PROSPECTUS SUPPLEMENT
- ---------------------
(To Prospectus dated August 13, 1997)
General Motors Acceptance Corporation
DM750,000,000
Pound Sterling300,000,000
Global Floating Rate Notes
------------
The Deutsche Mark Global Floating Rate Notes due September
25, 2002 (the "DM Notes") and Pound Sterling Global Floating Rate Notes due
September 25, 2002 (the "Sterling Notes") (collectively, for the purposes
of this Prospectus Supplement, the "Securities") will constitute direct,
general and unconditional obligations of General Motors Acceptance
Corporation (the "Company"). The Securities will bear interest from
September 25, 1997. Interest will be payable quarterly in arrears on March
25, June 25, September 25, and December 25 of each year, commencing
December 25, 1997. The Securities will mature on September 25, 2002 and be
redeemed by the Company at a redemption price equal to 100% of the
principal amount of the Securities together with accrued interest thereon.
The Securities will otherwise not be redeemable prior to maturity unless
certain events occur involving U.S. taxation. See "Description of the
Securities--Redemption for Tax Reasons". Interest shall accrue for each
Interest Period (as defined herein) at a rate equal to the applicable
Three-Month-LIBOR (as defined herein) or Three-Month-DM-LIBOR (as defined
herein), as the case may be, plus .125%, in each case as defined and
determined herein. See "Description of Securities--Sterling Notes" and
"Description of Securities--DM Notes".
In accordance with the provisions described in this Prospectus
Supplement, owners of book-entry interests in DM Notes or Sterling Notes held
through The Depository Trust Company ("DTC") (other than, in the case of
Sterling Notes, the Euroclear System ("Euroclear") or Cedel S.A. ("Cedel") and
investors who hold book-entry interests in Sterling Notes, directly or
indirectly, through Euroclear or Cedel and in the case of DM Notes, Deutscher
Kassenverein AG, Frankfurt am Main ("DKV") and investors who hold book-entry
interests in DM Notes, directly or indirectly through DKV) including Euroclear
or Cedel will receive payments in U.S. dollars unless they elect to receive
Deutsche Mark or Pounds Sterling, as the case may be. See "Description of
Securities--DM Notes--Payment", "--Sterling Notes--Payment" and "Currency
Conversions and Foreign Exchange Risks". Purchasers of the DM Notes or Pounds
Sterling are required to pay for such Notes in immediately available Deutsche
Mark or Pounds Sterling, as the case may be. The Underwriters are prepared to
arrange for the conversion of U.S. dollars into Deutsche Mark or Pounds
Sterling, as the case may be, to enable investors in the United States to make
such payment. See "Currency Conversions and Foreign Exchange Risks".
DM Notes. The DM Notes will be represented by a global note in
fully registered form, which will be deposited with DTC and registered in the
name of a nominee of DTC for the accounts of its participants, including DKV,
Euroclear and Cedel. Beneficial interests in each global note will trade in
DTC's Same-Day Funds Settlement System, and secondary market trading activity
in such interests will therefore settle in same-day funds. Beneficial
interests in each global note will be shown on, and transfers thereof will be
effected only through, records maintained by DTC and its participants. Except
in limited circumstances, registered definitive DM Notes will not be issued in
exchange for beneficial interests in their respective global note. See
"Global Clearance and Settlement--DM Notes".
Sterling Notes. The Sterling Notes will be represented by a
global note in fully registered form, which will be deposited with DTC and
registered in the name of a nominee of DTC for the accounts of its
participants, including Euroclear and Cedel. Beneficial interests in each
global note will trade in DTC's Same-Day Funds Settlement System, and
secondary market trading activity in such interests will therefore settle in
same-day funds. Beneficial interests in each global note will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants. Except in limited circumstances, registered definitive
Sterling Notes will not be issued in exchange for beneficial interests in
their respective global note. See "Global Clearance and Settlement--Sterling
Notes".
Application has been made to the Luxembourg Stock Exchange and
the New York Stock Exchange for permission to deal in, and for listing of the
Securities on such Exchanges.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Proceeds to the
Initial Price to Public(1) Underwriting Discount(2) Company(1)(3)
<S> <C> <C> <C>
Per DM Note............... 99.838% 0.225% 99.613%
Total DM Notes............ DM748,785,000 DM1,687,500 DM747,097,500
Per Sterling Note......... 99.855% 0.225% 99.63%
Total Sterling Notes...... Pound Sterling299,565,000 Pound Sterling675,000 Pound Sterling278,890,000
(1) Plus accrued interest, if any, from and including September 25, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of estimated expenses of approximately $250,000 payable
by the Company.
</TABLE>
------------
The Securities are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them,
subject to approval of certain legal matters by counsel for the
Underwriters and 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 Securities will be
made against payment therefor in same-day funds, on or about September 25,
1997.
-----------
Global Coordinator
Merrill Lynch & Co.
-----------
The date of this Prospectus Supplement is September 11, 1997.
Deutsche Mark Notes
Joint-lead Managers
-------------------
Dresdner Kleinwort Benson Merrill Lynch Capital Markets
Bank Limited
Dresdner Bank Aktiengesellschaft Frankfurt/Main Branch
Co-lead Managers
----------------
ABN AMRO Hoare Govett BZW Deutschland
ABN AMRO Bank (Deutschland) AG Branch of Barclays Bank PLC
Deutsche Morgan Grenfell Lehman Brothers Bankhaus AG
Deutsche Bank Aktiengesellschaft
Morgan Stanley Dean Witter Paribas
Banque Paribas-Zweigniederlassung
Frankfurt am Main
Sterling Notes
Joint-lead Managers
-------------------
Barclays de Zoete Wedd Limited Merrill Lynch International
Co-lead Managers
----------------
Dresdner Kleinwort Benson HSBC Markets
J.P. Morgan Securities Ltd. NatWest Markets
SBC Warburg Dillon Read UBS Limited
No person has been authorized to give any information or to
make any representations not contained in this Prospectus Supplement or the
accompanying Prospectus in connection with the offer made by this
Prospectus Supplement and the accompanying Prospectus and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company or by any underwriter. This Prospectus
Supplement and the accompanying Prospectus shall not constitute an offer of
any securities other than the Securities. The Prospectus Supplement is
part of and must be read in conjunction with the accompanying Prospectus
dated August 13, 1997. Neither the delivery of this Prospectus Supplement
and the accompanying Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in
the affairs of the Company or its subsidiaries since the date hereof or
that the information contained herein is correct as of any time subsequent
to its date.
The distribution of this Prospectus Supplement and the
Prospectus and the offering of the Securities in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus Supplement
and the Prospectus come should inform themselves about and observe any such
restrictions. This Prospectus Supplement and the Prospectus do not
constitute, and may not be used in connection with, an offer or solicitation
by anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to any person to whom it is unlawful to make such offer
or solicitation. See "Underwriting".
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
INCLUDE PARTICULARS GIVEN IN COMPLIANCE WITH THE RULES GOVERNING THE LISTING OF
SECURITIES ON THE LUXEMBOURG STOCK EXCHANGE FOR THE PURPOSE OF GIVING
INFORMATION WITH REGARD TO THE COMPANY. THE COMPANY ACCEPTS FULL
RESPONSIBILITY FOR THE ACCURACY OF THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND CONFIRMS, HAVING MADE ALL
REASONABLE INQUIRIES, THAT TO THE BEST OF ITS KNOWLEDGE AND BELIEF THERE ARE NO
OTHER FACTS THE OMISSION OF WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING
IN ANY MATERIAL RESPECT.
IN CONNECTION WITH THIS OFFERING, MERRILL LYNCH
INTERNATIONAL OR MERRILL LYNCH CAPITAL MARKETS BANK LIMITED FRANKFURT/MAIN
BRANCH, ON BEHALF OF THE UNDERWRITERS, MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET, SUBJECT TO APPLICABLE LAWS, SUCH TRANSACTIONS MAY BE EFFECTED
ON THE LUXEMBOURG STOCK EXCHANGE, THE NEW YORK STOCK EXCHANGE, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
In this Prospectus Supplement, all amounts are expressed in
U.S. dollars ("U.S.$", "$" or "dollars"), Pound Sterling (" Pound Sterling"
or "Pounds Sterling"), or Deutsche Mark ("DM" or "Deutsche Mark"), except
as otherwise specified. On September 11, 1997, the noon buying rate for
cable transfers of DM and Pounds Sterling, as reported by the Federal
Reserve Bank of New York, was 1.7815 DM per dollar and .6263 Pounds
Sterling per dollar, respectively.
This Prospectus Supplement and the accompanying Prospectus,
together with the documents incorporated by reference herein and the Company's
financial statements for the years ended December 31, 1996 and December 31,
1995, are available free of charge at the office of Banque Generale du
Luxembourg S.A., 50 Avenue J.F. Kennedy, L-2951, Luxembourg.
TABLE OF CONTENTS
Prospectus Supplement
Description of General Motors Acceptance Corporation..... S-5
Ratio of Earnings to Fixed Charges....................... S-5
Consolidated Capitalization of the Company............... S-6
Selected Consolidated Financial Data..................... S-7
Directors of the Company................................. S-9
Description of Securities................................ S-10
Global Clearance and Settlement.......................... S-21
Currency Conversions and Foreign Exchange Risks.......... S-27
United States Taxation................................... S-29
Underwriting............................................. S-33
General Information...................................... S-36
Concerning the Trustee................................... S-36
Legal Opinions........................................... S-36
Prospectus
Available Information...................................... 2
Incorporation of Certain Documents by Reference............ 2
Principal Executive Offices................................ 3
Ratio of Earnings to Fixed Charges......................... 3
Use of Proceeds............................................ 3
Description of Debt Securities............................. 3
Description of Warrants.................................... 7
Plan of Distribution....................................... 8
Experts.................................................... 9
DESCRIPTION OF GENERAL MOTORS ACCEPTANCE CORPORATION
General Motors Acceptance Corporation, a wholly-owned
subsidiary of General Motors Corporation, was incorporated in 1919 under the
New York Banking Law relating to investment companies. Operating directly and
through subsidiaries and associated companies in which it has equity
investments, the Company offers a wide variety of automotive financial
services to and through franchised General Motors dealers in many countries
throughout the world. Financial services also are offered to other automobile
dealerships and to the customers of those dealerships. Other financial
services offered by the Company or its subsidiaries include insurance and
mortgage banking.
The principal business of the Company and its subsidiaries is
to finance the acquisition by franchised General Motors dealers for resale of
various new automotive and nonautomotive products manufactured by General
Motors Corporation or certain of its subsidiaries and associates, and to
acquire from such dealers, either directly or indirectly, installment
obligations covering retail sales and leases of new General Motors products as
well as used units of any make. In addition, new products of other
manufacturers are financed. The Company also leases motor vehicles and
certain types of capital equipment to others.
The automotive financing industry is highly competitive. The
Company's principal competitors are affiliated finance subsidiaries of other
major manufacturers as well as a large number of banks, commercial finance
companies, savings and loan associations and credit unions. The business of
the Company is influenced by its ability to offer competitive financing rates
which in turn is directly affected by its access to capital markets.
The Company has its principal office at 767 Fifth Avenue, New
York, New York 10153, United States and administrative offices at 3044 West
Grand Boulevard, Detroit, Michigan 48202, United States.
RATIO OF EARNINGS TO FIXED CHARGES
Six Months Ended June 30, Years Ended December 31,
------------------------- ------------------------
1997 1996 1996 1995
------ ------ ------ ------
1.47 1.43 1.41 1.36
The ratio of earnings to fixed charges has been computed by
dividing earnings before income taxes and fixed charges by the fixed charges.
See "Ratio of Earnings to Fixed Charges" in the accompanying
Prospectus for additional information.
CONSOLIDATED CAPITALIZATION OF THE COMPANY
(Unaudited)
(In millions of U.S. Dollars)
<TABLE>
<CAPTION>
June 30, 1997
<S> <C>
Notes, Loans and Debentures
Payable within one year.......................................................................... $48,095.6
Payable after one year........................................................................... 34,368.4
--------
Total notes, loans and debentures.............................................................. $82,464.0
========
Stockholder's Equity
Common stock, $100 par value (authorized 25,000,000 shares, outstanding 22,000,000
shares)........................................................................................ $2,200.0
Net income retained for use in the business...................................................... 6,034.9
Net unrealized gains on securities............................................................... 327.8
Unrealized accumulated foreign currency translation adjustment................................... (71.9)
--------
Total stockholder's equity..................................................................... $8,490.8
========
</TABLE>
There has been no material change in the consolidated
capitalization of the Company since June 30, 1997.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data derived
from the audited consolidated financial statements of the Company for the two
years ended December 31, 1996 and 1995 and from unaudited consolidated
financial statements for the six month periods ended June 30, 1997 and June
30, 1996. The Company believes that all adjustments necessary for the fair
presentation thereof have been made to the unaudited financial data. The
following information should be read in conjunction with the consolidated
financial statements and related notes incorporated by reference in the
accompanying Prospectus. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
June 30, December 31,
--------------------- ---------------------
1997 1996 1996 1995
---- ---- ---- ----
(in millions of U.S. Dollars)
Balance Sheet Data (at end of period) (1):
<S> <C> <C> <C> <C>
Cash and Cash Equivalents....................... $814.3 $960.4 $742.3 $1,448.6
EARNING ASSETS
Investments in securities....................... 5,280.2 4,363.7 4,556.8 4,328.2
Finance receivables, net........................ 61,292.7 59,331.9 58,380.0 60,404.9
Investment in operating leases, net............. 25,819.9 24,112.6 24,909.5 22,134.9
Notes Receivable from General Motors
Corporation ................................... 469.8 45.7 190.5 --
Real estate mortgages - held for sale........... 3,759.0 1,768.6 2,785.0 1,486.8
- held for investment.......................... 610.0 736.1 611.2 706.8
- lending receivables.......................... 1,448.8 767.0 1,404.6 710.1
Due and deferred from receivable sales, net..... 897.6 1,227.4 1,214.5 1,371.4
Other........................................... 1,314.1 928.1 1,617.6 871.0
--------- -------- -------- --------
Total earning assets........................... 100,892.1 93,283.1 95,669.7 92,014.1
--------- -------- -------- --------
Nonearning assets............................... 2,266.6 1,833.6 2,166.0 2,184.8
--------- -------- -------- --------
TOTAL ASSETS.................................... $103,973.0 $96,077.1 $98,578.0 $95,647.5
========= ======== ======== ========
Notes, loans and debentures payable within
one year........................................ $48,095.6 $43,165.9 $45,809.9 $43,871.8
--------- -------- -------- --------
ACCOUNTS PAYABLE AND OTHER
LIABILITIES
General Motors Corporation and affiliated
companies...................................... 1,302.0 1,959.1 646.6 1,787.6
Interest........................................ 1,150.0 1,166.0 1,065.2 1,048.0
Unpaid insurance losses and loss adjustment
expense........................................ 1,587.6 1,529.1 1,581.9 1,499.7
Unearned insurance premiums..................... 1,450.3 1,426.6 1,437.5 1,421.9
Deferred income taxes........................... 2,120.8 2,195.7 2,215.8 2,175.6
United States and foreign income and other
taxes payable.................................. 458.5 140.2 35.6 294.5
Other postretirement benefits................... 647.4 622.0 627.0 600.4
Other........................................... 4,301.6 4,320.4 4,012.0 3,628.1
--------- -------- -------- --------
Total accounts payable and other
liabilities..................................... 13,018.2 13,359.1 11,621.6 12,455.8
--------- -------- -------- --------
Notes, loans and debentures payable after
one year ....................................... 34,368.4 31,210.1 32,878.9 31,050.6
Common stock, $100 par value (authorized
25,000,000 shares, outstanding
22,000,000 shares)............................. 2,200.0 2,200.0 2,200.0 2,200.0
Net income retained for use in the business..... 6,034.9 5,893.8 5,775.2 5,734.7
Net unrealized gains on securities.............. 327.8 242.8 276.7 284.7
Unrealized accumulated foreign currency
translation adjustment.......................... (71.9) 5.4 15.7 49.9
--------- -------- -------- --------
Total stockholder's equity..................... 8,490.8 8,342.0 8,267.6 8,269.3
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY............................ $103,973.0 $96,077.1 $98,578.0 $94,647.5
========= ======== ======== ========
- ----------
(1) Certain amounts for 1996 have been reclassified to conform with 1997
classifications.
