<PAGE>
Filed Pursuant to Rule 424(b)(5)
Reg. No. 333-60819
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 1, 1998)
$150,000,000
TECO ENERGY, INC.
REMARKETED NOTES DUE 2038
------------------------------
INTEREST PAYABLE MARCH 15 AND SEPTEMBER 15
------------------------
TECO ENERGY, INC. (THE "COMPANY") IS ISSUING REMARKETED NOTES (THE "NOTES") DUE
SEPTEMBER 15, 2038 (THE "STATED MATURITY"). THE NOTES WILL BEAR INTEREST,
DURING INTEREST RATE PERIODS (EACH AN "INTEREST RATE PERIOD"), AT
RATES ESTABLISHED PERIODICALLY AS DESCRIBED HEREIN, IN A
REPS* MODE, A LONG TERM RATE MODE OR A COMMERCIAL
PAPER TERM MODE (EACH AS DEFINED BELOW).
THE NOTES INITIALLY WILL BE IN A REPS MODE. FOR THE PERIOD FROM THE DATE OF
INITIAL ISSUANCE TO, BUT EXCLUDING, SEPTEMBER 15, 2001 (THE "INITIAL REPS
REMARKETING DATE"), THE REPS WILL BEAR INTEREST AT AN ANNUAL RATE OF 5.54%
(THE "INITIAL INTEREST RATE"). DURING THIS PERIOD, INTEREST WILL BE PAYABLE
ON EACH MARCH 15 AND SEPTEMBER 15, COMMENCING ON MARCH 15, 1999. THE NOTES
ARE SUBJECT TO MANDATORY TENDER FOR REMARKETING OR REPURCHASE ON
SEPTEMBER 15, 2001. IF MORGAN STANLEY & CO. INCORPORATED, AS THE INITIAL
CALLHOLDER (THE "INITIAL CALLHOLDER"), ELECTS TO PURCHASE THE NOTES AS
DESCRIBED HEREIN, THE NOTES WILL BE SUBJECT TO MANDATORY TENDER TO THE
INITIAL CALLHOLDER ON THE INITIAL REPS REMARKETING DATE, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED HEREIN, AND WILL, FOR THE PERIOD (THE
"REPS PERIOD") FROM THE INITIAL REPS REMARKETING DATE TO, BUT
EXCLUDING, SEPTEMBER 15, 2011, BEAR INTEREST AT THE REPS COUPON
RESET RATE (AS DEFINED BELOW). IF THE INITIAL CALLHOLDER DOES NOT
PURCHASE THE NOTES ON THE INITIAL REPS REMARKETING DATE, THE
NOTES WILL CEASE TO BE IN THE INITIAL REPS MODE, THE INITIAL
REPS REMARKETING DATE WILL CONSTITUTE AN INTEREST RATE
ADJUSTMENT DATE (AN "INTEREST RATE ADJUSTMENT DATE") AND,
FOLLOWING REMARKETING, EACH NOTE WILL BEAR INTEREST AT A RATE
OR RATES IN A NEW REPS MODE, THE LONG TERM RATE MODE OR A
COMMERCIAL PAPER TERM MODE. THE COMPANY WILL BE OBLIGATED TO
REPURCHASE ANY NOTES WHICH ARE NOT REMARKETED IN A NEW
INTEREST RATE MODE.
THE NOTES ARE NOT SUBJECT TO REDEMPTION BY THE COMPANY PRIOR TO SEPTEMBER 15,
2001. THE NOTES ARE SUBJECT TO REDEMPTION BY THE COMPANY ON THE INITIAL REPS
REMARKETING DATE AND ON EACH INTEREST RATE ADJUSTMENT DATE.
THE NOTES WILL BE ISSUED IN DENOMINATIONS OF $100,000 AND INTEGRAL MULTIPLES OF
$1,000 IN EXCESS THEREOF. EACH NOTE WILL BE ISSUED IN FULLY REGISTERED
BOOK-ENTRY FORM (A "BOOK-ENTRY NOTE") AND WILL BE REPRESENTED BY ONE OR MORE
FULLY REGISTERED GLOBAL SECURITIES (THE "GLOBAL SECURITIES") DEPOSITED
WITH OR ON BEHALF OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") AND
REGISTERED IN THE NAME OF THE DEPOSITARY OR THE DEPOSITARY'S NOMINEE.
INTERESTS IN THE GLOBAL SECURITIES WILL BE SHOWN ON, AND TRANSFERS
THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE
DEPOSITARY (WITH RESPECT TO ITS PARTICIPANTS' INTEREST) AND THE
DEPOSITARY'S PARTICIPANTS (WITH RESPECT TO OWNERS OF BENEFICIAL
INTERESTS IN THE NOTES ("BENEFICIAL OWNERS")). EXCEPT AS
DESCRIBED IN THE PROSPECTUS UNDER "DESCRIPTION OF DEBT
SECURITIES--GLOBAL SECURITIES" AND "--BOOK-ENTRY ISSUANCE,"
BENEFICIAL OWNERS WILL NOT BE ENTITLED TO RECEIVE PHYSICAL
DELIVERY OF DEBT SECURITIES IN DEFINITIVE FORM AND WILL
NOT BE CONSIDERED THE HOLDERS 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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
PRICE 100% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)(4)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
PER NOTE.................................. 100% .35% 102.04%
TOTAL..................................... $150,000,000 $525,000 $153,060,000
</TABLE>
- ------------------------------
(1) PLUS ACCRUED INTEREST, IF ANY, FROM SEPTEMBER 16, 1998.
(2) THE COMPANY HAS AGREED TO INDEMNIFY THE SEVERAL UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $265,000.
(4) INCLUDES CONSIDERATION PAYABLE BY MORGAN STANLEY & CO. INCORPORATED FOR THE
RIGHT TO SERVE AS INITIAL CALLHOLDER.
------------------------
*REPS IS A SERVICE MARK OF MORGAN STANLEY DEAN WITTER & CO.
------------------------
THE NOTES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS AND SUBJECT TO CERTAIN OTHER CONDITIONS. THE UNDERWRITERS
RESERVE THE RIGHT TO WITHDRAW, CANCEL OR MODIFY SUCH OFFER AND TO REJECT ORDERS
IN WHOLE OR IN PART. IT IS EXPECTED THAT DELIVERY OF THE NOTES WILL BE MADE IN
BOOK-
<PAGE>
ENTRY FORM THROUGH THE FACILITIES OF THE DEPOSITARY ON OR ABOUT SEPTEMBER 16,
1998, AGAINST PAYMENT THEREFOR IN IMMEDIATELY AVAILABLE FUNDS.
------------------------
MORGAN STANLEY DEAN WITTER CITICORP SECURITIES, INC.
SEPTEMBER 11, 1998
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR INCORPORATED BY
REFERENCE THEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE NOTES 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 ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
- ----------------------------------------------------------
<S> <C>
Offering Summary............................... S-3
Use of Proceeds................................ S-4
Description of the Notes....................... S-4
Certain United States Federal Income Tax
Considerations............................... S-29
Certain ERISA Considerations................... S-34
Underwriting................................... S-35
Legal Matters.................................. S-36
<CAPTION>
PROSPECTUS
- ----------------------------------------------------------
<S> <C>
Available Information.......................... 2
Documents Incorporated by Reference............ 2
The Company.................................... 3
Ratios of Earnings to Fixed Changes............ 3
Use of Proceeds................................ 4
Description of Debt Securities................. 4
Plan of Distribution........................... 12
Legal Matters.................................. 13
Experts........................................ 13
</TABLE>
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING OF
THE NOTES, AND MAY BID FOR AND PURCHASE THE NOTES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE>
OFFERING SUMMARY
<TABLE>
<S> <C>
Notes Offered............... $150 million principal amount of Remarketed Notes due 2038.
Stated Maturity............. September 15, 2038, subject to mandatory tender on September 15, 2001.
Available Modes............. The Notes will bear interest at rates determined periodically as
described herein, in the REPS Mode, the Long Term Rate Mode or a
Commercial Paper Term Mode (each an "Interest Rate Mode").
REPS Mode................. The REPS Mode is the Interest Rate Mode in which Notes bear interest and
are subject to remarketing as REset Put Securities ("REPS").
Long Term Rate Mode....... The Long Term Rate Mode is the Interest Rate Mode in which Notes bear
interest during a period of more than 364 days.
Commercial Paper Term The Commercial Paper Term Rate Mode is the Interest Rate Mode in which
Rate Mode................. the interest rate on the applicable Notes is reset on a periodic basis
not less than each calendar day nor more than 364 consecutive calendar
days.
Initial Mode................ The Notes initially will be in a REPS Mode. In this initial REPS Mode,
Notes will bear interest from the date of initial issuance to, but
excluding, September 15, 2001, at the Initial Interest Rate. If the
Initial Callholder exercises its right to purchase the Notes on
September 15, 2001, the Notes will bear interest at the REPS Coupon
Reset Rate from September 15, 2001 to, but excluding, September 15,
2011.
Initial Interest Rate....... The Notes will bear interest at the rate of 5.54% per annum from the
issuance date to, but excluding, September 15, 2001.
Interest Payment Dates...... March 15 and September 15, during the initial REPS Mode, commencing on
March 15, 1999, to the persons in whose name the Notes are registered on
the 15th calendar day immediately preceding the applicable interest
payment date.
Mandatory Tender to the The Initial Callholder has the right to purchase all of the Notes, on
Initial Callholder.......... September 15, 2001, at a price equal to 100% of the principal amount
thereof.
Mandatory Tender............ If the Initial Callholder does not purchase the Notes on September 15,
2001, the Notes will be subject to mandatory tender for redemption or
for remarketing in a new Interest Rate Mode at a price equal to 100% of
the principal amount thereof.
Redemption or Conversion.... If the Initial Callholder elects to purchase the Notes on September 15,
2001, the Company will have the right either (i) to redeem the Notes
from the Initial Callholder at a premium to par or (ii) to convert the
Notes to a new Interest Rate Mode and pay the Initial Callholder a fee.
Special Mandatory The Company will be obligated to purchase, on each Interest Rate
Purchase.................... Adjustment Date, any Notes which have not been successfully remarketed
by a Remarketing Agent appointed by the Company (a "Remarketing Agent")
at an aggregate purchase price equal to 100% of the principal amount
thereof.
Ranking..................... The Notes will be unsecured debt of the Company and rank on a parity
with other unsecured and unsubordinated indebtedness of the Company.
Use of Proceeds............. The net proceeds from the sale of the Notes will be used to repay
short-term indebtedness and for general corporate purposes.
Form and Denomination....... The Notes will be issued in denominations of $100,000 and integral
multiples of $1,000 in excess thereof. The Notes will be represented by
registered Global Securities registered in the name of Cede & Co., the
partnership nominee of the Depositary, The Depository Trust Company.
Beneficial interests in the Notes will be shown on, and transfers will
be effected through, records maintained by the Depositary and its
Participants (as defined in the accompanying Prospectus).
</TABLE>
S-3
<PAGE>
USE OF PROCEEDS
The net proceeds from the offering of the Notes are estimated to be
approximately $152,795,000. The Company expects to use the net proceeds from the
offering of the Notes to repay short-term indebtedness of the Company and of
TECO Finance, Inc., the Company's finance subsidiary, and for general corporate
purposes. Pending such uses, the net proceeds will be invested by the Company in
short-term money market instruments. At August 25, 1998, the Company had no
short-term debt outstanding and TECO Finance, Inc. had $301.1 million of
short-term debt outstanding at a weighted-average interest rate of approximately
5.58%.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements the description of the general terms of the Debt Securities
(as defined in the accompanying Prospectus) set forth under the caption
"Description of Debt Securities" in the accompanying Prospectus, to which
description reference is hereby made. Capitalized terms not defined herein have
the meanings set forth in the Indenture, dated as of August 17, 1998 (as amended
and supplemented by the First Supplemental Indenture thereto, the "Indenture"),
between the Company and The Bank of New York as trustee (the "Trustee").
The following summaries of certain provisions of the Indenture do not
purport to be complete, and are subject to, and are qualified in their entirety
by reference to, the provisions of the Indenture, the form of which has been
filed with the Securities and Exchange Commission (the "Commission") as an
exhibit to the Registration Statement of which the Prospectus forms a part. The
Indenture provides for the issuance from time to time of various series of Debt
Securities, including the Notes offered hereby. Each series may differ as to
terms, including maturity, interest rate, redemption and sinking fund
provisions, covenants, and events of default. As of the date of the Prospectus
Supplement, September 11, 1998, the Company has no Debt Securities outstanding
under the Indenture. For purposes of the following description, unless otherwise
indicated, a Business Day shall be any day that is not a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
GENERAL
The Notes offered hereby will be unsubordinated and unsecured obligations of
the Company and will rank PARI PASSU in right of payment with all other
unsubordinated and unsecured indebtedness of the Company. The Notes will not
limit other indebtedness or securities that may be incurred or issued by the
Company or any of its subsidiaries or contain financial or similar restrictions
of the Company or any of its subsidiaries. The Notes do not have a sinking fund.
The Notes will be issued in fully registered form, without coupons, in
minimum denominations of $100,000 or integral multiples of $1,000 in excess
thereof. The Notes initially will be issued as Global Securities. See
"Description of Debt Securities--Global Securities" and "--Book-Entry System" in
the accompanying Prospectus for additional information concerning the Notes, the
Indenture and the book-entry system. The Depository Trust Company will be the
depositary with respect to the Notes. Settlement of the sale of the Notes to the
Underwriters will be in immediately available funds. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity or earlier
redemption, as the case may be, and secondary market trading activity in the
Notes will therefore settle in immediately available funds. All payments of
principal and interest will be made by the Company in immediately available
funds to the Depositary in the City of New York.
PRINCIPAL AND MATURITY
The Notes will be limited to $150,000,000 in aggregate principal amount and
will mature on September 15, 2038.
