<PAGE>
Rule 424(b)(5)
Registration No. 333-59381
Prospectus Supplement
(To Prospectus dated September 9, 1998)
[LOGO OF ALCOA]
Alcoa Inc.
$500,000,000 7 1/4% Notes due 2005
Issue price: 99.652%
$1,000,000,000 7 3/8% Notes due 2010
Issue price: 99.202%
Interest payable February 1 and August 1
The 2005 Notes will mature on August 1, 2005 and the 2010 Notes will mature on
August 1, 2010. Interest will accrue from July 20, 2000. The notes are
redeemable in whole or in part at the option of Alcoa and in whole if certain
events occur involving U.S. taxation. See "Description of the Notes--Tax
Redemption" and "Description of the Notes--Optional Redemption." The notes will
be offered and sold in multiples of U.S.$1,000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<TABLE>
------------------------------------------------------
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company
------------------------------------------------------
<S> <C> <C> <C>
Per 2005 Note 99.652% 0.475% 99.177%
------------------------------------------------------
Total $498,260,000 $2,375,000 $495,885,000
------------------------------------------------------
Per 2010 Note 99.202% 0.550% 98.652%
------------------------------------------------------
Total $992,020,000 $5,500,000 $986,520,000
------------------------------------------------------
</TABLE>
Application has been made to list the notes on the Luxembourg Stock Exchange.
The underwriters have agreed to purchase all the notes if any notes are
purchased. We expect that delivery of the notes will be made to investors on or
about July 20, 2000 in book-entry form only through the facilities of The
Depository Trust Company for the accounts of its participants, including
Clearstream, Luxembourg or the Euroclear System.
J.P. Morgan & Co. Salomon Smith Barney
July 17, 2000
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information...................................... S-3
Incorporation by Reference............................................... S-3
Cautionary Statement Regarding Forward-Looking Statements................ S-5
Alcoa Inc. .............................................................. S-6
Capitalization........................................................... S-8
Ratios of Earnings to Fixed Charges...................................... S-8
Use of Proceeds.......................................................... S-9
Directors and Executive Officers......................................... S-10
Selected Historical Financial Data....................................... S-11
Unaudited Pro Forma Condensed Consolidated Financial Statements.......... S-12
Description of the Notes................................................. S-18
United States Federal Income Tax Consequences to Non-U.S. Holders of
Notes................................................................... S-25
Underwriting............................................................. S-27
Legal Matters............................................................ S-28
General Information...................................................... S-29
Prospectus
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
The Company.............................................................. 4
Ratios of Earnings to Fixed Charges...................................... 4
Alcoa Trust I............................................................ 5
Use of Proceeds.......................................................... 5
Description of Senior Debt Securities.................................... 6
Description of the Subordinated Debt Securities.......................... 22
Description of Warrants.................................................. 28
Description of Preferred Stock........................................... 29
Description of Common Stock.............................................. 32
Description of Trust Preferred Securities and Trust Guarantee............ 35
Plan of Distribution..................................................... 38
Legal Opinions........................................................... 39
Experts.................................................................. 39
</TABLE>
S-2
<PAGE>
You should only rely on the information contained or incorporated by reference
in this prospectus supplement and the prospectus. We have not, and the
underwriters have not, authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not, and the underwriters are
not, making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should not assume that the information
appearing in this prospectus supplement is accurate as of any date other than
the date on the front cover of this prospectus supplement. Our business,
financial condition, results of operations and prospects may have changed since
that date.
The distribution of this prospectus supplement and prospectus and the offering
of the notes in certain jurisdictions may be restricted by law. This prospectus
supplement and prospectus do not constitute an offer, or an invitation on our
behalf or on behalf of the underwriters or any of them to subscribe to or
purchase, any of the notes, and may not be used for or in connection with an
offer or solicitation by anyone, in any jurisdiction in which such an offer or
solicitation is not authorized or to any person to whom it is unlawful to make
such an offer or solicitation. See "Underwriting."
The prospectus supplement and the 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 Alcoa Inc.
(also referred to as "Alcoa" or the "Company"). The Luxembourg Stock Exchange
takes no responsibility for the contents of this document, makes no
representation as to its accuracy or completeness and expressly disclaims any
liability whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this prospectus supplement and related
prospectus.
We cannot guarantee that listing will be obtained on the Luxembourg Stock
Exchange. Inquiries regarding our listing status on the Luxembourg Stock
Exchange should be directed to our Luxembourg listing agent, Deutsche Bank
Luxembourg S. A., Boulevard F. D. Roosevelt 14, L-2450, Luxembourg.
All references in this prospectus supplement to "U.S. dollars," "dollars,"
"U.S. $," or "$" are to the currency of the United States of America.
WHERE YOU CAN FIND MORE INFORMATION
Alcoa Inc. files annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). Its
SEC filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You also may read and copy any document it files with the
SEC at the SEC's public reference rooms at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New York, New
York 10048; and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago,
Illinois 60661. Please call the SEC at 1-800-SEC-0330 for more information on
the public reference rooms and their copy charges. Alcoa's common stock is
listed and traded on the New York Stock Exchange (the "NYSE"). You may also
inspect the information it files with the NYSE at the NYSE's offices at 20
Broad Street, New York, New York 10005.
INCORPORATION BY REFERENCE
The SEC allows Alcoa to "incorporate by reference" the information in documents
it files with the SEC. This means that Alcoa can disclose important information
to you by referring you to those documents. Any information Alcoa files with
the SEC after the date of this prospectus supplement will automatically update
and supersede the information contained or incorporated by reference in this
prospectus supplement.
Alcoa incorporates by reference the following documents that it has filed with
the SEC:
Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000;
and
Current Reports on Form 8-K dated January 10, 2000, January 18, 2000,
January 19, 2000, May 8, 2000 (as amended by Form 8-K/A filed July 10,
2000), May 15, 2000 and June 22, 2000.
S-3
<PAGE>
Alcoa also incorporates by reference any future filings it will make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus supplement, but before the end of the
offering of the securities made by this prospectus supplement.
You may request a copy of any filings referred to above (excluding exhibits),
at no cost, by contacting Alcoa at the following address:
Alcoa Inc.
Attention: Treasurer
201 Isabella Street
Pittsburgh, Pennsylvania 15212-5858
Telephone: (412) 553-4545
S-4
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement includes and incorporates by reference certain
statements that may be deemed to be "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. This
prospectus supplement also includes information relating to Alcoa that is based
on the beliefs of the management of Alcoa, as well as assumptions made by, and
information currently available to, the management of Alcoa. When used in this
prospectus supplement, the words "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to Alcoa or the management of
Alcoa, identify forward-looking statements. Such statements, which include,
without limitation, the matters set forth in this prospectus supplement under
the caption "Alcoa Inc.," reflect the views of Alcoa with respect to future
events, the outcome of which is subject to certain risks. These forward-looking
statements are also subject to uncertainties and assumptions relating to the
operations and results of operations of Alcoa. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those described,
as anticipated, believed, estimated, expected or intended.
You should understand that the following important factors, along with those
discussed elsewhere in this prospectus supplement and in the documents that we
incorporate by reference, could affect the future results of Alcoa, and could
cause those results to differ materially from those expressed in the forward-
looking statements:
. materially adverse changes in economic or industry conditions generally or
in the markets served by Alcoa;
. political and economic risk associated with foreign activities, including
political instability in relevant areas of the world and fluctuations in
foreign currencies;
. changes in the supply and demand for and the price of aluminum, aluminum
products, and other products;
. material changes in available technology;
. operating factors such as supply disruptions, the failure of equipment or
processes to meet specifications, changes in operating conditions,
substantial increases in power costs, and weather;
. failure to complete capital projects as scheduled and within budget or
failure to successfully launch new growth or strategic business programs;
. labor relations;
. environmental risks and liability under federal, state and foreign
environmental laws and regulations;
. changes in laws and regulations, both U.S. and foreign, or their
interpretation and application, including changes in tax laws and
interpretation and application of tax laws;
. unanticipated legal proceedings or investigations or the disposition of
current proceedings other than as anticipated by Alcoa's management;
. relationships with and financial and operating conditions of customers or
suppliers;
. the actions of competitors;
. the success of Alcoa's sale of assets to be divested as a result of the
consent decrees associated with the Reynolds Metals merger;
. the ability to integrate the businesses of Alcoa, Reynolds Metals, Cordant
Technologies and Howmet and to realize expected synergies and strategic
benefits successfully after the mergers;
. the challenges inherent in diverting management's focus and resources from
operational matters during the integration process; and
. opportunities that may be presented to and pursued by the combined company
after the mergers.
S-5
<PAGE>
ALCOA INC.
General
Formed in 1888 under the laws of the Commonwealth of Pennsylvania, Alcoa Inc.
("Alcoa" or the "Company") has its registered office in Pittsburgh,
Pennsylvania. The name of the Company was changed, effective January 1, 1999,
from Aluminum Company of America to Alcoa Inc.
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum,
aluminum foil and alumina. The Company is a major participant in all phases of
the aluminum industry: mining, refining, smelting, fabricating and recycling.
In addition, Alcoa is active in selected, non-aluminum businesses including
electrical components for the automotive industry and fiber optic cable and
services for the telecommunications industry, plastic closures and packaging
equipment, rocket propulsion systems, and residential building products. Alcoa
serves customers worldwide with a great variety of fabricated and finished
products primarily in the transportation (including aerospace, automotive, rail
and shipping), packaging and consumer, building, construction and distribution,
and industrial markets.
Alcoa operates in the following worldwide business segments: Alumina and
Chemicals, Primary Metals, Flat-Rolled Products, Engineered Products and
Packaging and Consumer. All of the Company's products that do not fall into one
of those five segments are reported in the category titled "Other Businesses."
Alumina and Chemicals--Primary activities include bauxite mining and alumina
refining. Alumina is sold to internal and external customers worldwide and is
also processed into industrial chemicals.
Primary Metals--This is Alcoa's worldwide smelting system. Alumina from the
Alumina and Chemicals segment is used to produce aluminum ingot which is used
by a variety of Alcoa fabricating businesses as well as sold outside the
company. Reynolds Metals' smelters have been added to this segment.
Flat-Rolled Products--The main products here are aluminum sheet and plate.
These products include rigid container sheet (RCS) for aluminum beverage cans,
sheet and plate for aerospace applications, and mill products for a variety of
industrial uses.
Engineered Products--Products in this segment include hard and soft alloy
extrusions--including architectural extrusion businesses--castings, fasteners,
forgings and wheels, primarily for aerospace, automotive and distribution
markets. The Huck and Howmet businesses acquired under the Cordant Technologies
acquisition are in this segment as well as Reynolds Metals' wheels business.
Packaging and Consumer--This segment includes closures, packaging machinery,
PET bottle business in Latin America and Reynolds Metals' packaging and
consumer businesses. (The Alcoa businesses here were formerly reported as
"Other" businesses.)
Other Businesses--The operations listed here include Alcoa Fujikura, which
produces electrical components for the automotive industry and fiber optic
cable and services for the telecommunications industry; Thiokol, which produces
rocket propulsion systems; Alcoa residential building products; and Reynolds
Metals' distribution businesses.
Alcoa is organized into 26 independently-managed business units and has over
300 operating locations in 36 countries with approximately 140,000 employees.
S-6
<PAGE>
Recent Developments
Reynolds Metals Company
On August 19, 1999, Alcoa and Reynolds Metals Company ("Reynolds Metals")
announced that they had reached a definitive merger agreement under which Alcoa
would acquire all outstanding shares of Reynolds Metals in a tax-free stock-
for-stock exchange of 1.06 shares of Alcoa common stock for each share of
Reynolds Metals common stock. On February 11, 2000, the stockholders of
Reynolds Metals approved the proposed merger transaction.
On May 3, 2000, Alcoa and Reynolds Metals announced that the U. S. Department
of Justice (DOJ) and the European Union (EU) had approved the proposed merger
and that the merger had been completed. Under the terms of a consent decree
entered into with the DOJ and an undertaking agreed with the EU, Alcoa will
sell a 25% interest in Reynolds Metals' Longview, Washington aluminum smelter,
as well as Reynolds Metals' interest in three alumina refineries: Worsley,
Australia (56% owned); Stade, Germany (50% owned); and Sherwin, Texas (100%
owned).
These divestitures are required to be completed within six months of the merger
date of May 3, 2000 (nine months for Worsley). Alcoa may seek extensions to
these time periods under certain circumstances.
Cordant Technologies Inc. and Howmet International Inc.
On March 14, 2000, Alcoa and Cordant Technologies Inc. ("Cordant Technologies")
announced that they had entered into a definitive agreement under which Alcoa
would acquire all outstanding shares of Cordant Technologies for $57.00 per
share in cash.
Cordant Technologies is composed of three business units:
. Howmet Castings, a supplier of investment cast super-alloy and titanium
components used in aerospace and industrial gas turbine applications;
. Huck Fasteners, a designer and manufacturer of high-performance fasteners
and fastening systems; and
. Thiokol Propulsion, a supplier of solid fuel rocket propulsion systems.
Following clearance from U.S. antitrust authorities and the EU, Alcoa announced
the completion of its cash tender offer for the outstanding shares of Cordant
Technologies on May 22, 2000 and the completion of its acquisition of Cordant
Technologies on May 25, 2000.
On April 13, 2000, Alcoa announced its intent to begin a cash tender offer to
purchase all of the publicly held shares of common stock of Howmet
International Inc. ("Howmet") at a price of $20.00 per share in cash. Cordant
Technologies owned 84.7% of Howmet.
On June 2, 2000, Alcoa announced the execution of a definitive merger agreement
with Howmet. Under the merger agreement, which was approved by the Independent
Directors Committee of the Howmet Board of Directors, Alcoa offered to purchase
all of the publicly held Howmet shares for $21.00 per share in cash.
On June 20, 2000, Alcoa completed its acquisition of Howmet.
Operating Results (unaudited)
Alcoa reported net income of $377 million (47 cents per diluted share) for the
second quarter of 2000 compared with net income of $240 million (32 cents per
share) for the 1999 second quarter. Earnings per share were up 47%.
For the first half of 2000, net income was $732 million (94 cents per share)
compared with $461 million (62 cents per share) for the comparable 1999 period
- a 59% increase in earnings and a 52% increase in earnings per share.
Earnings were up 6% from the first quarter, making the 2000 second quarter
Alcoa's eighth consecutive quarter of improved earnings.
S-7
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
at June 30, 2000. The table should be read in conjunction with the Company's
historical consolidated financial statements and Unaudited Pro Forma Condensed
Consolidated Financial Statements and the notes thereto incorporated by
reference or included elsewhere in this prospectus supplement. Except as
reflected herein, as of the date of this prospectus supplement there has been
no material change to our capitalization since June 30, 2000.
<TABLE>
<CAPTION>
June 30, 2000
-------------
(In millions)
(unaudited)
<S> <C>
Cash, cash equivalents & short-term investments.................. $ 396
<CAPTION>
=============
<S> <C>
Total Assets..................................................... $30,832
<CAPTION>
=============
<S> <C>
Short-term debt.................................................. $ 3,395
Long-term debt:
Current portion of long-term debt.............................. 315
Long-term debt................................................. 4,608
<CAPTION>
-------------
<S> <C>
Total debt................................................... $ 8,318
<CAPTION>
=============
<S> <C>
Minority Interests............................................... $ 1,445
<CAPTION>
=============
<S> <C>
Shareholders' equity:
Preferred stock, $100 par value; 557,740 shares authorized;
557,649 shares issued......................................... $ 56
Common stock, $1.00 par value; 1.8 billion shares authorized
(a); 865,304,034 shares issued................................ 925
Additional Capital............................................. 5,921
Retained Earnings.............................................. 6,592
Treasury stock, at cost........................................ (1,696)
Accumulated other comprehensive income......................... (758)
<CAPTION>
-------------
<S> <C>
Total Shareholders' equity................................... $11,040
<CAPTION>
=============
<S> <C>
Total capitalization............................................. $20,803
Total Debt/Capitalization........................................ 40.0%
Long-term Debt/Long-term Capitalization.......................... 28.3%
</TABLE>
(a) On May 12, 2000, the Company increased the number of shares of its
authorized common stock to 1.8 billion shares and it completed a two-for-
one stock split on June 9, 2000.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of Alcoa's earnings to fixed charges
for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
------------------------------------------------------------- ------------------
1999 1998 1997 1996 1995 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
8.3 7.2 9.4 7.2 10.4 12.0
</TABLE>
The ratios include all earnings, before extraordinary items and the cumulative
effects of accounting changes, and fixed charges of Alcoa and its majority
owned subsidiaries plus Alcoa's proportionate share of earnings of 50% owned
entities. Earnings have been calculated by adding to net income the provision
for taxes on income, amortization of capitalized interest, interest expense and
an amount representative of the interest factor in rentals and the distributed
income of less than 50% owned entities, and have been decreased by the
undistributed earnings of entities less than 50% owned, preferred stock
dividend requirements of majority owned subsidiaries and the minority interest
share in the losses of majority owned subsidiaries without fixed charges of
Alcoa. Fixed charges consist of total interest expense, amortization of debt
expense, an amount representative of the interest factor in rentals,
capitalized interest and preferred stock dividend requirements of majority
owned subsidiaries.