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
June 30, December 31,
--------------------- ----------------------
1997 1996 1996 1995
---- ---- ---- ----
(in millions of U.S. Dollars)
Income Statement Data (1):
<S> <C> <C> <C> <C>
FINANCING REVENUE
Retail and lease financing..................... $1,830.2 $1,913.2 $3,822.2 $3,291.6
Operating leases............................... 3,618.5 3,522.9 7,214.6 6,285.0
Wholesale and term loans....................... 903.4 867.4 1,607.0 2,087.4
------- ------- -------- --------
Total financing revenue....................... 6,352.1 6,303.5 12,643.8 11,664.0
Interest and discount.......................... (2,577.7) (2,464.3) (4,937.5) (4,936.3)
Depreciation on operating leases............... (2,312.4) (2,273.6) (4,627.0) (4,304.8)
------- ------- -------- --------
Net financing revenue......................... 1,462.0 1,565.6 3,079.3 2,422.9
Insurance premiums earned...................... 611.8 585.4 1,158.0 1,082.4
Other income................................... 1,235.1 987.9 2,171.9 2,116.8
------- ------- -------- --------
NET FINANCING REVENUE AND
OTHER....................................... 3,308.9 3,138.9 6,409.2 5,622.1
------- ------- -------- --------
EXPENSES
Salaries and benefits.......................... 524.1 481.6 974.3 892.8
Other operating expenses....................... 844.9 791.8 1,716.0 1,499.0
Insurance losses and loss adjustment
expenses...................................... 469.6 507.3 972.2 998.3
Provision for financing losses................. 257.2 289.8 669.0 448.8
------- ------- -------- --------
Total expenses................................ 2,095.8 2,070.5 4,331.5 3,838.9
------- ------- -------- --------
Income before income taxes..................... 1,213.1 1,068.4 2,077.7 1,783.2
United States, foreign and other income
taxes.......................................... 503.4 409.3 837.2 752.2
------- ------- -------- --------
NET INCOME.................................... 709.7 659.1 1,240.5 1,031.0
Net income retained for use in the business
at beginning of the year....................... 5,775.2 5,734.7 5,734.7 5,653.7
------- ------- -------- --------
Total.......................................... 6,484.9 6,393.8 6,975.2 6,684.7
Cash dividends................................. 450.0 500.0 1,200.0 950.0
------- ------- -------- --------
NET INCOME RETAINED FOR USE
IN THE BUSINESS AT END OF
THE YEAR....................................... $6,034.9 $5,893.8 $5,775.2 $5,734.7
======= ======= ======= =======
- ----------
(1) Certain amounts for 1996 have been reclassified to conform with 1997
classifications.
</TABLE>
DIRECTORS OF THE COMPANY
John G. Blahnik, Chief Financial Officer, Delphi Automotive
Systems Inc.; Richard J.S. Clout, Executive Vice President; Eric A.
Feldstein, Executive Vice President and Chief Financial Officer; John D.
Finnegan, Vice President and Treasurer, General Motors Corporation; John
E. Gibson, Executive Vice President; J. Michael Losh, Chairman, General
Motors Acceptance Corporation and Executive Vice President, General Motors
Corporation; Harry J. Pearce, Vice Chairman, General Motors Corporation;
W. Allen Reed, Vice President, General Motors Corporation; John R.
Rines, President and Chief Executive Officer, General Motors Acceptance
Corporation and Vice President and Group Executive, General Motors
Corporation; John F. Smith, Jr., Chairman, President and Chief Executive
Officer, General Motors Corporation; and Ronald L. Zarella, Vice President
and Group Executive, General Motors Corporation.
The above Directors do not hold any significant position
outside General Motors Corporation, the Company and their respective
subsidiaries.
The business address of each Director is 3044 West Grand
Boulevard, Detroit, Michigan 48202, United States.
DESCRIPTION OF SECURITIES
General
The following description of the particular terms of the
Securities offered hereby supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of
Debt Securities set forth in the Prospectus. The Securities are part of the
Debt Securities registered by the Company in August 1997 to be issued on terms
to be determined at the time of sale.
The Securities offered hereby will be issued pursuant to an
Indenture dated as of July 1, 1982, as amended and supplemented (the
"Indenture"), which is more fully described in the accompanying Prospectus.
The Securities are not redeemable by the Company prior to
maturity unless certain events occur involving U.S. taxation. See
"--Redemption for Tax Reasons."
So long as the Securities are listed on the Luxembourg Stock
Exchange, as soon as possible after 11:00 A.M. (London time) on each Interest
Determination Date but in no event later than the first day of such Interest
Period, the Company shall notify the Luxembourg Stock Exchange by telex or
cable of the rates of interest , interest amount and the Interest Payment Date
(as defined below) for the next Interest Period (as defined below). The
Company shall notify the holders of the Securities of such rates of interest,
interest amount and Interest Payment Date as set forth under "--Notices" as
soon as possible after their determination but in no event later than the
fourth Business Day following the applicable Interest Determination Date
(except that no such notification or publication shall need to be given or
made, as the case may be, after the Securities have been declared due and
payable upon the occurrence of an event described under "Events of Default"
(as defined in the Prospectus)). The interest amounts and Interest Payment
Date so notified or published may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without notice in the
event of an extension or shortening of the Interest Period.
The interest rate on the Securities will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified
by United States law of general application. Under present New York law, the
maximum rate of interest is 25% per annum on a simple interest basis, with
certain exceptions. The limit may not apply to Securities in which $2,500,000
or more has been invested.
Form and Denominations and Registration
The Securities will be represented by one or more global
securities (collectively, the "Global Certificates") registered in the name of
Cede & Co., as nominee of DTC. The Global Certificates will be held by
Citibank N.A. at its New York branch ("Citibank NY"), as custodian for DTC.
The Securities will be issued only in fully registered form, without coupons,
and, in the case of any definitive Securities issued in exchange for the Global
Certificates, as provided below, in denominations of DM1,000 in the case of DM
Notes and Pound Sterling1,000 in the case of Sterling Notes and, in both
cases, integral multiples thereof.
Except as set forth below, the Global Certificates may be
transferred, in whole and not in part, only to DTC, another nominee of DTC or
a successor of DTC or its nominee.
Beneficial interests in the Securities will be represented, and
transfers of such beneficial interests will be effected, through accounts of
financial institutions acting on behalf of beneficial owners as direct and
indirect participants in DTC. Such beneficial interests will be in
denominations of DM1,000 in the case of DM Notes and Pound Sterling1,000 in
the case of Sterling Notes and integral multiples thereof. Investors may hold
beneficial interests in the DM Notes through DTC, DKV, Euroclear or Cedel, if
they are participants in such systems, or indirectly through organizations
that are participants in such systems. DKV holds beneficial interests in the
DM Notes on behalf of its account holders through DKV's account at DTC.
Euroclear and Cedel are participants in DKV and DTC, and thereby hold
beneficial interests in the DM Notes on behalf of their own participants,
through their respective accounts at DKV and DTC. Investors may hold
beneficial interests in the Sterling Notes through DTC, Euroclear and Cedel,
if they are participants in such systems, or indirectly through organizations
that are participants in such systems. Euroclear and Cedel are participants
in DTC, and thereby hold beneficial interests in the Sterling Notes on behalf
of their participants, through their respective accounts at DTC.
Transfers of beneficial interests in the Securities between DTC
participants shall be effected in accordance with the procedures established
for this purpose by DTC. Transfers of beneficial interests in the DM Notes
between DKV account holders shall be effected in accordance with the
procedures established for this purpose by DKV. Transfers of beneficial
interests in the Securities between Euroclear participants, between Cedel
participants and between Euroclear participants on the one hand and Cedel
participants on the other hand shall be effected in accordance with procedures
established for these purposes by Euroclear and Cedel. Transfers of
beneficial interests in the DM Notes between Euroclear or Cedel participants
on the one hand and other DKV account holders on the other hand shall be
effected through DKV in accordance with the procedures established for this
purpose. See "Global Clearance and Settlement".
DTC may grant proxies or otherwise authorize DTC participants
(or persons holding beneficial interests in the Securities through such DTC
participants) to exercise any rights of a holder or take any other actions
that a holder is entitled to take under the Indenture or the Securities.
Under its usual procedures, DTC would mail an omnibus proxy to the Company
assigning the consent or voting rights of Cede & Co. to those DTC participants
to whose accounts the Securities are credited on a record date as soon as
possible after such record date.
Persons who are not DTC participants may beneficially own
Securities held by DTC only through direct or indirect participants in DTC
(including DKV, Euroclear and Cedel). So long as Cede & Co., as the nominee of
DTC, is the registered owner of the Global Certificates, Cede & Co. for all
purposes will be considered the sole holder of the Securities under the
Indenture and the Securities. Except as provided below, owners of beneficial
interests in the Securities represented by the Global Certificates will not be
entitled to have Securities registered in their names, will not receive or be
entitled to receive physical delivery of Securities in definitive form and will
not be considered to be the holders thereof under the Indenture or the
Securities. Accordingly, any person owning a beneficial interest in the
Securities represented by the Global Certificates must rely on the procedures
of DTC and, to the extent relevant, DKV, Euroclear or Cedel, and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder of
Securities. The Company understands that, under existing industry practice,
in the event that an owner of a beneficial interest in the Securities
represented by the Global Certificates desires to take any action that Cede &
Co., as the holder of such Global Certificates, is entitled to take, Cede &
Co. would authorize the participants to take such action, and the participants
would authorize beneficial owners owning through such participants to take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
DM Notes
The DM Notes are to be issued in an aggregate principal amount
of DM750,000,000. The DM Notes will bear interest from and including
September 25, 1997. Interest on the DM Notes shall be payable quarterly in
arrears on March 25, June 25, September 25 and December 25 of each year,
commencing December 25, 1997 (each an "Interest Payment Date"), unless any
Interest Payment Date would otherwise fall on a day which is not a Banking
Day, in which case the Interest Payment Date shall be the immediately
succeeding Banking Day, unless it would thereby fall into the next calendar
month, in which case the Interest Payment Date shall be the immediately
preceding Banking Day. The record date (the "Record Date") for all payments
of interest on the DM Notes will be the close of business on March 10, June
10, September 10 or December 10, as the case may be, next preceding the
applicable Interest Payment Date. Transfers or exchanges of beneficial
interests in the Global Certificate representing the DM Notes may not be
effected during the period commencing on the Record Date and ending on the
related Interest Payment Date (both dates inclusive). Interest will be
calculated on the basis of actual days over 360. "Banking Day" means any day
that is not a day on which banking institutions in The City of New York,
London, or Frankfurt am Main are generally authorized or obligated by law,
regulation or executive order to close. Other than the initial interest
period which will commence on and include the issue date, each period of three
months commencing on and including an Interest Payment Date and lapsing at the
end of the day immediately preceding the next Interest Payment Date is
referred to as an "Interest Period".
The rate of interest and the amounts of Deutsche Mark payable
in respect of each Interest Period shall be determined on the second Banking
Day prior to the commencement of each Interest Period (the "Interest
Determination Date") by Citibank AG, Frankfurt-am-Main ("Citibank Frankfurt")
(in such capacity, the "DM Agent Bank"). For each Interest Period, the rate
of interest per annum shall be equal to three-month-DM-LIBOR plus .125%, as
applicable to such Interest Period. "Three-month DM-LIBOR" means the interest
rate expressed in decimal figures published by Telerate on the basis of the
interest rates for three-month-DM-deposits in the London interbank market
quoted to Telerate by banks designated by the British Bankers' Association and
published two Banking Days preceding the commencement of the relevant Interest
Period as of 11:00 a.m. (London time) as "BBA Interest Settlement rate" (at
present on Telerate page "3750"). In the event that the DM Agent Bank is
unable to determine Three-month DM-LIBOR, as neither Telerate nor, as the case
may be, a newly or additionally appointed publication agency quotes the
interest rate or the DM Agent Bank cannot determine Three-month DM-LIBOR for
other reasons, it will be replaced by the arithmetic mean calculated by the DM
Agent Bank of the rates quoted at the above mentioned time by six prime banks
(quoted on the Dow Jones' Telerate page "3752") in London determined by the DM
Agent Bank (except that such average will exclude the highest such rate and
the lowest such rate) as the interest rate per annum for their
three-month-DM-deposits, respectively, to prime banks in the London interbank
market. If such arithmetic mean has to be calculated it shall be rounded, if
necessary to the nearest 1/100000%, with 0.000005 being rounded upwards.
If by any of the means mentioned herein, no interest rate can
be determined then the rate of interest applicable to the next Interest Period
shall be a substitute interest rate (the "Substitute Interest Rate"). The
Substitute Interest Rate for DM Notes shall be the rate which is equal to the
arithmetic mean calculated by the DM Agent Bank of the rates which at least
two prime banks in Frankfurt am Main determined by the DM Agent Bank are
quoting to the DM Agent Bank on such Interest Determination Date (or, for the
purposes of this provision only, if such date should not be a Banking Day, on
the immediately succeeding Banking Date), at or about 11:00 a.m. (London time)
as the interest rate per annum for their three-month-DM-deposits in the case
of the following interest periods, to prime European banks outside Germany for
the next Interest Period, plus .125%. If applicable, such arithmetic mean
shall be rounded, if necessary, to the nearest 1/100000%, with 0.000005 being
rounded upwards. If no Substitute Interest Rate can be determined then the
rate of interest applicable to the next Interest Period shall be the current
rate of interest of the DM Notes in effect on that Interest Determination Date.
Payment
In respect of the DM Notes the Company has appointed Citibank
Frankfurt as registrar and transfer agent under the Indenture and as paying
agent under the Indenture (the "DM Paying Agent"). For as long as any DM
Notes shall be outstanding there shall always be a Registrar and a Paying
Agent to perform the functions assigned to any of them in this description of
DM Notes. The Company has appointed Citibank (Luxembourg) S.A. as paying and
transfer agent in Luxembourg with respect to the DM Notes; as long as the DM
Notes are listed on the Luxembourg Stock Exchange, the Company will maintain a
paying and transfer agent in Luxembourg.
Payments of principal of and interest on the DM Notes shall be
made to the registered holder of the Global Certificate representing the DM
Notes in U.S.$ or Deutsche Mark as set forth below.