S-4
<PAGE>
INTEREST
The Notes will bear interest at 5.54% per annum (assuming a 360-day year
consisting of twelve 30-day months) for the period from September 16, 1998 to,
but excluding, September 15, 2001 (the "Initial REPS Remarketing Date"). If
Morgan Stanley & Co. Incorporated, as the Initial Callholder, elects to remarket
the Notes (except in the limited circumstances described herein): (a) the Notes
will be subject to mandatory tender to the Initial Callholder at 100% of the
aggregate principal amount thereof for remarketing on the Initial REPS
Remarketing Date, on the terms and subject to the conditions described herein,
and (b) during the period (the "REPS Period") from the Initial REPS Remarketing
Date to, but excluding, September 15, 2011, the Notes will bear interest at the
rate determined by the Initial Callholder in accordance with the procedures set
forth below (the "REPS Coupon Reset Rate"). If the Initial Callholder does not
purchase the Notes on the Initial REPS Remarketing Date, the Notes will cease to
be in the initial REPS Mode, the Initial REPS Remarketing Date will constitute
an Interest Rate Adjustment Date and the Notes automatically will be subject to
mandatory tender at 100% of the principal amount thereof for redemption on such
date by the Company or for remarketing on such date by a Remarketing Agent in a
new REPS Mode, a Long Term Rate Mode or a Commercial Paper Term Mode.
During the initial REPS Mode, interest on the Notes will be payable
semi-annually on March 15 and September 15 of each year (each, an "Interest
Payment Date"), commencing March 15, 1999, to the persons in whose name the
Notes are registered on the 15th calendar day (whether or not a Business Day)
immediately preceding the related Interest Payment Date (each a "Regular Record
Date").
MANDATORY TENDER TO THE INITIAL CALLHOLDER
ELECTION TO REMARKET. Provided that the Initial Callholder gives notice to
the Company and the Trustee on a Business Day not later than five Business Days
prior to the Initial REPS Remarketing Date of its intention to purchase the
Notes for remarketing (the "Initial Notification Date"), each of the Notes will
be automatically tendered to the Initial Callholder for purchase on the Initial
REPS Remarketing Date, except in the circumstances described under "--Conversion
or Redemption Following Election by Initial Callholder to Remarket" and "--
Failure of Initial Callholder to Remarket." The purchase price for the tendered
Notes to be paid by the Initial Callholder will be equal to 100% of the
aggregate principal amount thereof. See "--Notification of Results; Settlement."
When the Notes are tendered to the Initial Callholder for remarketing, the
Initial Callholder may remarket the Notes for its own account at varying prices
to be determined by the Initial Callholder at the time of each sale. If the
Initial Callholder elects to remarket the Notes, the obligation of the Initial
Callholder to purchase the Notes on the Initial REPS Remarketing Date is subject
to certain conditions. See "--Initial Callholder." If the Initial Callholder
purchases the Notes, during the REPS Period, the Notes will bear interest at the
REPS Coupon Reset Rate.
REPS COUPON RESET RATE. The REPS Coupon Reset Rate will be determined by
the Initial Callholder by 3:30 p.m., New York City time, on the third Business
Day immediately preceding the Initial REPS Remarketing Date (the "Initial
Determination Date"), to the nearest one hundred-thousandth (0.00001) of one
percent per annum, and will be equal to the sum of 5.41% (the "Base Rate") and
the Applicable Spread (as defined below), which will be based on the Dollar
Price (as defined below) of the Notes.
For the purpose of determining the REPS Coupon Reset Rate, the following
terms have the following meanings:
"Applicable Spread" means the lowest bid indication, expressed as a spread
(in the form of a percentage or in basis points) above the Base Rate, obtained
by the Initial Callholder on the Initial Determination Date from the bids quoted
by five Reference Corporate Dealers (as defined below) for the full aggregate
outstanding principal amount of the Notes at the Dollar Price, but assuming (a)
an issue date that is the Initial REPS Remarketing Date, with settlement on such
date without accrued interest,
S-5
<PAGE>
(b) a maturity date of September 15, 2011 and (c) a stated annual interest rate
equal to the Base Rate plus the spread bid by the applicable Reference Corporate
Dealer. If fewer than five Reference Corporate Dealers bid as described above,
then the Applicable Spread shall be the lowest of such bid indications obtained
as described above. The REPS Coupon Reset Rate announced by the Initial
Callholder, absent manifest error, shall be binding and conclusive upon the
Beneficial Owners, the Holders (as defined in the Indenture) of the Notes, the
Company and the Trustee.
"Comparable Treasury Issues" means the United States Treasury security or
securities selected by the Callholder as having an actual or interpolated
maturity of September 15, 2011.
"Comparable Treasury Price" means, with respect to the Initial REPS
Remarketing Date, (a) the offer prices for the Comparable Treasury Issues
(expressed in each case as a percentage of its principal amount) at 11:00 a.m.
on the Initial Determination Date, as set forth on Telerate Page 500 (or such
other page as may replace Telerate Page 500) or (b) if such page (or any
successor page) is not displayed or does not contain such offer prices on such
date, (i) the average of the Reference Treasury Dealer Quotations (as defined
below) on the Initial Determination Date, after excluding the highest and lowest
of such Reference Treasury Dealer Quotations, or (ii), if the Callholder obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all
such Reference Treasury Dealer Quotations. "Telerate Page 500" means the display
designated as "Telerate Page 500" on Dow Jones Markets (or such other page as
may replace Telerate Page 500 on such service) or such other service displaying
the offer prices specified in (a) above as may replace Dow Jones Markets.
"Dollar Price" means, with respect to the Notes, the present value, as of
the Initial REPS Remarketing Date, of the Remaining Scheduled Payments (as
defined below) discounted to the Initial REPS Remarketing Date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined below).
"Reference Corporate Dealers" means such Reference Corporate Dealers as
shall be appointed by the Initial Callholder after consultation with the
Company.
"Reference Treasury Dealer" means such Reference Treasury Dealers as shall
be appointed by the Initial Callholder after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and the Initial REPS Remarketing Date, the offer prices for the
Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted in writing to the Initial Callholder by such Reference
Treasury Dealer by 3:30 p.m., New York City time on the Initial Determination
Date.
"Remaining Scheduled Payments" means, with respect to the Notes, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the Initial REPS
Remarketing Date to and including September 15, 2011.
"Treasury Rate" means, with respect to the Initial REPS Remarketing Date,
the rate per annum equal to the semi-annual equivalent yield to maturity or
interpolated (on a day count basis) yield to maturity of the Comparable Treasury
Issues (as defined above), assuming a price for the Comparable Treasury Issues
(expressed as a percentage of its principal amount), equal to the Comparable
Treasury Price (as defined above) for such Initial REPS Remarketing Date.
NOTIFICATION OF RESULTS; SETTLEMENT. Provided the Initial Callholder has
previously notified the Company and the Trustee on the Initial Notification Date
of its intention to purchase all tendered Notes on the Initial REPS Remarketing
Date, the Initial Callholder will notify the Company, the Trustee and the
Depositary by telephone, confirmed in writing, by 4:00 p.m., New York City time,
on the Initial Determination Date, of the REPS Coupon Reset Rate.
S-6
<PAGE>
All the tendered Notes will be automatically delivered to the account of the
Trustee, by book-entry through the Depositary pending payment of the purchase
price therefor, on the Initial REPS Remarketing Date.
The Initial Callholder will make or cause the Trustee to make payment to the
Participant of each tendering Beneficial Owner of Notes, by book-entry through
the Depositary by the close of business on the Initial REPS Remarketing Date
against delivery through the Depositary by the close of business on the Initial
REPS Remarketing Date of such Beneficial Owner's tendered Notes.
The transactions described above will be executed on the Initial REPS
Remarketing Date through the Depositary in accordance with the procedures of the
Depositary, and the accounts of the respective Participants will be debited and
credited and the Notes delivered by book-entry as necessary to effect the
purchases and sales thereof.
Transactions involving the sale and purchase of Notes remarketed by the
Initial Callholder during the REPS Period will settle in immediately available
funds through the Depositary's Same-Day Funds Settlement System.
The tender and settlement procedures described above, including provisions
for payment by purchasers of Notes in the remarketing or for payment to selling
Beneficial Owners of tendered Notes, may be modified, notwithstanding any
contrary terms of the Indenture, to the extent required by the Depositary or, if
the book-entry system is no longer available for the Notes at the time of the
remarketing, to the extent required to facilitate the tendering and remarketing
of Notes in certificated form. In addition, the Initial Callholder may,
notwithstanding any contrary terms of the Indenture, modify the settlement
procedures set forth above in order to facilitate the settlement process.
As long as the Depositary's nominee holds the certificates representing any
Notes in the book-entry system of the Depositary, no certificates for such Notes
will be delivered by any selling Beneficial Owner to reflect any transfer of
such Notes effected in the remarketing. In addition, under the terms of the
Notes and the Initial REPS Remarketing Agreement (as defined below), the Company
has agreed that, notwithstanding any provision to the contrary set forth in the
Indenture, (a) it will use reasonable commercial efforts to maintain the Notes
in book-entry form with the Depositary or any successor thereto and to appoint a
successor depositary to the extent necessary to maintain the Notes in book-entry
form and (b) it will waive any discretionary right it otherwise has under the
Indenture to cause the Notes to be issued in certificated form.
For further information with respect to transfers and settlement through the
Depositary, see "Description of Debt Securities--Book-Entry Issuance" in the
accompanying Prospectus.
INITIAL CALLHOLDER. On or prior to the date of original issuance of the
Notes, the Company and the Initial Callholder will enter into a REPS Remarketing
Agreement (the "Initial REPS Remarketing Agreement").
The Initial Callholder will not receive any fees or reimbursement of
expenses from the Company in connection with the remarketing. If the Initial
REPS Remarketing Agreement is terminated at the option of the Initial Callholder
based upon the occurrence of any of certain specified termination events, the
Company may be obligated thereunder to reimburse the Initial Callholder for all
of its reasonable out-of-pocket expenses. In addition, in the event of certain
specified termination events, the Company will be obligated to pay to the
Initial Callholder the fair market value, calculated as set forth in the Initial
REPS Remarketing Agreement, of the Initial Callholder's right to purchase and
remarket the Notes pursuant to the Initial REPS Remarketing Agreement.
The Company will agree to indemnify the Initial Callholder against certain
liabilities, including liabilities under the Securities Act, arising out of or
in connection with its duties under the Initial REPS Remarketing Agreement.
S-7
<PAGE>
In the event that the Initial Callholder elects to remarket the Notes as
described herein, the obligation of the Initial Callholder to purchase Notes
from tendering Beneficial Owners of Notes will be subject to several conditions
precedent set forth in the Initial REPS Remarketing Agreement, including the
conditions that, since the Initial Notification Date, no material adverse change
in the consolidated financial condition, stockholders' equity, results of
operations, business or prospects of the company and its subsidiaries considered
as one enterprise has occurred, and that no Event of Default (as defined in the
Indenture), or any event which, with the giving of notice or passage of time, or
both, would constitute an Event of Default, has occurred and is continuing with
respect to the Notes. In addition, the Initial REPS Remarketing Agreement will
provide for the termination thereof, or redetermination of the REPS Coupon Reset
Rate, by the Initial Callholder on or before the Initial REPS Remarketing Date,
upon the occurrence of certain events.
No Beneficial Owner of any Notes shall have any rights or claims under the
Initial REPS Remarketing Agreement or against the Company or the Initial
Callholder as a result of the Initial Callholder not purchasing the Notes.
The Initial REPS Remarketing Agreement will also provide that the Initial
Callholder may submit its resignation at any time as the Initial Callholder,
such resignation to be effective 10 business days after the delivery to the
Company and the Trustee of notice of such resignation. In such case, it shall be
the sole obligation of the Company to appoint a successor Callholder.
The Initial Callholder, in its individual or any other capacity, may buy,
sell, hold and deal in any of the Notes. The Initial Callholder may exercise any
vote to join in any action that any Beneficial Owner of Notes may be entitled to
exercise or take with like effect as if it did not act in any capacity under the
Initial REPS Remarketing Agreement. The Initial Callholder, in its individual
capacity, either as principal or agent, may also engage in or have an interest
in any financial or other transaction with the Company as freely as if it did
not act in any capacity under the Initial REPS Remarketing Agreement.
The summaries herein of certain provisions of the Initial REPS Remarketing
Agreement do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the provisions of the Initial REPS Remarketing
Agreement.
CONVERSION OR REDEMPTION FOLLOWING ELECTION BY THE INITIAL CALLHOLDER TO
REMARKET. If the Initial Callholder elects to remarket the Notes on the Initial
REPS Remarketing Date, the Notes will be subject to mandatory tender to the
Initial Callholder for remarketing on such date, subject to the Company's right
to convert the Notes to a new Interest Rate Mode or to redeem the Notes from the
Initial Callholder, in each case as described in the next sentence. The Company
will notify the Initial Callholder and the Trustee not later than the Business
Day immediately preceding the Initial Determination Date if the Company
irrevocably elects to exercise its right to either convert the Notes to a new
Interest Rate Mode or to redeem the Notes from the Initial Callholder at the
Optional Redemption Price (as defined below), in each case, on September 15,
2001.
In the event that the Company irrevocably elects to convert the Notes to a
new Interest Rate Mode, then as of September 15, 2001 the Notes will be subject
to remarketing on such date by a Remarketing Agent appointed by the Company in a
new REPS Mode, a Long Term Rate Mode or a Commercial Paper Term Mode established
by the Company in accordance with the procedures described below under
"--Conversion to New Interest Rate Mode," provided that, in such case, the
notice required for conversion shall be given no later than the Initial
Determination Date. In such case, the Company shall pay to the Initial
Callholder the excess of the Dollar Price of the Notes over 100% of the
principal amount of the Notes in same-day funds by wire transfer to an account
designated by the Initial Callholder.
In the event that the Company irrevocably elects to redeem the Notes from
the Initial Callholder, the "Optional Redemption Price" shall be the greater of
(i) 100% of the principal amount of the Notes plus accrued and unpaid interest
and (ii) the Dollar Price. If the Company elects to redeem the Notes, it shall
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pay the Optional Redemption Price in same-day funds by wire transfer to an
account designated by the Initial Callholder on September 15, 2001.