S-8
<PAGE>
USE OF PROCEEDS
The net proceeds of the offering are estimated to be $1,481,395,000. Alcoa
intends to use the net proceeds of the offering to refinance outstanding
extendible commercial notes, commercial paper and short-term debt and for
general corporate purposes. This indebtedness has a weighted average interest
rate of approximately 6.65% and it typically has a weighted average maturity of
less than 60 days. In addition, we are frequently engaged in the evaluation of,
and discussions with, potential acquisition candidates.
Pending any specific application, we may initially invest funds in short-term
marketable securities. Following repayment of such indebtedness, we expect to
incur additional indebtedness under our commercial paper program or otherwise
in the ordinary course of business.
S-9
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name and present principal occupation or
employment of each director and executive officer of Alcoa. The business
address of each such person is Alcoa Corporate Center, 201 Isabella Street,
Pittsburgh, Pennsylvania 15212-5858.
<TABLE>
<CAPTION>
Present Principal Occupation
Name or Employment
---- ----------------------------
<C> <S>
Directors
Alain J.P. Belda President and Chief Executive Officer, Alcoa Inc.
Kenneth W. Dam Max Pam Professor of American and Foreign Law, University
of Chicago Law School
Joseph T. Gorman Chairman and Chief Executive Officer, TRW Inc.
Judith M. Gueron President, Manpower Demonstration Research Corporation
Sir Ronald Hampel Chairman, United News & Media plc
Hugh M. Morgan Managing Director and Chief Executive Officer, WMC
Limited
John P. Mulroney (Former) President and Chief Operating Officer, Rohm and
Haas Company
Paul H. O'Neill Chairman of the Board, Alcoa Inc.
Henry B. Schacht Managing Director, E. M. Warburg, Pincus & Co., LLC
Franklin A. Thomas Consultant, TFF Study Group
Marina v.N. Whitman Professor of Business Administration and Public Policy,
School of Business Administration and the School of
Public Policy, University of Michigan
Executive Officers
Alain J. P. Belda President and Chief Executive Officer
Ricardo E. Belda Vice President and Group President--Alcoa Europe
Michael Coleman Vice President and President--Alcoa Rigid Packaging
Division
L. Patrick Hassey Executive Vice President and Group President--Industrial
Components and Chief Executive Officer, Cordant
Technologies Inc.
Barbara S. Jeremiah Vice President--Corporate Development
Richard B. Kelson Executive Vice President and Chief Financial Officer
William E. Leahey, Jr. Vice President and Group President--Packaging and
Consumer
Frank L. Lederman Vice President and Chief Technical Officer
Timothy S. Mock Vice President and Controller
Joseph C. Muscari Vice President--Environment, Health and Safety, Audit and
Compliance
G. John Pizzey Vice President and Group President--Primary Products
Lawrence R. Purtell Executive Vice President and General Counsel
Robert F. Slagle Executive Vice President, Human Resources and
Communications
G. Keith Turnbull Executive Vice President--Alcoa Business System
</TABLE>
S-10
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data of Alcoa set forth below have been
derived from the historical consolidated financial statements of Alcoa as they
appeared in Alcoa's Annual Report on Form 10-K filed with the SEC for the year
ended December 31, 1999, and Alcoa's Quarterly Report on Form 10-Q filed with
the SEC for the period ended March 31, 2000. Results for the three months ended
March 31, 2000 are not necessarily indicative of the results that may be
expected for the entire year. Per-share amounts have been restated to reflect
the two-for-one stock split that was completed on June 9, 2000.
<TABLE>
<CAPTION>
At or for the
Three Months
ended March 31, At or for the Year Ended
(unaudited) December 31,
--------------------- ----------------------------------
2000 1999 1999 1998 1997
--------- -------- -------- -------- -------
(dollars in millions, except per-share
amounts
and ingot prices)
<S> <C> <C> <C> <C> <C>
Operating Results
Sales...................... $ 4,531 $ 3,985 $ 16,323 $ 15,340 $13,319
Other income............... 41 (4) 124 149 163
Cost of goods sold......... 3,332 3,127 12,536 11,933 10,275
Selling, general
administrative and other
expenses.................. 227 192 851 783 682
Research and development
expenses.................. 39 27 128 128 143
Depreciation and
depletion................. 225 219 888 842 735
Special items--(income).... -- -- -- -- (96)
Interest expense........... 51 53 195 198 141
Taxes on income............ 238 116 553 514 529
Income from operations..... 460 247 1,296 1,091 1,073
Minority interests......... (105) (26) (242) (238) (268)
Net income................. 355 221 1,054 853 805
<CAPTION>
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Alcoa's average realized
price per pound for
aluminum ingot........... .79 .63 .67 .67 .75
Average U.S. market price
per pound for aluminum
ingot (Metals Week)...... .79 .59 .66 .66 .77
<CAPTION>
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Dividends Declared
Preferred stock............ 1 1 2 2 2
Common stock............... 90 73 296 263 169
<CAPTION>
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Financial Position
Working capital........... 1,335 1,718 1,797 1,757 1,964
Properties, plants and
equipment................ 9,003 9,089 9,133 9,134 6,667
Other liabilities, net.... (460) (505) (497) (482) (1,315)
Total assets.............. 17,110 17,103 17,066 17,463 13,071
Long-term debt
(noncurrent)............. 2,406 2,842 2,657 2,877 1,457
Minority interests........ 1,475 1,455 1,458 1,476 1,440
Shareholders' equity...... 5,997 6,005 6,318 6,056 4,419
<CAPTION>
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Common Share Data
(dollars per share)
Basic earnings per share... .49 .30 1.44 1.22 1.17
Diluted earnings per
share..................... .48 .30 1.41 1.21 1.16
Dividends declared......... .125 .1006 .4025 .375 .244
Book value (based on shares
outstanding).............. 8.16 8.11 8.51 8.18 6.49
Price range: High.......... 43 22 3/8 41 11/16 20 5/16 22 13/32
Low................. 30 5/8 18 7/16 17 31/32 14 1/2 16 1/16
Shareholders (number)...... N.A. N.A. 370,000 238,000 191,600
Average shares outstanding
(thousands)............... 732,872 733,922 733,888 698,228 688,904
<CAPTION>
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Operating Data
(thousands of metric tons)
Alumina shipments.......... 1,833 1,664 7,054 7,130 7,223
Aluminum product shipments:
Primary................... 339 370 1,411 1,367 920
Fabricated and finished
products................. 794 762 3,067 2,584 2,036
Total................... 1,133 1,132 4,478 3,951 2,956
Primary aluminum capacity:
Consolidated.............. 3,184 3,182 3,182 3,159 2,108
Total, including
affiliates' and others'
share of joint
ventures................. 4,024 4,022 4,024 3,984 2,652
Primary aluminum
production:
Consolidated.............. 710 703 2,851 2,471 1,725
Total, including
affiliates' and others'
share of joint
ventures................. 919 919 3,695 3,158 2,254
<CAPTION>
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Other Statistics
Capital expenditures....... $ 176 $ 194 $ 920 $ 932 $ 913
Number of employees........ 107,700 103,500 107,700 103,500 81,600
Pretax profit on revenues
(%)....................... 15.4 9.1 11.3 10.4 11.9
Return on average
shareholders' equity (%).. 21.5 14.1 17.2 16.3 18.1
Return on average invested
capital (%)............... 18.4 10.6 13.8 13.8 15.5
<CAPTION>
--------- -------- -------- -------- -------
</TABLE>
S-11
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Financial Statements
are based on and should be read in conjunction with the historical consolidated
financial statements of Alcoa and Reynolds, including the notes thereto. These
financial statements have been adjusted to give effect to the merger with
Reynolds. The Unaudited Pro Forma Condensed Consolidated Earnings Statement
does not (a) purport to represent what the results of operations actually would
have been if the above transaction had occurred as of the date indicated or
what such results will be for any future periods or (b) give effect to certain
nonrecurring charges expected to result from the Reynolds acquisition.
The Unaudited Pro Forma Condensed Consolidated Earnings Statements for the
three month period ended March 31, 2000 and for the year ended December 31,
1999 give effect to the Reynolds merger and related transactions as if such
transactions had occurred on January 1, 1999. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of March 31, 2000 gives effect to the Reynolds
merger and related transactions as if such transaction had occurred on that
date.
The pro forma adjustments are based upon available information and include
certain assumptions and adjustments that the management of Alcoa believes to be
reasonable. These adjustments are directly attributable to the transaction
referenced above and are expected to have a continuing impact on Alcoa's
business, results of operations and financial position. Reynolds has certain
severance plans, agreements and policies applicable to its executive management
and salaried employees. Some covered persons are entitled to severance benefits
under these arrangements. The amount payable under these arrangements will
range from $215 to $250 million pre-tax. The final amount to be paid has not
been determined as Alcoa is presently in the process of determining which
employees will be affected. However, the known amount of $215 million has been
reflected in the purchase price allocation. Alcoa has announced a curtailment
of Reynolds' Troutdale, Oregon smelter. This will result in severance and
related costs of $85 million pre-tax which has been included in the range of
severance benefits discussed above. Alcoa has completed a preliminary
assessment of potential benefits from synergies which are estimated at this
time to be $300 million over the next two years. The Unaudited Pro Forma
Condensed Consolidated Financial Statements do not include any adjustments
related to synergies.
The merger with Reynolds has been accounted for using the purchase method of
accounting. The total purchase costs of the acquisition will be allocated to
the tangible and intangible assets and liabilities acquired based upon their
estimated fair values. The purchase price allocation is preliminary, based on
facts currently known to Alcoa. Management is not aware of any significant
unrecorded obligations or contingencies, other than the severance and related
costs referred to above, and, except as noted above, does not believe that the
final purchase price allocation will materially differ from that included in
the pro forma financial information contained herein. The final allocation of
the purchase price will be made based upon valuations and other studies that
have not been completed.
As part of the merger agreement, Alcoa agreed to divest the following Reynolds
operations:
. Reynolds 56% stake in its alumina refinery at Worsley, Australia,
. Reynolds 50% stake in its alumina refinery at Stade, Germany,
. 100% of Reynolds alumina refinery at Sherwin, Texas and
. 25% of Reynolds interest in its aluminum smelter at Longview, Washington
These divestitures are required to be completed within six months of the merger
date of May 3, 2000 (nine months for Worsley). The Unaudited Pro Forma
Condensed Consolidated Financial Statements have been adjusted, in accordance
with EITF 87-11 "Allocation of Purchase Price to Assets to be Sold," to record
the impact of these divestitures. The net assets to be divested have been
reported as assets held for sale in the Unaudited Pro Forma Condensed
Consolidated Balance Sheet and the results of operations from these assets have
been removed from the Unaudited Pro Forma Condensed Consolidated Earnings
Statements.
On June 9, 2000, Alcoa completed a two-for-one stock split that was approved by
shareholders on May 12, 2000. Per share amounts in the following Unaudited Pro
Forma Condensed Consolidated Financial Statements have been labeled as pre-
split or post-split to eliminate uncertainty.
S-12
<PAGE>
Alcoa Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2000
(dollars in millions)
<TABLE>
<CAPTION>
Historical
Historical Reynolds Pro Forma Pro
Alcoa (A) Adjustments Forma
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash, cash equivalents and
short-term investments........ $ 289 $ 54 $ (30) (B) $ 313
Receivables from customers,
less allowances............... 2,538 722 (50) (D) 3,210
Inventories.................... 1,645 586 284 (B)
(44) (D) 2,471
Prepaid expenses and other
current assets................ 489 62 (1) (D) 550
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Total current assets......... 4,961 1,424 159 6,544
Properties, plant and
equipment..................... 18,363 4,335 1,611 (B)
(2,343) (B)
(873) (D) 21,093
Less: accumulated depreciation,
depletion and amortization.... (9,360) (2,343) 2,343 (B) (9,360)
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Net properties, plant and
equipment..................... 9,003 1,992 738 11,733
Goodwill....................... 1,338 -- 1,089 (B) 2,427
Other assets including assets
held for sale................. 1,808 2,623 1,055 (D) 5,486
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Total Assets................. $17,110 $ 6,039 $ 3,041 $26,190
<CAPTION>
========== ========== =========== =======
<S> <C> <C> <C> <C>
LIABILITIES
Short term borrowings.......... $ 684 $ 177 -- $ 861
Accounts payable and accrued
liabilities................... 2,640 798 $ (73) (D)
215 (B) 3,580
Long-term debt due within one
year.......................... 302 147 -- 449
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Total current liabilities.... 3,626 1,122 142 4,890
Long-term debt................... 2,406 1,150 -- 3,556
Accrued postretirement benefits.. 1,705 966 (261) (B) 2,410
Other noncurrent liabilities and
deferred costs.................. 1,901 584 (16) (D)
730 (B) 3,199
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Total liabilities............ 9,638 3,822 595 14,055
Minority interests............... 1,475 13 31 (D) 1,519
Shareholders' Equity
Preferred stock................ 56 -- -- 56
Common stock................... 790 1,588 (1,588) (B)
135 (C) 925
Additional capital............. 1,363 -- 4,367 (C) 5,730
Retained earnings.............. 6,232 1,305 (1,305) (B) 6,232
Common stock to be issued under
options ...................... -- -- 117 (B) 117
Treasury stock, at cost........ (1,727) (626) 626 (B) (1,727)
Accumulated other comprehensive
income........................ (717) (63) 63 (B) (717)
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Total shareholders' equity... 5,997 2,204 2,415 10,616
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Total Liabilities and
Equity...................... $17,110 $ 6,039 $ 3,041 $26,190
<CAPTION>
========== ========== =========== =======
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
condensed consolidated financial statements.
S-13
<PAGE>
Alcoa Inc.
Unaudited Pro Forma Condensed Consolidated Earnings Statement
For the Three-month Period Ended
March 31, 2000
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
Historical Reynolds Pro Forma Pro
Alcoa (A) Adjustments Forma
---------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Revenues
Sales.................... $4,531 $1,313 $ (55) (E)
(64) (D) $5,725
Other income............. 41 6 -- 47
<CAPTION>
---------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
4,572 1,319 (119) 5,772
Costs and Expenses
Cost of goods sold....... 3,332 1,047 (55) (E)
(16) (D) 4,308
Selling, general
administrative and other
expenses................ 227 82 (1) (D) 308
Research and development
expenses................ 39 6 -- 45
Provision for
depreciation, depletion
and amortization........ 225 61 17 (G)
(8) (D) 295
Interest expense......... 51 18 -- 69
Merger-related expenses.. -- 7 (7) (H) --
<CAPTION>
---------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
3,874 1,221 (70) 5,025
Earnings
Income before taxes on
income.................. 698 98 (49) 747
Provision for taxes on
income.................. 238 27 (15) (I) 250
<CAPTION>
---------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Income from operations... 460 71 (34) 497
Minority interests....... (105) -- (2) (D) (107)
<CAPTION>
---------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Net Income............. $ 355 $ 71 $ (36) $ 390
<CAPTION>
========== ========== =========== ======
<S> <C> <C> <C> <C> <C>
Earnings per Share (post-
split)
Basic.................... $ 0.49 $ 1.11 -- $ 0.45
Diluted.................. $ 0.48 $ 1.10 -- $ 0.44
Weighted average shares
outstanding (post-split):
Basic.................... 732 64 (64) (J)
135 (J) 867
Diluted.................. 744 64 (64) (J)
136 (J) 880
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
condensed consolidated financial statements.
S-14
<PAGE>
Alcoa Inc.
Unaudited Pro Forma Condensed Consolidated Earnings Statement
For the Year Ended December 31, 1999
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
Historical Reynolds Pro Forma Pro
Alcoa (A) Adjustments Forma
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Revenues
Sales........................ $16,323 $4,780 $ (191) (E)
(196) (D) $20,716
Other income................. 124 16 (1) (D) 139
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
16,447 4,796 (388) 20,855
Costs and Expenses
Cost of goods sold........... 12,536 3,928 (191) (E)
(123) (D) 16,150
Selling, general
administrative and other
expenses.................... 851 336 (17) (F)
(4) (D) 1,166
Research and development
expenses.................... 128 25 -- 153
Provision for depreciation,
depletion and amortization
............................ 888 242 69 (G)
(37) (D) 1,162
Interest expense............. 195 75 -- 270
Merger-related expenses...... -- 19 (19) (H) --
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
14,598 4,625 (322) 18,901
Earnings
Income before taxes on
income...................... 1,849 171 (66) 1,954
Provision for taxes on
income...................... 553 47 (14) (I) 586
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Income from operations....... 1,296 124 (52) 1,368
Minority interests........... (242) -- (4) (D) (246)
<CAPTION>
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Net Income................. $ 1,054 $ 124 $ (56) $ 1,122
<CAPTION>
========== ========== =========== =======
<S> <C> <C> <C> <C>
Earnings per Share (post-split)
Basic........................ $ 1.44 $ 1.95 -- $ 1.29
Diluted...................... $ 1.41 $ 1.94 -- $ 1.27
Weighted average shares
outstanding (post-split):
Basic........................ 734 64 (64) (J)
135 (J) 869
Diluted...................... 748 64 (64) (J)
136 (J) 884
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
condensed consolidated financial statements.
