), whether such Debt Securities will be issuable initially in
temporary global form, whether any such Debt Securities will be issuable in
permanent global form with or without coupons and, if so, whether beneficial
owners of interests in any such permanent global security may exchange such
interests for Debt Securities of such series in certificated form and of
like tenor of any authorized form and denomination and the circumstances
under which any such exchanges may occur, if other than in the manner
provided in the applicable Indenture, and, if Registered Securities are to
be issuable as a global security, the identity of the depository for such
Debt Securities.
(9) If other than U.S. dollars, the Currency or Currencies in which
payments of the principal of (or premium, if any) or interest, if any, on
such Debt Securities will be made or in which such Debt Securities will be
denominated.
(10) Whether the amount of payments of principal of (or premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may be based on one or more Currencies, commodities, equity indices
or other indices) and the manner in which such amounts will be determined.
(11) Whether the Company or a holder may elect payment of the principal
of (or premium, if any) or interest, if any, on such Debt Securities in one
or more Currencies, other than that in which such Debt Securities are
denominated or stated to be payable, the period or periods within which, and
the terms and conditions upon which, such election may be made, and the time
and manner of determining the exchange rate between the Currency or
Currencies in which such Debt Securities are denominated or stated to be
payable and the Currency or Currencies in which such Debt Securities are to
be so paid.
(12) The place or places, if any, other than or in addition to The City
of New York, where the principal of (and premium, if any) and interest, if
any, on such Debt Securities will be payable, where any Registered
Securities may be surrendered for registration of transfer, where such Debt
Securities may be surrendered for exchange and where notices or demands to
or upon the Company in respect of such Debt Securities and the applicable
Indenture may be served.
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(13) The denomination or denominations in which such Debt Securities will
be issuable, if other than $1,000 or any integral multiple thereof in the
case of Registered Securities and $5,000 in the case of Bearer Securities.
(14) If other than the applicable Trustee, the identity of each Security
Registrar and/or Paying Agent.
(15) The date as of which any Bearer Securities of the series and any
temporary Debt Security issued in global form representing Outstanding
Securities of the series will be dated if other than the date of original
issuance of the first Debt Security of the series to be issued.
(16) The applicability, if at all, to such Debt Securities of the
provisions of Article Fourteen of the applicable Indenture described under
"Defeasance and Covenant Defeasance" and any provisions in modification of,
in addition to or in lieu of any of the provisions of such Article.
(17) The Person to whom any interest on any Registered Security of the
series will be payable, if other than the Person in whose name such
Registered Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer Security
of the series will be payable, if otherwise than upon presentation and
surrender of the coupons appertaining thereto as they severally mature, and
the extent to which, or the manner in which, any interest payable on a
temporary Debt Security issued in global form will be paid if other than in
the manner provided in the applicable Indenture.
(18) If such Debt Securities are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary Debt Security
of such series) only upon receipt of certain certificates or other documents
or satisfaction of other conditions, the form and/or terms of such
certificates, documents or conditions.
(19) Whether and under what circumstances the Company will pay Additional
Amounts, as contemplated by Section 1004 of the applicable Indenture on such
Debt Securities to any holder who is not a United States person (including
any modification to the definition of such term as contained in the
applicable Indenture as originally executed) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities rather than pay such Additional
Amounts (and the terms of any such option).
(20) The provisions, if any, granting special rights to the holders of
such Debt Securities upon the occurrence of such events as may be specified.
(21) Any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to such Debt Securities
(which Events of Default or covenants may not be consistent with the Events
of Default or covenants set forth in the general provisions of the
applicable Indenture).
(22) The designation of the initial Exchange Rate Agent, if any.
(23) Any other terms of such Debt Securities.
If applicable, the prospectus supplement will also set forth information
concerning any other Securities offered thereby and a discussion of federal
income tax considerations relevant to the Securities being offered.
For purposes of this prospectus, any reference to the payment of principal
of (or premium, if any) or interest, if any, on such Debt Securities will be
deemed to include mention of the payment of any Additional Amounts required by
the terms of such Debt Securities.
Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Federal income tax and other
considerations pertaining to any such Original Issue Discount Securities will be
discussed in the applicable prospectus supplement.
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Each Indenture provides that the Debt Securities referred to on the cover
page of this prospectus and additional unsecured debt securities of the Company
unlimited as to aggregate principal amount may be issued in one or more series
thereunder, in each case as authorized from time to time by the Board of
Directors of the Company. (Section 301 of each Indenture) The applicable Debt
Securities referred to on the cover page of this prospectus and any additional
debt securities issued under an Indenture are herein collectively referred to,
when a single Trustee is acting for all debt securities issued under such
Indenture, as the "Indenture Securities". Each Indenture also provides that
there may be more than one Trustee thereunder, each with respect to one or more
different series of Indenture Securities. See also "Resignation of Trustee"
herein. At a time when two or more Trustees are acting under either Indenture,
each with respect to only certain series, the term "Indenture Securities", as
used herein, will mean the one or more series with respect to which each
respective Trustee is acting. In the event that there is more than one Trustee
under either Indenture, the powers and trust obligations of each Trustee as
described herein will extend only to the one or more series of Indenture
Securities for which it is Trustee. If two or more Trustees are acting under
either Indenture, then the Indenture Securities for which each Trustee is acting
would in effect be treated as if issued under separate indentures.