FAILURE OF INITIAL CALLHOLDER TO REMARKET. In the event that the Initial
Callholder for any other reason does not purchase the Notes on September 15,
2001, the Notes automatically will be subject to mandatory tender at 100% of the
principal amount thereof for redemption on such date by the Company or, if the
Company at its option elects, for remarketing on such date by a Remarketing
Agent appointed by the Company in a new REPS Mode, a Long Term Rate Mode or a
Commercial Paper Term Mode established by the Company in accordance with the
procedures described in "--Conversion to New Interest Rate Mode"; provided that
the notice period required for conversion shall be the lesser of ten (10) days
and the period commencing the date that the Initial Callholder notifies the
Company that it will not purchase the Notes for remarketing on September 15,
2001 or fails to so purchase, as the case may be.
CONVERSION TO NEW INTEREST RATE MODE
GENERAL. If the Company elects to convert the Notes to a new Interest Rate
Mode, on and after September 15, 2001, or, if the Initial Callholder remarkets
the Notes as described above, on and after September 15, 2011, each Note at the
option of the Company will bear interest for designated Interest Rate Periods in
the Commercial Paper Term Mode, the REPS Mode or the Long Term Rate Mode
(together the "Interest Rate Modes"). Each Note may bear interest in the same or
a different Interest Rate Mode from other Notes. The interest rate for the Notes
will be established periodically as described herein by a Remarketing Agent
selected by the Company. The Company also may appoint one or more standby
remarketing agents for any Remarketing Agent (each, a "Standby Remarketing
Agent") on the terms described herein.
Interest will be payable on any such Note at maturity and (i) for any
Interest Rate Period in the Commercial Paper Term Mode, on the interest rate
adjustment date (each an "Interest Rate Adjustment Date") commencing the next
succeeding Interest Rate Period for such Note and on such other dates (if any)
as will be established upon conversion of such Note to the Commercial Paper Term
Mode or upon remarketing of the Note in a new Interest Rate Period in the
Commercial Paper Term Mode; and (ii) in the Long Term Rate Mode or the REPS
Mode, no less frequently than semi-annually on such dates as will be established
upon conversion of such Note to the Long Term Rate Mode or the REPS Mode (or
upon remarketing of the Note to a new Interest Rate Period in the Long Term Rate
Mode or the REPS Mode, as the case may be) and set forth in the applicable
prospectus supplement, other remarketing document or the confirmation, in the
case of a fixed interest rate, or as described below under "--Floating Interest
Rates" in the case of a floating interest rate, and on the Interest Rate
Adjustment Date commencing the next succeeding Interest Rate Period (each such
date, an "Interest Payment Date"). Such interest will be payable to the holder
thereof as of the related record date (a "Record Date"), which, for any Note (x)
in the Commercial Paper Term Mode, is the Business Day prior to the related
Interest Payment Date; and (y) bearing interest in the Long Term Rate Mode or
the REPS Mode, is 15 days prior to the related Interest Payment Date whether or
not a Business Day. If any Interest Payment Date would otherwise be a day that
is not a Business Day, such Interest Payment Date will be postponed to the next
succeeding Business Day, and no interest will accrue on such payment for the
period from and after such Interest Payment Date to the date of such payment on
the next succeeding Business Day.
Interest on Notes bearing interest in the Commercial Paper Term Mode or at a
floating interest rate during any Interest Rate Period in the Long Term Mode or
the REPS Mode will be computed on the basis of actual days elapsed divided by
360; provided that, if an applicable Interest Rate Basis (as defined below) is
the CMT Rate or the Treasury Rate (each as defined below), interest will be
computed on the basis of actual days elapsed divided by the actual number of
days in the year. Interest on Notes bearing interest at a fixed rate in the Long
Term Rate Mode or the REPS Mode will be computed on the basis of a year of 360
days consisting of twelve 30-day months.
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As used in this section, a Business Day shall be any day that is not a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to close; provided, however, that with respect to
Notes in the Long Term Rate Mode or the REPS Mode as to which LIBOR (as defined
below) is an applicable Interest Rate Basis, such day is also a London Business
Day (as defined below). "London Business Day" means (i) if the Index Currency
(as defined below) is other than European Currency Units ("ECU"), any day on
which dealings in such Index Currency are transacted in the London interbank
market or (ii) if the Index Currency is ECU, any day that does not appear as an
ECU non-settlement day on the display designated as "ISDE" on the Reuter Monitor
Money Rates Service (or a day so designated by the ECU Banking Association) or,
if ECU non-settlement days do not appear on the page (and are not so
designated), is a day on which payments in ECU can be settled in the
international banking market.
DETERMINATION OF INTEREST RATES. The interest rate and, in the case of a
floating interest rate, the Spread (as defined below), if any, and the Spread
Multiplier (as defined below), if any, for any Note will be established by the
applicable Remarketing Agent in a remarketing (as described below) or otherwise
not later than the first day of each succeeding Interest Rate Period for such
Note, which must be a Business Day (each, an "Interest Rate Adjustment Date"),
and will be the minimum rate of interest and, in the case of a floating interest
rate, Spread (if any) and Spread Multiplier (if any) necessary in the judgment
of such Remarketing Agent to produce a par bid in the secondary market for such
Note on the date the interest rate is established. Such rate will be effective
for the next succeeding Interest Rate Period for such Note commencing on such
Interest Rate Adjustment Date.
In the event that (i) the applicable Remarketing Agent has been removed or
has resigned and no successor has been appointed, or (ii) such Remarketing Agent
has failed to announce the appropriate interest rate, Spread (if any) or Spread
Multiplier (if any), as the case may be, on the Interest Rate Adjustment Date
for any Note for whatever reason, or (iii) the appropriate interest rate, Spread
(if any), or Spread Multiplier (if any), as the case may be, or Interest Rate
Period cannot be determined for any Note for whatever reason, then the next
succeeding Interest Rate Period for such Note will be automatically converted to
a Weekly Rate Period (a Commercial Paper Term Period described below), and the
rate of interest thereon will be equal to the Federal Funds Rate (as defined
below; such rate of interest being referred to herein as the "Special Interest
Rate").
After any Interest Rate Adjustment Date, any Beneficial Owner may contact
the Trustee or the Remarketing Agent in order to be advised of the interest rate
applicable to such Beneficial Owner's remarketed Notes. No notice of the
applicable interest rate will be sent to Beneficial Owners.
The interest rate and other terms announced by the Remarketing Agent, absent
manifest error, will be binding and conclusive upon the Beneficial Owners, the
Company and the Trustee.
INTEREST RATE MODES
The times specified below are subject to extension pursuant to standby
remarketing arrangements, if any, as provided herein. See
"--Remarketing--Interest Rate Adjustment Date; Determination of Interest Rate"
below.
COMMERCIAL PAPER TERM MODE. As used herein, "Commercial Paper Term Mode"
means, with respect to any Note, the Interest Rate Mode in which the interest
rate on such Note is reset on a periodic basis, which shall not be less than one
calendar day nor more than 364 consecutive calendar days and interest is paid as
provided for such Interest Rate Mode above under "--Conversion to New Interest
Rate Mode-- General." The Interest Rate Period for any Note in the Commercial
Paper Term Mode will be a period of not less than one nor more than 364
consecutive calendar days (a "Commercial Paper Term Period"), as determined by
the Company (as described below under "--Conversion Between Interest Rate
Modes") or, if not so determined, by the Remarketing Agent for such Note (in its
best judgment in order to obtain the lowest interest cost for such Note). Each
Commercial Paper Term Period will commence on the Interest
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Rate Adjustment Date therefor and end on the day preceding the date specified by
such Remarketing Agent as the first day of the next Interest Rate Period for
such Note. A "Weekly Rate Period" is a Commercial Paper Term Period and will be
a period of seven days commencing on any Interest Rate Adjustment Date and
ending on the day preceding the first day of the next Interest Rate Period for
such Note. The interest rate for any Commercial Paper Term Period relating to a
Note will be determined not later than 11:50 a.m., New York City time, on the
Interest Rate Adjustment Date for such Note, which is the first day of each
Interest Period for such Note.
LONG TERM RATE MODE. As used herein, "Long Term Rate Mode" means, with
respect to any Note, the Interest Rate Mode in which the interest rate on such
Note is reset in a Long Term Rate Period and interest is paid as provided for
such Interest Rate Mode above under "--Conversion to New Interest Rate
Mode--General" or below under "--Floating Interest Rates." The Interest Rate
Period for any Note in the Long Term Rate Mode will be established by the
Company (as described below under "--Conversion Between Interest Rate Modes") as
a period of more than 364 days and not exceeding the remaining term to the
Stated Maturity (a "Long Term Rate Period"). The interest rate, or Spread (if
any) and Spread Multiplier (if any) for any Note in the Long Term Rate Mode will
be determined not later than 11:50 a.m., New York City time, on the Interest
Rate Adjustment Date for such Note, which is the first day of each Interest Rate
Period for such Note.
REPS MODE. As used herein, "REPS Mode" means, with respect to any Note, the
Interest Rate Mode in which the Notes shall bear interest and be subject to
remarketing as REset Put Securities ("REPS") by a remarketing agent selected by
the Company (a "Callholder") as described under "REPS Mode" below. The Notes
will initially be in a REPS Mode, and the provisions applicable while the Notes
are in this initial REPS Mode are found above under "--Interest" and
"--Mandatory Tender to the Initial Callholder." If any Notes are converted to a
new REPS Mode after the Initial REPS Mode, the provisions below "--REPS Mode"
will apply. So long as any Notes are in a new REPS Mode, the provisions set
forth herein applicable to the remarketing of Notes generally shall apply to
such Notes only to the extent expressly provided under "--REPS Mode" below.
The Interest Rate Period for any Note in the REPS Mode will be established
by the Company (as described below under "--Conversion Between Interest Rate
Modes") as a period of more than 364 days and not exceeding the remaining term
to the Stated Maturity (a "REPS Rate Period"). A REPS Rate Period shall consist
of the period to and excluding the REPS Remarketing Date (as defined below) and
the period from and including the REPS Remarketing Date to but excluding the
next succeeding Interest Rate Adjustment Date, as described below under "--REPS
Mode" and subject to the conditions therein and otherwise herein described. The
interest rate and, in the case of a floating interest rate, the Spread (if any),
and the Spread Multiplier (if any), to the REPS Remarketing Date for any Note in
the REPS Mode will be determined not later than 11:50 a.m., New York City time,
on the Interest Rate Adjustment Date for such Note, which for the REPS Mode is
the first day of each Interest Rate Period for such Note.
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CONVERSION BETWEEN INTEREST RATE MODES
The Company may change the Interest Rate Mode at its option in the manner
described below.
CONVERSION BETWEEN COMMERCIAL PAPER TERM PERIODS. Each Note in a Commercial
Paper Term Period may be remarketed into the same Interest Rate Period or
converted at the option of the Company to a different Commercial Paper Term
Period on any Interest Rate Adjustment Date upon either receipt by the
Remarketing Agent and the Trustee of a notice, which will be submitted or
promptly confirmed in writing (which includes facsimile or appropriate
electronic media), from the Company (a "Conversion Notice") prior to 9:30 a.m.,
New York City time, or the remarketing of such Note, whichever occurs later, on
such Interest Rate Adjustment Date.
CONVERSION FROM THE COMMERCIAL PAPER TERM MODE TO THE LONG TERM RATE MODE OR
THE REPS MODE. Each Note in the Commercial Paper Term Mode may be converted at
the option of the Company to the Long Term Rate Mode or the REPS Mode on any
Interest Rate Adjustment Date upon receipt not less than ten days prior to such
Interest Rate Adjustment Date by the Remarketing Agent and the Trustee of a
Conversion Notice from the Company.
CONVERSION BETWEEN LONG TERM RATE PERIODS OR FROM THE LONG TERM RATE MODE OR
THE REPS MODE TO THE COMMERCIAL PAPER TERM MODE, THE LONG TERM RATE MODE OR THE
REPS MODE. Each Note in a Long Term Rate Period may be remarketed in the same
Interest Rate Period or converted at the option of the Company to a different
Long Term Rate Period or from the Long Term Rate Mode to the Commercial Paper
Term Mode or the REPS Mode, or from the REPS Mode to a different REPS Mode or to
the Long Term Rate Mode or the Commercial Paper Term Mode, on any Interest Rate
Adjustment Date for such Note upon receipt by the Trustee and the Remarketing
Agent for such Note of a Conversion Notice from the Company not less than ten
days prior to such Interest Rate Adjustment Date; provided that the notice
required for conversion from the initial REPS Mode shall not be required until
the latest of the day after the Initial Callholder notifies the Company that it
will not purchase the Notes for remarketing, the day the Initial Callholder
fails to so purchase the Notes or the day the Company elects to convert the
Notes to a new Interest Rate Mode after the Initial Callholder has elected to
remarket the Notes.
CONVERSION NOTICE. Each Conversion Notice must state each Note to which it
relates and the new Interest Rate Mode (if applicable), the new Interest Rate
Period, the date of the applicable conversion (the "Conversion Date") and, with
respect to any Long Term Rate Period, any optional redemption or repayment terms
for each such Note. If the Company revokes a Conversion Notice or the Trustee
and the Remarketing Agent fail to receive a Conversion Notice from the Company
by the specified date in advance of the Interest Rate Adjustment Date for a
Note, the Note shall be converted automatically to the Weekly Rate Period.
REVOCATION OR CHANGE OF CONVERSION NOTICE OR FLOATING INTEREST RATE
NOTICE. The Company may, upon written notice received by the Trustee and the
applicable Remarketing Agent, revoke any Conversion Notice or Floating Interest
Rate Notice (as defined herein) or change the Interest Rate Mode to which such
Conversion Notice relates or change any Floating Interest Rate Notice up to 9:30
a.m., New York City time, on the Conversion Date, subject to the limitation set
forth in the next paragraph.