S-15
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars in millions, except per-share amounts)
(A) Certain reclassifications have been made to the Reynolds historical
financial statements to conform to the presentation to be used by Alcoa.
(B) The Reynolds merger is accounted for as a purchase business combination.
The Unaudited Pro Forma Condensed Consolidated Financial Statements do not
include any adjustments related to Reynolds restructuring costs or
recurring benefits from synergies, except for the Troutdate smelter
discussed below. Reynolds has certain severance plans, agreements and
policies applicable to its executive management and salaried employees. It
is probable that some covered persons will become entitled to severance
benefits under these arrangements following the completion of the merger.
The amount payable under such arrangements will range from $215 to $250
pre-tax. The final amount to be paid has not been determined at present
because Alcoa is in the process of determining which employees will be
affected. However, the known amount of $215 has been reflected in the
purchase price allocation. Alcoa has announced a curtailment of Reynolds'
Troutdale, Oregon smelter. This will result in severance and related costs
of $85 million pre-tax which has been included in the range of severance
benefits discussed above. Alcoa has completed a preliminary assessment of
potential benefits from synergies which are estimated at this time to be
$300 over the next two years.
The purchase price includes an adjustment for deferred income taxes
representing the difference between the assigned values and the tax basis
of the assets and liabilities acquired. Outstanding Reynolds employee stock
options as of May 3, 2000 have been converted to the equivalent Alcoa
options. These options were then valued using the Black Scholes Model with
a four year life, 29% volatility, 5% risk free interest rate and a 1.6%
dividend yield with the resulting value of $117 being added to the purchase
price. The weighted average fair market value of these options is $21 per-
share (pre-split). The purchase price, including acquisition costs, has
been allocated as follows:
<TABLE>
<S> <C>
Purchase price:
Acquisition of outstanding shares of common stock (see note
C).......................................................... $ 4,502
Acquisition expenses incurred by Alcoa....................... 30
Conversion of outstanding Reynolds options to Alcoa options.. 117
Less: Book value of net assets acquired...................... (2,204)
<CAPTION>
-------
<S> <C>
Increase in basis.......................................... $ 2,445
<CAPTION>
=======
<S> <C>
Allocation of increase in basis:
Increase in inventory value to convert LIFO to fair value.... $ 284
Increase in the fair value of property, plant and equipment
and intangibles not including goodwill...................... 1,756
Severance benefits........................................... (215)
Adjust pension and postretirement accruals................... 261
Increase in goodwill......................................... 1,089
Increase in deferred tax liabilities--long term.............. (730)
<CAPTION>
-------
<S> <C>
$ 2,445
<CAPTION>
=======
</TABLE>
The purchase price allocation is preliminary and further adjustments may be
made based on the completion of final valuation and other studies.
(C) Represents the issuance of Alcoa common stock for all of the common stock
of Reynolds at an exchange ratio of 1.06 (pre-split) shares of Alcoa
common stock per share of Reynolds common stock. In accordance with
generally accepted accounting principles, the value of Alcoa stock to be
issued was determined based on the market price of such Alcoa common stock
over a reasonable period of time before and after August 18, 1999, the
date the merger agreement was executed. This resulted in a value of $66.60
per share (pre-split) of Alcoa stock. Based on these facts, a value of
$70.60 (pre-split) was ascribed to each share of Reynolds common stock.
Therefore, the acquisition of 63,765,418 shares of Reynolds common stock
at a value of $70.60 (pre-split) totaled $4,502.
S-16
<PAGE>
The following details the issuance of common stock in connection with the
merger agreement.
<TABLE>
<S> <C>
Total stock acquisition price paid in shares of Alcoa common
stock......................................................... $4,502
Par value of Alcoa common stock issued at $33.30 (post-split).. (135)
------
Additional capital............................................. $4,367
======
</TABLE>
(D) Represents the Assets, Liabilities, Equity and Results of Operations from
Reynolds operations that Alcoa has agreed to divest as part of the merger
agreement. These assets include the refineries at Worsley, Australia (56%),
Stade, Germany (50%) and Sherwin, Texas (100%), as well as a 25% interest
in the aluminum smelter at Longview, Washington.
(E) Represents the elimination of inter-company sales and purchases between
Alcoa and Reynolds.
(F) Represents lower pension and OPEB expenses as a result of recording a pro
forma adjustment for pension and post-retirement accruals.
(G) Pro forma adjustments have been included to adjust depreciation expense
based on property, plant and equipment fair values and the amortization of
goodwill. An average useful life of 25 years was assumed for fixed assets
and intangibles not including goodwill and a 40-year amortization period
was assumed for goodwill.
(H) Represents the elimination of merger-related costs from the pro forma
statement of income.
(I) Represents income taxes related to pro forma adjustments at the statutory
rate and the impact of certain non-deductible costs.
(J) Represents the conversion of Reynolds common stock and the issuance of 135
million (post-split) shares of Alcoa common stock in connection with the
merger. Also included is the dilutive impact of the outstanding Reynolds
employees' stock options that have been converted to equivalent Alcoa
options.
S-17
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes offered hereby
supplements the description of the general terms and provisions of the debt
securities set forth under "Description of Senior Debt Securities" beginning on
page 6 in the accompanying prospectus. This description replaces the
description of the notes in the accompanying prospectus, to the extent of any
inconsistency. Terms used in this prospectus supplement that are otherwise not
defined will have the meanings given to them in the accompanying prospectus.
General
The 2005 Notes will be issued in an aggregate principal amount of $500,000,000,
will bear interest from July 20, 2000, at the rate of interest stated on the
cover page of this prospectus supplement and will mature on August 1, 2005.
The 2010 Notes will be issued in an aggregate principal amount of
$1,000,000,000, will bear interest from July 20, 2000, at the rate of interest
stated on the cover page of this prospectus supplement and will mature on
August 1, 2010.
Interest will be payable semi-annually on February 1 and August 1, commencing
February 1, 2001, to the persons in whose names the notes are registered at the
close of business on the January 15 or July 15, as the case may be, next
preceding such interest payment date.
The notes will be issued under the Senior Indenture described in the
accompanying prospectus. Chase Manhattan Trust Company, National Association,
as successor trustee to PNC Bank, National Association, is the trustee under
the Senior Indenture. Accordingly, references in this prospectus supplement and
the accompanying prospectus to the "Senior Trustee" shall mean Chase Manhattan
Trust Company, National Association.
The notes are not subject to the provisions of any optional or mandatory
sinking fund. The notes are not convertible or exchangeable into any other
security of the Company. The Senior Indenture sets forth the conditions under
which the Company may enter into a merger or consolidation, or convey, transfer
or lease all or substantially all of its assets or properties (see "Description
of Senior Debt Securities--Consolidation, Merger and Sale of Assets" in the
prospectus), but the covenants contained therein and the notes will not afford
holders protection in the event of a sudden decline in credit rating that may
result from a recapitalization, restructuring or other highly leveraged
transaction.
Optional Redemption
The notes will be redeemable, as a whole or in part, at our option, at any time
or from time to time, on at least 30 days, but not more than 60 days, prior
notice mailed to the registered address of each holder of notes, at a
redemption price equal to the greater of:
. 100% of the principal amount of the notes to be redeemed, plus accrued
interest, if any, to the redemption date or
. the sum of the present values of the Remaining Scheduled Payments, as
defined below, discounted, on a semiannual basis, assuming a 360-day year
consisting of twelve 30-day months, at the Treasury Rate, as defined below,
plus 12.5 basis points in the case of the 2005 Notes and 20 basis points in
the case of the 2010 Notes, plus, in either case, accrued interest to the
date of redemption which has not been paid.
"Treasury Rate" means, with respect to any redemption date for the notes:
. the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
comparable Treasury Issue; provided that if no maturity is within three
months before or after the maturity date for the notes, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue will be determined and the Treasury Rate will be interpolated or
extrapolated from those yields on a straight line basis rounding to the
nearest month; or
. if that release, or any successor release, is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date.
S-18
<PAGE>
The Treasury Rate will be calculated on the third business day preceding the
redemption date.
"Comparable Treasury Issue" means the United States Treasury security selected
by an Independent Investment Banker as having a maturity comparable to the
remaining term of the notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the remaining
term of such notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers, to
be appointed by Alcoa.
"Comparable Treasury Price" means, with respect to any redemption date for the
notes:
. the average of four Reference Treasury Dealer Quotations for that redemption
date, after excluding the highest and lowest of such Reference Treasury
Dealer Quotations; or
. if the Senior Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all quotations obtained by the Senior Trustee.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the Senior Trustee by such Reference Treasury Dealer at 3:30 p.m.,
New York City time on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of J.P. Morgan Securities Inc., Salomon
Smith Barney Inc., and two other treasury dealers selected by Alcoa, and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer, which we refer to as a
"Primary Treasury Dealer," Alcoa will substitute therefor another nationally
recognized investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each note to be redeemed,
the remaining scheduled payments of the principal thereof and interest thereon
that would be due after the related redemption date but for such redemption;
provided, however, that, if such redemption date is not an interest payment
date with respect to such note, the amount of the next succeeding scheduled
interest payment thereon will be deemed to be reduced by the amount of interest
accrued thereon to such redemption date.
On and after the redemption date, interest will cease to accrue on the notes or
any portion thereof called for redemption, unless Alcoa defaults in the payment
of the redemption price and accrued interest. On or before the redemption date,
Alcoa will deposit with a paying agent, or the Senior Trustee, money sufficient
to pay the redemption price of and accrued interest on the notes to be redeemed
on such date. If less than all of the notes are to be redeemed, the notes to be
redeemed shall be selected by the Senior Trustee by such method as the Senior
Trustee shall deem fair and appropriate.
Status
The notes will rank pari passu with other unsecured unsubordinated indebtedness
of Alcoa.
Defeasance of Certain Obligations
Alcoa may omit to comply with the covenants described under "Description of
Senior Debt Securities--Certain Limitations" and the covenants described under
"Descriptions of Senior Debt Securities--Consolidation, Merger and Sale of
Assets" in the prospectus if the conditions set forth under "Description of
Senior Debt Securities--Defeasance and Covenant Defeasance" in the prospectus
are satisfied.
Book-Entry, Delivery And Form
The notes will be issued in the form of one or more fully registered global
notes, which we refer to as the "Global Notes," which will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York, which we
refer to as the "Depositary" or "DTC," and registered in the name of Cede &
Co., the Depositary's nominee. Beneficial interests in the Global Notes will be
represented through book-entry accounts of financial institutions acting on
behalf of beneficial owners as direct and indirect participants in the
Depositary. Investors may elect to hold interests in the Global Notes through
the Depositary, Clearstream
S-19
<PAGE>
Banking, Societe Anonyme, which we refer to as "Clearstream, Luxembourg," or
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System, which we refer to as "Euroclear," if they are participants of
such systems, or indirectly through organizations which are participants in
such systems. Clearstream, Luxembourg and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in
Clearstream, Luxembourg's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of the Depositary.
Citibank, N.A. will act as depositary for Clearstream, Luxembourg and The Chase
Manhattan Bank will act as depositary for Euroclear, which we refer to in such
capacities as the "U.S. Depositaries." Except as set forth below, the Global
Notes may be transferred, in whole and not in part, only to another nominee of
the Depositary or to a successor of the Depositary or its nominee.
The Depositary has advised the Company as follows: the Depositary is a limited-
purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Securities Exchange Act of 1934. The
Depositary holds securities deposited with it by its participants and
facilitates the settlement of transactions among its participants in such
securities through electronic computerized book-entry changes in accounts of
the participants, thereby eliminating the need for physical movement of
securities certificates. The Depositary's participants include securities
brokers and dealers, including the underwriters, banks, trust companies,
clearing corporations and certain other organizations, some of whom, and/or
their representatives, own the Depositary. Access to the Depositary's book-
entry 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.
Clearstream, Luxembourg advises that it is incorporated under the laws of
Luxembourg as a bank. Clearstream, Luxembourg holds securities for its
customers, which we refer to as "Clearstream, Luxembourg Customers," and
facilitates the clearance and settlement of securities transactions between
Clearstream, Luxembourg Customers through electronic book-entry transfers
between their accounts. Clearstream, Luxembourg provides to Clearstream,
Luxembourg Customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream, Luxembourg interfaces with
domestic securities markets in over 30 countries through established depository
and custodial relationships. As a bank, Clearstream, Luxembourg is subject to
regulation by the Luxembourg Commission for the Supervision of the Financial
Sector, also known as the Commission de Surveillance du Secteur Financier.
Clearstream, Luxembourg Customers are recognized financial institutions around
the world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Clearstream,
Luxembourg's Customers in the United States are limited to securities brokers
and dealers and banks. Indirect access to Clearstream, Luxembourg is also
available to other institutions such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Clearstream, Luxembourg Customer.
Distributions with respect to the notes held through Clearstream, Luxembourg
will be credited to cash accounts of Clearstream, Luxembourg Customers in
accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Clearstream, Luxembourg.
Euroclear advises that it was created in 1968 to hold securities for its
participants, which we refer to as "Euroclear Participants," and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear provides various other services,
including securities lending and borrowing and interfaces with domestic markets
in several countries. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York, which we refer to as the "Euroclear
Operator," under contract with Euroclear Clearance Systems, S.C., a Belgian
cooperative corporation, which we refer to as the "Cooperative." All operations
are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks, including
central banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to Euroclear
is also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
S-20
<PAGE>
The Euroclear Operator is the Belgian branch of a New York banking corporation,
which is a member bank of the Federal Reserve System. As such, it is regulated
and examined by the Board of Governors of the Federal Reserve System and the
New York State Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator are
governed by the Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear System, and applicable Belgian law, which
we refer to collectively as, the "Terms and Conditions." The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to the notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary
for Euroclear.
Euroclear further advises that investors that acquire, hold and transfer
interests in the notes by book-entry through accounts with the Euroclear
Operator or any other securities intermediary are subject to the laws and
contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between
such an intermediary and each other intermediary, if any, standing between
themselves and the Global Notes.
The Euroclear Operator advises that under Belgian law, investors that are
credited with securities on the records of the Euroclear Operator have a co-
property right in the fungible pool of interests in securities on deposit with
the Euroclear Operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear Operator, Euroclear Participants would have a right under Belgian law
to the return of the amount and type of interests in securities credited to
their accounts with the Euroclear Operator. If the Euroclear Operator did not
have a sufficient amount of interests in securities on deposit of a particular
type to cover the claims of all Euroclear Participants credited with such
interests in securities on the Euroclear Operator's records, all Participants
having an amount of interests in securities of such type credited to their
accounts with the Euroclear Operator would have the right under Belgian law to
the return of their pro rata share of the amount of interest in securities
actually on deposit.
Under Belgian law, the Euroclear Operator is required to pass on the benefits
of ownership in any interests in securities on deposit with it, such as
dividends, voting rights and other entitlements, to any person credited with
such interests in securities on its records.
Individual certificates in respect of the notes will not be issued in exchange
for the Global Notes, except in very limited circumstances. If DTC notifies us
that it is unwilling or unable to continue as a clearing system in connection
with the Global Notes or ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, and a successor clearing system is not
appointed by us within 90 days after receiving such notice from DTC or upon
becoming aware that DTC is no longer so registered, we will issue or cause to
be issued individual certificates in registered form on registration of
transfer of, or in exchange for, book-entry interests in the notes represented
by such Global Notes upon delivery of such Global Notes for cancellation. In
the event that individual certificates are issued, holders of the notes will be
able to receive payments, including principal and interest, on the notes and
effect transfer of the notes at the offices of our paying and transfer agent in
Luxembourg, Deutsche Bank Luxembourg.
Title to book-entry interests in the notes will pass by book-entry registration
of the transfer within the records of Clearstream, Luxembourg, Euroclear or
DTC, as the case may be, in accordance with their respective procedures. Book-
entry interests in the notes may be transferred within Clearstream, Luxembourg
and within Euroclear and between Clearstream, Luxembourg and Euroclear in
accordance with procedures established for these purposes by Clearstream,
Luxembourg and Euroclear. Book-entry interests in the notes may be transferred
within DTC in accordance with procedures established for this purpose by DTC.
Transfers of book-entry interests in the notes among Clearstream, Luxembourg
and Euroclear and DTC may be effected in accordance with procedures established
for this purpose by Clearstream, Luxembourg, Euroclear and DTC.