The general provisions of the Indentures do not contain any provisions that
would limit the ability of the Company to incur indebtedness or that would
afford holders of Debt Securities protection in the event of a highly leveraged
or similar transaction involving the Company. However, the general provisions of
the Senior Indenture do provide that neither the Company nor any Restricted
Subsidiary (as defined below) will subject certain of its property or assets to
any mortgage or other encumbrance unless the Indenture Securities issued
thereunder are secured equally and ratably with or prior to such other
indebtedness thereby secured. See "Senior Indenture Provisions -- Limitation on
Liens" and "Senior Indenture Provisions -- Limitation on Sale and Lease-back
Transactions" below. Reference is made to the prospectus supplement for
information with respect to any deletions from, modifications of or additions to
the Events of Default or covenants of the Company that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
Under the Indentures, the Company has the ability to issue Indenture
Securities with terms different from those of Indenture Securities previously
issued thereunder and, without the consent of the holders thereof, to reopen a
previous issue of a series of Indenture Securities and issue additional
Indenture Securities of such series (unless such reopening was restricted when
such series was created), in an aggregate principal amount determined by the
Company. (Section 301 of each Indenture)
DENOMINATIONS, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable solely as Registered Securities,
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Unless otherwise provided in the prospectus supplement, Debt
Securities denominated in U.S. dollars (other than global securities, which may
be of any denomination) are issuable in denominations of $1,000 and integral
multiples of $1,000 (in the case of Registered Securities) and in the
denomination of $5,000 (in the case of Bearer Securities). The Indentures also
provide that Debt Securities of a series may be issuable in global form. See
"Book-Entry Debt Securities". Unless otherwise indicated in the prospectus
supplement, Bearer Securities will have interest coupons attached. (Section 201
of each Indenture)
Registered Securities will be exchangeable for other Registered Securities
of the same series. If (but only if) provided in the prospectus supplement,
Bearer Securities (with all unmatured coupons, except as provided below, and all
matured coupons which are in default) of any series may be similarly exchanged
for Registered Securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. If so provided, Bearer
Securities surrendered in exchange for Registered Securities between a Regular
Record Date or a Special Record Date and the relevant date for payment of
interest will be surrendered without the coupon relating to such date for
payment of interest, and interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable
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only to the holder of such coupon when due in accordance with the terms of the
applicable Indenture. Unless otherwise specified in the prospectus supplement,
Bearer Securities will not be issued in exchange for Registered Securities.
(Section 305 of each Indenture)
Registered Securities of a series may be presented for registration of
transfer and Debt Securities of a series may be presented for exchange (i) at
each office or agency required to be maintained by the Company for payment of
such series, as described in "Payment and Paying Agents", and (ii) at each other
office or agency that the Company may designate from time to time for such
purposes. No service charge will be made for any transfer or exchange of Debt
Securities, but the Company may require payment of any tax or other governmental
charge payable in connection therewith. (Section 305 of each Indenture)
The Company will not be required to (i) issue, register the transfer of or
exchange Debt Securities called for redemption during a period beginning at the
opening of business 15 days before any selection of Debt Securities of that
series to be redeemed and ending at the close of business on (A) if Debt
Securities of the series are issuable only as Registered Securities, the day of
mailing of the relevant notice of redemption and (B) if Debt Securities of the
series are issuable as Bearer Securities, the day of the first publication of
the relevant notice of redemption or, if Debt Securities of the series are also
issuable as Registered Securities and there is no publication, the day of
mailing of the relevant notice of redemption; (ii) register the transfer of or
exchange any Registered Security, or portion thereof, called for redemption,
except the unredeemed portion of any Registered Security being redeemed in part;
(iii) exchange any Bearer Security called for redemption, except to exchange
such Bearer Security for a Registered Security of that series and like tenor
that is simultaneously surrendered for redemption; or (iv) issue, register the
transfer of or exchange any Debt Security which has been surrendered for
repayment at the option of the holder, except the portion, if any, of such Debt
Security not to be so repaid. (Section 305 of each Indenture)
PAYMENT AND PAYING AGENTS
Unless otherwise provided in the prospectus supplement, the Place of Payment
for a series issuable solely as Registered Securities will be The City of New
York, and the Company will initially designate the office of the Senior Trustee
and the corporate trust office of the Subordinated Trustee, respectively, for
this purpose. Notwithstanding the foregoing, at the option of the Company,
interest, if any, may be paid on Registered Securities by (i) check mailed to
the address of the Person entitled thereto as such Person's address appears in
the Security Register or (ii) wire transfer to an account located in the United
States maintained by the Person entitled thereto as specified in the Security
Register. (Sections 307, 1001 and 1002 of each Indenture) Unless otherwise
provided in the prospectus supplement, payment of any installment of interest on
Registered Securities will be made to the Person in whose name such Registered
Security is registered at the close of business on the Regular Record Date for
such interest. (Section 307 of each Indenture)
If Debt Securities of a series are issuable solely as Bearer Securities or
as both Registered Securities and Bearer Securities, unless otherwise provided
in the prospectus supplement, the Company will be required to maintain an office
or agency (i) outside the United States at which, subject to any applicable laws
and regulations, the principal of (and premium, if any) and interest, if any, on
such series will be payable, and (ii) in The City of New York for payments with
respect to any Registered Securities of such series (and for payments with
respect to Bearer Securities of such series in the limited circumstances
described below, but not otherwise); provided that, if required in connection
with any listing of such Debt Securities on the Luxembourg Stock Exchange or any
other stock exchange located outside the United States, the Company will
maintain an office or agency for such Debt Securities in any city located
outside the United States required by such stock exchange. (Section 1002 of each
Indenture) The initial locations of such offices and agencies will be specified
in the prospectus supplement. Unless otherwise provided in the prospectus
supplement, principal of (and premium, if any) and interest, if any, on Bearer
Securities may be paid by wire transfer to an account maintained by the Person
entitled thereto with a bank located outside the United States. (Sections 307
and 1002 of each Indenture) Unless otherwise provided in the prospectus
supplement, payment of installments of interest on any Bearer Securities on or
before Maturity will be made only against
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surrender of coupons for such interest installments as they severally mature.
(Section 1001 of each Indenture) Unless otherwise provided in the prospectus
supplement, no payment with respect to any Bearer Security will be made at any
office or agency of the Company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States. Notwithstanding the foregoing, payments of
principal of (and premium, if any) and interest, if any, on Bearer Securities
payable in U.S. dollars will be made at the office of the Company's Paying Agent
in The City of New York if (but only if) payment of the full amount thereof in
U.S. dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 1002 of each Indenture)
The Company may from time to time designate additional offices or agencies,
approve a change in the location of any office or agency and, except as provided
above, rescind the designation of any office or agency.