Any noteholder holding DM Notes through DTC (a "DTC
Noteholder") shall, other than in the case of DKV, receive payments of
principal and interest in respect of the DM Notes in U.S. dollars, unless such
DTC Noteholder, other than DKV, elects to receive payments in Deutsche Mark in
accordance with the procedures set out below. To the extent that DTC
Noteholders, other than DKV, shall not have made such election in respect of
any payment of principal or interest, the aggregate amount designated for all
such DTC Noteholders in respect of such payment (the "DM Conversion Amount")
shall be converted by the DM Paying Agent into U.S. dollars and paid by wire
transfer of same day funds to the registered holder of the Global Certificate
representing the DM Notes for payment through DTC's settlement system to the
relevant DTC participants. DKV (in its capacity as a DTC direct participant
and as an indirect participant in DTC) and any persons who hold beneficial
interests in the DM Notes directly or indirectly through DKV (including
Euroclear and Cedel and their respective participants) (i) shall receive all
payments in Deutsche Mark without making any such election and (ii) may not
elect to receive payments in other than Deutsche Mark. All costs of any
conversion shall be borne by the relevant holders of beneficial interests
receiving such payments by deduction from such payments. Any such conversion
shall be based on Citibank NY's bid quotation, at or prior to 11:00 a.m., New
York time, on the second New York Business Day preceding the relevant payment
date, for the purchase of U.S. dollars with Deustche Mark for settlement on
such payment date. If such bid quotation is not available, payment of the DM
Conversion Amount will be made in Deutsche Mark to the account or accounts
specified by DTC to the DM Paying Agent.
Any DTC Noteholder (other than DKV) may elect to receive
payment of principal and interest with respect to the DM Notes in Deutsche
Mark by causing DTC through the relevant DTC participant to notify the DM
Paying Agent by the time specified below of (i) such DTC Noteholder's election
to receive all or a portion of such payment in Deutsche Mark and (ii) wire
transfer instructions to a Deutsche Mark account in the Federal Republic of
Germany. Such election in respect of any payment shall be made by the DTC
Noteholder at the time and in the manner required by the DTC procedures
applicable from time to time and shall, in accordance with such procedures, be
irrevocable. See "Currency Conversion and Foreign Exchange Risks". DTC's
notification of such election, wire transfer instructions and of the amount
payable in Deutsche Mark must be received by the DM Paying Agent prior to 5:00
p.m. New York time on the fifth New York Business Day following the relevant
Record Date in the case of interest and prior to 5:00 p.m. New York time on
the eighth New York Business Day prior to the payment date for the payment of
principal. "New York Business Day" means a day on which banking institutions
in The City of New York are not generally authorized or obligated by law,
regulation or executive order to close. Any payments in Deutsche Mark shall
be made by wire transfer of same day funds to Deutsche Mark accounts
designated by DTC. All costs of such payments by wire transfer will be borne
by noteholders receiving such payments by deduction from such payments.
Upon receipt of any payment in U.S. dollars of principal or of
interest on the Global Certificate in respect of DM Notes, DTC will credit DTC
participants' accounts with payment in amounts proportionate to their
respective beneficial interests in the principal amount of the respective
Global Certificate as shown on the records of DTC. Payments by DTC
participants to owners of beneficial interests in the Global Certificate in
respect of DM Notes held through such participants will be the responsibility
of such participants, as is now the case with securities held for the accounts
of customers registered in "street name". Distributions with respect to DM
Notes held through DKV, Euroclear or Cedel will be credited to the cash
accounts of DKV, Euroclear participants or Cedel participants in accordance
with the relevant system's rules and procedures, to the extent received by its
depositary. Neither the Company, the Trustee, nor the Exchange Rate Agent
will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests
in the Global Certificate in respect of the DM Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Any moneys held by the DM Paying Agent in respect of the DM
Notes and remaining unclaimed for two years after such amount shall have
become due and payable shall be returned to the Company, and the holder of
such DM Note shall thereafter look only to the Company for any payment to
which such holder may be entitled.
A copy of the Global Certificate representing the DM Notes, as
well as a German-language translation of such certificates, may be obtained
free of charge at the office of the DM Paying Agent.
Sterling Notes
The Sterling Notes are to be issued in an aggregate principal
amount of Pound Sterling300,000,000. The Sterling Notes will bear interest
from and including September 25, 1997. Interest on the Sterling Notes shall
be payable quarterly in arrears on March 25, June 25, September 25 and
December 25 of each year, commencing December 25, 1997, to the persons in
whose names the Sterling Notes are registered at the close of business on the
preceding March 10, June 10, September 10 or December 10, as the case may be.
Interest will be calculated on the basis of actual days over 365/6. If any
Interest Payment Date (as defined under "Description of Securities--DM Notes")
would otherwise fall on a day which is not a Banking Day (as defined under
"Description of Securities--DM Notes") the Interest Payment Date will be the
immediately succeeding Banking Day, unless it would thereby fall into the next
calendar month, in which event the Interest Payment Date shall be the
immediately preceding Banking Day.
The rate of interest and the amounts of Pounds Sterling payable
in respect of each Interest Period (as defined under "Description of
Securities--DM Notes"), shall be determined on the Interest Determination Date
(which in case of the Sterling Notes shall be the day of the commencement of
the relevant Interest Period) by Citibank N.A. London Branch or its successor
(the "Agent Bank"). For each Interest Period, the rate of interest per annum
shall be equal to the Three-month-LIBOR plus .125%, as applicable to such
Interest Period. "Three-month-LIBOR" means the interest rate expressed in
decimal figures published by Telerate Monitor Screen ("Telerate") on the basis
of the interest rates for three-month-Pounds-Sterling-deposits in the London
interbank market quoted to Telerate by banks designated by the British
Bankers' Association and published on the day of the commencement of the
relevant Interest Period as of 11:00 a.m. (London time) as "BBA Interest
Settlement Rate" (at present on Telerate page "3750"). In the event that the
Agent Bank is unable to determine the applicable Three-month-LIBOR for other
reasons, it shall be replaced by the arithmetic mean calculated by the Agent
Bank of the rates quoted at the above mentioned time by six prime banks in
London (quoted on the Dow Jones' Telerate page "3751") determined by the Agent
Bank (except that such average will exclude the highest such rate and the
lowest such rate) as the interest rate per annum for their
three-month-Pounds-Sterling-deposits to prime banks in the London interbank
market. If such arithmetic mean has to be calculated it shall be rounded, if
necessary, to the nearest 1/100000%, with 0.000005 being rounded upwards.
If by any of the means mentioned herein, no interest rate can
be determined then the rate of interest applicable to the next Interest Period
shall be the Substitute Interest Rate. The Substitute Interest Rate for
Sterling Notes shall be the rate which is equal to the arithmetic mean
calculated by the Agent Bank of the rates which at least two prime banks in
London determined by the Agent Bank are quoting to the Agent Bank on such
Interest Determination Date or, if such date should not be a Banking Day, on
the immediately succeeding Banking Day, at or about 11:00 a.m. (London time)
as the interest rate per annum for their three-month-Pounds-Sterling-deposits
in the case of the following interest periods, to prime European banks outside
London for the next Interest period, plus .125%. If applicable, such
arithmetic mean shall be rounded, if necessary, to the nearest 1/100000%, with
0.000005 being rounded upwards. If no Substitute Interest Rate can be
determined then the rate of interest applicable to the next Interest Period
shall be the current rate of interest of the Sterling Notes in effect on that
Interest Determination Date.
Payment
In respect of the Sterling Notes the Company has appointed
Citibank N.A. London branch ("Citibank London") as registrar and transfer
agent under the Indenture and as paying agent under the Indenture. For so long
as Sterling Notes shall be outstanding there shall always be a Registrar and
Paying Agent to perform the functions assigned to any of them in this
description of Sterling Notes. The Company has appointed Citibank (Luxembourg)
S.A. as paying and transfer agent in Luxembourg with respect to the Sterling
Notes; as long as the Sterling Notes are listed on the Luxembourg Stock
Exchange, the Company will maintain a paying and transfer agent in Luxembourg.
Payment of principal of and interest on the Global Certificate
representing the Sterling Notes will be payable to Cede & Co., the nominee for
DTC, as the registered owner. The principal of and interest on the Sterling
Notes will be payable in Pounds Sterling. However, registered holders of
Sterling Notes, including DTC or its nominee as the registered holder of the
Global Certificate but excluding Euroclear or Cedel and investors who hold
beneficial interests in the Sterling Notes, directly or indirectly, through
Euroclear or Cedel, will be paid in U.S. dollars converted from such payments
by Citibank NY, or its successor, as exchange rate agent (the "Exchange Rate
Agent"), unless the registered holder elects to receive payments in Pounds
Sterling as described below; provided, however, that Euroclear and Cedel may
not elect to receive payments in other than Pounds Sterling. All costs of
conversion will be borne by registered holders receiving U.S. dollar payments
by deduction from such payments. The U.S. dollar amount of any payment of
principal or interest to be received by such a registered holder not electing
Pounds Sterling payments will be based on the Exchange Rate Agent's bid
quotation, at or prior to 11:00 a.m., New York City time, on the second New
York Business Day preceding the relevant payment date, for the purchase of
U.S. dollars with Pounds Sterling for settlement on such payment date. If
such bid quotation is not available, all such payments will be made in Pounds
Sterling. As long as Sterling Notes continue to be represented by a global
Certificate, dollar payments so converted will be paid to Cede & Co. for
payment to DTC Participants in accordance with customary procedures
established from time to time by DTC. Owners of beneficial interests in the
Global Certificate may elect through DTC to receive payment in Pounds Sterling
as described herein, in which case the Trustee under the Indenture will
arrange for the transfer of such Pounds Sterling amounts directly to accounts
designated by DTC on behalf of its participants. See "Currency Conversions
and Foreign Exchange Risks".
The amounts in Pounds Sterling payable by the Paying Agent to
DTC with respect to the Sterling Notes held through DTC will be paid in Pounds
Sterling by wire transfer of same day funds to the designated Pounds Sterling
accounts of DTC participants entitled to receive the relevant payment who make
an irrevocable election to receive that payment in Pounds Sterling. The
Exchange Rate Agent, after converting Pounds Sterling amounts into U.S.
dollars as necessary to make payments in U.S. dollars, will deliver U.S.
dollar amounts in same day funds to DTC or its nominee for payment through its
settlement system to DTC participants entitled to receive the relevant payment.
Upon receipt of any payment in U.S. dollars of principal or of
interest on the Global Certificate in respect of Sterling Notes, DTC will
credit DTC participants' accounts with payment in amounts proportionate to
their respective beneficial interests in the principal amount of the
respective Global Certificate as shown on the records of DTC. Payments by DTC
participants to owners of beneficial interests in the Global Certificate in
respect of Sterling Notes held through such participants will be the
responsibility of such participants, as is now the case with securities held
for the accounts of customers registered in "street name". Distributions with
respect to Sterling Notes held through Euroclear or Cedel will be credited to
the cash accounts of Euroclear participants or Cedel participants in
accordance with the relevant system's rules and procedures, to the extent
received by its depositary. Neither the Company, the Trustee, nor the
Exchange Rate Agent will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Certificate in respect of the Sterling Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Any moneys held by Citibank London, as Paying Agent, in respect
of the Sterling Notes and remaining unclaimed for two years after such amount
shall have become due and payable shall be returned to the Company, and the
holder of such Sterling Note shall thereafter look only to the Company for any
payment to which such holder may be entitled.
Definitive Securities
If DTC notifies the Company that it is unwilling or unable to
continue as depositary for the Global Certificate or ceases to be a clearing
agency registered under the U.S. Securities Exchange Act of 1934 (the
"Exchange Act") at a time when it is required to be and a successor depositary
is not appointed by the Company within 90 days after receiving such notice or
becoming aware that DTC is no longer so registered, or if an event of default
with respect to the Sterling Notes or the DM Notes, as the case may be, shall
have occurred and be continuing as described under "Description of Debt
Securities--Events of Default" in the Prospectus, the Company will issue or
cause to be issued Sterling Notes or DM Notes, as the case may be, in
definitive form in exchange for the Global Certificates. The Company may also
at any time and in its sole discretion determine not to have any of the
Sterling Notes or DM Notes, as the case may be, represented by a Global
Certificate, and, in such event, will issue or cause to be issued Sterling
Notes or DM Notes, as the case may be, in definitive form in exchange for the
applicable Global Certificate. Sterling Notes and DM Notes issued in
definitive form will be issued only in fully registered form, without coupons,
in denominations of Pound Sterling1,000 and DM 1,000, respectively, and in
both cases in integral multiples thereof, in the amount of each holder's
registered holdings. Any Sterling Notes or DM Notes, as the case may be, so
issued will be registered in such names, and in such denominations, as DTC
shall request. Such Sterling Notes or DM Notes, as the case may be, may be
presented for registration of transfer or exchange at the office of the
Trustee in The City of New York and principal thereof and interest thereon
will be payable at such office of the Trustee, provided that interest thereon
may be paid by check mailed to the registered holders of the definitive
Sterling Notes or DM Notes, as the case may be. In the event definitive
Securities are issued, the holders thereof will be able to receive payments
thereon and effect transfers thereof at the offices of Citibank (Luxembourg)
S.A. or its successor as paying and transfer agent in Luxembourg with respect
to the Securities.
Further Issues
The Issuer may from time to time, without notice to or the
consent of the registered holders of the Securities, create and issue further
securities ranking pari passu with the Securities in all respects (or in all
respects except for the payment of interest accruing prior to the issue date
of such further Securities or except for the first payment of interest
following the issue date of such further Securities) and so that such further
Securities may be consolidated and form a single series with the Securities
and have the same term as to status, redemption or otherwise as the Securities.
Notices
Notices to holders of the Securities will be published in
authorized newspapers in The City of New York, in London, in Frankfurt am Main
and, so long as the Securities are listed on the Luxembourg Stock Exchange, in
a daily newspaper of general circulation in Luxembourg. It is expected that
publication will be made in The City of New York in The Wall Street Journal,
in London in The Financial Times, in Frankfurt am Main in the Borsen-Zeitung
and in Luxembourg in the Luxemburger Wort. Any such notice shall be deemed to
have been given on the date of such publication or, if published more than
once, on the date of the first such publication.
Judgments
The Indenture and the Securities are governed by and construed
in accordance with the laws of the State of New York. A judgment for money in
an action based on the Securities in a Federal or state court in the United
States (other than in New York as described below) ordinarily would be
enforced in the United States only in U.S. dollars. The date used to
determine the rate of conversion into U.S. dollars will depend upon various
factors, including which court renders the judgment. However, in the event an
action based on the Securities were commenced in a State court in New York,
the Judiciary Law of the State of New York would require that such court grant
judgment in Deutsche Mark or Pounds Sterling, as the case may be, but that
such judgment be converted into U.S. dollars at the rate of exchange
prevailing on the date of entry of the judgment.