S-21
<PAGE>
A further description of the Depositary's procedures with respect to the Global
Notes is set forth in the accompanying prospectus under "Description of Senior
Debt Securities--Book-Entry Securities" beginning on page 10. The Depositary
has confirmed to us, the underwriters and the trustee that it intends to follow
such procedures.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available funds.
Secondary market trading between DTC participants will occur in the ordinary
way in accordance with the Depositary's rules and will be settled in
immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Clearstream, Luxembourg Customers
and/or Euroclear Participants will occur in the ordinary way in accordance with
the applicable rules and operating procedures of Clearstream, Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
Eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through
the Depositary on the one hand, and directly or indirectly through Clearstream,
Luxembourg Customers or Euroclear Participants, on the other, will be effected
in the Depositary in accordance with the Depositary's rules on behalf of the
relevant European international clearing system by its U.S. Depositary;
however, such cross-market transactions will require delivery of instructions
to the relevant European international clearing system by the counterparty in
such system in accordance with its rules and procedures and within its
established deadlines, in European time. The relevant European international
clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its U.S. Depositary to take action to effect final
settlement on its behalf by delivering interests in the notes to or receiving
interests in the notes from the Depositary, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the Depositary. Clearstream, Luxembourg Customers and Euroclear Participants
may not deliver instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of interests in the notes received in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing and
dated the business day following the Depositary settlement date. Such credits
or any transactions involving interests in such notes settled during such
processing will be reported to the relevant Clearstream, Luxembourg Customers
or Euroclear Participants on such business day. Cash received in Clearstream,
Luxembourg or Euroclear as a result of sales of interests in the notes by or
through a Clearstream, Luxembourg Customer or a Euroclear Participant to a DTC
participant will be received with value on the Depositary settlement rate but
will be available in the relevant Clearstream, Luxembourg or Euroclear cash
account only as of the business day following settlement in the Depositary.
Although the Depositary, Clearstream, Luxembourg and Euroclear have agreed to
the foregoing procedures in order to facilitate transfers of interests in the
notes among participants of the Depositary, Clearstream, Luxembourg and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be changed or discontinued at any time.
Tax Redemption
The notes may be redeemed as a whole, at our option at any time prior to
maturity, upon the giving of a notice of redemption as described below, if (a)
we determine that, as a result of any change in or amendment to the laws, or
any regulations or rulings promulgated thereunder, of the United States or of
any political subdivision or taxing authority thereof or therein, or any change
in official position regarding the application or interpretation of such laws,
regulations or rulings, which change or amendment becomes effective on or after
the date of this prospectus supplement, we have or will become obligated to pay
additional amounts as described under "--Payment of Additional Amounts" below
or (b) a taxing authority of the United States takes an action on or after the
date of this prospectus supplement whether or not with respect to us or any of
our affiliates that results in a substantial probability that we will or may be
required to pay such additional amounts, in either case, with respect to such
notes for reasons outside our control and after taking reasonable measures
available to us to avoid such obligation. The notes will be redeemed at a
redemption price equal to
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<PAGE>
100% of the principal amount thereof, together with accrued interest to the
date fixed for redemption. Prior to the giving of any notice of redemption
pursuant to this paragraph, we will deliver to the Senior Trustee:
. a certificate stating that we are entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to
our right to so redeem have occurred, and
. an opinion of independent counsel satisfactory to the Senior Trustee to the
effect that we have or will become obligated or there is a substantial
probability that we will or may be required to pay such additional amounts
for the reasons described above;
provided that no such notice of redemption shall be given earlier than 60 days
prior to the earliest date on which we would be obligated to pay such
additional amounts if a payment in respect of the notes were then due.
Notice of redemption will be given not less than 30 nor more than 60 days prior
to the date fixed for redemption, which date and the applicable redemption
price will be specified in the notice. This notice will be given in accordance
with "--Notices" below.
Further Issues
We may from time to time, without notice to, or the consent of, the registered
holders of the notes, create and issue further notes equal in rank to the notes
offered hereby in all respects (or in all respects except for the payment of
interest accruing prior to the issue date of such further notes or except for
the first payment of interest following the issue date of such further notes)
and so that such further notes may be consolidated and form a single series
with the notes and have the same terms as to status, redemption or otherwise as
the notes.
Payment of Additional Amounts
We will, subject to certain exceptions and limitations set forth below, pay
such additional amounts to the beneficial owner of any note who is a Non-U.S.
Holder, as defined below, as may be necessary in order that every net payment
of principal of and interest on such note and any other amounts payable on such
note, after withholding 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 note to be
then due and payable. We will not, however, be required to make any such
payment of additional amounts to any beneficial owner for or on account of:
. any such tax, assessment or other governmental charge that would not have
been so imposed or withheld but for the existence of any present or former
connection between such beneficial owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of such beneficial owner, if such
beneficial owner is an estate, a trust, a partnership or a corporation) and
the United States and its possessions, including, without limitation, such
beneficial owner (or such fiduciary, settlor, beneficiary, member or
shareholder) being or having been a citizen or resident thereof or being or
having been engaged in a trade or business or present therein or having, or
having had, a permanent establishment therein;
. any estate, inheritance, gift, sales, excise, transfer, wealth or personal
property tax or any similar tax, assessment or governmental charge;
. any tax, assessment or other governmental charge imposed or withheld by
reason of such beneficial owner's past or present status as a personal
holding company or foreign personal holding company or controlled foreign
corporation or passive foreign investment company with respect to the United
States or as a corporation that accumulates earnings to avoid United States
federal income tax;
. any tax, assessment or other governmental charge that is payable otherwise
than by withholding from payments on or in respect of any note;
. any tax, assessment or other governmental charge that would not have been
imposed or withheld but for the failure to comply with certification,
information or other reporting requirements concerning the nationality,
residence or identity of the beneficial owner of such note, if such
compliance is required by statute or by regulation of the United States or
of any political subdivision or taxing authority thereof or therein or by an
applicable income tax treaty to which the United States is a party as a
precondition to relief or exemption from such tax, assessment or other
governmental charge;
S-23
<PAGE>
. any tax, assessment or other governmental charge imposed or withheld by
reason of such beneficial owner's past or present status as the actual or
constructive owner of 10% or more of the total combined voting power of all
classes of our stock entitled to vote or as a controlled foreign corporation
that is related directly or indirectly to us through stock ownership; or
. any combination of these factors.
Such additional amounts shall also not be paid with respect to any payment on a
note to a Non-U.S. Holder, as defined below, who is a fiduciary or partnership
or other than the sole beneficial owner of such payment to the extent such
payment would be required by the laws of the United States, or any political
subdivision thereof, to be included in the income, for tax purposes, of a
beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to such
additional amounts had such beneficiary, settlor, member or beneficial owner,
as the case may be, held its interest in the note directly. The term "Non-U.S.
Holder" is defined below and includes a foreign partnership to the extent that
one or more of its members is a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust.
Notices
Notices to holders of the notes will be sent by mail to the registered holders
and will be published, whether the notes are in global or definitive form, and
so long as the notes 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 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. So long as the notes are
listed on the Luxembourg Stock Exchange, any appointment of or change in the
Luxembourg paying agent and transfer agent will be published in Luxembourg in
the manner set forth above.
Regarding the Senior Trustee
Chase Manhattan Trust Company, National Association, is the Senior Trustee
under the Senior Indenture. The Company and certain of its subsidiaries
maintain deposit accounts and conduct other banking transactions, including
borrowings in the ordinary course of business, with Chase Manhattan Trust
Company, National Association, or its affiliates.
S-24
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF NOTES
The following is a summary of certain of the United States federal income tax
consequences of the purchase, ownership and disposition of the notes. This
summary addresses only notes that are held as capital assets (generally, assets
held for investment) by non-U.S. holders that purchase the notes upon original
issuance. This summary does not address all of the tax consequences that may be
relevant to non-U.S. holders subject to special tax treatment such as, for
example, banks, insurance companies, broker dealers, or tax-exempt
organizations. This summary does not apply to holders owning 10% or more of the
voting stock of Alcoa, controlled foreign corporations related to Alcoa through
stock ownership or banks making a loan in the ordinary course of their
business. In addition, this summary does not address any aspect of state,
local, foreign or other tax laws. This summary is based on the United States
federal income tax law in effect as of the date hereof, which is subject to
change, possibly on a retroactive basis. We have not sought, and will not seek,
any ruling from the IRS with respect to the tax consequences discussed in this
prospectus supplement, and we cannot assure you that the IRS will not take a
position contrary to the tax consequences discussed below or that a court would
not sustain any such position taken by the IRS. You should consult your tax
advisor as to the particular tax consequences of purchasing, owning, and
disposing of the notes, including the application and effect of United States
federal, state, local, foreign and other tax laws.
For purposes of this summary, the term "non-U.S. holder" means any beneficial
owner of the notes that is not a U.S. holder. A "U.S. holder" is a beneficial
owner of the notes that is for United States federal income tax purposes
. an individual who is a citizen or resident of the United States,
. a corporation created or organized under the laws of the United States
or any state or political subdivision thereof
. an estate the income of which is includible in gross income for United
States federal income tax purposes regardless of its source, or
. a trust (A) the administration of which is subject to the primary
supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial
decisions of the trust or (B) that was in existence on August 20, 1996,
was treated as a United States person under the Code on the previous day
and elected to continue to be so treated.
No U.S. federal income tax will generally be imposed on the income of a
partnership, but a partner in such partnership may be subject to taxation on
such partner's share of partnership income, depending upon the status of the
partner and the activities of the partnership. Partnerships that hold notes and
partners in such partnerships should consult their tax advisors regarding the
United States federal income tax consequences of the acquisition, ownership,
and disposition of such notes.
Treatment of Non-U.S. Holders
A non-U.S. holder will generally not be subject to United States federal
income or withholding tax on payments of principal or interest on the notes
provided that the non-U.S. holder satisfies the requirements of the "portfolio
interest" exemption. These requirements will generally be satisfied if the non-
U.S. holder:
. does not actually or constructively own 10% or more of the total
combined voting power of all classes of the capital stock of Alcoa;
. is not a controlled foreign corporation that is related to Alcoa through
stock ownership, a foreign tax-exempt organization, or a foreign private
foundation for U.S. federal income tax purposes; and
. either (A) the non-U.S. holder provides a signed statement (generally on
IRS Form W-8 or other approved form) (the "Owner's Statement") to Alcoa
or its paying agent, if any, under the penalty of perjury that it is a
non-U.S. holder 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 notes in that capacity, certifies
to Alcoa or its paying agent, if any, under the penalty of perjury that
such Owner's Statement has been received from the non-U.S. holder by it
or by a financial institution between it and the non-U.S. holder and
furnishes Alcoa or its paying agent, if any, with a copy of such Owner's
Statement.
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<PAGE>
If a non-U.S. holder does not satisfy the requirements of the "portfolio
interest" exemption, payments of interest made to the non-U.S. holder will
generally be subject to a 30% withholding tax. A non-U.S. holder may reduce or
eliminate this 30% withholding tax if the non-U.S. holder provides Alcoa or its
paying agent, if any, with a properly completed
. IRS Form W-8BEN properly claiming an exemption from, or a reduction of,
such withholding tax under an applicable tax treaty; or
. IRS Form W-8ECI stating that payment with respect to the notes is not
subject to withholding tax because it is effectively connected with the
non-U.S. holder's conduct of a trade or business in the United States.
Generally, a non-U.S. holder will not be subject to United States federal
income or withholding tax on any amount which constitutes gain upon sale,
exchange, retirement or other disposition of the notes, provided:
. the gain is not effectively connected with conduct of a trade or
business in the United States by the non-U.S. holder; and
. in the case of a non-U.S. holder who is a nonresident alien individual,
either (a) that non-U.S. holder was not present in the United States for
183 days or more in the taxable year of the disposition or (b) certain
other conditions necessary for the imposition of tax were not present.
Any interest or gain from the notes that is effectively connected with the
conduct of a United States trade or business by a non-U.S. holder will be
subject to United States federal income tax on a net income basis in the same
manner as if that non-U.S. holder were a United States person and, if the non-
U.S. holder is a corporation, that non-U.S. holder will also be subject to a
United States branch profits tax equal to 30 percent of its "effectively
connected earnings and profits" as adjusted for the taxable year, unless the
non-U.S. holder qualifies for an exemption from, or a reduction of, such tax
under an applicable tax treaty.
Information Reporting and Backup Withholding
Current United States federal income tax law provides that the 31% backup
withholding tax will not apply to interest payments made outside the United
States to non-U.S. Holders by Alcoa or its paying agent, if any, if an Owner's
Statement is received or an exemption has otherwise been established; provided
in each case that Alcoa or its paying agent, if any, does not have actual
knowledge that the payee is a United States person. Interest payments made to
non-U.S. holders will be reported to the IRS on Form 1042-S.
Under current Treasury Regulations, payments of the proceeds of the sale of a
note to or through a foreign office of a "broker" will not be subject to backup
withholding but will be subject to information reporting if the broker is a
United States person, a controlled foreign corporation for United States
federal income tax purposes, or a foreign person 50% or more of whose gross
income is from a United States trade or business for a specified three-year
period, unless the broker has in its records documentary evidence that the non-
U.S. holder is not a United States person and certain conditions are met or the
non-U.S. holder otherwise establishes an exemption. Payment of the proceeds of
a sale to or through the United States office of a broker is subject to backup
withholding and information reporting unless the holder certifies its non-
United States status under the penalty of perjury or otherwise establishes an
exemption.
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UNDERWRITING
Under the terms and subject to the conditions contained in the underwriting
agreement dated the date hereof, the underwriters named below have severally
agreed to purchase, and we have agreed to sell to them severally, the
respective amount of the notes set forth below opposite their names. In the
underwriting agreement, the underwriters have agreed to purchase all the notes
if any notes are purchased.
<TABLE>
<CAPTION>
Principal Amount Principal Amount
Name of 2005 Notes of 2010 Notes
---- ---------------- ----------------
<S> <C> <C>
J.P. Morgan Securities Inc. ........... $195,000,000 $ 390,000,000
Salomon Smith Barney Inc. ............. 195,000,000 390,000,000
Credit Suisse First Boston
Corporation........................... 50,000,000 100,000,000
ABN AMRO Incorporated.................. 10,000,000 20,000,000
Banc of America Securities LLC......... 10,000,000 20,000,000
Chase Securities Inc. ................. 10,000,000 20,000,000
Deutsche Bank Securities Inc. ......... 10,000,000 20,000,000
Banc One Capital Markets, Inc. ........ 5,000,000 10,000,000
CommerzBank Capital Markets
Corporation........................... 5,000,000 10,000,000
Mellon Financial Markets LLC........... 5,000,000 10,000,000
Tokyo-Mitsubishi International PLC..... 5,000,000 10,000,000
------------ --------------
Total................................ $500,000,000 $1,000,000,000
============ ==============
</TABLE>
We have been advised by the underwriters that the underwriters propose to offer
the notes to the public initially at the public offering price set forth on the
cover page of this prospectus supplement and to certain dealers at such price
less a concession not in excess of 0.25% of the principal amount of the 2005
Notes and 0.35% of the principal amount of the 2010 Notes; that the
underwriters may allow, and such dealers may reallow, a concession not in
excess of 0.125% of the principal amount of the 2005 Notes and 0.125% of the
principal amount of the 2010 Notes on sales to certain other dealers; and that
after the initial public offering the public offering price and such
concessions may be changed by the underwriters.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
The notes are offered for sale in those jurisdictions in the United States,
Europe and Asia where it is legal to make such offers.
The underwriters have represented and agreed that (1) they have not taken any
action in any jurisdiction that would permit a public offering of the notes,
and will not possess or distribute this prospectus supplement and the
accompanying prospectus or any other offering material in any other
jurisdiction where action for that purpose is required and (2) they will comply
with all relevant laws and regulations in each jurisdiction in which they (A)
purchase, offer, sell or deliver notes or (B) have in their possession or
distribute the prospectus supplement and prospectus or any other offering
material.
The underwriters have agreed that they have not offered or sold, and will not
offer or sell, directly or indirectly, any of the notes in or to residents of
Japan or to any persons for reoffering or resale, directly or indirectly, in
Japan or to any resident of Japan unless an exemption from the registration
requirements of the Securities and Exchange Law is available and they are in
compliance with the other relevant laws of Japan.
The underwriters have represented and agreed that (1) they have not offered or
sold and prior to the date six months after the date of issue of the notes will
not offer or sell any notes to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purpose 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; (2) they have complied and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by them in relation to the notes in, from or
otherwise involving the United Kingdom; and (3) they have only issued or passed
on and will only issue or pass on in the United Kingdom any document received
by them in connection with the issue of the notes to a person who is of a kind
described in Article 11 (3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document
may otherwise lawfully be issued or passed on.