Unless otherwise provided in the prospectus supplement, all payments of
principal of (and premium, if any) and interest, if any, on any Debt Security
that is payable in a Currency other than U.S. dollars will be made in U.S.
dollars in the event that such Currency (i) is a currency, and it ceases to be
used by both the government of the country that issued the currency and by a
central bank or other public institution of or within the international banking
community for the settlement of transactions, (ii) is the ECU, and it ceases to
be used both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) is any other currency unit (or composite currency) other than the ECU, and
it ceases to be used for the purposes for which it was established (each of the
events described in clauses (i) through (iii), a "Conversion Event"). (Section
312 of each Indenture)
EVENTS OF DEFAULT
Each Indenture provides, with respect to Debt Securities of a series
outstanding thereunder, that the following will constitute Events of Default:
(i) default in the payment of any interest upon any Debt Security of that
series, or of any coupon appertaining thereto, when the same becomes due and
payable, continued for 30 days; (ii) default in the payment of the principal of
(or premium, if any, on) any Debt Security of that series at its maturity; (iii)
default in the deposit of any sinking fund payment when due by the terms of any
Debt Security of that series; (iv) default in the performance, or breach, of any
covenant or agreement of the Company in the applicable Indenture with respect to
any Debt Security of that series, continued for 60 days after written notice to
the Company; (v) certain events of bankruptcy, insolvency or reorganization
affecting the Company; and (vi) any other Event of Default provided with respect
to Debt Securities of that series. (Section 501 of each Indenture) The Company
is required to file with the applicable Trustee, annually, an officer's
certificate as to the Company's compliance with all conditions and covenants
under the applicable Indenture. (Section 1005 of each Indenture) Each Indenture
provides that the applicable Trustee may withhold notice to the holders of Debt
Securities of a series of any default (except payment defaults on any Debt
Securities of that series) if it considers it in the interest of the holders of
Debt Securities of such series to do so. (Section 601 of each Indenture)
If an Event of Default with respect to Debt Securities of a series has
occurred and is continuing, the applicable Trustee or the holders of not less
than 25% in principal amount of Outstanding Debt Securities of that series may
declare the principal amount (or, if any Debt Securities of that series are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal amount as may be specified in the terms thereof) of all of the Debt
Securities of that series due and payable immediately. (Section 502 of each
Indenture)
Subject to the provisions of the applicable Indenture relating to the duties
of the Trustee thereunder, in case an Event of Default with respect to Debt
Securities of a series has occurred and is continuing, that Trustee is under no
obligation to exercise any of its rights or powers under such Indenture at the
request, order or direction of the applicable holders of Debt Securities of that
series, unless such holders have offered such Trustee reasonable indemnity
against the expenses and liabilities which might be incurred by it in compliance
with such request. (Section 507 of each Indenture and TIA Section 315) Subject
to such provisions for the indemnification of the applicable Trustee, the
holders of a majority in principal amount of
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the Outstanding Debt Securities of such series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
such Trustee, or exercising any trust or power conferred on such Trustee with
respect to the Debt Securities of that series. (Section 512 of each Indenture)
The holders of not less than a majority in principal amount of the
Outstanding Debt Securities of a series may, on behalf of the holders of all
Debt Securities of such series and any related coupons, waive any past default
under the applicable Indenture with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or premium, if any) or
interest, if any, on any Debt Security of such series or any related coupons or
(ii) in respect of a covenant or provision that cannot be modified or amended
without the consent of the holder of each Outstanding Debt Security of such
series affected thereby. (Section 513 of each Indenture)
MERGER OR CONSOLIDATION
Each Indenture provides that the Company may not consolidate with or merge
with or into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, unless either (i) the Company
is the continuing corporation or (ii) such corporation or Person assumes by
supplemental indenture the due and punctual payment of the principal of (and
premium, if any) and interest, if any, on the Indenture Securities issued
thereunder and the performance of every covenant thereunder and, in either case,
immediately after the transaction no default shall exist. In addition, under the
Senior Indenture, no such consolidation, merger or transfer may be made if as a
result thereof any property or assets of the Company or a Restricted Subsidiary
would become subject to any mortgage or other encumbrance, unless either (i)
such mortgage or other encumbrance could be created pursuant to Section 1006 of
such Indenture (see "Senior Indenture Provisions -- Limitation on Liens")
without equally and ratably securing the Indenture Securities issued under such
Indenture or (ii) such Indenture Securities are secured equally and ratably with
or prior to the debt secured by such mortgage or other encumbrance. (Section 801
of each Indenture)
MODIFICATION OR WAIVER
Modification and amendment of an Indenture may be made by the Company and
the Trustee thereunder with the consent of the holders of not less than a
majority in principal amount of all Outstanding Indenture Securities issued
thereunder that are affected by such modification or amendment; provided that no
such modification or amendment may, without the consent of the holder of each
Outstanding Indenture Security affected thereby, among other things: (i) change
the Stated Maturity of the principal of (or premium, if any, on) or any
installment of principal of or interest on any such Indenture Security; (ii)
reduce the principal amount of, or the rate of interest on or any Additional
Amounts payable in respect of, or any premium payable upon the redemption of,
any such Indenture Security; (iii) change any obligation of the Company to pay
Additional Amounts in respect of any such Indenture Security; (iv) reduce the
portion of the principal of an Original Issue Discount Security or Indexed
Security that would be due and payable upon a declaration of acceleration of the
Maturity thereof or provable in bankruptcy; (v) adversely affect any right of
repayment at the option of the holder of any such Indenture Security; (vi)
change the place or Currency of payment of principal of, or any premium or
interest on, any such Indenture Security; (vii) impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof or on or after any Redemption Date or Repayment Date therefor; (viii)
reduce the percentage in principal amount of such Outstanding Indenture
Securities (or of such Outstanding Indenture Securities of any series, as the
case may be), the consent of whose holders is required to amend or waive
compliance with certain provisions of such Indenture or to waive certain