LIMITATION ON CONVERSION, CHANGE OF CONVERSION NOTICE OR FLOATING INTEREST
RATE NOTICE AND REVOCATION. Notwithstanding the foregoing, the Company may not,
without the consent of the applicable Remarketing Agent, convert any Note or
revoke or change any Conversion Notice or Floating Interest Rate Notice at or
after the time at which such Remarketing Agent has determined the interest rate,
or Spread (if any) and Spread Multiplier (if any), for any Note being remarketed
(i.e., the time at which such Note has been successfully remarketed, subject to
settlement on the related Interest Rate Adjustment Date). The Remarketing Agent
may advise the Company of indicative rates from time to time, or at any time
upon the request of the Company, prior to making such determination of the
interest rate, Spread or Spread Multiplier, as the case may be.
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TENDER OF NOTES
Each Note will be automatically tendered for purchase, or deemed tendered
for purchase, on each Interest Rate Adjustment Date relating thereto. Notes will
be purchased on the Interest Rate Adjustment Date relating thereto as described
below.
REMARKETING
When any Note is tendered for remarketing, the Remarketing Agent therefor
will use its reasonable efforts to remarket such Note on behalf of the
Beneficial Owner thereof at a price equal to 100% of the principal amount
thereof. The Remarketing Agent may purchase tendered Notes for its own account
in a remarketing, but will not be obligated to do so. The Company may offer to
purchase Notes in a remarketing, provided that the interest rate established
with respect to Notes in such remarketing is not different from the interest
rate that would have been established if the Company had not purchased such
Notes. Any Notes for which the Company shall have given a notice of redemption
to the Trustee and the Remarketing Agent will not be considered in a
remarketing.
INTEREST RATE ADJUSTMENT DATE; DETERMINATION OF INTEREST RATE. By 11:00
a.m., New York City time, on the Interest Rate Adjustment Date for any Note, the
applicable Remarketing Agent will determine the interest rate for such Note
being remarketed to the nearest one hundred thousandth (0.00001) of one percent
per annum for the next Interest Rate Period in the case of a fixed interest
rate, and the Spread (if any) and Spread Multiplier (if any) in the case of a
floating interest rate; provided, that between 11:00 a.m., New York City time,
and 11:50 a.m., New York City time, the Remarketing Agent and the Standby
Remarketing Agent, if any, will use their reasonable efforts to determine the
interest rate for any Notes not successfully remarketed as of the applicable
deadline specified in this paragraph. In determining the applicable interest
rate for such Note and other terms, such Remarketing Agent will, after taking
into account market conditions as reflected in the prevailing yields on fixed
and variable rate taxable debt securities, (i) consider the principal amount of
all Notes tendered or to be tendered on such date and the principal amount of
such Notes prospective purchasers are or may be willing to purchase and (ii)
contact, by telephone or otherwise, prospective purchasers and ascertain the
interest rates therefor at which they would be willing to hold or purchase such
Notes.
NOTIFICATION OF RESULTS; SETTLEMENT. By 12:30 p.m., New York City time, on
the Interest Rate Adjustment Date of any Notes, the applicable Remarketing Agent
will notify the Company and the Trustee in writing (which may include facsimile
or other electronic transmission), of (i) the interest rate or, in the case of a
floating interest rate, the initial interest rate, the Spread and Spread
Multiplier and the initial Interest Reset Date (as defined below), applicable to
such Notes for the next Interest Rate Period, (ii) the Interest Rate Adjustment
Date, (iii) the Interest Payment Dates for any Notes in the Commercial Paper
Term Mode (if other than the Interest Rate Adjustment Date), the Long Term Rate
Mode or the REPS Mode, (iv) the optional redemption terms, if any, and early
remarketing terms, if any, in the case of a remarketing into a Long Term Rate
Period, (v) the aggregate principal amount of tendered Notes and (vi) the
aggregate principal amount of such tendered Notes that such Remarketing Agent
was able to remarket, at a price equal to 100% of the principal amount thereof
plus accrued interest, if any. Immediately after receiving such notice and, in
any case, not later than 1:30 p.m., New York City time, the Trustee will
transmit such information and any other settlement information required by DTC
to DTC in accordance with DTC's procedures as in effect from time to time.
By telephone at approximately 1:00 p.m., New York City time, on such
Interest Rate Adjustment Date, the applicable Remarketing Agent will advise each
purchaser of Notes (or the DTC Participant of each such purchaser who it is
expected in turn will advise such purchaser) of the principal amount of such
Notes that such purchaser is to purchase.
Each purchaser of Notes in a remarketing will be required to give
instructions to its DTC Participant to pay the purchase price therefor in same
day funds to the applicable Remarketing Agent against delivery
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of the principal amount of such Notes by book-entry through DTC by 3:00 p.m.,
New York City time, on the Interest Rate Adjustment Date.
All tendered Notes will be automatically delivered to the account of the
Trustee (or such other account meeting the requirements of DTC's procedures as
in effect from time to time), by book-entry through DTC against payment of the
purchase price or redemption price therefor, on the Interest Rate Adjustment
Date relating thereto.
The applicable Remarketing Agent will make, or cause the Trustee to make,
payment to the DTC participant of each tendering Beneficial Owner of Notes
subject to a remarketing, by book-entry through DTC by the close of business on
the Interest Rate Adjustment Date against delivery through DTC of such
Beneficial Owner's tendered Notes, of the purchase price for tendered Notes that
have been sold in the remarketing. If any such Notes were purchased pursuant to
a Special Mandatory Purchase (as defined below), subject to receipt of funds
from the Company or, if applicable, an institution providing credit support, as
the case may be, the Trustee will make such payment of the purchase price of
such Notes plus accrued interest, if any, to such date.
The transactions described above for a remarketing of any Notes will be
executed on the Interest Rate Adjustment Date for such Notes through DTC in
accordance with the procedures of DTC, and the accounts of the respective DTC
Participants will be debited and credited and such Notes delivered by book-entry
as necessary to effect the purchases and sales thereof, in each case as
determined in the related remarketing.
Except as otherwise set forth below under "--Purchase and Redemption of
Notes," any Notes tendered in a remarketing will be purchased solely out of the
proceeds received from purchasers of such Notes in such remarketing, and none of
the Trustee, the applicable Remarketing Agent, any Standby Remarketing Agent or
the Company will be obligated to provide funds to make payment upon any
Beneficial Owner's tender in a remarketing.
Although tendered Notes will be subject to purchase by a Remarketing Agent
in a remarketing, such Remarketing Agent and any Standby Remarketing Agent will
not be obligated to purchase any such Notes.
The settlement and remarketing procedures described above, including
provisions for payment by purchasers of tendered Notes or for payment to selling
Beneficial Owners of tendered Notes, may be modified to the extent required by
DTC. In addition, each Remarketing Agent may, in accordance with the terms of
the Indenture, modify the settlement and remarketing procedures set forth above
in order to facilitate the settlement and remarketing process.
As long as DTC's nominee holds the certificates representing the Notes in
the book-entry system of DTC, no certificates for such Notes will be delivered
by any selling Beneficial Owner to reflect any transfer of Notes effected in any
remarketing.
FAILED REMARKETING. Notes not successfully remarketed will be subject to
Special Mandatory Purchase by the Company (a "Special Mandatory Purchase"). The
procedures for a Special Mandatory Purchase are described below under
"--Purchase and Redemption of Notes--Special Mandatory Purchase."
PURCHASE AND REDEMPTION OF NOTES
SPECIAL MANDATORY PURCHASE. Subject to certain exceptions, if on any
Interest Rate Adjustment Date for any Notes, the applicable Remarketing Agent
and the applicable Standby Remarketing Agent(s) have not remarketed all such
Notes, the Notes that have not been remarketed are subject to Special Mandatory
Purchase by the Company. The Company is obligated to pay all accrued and unpaid
interest, if any, on unremarketed Notes to such Interest Rate Adjustment Date.
Payment of the principal amount of unremarketed Notes by the Company, and
payment of accrued and unpaid interest, if any, by the Company, will be made by
deposit of same-day funds with the Trustee (or such other account meeting the
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requirements of DTC's procedures as in effect from time to time) irrevocably in
trust for the benefit of the Beneficial Owners of Notes subject to Special
Mandatory Purchase by 3:00 p.m., New York City time, on such Interest Rate
Adjustment Date.
Failure by the Company to purchase Notes pursuant to a Special Mandatory
Purchase will constitute an Event of Default under the Indenture in which event
the date of such failure shall constitute a date of Maturity for such Notes and
the principal thereof may be declared due and payable in the manner and with the
effect provided in the Indenture. Following such failure to pay pursuant to a
Special Mandatory Purchase, such Notes will bear interest at the Special
Interest Rate as provided above under "--Conversion to New Interest Rate
Mode--Determination of Interest Rates."
OPTIONAL REDEMPTION ON ANY INTEREST RATE ADJUSTMENT DATE. Each Note will be
subject to redemption at the option of the Company in whole or in part on any
Interest Rate Adjustment Date relating thereto without notice to the holders
thereof at a redemption price equal to 100% of the principal amount thereof.
REDEMPTION WHILE NOTES ARE IN THE LONG TERM RATE MODE. Any Notes in the
Long Term Rate Mode are subject to redemption at the option of the Company at
the times and upon the terms specified at the time of conversion to or within
such Long Term Rate Mode.
ALLOCATION. Except in the case of a Special Mandatory Purchase, if the
Notes are to be redeemed in part, DTC, after receiving notice of redemption
specifying the aggregate principal amount of Notes to be so redeemed, will
determine by lot (or otherwise in accordance with the procedures of DTC) the
principal amount of such Notes to be redeemed from the account of each DTC
Participant. After making its determination as described above, DTC will give
notice of such determination to each DTC Participant from whose account such
Notes are to be redeemed. Each such DTC Participant, upon receipt of such notice
will in turn determine the principal amount of Notes to be redeemed from the
accounts of the Beneficial Owners of such Notes for which it serves as DTC
Participant, and give notice of such determination to the Remarketing Agent.
REPS MODE
Except as otherwise specified in an applicable prospectus supplement or
other offering memorandum, if so designated by the Company prior to commencement
of an Interest Rate Period in accordance with the procedures described above
under "--Conversion to New Interest Rate Mode," during a period in which Notes
are in the REPS Mode the Notes shall bear interest and be subject to remarketing
by a Callholder designated by the Company as described below.
GENERAL. Each Note in the REPS Mode will bear interest at the annual
interest rate established by the Callholder from, and including, the Interest
Rate Adjustment Date commencing the Interest Rate Period for the REPS Mode to,
but excluding, the date (the "REPS Remarketing Date") designated at such time by
the Callholder after consultation with the Company. Such interest rate will be
the minimum rate of interest and, in the case of a floating interest rate,
Spread (if any) and Spread Multiplier (if any) necessary in the judgment of such
Callholder to produce a par bid in the secondary market for such Note on the
date the interest rate is established. The designated REPS Remarketing Date
shall be an Interest Payment Date within such Interest Rate Period. If the
Callholder elects to remarket the Notes (except in the limited circumstances
described herein) (i) the Notes will be subject to mandatory tender to the
Callholder at 100% of the principal amount thereof for remarketing on the REPS
Remarketing Date, on the terms and subject to the conditions described herein,
and (ii) from, and including, the REPS Remarketing Date to, but excluding, the
next succeeding Interest Rate Adjustment Date, the Notes will bear interest at
the rate determined by the Callholder in accordance with the procedures set
forth below (the "REPS Coupon Reset Rate"). See "--Tender; Remarketing" below.
Under the circumstances described below, the Notes are subject to
remarketing in a new Interest Rate Mode or repurchase by the Company on the REPS
Remarketing Date. See "--Conversion or Redemption
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Following Election by the Callholder to Remarket" below. If the Callholder does
not elect to purchase the Notes for remarketing on the REPS Remarketing Date or
if the Callholder gives notice of its election to remarket the Notes but for any
reason does not purchase all tendered Notes on the REPS Remarketing Date, then
as of such date the Notes will cease to be in the REPS Mode, the REPS
Remarketing Date will constitute an Interest Rate Adjustment Date, and the Notes
will be subject to remarketing on such date by a Remarketing Agent appointed by
the Company in the Commercial Paper Term Mode or the Long Term Rate Mode or a
new REPS Mode established by the Company in accordance with the procedures
described above under "--Conversion to New Interest Rate Mode;" provided that,
in such case, the notice period required for conversion shall be the lesser of
ten (10) days and the period commencing the date that the Callholder notifies
the Company that it will not purchase the Notes for remarketing on the REPS
Remarketing Date or fails to so purchase, as the case may be.
TENDER; REMARKETING. The following description sets forth the terms and
conditions of the remarketing of the Notes, in the event that the Callholder
elects to purchase the Notes and remarkets the Notes on the REPS Remarketing
Date.
Provided that the Callholder gives notice to the Company and the Trustee on
a Business Day not later than five (5) days prior to the REPS Remarketing Date
of its intention to purchase the Notes for remarketing (the "Notification
Date"), each Note will be automatically tendered, or deemed tendered, to the
Callholder for remarketing at the REPS Coupon Reset Rate on the REPS Remarketing
Date, except in the circumstances described above. The purchase price for the
tendered Notes to be paid by the Callholder will equal 100% of the principal
amount thereof. See "--Notification of Results; Settlement" below. When the
Notes are tendered for remarketing, the Callholder may remarket the Notes for
its own account at varying prices to be determined by the Callholder at the time
of each sale. From, and including, the REPS Remarketing Date to, but excluding,
the next succeeding Interest Rate Adjustment Date, the Notes will bear interest
at the REPS Coupon Reset Rate. If the Callholder elects to remarket the Notes,
the obligation of the Callholder to purchase the Notes on the REPS Remarketing
Date is subject to certain conditions. See "--The Callholder."
The REPS Coupon Reset Rate shall be determined by the Callholder by 3:30
p.m., New York City time, on the third Business Day immediately preceding the
REPS Remarketing Date (the "Determination Date") to the nearest one
hundred-thousandth (0.00001) of one percent per annum and will be equal to the
Base Rate established by the Callholder, after consultation with the Company, at
or prior to the commencement of the REPS Mode (the "Base Rate"), plus the
Applicable Spread (as defined below), which will be based on the Dollar Price
(as defined below) of the Notes.