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<PAGE>
Although application has been made to list the notes on the Luxembourg Stock
Exchange, a listing may not be obtained. In addition, the notes are a new issue
of securities with no established trading market. The Company has been advised
by the underwriters that they intend to make a market in the notes, but that
they are not obligated to do so and may discontinue such market-making at any
time without notice.
Purchasers of the notes 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.
In connection with the offering of the notes, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the underwriters may overallot in connection with the
offering of the notes, creating a syndicate short position. In addition, the
underwriters may bid for, and purchase, notes in the open market to cover
syndicate shorts or to stabilize the price of the notes. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the notes in the offering of the notes, if the syndicate repurchases previously
distributed notes in syndicate covering transactions, stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the notes above independent market levels. The underwriters
are not required to engage in any of these activities and may end any of them
at any time.
Expenses associated with this offering to be paid by Alcoa are estimated at
$1,010,000.
Two of our directors, Henry B. Schacht and Marina v.N. Whitman, are also
directors of The Chase Manhattan Corporation and The Chase Manhattan Bank,
affiliates of Chase Securities Inc. The Senior Trustee, Chase Manhattan Trust
Company, National Association, is also an affiliate of Chase Securities Inc.
In the ordinary course of their respective businesses, the underwriters or
their affiliates have engaged, are engaging and may in the future engage in
investment banking, financial advisory and/or commercial banking transactions
with us and our affiliates.
LEGAL MATTERS
The validity of the notes offered by this prospectus supplement will be passed
upon for Alcoa by Thomas F. Seligson, Esq., Counsel of Alcoa. Mr. Seligson is
paid a salary by Alcoa, is a participant in various employee benefit plans
offered by Alcoa to employees of Alcoa generally and has options to purchase
shares of Alcoa common stock. The underwriters have been represented by
Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore is
currently representing Alcoa in connection with various matters.
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<PAGE>
GENERAL INFORMATION
Listing
Application has been made to list the notes on the Luxembourg Stock Exchange.
In connection with the listing application, Alcoa's articles of incorporation
and by-laws and a legal notice relating to the issuance of the notes have been
deposited prior to listing with the Chief Registrar of the District Court of
Luxembourg, where copies thereof may be obtained upon request. Copies of the
above documents together with this prospectus supplement, the accompanying
prospectus and the Senior Indenture and our current Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and Current Reports on Form 8-K, as well as all
such future reports, so long as any of the notes are outstanding, will be made
available for inspection at the main office in Luxembourg. Deutsche Bank
Luxembourg will act as intermediary for Alcoa and the holders of the notes. In
addition, copies of the above reports of Alcoa may be obtained free of charge
at such office. The underwriting agreement will be available for inspection at
the offices of Deutsche Bank Luxembourg.
Independent Accountants
The independent accountants of Alcoa are PricewaterhouseCoopers LLP.
Material Change
Other than as disclosed or contemplated herein or in the documents incorporated
herein by reference, there has been no material adverse change in our financial
position since March 31, 2000.
Litigation
Other than as disclosed or contemplated in the documents incorporated herein by
reference, neither we nor any of our subsidiaries is involved in litigation,
arbitration, or administrative proceedings relating to claims or amounts that
are material in the context of the issue of the notes and we are not aware of
any such litigation, arbitration, or administrative proceedings pending or
threatened.
Authorization
Resolutions relating to the issue and sale of the notes were adopted by the
Board of Directors of Alcoa on January 15, 1993, May 13, 1993, March 11, 1994,
November 10, 1995, March 13, 1998 and March 10, 2000.
Identification Numbers
The notes have been accepted for clearing through Euroclear and Clearstream,
Luxembourg. The 2005 Notes have been assigned International Security
Identification Number (ISIN) No. US013817AA95 and CUSIP No. 013817AA9. The 2010
Notes have been assigned International Security Identification Number (ISIN)
No. US013817AB78 and CUSIP No. 013817AB7.
S-29
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[LOGO OF ALCOA]
$1,500,000,000
Aluminum Company of America
Debt Securities,
Warrants to Purchase Senior Debt Securities,
Preferred Stock and Common Stock
Alcoa Trust I
Trust Preferred Securities Fully and Unconditionally
Guaranteed by Aluminum Company of America
---------------
Aluminum Company of America, a Pennsylvania corporation (the "Company" or
"Alcoa"), may issue from time to time, together or separately up to an
aggregate initial offering price of $1,500,000,000 of its (i) unsecured senior
debt securities (the "Senior Debt Securities"), (ii) unsecured subordinated
debt securities (the "Subordinated Debt Securities" and, together with the
Senior Debt Securities, the "Debt Securities"), (iii) warrants to purchase
Senior Debt Securities (the "Warrants"), (iv) Class B Serial Preferred Stock
(the "Preferred Stock" or "Class B Stock") in one or more series, and (v)
shares of common stock, $1.00 par value, of the Company (the "Common Stock")
issuable only upon conversion of securities which are, pursuant to the terms
thereof, convertible into shares of Common Stock. The Debt Securities,
Preferred Stock and Warrants may be offered independently or together in any
combination for sale directly to purchasers or through dealers, underwriters or
agents designated and in amounts, at prices and on terms to be determined by
market conditions at the time of the offering. The Debt Securities, Warrants,
Preferred Stock and Common Stock are referred to herein collectively as the
"Company Securities."
Alcoa Trust I (the "Alcoa Trust"), a statutory business trust formed under
Delaware law, may offer, from time to time, preferred securities (the "Trust
Preferred Securities") with the payment of dividends and payments on
liquidation or redemption of the Trust Preferred Securities issued by the Alcoa
Trust guaranteed on a subordinated basis by the Company (the "Trust Guarantee")
to the extent described herein and in an accompanying prospectus supplement
(the "Prospectus Supplement"). The Company will be the owner of the trust
interests represented by common securities (the "Trust Common Securities") to
be issued by the Alcoa Trust. Unless indicated otherwise in a Prospectus
Supplement, the Alcoa Trust exists for the sole purpose of issuing its trust
interests and investing the proceeds thereof in Subordinated Debt Securities.
The Company Securities and the Trust Preferred Securities are referred to
herein collectively as the "Offered Securities."
The Offered Securities may be issued in one or more series or issuances and
will be limited to $1,500,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt
Securities are issued for one or more foreign currencies or currency units).
The Offered Securities may be sold for U.S. dollars, or any foreign currency or
currencies or currency units, and the principal of, any premium on, and any
interest on, the Debt Securities may be payable in U.S. dollars, or any foreign
currency or currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series in amounts, at prices and on terms to be
determined at or prior to the time of sale.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement, including, where applicable, (i) in the case of Debt Securities,
the specific designation, aggregate principal amount, authorized denomination,
initial offering price, maturity (which may be fixed or extendible), premium
(if any), interest rate (which may be fixed or floating), time of and method of
calculating the payment of interest, if any, the currency in which principal,
premium, if any, and interest, if any, are payable, any redemption, conversion
or sinking fund terms and other specific terms; (ii) in the case of the
Warrants, a description of the Debt Securities for which each Warrant is
exercisable and the offering price, if any, the exercise price, duration and
any other specific terms not set forth herein of the Warrants; (iii) in the
case of the Preferred Stock, the specific title, number of shares, rate (or
method of calculation) and time of payments of dividend, liquidation amounts,
any conversion or exchange provisions and any other specific terms of the
Preferred Stock; (iv) in the case of Trust Preferred Securities, the
designation, number of shares, liquidation amount per share, initial public
offering price, dividend rate (or method of calculation thereof), dates on
which dividends shall be payable and dates from which dividends shall accrue,
any redemption or sinking fund provisions and any conversion or exchange
provisions; and (v) in the case of all Offered Securities, whether such Offered
Securities will be offered separately or as a unit with other Offered
Securities. The Prospectus Supplement will also contain information, where
applicable, about certain United States Federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered
Securities covered by the Prospectus Supplement.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Offered Securities will be sold directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of such
methods. If any agents of the Company or the Alcoa Trust or any dealers or
underwriters are involved in the sale of the Offered Securities in respect of
which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable agent's commission, dealer's purchase price or
underwriter's discount will be set forth in or may be calculated from the
Prospectus Supplement. The net proceeds to the Company or the Alcoa Trust from
such sale will be the purchase price less such commission in the case of an
agent, the purchase price 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, other
attributable expenses. See "Plan of Distribution."
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is September 9, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company and the Alcoa Trust have filed with the Securities and Exchange
Commission (the "Commission") a joint registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the Alcoa
Trust and the securities offered hereby, reference is made to the Registration
Statement and to the exhibits thereto. Any statements made in this Prospectus
concerning the provisions of certain documents are not necessarily complete
and, in each instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the
Commission.
Alcoa 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 Registration Statement, the exhibits forming a part thereof
and the reports and other information filed by the Company with the Commission
may be inspected and copies may be obtained at the principal office of the
Commission at 450 Fifth Street, N.W., Washington D.C. 20549, and at the
following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such materials can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such information 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 Alcoa can also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
No separate financial statements of the Alcoa Trust have been included or
incorporated by reference herein. Neither the Alcoa Trust nor the Company
considers such financial statements material to holders of Trust Preferred
Securities because (i) all of the voting securities of the Alcoa Trust will be
owned, directly or indirectly, by the Company, a reporting company under the
Exchange Act, (ii) the Alcoa Trust has no independent operations but rather
exists for the purpose of issuing securities representing undivided beneficial
interests in the assets of the Alcoa Trust and investing the proceeds thereof
in Subordinated Debt Securities, and (iii) the obligations of the Alcoa Trust
under the Trust Preferred Securities are fully and unconditionally guaranteed
on a subordinated basis by the Company to the extent set forth herein. See
"The Alcoa Trust" and "Description of Trust Preferred Securities and Trust
Guarantee--Trust Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Alcoa has filed with the Commission, pursuant to the Exchange Act, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, filed on
March 11, 1998, as amended by Amendment No. 1 on Form 10-K/A, filed on June
26, 1998 (the "Alcoa 1997 Form 10-K"), Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998 and June 30, 1998, and a Current Report on Form
8-K, dated June 10, 1998, each of which is hereby incorporated in and made a
part of this Prospectus. Statements contained in any such documents as to the
contents of any contract or other document referred to therein are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or other document filed with the Commission, each such statement
being qualified in all respects by such reference.
All documents filed by the Company 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
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<PAGE>
the Offered Securities shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated, or deemed to be
incorporated, by reference herein or contained in this Prospectus shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent any statement contained herein or in any 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 to constitute a part hereof except as so modified or
superseded. This Prospectus does not contain all the information set forth in
the Registration Statement of which this Prospectus forms a part which the
Company has filed with the Commission and to which reference is hereby made.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to Aluminum Company of America, 201 Isabella Street,
Pittsburgh, Pennsylvania 15212-5858, Attention: Treasurer (telephone:
(412) 553-4545).
3
<PAGE>
THE COMPANY
The Company is the world's leading producer of aluminum and alumina and a
major participant in all segments of the industry: mining, refining, smelting,
fabricating and recycling. The Company serves customers worldwide in the
packaging, automotive, aerospace, construction and other markets with a great
variety of fabricated and finished products. Its operations consist of the
three segments described below.
The alumina and chemicals segment includes the production and sale of
bauxite, alumina chemicals and related transportation services. The aluminum
processing segment comprises the production and sale of molten metal, ingot
and aluminum products that are flat-rolled, engineered or finished. Also
included are power, transportation and other services. The non-aluminum
products segment includes the production and sale of electrical, plastic and
composite materials products, manufacturing equipment, gold, magnesium
products and steel and titanium forgings.
Alcoa is organized into 21 independently-managed business units and has over
180 operating locations in 28 countries, serving a broad range of markets in
developing and industrialized economies. The principal executive offices of
the Company are located at 201 Isabella Street, Pittsburgh, Pennsylvania
15212-5858 (Telephone: (412) 553-4545).
Ratios Of Earnings To Fixed Charges
The ratios of the Company's earnings to fixed charges for the years ended
December 31, 1993 through 1997 are 2.22, 6.47, 10.45, 7.25 and 9.44. The ratio
of the Company's earnings to fixed charges for the three month period ended
March 31, 1998 is 9.10. The ratios include all earnings, before extraordinary
items and the cumulative effects of accounting changes, and fixed charges of
the Company and its majority owned subsidiaries plus the Company's
proportionate share of earnings of 50% owned entities. Earnings have been
calculated by adding to net income the provision for taxes on income,
amortization of capitalized interest, interest expense and an amount
representative of the interest factor in rentals, and have been decreased by
the undistributed earnings of entities less than 50% owned, preferred stock
dividend requirements of majority owned subsidiaries and the minority interest
share in the losses of majority owned subsidiaries without fixed charges of
the Company. Fixed charges consist of total interest expense, amortization of
debt expense, an amount representative of the interest factor in rentals,
capitalized interest and preferred stock dividend requirements of majority
owned subsidiaries.
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<PAGE>
ALCOA TRUST I
Alcoa Trust I (the "Alcoa Trust") is a statutory business trust formed under
Delaware law pursuant to (i) a Declaration of Trust (a "Declaration") executed
by the Company, as sponsor for the Alcoa Trust, and the Trustees (as defined
herein) of the Alcoa Trust and (ii) the filing of a certificate of trust with
the Delaware Secretary of State. Unless an accompanying Prospectus Supplement
provides otherwise, the Alcoa Trust exists for the sole purposes of (i)
issuing the Trust Preferred Securities and investing the proceeds thereof in a
specific series of Subordinated Debt Securities, (ii) issuing and selling
Common Securities to the Company in exchange for cash and investing the
proceeds thereof in additional Subordinated Debt Securities, and (iii)
engaging in such other activities as are necessary, convenient or incidental
thereto. The Alcoa Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the Alcoa
Trust not to be classified for United States federal income tax purposes as a
grantor trust. All of the Trust Common Securities will be owned by the
Company. The Trust Common Securities will rank pari passu, and payments will
be made thereon pro rata, with the Trust Preferred Securities, except that
upon the occurrence and continuance of an event of default under the
Declaration, the rights of the holders of the Trust Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. The Company will acquire Trust Common Securities having
an aggregate liquidation amount equal to a minimum of 3% of the total capital
of the Alcoa Trust. The Alcoa Trust will have a term of 40 years, but may
terminate earlier as provided in the Declaration. The Alcoa Trust's business
and affairs will be conducted by the Trustees. The holder of the Trust Common
Securities will be entitled to appoint, remove or replace any of, or increase
or reduce the number of, the Trustees of the Alcoa Trust. The duties and
obligations of the Trustees shall be governed by the Declaration of the Alcoa
Trust. At least one of the Trustees of the Alcoa Trust will be a person who is
an employee or officer of or who is affiliated with the Company (a "Regular
Trustee"). One Trustee of the Alcoa Trust will be a financial institution that
is not affiliated with the Company, which shall act as property trustee and as
indenture trustee for the purposes of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), pursuant to the terms set forth in a
Prospectus Supplement (the "Property Trustee"). In addition, unless the
Property Trustee maintains a principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, one Trustee
of the Alcoa Trust will be a legal entity having a principal place of business
in, or an individual resident of, the State of Delaware (the "Delaware
Trustee" and, together with the Regular Trustee and the Property Trustee, the
"Trustees"). The Company will pay all fees and expenses related to the Alcoa
Trust and the offering of the Trust Preferred Securities. Unless otherwise set
forth in the Prospectus Supplement, the Property Trustee will be The Chase
Manhattan Bank, and the Delaware Trustee will be Chase Manhattan Bank
Delaware. The office of the Delaware Trustee in the State of Delaware is 1201
Market Street, Wilmington, Delaware 19801. The principal place of business of
the Alcoa Trust is c/o Aluminum Company of America, 201 Isabella Street,
Pittsburgh, Pennsylvania 15212-5858. Telephone: (412) 553-4545.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Company Securities offered hereby will be used for
general corporate purposes, including repayment of borrowings, working
capital, capital expenditures, stock repurchase programs and acquisitions,
including borrowings under the Company's commercial paper program. Unless
otherwise specified in the Prospectus Supplement, the Alcoa Trust will use all
proceeds received from the sale of Trust Preferred Securities to purchase
Subordinated Debt Securities of the Company. Additional information on the use
of net proceeds from the sale of the Offered Securities offered hereby may be
set forth in the Prospectus Supplement relating to such Offered Securities.
5
<PAGE>
DESCRIPTION OF SENIOR DEBT SECURITIES
The following description of the terms of the Senior Debt Securities
summarizes certain general terms and provisions of the Senior Debt Securities
to which any Prospectus Supplement may relate. The particular terms of the
Senior Debt Securities and the extent, if any, to which such general
provisions may apply to any series of Senior Debt Securities will be described
in the Prospectus Supplement relating to such series.