Payment of Additional Amounts
The Company will pay to the holder of any Security who is a
non-United States person (as defined below) such additional amounts as may be
necessary in order that every net payment in respect of the principal, premium,
if any, or interest, if any, on such Security, after deduction or withholding
by the Company or any paying agent for or on account of any present or future
tax, assessment or governmental charge imposed upon or as a result of such
payment by the United States or any political subdivision or taxing authority
thereof or therein, will not be less than the amount provided for in such
Security to be then due and payable before any such deduction or withholding
for or on account of any such tax, assessment or governmental charge;
provided, however, that the foregoing obligation to pay such additional
amounts shall not apply to:
(a) any tax, assessment or other governmental charge which would
not have been so imposed but for (i) the existence of any present or
former connection between such holder (or a fiduciary, settlor,
beneficiary, member or shareholder of, or holder of a power over, such
holder, if such holder is an estate, trust, partnership or
corporation) and the United States, including, without limitation,
such holder (or such fiduciary, settlor, beneficiary, member,
shareholder of, or holder of a power) being or having been a citizen
or resident or treated as a resident thereof or being or having been
engaged in a trade or business therein or being or having been present
therein or having or having had a permanent establishment therein, or
(ii) such holder's present or former status as a personal holding
company or foreign personal holding company or controlled foreign
corporation for United States federal income tax purposes or
corporation which accumulates earnings to avoid United States federal
income tax;
(b) any tax, assessment or other governmental charge which would
not have been so imposed but for the presentation by the holder of
such Security for payment on a date more than 30 days after the date
on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer, personal
property or excise tax or any similar tax, assessment or governmental
charge;
(d) any tax, assessment or other governmental charge which is
payable otherwise than by withholding from payments in respect of
principal of, premium, if any, or interest, if any, on any Security;
(e) any tax, assessment or other governmental charge imposed on
interest received by a holder or beneficial owner of a Security who
actually or constructively owns 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote
within the meaning of Section 871(h)(3) of the United States Internal
Revenue Code;
(f) any tax, assessment or other governmental charge imposed as
a result of the failure to comply with (i) certification, information,
documentation, reporting or other similar requirements concerning the
nationality, residence, identity or connection with the United States
of the holder or beneficial owner of the Security, if such compliance
is required by statute, or by regulation of the United States Treasury
Department, as a precondition to relief or exemption from such tax,
assessment or other governmental charge (including backup withholding)
or (ii) any other certification, information, documentation, reporting
or other similar requirements under United States income tax laws or
regulations that would establish entitlement to otherwise applicable
relief or exemption from such tax, assessment or other governmental
charge;
(g) any tax, assessment or other governmental charge required to
be withheld by any paying agent from any payment of the principal of,
premium, if any, or interest, if any, on any Security, if such payment
can be made without such withholding by at least one other paying
agent; or
(h) any combination of items (a), (b), (c), (d), (e), (f) or (g);
nor will such additional amounts be paid to any holder who is a fiduciary
or partnership or other than the sole beneficial owner of the Security to
the extent a settlor or beneficiary with respect to such fiduciary or a
member of such partnership or a beneficial owner of the Security would not
have been entitled to payment of such additional amounts had such
beneficiary, settlor, member or beneficial owner been the holder of the
Security.
The Securities are subject in all cases to any tax, fiscal or
other law or regulation or administrative or judicial interpretation
applicable thereto. Except as specifically provided under this heading
"Payment of Additional Amounts" and under the heading "Description of the
Securities--Redemption for Tax Reasons", the Company shall not be required to
make any payment with respect to any tax, assessment or governmental charge
imposed by any government or a political subdivision or taxing authority
thereof or therein.
As used under this heading "Payment of Additional Amounts" and
under the heading "Description of the Securities--Redemption for Tax Reasons"
the term "United States" means the United States of America (including the
States and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction, "United States person" means any
individual who is, for United States federal income tax purposes, a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any estate
or trust the income of which is subject to United States federal income
taxation regardless of its source and "non-United States person" means a
person who is not a United States person.
Redemption for Tax Reasons
If, as a result of any change in or amendment to the laws
(including any regulations or rulings promulgated thereunder) of the United
States or any political subdivision thereof or therein affecting taxation, or
any change in the official application or interpretation of such laws,
including any official proposal for such a change, amendment or change in the
application or interpretation of such laws, which change, amendment,
application or interpretation is announced or becomes effective after the date
of this Prospectus Supplement or which proposal is made after such date, or as
a result of any action taken by any taxing authority of the United States
which action is taken or becomes generally known after such date, or any
commencement of a proceeding in a court of competent jurisdiction in the
United States after such date, whether or not such action was taken or such
proceeding was brought with respect to the Company, there is, in such case, in
the written opinion of independent legal counsel of recognized standing to the
Company, a material increase in the probability that the Company has or may
become obligated to pay additional amounts (as described above under "Payment
of Additional Amounts"), and the Company in its business judgment, determines
that such obligation cannot be avoided by the use of reasonable measures
available to the Company, not including assignment of the Securities, the
Securities may be redeemed, as a whole but not in part, on any Interest
Payment Date thereafter, at the option of the Company, upon notice to the
Trustee and the holders of the Notes in accordance with the provisions of the
Indenture at a redemption price equal to 100% of the principal amount of the
Securities to be redeemed together with accrued interest thereon to the date
fixed for redemption.
Redenomination, Renominalization and Consolidation
European Monetary Union
Under the treaty establishing the European Community (the
"EC"), as amended by the treaty on European Union (the "Treaty"), to which
each of the Federal Republic of Germany and the United Kingdom is a party, it
is provided that no later than January 1, 1999, and subject to the fulfillment
of certain conditions, the third stage of European economic and monetary union
("EMU") will start with the introduction of a new single European currency,
substituting all or some of the 15 currencies of the Member States of the EC,
including the Deutsche Mark and Pound Sterling. Such new currency is to be
named the "euro". The euro shall be divided into one hundred cents and
references herein to the "euro" and the "cent" are to such new currency
adopted pursuant to the Treaty.
Redenomination
The Company may, without the consent of the holders of the
Securities, on giving at least 30 days' prior notice to the holders of the
Securities in accordance with the Indenture (which notice shall detail the
manner in which any such action by the Company shall be effected), elect that,
with effect from any Interest Payment Date as may be specified in such notice
(the "Redenomination Date") falling on or after the start of the third stage of
EMU (or if, in the case of DM Notes, the Federal Republic of Germany is not
one of the countries then participating in such third stage, falling on or
after such later date as it does so participate or, if in the case of Sterling
Notes, the United Kingdom is not one of the countries then participating in
such third stage, falling on or after such later date as it does so
participate), each DM Note or Sterling Note, as the case may be, shall be
deemed to be denominated in such amount of euro as is equivalent to its
denomination in Deutsche Mark or Pound Sterling, as the case may be, converted
into euro at the rate for the conversion of Deutsche Mark or Pound Sterling,
as the case may be, established by the Council of the European Union pursuant
to the Treaty and rounded to the nearest cent. Upon such redenomination the
holders of the DM Notes or the Sterling Notes, as the case may be, shall not
be entitled to request delivery of certificates representing such
redenominated amounts. On and after the Redenomination Date all payments in
respect of the DM Notes or the Sterling Notes, as the case may be, will be
made solely in euro, including payments of interest with respect to periods
before the Redenomination Date.
Renominalization
In connection with any such redenomination and simultaneously
therewith, the Company may, without the consent of the holders of the DM Notes
or the Sterling Notes, as the case may be, on giving notice in the manner set
forth above under "-Redenomination," elect that the nominal amount of each
such redenominated DM Note or Sterling Note, as the case may be, shall be
altered in such manner and subject to such procedures as the Trustee, after
consultation with the Company, shall determine to be consistent with market
practices applicable for the renominalization of eurobonds held in national
and international clearing systems. Upon such renominalization the holders of
the DM Note or Sterling Note, as the case may be, shall not be entitled to
request delivery of certificates representing such renominalized amounts.
Any fraction, if any, arising from such renominalization shall be paid to the
holder of the DM Note or Sterling Note, as the case may be, on the
Redenomination Date, in addition to the payment of interest otherwise payable
on such date.
In connection with any such redenomination and simultaneously
therewith, the Company may also, without the consent of the holders of the DM
Note or Sterling Note, as the case may be, on giving notice in the manner set
forth above under "-Redenomination", elect that the nominal amount of any DM
Note or Sterling Note, as the case may be, deemed to have been redenominated
in an amount of euro shall be divided into smaller nominal amounts deemed to
be denominated in euro in such manner and subject to such procedures as the
Trustee, after consultation with the Company, shall determine to be consistent
with market practices applicable for the renominalization of eurobonds held in
national and international clearing systems. Upon such division, the DM Note
or Sterling Note, as the case may be, shall be deemed to be denominated in
such smaller nominal amounts of euro; provided, however, that the holders of
the DM Note or Sterling Note, as the case may be, shall not be entitled to
request delivery of certificates representing such smaller nominal amounts.
In connection with any such redenomination and/or
renominalization and either simultaneously therewith or on such later Interest
Payment Date as the Company may specify (the "Specified Date"), the Company
may also, without the consent of the holders of the DM Notes or the Sterling
Notes, as the case may be, on giving notice in the manner set forth above
under "-Redenomination," elect that with effect from such Specified Date, the
then existing DM Notes or the Sterling Notes, as the case may be (the
"Original Notes") shall be exchangeable at the specified office of the
Trustee, and at the specified offices of the Paying Agents, for new euro Notes
having the same nominal amount in euro as the deemed nominal amount of the
Original Notes so exchanged.
Consolidation
In connection with any such redenomination and/or
renominalization and either simultaneously therewith or on such later date as
the Company may specify (the "Consolidation Date"), the Company may also,
without the consent of the holders of the DM Notes or the Sterling Notes, on
giving notice in the manner set forth above under "- Redenomination", elect
that with effect from such Consolidation Date, the then existing DM Notes and
Sterling Notes shall be consolidated by way of merger so as to form a single
series of notes (the "Notes"); provided, however, that such consolidation may
only be carried out if such consolidated Notes (i) have, in respect of all
periods subsequent to such consolidation, the same terms and conditions and
(ii) will, with effect from such consolidation, be cleared and settled on an
interchangeable basis with the same International Securities Identification
Number through each clearing system through which the DM Notes and the
Sterling Notes are cleared and settled immediately prior to such
consolidation, as determined by the Trustee after consultation with the
Company.
Miscellaneous
References in this Prospectus Supplement to any Business Day,
day-count fraction or other convention (whether for the calculation of
interest, determination of payment dates or otherwise) shall, if different,
with effect from the Redenomination Date, be deemed to be modified to comply
with any conventions applicable to euro-denominated debt obligations pursuant
to applicable requirements of relevant monetary, stock exchange or other
authorities, applicable laws and regulations of the European Community, the
Federal Republic of Germany and the United Kingdom, as applicable, and such
market practices consistent therewith as the Trustee, after consultation with
the Company shall determine to be applicable for the redenomination,
renominalization and exchange of eurobonds held in national and international
clearing systems, and the terms and conditions of the DM Notes or the Sterling
Notes, as the case may be, shall be deemed to be amended accordingly.
Determinations of the Trustee will, in the absence of manifest error, be
conclusive and binding on the holders of the Securities.
In the event of the redenomination of the DM Notes or the
Sterling Notes, the rate of interest and amounts of euro payable in respect of
each Interest Period shall be the rate of interest per annum equal to .125%
plus the interest rate applicable to three-month-euro deposits in the London
interbank market as the same shall be determined by the DM Agent Bank or the
Agent Bank, as the case may be, or such other rate as is then customary for
determining floating- rate-euro interest rates in accordance with market
practices as determined by the DM Agent Bank or the Agent Bank, as the case
may be.
GLOBAL CLEARANCE AND SETTLEMENT
DM Notes
Although DKV, DTC, Euroclear and Cedel have agreed to the
procedures provided below in order to facilitate transfers of DM Notes among
participants of DKV, DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
modified or discontinued at any time. Neither the Company, the Trustee, nor
the DM Paying Agent will have any responsibility for the performance by DKV,
DTC, Euroclear or Cedel or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certification and Custody
Clearing and settlement arrangements, including the existing
links between DKV, Euroclear and Cedel and a specially created link between
these systems and DTC, will provide investors access to four major clearing
systems. At initial settlement, the DM Notes will be represented by one or
more permanent global certificates which will not be exchangeable for
definitive certificates representing individual notes except for the limited
circumstances described herein. Financial institutions that are participants
in DTC, including DKV, will hold beneficial interests in the DM Notes through
their accounts at DTC. In turn, Euroclear and Cedel will hold beneficial
interests in the DM Notes through DKV and, accordingly, investors electing to
hold such interests through financial institutions that are participants in
Euroclear and Cedel will hold indirect interests in the Global Certificate
representing the DM Notes.
Payment
Principal and interest payments on the DM Notes will be made by
the Company through the DM Paying Agent to the registered holder of the Global
Certificate representing the DM Notes in U.S. dollars or Deutsche Mark as set
forth under "Description of Securities--DM Notes--Payment." All payments duly
made by the Company to, or to the order of, the registered holder of the
Global Certificate representing the DM Notes, shall discharge the liability of
the Company under the DM Notes to the extent of the sum or sums so paid.
Therefore, after such payments have been duly made, neither the Company nor
the DM Paying Agent has any direct responsibility or liability for the payment
of principal or interest on the DM Notes to owners of beneficial interests in
the Global Certificate representing the DM Notes.
Payments by DTC participants and indirect DTC participants to
owners of beneficial interests in the Global Certificate representing the DM
Notes will be governed by standing instructions and customary practices, as is
now the case with securities held for the accounts of customers in bearer form
or registered in "street name", and will be the responsibility of the DTC
participants or indirect DTC participants. Neither the Company nor the DM
Paying Agent will have any responsibility or liability for any aspect of the
records of DTC relating to or payments made by DTC on account of beneficial
interest in the Global Certificate representing the DM Notes or for
maintaining, supervising or reviewing any records of DTC relating to such
beneficial interests.
The Clearing Systems
DKV is incorporated under the laws of Germany and acts as a
specialized depositary and clearing organization. DKV is subject to
regulation and supervision by the Bundesaufssichtsamt fur das Kreditwesen (the
German banking supervisory authority). DKV holds securities for its account
holders and facilitates the clearance and settlement of securities
transactions between them through electronic book-entry changes in securities
accounts with simultaneous payment in Deutsche Mark in same-day funds. Thus
the need for physical delivery of certificates is eliminated. DKV provides to
its account holders, among other things, services for safekeeping,
administration, clearance and settlement of domestic German and
internationally traded securities and securities lending and borrowing, DKV
Account Holders are banking institutions located in Germany, including German
branches of non-German financial institutions and securities brokers or
dealers admitted to a German stock exchange that meet certain additional
requirements. Indirect access to DKV is available to others such as
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and others, including individuals, that clear through or maintain
custodial relationships with DKV Account Holders either directly or indirectly.
Information regarding DTC, Euroclear and Cedel is set forth
herein under "Global Clearance and Settlement--Sterling Notes--The Clearing
Systems".
Initial Settlement
The Global Certificate representing the DM Notes will be
delivered at initial settlement to Citibank NY, as custodian for DTC. Initial
settlement for the DM Notes will be made in immediately available Deutsche Mark
funds (i.e. for value on the date of delivery of the DM Notes). However, the
Underwriters are prepared to arrange for the conversion of U.S. dollars into
Deutsche Mark to enable United States investors to make payments in Deutsche
Mark. See "Currency Conversions and Foreign Exchange Risks".