For the purposes of such calculations, the following terms have the
following meanings:
"Applicable Spread" means the lowest bid indication, expressed as a spread
(in the form of a percentage or in basis points) above the Base Rate, obtained
by the Callholder on the Determination Date from the bids quoted by up to five
Reference Corporate Dealers (as defined below) for the full aggregate
outstanding principal amount of the Notes at the Dollar Price, but assuming (i)
an issue date equal to the REPS Remarketing Date, with settlement on such date
without accrued interest, (ii) a maturity date equal to the next succeeding
Interest Rate Adjustment Date of the Notes, and (iii) a stated annual interest
rate, payable semiannually on each Interest Payment Date, equal to the Base Rate
plus the spread bid by the applicable Reference Corporate Dealer. If fewer than
five Reference Corporate Dealers bid as described above, then the Applicable
Spread shall be the lowest of such bid indications obtained as described above.
The REPS Coupon Reset Rate announced by the Callholder, absent manifest error,
shall be binding and conclusive upon the Beneficial Owners and holders of the
Notes, the Company and the Trustee.
"Comparable Treasury Issues" means the United States Treasury security or
securities selected by the Callholder as having an actual or interpolated
maturity or maturities comparable or applicable to the remaining term to the
next succeeding Interest Rate Adjustment Date of the Notes being purchased.
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"Comparable Treasury Price" means, with respect to the REPS Remarketing
Date, (a) the offer prices for the Comparable Treasury Issues (expressed in each
case as a percentage of its principal amount) at 11:00 a.m. on the Determination
Date, as set forth on Telerate Page 500 (or such other page as may replace
Telerate Page 500) or (b) if such page (or any successor page) is not displayed
or does not contain such offer prices on such Determination Date, (i) the
average of the Reference Treasury Dealer Quotations (as defined below) for such
REPS Remarketing Date, after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (ii) if the Callholder obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such Reference
Treasury Dealer Quotations. "Telerate Page 500" means the display designated as
"Telerate Page 500" on Dow Jones Markets (or such other page as may replace
Telerate Page 500 on such service) or such other service displaying the offer
prices specified in (a) above as may replace Dow Jones Markets.
"Dollar Price" means, with respect to the Notes, the present value
determined by the Callholder, as of the REPS Remarketing Date, of the Remaining
Scheduled Payments (as defined below) discounted to the REPS Remarketing Date,
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months), at the Treasury Rate (as defined below).
"Reference Corporate Dealers" means such Reference Corporate Dealers as
shall be appointed by the Callholder after consultation with the Company.
"Reference Treasury Dealer" means such Reference Treasury Dealer as shall be
appointed by the Callholder after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and the REPS Remarketing Date, the offer prices for the
Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted in writing to the Callholder by such Reference Treasury
Dealer by 3:30 p.m., New York City time, on the Determination Date.
"Remaining Scheduled Payments" means, with respect to the Notes, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the REPS Remarketing
Date to and including the next succeeding Interest Rate Adjustment Date.
"Treasury Rate" means, with respect to the REPS Remarketing Date, the rate
per annum equal to the semiannual equivalent yield to maturity or interpolated
(on a day count basis) yield to maturity of the Comparable Treasury Issues (as
defined above), assuming a price for the Comparable Treasury Issues (expressed
as a percentage of its principal amount), equal to the Comparable Treasury Price
(as defined above) for such REPS Remarketing Date.
NOTIFICATION OF RESULTS; SETTLEMENT. Provided the Callholder has previously
notified the Company and the Trustee on the Notification Date of its intention
to purchase all tendered Notes on the REPS Remarketing Date, the Callholder will
notify the Company, the Trustee and DTC by telephone, confirmed in writing, by
4:00 p.m., New York City time, on the Determination Date, of the REPS Coupon
Reset Rate.
All of the tendered Notes will be automatically delivered to the account of
the Trustee, by book-entry through DTC pending payment of the purchase price
therefor, on the REPS Remarketing Date.
In the event that the Callholder purchases the tendered Notes on the REPS
Remarketing Date, the Callholder will make or cause the Trustee to make payment
to the DTC Participant of each tendering Beneficial Owner of Notes, by
book-entry through DTC by the close of business on the REPS Remarketing Date
against delivery through DTC of such Beneficial Owner's tendered Notes. If the
Callholder does not purchase all of the Notes on the REPS Remarketing Date, the
Company may attempt to convert the Notes to a new Interest Rate Mode; the
interest rate will be determined as provided above in "--Conversion to New
Interest Rate Mode--Determination of Interest Rates;" and settlement will be
effected as described above under "--Remarketing--Notification of Results;
Settlement" or "--Failed Remarketing," as the case may be. In any case, the
Company will make or cause the Trustee to make payment of interest to each
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Beneficial Owner of Notes due on the REPS Remarketing Date by book-entry through
DTC by the close of business on the REPS Remarketing Date.
The transactions described above will be executed on the REPS Remarketing
Date through DTC in accordance with the procedures of DTC, and the accounts of
the respective DTC participants will be debited and credited and the Notes
delivered by book-entry as necessary to effect the purchases and sales thereof.
Transactions involving the sale and purchase of Notes remarketed by the
Callholder on and after the REPS Remarketing Date will settle in immediately
available funds through DTC's Same-Day Funds Settlement System.
The tender and settlement procedures described above, including provisions
for payment by purchasers of Notes in the remarketing or for payment to selling
Beneficial Owners of tendered Notes, may be modified to the extent required by
DTC or to the extent required to facilitate the tender and remarketing of Notes
in certificated form, if the book-entry system is no longer available for the
Notes at the time of the remarketing. In addition, the Callholder may, in
accordance with the terms of the Indenture, modify the tender and settlement
procedures set forth above in order to facilitate the tender and settlement
process.
As long as DTC's nominee holds the certificates representing any Notes in
the book-entry system of DTC, no certificates for such Notes will be delivered
by any selling Beneficial Owner to reflect any transfer of such Notes effected
in the remarketing. In addition, under the terms of the Notes and the REPS
Remarketing Agreement (described below), the Company will agree that,
notwithstanding any provision to the contrary set forth in the Indenture, (i) it
will use reasonable commercial efforts to maintain the Notes in book-entry form
with DTC or any successor thereto and to appoint a successor depositary to the
extent necessary to maintain the Notes in book-entry form, and (ii) it will
waive any discretionary right it otherwise has under the Indenture to cause the
Notes to be issued in certificated form.
THE CALLHOLDER. If the Notes are to be remarketed in the REPS Mode, the
Company and the Callholder will enter into a REPS Remarketing Agreement (a "REPS
Remarketing Agreement"), the general terms and provisions of which are
summarized below.
The Callholder will not receive any fees or reimbursement of expenses from
the Company in connection with the remarketing in the REPS Mode.
The Company will agree to indemnify the Callholder against certain
liabilities, including liabilities under the Securities Act, arising out of or
in connection with its duties under the REPS Remarketing Agreement.
In the event that the Callholder elects to remarket the Notes as described
herein, the obligation of the Callholder to purchase Notes from tendering
Beneficial Owners of Notes will be subject to several conditions precedent set
forth in the REPS Remarketing Agreement, including the conditions that, since
the Notification Date, no material adverse change in the consolidated financial
condition, stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries, considered as one enterprise, shall have
occurred and that no Event of Default (as defined in the Indenture), or any
event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, with respect to the Notes shall have occurred
and be continuing. In addition, the REPS Remarketing Agreement will provide for
the termination thereof, or redetermination of the REPS Coupon Reset Rate, by
the Callholder on or before the REPS Remarketing Date, upon the occurrence of
certain events as set forth in the REPS Remarketing Agreement.
No holder or Beneficial Owner of any Notes will have any rights or claims
under the REPS Remarketing Agreement or against the Callholder as a result of
the Callholder not purchasing such Notes.
A REPS Remarketing Agreement will also provide that the Callholder may
resign at any time as Callholder, such resignation to be effective 10 days after
the delivery to the Company and the Trustee of
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notice of such resignation. In such case, it shall be the sole obligation of the
Company to appoint a successor Callholder.
The Callholder, in its individual or any other capacity, may buy, sell, hold
and deal in any of the Notes. The Callholder may exercise any vote or join in
any action that any Beneficial Owner of Notes may be entitled to exercise or
take with like effect as if it did not act in any capacity under the applicable
REPS Remarketing Agreement. The Callholder, in its individual capacity, either
as principal or agent, may also engage in or have an interest in any financial
or other transaction with the Company as freely as if did not act in any
capacity under the REPS Remarketing Agreement.
The summaries herein of certain provisions of a REPS Remarketing Agreement
do not purport to be complete, and are subject to, and are qualified in their
entirety by reference to, the provisions of any REPS Remarketing Agreement.
CONVERSION OR REDEMPTION FOLLOWING ELECTION BY THE CALLHOLDER TO
REMARKET. If the Callholder elects to remarket the Notes on the REPS
Remarketing Date, the Notes will be subject to mandatory tender to the
Callholder for remarketing on such date, in each case subject to the conditions
described above under "--Tender; Remarketing" and to the Company's right to
either convert the Notes to a new Interest Rate Mode on the REPS Remarketing
Date or to redeem the Notes from the Callholder, in each case as described in
the next sentence. The Company will notify the Callholder and the Trustee, not
later than the Business Day immediately preceding the Determination Date, if the
Company irrevocably elects to exercise its right to either convert the Notes to
a new Interest Rate Mode, or to redeem the Notes, in whole but not in part, from
the Callholder at the Optional Redemption Price, in each case on the REPS
Remarketing Date.
In the event that the Company irrevocably elects to convert the Notes to a
new Interest Rate Mode, then as of the REPS Remarketing Date the Notes will
cease to be in the REPS Mode, the REPS Remarketing Date will constitute an
Interest Rate Adjustment Date, and the Notes will be subject to remarketing on
such date by a Remarketing Agent appointed by the Company in the Commercial
Paper Term Mode or the Long Term Rate Mode or a new REPS Mode established by the
Company in accordance with the procedures described above under "--Conversion
Between Interest Rate Modes," provided that, in such case, the notice period
required for conversion shall be the period commencing on the Determination
Date. In such case, the Company shall pay to the Callholder the excess of the
Dollar Price of the Notes over 100% of the principal amount of the Notes in
same-day funds by wire transfer to an account designated by the Callholder on
the REPS Remarketing Date.
In the event that the Company irrevocably elects to redeem the Notes, the
"Optional Redemption Price" shall be the greater of either (i) 100% of the
principal amount of the Notes or (ii) the Dollar Price, plus in either case
accrued and unpaid interest from the REPS Remarketing Date on the principal
amount being redeemed to the date of redemption. If the Company elects to redeem
the Notes, it shall pay the redemption price therefor in same-day funds by wire
transfer to an account designated by the Callholder on the REPS Remarketing
Date.
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FLOATING INTEREST RATES
While any Note bears interest in the Long Term Rate Mode or the REPS Mode
(with respect to the period from, and including, the Interest Rate Adjustment
Date commencing such period to, but excluding, the REPS Remarketing Date), the
Company may elect a floating interest rate by providing notice, which will be
submitted or promptly confirmed in writing (which includes facsimile or
appropriate electronic media), received by the Trustee and the Remarketing Agent
for such Note (the "Floating Interest Rate Notice") not less than ten (10) days
prior to the Interest Rate Adjustment Date for such Long Term Rate or REPS Rate
Period. The Floating Interest Rate Notice must identify by CUSIP number or
otherwise the portion of the Note to which it relates and state the Interest
Rate Period (or portion thereof, in the case of the REPS Mode) therefor to which
it relates. Each Floating Interest Rate Notice must also state the Interest Rate
Basis or Bases, the initial Interest Reset Date, the Interest Reset Period and
Dates, the Interest Rate Period and Dates, the Index Maturity (as defined below)
and the Floating Rate Maximum Interest Rate (as defined below) and/or Floating
Rate Minimum Interest Rate (as defined below), if any. If one or more of the
applicable Interest Rate Bases is LIBOR or the CMT Rate, the Floating Interest
Rate Notice will also specify the Index Currency and Designated LIBOR Page or
the Designated CMT Maturity Index and Designated CMT Telerate Page,
respectively, as such terms are defined below.
If any Note bears interest at a floating rate in a Long Term Rate Period or
REPS Rate Period, such Note will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a) plus or minus the
Spread, if any, and/or (b) multiplied by the Spread Multiplier, if any,
specified by the Remarketing Agent, in the case of a Long Term Rate Period, or
the Callholder, in the case of a REPS Rate Period. Commencing on the Interest
Rate Adjustment Date for such Interest Rate Period, the rate at which interest
on such Note will be payable will be reset as of each Interest Reset Date during
such Interest Rate Period specified in the applicable Floating Interest Rate
Notice.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to an Interest Rate Period
for such Note. The "Spread Multiplier" is the percentage of the related Interest
Rate Basis or Bases applicable to such Interest Rate Period by which such
Interest Rate Basis or Bases will be multiplied to determine the applicable
interest rate from time to time for such Long Term Rate Period or REPS Rate
Period, as the case may be. The "Index Maturity" is the period to maturity of
the instrument or obligation with respect to which the related Interest Rate
Basis or Bases will be calculated.
The applicable floating interest rate on any Note during any Interest Rate
Period will be determined by reference to the applicable Interest Rate Basis or
Interest Rate Bases, which may include (i) the CD Rate, (ii) the CMT Rate, (iii)
the Federal Funds Rate, (iv) LIBOR, (v) the Prime Rate, (vi) the Treasury Rate
or (vii) such other Interest Rate Basis or interest rate formula as may be
specified in the applicable Floating Interest Rate Notice (each, an "Interest
Rate Basis").
Unless otherwise specified in the applicable Floating Interest Rate Notice,
the interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable Floating Interest Rate Notice, the interest rate in effect on
each day will be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as defined below) immediately
preceding such Interest Reset Date or (ii), if such day is not an Interest Reset
Date, the interest rate determined as of the Interest Determination Date
immediately preceding the most recent Interest Reset Date. If any Interest Reset
Date would otherwise be a day that is not a Business Day, such Interest Reset
Date will be postponed to the next succeeding Business Day, unless LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, in which case such Interest Reset Date will be the
immediately preceding Business Day. In addition, if the Treasury Rate is an
applicable Interest Rate Basis and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day.