defaults thereunder; (ix) reduce the requirements for voting or quorum described
below; or (x) modify any of the provisions relating to supplemental indentures
requiring the consent of holders, relating to the waiver of past defaults or
relating to the waiver of certain covenants, except to increase the percentage
of such Outstanding Indenture Securities required for such actions or to provide
that certain other provisions of such Indenture cannot be modified or waived
without the consent of the holder of each Outstanding Indenture Security
affected thereby. (Section 902 of each Indenture)
In addition, under the Subordinated Indenture, no modification or amendment
thereof may, without the consent of the holder of each Outstanding Subordinated
Security affected thereby, modify any of the
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provisions of such Indenture relating to the subordination of the Subordinated
Securities in a manner adverse to the holders thereof and no such modification
or amendment may adversely affect the rights of any holder of Senior
Indebtedness under Article Sixteen of such Indenture (described under the
caption "Subordinated Indenture Provisions -- Subordination") without the
consent of such holder of Senior Indebtedness. (Sections 902 and 907 of the
Subordinated Indenture)
The holders of a majority in aggregate principal amount of Outstanding
Indenture Securities have the right to waive compliance by the Company with
certain covenants in the applicable Indenture. (Section 1008 of the Senior
Indenture and Section 1006 of the Subordinated Indenture)
Modification and amendment of an Indenture may be made by the Company and
the Trustee thereunder without the consent of any holder for any of the
following purposes: (i) to evidence the succession of another Person to the
Company as obligor under such Indenture; (ii) to add to the covenants of the
Company for the benefit of the holders of all or any series of Indenture
Securities issued thereunder and any related coupons or to surrender any right
or power conferred upon the Company thereunder; (iii) to add Events of Default
for the benefit of the holders of all or any series of Indenture Securities;
(iv) to add or change any provisions of such Indenture to facilitate the
issuance of, or to liberalize certain terms of, Bearer Securities, or to permit
or facilitate the issuance of Indenture Securities in uncertificated form,
provided that any such actions do not adversely affect the holders of such
Indenture Securities or any related coupons; (v) to change or eliminate any
provisions of such Indenture, provided that any such change or elimination will
become effective only when there are no such Indenture Securities Outstanding of
any series created prior thereto which are entitled to the benefit of such
provisions; (vi) in the case of the Senior Securities, to secure the Indenture
Securities under the Senior Indenture pursuant to the requirements of Section
801 or Section 1006 of the Senior Indenture, or otherwise; (vii) to establish
the form or terms of Indenture Securities of any series and any related coupons;
(viii) to provide for the acceptance of appointment by a successor Trustee or
facilitate the administration of the trusts under such Indenture by more than
one Trustee; (ix) to cure any ambiguity, defect or inconsistency in such
Indenture, provided such action does not adversely affect the interests of
holders of Indenture Securities of a series issued thereunder or any related
coupons in any material respect; or (x) to supplement any of the provisions of
such Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of Indenture Securities thereunder, provided that such
action shall not adversely affect the interests of the holders of any such
Indenture Securities and any related coupons of any other series of Indenture
Securities in any material respect. (Section 901 of each Indenture)
In determining whether the holders of the requisite principal amount of
Outstanding Indenture Securities have given any request, demand, authorization,
direction, notice, consent or waiver under either Indenture or whether a quorum
is present at a meeting of holders of Indenture Securities thereunder, (i) the
principal amount of an Original Issue Discount Security that will be deemed to
be outstanding will be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof, (ii) the principal amount of an Indenture Security denominated in a
foreign Currency or Currencies will be the U.S. dollar equivalent, determined on
the trade date for such Indenture Security, of the principal amount thereof (or,
in the case of an Original Issue Discount Security or Indexed Security, the U.S.
dollar equivalent on the trade date of such Indenture Security of the amount
determined as provided in (i) above or (iii) below), (iii) the principal amount
of an Indexed Security that may be counted in making such determination or
calculation and that will be deemed outstanding for such purpose will be equal
to the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to
Section 301 of such Indenture and (iv) Indenture Securities owned by the Company
or any other obligor upon the Indenture Securities or any Affiliate of the
Company or of such other obligor will be disregarded. (Section 101 of each
Indenture)
Each Indenture contains provisions for convening meetings of the holders of
Indenture Securities of a series if Indenture Securities of that series are
issuable as Bearer Securities. (Section 1501 of each Indenture) A meeting may be
called at any time by the applicable Trustee, and also, upon request, by the
Company or the holders of at least 10% in principal amount of the Outstanding
Indenture Securities of that series, in any such case upon notice given as
provided in the applicable Indenture. (Section 1502 of each
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Indenture) Except for any consent that must be given by the holder of each
Indenture Security affected thereby, as described above, any resolution
presented at a meeting (or an adjourned meeting duly reconvened) at which a
quorum is present may be adopted by the affirmative vote of the holders of a
majority in principal amount of the Outstanding Indenture Securities of that
series; provided, however, that any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
may be made, given or taken by the holders of a specified percentage which is
less than a majority in principal amount of the Outstanding Indenture Securities
of a series, may be adopted at a meeting (or an adjourned meeting duly
reconvened) at which a quorum is present by the affirmative vote of the holders
of such specified percentage in principal amount of the Outstanding Indenture
Securities of that series. Any resolution passed or decision taken at any
meeting of holders of Indenture Securities of a series duly held in accordance
with that Indenture will be binding on all holders of Indenture Securities of
that series and any related coupons. The quorum at any meeting called to adopt a
resolution will be persons holding or representing a majority in principal
amount of the Outstanding Indenture Securities of a series; provided, however,
that, if any action is to be taken at such meeting with respect to a consent or
waiver which may be given by the holders of not less than a specified percentage
in principal amount of the Outstanding Indenture Securities of a series, the
persons holding or representing such specified percentage in principal amount of
the Outstanding Indenture Securities of that series will constitute a quorum.