Customary settlement procedures will be followed for
participants of each system at initial settlement. Settlement procedures
applicable to the domestic Deutsche Mark market will be followed for primary
market purchasers which are DKV Account Holders, and DM Notes will be credited
to their securities accounts not later than the day after the settlement date
in New York, against payment in Deutsche Mark in same day funds. Settlement
procedures applicable to Deutsche Mark eurobonds will be followed for primary
market purchasers which are Euroclear or Cedel participants and DM Notes will
be credited to their securities accounts on the settlement date against
payment in same-day funds. Primary market purchasers which are DTC
participants can have their securities accounts with DTC credited with DM
Notes (i) "free of payment" if they have arranged for payment in Deutsche Mark
outside DTC and (ii) against payment in U.S. dollars in same-day funds on the
settlement date through DTC's Same-Day Funds Settlement system.
Secondary Market
Secondary market sales between purchasers within a single
clearing system and between Euroclear and Cedel Participants. Secondary
market sales of DM Notes for settlement within each clearing system and between
Euroclear and Cedel participants will be settled in accordance with the rules
and procedures established by that system. Settlement within DKV of regular
sales will be made on a two business-day basis. Sales to be settled within
Euroclear or Cedel and between Euroclear and Cedel will normally settle on a
three business-day basis unless parties specify a different period (which may
be as short as two business days). Sales to be settled within DTC will be
settled using the procedures applicable to U.S. corporate debt obligations in
DTC's Same-Day Funds Settlement System in same-day funds, if payment is
effected in U.S. dollars, or free of payment, if payment is not effected in
U.S. dollars. In such case, separate payment arrangements outside of DTC are
required to be made between the DTC Participants.
Secondary market sales between DKV Account Holders and
Euroclear or Cedel Participants. These trades normally settle on a three
business-day basis (unless parties specify a different period, which may be as
short as two business days).
Secondary market sales from a DTC Participant (other than DKV)
to a DKV Account Holder or a Euroclear or Cedel Participant. Prior to 5:00
p.m. Frankfurt time on the Business Day prior to settlement, a DTC participant
(other than DKV and its participants) selling beneficial interest in DM Notes
to a DKV account holder or a Euroclear or Cedel participant will deliver the
beneficial interests in DM Notes to DKV's account with DTC by means of DTC's
Deliver Order procedure, specifying the DKV account holder to whom such
beneficial interests are being sold. If such beneficial interests are being
sold to a Euroclear or a Cedel participant, DKV also must be notified of the
account number of the respective Euroclear or Cedel participant, as the case
may be, within the Euroclear or Cedel system, as the case may be, prior to
5:00 p.m. Frankfurt time on the Business Day prior to the settlement date.
Transactions between DKV and other DTC participants can only be made free of
payment; thus, separate payment arrangements outside of DTC are required to be
made. Notwithstanding the foregoing, transfers of beneficial interests in DM
Notes between DKV and Euroclear and between DKV and Cedel may be effected
against payment in Deutsche Mark within such systems.
Secondary market sales from a DKV Account Holder or a Euroclear
or Cedel Participant to a DTC Participant (other than DKV). Prior to 5:00
p.m. Frankfurt time on the Business Day prior to the settlement date, a DKV
account holder or Euroclear or Cedel, through DKV, for the account of one of
its participants, selling beneficial interests in DM Notes to a DTC
participant (other than DKV and its participants) must instruct DKV to transfer
such beneficial interests to such other DTC participant, indicating the
account number of such other participant. Transactions between DKV and other
DTC participants can only be made free of payment, thus separate payment
arrangements outside of DTC are required to be made. Notwithstanding the
foregoing, transfers of beneficial interests in DM Notes between DKV and
Euroclear and between DKV and Cedel may be effected against payment in DM
within such systems.
Sterling Notes
Although DTC, Euroclear and Cedel have agreed to the procedures
provided below in order to facilitate transfers of Sterling Notes among
participants of DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
modified or discontinued at any time. Neither the Company, the Agent Bank,
the Exchange Rate Agent, the Paying Agent nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
DTC, Euroclear and Cedel have advised the Company as follows:
The Clearing Systems
DTC. DTC is a limited purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Exchange Act. DTC
was created to hold securities for its participants and to facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. DTC participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations such as the
Underwriters. Indirect access to the DTC system also is available to indirect
DTC participants such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a DTC participant,
either directly or indirectly.
Because DTC can act only on behalf of DTC participants, who in
turn act on behalf of indirect DTC participants and certain banks, the ability
of an owner of a beneficial interest in the Global Certificates to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be limited by the lack
of a definitive certificate for such interest. The laws of some jurisdictions
require that certain persons take physical delivery of securities in
definitive form. Consequently, the ability to transfer beneficial interests
in a Global Certificate to such persons may be limited. In addition,
beneficial owners of Securities through the DTC system will receive
distributions of principal and interest on the Sterling Notes only through DTC
participants.
Euroclear and Cedel. Euroclear and Cedel hold securities for
participating organizations and facilitate the clearance and settlement of
securities transactions between their respective participants through
electronic book-entry changes in accounts of such participants. Euroclear and
Cedel provide to their participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Euroclear and Cedel
interface with domestic securities markets. Euroclear and Cedel participants
are financial institutions such as underwriters, securities brokers and
dealers, banks, trust companies and certain other organizations and include
certain of the Underwriters. Indirect access to Euroclear or Cedel is also
available to other such banks, brokers, a dealers and trust companies that
clear through or maintain a custodial relationship with a Euroclear or Cedel
participant, either directly or indirectly.
Distributions of principal and interest with respect to
Sterling Notes held through Euroclear or Cedel will be credited through DTC to
the cash accounts of Euroclear or Cedel Participants in accordance with the
relevant system's rules and procedures, to the extent received by such
system's depositary.
Initial Settlement
The Global Certificate representing the Sterling Notes will be
delivered at initial settlement to Citibank NY, as custodian for DTC. Initial
settlement for the Sterling Notes will be made in immediately available pound
sterling funds. However, the Underwriters are prepared to arrange for the
conversion of U.S. dollars into Pounds Sterling to enable United States
investors to make payment in Pounds Sterling. See "Currency Conversions and
Foreign Exchange Risks".
Investors electing to hold their Sterling Notes through DTC
(other than through accounts at Euroclear or Cedel) will follow the settlement
practices applicable to U.S. corporate debt obligations. The securities
custody accounts of investors will be credited with their holdings against
payment in same-day funds on the settlement date.
Investors electing to hold their Sterling Notes through
Euroclear or Cedel accounts will follow the settlement procedures applicable
to conventional eurobonds in registered form. Securities will be credited to
the securities custody accounts of Euroclear and Cedel holders on the business
day following the settlement date against payment for value on the settlement
date.
Secondary Market Trading
Because the purchaser determines the place of delivery, it is
important to establish at the time of trading of any Sterling Notes where both
the purchaser's and seller's accounts are located to ensure that settlement
can be made on the desired value date.
Trading Between DTC Participants. Secondary market trading
between DTC participants (other than The Chase Manhattan Bank ("Chase") and
Citibank, N.A. ("Citibank") as depositories for Euroclear and Cedel,
respectively) will be settled using the procedures applicable to U.S.
corporate debt obligations in same-day funds.
Trading Between Euroclear and/or Cedel Participants. Secondary
market trading between Euroclear participants and/or Cedel participants will
be settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading Between DTC Seller and Euroclear or Cedel Purchaser.
When Sterling Notes are to be transferred from the account of a DTC
participant (other than Chase and Citibank as depositories for Euroclear and
Cedel, respectively) to the account of a Euroclear participant or a Cedel
participant, the purchaser must send instructions to Euroclear or Cedel
through a participant at least one business day prior to settlement.
Euroclear or Cedel, as the case may be, will instruct Chase or Citibank,
respectively, to receive the Sterling Notes against payment. Payment will
then be made by Chase or Citibank, as the case may be, to the DTC
participant's account against delivery of the Sterling Notes. After
settlement has been completed, the Sterling Notes will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Euroclear participants or Cedel participants'
account. Credit for the Sterling Notes will appear on the next day (European
time) and cash debit will be back-valued to, and the interest on the Sterling
Notes will accrue from, the value date (which would be the preceding day when
settlement occurs in New York). If settlement is not completed on the
intended value date (i.e.,, the trade fails), the Euroclear or Cedel cash
debit will be valued instead as of the actual settlement date.
Euroclear participants and Cedel participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
or credit, as they would for any settlement occurring within Euroclear or
Cedel. Under this approach, they may take on credit exposure to Euroclear or
Cedel until the Sterling Notes are credited to their accounts one day later.
As an alternative, if Euroclear or Cedel has extended a line of
credit to them, participants can elect not to pre-position funds and allow
that credit line to be drawn upon to finance settlement. Under this
procedure, Euroclear participants or Cedel participants purchasing Sterling
Notes would incur overdraft charges for one day, assuming they cleared the
overdraft when the Sterling Notes were credited to their accounts. However
interest on the Sterling Notes would accrue from the value date. Therefore,
in many cases, the investment income on Sterling Notes earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each participant's particular
cost of funds.
Because the settlement is taking place during New York business
hours, DTC participants can employ their usual procedures for sending Sterling
Notes to Chase or Citibank for the benefit of Euroclear participants or Cedel
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant, a cross-market transaction
will settle no differently from a trade between two DTC participants.
Trading Between Euroclear or Cedel Seller and DTC Purchaser.
Due to time zone differences in their favor, Euroclear participants and Cedel
participants may employ their customary procedures for transactions in which
Sterling Notes are to be transferred by the respective clearing system,
through Chase or Citibank to another DTC participant. The seller must send
instructions to Euroclear or Cedel through a participant at least one business
day prior to settlement. In these cases, Euroclear or Cedel will instruct
Chase or Citibank, as appropriate, to credit the Sterling Notes to the DTC
participant's account against payment. The payment will then be selected in
the account of the Euroclear participant or Cedel participant the following
business day, and receipt of the cash proceeds in the Euroclear or Cedel
participant's account will be back-valued to the value date (which would be the
preceding day, when settlement occurs in New York). If the Euroclear
participant or Cedel participant has a line of credit with its respective
clearing system and elects to draw on such line of credit in anticipation of
receipt of the sale proceeds in its account, the back-valuation may
substantially reduce or offset any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Euroclear or
Cedel participant's account would instead be valued as of the actual
settlement date.
Settlement in other currencies between DTC and Euroclear and
Cedel is possible using free-of -payment transfers to move the Sterling Notes,
but funds movement will take place separately.
Finally, day traders that use Euroclear or Cedel and that
purchase Sterling Notes from DTC participants for credit to Euroclear
participants or Cedel participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(1) borrowing through Euroclear or Cedel for one day (until the
purchase side of the day trade is reflected in their Euroclear account
or Cedel account) in accordance with the clearing system's customary
procedures;
(2) borrowing the Sterling Notes in the United States from a DTC
participant no later than one day prior to settlement, which would
give the Sterling Notes sufficient time to be reflected in the
borrower's Euroclear account or Cedel account in order to settle the
sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC participant
is at least one day prior to the value date for the sale to the
Euroclear participant or Cedel participant.
CURRENCY CONVERSIONS AND FOREIGN EXCHANGE RISKS
Currency Conversions
Initial purchasers of DM Notes or Sterling Notes are required
to make payment in Deutsche Mark or Pounds Sterling, as the case may be. The
Underwriters are prepared to arrange for the conversion of U.S. dollars into
Deutsche Mark or Pounds Sterling, as the case may be, to enable investors in
the United States to make payment in Deutsche Mark or Pounds Sterling, as the
case may be. Each such conversion will be made by such Underwriter on such
terms and subject to such conditions, limitations and charges as such
Underwriter may from time to time establish in accordance with its regular
foreign exchange practices, and subject to applicable United States laws and
regulations. All costs of conversions will be borne by such investors. See
"--Foreign Exchange Risks".
The Company is required to make principal and interest payments
in respect of the DM Notes in DM and in respect of the Sterling Notes in
Pounds Sterling. However, registered holders of DM Notes or Sterling Notes,
including DTC or its nominee as the registered holder of the Global
Certificate representing the DM Notes and the Global Certificate representing
the Sterling Notes (but excluding DKV, Euroclear or Cedel and investors who
hold beneficial interests in the DM Notes or Sterling Notes, directly or
indirectly, through DKV, Euroclear or Cedel) will be paid in U.S. dollars
converted from such Deutsche Mark payments or Pounds Sterling payments, as the
case may be, by the DM Paying Agent or Exchange Rate Agent unless the holder
elects to receive payments in Deutsche Mark or Pounds Sterling as described
below; provided, however, that DKV may not elect to receive payments in other
than Deutsche Mark and Euroclear and Cedel may not elect to receive payments
in other than Deutsche Mark or Pounds Sterling. See "Description of
Securities--Sterling Notes--Payments" and "Description of Securities--DM
Notes--Payment".
As long as Sterling Notes or DM Notes continue to be
represented by a Global Certificate, an owner of a beneficial interest in the
Global Certificate may elect to receive payment in respect of principal or
interest on the Sterling Notes in Pounds Sterling or DM Notes in Deutsche Mark
by notifying the DTC participant though which its beneficial interest in the
Global certificate is held on or prior to the applicable record date of (i)
such investor's election to receive all or a portion of such payment in Pounds
Sterling or Deutsche mark, as the case may be, and (ii) wire transfer
instructions to a Pounds Sterling account with respect to any payment in
Pounds Sterling or Deutsche Mark account with respect to any payment in
Deutsche Mark. Such DTC participant must notify DTC of such election and wire
transfer instructions on or prior to the third New York Business Day after
such record date for any payment of interest and on or prior to the twelfth
day prior to the payment of principal. DTC will notify the Trustee of such
election and wire transfer instructions on or prior to the fifth New York
Business Day after such record date for any payment of interest and on or
prior to the eighth New York Business Day prior to the payment of principal.
If complete instructions are received by the DTC participant and forwarded by
the DTC participant to DTC and by DTC to the Trustee on or prior to such
dates, such investor will receive payment in Pounds Sterling or Deutsche Mark
outside DTC; otherwise only U.S. dollar payments will be made by the Trustee.
Investors may be subject to foreign exchange risks as to
payments of principal and interest that may have important economic and tax
consequences to them. For further information as to such consequences, see
"Foreign Exchange Risks" and "Taxation--United States Taxation".
Foreign Exchange Risks
An investment in the Securities that are denominated in, and
all payments in respect of which are to be made in, a currency other than the
currency of the country in which the purchaser is resident or the currency in
which the purchaser conducts its business or activities (the "home currency")
entails significant risks not associated with a similar investment in a
security denominated in the home currency. Such risks include, without
limitation, the possibility of significant changes in rates of exchange
between the home currency and the Deutsche Mark or Pounds Sterling and the
possibility of the imposition or modification of foreign exchange controls
with respect to the dollar, Deutsche Mark or Pounds Sterling. Such risks
generally depend on events over which the Company has no control, such as
economic and political events and the supply of and demand for the dollar,
Deutsche Mark or Pounds Sterling and the home currency. In recent years,
rates of exchange for certain currencies have been highly volatile and such
volatility may be expected to continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in such rate that may occur during the
term of the Securities. Depreciation of the Deutsche Mark or Pounds Sterling
against the relevant home currency could result in a decrease in the effective
yield of a particular security below its coupon rate and, in certain
circumstances could result in a loss to the investor on a home currency basis.