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The applicable Floating Interest Rate Notice will specify whether the rate
of interest will be reset daily, weekly, monthly, quarterly, semiannually or
annually or on such other specified basis (each, an "Interest Reset Period") and
the dates on which such rate of interest will be reset (each, an "Interest Reset
Date"). Unless otherwise specified in the applicable Floating Interest Rate
Notice, the Interest Reset Dates will be, in the case of a floating interest
rate which resets: (i) daily, each Business Day; (ii) weekly, the Wednesday of
each week (unless the Treasury Rate is an applicable Interest Rate Basis, in
which case the Tuesday of each week except as described below); (iii) monthly,
the third Wednesday of each month; (iv) quarterly, the third Wednesday of March,
June, September and December of each year, (v) semiannually, the third Wednesday
of the two months specified in the applicable Floating Interest Rate Notice; and
(vi) annually, the third Wednesday of the month specified in the applicable
Floating Interest Rate Notice.
The interest rate applicable to each Interest Reset Period commencing on the
related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date. The "Interest Determination Date" with respect to
the CD Rate, the CMT Rate, the Federal Funds Rate and the Prime Rate will be the
second Business Day immediately preceding the applicable Interest Reset Date;
and the "Interest Determination Date" with respect to LIBOR will be the second
London Business Day immediately preceding the applicable Interest Reset Date,
unless the Index Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable Interest Reset Date. The
"Interest Determination Date" with respect to the Treasury Rate will be the day
in the week in which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are
normally sold at an auction held on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination Date"
will be such preceding Friday. If the interest rate of any Note is a floating
interest rate determined with reference to two or more Interest Rate Bases
specified in the applicable Floating Interest Rate Notice, the "Interest
Determination Date" pertaining to the Note will be the most recent Business Day
which is at least two Business Days prior to the applicable Interest Reset Date
on which each Interest Rate Basis is determinable. Each Interest Rate Basis will
be determined as of such date, and the applicable interest rate will take effect
on the related Interest Reset Date.
Either or both of the following may also apply to the floating interest rate
on any Note for an Interest Rate Period: (i) a floating rate maximum interest
rate, or ceiling, that may accrue during any Interest Reset Period (the
"Floating Rate Maximum Interest Rate") and (ii) a floating rate minimum interest
rate, or floor, that may accrue during any Interest Reset Period (the "Floating
Rate Minimum Interest Rate"). In addition to any Floating Rate Maximum Interest
Rate that may apply, the interest rate on any Note will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified by
United States laws of general application.
Except as provided below or in the applicable Floating Interest Rate Notice,
interest will be payable, in the case of floating interest rates which reset:
(i) daily, weekly or monthly, on the third Wednesday of each month; (ii)
quarterly, on the third Wednesday of March, June, September and December of each
year; (iii) semiannually, on the third Wednesday of the two months of each year
specified in the applicable Floating Interest Rate Notice; and (iv) annually, on
the third Wednesday of the month of each year specified in the applicable
Floating Interest Rate Notice and, in each case, on the Business Day immediately
following the applicable Long Term Rate Period or REPS Rate Period, as the case
may be. If any Interest Payment Date for the payment of interest at a floating
rate (other than following the end of the applicable Long Term Rate Period or
REPS Rate Period, as the case may be) would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the next
succeeding Business Day, except that if LIBOR is an applicable Interest Rate
Basis and such Business Day falls in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding Business Day.
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All percentages resulting from any calculation of floating interest rates
will be rounded to the nearest one hundred thousandth of a percentage point,
with five one-millionths of a percentage point rounded upwards (e.g., 9.876545%
(or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation will be rounded, in the case of United
States dollars, to the nearest cent or, in the case of a foreign currency or
composite currency, to the nearest unit (with one-half cent or unit being
rounded upwards).
Accrued floating rate interest will be calculated by multiplying the
principal amount of the applicable Note by an accrued interest factor. Such
accrued interest factor will be computed by adding the interest factor
calculated for each day in the applicable Interest Reset Period. Unless
otherwise specified in the applicable Floating Interest Rate Notice, the
interest factor for each such day will be computed by dividing the interest rate
applicable to such day by 360, if an applicable Interest Rate Basis is the CD
Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number
of days in the year if an applicable Interest Rate Basis is the CMT Rate or the
Treasury Rate. Unless otherwise specified in the applicable Floating Interest
Rate Notice, if the floating interest rate is calculated with reference to two
or more Interest Rate Bases, the interest factor will be calculated in each
period in the same manner as if only one of the applicable Interest Rate Bases
applied as specified in the applicable Floating Interest Rate Notice.
Prior to having Notes remarketed with a floating interest rate, the Company
will select a calculation agent (the "Calculation Agent"). For any Note bearing
interest at a floating rate, the applicable Remarketing Dealer will determine
the interest rate in effect from the Interest Rate Adjustment Date for such Note
to the initial Interest Reset Date. The Calculation Agent will determine the
interest rate in effect for each Interest Reset Period thereafter. Upon request
of the Beneficial Owner of a Note, after any Interest Rate Adjustment Date, the
Calculation Agent or the Remarketing Dealer will disclose the interest rate and,
in the case of a floating interest rate, Interest Rate Basis or Bases, Spread
(if any) and Spread Multiplier (if any), and in each case the other terms
applicable to such Note then in effect and, if determined, the interest rate
that will become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to such Note. Except as described
herein with respect to a Note earning interest at floating rates, no notice of
the applicable interest rate, Spread (if any) or Spread Multiplier (if any) will
be sent to the Beneficial Owner of any Note.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
the "Calculation Date," if applicable, pertaining to any Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity, as the case may be.
CD RATE. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the "CD Rate," the CD Rate means,
with respect to any Interest Determination Date relating to a Note for which the
interest rate is determined with reference to the CD Rate (a "CD Rate Interest
Determination Date"), the rate on such date for negotiable United States dollar
certificates of deposit having the Index Maturity specified in the applicable
Floating Interest Rate Notice as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication ("H.15(519)") under the heading "CDs
(Secondary Market)," or, if not published by 3:00 p.m., New York City time, on
the related Calculation Date, the rate on such CD Rate Interest Determination
Date for negotiable United States dollar certificates of deposit of the Index
Maturity specified in the applicable Floating Interest Rate Notice as published
by the Federal Reserve Bank of New York in its daily statistical release
"Composite 3:30 P.M. Quotations for United States Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 p.m., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate 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 CD Rate Interest
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Determination Date, of three leading nonbank dealers in negotiable United States
dollar certificates of deposit in the City of New York (which may include the
Remarketing Agent or its affiliates) selected by the Calculation Agent, after
consultation with the Company, for negotiable United States dollars certificates
of deposit of major United States money center banks for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity specified in
the applicable Floating Interest Rate Notice in an amount that is representative
for a single transaction in that market at that time; provided, however, that if
the dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate determined as of such CD Rate Interest Determination
Date will be the CD Rate in effect on such CD Rate Interest Determination Date.
CMT RATE. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the "CMT Rate," the CMT Rate means,
with respect to any Interest Determination Date relating to a Note for which the
interest rate is determined with reference to the CMT Rate (a "CMT Rate Interest
Determination Date"), the rate displayed on the Designated CMT Telerate Page (as
defined below) under the caption ". . . Treasury Constant Maturities . . .
Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under
the column for the Designated CMT Maturity Index (as defined below) for (i) if
the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the Floating Interest Rate Notice,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page or is not displayed by 3:00 p.m., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in H.15(519). If such rate is no longer published or
is not published by 3:00 p.m., New York City time, on the related Calculation
Date, then the CMT Rate on such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for the
CMT Rate Interest Determination Date with respect to such Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in H.15(519). If such information is
not provided by 3:00 p.m., New York City time, on the related Calculation Date,
then the CMT Rate on the CMT Rate 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 CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in the City of New York (which may include the Remarketing Agent or its
affiliates) selected by the Calculation Agent after consultation with the
Company (from five such Reference Dealers selected by the Calculation Agent,
after consultation with the Company, and eliminating the highest quotation (or,
in the event of equality, one of the highest) and the lowest quotation (or, in
the event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such Treasury
Note quotations, the CMT Rate on such CMT Rate 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 such CMT Rate Interest
Determination Date of three Reference Dealers in the City of New York (from five
such Reference Dealers selected by the Calculation Agent, after consultation
with the Company, and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
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Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least U.S. $100 million. If three or four (and not
five) of such Reference Dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes will be eliminated; PROVIDED,
HOWEVER, that if fewer than three Reference Dealers so selected by the
Calculation Agent, after consultation with the Company, are quoting as mentioned
herein, the CMT Rate determined as of such CMT Rate Interest Determination Date
will be the CMT Rate in effect on such CMT Rate Interest Determination Date. If
two Treasury Notes with an original maturity as described in the second
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the Calculation Agent, after consultation with
the Company, will obtain from five Reference Dealers quotations for the Treasury
Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Markets
(or any successor service) on the page specified in the applicable Floating
Interest Rate Notice (or any other page as may replace such page on such service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified in the applicable Floating
Interest Rate Notice, the shall be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Floating Interest Rate Notice with respect to which
the CMT Rate will be calculated. If no such maturity is specified in the
applicable Floating Interest Rate Notice, the Designated CMT Maturity Index
shall be 2 years.
FEDERAL FUNDS RATE. If an Interest Rate Basis for any Note is specified in
the applicable Floating Interest Rate Notice, as the "Federal Funds Rate", the
Federal Funds Rate means, with respect to any Interest Determination Date
relating to a Note for which the interest rate is determined with reference to
the Federal Funds Rate (a "Federal Funds Rate Interest Determination Date"), the
rate on such date for United States dollar federal funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not published by
3:00 p.m., New York City time, on the Calculation Date, the rate on such Federal
Funds Rate Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If such rate is not published
in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on
the related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate 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
United States dollar federal funds arranged by three leading brokers of federal
funds transactions in The City of New York (which may include the Remarketing
Agent or its affiliates) selected by the Calculation Agent after consultation
with the Company, prior to 9:00 a.m., New York City time, on such Federal Funds
Rate Interest Determination Date; provided, however, that if the brokers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Federal Funds Rate determined as of such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on such Federal
Funds Rate Interest Determination Date.
LIBOR. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as "LIBOR," LIBOR means the rate
determined by the Calculation Agent as of the applicable Interest Determination
Date (a "LIBOR Interest Determination Date") in accordance with the following
provisions:
(i) If (a) "LIBOR Reuters" is specified in the applicable Floating
Interest Rate Notice, the arithmetic mean of the offered rates (unless the
Designated LIBOR Page (as defined below) by its terms provides only for a
single rate, in which case such single rate will be used) for deposits in
the Index Currency having the Index Maturity specified in the applicable
Floating Interest Rate Notice, commencing on the applicable Interest Reset
Date, that appear (or, if only a single rate is required as
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aforesaid, appears) on the Designated LIBOR Page (as defined below) as of
11:00 a.m., London time, on such LIBOR Interest Determination Date, or (b)
"LIBOR Telerate" is specified in the applicable Floating Interest Rate
Notice, or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in
the applicable Floating Interest Rate Notice as the method for calculating
LIBOR, the rate for deposits in the Index Currency having the Index Maturity
specified in the applicable Floating Interest Rate Notice, commencing on
such Interest Reset Date, that appears on the Designated LIBOR Page as of
11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer
than two such offered rates appear, or if no such rate appears, as
applicable, LIBOR on such LIBOR Interest Determination Date will be
determined in accordance with the provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause(i) above, the Calculation
Agent will request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the
Calculation Agent, after consultation with the Company, to provide the
Calculation Agent with its offered quotation for deposits in the Index
Currency for the period of the Index Maturity specified in the applicable
Floating Interest Rate Notice, commencing on the applicable Interest Reset
Date, to prime banks in the London interbank market at approximately 11:00
a.m., London time, on such LIBOR Interest Determination Date and in a
principal amount that is representative for a single transaction in such
Index Currency in such market at such time. If at least two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will
be the arithmetic mean of such quotations. If fewer than two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will
be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent, after consultation with the Company, for
loans in the Index Currency to leading European banks, having the Index
Maturity specified in the applicable Floating Interest Rate Notice and in a
principal amount that is representative for a single transaction in such
Index Currency in such market at such time; provided, however, that if the
banks so selected by the Calculation Agent are not quoting as mentioned in
this sentence, LIBOR determined as of such LIBOR Interest Determination Date
will be LIBOR in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Floating Interest Rate Notice as to which LIBOR will be calculated.
If no such currency or composite currency is specified in the applicable
Floating Interest Rate Notice, the Index Currency will be United States dollars.
"Principal Financial Center" means the capital city of the country issuing
the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECUs, the Principal Financial Center will be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Floating Interest Rate Notice, the display on the Reuter Monitor
Money Rates Service (or any successor service), on the page specified in such
Floating Interest Rate Notice (or any other page as may replace such page on
such service) for the purpose of displaying the London interbank rates of major
banks for the Index Currency, or (b) if "LIBOR Telerate" is specified in the
applicable Floating Interest Rate Notice or neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable Floating Interest Rate Notice as the
method for calculating LIBOR, the display on the Dow Jones Markets (or any
successor service) on the page specified in such Floating Interest Rate Notice
(or any other page as may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for the Index Currency.