(Section 1504 of each Indenture)
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of holders of Indenture Securities of a series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the applicable Indenture expressly provides may be made, given or
taken by the holders of a specified percentage in principal amount of all
Outstanding Indenture Securities affected thereby or of the holders of such
series and one or more additional series: (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the Outstanding
Indenture Securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action will be taken
into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or taken
under such Indenture. (Section 1504 of each Indenture)
SATISFACTION AND DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of Debt Securities
of a series that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or are by their terms
due and payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in an amount
sufficient to pay the entire indebtedness on such Debt Securities for principal
(and premium, if any) and interest, if any with respect thereto, to the date of
such deposit (if such Debt Securities have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be. (Section 401 of each
Indenture)
Each Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within a series and any related coupons
pursuant to Section 301 thereunder, the Company may elect either (i) to defease
and be discharged from any and all obligations with respect to such Debt
Securities and coupons (except for the obligations to pay Additional Amounts, if
any; to register the transfer or exchange of such Debt Securities and coupons;
to replace temporary or mutilated, destroyed, lost or stolen Debt Securities and
coupons; to maintain one or more offices or agencies in respect of such Debt
Securities and coupons; and to hold moneys for payment in trust) ("defeasance")
or (ii) to be released (a) in the case of any such Debt Securities that are
Senior Securities, from its obligations under Sections 1006 and 1007 of such
Indenture (being the restrictions described under "Senior Indenture Provisions
- -- Limitation on Liens" and "Senior Indenture Provisions -- Limitation on Sale
and Leaseback Transactions") or (b) in the case of any such Debt Securities
(whether they are Senior or Subordinated Securities), if so provided in the
prospectus supplement, from its obligations with respect to any other covenant
relating to such Debt Securities and, in the case of either (a) or (b) above,
any omission to comply with such obligations will not constitute a default or an
Event of Default with respect to such Debt Securities and coupons ("covenant
defeasance"), in either case upon the irrevocable deposit by the Company with
the applicable Trustee (or
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other qualifying trustee), in trust, of (1) an amount, in the Currency or
Currencies in which such Debt Securities and coupons are then specified as
payable at Stated Maturity, (2) Government Obligations (as defined below)
applicable to such Debt Securities and coupons (with such applicability being
determined on the basis of the Currency in which such Debt Securities are then
specified as payable at Stated Maturity) that, through the payment of principal
and interest in accordance with their terms, will provide money in an amount, or
(3) a combination thereof in an amount, sufficient to pay the principal of (and
premium, if any) and interest, if any, on such Debt Securities and coupons, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
Such a trust may only be established if, among other things, the Company has
delivered to the applicable Trustee an Opinion of Counsel (as specified in the
applicable Indenture) to the effect that the holders of such Debt Securities and
related coupons to be defeased will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, and such
Opinion of Counsel, in the case of defeasance under clause (i) above, must refer
to and be based upon a ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date of the
applicable Indenture. (Article Fourteen of each Indenture)
"Government Obligations" means securities which are (i) direct obligations
of the United States or the government which issued the foreign Currency in
which the Debt Securities of that series are payable, for the payment of which
its full faith and credit is pledged, or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States
or the government which issued such foreign Currency, as the case may be, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States or such other government, which, in either case,
are not callable or redeemable at the option of the issuer thereof. Such term
also includes a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
the amount received by such custodian in respect of the Government Obligation or
the specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt. (Section 101 of each Indenture)
Unless otherwise provided in the prospectus supplement, if, after the
Company has deposited funds, Government Obligations or both to effect defeasance
or covenant defeasance with respect to Debt Securities of a series, (i) the
holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the terms of such Debt Security to receive payment in a Currency
other than that in which such deposit has been made in respect of such Debt
Security or (ii) a Conversion Event occurs, then the indebtedness represented by
such Debt Security will be deemed to have been, and will be, fully discharged
and satisfied through the payment of the principal of (and premium, if any) and
interest, if any, on such Debt Security as they become due out of the proceeds
yielded by converting the amount so deposited in respect of such Debt Security
into the Currency in which such Debt Security becomes payable as a result of
such election or such Conversion Event based on the applicable Market Exchange
Rate. (Section 1405 of each Indenture) Unless otherwise provided in the
prospectus supplement, all payments of principal of (and premium, if any) and
interest, if any, on any Debt Security that is payable in a foreign Currency
with respect to which a Conversion Event occurs will be made in U.S. dollars.
(Section 312 of each Indenture)
In the event the Company effects covenant defeasance with respect to any
Debt Securities and any related coupons and such Debt Securities and coupons are
declared due and payable because of the occurrence of any Event of Default other
than the Event of Default described in clause (iv) under "Events of Default"
with respect to Sections 1006 and 1007 of the Senior Indenture (which Sections
would no longer be applicable to such Debt Securities or any related coupons) or
described in clause (iv) or (vi) under "Events of Default" with respect to any
other covenant with respect to which there has been defeasance, the amount of
Government Obligations and funds on deposit with the applicable Trustee will be
sufficient to pay
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amounts due on such Debt Securities and coupons at the time of their Stated
Maturity but may not be sufficient to pay amounts due on such Debt Securities
and coupons at the time of the acceleration resulting from such Event of
Default. In such case, the Company would remain liable to make payment of such
amounts due at the time of acceleration.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with the applicable Indenture by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under such
Indenture and such Debt Securities and coupons shall be revived and reinstated
as though no deposit had occurred pursuant to such Indenture, until such time as
such Trustee or Paying Agent is permitted to apply all such money in accordance
with such Indenture; provided, however, that, if the Company makes any payment
of principal of (or premium, if any) or interest, if any, on any such Debt
Security or coupon following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the holders of such Debt Securities and
coupons to receive such payment from the money held by such Trustee or Paying
Agent.
The prospectus supplement may further describe the provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Debt Securities of or
within a particular series and any related coupons.
BOOK-ENTRY DEBT SECURITIES
Debt Securities of a series may be issued in whole or in part in global form
that will be deposited with, or on behalf of, a depository identified in the
prospectus supplement. Global securities may be issued in either registered or
bearer form and in either temporary or permanent form (each a "Global
Security"). Unless otherwise provided in the prospectus supplement, Debt
Securities that are represented by a Global Security will be issued in
denominations of $1,000 and any integral multiple thereof, and will be issued in
registered form only, without coupons. Payments of principal of (and premium, if
any) and interest, if any, on Debt Securities represented by a Global Security
will be made by the Company to the applicable Trustee and then by such Trustee
to the depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company ("DTC"), New York, New York, that
such Global Securities will be registered in the name of DTC's nominee, and that
the following provisions will apply to the depository arrangements with respect
to any such Global Securities. Additional or differing terms of the depository
arrangements will be described in the prospectus supplement.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole holder of
the Debt Securities represented by such Global Security for all purposes under
the applicable Indenture. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities in certificated
form and will not be considered the owners or holders thereof under the
applicable Indenture. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in certificated form;
accordingly, such laws may limit the transferability of beneficial interests in
a Global Security.
If (i) 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 following
notice to the Company, (ii) the Company determines, in its sole discretion, not
to have any Debt Securities represented by one or more Global Securities, or
(iii) an Event of Default under the applicable Indenture has occurred and is
continuing, then the Company will issue individual Debt Securities in
certificated form in exchange for beneficial interests in such Global
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery of individual Debt Securities in
certificated form of like tenor and rank, equal in principal amount to such
beneficial interest and to have such Debt Securities in certificated form
registered in its name. Unless otherwise provided in the prospectus supplement,
Debt Securities so issued in certificated form will be issued in denominations
of $1,000 or any integral multiple thereof, and will be issued in registered
form only, without coupons.
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The following is based on information furnished by DTC:
DTC will act as securities depository for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully registered Debt
Security certificate is issued with respect to each $150 million of
principal amount of the Debt Securities of a series, and an additional
certificate will be issued with respect to any remaining principal amount of
such series.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need
for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser
of each Debt Security ("Beneficial Owner") is in turn recorded on the Direct
and Indirect Participants' records. A Beneficial Owner does not receive
written confirmation from DTC of its purchase, but such Beneficial Owner is
expected to receive a written confirmation providing details of the
transaction, as well as periodic statements of its holdings, from the Direct
or Indirect Participant through which such Beneficial Owner entered into the
transaction. Transfers of ownership interests in Debt Securities are
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners do not receive certificates
representing their ownership interests in Debt Securities, except in the
event that use of the book-entry system for the Debt Securities is
discontinued.
