PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 13, 1997)
$300,000,000
GENERAL MOTORS ACCEPTANCE CORPORATION
6% NOTES DUE FEBRUARY 1, 2002
The Notes will bear interest from February 1, 1998, at the rate of 6%
per annum, payable semiannually on February 1 and August 1, commencing August 1,
1998. The Notes will not be redeemable prior to maturity and will not be subject
to any sinking fund. See "Description of Notes."
The Notes will be represented by Global Notes registered in the name of
the Depository's nominee. Beneficial interests in the Global Notes will be shown
on, and transfers thereof will be effected only through, records maintained by
the Depository and, with respect to the beneficial owners' interests, by the
Depository's participants. Except as described in the Prospectus, Notes
in definitive form will not be issued. See "Book-Entry, Delivery and Form."
------------------
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.
- --------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT COMPANY (1)(2)
- --------------------------------------------------------------------------
Per Note ...............99.908% .400% 99.508%
Total .................$299,724,000 $1,200,000 $298,524,000
- --------------------------------------------------------------------------
(1)Plus accrued interest from February 1, 1998.
(2)Before deduction of expenses payable by the Company estimated at
$210,000.
------------------
The Notes are offered, subject to prior sale, when, as and if accepted
by the Underwriters, and subject to approval of certain legal matters by Davis
Polk & Wardwell, counsel for the Underwriters. It is expected that delivery of
the Global Note in book-entry form will be made on or about February 5, 1998,
through the facilities of The Depository Trust Company, against payment therefor
in same-day funds.
------------------
BEAR, STEARNS & CO. INC.
ARTEMIS CAPITAL GROUP, INC.
BLAYLOCK & PARTNERS, L.P.
THE WILLIAMS CAPITAL GROUP, L.P.
February 2, 1998
<PAGE>
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 NOTES.
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.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES, INCLUDING PURCHASES OF THE NOTES TO STABILIZE THEIR MARKET PRICE AND
PURCHASES OF THE NOTES TO COVER ANY SHORT POSITION IN THE NOTES MAINTAINED BY
THE UNDERWRITERS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
----------------- ------------
1997 1996 1996 1995
---- ---- ---- ----
1.45 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.
DESCRIPTION OF NOTES
The Notes offered hereby will be limited to $300,000,000 aggregate
principal amount and are to be issued under an Indenture dated as of July 1,
1982, as amended, which is more fully described in the accompanying Prospectus.
The Notes are not redeemable by the Company prior to maturity. The
Notes will bear interest from February 1, 1998, payable semiannually on each
February 1 and August 1, the first such payment to be made on August 1, 1998 in
respect of the period from February 1, 1998 to August 1, 1998, to the persons in
whose names the Notes are registered at the close of business on the 15th day of
the calendar month next preceding such February 1 and August 1.
The Notes will be issued in book-entry form. See "Book-Entry, Delivery
and Form" in the accompanying Prospectus.
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated February 2, 1998, the Underwriters named below have
severally agreed to purchase and the Company has agreed to sell to them,
severally, the respective principal amounts of Notes set forth below.
PRINCIPAL
NAME AMOUNT
---- ------------
Bear, Stearns & Co. Inc. ......................................$ 75,000,000
Artemis Capital Group, Inc. ................................... 75,000,000
Blaylock & Partners, L.P. .................................... 75,000,000
The Williams Capital Group, L.P. .............................. 75,000,000
------------
Total ....................................$300,000,000
============
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Application will be made to list the Notes on the New York Stock
Exchange. There can be no assurance that there will be a secondary market for
the Notes. However, from time to time, the Underwriters may make a market in the
Notes.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the offering price set
forth on the cover page of this Prospectus Supplement and to certain dealers at
such price less a concession not in excess of .20% of the principal amount of
the Notes; that the Underwriters and such dealers may reallow a discount not in
excess of .15% of such principal amount on sales to certain other dealers; and
that after the initial public offering the public offering price and concession
and discount to dealers may be changed by the Underwriters.
In connection with this offering, certain Underwriters and their
affiliates may engage in transactions that stabilize, maintain or otherwise
affect the market price of the Notes. Such transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
pursuant to which such persons may bid for or purchase Notes for the purpose of
stabilizing their market price. The Underwriters also may create a short
position for the account of the Underwriters by selling more Notes in connection
with the offering than they are committed to purchase from the Company, and in
such case may purchase Notes in the open market following completion of the
offering to cover such short position. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Notes at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.
<PAGE>
In the ordinary course of their respective businesses, affiliates of
the Underwriters have engaged, and will in the future engage, in commercial
banking and investment banking transactions with the Company and certain of its
affiliates.
RECENT DEVELOPMENTS
General Motors Acceptance Corporation (formerly named GMAC Financial
Services Corporation), a wholly-owned subsidiary of General Motors Corporation,
was incorporated in 1997 under the Delaware General Corporation Law. On January
1, 1998, the Company merged with General Motors Acceptance Corporation ("GMAC"),
a wholly-owned subsidiary of General Motors Corporation, originally incorporated
in 1919 under the New York Banking Law relating to investment companies. The
Company was the surviving entity of such merger and assumed all of the assets,
liabilities and obligations of GMAC on January 1, 1998. The name of the Company
was changed to General Motors Acceptance Corporation on January 1, 1998.
LEGAL OPINIONS
The validity of the Notes 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.
<PAGE>
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
<PAGE>
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.
------------------------------
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).
RATIO OF EARNINGS TO FIXED CHARGES
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
------ ---------- ----------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
1.47 1.43 1.41 1.36 1.33 1.33 1.35
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.)
<PAGE>
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.
<PAGE>
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.
<PAGE>
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:
<PAGE>
(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.)
<PAGE>
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.)
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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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