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PRIME RATE. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the "Prime Rate," Prime Rate means,
with respect to any Interest Determination Date relating to a Note for which the
interest rate is determined with reference to the Prime Rate (a "Prime Rate
Interest Determination Date"), the rate on such date as such rate is published
in H.15(519) under the heading "Bank Prime Loan." If such rate is not published
prior to 3:00 p.m., New York City time, on the related Calculation Date, then
the Prime Rate will be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen U.S. PRIME 1 Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen U.S. PRIME 1 Page for such Prime Rate Interest
Determination Date, the Prime Rate will be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks (which may include the
Calculation Agency) in The City of New York selected by the Calculation Agent,
after consultation with the Company. If fewer than four such quotations are so
provided, the Prime Rate will be the arithmetic mean of four prime rates quoted
on the basis of the actual number of days in the year divided by a 360-day year
as of the close of business on such Prime Rate Interest Determination Date as
furnished in The City of New York by the major money center banks, if any, that
have provided such quotations and by as many substitute banks or trust companies
(which may include The Bank of New York) as necessary in order to obtain four
such prime rate quotations, provided such substitute banks or trust companies
are organized and doing business under the laws of the United States, or any
State thereof, have total equity capital of at least U.S. $500 million and are
each 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 so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen U.S. PRIME 1 Page" means the display designated as page
"U.S. PRIME I" on the Reuter Monitor Money Rates Service (or any successor
service) on the U.S. PRIME 1 Page (or such other page as may replace the U.S.
PRIME 1 Page on such service) for the purpose of displaying prime rates or base
lending rates of major United States banks.
TREASURY RATE. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the "Treasury Rate," Treasury Rate
means, with respect to any Interest Determination Date relating to a Note for
which the interest rate is determined with reference to the Treasury Rate (a
"Treasury Rate Interest Determination Date"), as the rate from the auction held
on such Treasury Rate Interest Determination Date (the "Auction") of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Floating Interest Rate Notice, as such rate is
published in H.15(519) under the heading "Treasury Bills-auction average
(investment)" or, if not published by 3:00 p.m., New York City time, on the
related Calculation Date, the auction average rate of such Treasury Bills
(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 specified in the applicable Floating
Interest Rate Notice are not reported as provided above by 3:00 p.m., New York
City time, on such Calculation Date, or if no such Auction is held, then 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 approximately 3:30 p.m., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers (which may include the Remarketing
Agent or its affiliates) 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 Floating Interest Rate
Notice; provided, however, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as
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of such Treasury Rate Interest Determination Date will be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
REMARKETING AGENTS
THE REMARKETING AGREEMENT. The Company and each Remarketing Agent for the
Notes will enter into a Remarketing Agreement. The summaries below are summaries
of certain expected provisions in such Remarketing Agreements and do not purport
to be complete and are subject to, and qualified in their entirety by, the
provisions of any Remarketing Agreement. The terms of the Initial REPS
Remarketing Agreement are described under "--Mandatory Tender to Initial
Callholder--Initial Callholder." The general provisions of any other REPS
Remarketing Agreement are described above under "--REPS Mode--The Callholder."
FEES AND EXPENSES. For its services in determining the interest rate and
remarketing Notes, each Remarketing Agreement is expected to provide that, the
Remarketing Agent will receive from the Company a fee to be determined in
accordance with the Remarketing Agreement. The Remarketing Agent may pay to
selected broker-dealers a portion of any fees it receives from the Company for
its services as Remarketing Agent reflecting Notes sold through such
broker-dealers to purchasers in remarketings.
INDEMNIFICATION OF REMARKETING AGENT. The Company, if applicable, will
agree to indemnify the Remarketing Agent against certain liabilities, including
liabilities under the Securities Act arising out of or in connection with its
duties under the Remarketing Agreement.
CONDITIONS TO THE REMARKETING AGENT'S OBLIGATIONS. The obligation of the
Remarketing Agent to remarket Notes and perform its other obligations under a
Remarketing Agreement are expected to be subjected to certain conditions,
including (a) the accuracy of certain representations and warranties by the
Company and the performance by the Company of its obligations and agreements set
forth in the Remarketing Agreement; (b) the absence of certain adverse events;
and (c) between the time at which the interest rate on any Note is established
and the time at which payment therefor is to be made, the rating of the Notes
not having been downgraded or put on Credit Watch or Watch List with negative
implications or withdrawn by a national rating service, the effect of which, in
the opinion of the Remarketing Agent, is to affect materially and adversely the
market price of the Notes or the Remarketing Agent's ability to remarket the
Notes.
REMOVAL OF THE REMARKETING AGENT. Each Remarketing Agreement is expected to
provide that the Company may in its absolute discretion remove any Remarketing
Agent by giving prior notice to such Remarketing Agent, the Trustee and the
other Remarketing Agents; PROVIDED, HOWEVER, that if (i) such removed
Remarketing Agent shall then be the sole Remarketing Agent or (ii) all of the
remaining Remarketing Agents elect to resign or are removed within one week of
delivery of such notice, then, except as provided in the following sentence, no
such removal shall become effective until the Company shall have appointed a
successor to perform the services of the Remarketing Agent under the Remarketing
Agreement. In such case, the Company will use reasonable commercial efforts to
appoint a successor Remarketing Agent as soon as reasonably practicable;
PROVIDED, HOWEVER, that, if the Company has not so appointed a successor
Remarketing Agent within 90 days of delivery of such notice, the Remarketing
Agreement shall automatically terminate on such 90th day.
RESIGNATION OF THE REMARKETING AGENT. The Remarketing Agreement is also
expected to provide that a Remarketing Agent may resign at any time as
Remarketing Agent, such resignation to be effective 30 days after the delivery
to the Company, the Trustee and the other Remarketing Agents of notice of such
resignation; PROVIDED, HOWEVER, that if (i) such resigning Remarketing Agent
shall then be the sole Remarketing Agent or (ii) all of the remaining
Remarketing Agents elect to resign or are removed within one week of delivery of
such notice, then, except as provided in the following sentence, no such
resignation
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shall become effective until the Company shall have appointed at least one
successor to perform the services of the Remarketing Agent under the Remarketing
Agreement. In such case, the Company will use reasonable commercial efforts to
appoint a successor Remarketing Agent as soon as reasonably practicable;
PROVIDED, HOWEVER, that, if the Company has not so appointed a successor
Remarketing Agent within 90 days of delivery of such notice, the Remarketing
Agreement shall automatically terminate on such 90th day. In such case, it shall
be the sole obligation of the Company to appoint a successor Remarketing Agent.
In certain circumstances, including upon the occurrence of certain events, a
Remarketing Agent may resign effective immediately upon giving notice to the
Company and the Trustee.
CREDIT SUPPORT
GENERAL. Credit support may be provided with respect to Notes in a
particular Interest Rate Mode during all or any portion of an Interest Rate
Period. Such credit support may be in the form of a Standby Note Purchase
Agreement (a "Standby Note Purchase Agreement"), a letter of credit, a financial
guaranty insurance policy, a limited guaranty issued by a guarantor, the
establishment of one or more reserve funds, any other form of credit support or
any combination of the foregoing. Unless otherwise specified in an applicable
prospectus supplement or other Remarketing documents, no form of credit support
will provide protection against all risks of loss or guarantee repayment of the
entire principal of and interest on the Notes. The following summaries of terms
of potential credit support arrangements are qualified in their entirety by
reference to the provisions of any agreements governing such arrangements.
STANDBY NOTE PURCHASE AGREEMENT. In order to support its obligation to
purchase Notes pursuant to any Special Mandatory Purchase obligation, the
Company may from time to time, at its option, enter into a Standby Note Purchase
Agreement with one or more banks or other credit providers. Any such Standby
Note Purchase Agreement would provide that, subject to certain conditions
specified therein, the credit provider would advance funds for payment of the
purchase price for Notes subject to a Special Mandatory Purchase.
LETTER OF CREDIT. The Company may from time to time, at its option, provide
credit support for Notes in the form of a letter of credit from a bank or other
financial institution. The coverage, amount and other terms of any such letter
of credit would be specified in an applicable prospectus supplement or other
offering document.
FINANCIAL GUARANTY INSURANCE. The Company may from time to time, at its
option, provide credit support for Notes in the form of a financial guaranty
insurance policy which would guaranty payment of interest on and principal of
the Notes. The coverage, amount and other terms of any such financial guaranty
insurance policy would be specified in an applicable prospectus supplement or
other offering document.
LIMITED GUARANTY. The Company may from time to time, at its option, provide
credit support for Notes in the form of a guaranty pursuant to which a guarantor
agrees to provide the Company with sufficient funds to make timely interest and
principal payments in the event the Company lacks sufficient resources to do so.
The coverage, amount and other terms of any such guaranty would be specified in
an applicable prospectus supplement or other offering document.
RESERVE FUNDS. The Company may from time to time, at its option, provide
credit support for Notes in a reserve fund established with the Trustee. The
manner of funding any such reserve fund and the amounts required from time to
time to be on deposit therein would be specified in an applicable prospectus
supplement or other offering document.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary, which is based upon the advice of Palmer & Dodge LLP,
special tax counsel to the Company, whose opinion is set forth herein, of
certain United States Federal income tax consequences of the purchase, ownership
and disposition of the Notes is based upon laws, regulations, rulings and
decisions now in effect (or, in the case of certain regulations, in proposed
form), all of which are subject to change (including changes in effective dates)
or possible differing interpretations. It deals only with purchasers who hold
Notes as capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding Notes
as a hedge against currency risk or as a position in a "straddle" for tax
purposes, or persons whose functional currency is not the U.S. dollar. In
addition, this discussion does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering the
purchase of Notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof (other than a partnership that is not treated as a United
States person under any applicable regulations of the U.S. Department of the
Treasury ("Treasury" or "Treasury Department")), (iii) an estate whose income is
subject to United States Federal income tax regardless of its source, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in Treasury
regulations and guidance, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to such date, that elect to continue to
be treated as United States persons also will be U.S. Holders. In general, any
other person whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business is also treated as a U.S.
Holder. As used herein, the term "non-U.S. Holder" means a beneficial owner of a
Note that is not a U.S. Holder.
U.S. HOLDERS
The United States Federal income tax treatment of debt obligations such as
the Notes is not certain. The proper treatment of the Notes will depend, in
part, upon whether the Notes are treated as maturing on (i) the Stated Maturity
or (ii) each Interest Rate Adjustment Date or REPS Remarketing Date. Because the
Notes are subject to mandatory tender at par on each Interest Rate Adjustment
Date and REPS Remarketing Date, the Company intends, for United States Federal
income tax purposes, to treat the Notes as maturing and (in the case of Notes
that are remarketed) as reissued on each Interest Rate Adjustment Date and REPS
Remarketing Date. By purchasing the Notes, a U.S. Holder agrees to follow such
treatment for United States Federal income tax purposes. Except where indicated
to the contrary, the following discussion assumes such treatment of the Notes
for United States Federal income tax purposes.
PAYMENTS OF INTEREST. Interest on the Notes during the period commencing on
the date of initial issuance to, but excluding, September 15, 2001 (the "Initial
Interest Rate Period") and during each subsequent period commencing on an
Interest Rate Adjustment Date or a REPS Remarketing Date and ending on the day
before the next Interest Rate Adjustment Date or REPS Remarketing Date (a
"Subsequent Interest Rate Period") of more than one year will constitute
"qualified stated interest" and generally will be taxable to a U.S. Holder as
ordinary interest income at the time it is accrued or received, in accordance
with the U.S. Holder's regular method of tax accounting. If a Subsequent
Interest Rate Period of one year or less is established for the Notes, however,
interest on the Notes during that
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Subsequent Interest Rate Period may be treated as original issue discount. See
"--SHORT-TERM OBLIGATIONS," below.
ORIGINAL ISSUE DISCOUNT. The Notes will not be treated as issued with
original issue discount (except as described below under "--SHORT-TERM
OBLIGATIONS") if (i) their issue price (generally, the first price at which a
substantial amount of such Notes has been sold or remarketed (ignoring sales to
bond houses, brokers, or similar persons or organizations acting in the capacity
of underwriters, placement agents, or wholesalers)) is equal to their par value
or (ii) the excess (if any) of their par value over their issue price is less
than a statutory DE MINIMIS amount (generally 1/4 of 1% of the Notes' par value
multiplied by the number of complete years from the date the Notes are issued or
treated as reissued to the date the Notes are treated as maturing). If the Notes
are issued or treated as reissued at a discount equal to or greater than the
statutory DE MINIMIS amount, however, the Notes will have original issue
discount equal to the excess of their par value over their issue price. For
United States Federal income tax purposes, the U.S. Holder will be required to
include this original issue discount in income as ordinary interest as it
accrues under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of the U.S. Holder's regular method of
accounting. In general, the amount of original issue discount included in income
by an initial U.S. Holder of Notes issued with original issue discount will be
the sum of the daily portions of original issue discount with respect to such
Notes for each day during the taxable year (or portion of the taxable year) on
which such U.S. Holder held such Notes. The "daily portion" of original issue
discount on any Notes is determined by allocating to each day in any accrual
period a ratable portion of the original issue discount allocable to that
accrual period. An "accrual period" may be of any length and the accrual periods
may vary in length over the term of the Notes, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs either on the final day of an accrual period or on the first day of an
accrual period. The amount of original issue discount allocable to each accrual
period is generally equal to the difference between (i) the product of (x) the
Notes' adjusted issue price at the beginning of such accrual period and (y) the
yield of the Notes (appropriately adjusted to take into account the length of
the particular accrual period) and (ii) the amount of any qualified stated
interest payments allocable to such accrual period. The "adjusted issue price"
of the Notes at the beginning of any accrual period is the sum of the issue
price of the Notes plus the amount of original issue discount allocable to all
prior accrual periods minus the amount of any prior payments on the Notes that
were not qualified stated interest payments. Under these rules, U.S. Holders
generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
A U.S. Holder who purchases a Note with original issue discount for an
amount that is greater than the Note's adjusted issue price as of the purchase
date and less than or equal to the sum of all amounts payable on the Note after
the purchase date, other than payments of qualified stated interest, will be
considered to have purchased the Note at an "acquisition premium." Under the
acquisition premium rules, the amount of original issue discount which such U.S.