To facilitate subsequent transfers, the Debt Securities are registered
in the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co. effects
no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the
identity of the Direct Participants to whose accounts Debt Securities are
credited, which may or may not be the Beneficial Owners. The Participants
remain responsible for keeping account of their holdings on behalf of their
customers.
Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners are governed by
arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of interest of each Direct Participant in such
issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus
Proxy") to the issuer as soon as possible after the
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record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Debt Securities
are credited on the record date (identified on a list attached to the
Omnibus Proxy).
Payment of principal (and premium, if any) and interest on the Debt
Securities will be made to DTC. DTC's practice is to credit Direct
Participants' accounts on the payable date in accordance with their
respective holdings as shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is 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 Participant and not of DTC, the Paying
Agent or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal (and premium, if
any) and interest to DTC is the responsibility of the Company or the Paying
Agent, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to
the Company or the Paying Agent. Under such circumstances, in the event that
a successor securities depository is not appointed, Debt Security
certificates are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the prospectus supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the applicable Trustee or any
applicable Paying Agent will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial interests
in a Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
RESIGNATION OF TRUSTEE
Each Trustee may resign or be removed with respect to one or more series of
Indenture Securities and a successor Trustee may be appointed to act with
respect to such series. (Section 608 of each Indenture) In the event that two or
more persons are acting as Trustee with respect to different series of Indenture
Securities under one of the Indentures, each such Trustee will be a Trustee of a
trust thereunder separate and apart from the trust administered by any other
such Trustee (Section 609 of each Indenture), and any action described herein to
be taken by the "Trustee" may then be taken by each such Trustee with respect
to, and only with respect to, the one or more series of Indenture Securities for
which it is Trustee.
SENIOR INDENTURE PROVISIONS
LIMITATION ON LIENS
The Company covenants in the Senior Indenture that it will not, nor will it
permit any Restricted Subsidiary to, incur, assume or guarantee any debt (herein
referred to as "Debt") if such Debt is secured by any mortgage, security
interest, pledge, lien or other encumbrance (herein referred to as "mortgage" or
"mortgages") upon any Important Property (as defined below) of the Company or
any Restricted Subsidiary or any shares of stock or indebtedness of any
Restricted Subsidiary, whether owned at the date of such Indenture or thereafter
acquired, without effectively securing the Indenture Securities issued under the
Senior Indenture equally and ratably with or prior to such Debt. The foregoing
restriction will not apply to: (i) mortgages on any property acquired,
constructed or improved after the date of such Indenture which are
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created or assumed within 120 days after such acquisition, construction or
improvement to secure or provide for the payment of the purchase price or cost
thereof incurred after the date of such Indenture, or existing mortgages on
property acquired after the date of such Indenture, provided that such mortgages
do not apply to any Important Property theretofore owned by the Company or a
Restricted Subsidiary other than theretofore unimproved real property; (ii)
existing mortgages on any property acquired from a corporation merged with or
into, or substantially all of the assets of which are acquired by, the Company
or a Restricted Subsidiary; (iii) mortgages on property of any corporation
existing at the time it becomes a Restricted Subsidiary; (iv) mortgages securing
Debt owed by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary; (v) mortgages in favor of governmental bodies to secure advance or
other payments pursuant to any contract or statute or to secure indebtedness
incurred to finance the purchase price or cost of constructing or improving the
property subject to such mortgages, including mortgages to secure tax exempt
pollution control revenue bonds; (vi) sales of receivables that are reflected as
secured indebtedness; (vii) certain other liens not related to the borrowing of
money; (viii) extensions, renewals or replacements of the foregoing; (ix)
mortgages on margin stock owned by the Company and Restricted Subsidiaries to
the extent such margin stock exceeds 25% of the fair market value of Important
Property of the Company and the Restricted Subsidiaries plus certain stock and
indebtedness of the Restricted Subsidiaries; and (x) mortgages on Important
Property of, or any shares of stock or indebtedness issued or incurred by, any
Restricted Subsidiary organized under the laws of Canada. (Section 1006 of the
Senior Indenture)
The foregoing restrictions do not apply to the incurrence, assumption or
guarantee by the Company or any Restricted Subsidiary of Debt secured by a
mortgage that would otherwise be subject to such restrictions up to an aggregate
amount which, together with all other Debt secured by mortgages (not including
secured Debt permitted under the foregoing exceptions) and the Attributable Debt
(generally defined as the discounted present value of net rental payments)
associated with Sale and Lease-back Transactions existing at such time (other
than Sale and Lease-back Transactions the proceeds of which have been or will be
applied as set forth in clause (iii) or (iv) under "Limitation on Sale and
Lease-back Transactions" below, and other than Sale and Lease-back Transactions
in which the property involved would have been permitted to be mortgaged under
clause (i) above), does not exceed 5% of Consolidated Net Tangible Assets of the
Company and its consolidated subsidiaries, as shown on the audited consolidated
balance sheet contained in the latest annual report to stockholders of the
Company. (Section 1006 of the Senior Indenture)
The term "Restricted Subsidiary" is defined in the Senior Indenture to mean
any subsidiary (i) engaged in, or whose principal assets consist of property
used by the Company or any Restricted Subsidiary in, the manufacture of products
within the United States or Canada or in the sale of products principally to
customers located in the United States or Canada except any corporation which is
a retail dealer in which the Company has, directly or indirectly, an investment
under an arrangement providing for the liquidation of such investment; or (ii)
which the Company shall designate as a Restricted Subsidiary. (Section 1006 of
the Senior Indenture)
The term "Important Property" is defined in the Senior Indenture to include:
(i) any manufacturing plant, including its machinery and equipment, used by the
Company or a Restricted Subsidiary primarily for the manufacture of products to
be sold by the Company or such Restricted Subsidiary; (ii) the executive office
and administrative building of the Company in Moline, Illinois; and (iii)
research and development facilities; except, in each case, property the fair
value of which as determined by the Board of Directors does not at the time