This description of foreign currency risks does not describe
all of the risks of an investment in securities denominated in a currency
other than the home currency. Prospective investors should consult their own
financial and legal advisers as to the risks involved in an investment in the
Securities.
UNITED STATES TAXATION
The following summary describes the material United States
federal income and estate tax consequences of ownership and disposition of the
Securities to initial holders purchasing DM Notes or Sterling Notes at the
first price to the public (not including bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers) at which a substantial amount of such DM Notes or
Sterling Notes, as the case may be, is sold. This summary is based on the
Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
administrative pronouncements, judicial decisions and existing and proposed
Treasury Regulations, changes to any of which subsequent to the date of this
Prospectus Supplement may affect the tax consequences described herein,
possibly with retroactive effect. This summary discusses only Securities held
as capital assets within the meaning of Section 1221 of the Code. The summary
does not discuss all of the tax consequences that may be relevant to a holder
in light of his particular circumstances or to holders subject to special
rules, such as certain financial institutions, insurance companies, dealers in
securities or foreign currencies, persons holding Securities in connection
with a hedging transaction, "straddle", conversion transaction or other
integrated transaction, United States persons whose functional currency (as
defined in Code Section 985) is not the U.S. dollar or nonresident alien
individuals who have ceased to be United States citizens or to be taxed as
resident aliens.
Persons considering the purchase of the Securities should
consult their tax advisors with regard to the application of the United States
federal income tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
As used herein, the term "United States person" means an owner
of a Security 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 or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source.
As used herein, the term "non-United States person" means an
owner of a Security that is, for United States federal income tax purposes,
(i) a nonresident alien individual, (ii) a foreign corporation, (iii) a
nonresident alien fiduciary of a foreign estate or trust or (iv) a foreign
partnership one or more of the members of which is, for United States federal
income tax purposes, a nonresident alien individual, a foreign corporation or
a nonresident alien fiduciary of a foreign estate or trust.
Tax Consequences to United States Persons
Payments of Interest
Interest paid on a Security will generally be taxable to a
United States person as ordinary interest income at the time it accrues or is
received in accordance with the United States person's method of accounting
for federal income tax purposes.
A United States person that uses the cash method of accounting
and receives a payment of interest with respect to a Security in U.S. dollars
will be required to include the amount of such payment in income upon receipt.
A cash method United States person that receives a payment of interest on a DM
Note in Deutsche Mark or a payment of interest on a Sterling Note in Pounds
Sterling, pursuant to the election described under "Description of
Securities--DM Notes--Payment" or "--Sterling Notes--Payment", as the case may
be, will be required to include in income the U.S dollar value of the foreign
currency payment (determined on the date such payment is received) regardless
of whether the payment is in fact converted to U.S. dollars at that time, and
such U.S. dollar value will be the United States person's tax basis in the
foreign currency.
A United States person that uses the accrual method of
accounting will be required to include in income the U.S. dollar value of the
amount of interest income that has accrued with respect to a Security during
an accrual period. The U.S. dollar value of such accrued income will be
determined by translating such income at the average rate of exchange for the
accrual period or, with respect to an accrual period that spans two taxable
years, at the average rate for the partial period within the taxable year.
Such United States person will recognize ordinary income or loss with respect
to accrued interest income on the date such income is actually received. The
amount of ordinary income or loss recognized will equal the difference between
the U.S. dollar value of the foreign currency payment received (determined on
the date such payment is received) in respect of such accrual period (or,
where a Holder receives U.S. dollars, the amount of such payment in respect of
such accrual period) and the U.S. dollar value of interest income that has
accrued during such accrual period (as determined above). A United States
person may elect to translate interest income into U.S. dollars at the spot
rate on the last day of the interest accrual period (or, in the case of a
partial accrual period, the spot rate on the last day of the taxable year) or,
alternatively, if the date of receipt or payment is within five business days
of the last day of the interest accrual period, the spot rate on the date of
receipt. A United States person that makes such an election must apply it
consistently to all debt instruments from year to year and cannot change the
election without the consent of the Internal Revenue Service. See
"Description of Securities--DM Notes--Payment" and "--Sterling Notes--Payment".
Sale, Exchange or Retirement of the Securities
Upon the sale, exchange or retirement of a Security, a United
States person will recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement and the United
States person's adjusted tax basis in the Security. For these purposes, the
amount realized does not include any amount attributable to accrued interest
on the Security. Amounts attributable to accrued interest are treated as
interest as described under "Payments of Interest" above. A United States
person's adjusted tax basis in a Security generally will equal the cost of the
Security to the United States person.
Except as described below, gain or loss realized on the sale,
exchange or retirement of a Security will be capital gain or loss.
Prospective investors should consult their tax advisers regarding the
treatment of capital gains (which may be taxed at a lower rate than ordinary
income for taxpayers who are individuals) and losses (the deductibility of
which is subject to limitations).
A United States person's tax basis in a Security, and the
amount of any subsequent adjustment to such Holder's tax basis, will be the
U.S. dollar value of the foreign currency amount paid for such Security, or of
the foreign currency amount of the adjustment, determined on the date of such
purchase or adjustment. A United States person who purchases a Security with
previously owned foreign currency will recognize ordinary income or loss in an
amount equal to the difference, if any, between such United States person's
tax basis in the foreign currency and the U.S. dollar fair market value of the
Security on the date of purchase.
Gain or loss realized upon the sale, exchange or retirement of
a Security that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss, which will not be treated as interest income
or expense. Gain or loss attributable to fluctuations in exchange rates will
equal the difference between (i) the U.S. dollar value of the foreign currency
principal amount of such Security, and any payment with respect to accrued
interest, determined on the date such payment is received or such Security is
disposed of, and (ii) the U.S. dollar value of the foreign currency principal
amount of such Security, determined on the date such United States person
acquired such Security, and the U.S. dollar value of the accrued interest
received, determined by translating such interest at the average exchange rate
for the accrual period or at a spot rate elected as described above. Such
foreign currency gain or loss will be recognized only to the extent of the
total gain or loss realized by a United States person on the sale, exchange or
retirement of the Security. The source of such foreign currency gain or loss
will be determined by reference to the residence of the United States person
or the "qualified business unit" of the United States person on whose books
the Security is properly reflected. Any gain or loss realized by a United
States person in excess of such foreign currency gain or loss will be capital
gain or loss.
A United States person will have a tax basis in any foreign
currency received on the sale, exchange or retirement of a Security equal to
the U.S. dollar value of such foreign currency, determined at the time of such
sale, exchange or retirement. Regulations issued under Section 988 of the Code
provide a special rule for purchases and sales of publicly traded Securities
by a cash method taxpayer under which units of foreign currency paid or
received are translated into U.S. dollars at the spot rate on the settlement
date of the purchase or sale. Accordingly, no exchange gain or loss will
result from currency fluctuations between the trade date and the settlement of
such a purchase or sale. An accrual method taxpayer may elect the same
treatment required of cash-method taxpayers with respect to the purchase and
sale of publicly traded Securities provided the election is applied
consistently. Such election cannot be changed without the consent of the
Internal Revenue Service. Any gain or loss realized by a United States person
on a sale or other disposition of foreign currency (including its exchange for
U.S. dollars or its use to purchase Securities) will be ordinary income or
loss.
Backup Withholding and Information Reporting
Certain noncorporate United States persons may be subject to
backup withholding at a rate of 31% on payments of principal, premium and
interest on, and the proceeds of disposition of, a Security. Backup withholding
will apply only if the United States person (i) fails to furnish its Taxpayer
Identification Number ("TIN") which, for an individual, would be his Social
Security number, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service that it has failed to properly report payments of
interest and dividends or (iv) under certain circumstances, fails to certify,
under penalty of perjury, that it has furnished a correct TIN and has not been
notified by the Internal Revenue Service that it is subject to backup
withholding for failure to report interest and dividend payments. United
States persons should consult their tax advisers regarding their qualification
for exemption from backup withholding and the procedure for obtaining such an
exemption if applicable.
The amount of any backup withholding from a payment to a United
States person will be allowed as a credit against the United States person's
United States federal income tax liability and may entitle the United States
person to a refund, provided that the required information is furnished to the
Internal Revenue Service.
Tax Consequences to Non-United States Persons
Income and Withholding Tax
Subject to the discussion of backup withholding below:
(a) payments of principal and interest on a Security that is beneficially
owned by a non-United States person will not be subject to United States
federal withholding tax; provided, that in the case of interest, (1) (i)
the beneficial owner does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company
entitled to vote, (ii) the beneficial owner is not a controlled foreign
corporation that is related to the Company through stock ownership, and
(iii) either (A) the beneficial owner of the Security certifies to the
person otherwise required to withhold United States federal income tax from
such interest, under penalties of perjury, that it is not a United States
person and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Security certifies to the person otherwise
required to withhold United States federal income tax from such interest,
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof; (2) the
beneficial owner is entitled to the benefits of an income tax treaty under
which the interest is exempt from United States federal withholding tax and
the beneficial owner of the Security or such owner's agent provides an IRS
Form 1001 claiming the exemption; or (3) the beneficial owner conducts a
trade or business in the United States to which the interest is effectively
connected and the beneficial owner of the Security or such owner's agent
provides an IRS Form 4224; provided that in each such case, the relevant
certification or IRS Form is delivered pursuant to applicable procedures
and is properly transmitted to the person otherwise required to withhold
United States federal income tax, and none of the persons receiving the
relevant certification or IRS Form has actual knowledge that the
certification or any statement on the IRS Form is false;
(b) a non-United States person will not be subject to United States
federal withholding tax on any gain realized on the sale, exchange or
redemption of a Security unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the case
of an individual, the holder is present in the United States for 183 days
or more in the taxable year in which the sale, exchange or redemption
occurs and certain other conditions are met; and
(c) a Security owned by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if the
individual does not actually or constructively own 10% or more of the total
combined voting power or all classes of stock of the Company entitled to
vote and the income on such Security would not have been effectively
connected with a U.S. trade or business of the individual.
Interest or gain on a Security that is effectively connected
with the conduct of a trade or business in the United States by a holder of a
Security who is a non-United States person, although exempt from United States
withholding tax, may be subject to (i) federal income tax as if such interest
was earned by a United States person and (ii) if such non-United States person
is a foreign corporation, a branch profits tax of 30% (unless reduced or
eliminated by an applicable treaty).
EACH HOLDER OF A SECURITY SHOULD BE AWARE THAT IF IT DOES NOT
PROPERLY PROVIDE THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF
PERMISSIBLE, A COPY OF SUCH FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED
BY THE WITHHOLDING AGENT OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL
INCOME TAX, INTEREST ON SUCH SECURITY MAY BE SUBJECT TO UNITED STATES
WITHHOLDING TAX AT A 30% RATE AND THE HOLDER (INCLUDING THE BENEFICIAL OWNER)
WILL NOT BE ENTITLED TO ANY ADDITIONAL AMOUNTS FROM THE COMPANY DESCRIBED
UNDER THE HEADING "DESCRIPTION OF SECURITIES -- PAYMENT OF ADDITIONAL AMOUNTS"
WITH RESPECT TO SUCH TAX. SUCH TAX, HOWEVER, MAY IN CERTAIN CIRCUMSTANCES BE
ALLOWED AS A REFUND OR AS A CREDIT AGAINST SUCH HOLDER'S UNITED STATES FEDERAL
INCOME TAX. THE FOREGOING DOES NOT DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAX WITHHOLDING THAT MAY BE RELEVANT TO FOREIGN HOLDERS OF THE SECURITIES.
INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS FOR SPECIFIC ADVICE
CONCERNING THE OWNERSHIP AND DISPOSITION OF NOTES.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to
payments of principal and interest made on a Security and the proceeds of the
sale of a Security within the United States paid to non-corporate holders of
the Security and "backup withholding" at a rate of 31% will apply to such
payments if the holder fails to provide an accurate taxpayer identification
number in the manner required.
Information reporting and backup withholding generally will not
apply to payments made by the Company or a paying agent to a non-United States
person on a Security if the applicable IRS Form described above has been
provided under applicable procedures, provided that the payor does not have
actual knowledge that the certifications are incorrect.
Payments of the proceeds from the sale of a Security made to or
through a foreign office of a broker will not be subject to information
reporting or backup withholding, except that if the broker is a United States
person, a controlled foreign corporation for United States tax purposes or a
foreign person 50% or more of whose gross income is effectively connected with
a United States trade or business for a specified three-year period,
information reporting may apply to such payments. Payments of the proceeds
from the sale of a Security to or through the United States office of a broker
are subject to information reporting and backup withholding unless the holder
or beneficial owner certifies that it is a non-United States person and that
it satisfies certain other conditions or otherwise establishes an exemption
from information reporting and backup withholding.
Backup withholding is not a separate tax, but is allowed as a
refund or credit against the holder's United States federal income tax,
provided the necessary information is furnished to the Internal Revenue
Service.
Interest on a Security that is beneficially owned by a
non-United States person will be reported annually on IRS Form 1042S, which
must be filed with the Internal Revenue Service and furnished to such
beneficial owner.
UNDERWRITING
The underwriters named below (the "DM Notes Underwriters"),
acting through their representative, Dresdner Bank Aktiengesellschaft and
Merrill Lynch Capital Markets Bank Limited Frankfurt/Main Branch (the "DM Notes
Representatives"), have severally agreed, subject to the terms and conditions
set forth in an Underwriting Agreement dated as of September 11, 1997 (the "DM
Underwriting Agreement") to purchase and the Company has agreed to sell them,
the principal amount of the DM Notes set forth opposite its name below:
<TABLE>
<CAPTION>
Principal Amount of
Underwriters -- DM Notes DM Notes
- ------------------------ -------------------
<S> <C>
Dresdner Bank Aktiengesellschaft...................................................... DM300,000,000
Merrill Lynch Capital Markets Bank Limited Frankfurt/Main Branch...................... 300,000,000
ABN AMRO Bank (Deutschland) AG........................................................ 25,000,000
Banque Paribas-Zweigniederlassung Frankfurt am Main................................... 25,000,000
BZW Deutschland Branch of Barclays Bank PLC........................................... 25,000,000
Deutsche Bank Aktiengesellschaft...................................................... 25,000,000
Lehman Brothers Bankhaus Aktiengesellschaft........................................... 25,000,000
Morgan Stanley & Co. International Limited............................................ 25,000,000
-------------
Total ...................................................................... DM750,000,000
=============
</TABLE>
The underwriters named below (the "Sterling Notes Underwriters"
and together with the DM Notes Underwriters, the "Underwriters"), acting
through their Representatives Barclays de Zoete Wedd Limited and Merrill Lynch
International (the "Sterling Notes Representatives" and together with the DM
Notes Representatives, the "Representatives"), have severally agreed, subject
to terms and conditions set forth in an Underwriting Agreement dated as of
September 11, 1997 (the "Sterling Underwriting Agreement") to purchase and the
Company has agreed to sell them the principal amount of Sterling Notes set
forth opposite its name below:
<TABLE>
<CAPTION>
Principal Amount of
Sterling Notes
Underwriters -- Sterling Notes -------------------
- ------------------------------
<S> <C>
Barclays de Zoete Wedd Limited....................................................... Pound Sterling120,000,000
Merrill Lynch International.......................................................... 120,000,000
Kleinwort Benson Limited............................................................. 10,000,000
Midland Bank plc..................................................................... 10,000,000
J.P. Morgan Securities Ltd........................................................... 10,000,000
NatWest Capital Markets (as agent for National Westminster Bank Plc)................. 10,000,000
Swiss Bank Corporation............................................................... 10,000,000
UBS Limited.......................................................................... 10,000,000
----------
Total...................................................................... Pound Sterling300,000,000
===========
</TABLE>
Under the terms and conditions of the DM Underwriting
Agreement, the DM Notes Underwriters are committed to take and pay for all of
the DM Notes, if any are taken. Under the terms and conditions of the
Sterling Underwriting Agreement, the Sterling Notes Underwriters are committed
to take and pay for all of the Sterling Notes, if any are taken.