Senior Debt Securities may be issued, from time to time, in one or more
series under an Indenture, dated as of September 30, 1993 (the "Senior
Indenture"), between the Company and PNC Bank, National Association, as
trustee, or such other trustee as shall be named in a Prospectus Supplement
(the "Senior Trustee"). The Senior Indenture is filed with the Commission and
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part. The following statements are subject to the
detailed provisions of the Senior Indenture. Wherever any particular
provisions of the Senior Indenture or terms defined therein are referred to,
such provisions and terms are incorporated by reference as a part of the
statements made herein and such statements are qualified in their entirety by
such references, including the definitions therein of certain terms.
References to particular sections of the Senior Indenture are noted below.
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Senior Indenture.
General
The Senior Indenture does not limit the aggregate amount of Senior Debt
Securities which may be issued thereunder and Senior Debt Securities may be
issued thereunder from time to time in separate series up to the aggregate
amount from time to time authorized by the Company for each series. The Senior
Debt Securities will be unsecured obligations of the Company and will rank on
a parity with all other unsecured and unsubordinated indebtedness of the
Company.
The applicable Prospectus Supplement relating to the Senior Debt Securities
will describe the following terms of the Senior Debt Securities: (1) the title
of the Senior Debt Securities; (2) any limit on the aggregate principal amount
of the Senior Debt Securities; (3) whether the Senior Debt Securities are to
be issuable as Registered Securities or Bearer Securities or both, whether any
of the Senior Debt Securities are to be issuable initially in temporary global
form and whether any of the Senior Debt Securities are to be issuable in
permanent global form; (4) the price or prices (expressed as a percentage of
the aggregate principal amount thereof) at which the Senior Debt Securities
will be issued; (5) the date or dates on which the Senior Debt Securities will
mature; (6) the rate or rates per annum at which the Senior Debt Securities
will bear interest, if any, or the formula pursuant to which such rate or
rates shall be determined, and the date from which any such interest will
accrue; (7) the Interest Payment Dates on which any such interest on the
Senior Debt Securities will be payable, the Regular Record Date for any
interest payable on any Senior Debt Securities which are Registered Securities
on any Interest Payment Date and the extent to which, or the manner in which,
any interest payable on a temporary global Senior Debt Security on an Interest
Payment Date will be paid if other than in the manner described under "--
Temporary Global Securities" below; (8) the person to whom any interest on any
Registered Security of the series will be payable if other than the person in
whose name such Registered Security is registered at the close of business on
the Regular Record Date for such interest as described under "--Payment and
Paying Agents" below, and the manner in which any interest on any Bearer
Security will be paid if other than in the manner described under "--Payment
and Paying Agents" below; (9) any mandatory or optional sinking fund or
analogous provisions; (10) each office or agency where, subject to the terms
of the Senior Indenture as described below under "--Payment and Paying
Agents," the principal of and any premium and interest on the Senior Debt
Securities will be payable and each office or agency where, subject to the
terms of the Senior Indenture as described below under "--Form, Exchange,
Registration and Transfer," the Senior Debt Securities may be presented for
registration of transfer or exchange; (11) the date, if any, after which
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and the price or prices at which the Senior Debt Securities may, pursuant to
any optional or mandatory redemption provisions, be redeemed, in whole or in
part, and the other detailed terms and provisions of any such optional or
mandatory redemption provisions; (12) the denominations in which any Senior
Debt Securities which are Registered Securities will be issuable, if other
than denominations of $1,000 and any integral multiple thereof, and the
denomination or denominations in which any Senior Debt Securities which are
Bearer Securities will be issuable, if other than the denomination of $5,000;
(13) the currency, currencies or currency units of payment of principal of and
any premium and interest on the Senior Debt Securities and the manner of
determining the U.S. dollar equivalent thereof for purposes of determining
Outstanding Senior Debt Securities of such series; (14) any index used to
determine the amount of payments of principal of and any premium and interest
on the Senior Debt Securities; (15) the portion of the principal amount of the
Senior Debt Securities if other than the principal amount thereof, payable
upon acceleration of maturity thereof; (16) if other than the Senior Trustee,
the Person who shall be the Security Registrar of Senior Debt Securities; (17)
if applicable, that the Senior Debt Securities shall be subject to defeasance
or covenant defeasance as described under "--Defeasance and Covenant
Defeasance;" (18) the terms and conditions, if any, pursuant to which the
Senior Debt Securities of the series are convertible into or exchangeable for
Common Stock of the Company; (19) if and as applicable, that the Senior Debt
Securities of the series shall be issuable in whole or in part in the form of
one or more Book-Entry Securities and, in such case, the Depository or
Depositories for such Book-Entry Debt Security or Book-Entry Securities and
any circumstances other than those set forth in the Senior Indenture in which
any such Book-Entry Security may be transferred to, and registered and
exchanged for Senior Debt Securities registered in the name of, a Person other
than the Depository for such Book-Entry Security or a nominee thereof and in
which any such transfer may be registered; and (20) any other terms of the
Senior Debt Securities not inconsistent with the provisions of the Senior
Indenture. (Section 301) Any such Prospectus Supplement will also describe any
special provisions for the payment of additional amounts with respect to the
Senior Debt Securities.
Senior Debt Securities may be issued at a substantial discount below their
stated principal amount. Certain United States Federal income tax
considerations applicable to Senior Debt Securities issued at discount and to
Senior Debt Securities which are denominated in a currency other than United
States dollars will be described in the Prospectus Supplement relating
thereto.
Senior Debt Securities may also be issued under the Senior Indenture upon
the exercise of Warrants issued by the Company. See "Description of Warrants."
United States Federal income tax consequences applicable to any Warrants will
be set forth in the Prospectus Supplement relating thereto.
Form, Exchange, Registration And Transfer
Senior Debt Securities of a series may be issuable in definitive form solely
as Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in an applicable
Prospectus Supplement, definitive Bearer Securities will have interest coupons
attached. (Section 201) The Senior Indenture also will provide that Senior
Debt Securities of a series may be issuable in temporary and permanent global
form. (Section 201) See "Permanent Global Securities."
In connection with its sale during the restricted period (as defined in
United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), no Bearer
Security (including a Senior Debt Security in permanent global form) shall be
mailed or otherwise delivered to any location in the United States or its
possessions. No Bearer Security other than a temporary global Bearer Security
may be delivered, nor may interest be paid on any Bearer Security unless the
Person entitled to receive such Bearer Security or such interest furnishes
written certification, in the form required by the Senior Indenture, to the
effect that such person (i) is not a United States person, (ii) is a foreign
branch of a United States
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financial institution purchasing for its own account or for resale, or is a
United States person who acquired the Senior Debt Security through such a
financial institution and who holds the Senior Debt Security through such
financial institution on the date of certification, provided in either case
that such financial institution provides a certificate to the Company or the
distributor selling the Senior Debt Security to it stating that it agrees to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the United States
Treasury Regulations thereunder, or (iii) is a financial institution holding
for purposes of resale during the restricted period (as defined in United
States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). A financial
institution described in clause (iii) of the preceding sentence (whether or
not also described in clause (i) or (ii)) must certify that it has not
acquired the Senior Debt Security for purposes of resale directly or
indirectly to a United States person or to a person within the United States
or its possessions. In the case of a Bearer Security in permanent global form,
such certification must be given in connection with notation of a beneficial
owner's interest therein. (Section 303) See "--Temporary Global Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, if Senior
Debt Securities of any series are issuable as both Registered Securities and
Bearer Securities, at the option of the Holder upon request confirmed in
writing, and subject to the terms of the Senior Indenture, Bearer Securities
(with all unmatured coupons, except as provided below, and all matured coupons
in default) of such series will be exchangeable into Registered Securities of
the same series of any authorized denominations and of a like aggregate
principal amount and tenor. Bearer Securities surrendered in exchange for
Registered Securities between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest and interest will not be
payable in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such coupon when
due in accordance with the terms of the Senior Indenture. Bearer Securities
will not be issued in exchange for Registered Securities. (Section 305) Each
Bearer Security other than a temporary global Bearer Security will bear a
legend substantially to the following effect: "Any United States Person who
holds this obligation will be subject to limitations under the United States
income tax laws, including the limitations provided in Sections 165(j) and
1287(a) of the Internal Revenue Code."
Senior Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed, if so required by the Company
or the Senior Trustee or any transfer agent), at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Senior Debt Securities and referred
to in an applicable Prospectus Supplement, without service charge and upon
payment of any taxes and other governmental charges as described in the Senior
Indenture. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. (Section
305) If a Prospectus Supplement refers to any transfer agents (in addition to
the Security Registrar) initially designated by the Company with respect to
any series of Senior Debt Securities, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that, if Senior Debt
Securities of a series are issuable solely as Registered Securities, the
Company will be required to maintain a transfer agent in each Place of Payment
for such series and, if Senior Debt Securities of a series are issuable as
Bearer Securities, the Company will be required to maintain (in addition to
the Security Registrar) a transfer agent in a Place of Payment for such series
located outside the United States. The Company may at any time designate
additional transfer agents with respect to any series of Senior Debt
Securities. (Section 1002)
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In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Senior Debt Securities of any
series during a period beginning at the opening of business 15 days before any
selection of Senior Debt Securities of that series to be redeemed and ending
at the close of business on (A) if Senior Debt Securities of the series are
issuable only as Registered Securities, the day of mailing of the relevant
notice of redemption and (B) if Senior Debt Securities of the series are
issuable as Bearer Securities, the day of the first publication of the
relevant notice of redemption or, if Senior Debt Securities of the series are
also issuable as Registered Securities and there is no publication, the
mailing of the relevant notice of redemption; (ii) register the transfer of or
exchange any Registered Security, or portion thereof, called for redemption,
except the unredeemed portion of any Registered Security being redeemed in
part; or (iii) exchange any Bearer Security called for redemption, except to
exchange such Bearer Security for a Registered Security of that series and
like tenor which is immediately surrendered for redemption. (Section 305)
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of
such Paying Agents outside the United States as the Company may designate from
time to time by check or by transfer, at the option of the Holder, to an
account maintained by the payee with a bank located outside the United States.
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
interest on Bearer Securities on any Interest Payment Date will be made only
against surrender outside the United States, to the Paying Agent, of the
coupon relating to such Interest Payment Date. (Section 1001) No payment with
respect to any Bearer Security will be made at any office or agency of the
Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the
United States. Notwithstanding the foregoing, payments of principal of and any
premium and interest on Bearer Securities denominated and payable in U.S.
dollars will be made at the office of the Company's Paying Agent in the
Borough of Manhattan, the City of New York, if (but only if) payment of the
full amount thereof in U.S. dollars at all offices or agencies outside the
United States is illegal or effectively precluded by exchange controls or
other similar restrictions. (Section 1002)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Registered Securities will be
made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that at the option of the Company, payment
of any interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
instalment of interest on Registered Securities will be made to the Person in
whose name such Registered Security is registered at the close of business on
the Regular Record Date for such interest. (Section 307)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Corporate Trust Office of the Senior Trustee in Pittsburgh, Pennsylvania, will
be designated as a Paying Agent for the Company for payments with respect to
Senior Debt Securities which are issuable solely as Registered Securities and
the Company will maintain a Paying Agent outside of the United States for
payments with respect to Senior Debt Securities (subject to the limitations
described above in the case of Bearer Securities) which are issuable solely as
Bearer Securities or as both Registered Securities and Bearer Securities. Any
Paying Agents outside the United States and any other Paying Agents in the
United States initially designated by the Company for the Senior Debt
Securities will be named in an applicable Prospectus Supplement. The Company
may at any time designate additional Paying Agents or rescind the designation
of any Paying Agent or approve a change in the office through which any Paying
Agent acts, except that, if Senior Debt Securities of a series are issuable
solely as Registered Securities, the Company will be required to maintain a
Paying Agent in each Place of Payment for such series and, if
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Senior Debt Securities of a series are issuable as Bearer Securities, the
Company will be required to maintain (i) a Paying Agent in the Borough of
Manhattan, the City of New York for payments with respect to any Registered
Securities of the series (and for payments with respect to Bearer Securities
of the series in the circumstances described above, but not otherwise), and
(ii) a Paying Agent in a Place of Payment located outside the United States
where Senior Debt Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment; provided that if the
Senior Debt Securities of such series are listed on The Stock Exchange of the
United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in London
or Luxembourg or any other required city located outside the United States, as
the case may be, for the Senior Debt Securities of such series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Senior Debt Security which
remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and
the Holder of such Senior Debt Security or any coupon will thereafter look
only to the Company for payment thereof. (Section 1003)
Book-Entry Securities
The Senior Debt Securities of a series may be issued in the form of one or
more Registered Securities that will be registered in the name of the
Depository or its nominee and bearing a legend as specified in the Senior
Indenture ("Book-Entry Security"). Unless otherwise indicated in the
applicable Prospectus Supplement, a Book-Entry Security may not be registered
for transfer or exchange to any Person other than the Depository or its
nominee unless (i) the Depository notifies the Company that it is unwilling to
continue as Depository or ceases to be a clearing agency registered under the
Exchange Act, (ii) the Company executes and delivers to the Senior Trustee a
Company Order that such Book-Entry Security shall be so exchangeable and the
transfer thereof so registrable, or (iii) there shall have occurred and be
continuing an Event of Default, or an event which after notice or lapse of
time, or both, would be an Event of Default, with respect to the Senior Debt
Securities evidenced by such Book-Entry Security. Upon the occurrence in
respect of any Book-Entry Security of any series of any one or more of the
conditions specified in clauses (i), (ii) or (iii) of the preceding sentence
or such other conditions as may be specified as contemplated by the Indentures
for such series, such Book-Entry Security may be exchanged for Senior Debt
Securities of such series registered in the names of, and the transfer of such
Book-Entry Security may be registered to, such Persons (including Persons
other than the Depository with respect to such series and its nominees) as
such Depository shall direct.
The specific terms of the depositary arrangement with respect to any portion
of a series of Registered Book-Entry Securities to be represented by a Book-
Entry Security will be described in the applicable Prospectus Supplement. The
Company expects that the following provisions will apply to depositary
arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Senior
Debt Securities which are to be represented by a Book-Entry Security to be
deposited with or on behalf of a Depository will be represented by a Book-
Entry Security registered in the name of such Depository or its nominee. Upon
the issuance of such Book-Entry Security, and the deposit of such Book-Entry
Security with or on behalf of the Depository for such Book-Entry Security, the
Depository will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Senior Debt Securities represented by
such Book-Entry Security to the accounts of institutions that have accounts
with such Depository or its nominee ("participants"). The accounts to be
credited will be designated by the underwriters or agents of such Senior Debt
Securities or by the Company if such Senior Debt Securities are offered and
sold directly by the Company. Ownership of beneficial interests in such Book-
Entry Security will be limited to participants or Persons that may hold
interests through
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participants. Ownership of beneficial interests by participants in such Book-
Entry Security will be shown on, and the transfer of that ownership interest
will be effected only through, records maintained by the Depository or its
nominee for such Book-Entry Security. Ownership of beneficial interests in
such Book-Entry Security by Persons that hold through participants will be
shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant. The
laws of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in certificated form. The foregoing
limitations and such laws may impair the ability to transfer beneficial
interests in such Book-Entry Securities.
So long as the Depository for a Book-Entry Security, or its nominee, is the
registered owner of such Book-Entry Security, such Depository or such nominee,
as the case may be, will be considered the sole owner or Holder of the Senior
Debt Securities represented by such Book-Entry Security for all purposes under
the Senior Indenture. Unless otherwise specified in the applicable Prospectus
Supplement, owners of beneficial interests in such Book-Entry Security will
not be entitled to have Senior Debt Securities of the series represented by
such Book-Entry Security registered in their names, will not receive or be
entitled to receive physical delivery of Senior Debt Securities of such series
in certificated form and will not be considered the Holders thereof for any
purposes under the Senior Indenture. (Sections 204 and 305) Accordingly, each
Person owning a beneficial interest in such Book-Entry Security must rely on
the procedures of the Depository 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 under the Senior Indenture. The Senior
Indenture provides that the Depository may grant proxies and otherwise
authorize participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a Holder is entitled
to give or take under the Senior Indenture. (Section 104) The Company
understands that under existing industry practices, if the Company requests
any action of Holders, or an owner of a beneficial interest in such Book-Entry
Security desires to give any notice or take any action a Holder is entitled to
give or take under the Senior Indenture, the Depository would authorize the
participants to give such notice or take such action, and participants would
authorize beneficial owners owning through such participants to give such
notice or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Temporary Global Securities
If so specified in an applicable Prospectus Supplement, all or any portion
of the Senior Debt Securities of a series which are issuable as Bearer
Securities will initially be represented by one or more temporary global
Senior Debt Securities, without interest coupons, to be deposited with a
common depositary in London for the Euroclear System ("Euroclear") and CEDEL
S.A. ("CEDEL") for credit to the designated accounts. On and after the date
determined as provided in any such temporary global Senior Debt Security and
described in an applicable Prospectus Supplement, each such temporary global
Senior Debt Security will be exchanged for an interest in a permanent global
Bearer Security as specified in an applicable Prospectus Supplement, but,
unless otherwise specified in an applicable Prospectus Supplement, only upon
receipt of written certification from Euroclear or CEDEL, as the case may be,
in the form and to the effect required by the Senior Indenture (a "Depository
Tax Certification") and upon receipt of written certification by Euroclear or
CEDEL from the person entitled to receive such Senior Debt Securities in the
form and to the effect described under "--Form, Exchange, Registration and
Transfer." No definitive Bearer Security (including a Senior Debt Security in
permanent global form that is either a Bearer Security or exchangeable for
Bearer Securities) delivered in exchange for a portion of a temporary or
permanent global Senior Debt Security shall be mailed or otherwise delivered
to any location in the United States in connection with such exchange.