exceed 1% of Consolidated Net Tangible Assets of the Company and its
consolidated subsidiaries, as shown on the audited consolidated balance sheet
contained in the latest annual report to stockholders of the Company. (Section
1006 of the Senior Indenture)
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
The Company covenants in the Senior Indenture that it will not nor will it
permit any Restricted Subsidiary to enter into any arrangement with any Person
providing for the leasing to the Company or any Restricted Subsidiary of any
Important Property (except for temporary leases for a term, including renewals,
of not more than three years) which has been or is to be sold by the Company or
such Restricted Subsidiary to such Person unless the net proceeds are at least
equal to the fair value (as determined by the Board of
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Directors) of such property and either (i) the Company or such Restricted
Subsidiary would be entitled to incur Debt secured by a mortgage on such
Important Property without securing the Indenture Securities issued under the
Senior Indenture under clause (i) of the first paragraph under "Limitation on
Liens" above; (ii) the Attributable Debt associated therewith would be an amount
permitted under the second paragraph under "Limitation on Liens" above; (iii)
the Company applies an amount equal to the fair value of such Important Property
to the retirement of Indenture Securities or certain long-term indebtedness of
the Company or a Restricted Subsidiary, as the case may be; or (iv) the Company
enters into a BONA FIDE commitment to expend for the acquisition or improvement
of an Important Property an amount at least equal to the fair value of such
Important Property. (Section 1007 of the Senior Indenture)
SUBORDINATED INDENTURE PROVISIONS
SUBORDINATION
Upon any distribution of assets of the Company upon any dissolution, winding
up, liquidation or reorganization, the payment of the principal of (and premium,
if any) and interest, if any, on Subordinated Securities is to be subordinated
to the extent provided in the Subordinated Indenture in right of payment to the
prior payment in full of all Senior Indebtedness (Sections 1601 and 1602 of the
Subordinated Indenture), but the obligation of the Company to make payment of
principal (and premium, if any) or interest, if any, on Subordinated Securities
will not otherwise be affected. (Section 1604 of the Subordinated Indenture) In
addition, no payment on account of principal (and premium, if any), sinking fund
or interest, if any, may be made on the Subordinated Securities unless full
payment of all amounts then due in respect of the principal (and premium, if
any), sinking fund and interest on Senior Indebtedness has been made or duly
provided for in money or money's worth. (Section 1603 of the Subordinated
Indenture) In the event that, notwithstanding the foregoing, any such payment by
the Company is received by the Subordinated Trustee or the holders of any of the
Subordinated Securities before all Senior Indebtedness is paid in full, such
payment or distribution will be paid over to the holders of such Senior
Indebtedness or on their behalf for application to the payment of all such
Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been
paid in full, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness. Subject to the payment in full of all
Senior Indebtedness upon such distribution of assets of the Company, the holders
of the Subordinated Securities will be subrogated to the rights of the holders
of the Senior Indebtedness to the extent of payments made to the holders of such
Senior Indebtedness out of the distributive share of the Subordinated
Securities. (Section 1602 of the Subordinated Indenture) By reason of such
subordination, in the event of a distribution of assets upon insolvency, certain
general creditors of the Company may recover more, ratably, than holders of the
Subordinated Securities. The Subordinated Indenture provides that the
subordination provisions thereof will not apply to money and securities held in
trust pursuant to the defeasance provisions of the Subordinated Indenture.
(Section 1402 of the Subordinated Indenture)
Senior Indebtedness is defined in the Subordinated Indenture as the
principal of (and premium, if any) and unpaid interest on (i) indebtedness of
the Company (including indebtedness of others guaranteed by the Company),
whether outstanding on the date of the Subordinated Indenture or thereafter
created, incurred, assumed or guaranteed, for money borrowed (other than the
Indenture Securities issued under the Subordinated Indenture and the 5 1/2%
Convertible Subordinated Debentures due 2001), unless in the instrument creating
or evidencing the same or pursuant to which the same is outstanding it is
provided that such indebtedness is not senior or prior in right of payment to
the Subordinated Securities and (ii) renewals, extensions, modifications and
refundings of any such indebtedness. (Section 101 of the Subordinated Indenture)
If this prospectus is being delivered in connection with the offering of a
series of Subordinated Securities, the accompanying prospectus supplement or the
information incorporated by reference will set forth the approximate amount of
Senior Indebtedness outstanding as of a recent date.
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THE TRUSTEES UNDER THE INDENTURES
The Chase Manhattan Bank (National Association) and Chemical Bank are two of
a number of banks with which the Company maintains ordinary banking
relationships and from which the Company has obtained credit facilities and
lines of credit. The Chase Manhattan Bank (National Association) and Chemical
Bank each also serves as trustee under other indentures under which the Company
is the obligor.
DESCRIPTION OF DEBT WARRANTS
The Company may issue (either separately or together with other Offered
Securities) Debt Warrants to purchase Underlying Debt Securities (the "Offered
Debt Warrants"). Such Debt Warrants will be issued under warrant agreements
(each a "Debt Warrant Agreement") to be entered into between the Company and a
bank or trust company, as warrant agent (the "Debt Warrant Agent"), all as shall
be set forth in the prospectus supplement. A copy of the form of Debt Warrant
Agreement has been filed as an exhibit to the registration statement. The
following summary of certain provisions of the Debt Warrant Agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Debt Warrant Agreement, including the
definitions of certain terms.
GENERAL
Reference is made to the prospectus supplement for the terms of the Offered
Debt Warrants, including the following:
(1) The title and aggregate number of such Debt Warrants.
(2) The title, rank, aggregate principal amount and terms of the
Underlying Debt Securities purchasable upon exercise of such Debt Warrants.
(3) The principal amount of Underlying Debt Securities that may be
purchased upon exercise of each such Debt Warrant, and the price, or the
manner of determining the price, at which such principal amount may be
purchased upon such exercise.
(4) The time or times at which, or period or periods in which, such Debt
Warrants may be exercised and the expiration date of such Debt Warrants.
(5) The terms of any right of the Company to redeem such Debt Warrants.
(6) Whether certificates evidencing such Debt Warrants ("Debt Warrant
Certificates") will be issued in registered or bearer form, and, if
registered, where they may be transferred and exchanged.
(7) Whether such Debt Warrants are to be issued with any Debt Securities
or any other Securities.
(8) The date, if any, on and after which such Debt Warrants and such
Debt Securities or other Securities will be separately transferable.
(9) Any other terms of such Debt Warrants.