The Company has been advised that the Underwriters propose to
offer the Securities in part directly to retail purchasers at the public
offering price set forth on the cover page of this Prospectus Supplement and
in part to certain securities dealers at such price less a concession of .10%
of the principal amount of the Securities. After the Securities are released
for sale to the public, the offering price and other selling terms may from
time to time be varied by the Representatives.
The Securities are offered for sale in those jurisdictions in
the United States, Europe and Asia where it is legal to make such offers.
Each of the Underwriters has agreed that it will not offer,
sell or deliver any of the Securities, directly or indirectly, or distribute
this Prospectus Supplement or the Prospectus or any other offering material
relating to the Securities, in or from any jurisdiction except under
circumstances that will result in compliance with the applicable laws and
regulations thereof and that will not impose any obligations on the Company
except as set forth in the Underwriting Agreement.
Each Underwriter has represented and agreed that:
(i) it has not offered or sold and will not offer or sell any Securities
to persons in the United Kingdom prior to the expiry of the period of six
months from the issue date of the Securities except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995;
(ii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the Securities to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom such document
may otherwise lawfully be issued or passed on; and
(iii) it has complied and will comply with all applicable provisions of
the Financial Service Act 1986 with respect to anything done by it in
relation to any Securities in, from or otherwise involving the United
Kingdom.
The Securities are issued under the "Euro-Securities
Exemption" pursuant to Section 4(1) No. 1 and Section 4(2) of the
Securities Sales Prospectus Act of the Federal Republic of Germany
(Wertpapier-Verkaufsprospektgesetz) of December 13, 1990 (the "Securities
Prospectus Act"). Each Underwriter has acknowledged the fact that no sales
prospectus in Germany has been or will be published and each Underwriter
has represented and agreed that it has complied and will comply with the
Securities Prospectus Act and the restrictions applying to the offer and
distribution of Euro-Securities. In particular, each Underwriter has
undertaken not to engage in public advertisements (offentliche Werbung) in
the Federal Republic of Germany with respect to the Securities.
The Securities has not been and will not be registered under
the Securities and Exchange Law of Japan (the "Securities and Exchange Law").
Accordingly, each Underwriter has represented and agreed that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell any Securities in Japan or to a resident of Japan except
pursuant to an exemption from the registration requirements of, and otherwise
in compliance with, the Securities and Exchange Law and other relevant laws
and regulations of Japan. As used in this paragraph, "resident of Japan"
means any person resident in Japan, including any corporation or other entity
organized under the laws of Japan.
Although application has been made to list the Securities on
the Luxembourg Stock Exchange and the New York Stock Exchange, the Securities
are new issues of securities with no established trading market. No assurance
can be given as to the liquidity of, or the trading markets for, the
Securities. Purchasers of the Securities may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the issue price set forth on the cover page hereof.
The Company has been advised by the Underwriters that they intend to make a
market in each of the DM Notes and the Sterling Notes, but they are not
obligated to do so and may discontinue such market-making at any time without
notice.
It is expected that delivery of the Securities will be made
against payment therefore on or about September 25, 1997.
The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the U.S. Securities Act of
1933, as amended.
GENERAL INFORMATION
Application has been made to list the Securities on the
Luxembourg Stock Exchange and the New York Stock Exchange. In connection with
the listing application, the Certificate of Incorporation and the By-Laws of
the Company and a legal notice relating to the issuance of the Securities have
been deposited prior to listing with the Greffier en Chef du Tribunal
d'Arrondissement de et a Luxembourg, where copies thereof may be obtained upon
request. Copies of the above documents together with this Prospectus
Supplement, the accompanying Prospectus, the Indenture and the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 and Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997,
as well as all future Annual Reports and Quarterly Reports, so long as any of
the Securities are outstanding, will be made available free of charge at the
main office of Banque Generale du Luxembourg S.A. Banque Generale du
Luxembourg S.A. will act as a contact between the Company and the holders of
the Securities. In addition, copies of the Annual Reports and Quarterly
Reports of the Company may be obtained free of charge at such office.
The Company has appointed Citibank (Luxembourg) S.A. as paying
agent and transfer agent with respect to the Securities in Luxembourg.
The Company is not a party to any legal or arbitration
proceedings (including any that are pending or threatened) which may have or
have had during the previous 12 months a significant effect on the Company's
consolidated financial position. Except as disclosed herein, there has been
no material adverse change in the financial position of the Company or its
subsidiaries, taken as a whole, since June 30, 1997.
The issuance of the Securities has been authorized pursuant to
the authority of certain officers of the Company under a resolution of the
board of directors of the Company dated January 17, 1995.
The DM Notes have been accepted for clearance through Euroclear
and Cedel (Common Code: 8039283; ISIN: US370425QG81; CUSIP: 370425QG8;
Wertpapier-Kenn-Nummer 195030). The Sterling Notes have been accepted for
clearance through Euroclear and Cedel (Common Code: 8021245; ISIN:
US370425QH64; CUSIP: 370425QH6).
CONCERNING THE TRUSTEE
The Bank of New York is the Successor Trustee under the
Indenture. Pursuant to a Purchase Agreement dated as of December 4, 1995, The
Bank of New York purchased the corporate trust business of NationsBank of
Georgia, National Association. Pursuant to the Indenture, as supplemented,
The Bank of New York succeeded to the position of Trustee without the need for
further action by the Company. It is also Successor Trustee under various
other indentures covering outstanding debt securities of the Company. The
Bank of New York and its affiliates act as depository for funds of, make loans
to, act as trustee and perform certain other services for, the Company and
certain of its affiliates in the normal course of its business. As trustee of
various trusts, it has purchased securities of the Company and certain of its
affiliates.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed on
for the Company by Martin I. Darvick, Esq., Assistant General Counsel of the
Company, and for the Underwriters by Davis Polk & Wardwell. Mr. Darvick owns
shares, and has options to purchase shares, of General Motors Corporation
common stock, $1 2/3 par value.
The firm of Davis Polk & Wardwell acts as counsel to the
Executive Compensation Committee of the Board of Directors of General Motors
Corporation and has acted as counsel for General Motors Corporation and the
Company in various matters.
REGISTERED OFFICES OF THE COMPANY
3044 West Grand Boulevard 767 Fifth Avenue
Detroit, Michigan 48202 New York, New York 10153
United States United States
LEGAL AND TAX ADVISORS TO THE COMPANY
Assistant General Counsel of the Senior Tax Counsel of the Company
Company as to United States Law as to United States Law
Martin I. Darvick, Esq. Peter F. Hiltz, Esq.
3031 West Grand Boulevard 3044 West Grand Boulevard
Detroit, Michigan 48202 Detroit, Michigan 48202
United States United States
AUDITORS
Independent Auditors
of the Company
Deloitte & Touche LLP
600 Renaissance Center
Detroit, Michigan 48243-1274
United States
LEGAL ADVISORS TO THE UNDERWRITERS
(as to United States Law)
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
United States
LISTING AGENT
Banque Generale du Luxembourg S.A.
50 Avenue J.F. Kennedy
L-2951 Luxembourg
TRUSTEE
The Bank of New York
101 Barclay Street
Floor 7E
New York, New York 10286
United States
REGISTRAR AND TRANSFER AGENT, PAYING AGENT AND INTEREST RATE CALCULATION
AGENT FOR THE STERLING NOTES
Citibank N.A. London
Citibank House
336 Strand
London WC2R 1HB
England
REGISTRAR AND TRANSFER AGENT, PAYING AGENT, EXCHANGE RATE AGENT AND
INTEREST RATE CALCULATION AGENT FOR THE DM NOTES
Citibank, AG, Frankfurt am Main
Neue Mainzer Strasse 75
D-60311 Frankfurt am Main
Federal Republic of Germany
CUSTODIAN OF THE SECURITIES AND EXCHANGE RATE AGENT FOR THE STERLING NOTES
Citibank N.A.
120 Wall Street
13th Floor
New York, New York 10005
United States
PAYING AGENT AND TRANSFER AGENT IN LUXEMBOURG FOR THE SECURITIES
Citibank (Luxembourg) S.A.
58 Boulevard Grand-Duchesse Charlotte
L-1300 Luxembourg
PROSPECTUS
GENERAL MOTORS ACCEPTANCE CORPORATION
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
General Motors Acceptance Corporation (the "Company"), directly, through
agents designated from time to time, or through dealers or underwriters also to
be designated, may offer from time to time its debt securities (the "Debt
Securities") and its warrants (the "Warrants") to purchase any of the Debt
Securities, for issuance and sale, at an aggregate initial offering price not to
exceed $5,000,000,000, on terms to be determined at the time of sale. The Debt
Securities and the Warrants are herein collectively called the "Securities." The
terms of the Debt Securities including, where applicable, the specific
designation, aggregate principal amount, maturity, rate and time of payment of
interest, purchase price, any terms for redemption and the agent, dealer or
underwriter, if any, in connection with the sale of the Debt Securities in
respect of which this Prospectus is being delivered are set forth in the
accompanying Prospectus Supplement ("Prospectus Supplement"). Where Warrants are
to be offered, a Prospectus Supplement shall set forth the offering price or
terms, a description of the Debt Securities for which each Warrant is
exercisable, the aggregate number, exercise price or prices, exercise period or
periods, the expiration date or dates of the Warrants, the currency or
currencies in which such Warrants are exercisable, the price or prices, if any,
at which the Warrants may be redeemed at the option of the holder or will be
redeemed upon expiration, and the Warrant Agent acting under the Warrant
Agreement pursuant to which the Warrants are to be issued. The Company reserves
the sole right to accept and, together with its agents from time to time, to
reject in whole or in part any proposed purchase of Securities to be made
directly or through agents.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------
If an agent of the Company or a dealer or underwriter is involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the agent's commission or dealer's or underwriter's discount is set forth in, or
may be calculated from, the Prospectus Supplement and the net proceeds to the
Company from such sale will be the purchase price of such Securities less such
commission in the case of an agent, the purchase price of such Securities in the
case of a dealer or the public offering price less such discount in the case of
an underwriter, and less, in each case, the other attributable issuance
expenses. The aggregate proceeds to the Company from all the Securities will be
the purchase price of Securities sold less the aggregate of agents' commissions
and underwriter discounts and other expenses, if any, of issuance and
distribution. See "Plan of Distribution" for possible indemnification
arrangements for the agents, dealers and underwriters.
AUGUST 13, 1997
<PAGE>
IN CONNECTION WITH THE OFFERING OF THE SECURITIES, THE UNDERWRITERS MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE
OF THE SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES AND THE IMPOSITION OF PENALTY BIDS IN CONNECTION
WITH THE OFFERING OF THE SECURITIES. SEE PLAN OF DISTRIBUTION.
------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, THE ACCOMPANYING PROSPECTUS
SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY REFERENCE
HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR THEREIN
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY
AGENT, DEALER OR UNDERWRITER.
------------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by the
Company with the Commission can be inspected, and copies may be obtained at
prescribed rates, at the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the following Regional
Offices of the Commission at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov. Reports and
other information concerning the Company can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including all amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities. As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto and to which reference is hereby made.
-------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1996 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997 filed with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act are incorporated by reference in this Prospectus.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the Notes shall
be deemed to be incorporated by reference in this Prospectus and to be a part
thereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
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THE COMPANY WILL PROVIDE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST, TO
EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, A COPY OF ANY OR ALL OF THE
DOCUMENTS DESCRIBED ABOVE WHICH HAVE BEEN INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS. SUCH REQUEST SHOULD BE
DIRECTED TO:
G. E. GROSS, COMPTROLLER
GENERAL MOTORS ACCEPTANCE CORPORATION
3044 WEST GRAND BOULEVARD, ANNEX 103
MAIL CODE 482-1X1-103
DETROIT, MICHIGAN 48202
(313) 556-1240
<PAGE>
PRINCIPAL EXECUTIVE OFFICES
General Motors Acceptance Corporation has its principal office at 767
Fifth Avenue, New York, New York 10153 (Tel. No. 212-418-6120) and
administrative offices at 3044 West Grand Boulevard, Detroit, Michigan 48202
(Tel. No. 313-556-5000).
<TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
----------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
1.47 1.43 1.41 1.36 1.33 1.33 1.35
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and fixed charges by the fixed charges. This ratio
includes the earnings and fixed charges of the Company and its consolidated
subsidiaries; fixed charges consist of interest and discount and the portion of
rentals for real and personal properties in an amount deemed to be
representative of the interest factor.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be added to the
general funds of the Company and will be available for the purchase of
receivables, the making of loans or the repayment of debt. Such proceeds
initially may be used to reduce short-term borrowings or invested in short-term
securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby are to be issued under an Indenture dated
as of July 1, 1982, as amended by a First Supplemental Indenture dated as of
April 1, 1986, a Second Supplemental Indenture dated as of June 15, 1987, a
Third Supplemental Indenture dated as of September 30, 1996 and as further
amended by the Trust Indenture Reform Act of 1990 (together, the "Indenture"),
between the Company and The Bank of New York, Successor Trustee (the "Trustee"),
copies of which are filed as exhibits to the Registration Statement. 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, all provisions of the Indenture, including the definition therein of certain
terms.
The Indenture provides that, in addition to the Debt Securities offered
hereby, additional Debt Securities may be issued thereunder without limitation
as to aggregate principal amount, except as authorized from time to time by the
Company's Board of Directors. (Section 2.01 of the Indenture.)
GENERAL
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered thereby: (1) the designation of such Debt
Securities; (2) the aggregate principal amount of such Debt Securities; (3) the
percentage of their principal amount at which such Debt Securities will be
issued; (4) the date or dates on which such Debt Securities will mature; (5) the
rate or rates per annum, if any, at which such Debt Securities will bear
interest; (6) the times at which such interest, if any, will be payable; (7) the
date, if any, after which such Debt Securities may be redeemed and the
redemption price; (8) the currency or currencies in which such Debt Securities
are issuable or payable; (9) the exchanges, if any, on which such Debt
Securities may be listed and (10) whether such Debt Securities shall be issued
in book-entry form. Principal and interest, if any, will be payable, and, unless
the Debt Securities are issued in book-entry form, the Debt Securities offered
hereby will be transferable, at the office of the Trustee, 101 Barclay Street,
New York, New York 10286, provided that payment of interest may be made at the
option of the Company by check mailed to the address of the person entitled
thereto. (Sections 2.04 and 4.02 of the Indenture.)
The Debt Securities will be unsecured and unsubordinated and will rank PARI
PASSU with all other unsecured and unsubordinated obligations of the Company
(other than obligations preferred by mandatory provisions of law).