Holder must include in its gross income with respect to such Note for any
taxable year (or portion thereof in which the U.S. Holder holds the Note) will
be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
SHORT-TERM OBLIGATIONS. Notes that are treated as maturing at the end of a
Subsequent Interest Rate Period of one year or less will constitute "short-term
obligations" during such Subsequent Interest Rate Period. Under special rules
applicable to short-term obligations, all interest on such Notes during such
Subsequent Interest Rate Period will be treated as original issue discount. In
general, individuals or other cash method U.S. Holders will not be required to
include this original issue discount in income in advance of receipt, unless
they elect to do so. If such an election is not made: (i) any gain recognized by
such holders on the sale, exchange or maturity of the Notes will be ordinary
income to the extent of this original issue discount, accrued on a straight-line
basis (or, upon election, under the constant yield method based on daily
compounding) through the date of sale or maturity, and (ii) a portion of the
deductions otherwise allowable for interest on borrowings allocable to the Notes
will be deferred until a corresponding amount
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of income is realized. U.S. Holders who report income for United States Federal
income tax purposes under the accrual method and certain other holders,
including banks, dealers in securities and cash basis holders who so elect, will
be required to accrue original issue discount on the Notes, either on a
straight-line basis or, if an election is made, under a constant yield method
based on daily compounding. At the election of a holder, the above rules may be
applied to acquisition discount (defined as the excess of (i) the Notes' par
value plus interest on the Notes during the Subsequent Interest Rate Period over
(ii) the holder's basis in the Notes) in lieu of original issue discount.
MARKET DISCOUNT. In general, if a U.S. Holder purchases a Note, other than
a Note treated as a short-term obligation, for an amount that is less than its
par value or, in the case of a Note with original issue discount, for an amount
that is less than its adjusted issue price 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 (generally 1/4 of 1% of the Notes'
par value multiplied by the number of complete years from the date of purchase
to the date the Notes are treated as maturing). Under the market discount rules,
a U.S. Holder will be required to treat any principal payment (or, in the case
of a Note with original issue discount, any payment that does not constitute
qualified stated interest) on, or any gain realized on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
the lesser of (i) the amount of such payment or realized gain or (ii) 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. Market
discount will be considered to accrue ratably during the period from the date of
acquisition to the maturity date of the Note, unless the U.S. Holder elects to
accrue market discount on the basis of semiannual compounding. In addition, a
U.S. Holder 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 a Note with market discount until the maturity of the Note or its
earlier disposition in a taxable transaction. A U.S. Holder may elect to include
market discount in income currently as it accrues on either a ratable or
semiannual compounding basis, in which case the rules described above will not
apply. Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes
PREMIUM. If a U.S. Holder purchases a Note for an amount that is greater
than its par value, such U.S. Holder will be considered to have purchased the
Note with "amortizable bond premium" equal in amount to such excess. A U.S.
Holder may elect to amortize such premium using a constant yield method over the
remaining term of the Note and may offset interest otherwise required to be
included in respect of the Note during any taxable year by the amortized amount
of such excess for the taxable year.
DISPOSITION OF THE NOTES. Upon the sale, exchange or retirement of a Note,
a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in
the Note generally will equal such U.S. Holder's initial investment in the Note
increased by any original issue discount included in income (and accrued market
discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such Note. Subject to the application of the market discount rules, such gain or
loss will be capital if the Note is held as a capital asset.
The Taxpayer Relief Act of 1997 (the "1997 Act") reduced the maximum rates
on long-term capital gains recognized on capital assets held by individual
taxpayers for more than eighteen months as of the date of disposition (and would
further reduce the maximum rates on such gains in the year 2001 and thereafter
for certain individual taxpayers who meet specified conditions). Under the
Internal Revenue Service Restructuring and Reform Act of 1998 (the "1998 Act")
capital assets held for more than one year (rather than eighteen months) are
eligible for the reduced capital gain rates provided by the 1997 Act. The
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1997 Act and the 1998 Act did not change the capital gain rates for
corporations. Prospective investors should consult their own tax advisors
concerning these tax law changes.
ALTERNATIVE TREATMENT OF THE NOTES. There can be no assurance that the
Internal Revenue Service ("IRS") will agree with the Company's treatment of the
Notes. In particular, the IRS could seek to treat the Notes as maturing on the
Stated Maturity. In the event the Notes are treated, for United States Federal
income tax purposes, as maturing on the Stated Maturity, it is unclear whether
the Notes will be treated as "variable rate debt instruments" ("VRDIs") or as
"contingent payment debt instruments." If the Notes qualify as VRDIs, the tax
treatment of the Notes may generally be similar to that described above for
Notes that are treated as maturing on each Interest Rate Adjustment Date or REPS
Remarketing Date.
If the Notes do not qualify as VRDIs, the Notes may be classified as
"contingent payment debt instruments." In such event, under Treasury regulations
governing contingent payment debt instruments (the "Contingent Payment
Regulations"), the Company would be required to construct a projected payment
schedule for the Notes based upon the Company's current borrowing costs for
comparable debt instruments of the Company, from which an estimated yield on the
Notes would be calculated. A U.S. Holder would be required to include in income
as ordinary interest an amount equal to the sum of the daily portions of
interest on the Notes that would be deemed to accrue at this estimated yield
under this projected payment schedule for each day during the U.S. Holder's
taxable year on which the U.S. Holder holds the Notes. The amount of interest
that would be deemed to accrue in any accrual period would equal the product of
this estimated yield (properly adjusted for the length of the accrual period)
and the Notes' adjusted issue price (as defined below) at the beginning of the
accrual period. The daily portions of interest would be determined by allocating
to each day in the accrual period the ratable portion of the interest that would
be deemed to accrue during the accrual period. In general, for these purposes,
the Notes' adjusted issue price would equal the Notes' issue price increased by
the interest previously accrued on the Notes, and reduced by the amount of any
noncontingent payment and the projected amount of any contingent payment
previously made on the Notes. To the extent that contingent payments actually
made during a year differ from the projected amounts of those contingent
payments, adjustments would be made on the Notes which would generally increase
or decrease the amount includible in income as interest on the Notes.
Nevertheless, as a result of the application of the Contingent Payment
Regulations, it is possible that a U.S. Holder would be required to include
interest in income in excess of actual cash payments received for certain
taxable years.
Under the Contingent Payment Regulations, upon the sale or exchange of a
Note (including a sale pursuant to a mandatory tender on an Interest Rate
Adjustment Date or REPS Remarketing Date), a U.S. Holder would be required to
recognize taxable income or loss in an amount equal to the difference, if any,
between the amount realized by the U.S. Holder upon such sale or exchange and
the U.S. Holder's adjusted tax basis in the Note as of the date of disposition.
A U.S. Holder's adjusted tax basis in the Note generally would equal such U.S.
Holder's initial investment in the Note increased by any interest previously
accrued on the Note, and decreased by the amount of any noncontingent payment
and the projected amount of any contingent payment previously made on the Note.
Any such taxable income generally would be treated as ordinary income. Any such
taxable loss generally would be treated as ordinary loss to the extent that the
U.S. Holder's total interest inclusions on the Note exceeded the total net
negative adjustments on the Note. Any remaining loss generally would be treated
as short-term or long-term capital loss (depending upon the U.S. Holder's
holding period for the Notes). All amounts includable in income by a U.S. Holder
as ordinary income pursuant to the Contingent Payment Treasury Regulations would
be treated as original issue discount.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal or interest (including original issue discount and
accruals under the Treasury regulations applicable to
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contingent payment debt obligations, if any) on a Note, unless such non-U.S.
Holder owns actually or constructively 10% or more of the total combined voting
power of the Company, is a controlled foreign corporation related to the Company
through actual or constructive stock ownership or is a bank receiving interest
described in Section 881(c)(3)(A) of the Code. To qualify for the exemption from
taxation, the last United States payor in the chain of payment prior to payment
to a non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the Beneficial Owner
of the Notes under penalties of perjury, (ii) certifies that such owner is not a
U.S. Holder and (iii) provides the name and address of the Beneficial Owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the Beneficial Owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent that the IRS Form W-8 or the substitute form has been
provided by the Beneficial Owner to the organization or institution. In such
case, however, the signed statement must be accompanied by a copy of the Form
W-8 or substitute form provided by the Beneficial Owner.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes gain upon retirement or disposition
of a Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includable in the estate of a non-U.S. Holder unless
the individual owns, actually or constructively, 10% or more of the total
combined voting power of the Company or, at the time of such individual's death,
payments in respect of the Notes would have been effectively connected with the
conduct by such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals and partnerships are not exempt recipients,
whereas corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient. Compliance with the
identification procedures described in the preceding section would establish an
exemption from backup withholding for those non-U.S. Holders who are not exempt
recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. Holder
status (and certain other conditions are met). Certification of the registered
owner's non-U.S. Holder status would be made normally on an IRS Form W-8 under
penalties of perjury, although in certain cases it may be possible to submit
other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
Beneficial Owner generally would be allowed as a refund or a credit against such
Beneficial Owner's United States Federal income tax provided the required
information is furnished to the IRS.
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NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New Regulations
attempt to unify certification requirements and clarify reliance standards. The
New Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1984, as amended ("ERISA"),
the Code impose certain restrictions on (a) employee benefit plans (as defined
in Section 3(3) of ERISA), (b) plans described in section 4975(e)(1) of the
Code, including individual retirement accounts or Keogh plans, (c) any entities
whose underlying assets include plan assets by reason of a plan's investment in
such entities (each a "Plan") and (e) persons who have certain specified
relationships to such Plans ("Parties-in-Interest" under ERISA and "Disqualified
Persons" under the Code). Moreover, based on the reasoning of the United States
Supreme Court in John Hancock Life Ins. v. Harris Trust and Sav. Bank, 114 S.
Ct. 517 (1993), an insurance company's general account may be deemed to include
assets of the Plans investing in the general account (e.g., through the purchase
of an annuity contract). ERISA also imposes certain duties on persons who are
fiduciaries of Plans subject to ERISA and prohibits certain transactions between
a Plan and Parties-in-Interest or Disqualified Persons with respect to such
Plans.
The Company, the Callholder and any Remarketing Agent, because of their
activities or the activities of their respective affiliates, may be considered
to be Parties-in-Interest or Disqualified Persons with respect to certain Plans.
If the Notes are acquired by a Plan with respect to which the Company, the
Callholder or any Remarketing Agent is, or subsequently becomes, a
Party-in-Interest or Disqualified Person, the purchase, holding or sale of Notes
to the Callholder could be deemed to be a direct or indirect violation of the
Prohibited Transaction rules of ERISA and the Code unless such transaction were
subject to one or more statutory or administrative exemptions such as Prohibited
Transaction Class Exemption ("PTCE") 75-1, which exempts certain transactions
involving employee benefit plans and certain broker-dealers, reporting dealers
and banks; PTCE 90-1, which exempts certain transactions between insurance
company pooled separate accounts and Parties-in-Interest or Disqualified
Persons; PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties-in-Interest or Disqualified Persons; PTCE 84-14,
which exempts certain transactions effected on behalf of a Plan by a "qualified
professional asset manager"; PTCE 95-60, which exempts certain transactions
between insurance company general accounts and Parties-in-Interest or
Disqualified Persons; or PTCE 96-23, which exempts certain transactions effected
on behalf of a Plan by an "in-house assets manager." Even if the conditions
specified in one or more of these exemptions are met, the scope of relief
provided by these exemptions will not necessarily cover all acts that might be
construed as prohibited transactions. Each Purchaser of the Notes will be deemed
to have represented that it is not acquiring the Notes for or on behalf, or with
the assets, of, and will not sell or otherwise transfer the Notes to, any such
Plan, except to the extent such purchase, sale or transfer satisfies the
conditions for exemption relief under one or more of the PTCEs described in the
prior paragraph or is to a governmental plan (as defined in Section 3 of ERISA)
that is not subject to Title I of ERISA or Section 4975 of the Code or to any
similar law, rule or regulation.
Accordingly, prior to making an investment in the Notes, a Plan should
determine whether the Company, the Callholder or any Remarketing Agent is a
Party-in-Interest or Disqualified Person with respect to such Plan and, if so,
whether such transaction is subject to one or more statutory or administrative
exemptions, including those described above.
Prior to making an investment in the Notes, Plans should consult with their
legal advisors concerning the impact of ERISA and the Code and the potential
consequences of such investment with respect to
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their specific circumstances. Moreover, each Plan fiduciary has the authority to
make the investment on behalf of the Plan; whether the investment constitutes a
direct or indirect transaction with a Party-in-Interest or a Disqualified
Person; and whether under the general fiduciary standards of investment prudence
and diversification an investment in the Notes is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") among the Company and the Underwriters named below, the
Company has agreed to sell to each of the Underwriters, and each of the
Underwriters has severally agreed to purchase, the principal amounts of the
Notes set forth opposite its name below.
<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated........................................... $ 75,000,000
Citicorp Securities, Inc.................................................... 75,000,000
----------------
Total................................................................. $ 150,000,000
----------------
----------------
</TABLE>
The Purchase Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent. The nature of the underwriting
commitment is such that the Underwriters purchasing the Notes will be obligated
to purchase all of the Notes if any of the Notes are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain dealers
at such price less a concession of .250% of the principal amount of the Notes.
The Underwriters and such dealers may reallow a discount of .125% of such
principal amount on sales to certain other dealers. The public offering price
and concessions and discounts to dealers may be changed by the Underwriters.
The Company does not intend to apply for listing of any of the Notes on a
national securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market-making may be discontinued at any time at the
sole
discretion of the Underwriters. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Notes.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the prices
of the Notes. Specifically, the Underwriters may overallot in connection with
the offering, creating a short position in the Notes for their own account. In
addition, to cover overallotments or to stabilize the price of the Notes, the
Underwriters may bid to stabilize the price of the Notes in the open market.
Finally, the underwriting syndicate may reclaim selling concessions allowed to
an underwriter or a dealer for distributing the Notes in the offering, if the
syndicate repurchases previously distributed Notes in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market prices of the Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
In the ordinary course of their businesses, Morgan Stanley & Co.
Incorporated and Citicorp Securities, Inc. and their affiliates have engaged and
may in the future engage in investment and commercial banking transactions with
the Company and certain of its affiliates. Morgan Stanley & Co. Incorporated is
the Initial Callholder.
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The Company has agreed to indemnify the several Underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the Notes to which this Prospectus Supplement relates will
be passed upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts and
for the Underwriters by Ropes & Gray, Boston, Massachusetts. Palmer & Dodge LLP,
Boston, Massachusetts will also advise the Company on certain federal income tax
matters.
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