If applicable, the prospectus supplement will also set forth information
concerning any other Securities offered thereby and a discussion of federal
income tax considerations relevant thereto.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations. No service charge will be made for any
permitted transfer or exchange of Debt Warrant Certificates, but the Company may
require payment of any tax or other governmental charge payable in connection
therewith. Debt Warrants may be exercised and exchanged, and Debt Warrants in
registered form may be presented for registration of transfer at the corporate
trust office of the Debt Warrant Agent or any other office indicated in the
prospectus supplement.
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EXERCISE OF DEBT WARRANTS
Each Offered Debt Warrant will entitle the holder thereof to purchase such
amount of Underlying Debt Securities at the exercise price set forth in, or
calculable from, the prospectus supplement relating to such Offered Debt
Warrants. After the close of business on the applicable expiration date,
unexercised Debt Warrants will become void.
Debt Warrants may be exercised by payment to the Debt Warrant Agent of the
applicable exercise price and by delivery to the Debt Warrant Agent of the
related Debt Warrant Certificate, with the reverse side thereof properly
completed. Debt Warrants will be deemed to have been exercised upon receipt of
the exercise price, subject to the receipt by the Debt Warrant Agent, within
five business days thereafter, of the Debt Warrant Certificate or Certificates
evidencing such Debt Warrants. Upon receipt of such payment and the properly
completed Debt Warrant Certificates at the corporate trust office of the Debt
Warrant Agent or any other office indicated in the prospectus supplement, the
Company will, as soon as practicable, deliver the amount of Underlying Debt
Securities purchased upon such exercise. If fewer than all of the Debt Warrants
represented by any Debt Warrant Certificate are exercised, a new Debt Warrant
Certificate will be issued for the unexercised Debt Warrants. The holder of a
Debt Warrant will be required to pay any tax or other governmental charge that
may be imposed in connection with any transfer involved in the issuance of
Underlying Debt Securities purchased upon such exercise.
MODIFICATIONS
The Debt Warrant Agreement and the terms of the Offered Debt Warrants may be
modified or amended by the Company and the Debt Warrant Agent, without the
consent of any holder, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective or inconsistent provision contained
therein, or in any other manner that the Company deems necessary or desirable
and that will not materially and adversely affect the interests of the holders
of the Offered Debt Warrants.
The Company and the Debt Warrant Agent may also modify or amend the Debt
Warrant Agreement and the terms of the Offered Debt Warrants with the consent of
the holders of not less than a majority in number of the then outstanding
unexercised Debt Warrants affected thereby; provided that no such modification
or amendment that accelerates the expiration date, increases the exercise price,
reduces the number of outstanding Debt Warrants the consent of the holders of
which is required for any such modification or amendment, or otherwise
materially and adversely affects the rights of the holders of the Debt Warrants,
may be made without the consent of each holder affected thereby.
NO RIGHTS AS HOLDERS OF UNDERLYING DEBT SECURITIES
Holders of Debt Warrants are not entitled, by virtue of being such holders,
to payments of principal of (or premium, if any) or interest, if any, on the
related Underlying Debt Securities or to exercise any other rights whatsoever as
holders of the Underlying Debt Securities.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to or through underwriters or
dealers, and also may sell the Offered Securities directly to one or more other
purchasers or through agents.
The prospectus supplement sets forth the terms of the offering of the
particular series of Offered Securities to which such prospectus supplement
relates, including (i) the name or names of any underwriters or agents with whom
the Company has entered into arrangements with respect to the sale of such
series of Offered Securities, (ii) the initial public offering or purchase price
of such series of Offered Securities, (iii) any underwriting discounts,
commissions and other items constituting underwriters' compensation from the
Company and any other discounts, concessions or commissions allowed or reallowed
or paid by any underwriters to other dealers, (iv) any commissions paid to any
agents, (v) the net proceeds to the Company and (vi) the securities exchanges,
if any, on which such series of Offered Securities will be listed.
Unless otherwise set forth in the prospectus supplement relating to a
particular series of Offered Securities, the obligations of the underwriters to
purchase such series of Offered Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of Offered
Securities
20
<PAGE>
will be obligated to purchase all of the Offered Securities of such series
allocated to it if any such Offered Securities are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
The Offered Securities may be offered and sold by the Company directly or
through agents designated by the Company from time to time. Any agent involved
in the offer or sale of the Offered Securities in respect of which this
prospectus is delivered will be named in, and any commissions payable by the
Company to such agent will be set forth in, the applicable prospectus
supplement. Unless otherwise indicated in the applicable prospectus supplement,
each such agent will be acting on a best efforts basis for the period of its
appointment.
Any underwriters, dealers or agents participating in the distribution of
Offered Securities may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of Offered Securities may be
deemed to be underwriting discounts and commissions under the Securities Act of
1933, as amended (the "Securities Act"). Underwriters, dealers and agents may be
entitled, under agreements entered into with the Company, to indemnification by
the Company against certain civil liabilities, including liabilities under the
Securities Act.
If so indicated in the prospectus supplement relating to a particular series
of Offered Securities, the Company will authorize underwriters, dealers or
agents to solicit offers by certain institutions to purchase Offered Securities
of such series from the Company pursuant to delayed delivery contracts providing
for payment and delivery at a future date. Such contracts will be subject only
to those conditions set forth in the prospectus supplement and the prospectus
supplement will set forth the commission payable for solicitation of such
contracts.
LEGAL OPINIONS
The validity of the Securities will be passed upon for the Company by
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022 and for any
underwriters, dealers or agents by Brown & Wood, One World Trade Center, New
York, New York 10048.
EXPERTS
The financial statements and financial statement schedules incorporated in
this prospectus by reference to the Company's Annual Report on Form 10-K have
been audited by Deloitte & Touche, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT
(INCLUDING ANY PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON, UNDERWRITER, DEALER
OR AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY
PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER
AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF AND THEREOF.
THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY PRICING SUPPLEMENT) AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes........................... S-2
Important Currency Exchange Information........ S-19
Foreign Currency Risks......................... S-19
United States Taxation......................... S-21
Plan of Distribution........................... S-27
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 3
Use of Proceeds................................ 4
Description of Debt Securities................. 4
Description of Debt Warrants................... 19
Plan of Distribution........................... 20
Legal Opinions................................. 21
Experts........................................ 21
</TABLE>
O
U.S. $500,000,000
DEERE & COMPANY
MEDIUM-TERM NOTES,
SERIES C
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
JULY 14, 1994
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