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold as a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the accompanying Prospectus Supplement relating thereto.
As used herein, Debt Securities shall include Debt Securities denominated in
United States dollars or, at the option of the Company if so specified in the
applicable Prospectus Supplement, in any other freely transferable currency or
in European Currency Units.
If a Prospectus Supplement specifies that Debt Securities are denominated in
a currency other than United States dollars, such Prospectus Supplement shall
also specify the denomination in which such Debt Securities will be issued and
the coin or currency in which the principal, premium, if any, and interest on
such Debt Securities, where applicable, will be payable, which may be United
States dollars based upon the exchange rate for such other currency existing on
or about the time a payment is due.
If a Prospectus Supplement specifies that the Debt Securities will have a
redemption option, the "Option to Elect Repurchase" constitutes an issuer tender
offer under the Exchange Act. The Company will comply with all issuer tender
offer rules and regulations under the Exchange Act, including Rule 14e-1, if
such redemption option is elected, including making any required filings with
the Commission and the furnishing of certain information to the holders of the
Debt Securities.
BOOK-ENTRY, DELIVERY AND FORM
Unless otherwise indicated in the Prospectus Supplement, the Debt Securities
will be issued in the form of one or more fully registered global securities
(collectively, the "Global Debt Security") which will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the "Depository")
and registered in the name of the Depository's nominee. Except as set forth
below, the Global Debt Security may be transferred, in whole and not in part,
only to another nominee of the Depository or to a successor of the Depository or
its nominee.
The Depository has advised as follows: It is a limited-purpose trust company
which was created to hold securities for its participating organizations (the
"Participants") and to facilitate the clearance and settlement of securities
transactions between Participants in such securities through electronic
book-entry changes in accounts of its Participants. Participants include
securities brokers and dealers (including the underwriters named in the
Prospectus Supplement), banks and trust companies, clearing corporations and
certain other organizations. Access to the Depository's system is also available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depository only through Participants or
indirect participants.
The Depository advises that pursuant to procedures established by it (i)
upon issuance of the Debt Securities by the Company, the Depository will credit
the account of Participants designated by the underwriters with the principal
amounts of the Debt Securities purchased by the underwriters, and (ii) ownership
of beneficial interests in the Global Debt Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depository (with respect to Participants' interests), the Participants and
the indirect participants (with respect to the owners of beneficial interests in
the Global Debt Security). The laws of some states require that certain persons
take physical delivery in definitive form of securities which they own.
Consequently, the ability to transfer beneficial interests in the Global Debt
Security is limited to such extent.
As long as the Depository's nominee is the registered owner of the Global
Debt Security, such nominee for all purposes will be considered the sole owner
or holder of the Debt Securities under the Indenture. Except as provided below,
owners of beneficial interests in the Global Debt Security will not be entitled
to have any of the Debt Securities registered in their names, will not receive
or be entitled to receive physical delivery of the Debt Securities in definitive
form, and will not be considered the owners or holders thereof under the
Indenture.
Neither the Company, the Trustee, any Paying Agent nor the Depository will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the Global Debt
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Debt Securities registered in the
name of the Depository's nominee will be made by the Trustee to the Depository's
nominee as the registered owner of the Global Debt Security. Under the terms of
the Indenture, the Company and the Trustee will treat the persons in whose names
the Debt Securities are registered as the owners of such Debt Securities for the
purpose of receiving payment of principal and interest on the Debt Securities
and for all other purposes whatsoever. Therefore, neither the Company, the
Trustee nor any Paying Agent has any direct responsibility or liability for the
payment of principal or interest on the Debt Securities to owners of beneficial
interests in the Global Debt Security. The Depository has advised the Company
and the Trustee that its present practice is, upon receipt of any payment of
principal or interest, to immediately credit the accounts of the Participants
with such payment in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the Global Debt Security as shown on
the records of the Depository. Payments by Participants and indirect
participants to owners of beneficial interests in the Global Debt Security will
be the responsibility of such Participants and indirect participants and will be
governed by their standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name."
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Debt Securities in definitive form in exchange for
the Global Debt Security. In addition, the Company may at any time determine not
to have the Debt Securities represented by the Global Debt Security and, in such
event, will issue Debt Securities in definitive form in exchange for the Global
Debt Security. In either instance, an owner of a beneficial interest in a Global
Debt Security will be entitled to have Debt Securities equal in principal amount
to such beneficial interest registered in its name and will be entitled to
physical delivery of such Debt Securities in definitive form. Debt Securities so
issued in definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
No service charge will be made for any transfer or exchange of such Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. (Section 2.06
of the Indenture.)
CERTAIN COVENANTS AS TO LIENS
The only financial covenant applicable to the Debt Securities is that
described below. That covenant requires that the Debt Securities be equally and
ratably secured in the circumstances described therein but has no special
application merely by virtue of the occurrence of any transaction or series of
transactions resulting in material changes in the Company's debt-to-equity
ratio.
The Debt Securities are not secured by mortgage, pledge or other lien. The
Company will covenant in the Debt Securities that so long as any of the Debt
Securities remain outstanding, it will not pledge or otherwise subject to any
lien any of its property or assets unless the Debt Securities are secured by
such pledge or lien equally and ratably with any and all other obligations and
indebtedness secured thereby so long as any such other obligations and
indebtedness shall be so secured. Such covenant does not apply to:
(a) the pledge of any assets to secure any financing by the Company of the
exporting of goods to or between, or the marketing thereof in, foreign countries
(other than Canada), in connection with which the Company reserves the right, in
accordance with customary and established banking practice, to deposit, or
otherwise subject to a lien, cash, securities or receivables, for the purpose of
securing banking accommodations or as the basis for the issuance of bankers'
acceptances or in aid of other similar borrowing arrangements;
(b) the pledge of receivables payable in foreign currencies (other than
Canadian dollars) to secure borrowings in foreign countries (other than Canada);
(c) any deposit of assets of the Company with any surety company or clerk of
any court, or in escrow, as collateral in connection with, or in lieu of, any
bond on appeal by the Company from any judgment or decree against it, or in
connection with other proceedings in actions at law or in equity by or against
the Company;
(d) any lien or charge on any property, tangible or intangible, real or
personal, existing at the time of acquisition of such property (including
acquisition through merger or consolidation) or given to secure the payment of
all or any part of the purchase price thereof or to secure any indebtedness
incurred prior to, at the time of, or within 60 days after, the acquisition
thereof for the purpose of financing all or any part of the purchase price
thereof; and
(e) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any lien, charge or pledge
referred to in the foregoing clauses (a) to (d) inclusive of this paragraph;
provided, however, that the amount of any and all obligations and indebtedness
secured thereby shall not exceed the amount thereof so secured immediately prior
to the time of such extension, renewal or replacement and that such extension,
renewal or replacement shall be limited to all or a part of the property which
secured the charge or lien so extended, renewed or replaced (plus improvements
on such property). (Section 4.03 of the Indenture.)
Similar covenants are applicable to the Company's other term indebtedness,
but not all contain the exceptions set forth in clauses (d) and (e) above.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee to
modify or amend the Indenture or any supplemental indenture or the rights of the
holders of the Debt Securities issued thereunder, with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of the Debt
Securities of all series at the time outstanding under such Indenture which are
affected by such modification or amendment (voting as one class), provided that
no such modification shall (a) extend the fixed maturity of any Debt Securities,
or reduce the principal amount thereof, or premium, if any, or reduce the rate
or extend the time of payment of interest thereon, without the consent of the
holder of each Debt Security so affected, or (b) reduce the aforesaid percentage
of Debt Securities, the consent of the holders of which is required for any such
modification, without the consent of the holders of all Debt Securities then
outstanding under the Indenture. (Section 10.02 of the Indenture.)
EVENTS OF DEFAULT
An Event of Default with respect to any series of Debt Securities is
defined in the Indenture as being (a) default in payment of any principal or
premium, if any, on such series; (b) default for 30 days in payment of any
interest on such series; (c) default for 30 days after notice in performance of
any other covenant in the Indenture; or (d) certain events of bankruptcy,
insolvency or reorganization. (Section 6.01 of the Indenture.)
No Event of Default with respect to a particular series of Debt Securities
issued under the Indenture necessarily constitutes an Event of Default with
respect to any other series of Debt Securities issued thereunder. In case an
Event of Default under clause (a) or (b) shall occur and be continuing with
respect to any series, the Trustee or the holders of not less than 25% in
aggregate principal amount of Debt Securities of each such series then
outstanding may declare the principal (or, in the case of discounted Debt
Securities, the amount specified in the terms thereof) of such series to be due
and payable. In case an Event of Default under clause (c) or (d) shall occur and
be continuing, the Trustee or the holders of not less than 25% in aggregate
principal amount of all the Debt Securities then outstanding (voting as one
class) may declare the principal (or, in the case of discounted Debt Securities,
the amount specified in the terms thereof) of all outstanding Debt Securities to
be due and payable. Any Event of Default with respect to a particular series of
Debt Securities may be waived by the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series (or of all
the outstanding Debt Securities, as the case may be), except in a case of
failure to pay principal or premium, if any, or interest on such Debt Security
for which payment had not been subsequently made. (Section 6.01 of the
Indenture.) The Company is required to file with the Trustee annually an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 4.05 of the Indenture.) The Indenture provides that the
Trustee may withhold notice to the securityholders of any default (except in
payment of principal, premium, if any, or interest) if it considers it in the
interest of the securityholders to do so. (Section 6.07 of the Indenture.)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
shall be under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Securityholders,
unless such Securityholders shall have offered to the Trustee reasonable
indemnity or security. (Sections 7.01 and 7.02 of the Indenture.)
Subject to such provisions for the indemnification of the Trustee and to
certain other limitations, the holders of a majority in principal amount of the
Debt Securities of each series affected (with each series voting as a separate
class) at the time outstanding shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee.
(Section 6.06 of the Indenture.)
CONCERNING THE TRUSTEE
The Bank of New York is the Successor Trustee under the Indenture. It is
also Successor Trustee under various other indentures covering outstanding Notes
and Debentures of the Company. The Bank of New York and its affiliates act as
depository for funds of, make loans to, act as trustee and perform certain other
services for, the Company and certain of its affiliates in the normal course of
its business. As trustee of various trusts, it has purchased securities of the
Company and certain of its affiliates.
DESCRIPTION OF WARRANTS
GENERAL
The following statements with respect to the Warrants are summaries of the
detailed provisions of one or more separate Warrant Agreements (each a "Warrant
Agreement") between the Company and a banking institution organized under the
laws of the United States or one of the states thereof (each a "Warrant Agent"),
a form of which is filed as an exhibit to the Registration Statement. Wherever
particular provisions of the Warrant Agreement or terms defined therein are
referred to, such provisions or definitions are incorporated by reference as a
part of the statements made, and the statements are qualified in their entirety
by such reference.
The Warrants will be evidenced by Warrant Certificates (the "Warrant
Certificates") and, except as otherwise specified in the Prospectus Supplement
accompanying this Prospectus, may be traded separately from any Debt Securities
with which they may be issued. Warrant Certificates may be exchanged for new
Warrant Certificates of different denominations at the office of the Warrant
Agent. The holder of a Warrant does not have any of the rights of a holder of a
Debt Security in respect of, and is not entitled to any payments on, any Debt
Securities issuable (but not yet issued) upon exercise of the Warrants.
The Warrants may be issued in one or more series, and reference is made to
the Prospectus Supplement accompanying this Prospectus relating to the
particular series of Warrants, if any, offered thereby for the terms of, and
other information with respect to, such Warrants, including: (1) the title and
the aggregate number of Warrants; (2) the Debt Securities for which each Warrant
is exercisable; (3) the date or dates on which such Warrants will expire; (4)
the price or prices at which such Warrants are exercisable; (5) the currency or
currencies in which such Warrants are exercisable; (6) the periods during which
and places at which such Warrants are exercisable; (7) the terms of any
mandatory or optional call provisions; (8) the price or prices, if any, at which
the Warrants may be redeemed at the option of the holder or will be redeemed
upon expiration; (9) the identity of the Warrant Agent; (10) the exchanges, if
any, on which such Warrants may be listed and (11) whether such Warrants shall
be issued in book-entry form.
EXERCISE OF WARRANTS
Warrants may be exercised by payment to the Warrant Agent of the exercise
price, in each case in such currency or currencies as are specified in the
Warrant, and by communicating to the Warrant Agent the identity of the
Warrantholder and the number of Warrants to be exercised. Upon receipt of
payment and the Warrant Certificate properly completed and duly executed, at the
office of the Warrant Agent, the Warrant Agent will, as soon as practicable,
arrange for the issuance of the applicable Debt Securities, the form of which
shall be set forth in the Prospectus Supplement. If less than all of the
Warrants evidenced by a Warrant Certificate are exercised, a new Warrant
Certificate will be issued for the remaining amounts of Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in four ways: (i)
directly to purchasers, (ii) through agents, (iii) through underwriters, and
(iv) through dealers.
Offers to purchase Securities may be solicited directly by the Company or by
agents designated by the Company from time to time. Any such agent, who may be
deemed to be an underwriter as that term is defined in the Securities Act, as
amended, involved in the offer or sale of the Securities in respect of which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment (ordinarily five business days
or less). Agents may be entitled under agreements which may be entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for the Company in the ordinary course
of business.
If an underwriter or underwriters are utilized in the sale, the Company will
enter into an underwriting agreement with such underwriters at the time of sale
to them and the names of the underwriters and the terms of the transaction will
be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Securities in respect of which this
Prospectus is delivered to the public. The underwriters may be entitled, under
the relevant underwriting agreement, to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act of 1933.
Among others, one or more of the following firms may act as managing
underwriter(s) with respect to the offering of the Securities: Bear Stearns &
Co. Inc., Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan
Stanley Dean Witter, Morgan Stanley & Co. Incorporated, Salomon Brothers Inc and
UBS Securities LLC.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer as principal. The dealer may then resell such Securities to the public at
varying prices to be determined by such dealer at the time of resale. Dealers
may be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Each Contract will be for an amount not less than, and unless the
Company otherwise agrees the aggregate principal amount of Securities sold
pursuant to Contracts shall be not less nor more than, the respective amounts
stated in the Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but shall in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
that the purchase by an institution of the Securities covered by its Contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the Prospectus Supplement will be paid to underwriters
and agents soliciting purchases of Securities pursuant to Contracts accepted by
the Company.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus Supplement.
In connection with the offering of the Securities, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Securities during and after the offering. Specifically, the Underwriters may
over-allot or otherwise create a short position in the Securities for their own
account by selling more Securities than have been sold to them by the Company.
The Underwriters may elect to cover any such short position by purchasing
Securities in the open market. In addition, the Underwriters may stabilize or
maintain the price of the Securities by bidding for or purchasing Securities in
the open market and may impose penalty bids, under which selling concessions
allowed to syndicate members or other broker-dealers participating in the
offering are reclaimed if Securities previously distributed in the offering are
repurchased in connection with stabilization transactions or otherwise. The
effect of these transactions may be to stabilize or maintain the market price of
the Securities at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the price of the
Securities to the extent that it discourages resales thereof. No representation
is made as to the magnitude or effect of any stabilization or other
transactions. Such transactions, if commenced, may be discontinued at any time.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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