(Section 304)
Unless otherwise specified in an applicable Prospectus Supplement, interest
in respect of any portion of a temporary global Senior Debt Security payable
in respect of an Interest Payment Date
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occurring prior to the issuance of securities in permanent global form will be
paid to each of Euroclear and CEDEL with respect to the portion of the
temporary global Senior Debt Security held for its account following the
receipt by the Company or its agent of a Depository Tax Certification. Each of
Euroclear and CEDEL will undertake in such circumstances to credit such
interest received by it in respect of a temporary global Senior Debt Security
to the respective accounts for which it holds such temporary global Senior
Debt Security only upon receipt in each case of certification in the form and
to the effect described under "--Form, Exchange, Registration and Transfer"
with respect to the portion of such temporary global Senior Debt Security on
which such interest is to be so credited. Receipt of the certification
described in the preceding sentence by Euroclear or CEDEL, as the case may be,
shall constitute irrevocable instructions to Euroclear or CEDEL to exchange
such portion of the temporary global Senior Debt Security with respect to
which such certification was received for an interest in a permanent global
Senior Debt Security.
Permanent Global Securities
If any Senior Debt Securities of a series are issuable in permanent global
form, the applicable Prospectus Supplement will describe the circumstances, if
any, under which beneficial owners of interests in any such permanent global
Senior Debt Security may exchange such interests for Senior Debt Securities of
such series and of like tenor and principal amount in any authorized form and
denomination. No Bearer Security delivered in exchange for a portion of a
permanent global Senior Debt Security shall be mailed or otherwise delivered
to any location in the United States in connection with such exchange.
(Section 305) A Person having a beneficial interest in a permanent global
Senior Debt Security will, except with respect to payment of principal of and
any premium and interest on such permanent global Senior Debt Security, be
treated as a Holder of such principal amount of Outstanding Senior Debt
Securities represented by such permanent global Senior Debt Security as shall
be specified in a written statement of the Holder of such permanent global
Senior Debt Security or, in the case of a permanent global Senior Debt
Security in bearer form, of the operator of Euroclear or CEDEL which is
produced to the Senior Trustee by such Person. (Section 203) Principal of and
any premium and interest on a permanent global Senior Debt Security will be
payable in the manner described in the applicable Prospectus Supplement.
Certain Limitations
The Senior Indenture contains the covenants and limitations summarized
below, which will be applicable (unless waived or amended) so long as any of
the Senior Debt Securities are outstanding, unless stated otherwise in the
Prospectus Supplement.
Liens. The Company covenants in the Senior Indenture that it will not
create, incur, assume or guarantee, and will not permit any Restricted
Subsidiary to create, incur, assume or guarantee, any indebtedness for
borrowed money ("Debt") secured by a mortgage, security interest, pledge,
charge or similar encumbrance ("mortgages") upon any Principal Property of the
Company or any Restricted Subsidiary or upon any shares of stock or
indebtedness of any Restricted Subsidiary without equally and ratably securing
the Senior Debt Securities. The foregoing restriction, however, will not apply
to (a) mortgages on property, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary; (b) mortgages on property existing at the time of acquisition of
such property by the Company or a Restricted Subsidiary or mortgages to secure
the payment of all or any part of the purchase price of such property upon the
acquisition or to secure any Debt incurred prior to, at the time of, or within
180 days after, the acquisition of such property for the purpose of financing
all or any part of the purchase price thereof, or mortgages to secure the cost
of improvements to such acquired property; (c) mortgages to secure Debt of a
Restricted Subsidiary to the Company or another Restricted Subsidiary; (d)
mortgages existing at the date of the Senior Indenture; (e) mortgages on
property of a corporation existing at the time such corporation is merged into
or consolidated with the Company or a Restricted Subsidiary or at the time of
a sale, lease, or
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other disposition of the properties of a corporation as an entirety or
substantially as an entirety to the Company or a Restricted Subsidiary; (f)
certain mortgages in favor of governmental entities; or (g) extensions,
renewals or replacements of any mortgage referred to in the foregoing clauses
(a) through (f). (Section 1009)
Notwithstanding the restrictions outlined in the preceding paragraph, the
Company or any Restricted Subsidiary will be permitted to create, incur,
assume or guarantee any Debt secured by a mortgage without equally and ratably
securing the Senior Debt Securities, provided that after giving effect
thereto, the aggregate amount of all debt so secured by mortgages (not
including mortgages permitted under clauses (a) through (g) above) does not
exceed 10% of Consolidated Net Tangible Assets. (Section 1009)
Sale and Leaseback Arrangements. The Company covenants that it will not, nor
will it permit any Restricted Subsidiary to, enter into any arrangement with
any person that provides for the leasing to the Company or any Restricted
Subsidiary of Principal Property (other than any such transaction involving a
lease for a term of not more than three years or any such transaction between
the Company and a Restricted Subsidiary or between Restricted Subsidiaries)
which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such person, unless either (a) the Company or such
Restricted Subsidiary would be entitled to create, incur, assume or guarantee
Debt secured by a mortgage on such Principal Property at least equal in amount
to the Attributable Debt with respect to such arrangement, without equally and
ratably securing the Senior Debt Securities, pursuant to the limitation in the
Senior Indenture on liens, or (b) the Company shall apply an amount equal to
the greater of the net proceeds of such sale or the Attributable Debt with
respect to such arrangement to the retirement of Debt that matures more than
twelve months after the creation of such Debt. (Section 1010)
Highly leveraged transactions. The Senior Indenture does not contain
provisions which would afford protection to the Holders of the Senior Debt
Securities in the event of a highly leveraged transaction involving the
Company.
Certain Definitions
The term "Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
The term "Attributable Debt" when used in connection with a sale and
leaseback transaction referred to above shall mean, at the time of
determination, the lesser of (a) the fair value of such property (as
determined by the Board of Directors of the Company) or (b) the present value
(discounted at the annual rate of 9%, compounded semi-annually) of the
obligation of the lessee for net rental payments during the remaining term of
the lease (including any period for which such lease has been extended).
The term "Bearer Security" means any Senior Debt Security established
pursuant to the Senior Indenture which is payable to bearer.
The term "Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
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The term "Book-Entry Security" means a Registered Security bearing the
legend specified in Section 204 of the Senior Indenture, evidencing all or
part of a series of Senior Debt Securities, issued to the Depository for such
series or its nominee, and registered in the name of such Depository or
nominee. Book-Entry Securities shall not be deemed to be securities in global
form for purposes of Sections 201 and 203 and Article Three of the Senior
Indenture.
The term "Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event
of any voluntary of involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 1511 of the Senior Indenture, shares
issuable on conversion of Senior Debt Securities shall include only shares of
the class designated as Common Stock of the Company at the date of this
instrument or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which
are not subject to redemption by the Company; provided that if at any time
there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the
total number of shares of each such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
The term "Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board of
Directors, its Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Senior Trustee.
The term "Corporate Trust Office" means the principal office of the Senior
Trustee in Pittsburgh, Pennsylvania, at which at any particular time its
corporate trust business shall be administered.
The term "Consolidated Net Tangible Assets" shall mean, as of any particular
time, the aggregate amount of assets (less applicable reserves and other
properly deductible items) adjusted for inventories on the basis of cost
(before application of the "last-in first-out" method of determining cost) or
current market value, whichever is lower, and deducting therefrom (a) all
current liabilities except for (1) notes and loans payable, (2) current
maturities of long-term debt and (3) current maturities of obligations under
capital leases and (b) all goodwill, tradenames, trademarks, patents,
unamortized debt discount and expenses (to the extent included in said
aggregate amount of assets) and other like intangibles, all as set forth on
the most recent consolidated balance sheet of the Company and its consolidated
Subsidiaries and computed in accordance with generally accepted accounting
principles.
The term "Defaulted Interest" shall mean any interest on any Registered
Security of any series which is payable, but is not punctually paid or duly
provided for on any Interest Payment Date.
The term "Depository" means, with respect to the Senior Debt Securities of
any series issuable or issued in whole or in part in the form of one or more
Book-Entry Securities, the clearing agency registered under the Exchange Act
specified for that purpose as contemplated by Section 301 of the Senior
Indenture.
The term "Exchange Act" means the Securities Exchange Act of 1934, each as
amended from time to time, and any statute successor thereto.
The term "Holder," when used with respect to any Senior Debt Security, means
in the case of a Registered Security the Person in whose name the Senior Debt
Security is registered in the Security Register and in the case of a Bearer
Security the bearer thereof and, when used with respect to any coupon, means
the bearer thereof.
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The term "Indenture" means the Senior Indenture, as such indenture was
originally executed or as it may from time to time be supplemented or amended
by one or more indentures supplemental thereto entered into pursuant to the
applicable provisions thereof, including, for all purposes of that instrument
and any such supplemental indenture, the provisions of the Trust Indenture Act
that are deemed to be a part of and govern the indenture, and any such
supplemental indenture, respectively. The term "Indenture" shall also include
the terms of particular series of Senior Debt Securities established as
contemplated by Section 301 therein.
The term "Interest Payment Date," when used with respect to any Senior Debt
Security, means the Stated Maturity of an installment of interest on such
Senior Debt Security.
The term "Maturity," when used with respect to any Senior Debt Security,
means the date on which the principal of such Senior Debt Security or an
installment of principal becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
The term "Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and shall be acceptable to the Senior Trustee.
The term "Original Issue Discount Security" means any Senior Debt Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502 of the Senior Indenture.
The term "Outstanding," when used with respect to Senior Debt Securities,
means, as of the date of determination, all Senior Debt Securities theretofore
authenticated and delivered under the Senior Indenture, except:
(1) Senior Debt Securities theretofore canceled by the Senior Trustee or
delivered to the Senior Trustee for cancellation;
(2) Senior Debt Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Senior Trustee or
any Paying Agent in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders
of such Senior Debt Securities and any coupons appertaining thereto;
provided that, if such Senior Debt Securities are to be redeemed, notice of
such redemption has been duly given pursuant to the Senior Indenture or
provision therefor satisfactory to the Senior Trustee has been made;
(3) Senior Debt Securities as to which Defeasance has been effected
pursuant to Section 1302 of the Senior Indenture (See also "--Defeasance
and Covenant Defeasance" section herein); and
(4) Senior Debt Securities which have been paid pursuant to Section 306
of the Senior Indenture or in exchange for or in lieu of which other Senior
Debt Securities have been authenticated and delivered pursuant to the
Senior Indenture, other than any such Senior Debt Securities in respect of
which there shall have been presented to the Senior Trustee proof
satisfactory to it that such Senior Debt Securities are held by a bona fide
purchaser in whose hands such Senior Debt Securities are valid obligations
of the Company; provided, however, that in determining whether the Holders
of the requisite principal amount of the Outstanding Senior Debt Securities
have given any request, demand, authorization, direction, notice, consent
or waiver hereunder or whether a quorum is present at a meeting of Holders
of Senior Debt Securities (A) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding shall be the
amount of the principal thereof that would be due and payable as of the
date of such determination upon acceleration of the Maturity thereof to
such date pursuant to Section 502 of the Senior Indenture, (B) the
principal amount of a Senior Debt Security
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denominated in one or more foreign currencies or currency units shall be
the Dollar equivalent, determined in the manner provided as contemplated by
Section 301 of the Senior Indenture on the date of original issuance of
such Senior Debt Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the Dollar equivalent on the date of
original issuance of such Senior Debt Security of the amount determined as
provided in Clause (A) above), of such Senior Debt Security, and (C) Senior
Debt Securities owned by the Company or any other obligor upon the Senior
Debt Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Senior Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or
waiver, or upon any such determination as to the presence of a quorum, only
Senior Debt Securities which the Senior Trustee knows to be so owned shall
be so disregarded. Senior Debt Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Senior Trustee the pledgee's right so to act with
respect to such Senior Debt Securities and that the pledgee is not the
Company or any other obligor upon the Senior Debt Securities or any
Affiliate of the Company or of such other obligor.
The term "Paying Agent" means any Person authorized by the Company to pay
the principal of or any premium or interest on any Senior Debt Securities on
behalf of the Company.
The term "Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
The term "Place of Payment," when used with respect to the Senior Debt
Securities of any series, means the place or places where, subject to the
provisions of Section 1002 of the Senior Indenture, the principal of and any
premium and interest on the Senior Debt Securities of that series are payable
as specified as contemplated by Section 301 of the Senior Indenture.
The term "Principal Property" shall mean any manufacturing plant or
manufacturing facility which is (i) owned by the Company or any Restricted
Subsidiary and (ii) located within the continental United States of America,
except any such plant which, in the opinion of the Board of Directors, is not
of material importance to the total business conducted by the Company and the
Restricted Subsidiaries taken as a whole.
The term "Redemption Date," when used with respect to any Senior Debt
Security to be redeemed, means the date fixed for such redemption by or
pursuant to the Senior Indenture.
The term "Registered Security" means any Senior Debt Security established
pursuant to the Senior Indenture which is registered in the Security Register.
The term "Regular Record Date" for the interest payable on any Interest
Payment Date on the Registered Securities of any series means the date
specified for that purpose as contemplated by Section 301 of the Senior
Indenture.
The term "Restricted Subsidiary" shall mean any Subsidiary substantially all
the property of which is located within the continental United States;
provided, however, that the term "Restricted Subsidiary" shall not include any
Subsidiary which is principally engaged in leasing or in financing
receivables, or which is principally engaged in financing the Company's
operations outside the continental United States, or which principally serves
as a partner in a partnership.
The term "Security Register" and "Security Registrar" shall mean the Person
named in the applicable Prospectus Supplement.
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The term "Special Record Date" for the payment of any Defaulted Interest on
the Registered Securities of any series means a date fixed by the Senior
Trustee pursuant to Section 307 of the Senior Indenture.
The term "Stated Maturity," when used with respect to any Senior Debt
Security or any installment of principal thereof or interest thereon, means
the date specified in such Senior Debt Security or a coupon representing such
installment of interest as the fixed date on which the principal of such
Senior Debt Security or such installment of principal or interest is due and
payable.
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding stock having the voting power to elect a majority
of the board of directors of such corporation as at the time is owned,
directly or indirectly, by the Company or by one or more Subsidiaries, or by
the Company and one or more Subsidiaries.
The term "Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which the Common Stock is not traded on the New
York Stock Exchange, Inc. ("NYSE") or, if the Common Stock is not traded on
the NYSE on the principal exchange or market on which the Common Stock is
traded or quoted.
The term "Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which the Senior Indenture was executed, provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
The term "U.S. Government Obligations" shall mean (x) any security that is
(i) a direct obligation of the United States of America for the payment of
which full faith and credit of the United States of America is pledged or (ii)
an obligation of a Person controlled or supervised by or acting as an agent or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any U.S. Government Obligation
specified in Clause (x) and held by such custodian for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any such U.S. Government Obligation, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depositary receipt
from any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by such
depositary receipt.
Events of Default
Unless otherwise provided in the applicable Prospectus Supplement, any one
of the following events will constitute an Event of Default under the Senior
Indenture with respect to Senior Debt Securities of any series: (a) failure to
pay any interest on any Senior Debt Security of that series when due,
continued for 30 days; (b) failure to pay principal of or any premium on any
Senior Debt Security of that series when due; (c) failure to deposit any
sinking fund payment when due in respect of any Senior Debt Security of that
series, continued for 30 days; (d) failure to perform any other covenant of
the Company in the Senior Indenture (other than a covenant included in the
Senior Indenture solely for the benefit of a series of Senior Debt Securities
other than that series), continued for 90 days after written notice as
provided in the Senior Indenture; (e) default resulting in acceleration of any
indebtedness for money borrowed by the Company under the terms of the
instrument or instruments under which such indebtedness is issued or secured
if such acceleration is not rescinded or annulled within 10 days after written
notice as provided in the Senior Indenture (provided that, the resulting Event
of Default under the Senior Indenture will be cured or waived if such other
default is cured or
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waived); (f) certain events in bankruptcy, insolvency or reorganization
involving the Company; and (g) any other Event of Default provided with
respect to Senior Debt Securities of that series. (Section 501)
If an Event of Default with respect to Senior Debt Securities of any series
at the time Outstanding occurs and is continuing, either the Senior Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Senior Debt Securities of that series by notice as provided in the Senior
Indenture may declare the principal amount (or, if the Senior Debt Securities
of that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Senior Debt Securities of that series to be due and payable immediately. At
any time after a declaration of acceleration with respect to Senior Debt
Securities of any series has been made, but before a judgment or decree for
payment of money has been obtained by the Senior Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Senior Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502)
The Senior Indenture will provide that, subject to the duty of the Senior
Trustee during default to act with the required standard of care, the Senior
Trustee will be under no obligation to exercise any of its rights or powers
under the Senior Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Senior Trustee reasonable
indemnity. (Sections 601 and 603) The Holders of a majority in aggregate
principal amount of the Outstanding Senior Debt Securities of any series will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Senior Trustee, or exercising any
trust or power conferred on the Senior Trustee, with respect to the Senior
Debt Securities of that series. (Section 512)
Conversion and Exchange Rights
The Senior Debt Securities of any series may be convertible into or
exchangeable for Common Stock of the Company on the terms and subject to the
conditions set forth in the Prospectus Supplement.
Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to the Senior Debt Securities of a series, the Company, at its option,
(i) will be discharged from any and all obligations in respect of the Senior
Debt Securities of such series (except for certain obligations to issue
temporary Senior Debt Securities pending preparation of definitive Senior Debt
Securities, to register the transfer or exchange of Senior Debt Securities of
such series, to replace stolen, lost or mutilated Senior Debt Securities of
such series, and to maintain paying agents and hold moneys for payment in
trust) or (ii) need not comply with the covenants that are set forth under "--
Certain Limitations" and "--Consolidation, Merger and Sale of Assets," and the
occurrence of an event described under clause (d) of the "Events of Default"
with respect to any defeased covenant and Clauses (e) and (g) of "--Events of
Default" shall no longer be an Event of Default if, in each case, the Company
irrevocably deposits with the Senior Trustee, in trust, money and/or U.S.
Government Obligations that through the scheduled payment of interest thereon
and principal thereof in accordance with their terms will provide money in an
amount sufficient to pay all the principal of (and premium, if any) and any
interest on the Senior Debt Securities of such series on the dates such
payments are due (which may include one or more redemption dates designated by
the Company) in accordance with the terms of the Senior Indenture and such
Senior Debt Securities. Such a trust may only be established if, among other
things, (a) no Event of Default or event which with the giving of notice or
lapse of time, or both, would become an Event of Default under the Senior
Indenture shall have occurred and be continuing on the date of such deposit,
or with regard to any Event of Default or any such event described under
clause (f) of "--Events of Default" shall have occurred and be continuing at
any time during the period ending on the 91st day following such date of
deposit, and (b) the Company shall have delivered an Opinion of Counsel based,
in the event of a defeasance of the type
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described in clause (i) above, upon a ruling from the Internal Revenue Service
or a change in applicable Federal income tax law from the date of the Senior
Indenture to the effect that the Holders of the Senior Debt Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such deposit or defeasance and will be subject to Federal income tax in the
same manner as if such defeasance had not occurred. In the event the Company
omits to comply with its remaining obligations under the Senior Indenture
after a defeasance of the Senior Indenture with respect to the Senior Debt
Securities of any series as described under clause (ii) above and the Senior
Debt Securities of such series are declared due and payable because of the
occurrence of any undefeased Event of Default, the amount of money and/or U.S.
Government Obligations on deposit with the Senior Trustee may be insufficient
to pay amounts due on the Senior Debt Securities of such series at the time of
the acceleration resulting from such Event of Default. However, the Company
will remain liable in respect of such payments. (Article Thirteen)
Meetings, Modification and Waiver
Modifications and amendments of the Senior Indenture may be made by the
Company and the Senior Trustee with the consent of the Holders of not less
than 66 2/3% in aggregate principal amount of the Outstanding Senior Debt
Securities of each series affected by such modification or amendment;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each Outstanding Senior Debt Security affected
thereby, (a) change the Stated Maturity of the principal of, or any instalment
of principal of or interest on any Senior Debt Security, (b) reduce the
principal amount of, or premium or interest on, any Senior Debt Security, (c)
change any obligation of the Company to pay additional amounts, (d) reduce the
amount of principal of an Original Issue Discount Security payable upon
acceleration of the Maturity thereof, (e) change the coin or currency in which
any Senior Debt Security or any premium or interest thereon is payable, (f)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Senior Debt Security, (g) reduce the percentage in
principal amount of Outstanding Senior Debt Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Senior Indenture or for waiver of compliance with certain provisions of such
Senior Indenture or for waiver of certain defaults, (h) reduce the
requirements contained in such Senior Indenture for quorum or voting, (i)
change any obligation of the Company to maintain an office or agency in the
places and for the purposes required by such Senior Indenture, or (j) modify
any of the above provisions. (Section 902)
The Holders of at least 66 2/3% of the outstanding Senior Debt Securities of
a series may waive compliance by the Company with certain restrictive
provisions of the Senior Indenture. (Section 1012) The Holders of not less
than a majority in aggregate principal amount of the Outstanding Senior Debt
Securities of each series may, on behalf of all Holders of Senior Debt
Securities of that series and any coupons appertaining thereto, waive any past
default under the Senior Indenture with respect to Senior Debt Securities of
that series, except a default (a) in the payment of principal of (or premium
if any) or any interest on any Senior Debt Security of such series, and (b) in
respect of a covenant or provision of the Senior Indenture which cannot be
modified or amended without the consent of the Holder of each Outstanding
Senior Debt Security of such series affected. (Section 513)
The Senior Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Senior Debt Securities have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or are present at a meeting of Holders of Senior Debt Securities
for quorum purposes, (i) the principal amount of an Original Issue Discount
Security that shall be deemed to be Outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof, (ii) the principal
amount of a Senior Debt Security denominated in a foreign currency or
currencies shall be the U.S. dollar equivalent, determined on the date of
original issuance of such Security, of the principal amount
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of such Senior Debt Security (or, in the case of an Original Issue Discount
Security, the U.S. dollar equivalent, determined on the date of original
issuance of such Senior Debt Security, of the amount determined as provided in
(i) above), and (iii) Senior Debt Securities owned by the Company or an
Affiliate thereof shall not be deemed outstanding. (Section 101)
The Senior Indenture contains provisions for convening meetings of the
Holders of Senior Debt Securities of a series if Senior Debt Securities of
that series are issuable as Bearer Securities. (Section 1401) A meeting may be
called at any time by the Senior Trustee, and also, upon request, by the
Company or the Holders of at least 10% in principal amount of the Outstanding
Senior Debt Securities of such series, in any such case upon notice given in
accordance with "--Notices" below. (Section 1402) To be entitled to vote at
any meeting of Holders of Senior Debt Securities of any series, a Person shall
be (1) a Holder of one or more Outstanding Senior Debt Securities of such
series, or (2) a person appointed by an instrument in writing as proxy of a
Holder or Holders, including proxies given to beneficial owners of Book-Entry
Securities by the Depository, or its nominee. (Section 1403) Except for any
consent which must be given by the Holder of each Outstanding Senior Debt
Security affected thereby, as described above, any resolution presented at a
meeting or adjourned meeting at which a quorum is present may be adopted by
the affirmative vote of the Holders of a majority in principal amount of the
Outstanding Senior Debt Securities of that series; provided, however, that,
except for any consent which must be given by the Holder of each Outstanding
Senior Debt Security affected thereby, as described above, any resolution with
respect to any consent or waiver which may be given by the Holders of not less
than 66 2/3% in principal amount of the Outstanding Senior Debt Securities of
a series may be adopted at a meeting or an adjourned meeting at which a quorum
is present only by the affirmative vote of 66 2/3% in principal amount of the
Outstanding Senior Debt Securities of that series; and provided, further,
that, except for any consent which must be given by the Holder of each
Outstanding Senior Debt Security affected thereby, as described above, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of Outstanding Senior Debt Securities of a series may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Senior Debt Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of Senior Debt
Securities of any series duly held in accordance with the Senior Indenture
will be binding on all Holders of Senior Debt Securities of that series and
the related coupons. The quorum at any meeting called to adopt a resolution,
and at any reconvened meeting, will be persons holding or representing a
majority in principal amount of the Outstanding Senior Debt Securities of a
series; provided, however, that if any action is to be taken at such meeting
with respect to a consent or waiver which may be given by the Holders of not
less than 66 2/3% in principal amount of the Outstanding Senior Debt
Securities of a series, the persons holding or representing 66 2/3% in
principal amount of the Outstanding Senior Debt Securities of such series will
constitute a quorum. (Section 1404)
Consolidation, Merger and Sale of Assets
The Company, without the consent of the Holders of any of the Outstanding
Senior Debt Securities under the Senior Indenture, may consolidate or merge
with or into, or transfer or lease its assets substantially as an entirety to,
any Person which is a corporation, partnership or trust organized and validly
existing under the laws of any domestic jurisdiction, or may permit any such
Person to consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
provided that any successor Person assumes the Company's obligations on the
Senior Debt Securities and under the Senior Indenture, that after giving
effect to the transaction no Event of Default, and no event which, after
notice or lapse of time, would become an Event of Default, shall have occurred
and be continuing, and that certain other conditions are met. (Section 801)
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Notices
Except as otherwise provided in the Senior Indenture, notices to Holders of
Bearer Securities will be given by publication at least twice in a daily
newspaper in the City of New York and in such other city or cities as may be
specified in such Senior Debt Securities and described in the applicable
Prospectus Supplement. Notices to Holders of Registered Securities will be
given by mail to the addresses of such Holders as they appear in the Security
Register. (Sections 101 and 106)
Title
Title to any Bearer Securities and any coupons appertaining thereto will
pass by delivery. The Company, the Senior Trustee and any agent of the Company
or the Senior Trustee may treat the bearer of any Bearer Security and the
bearer of any coupon and the registered owner of any Registered Security as
the absolute owner thereof (whether or not such Senior Debt Security or coupon
shall be overdue and notwithstanding any notice to the contrary) for the
purpose of making payment and for all other purposes. (Section 308)
Replacement of Securities and Coupons
Any mutilated Senior Debt Security or a Senior Debt Security with a
mutilated coupon appertaining thereto will be replaced by the Company at the
expense of the Holder upon surrender of such Senior Debt Security to the
Security Registrar. Senior Debt Securities or coupons that become destroyed,
stolen or lost will be replaced by the Company at the expense of the Holder
upon delivery to the Senior Trustee of the Senior Debt Security and coupons or
evidence of the destruction, loss or theft thereof satisfactory to the Company
and the Senior Trustee; in the case of any coupon which becomes destroyed,
stolen or lost, such coupon will be replaced by issuance of a new Senior Debt
Security in exchange for the Senior Debt Security to which such coupon
appertains. In the case of a destroyed, lost or stolen Senior Debt Security or
coupon, an indemnity satisfactory to the Senior Trustee and the Company may be
required at the expense of the Holder of such Senior Debt Security or coupon
before a replacement Senior Debt Security will be issued. (Section 306)
Governing Law
The Senior Indenture, the Senior Debt Securities and the coupons will be
governed by, and construed in accordance with, the laws of the Commonwealth of
Pennsylvania. (Section 113)
Regarding the Senior Trustee
PNC Bank, National Association is the trustee under the Senior Indenture.
The Company and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions, including borrowings in the ordinary
course of business, with PNC Bank, National Association.
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
The following description of the terms of the Subordinated Debt Securities
summarizes certain general terms and provisions of the Subordinated Debt
Securities to which any Prospectus Supplement may relate. The particular terms
of the Subordinated Debt Securities and the extent, if any, to which such
general provisions may apply to the Subordinated Debt Securities will be
described in the Prospectus Supplement relating to such Subordinated Debt
Securities.
The Subordinated Debt Securities may be issued under an indenture (the
"Subordinated Indenture") between the Company and The Chase Manhattan Bank, as
trustee, or such other trustee as shall be named in a Prospectus Supplement
(the "Subordinated Trustee"), the form of which has been filed with the
Commission as an exhibit to the Registration Statement of which this
Prospectus forms a part. This summary of certain terms and provisions of the
Subordinated Debt Securities and the Subordinated Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, the Subordinated Indenture. References to particular sections of
the Subordinated Indenture are noted below. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to them in the
Subordinated Indenture.
General
The Subordinated Debt Securities will be unsecured and will rank junior and
be subordinate in right of payment to all Senior Debt (as defined below) of
the Company. The Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, whether under the
Subordinated Indenture or any existing or other indenture that the Company may
enter into in the future or otherwise. See "--Subordination."
Concurrently with the issuance of Trust Preferred Securities, the Alcoa
Trust will invest the proceeds thereof and the consideration paid by the
Company for the related Trust Common Securities in Subordinated Debt
Securities. The Subordinated Debt Securities will be in the principal amount
equal to the aggregate stated liquidation amount of the Trust Preferred
Securities plus the Company's concurrent investment in the related Trust
Common Securities.
The Subordinated Debt Securities will not be subject to any sinking fund
provision.
Reference is made to the Prospectus Supplement for the following terms of
the Subordinated Debt Securities being offered hereby (to the extent such
terms are applicable to the Subordinated Debt Securities): (i) the specific
designation of such Subordinated Debt Securities, aggregate principal amount
and purchase price; (ii) any limit on the aggregate principal amount of such
Subordinated Debt Securities; (iii) the date or dates on which the principal
of such Subordinated Debt Securities is payable and the right, if any, to
extend such date or dates; (iv) the rate or rates at which such Subordinated
Debt Securities will bear interest or the method of calculating such rate or
rates, if any; (v) the date or dates from which such interest shall accrue,
the interest payment dates on which such interest will be payable or the
manner of determination of such interest payment dates and the record dates
for the determination of holders to whom interest is payable on any such
interest payment dates; (vi) the right, if any, to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment periods
and the duration of such extensions (each, an "Extension Period"); (vii) the
period or periods within which, the price or prices at which, and the terms
and conditions upon which, such Subordinated Debt Securities may be redeemed,
in whole or in part, at the option of the Company; (viii) the obligation, if
any, of the Company to redeem or purchase such Subordinated Debt Securities at
the option of the holder thereof and the period or periods within which, the
price or prices at which, and the terms and conditions upon which, such
Subordinated Debt Securities shall be redeemed or purchased, in whole or part,
pursuant to such obligation; (ix) any applicable United States Federal income
tax consequences, including whether and under what circumstances the Company
will pay additional amounts on the Subordinated Debt Securities held by a
person who is not a U.S. person in
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respect of any tax, assessment or governmental charge withheld or deducted
and, if so, whether the Company will have the option to redeem such
Subordinated Debt Securities rather than pay such additional amounts; (x) the
form of such Subordinated Debt Securities; (xi) if other than denominations of
$50 or any integral multiple thereof, the denominations in which such
Subordinated Debt Securities shall be issuable; (xii) any and all other terms
with respect to such Subordinated Debt Securities, including any modification
of or additions to the events of default or covenants provided for with
respect to the Subordinated Debt Securities, and any terms which may be
required by or advisable under applicable laws or regulations not inconsistent
with the Subordinated Indenture; (xiii) the terms and conditions upon which
the Subordinated Debt Securities may be convertible into or exchanged for
Common Stock of the Company; and (xiv) whether such Subordinated Debt
Securities are issuable as a global security, and in such case, the identity
of the depositary.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Subordinated Debt Securities will be issued in United States dollars in fully
registered form without coupons in denominations of $50 or integral multiples
thereof. No service charge will be made for any transfer or exchange of any
Subordinated Debt Securities, but the Company may, except in certain specified
cases not involving any transfer, require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Unless
otherwise set forth in the applicable Prospectus Supplement, interest on
outstanding Subordinated Debt Securities will be paid to holders of record on
the date which is 15 days immediately prior to the date such interest is to be
paid.
Global Securities
If any Subordinated Debt Securities are represented by one or more Global
Securities, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
Global Security may exchange such interests for Subordinated Debt Securities
and of like tenor and principal amount in any authorized form and
denomination. Principal of, and any premium and interest on, a Global Security
will be payable in the manner described in the applicable Prospectus
Supplement.
The specific terms of the depositary arrangement with respect to any portion
of Subordinated Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement.
Payment and Paying Agents
Payments on Subordinated Debt Securities represented by a Global Security
will be made to the depositary for the Subordinated Debt Securities. In the
event Subordinated Debt Securities are issued in definitive form, principal of
and premium, if any, and any interest on Subordinated Debt Securities will be
payable, the transfer of the Subordinated Debt Securities will be registrable,
and the Subordinated Debt Securities will be exchangeable for Subordinated
Debt Securities of other denominations of a like aggregate principal amount at
the corporate office of the Subordinated Trustee in the City of New York or at
the office of such Paying Agent or Paying Agents as the Company may designate,
except that at the option of the Company payment of any interest may be made
(i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Securities Register or (ii) by wire transfer to an
account maintained by the Person entitled thereto as specified in the
Securities Register, provided that proper transfer instructions have been
received by the Regular Record Date. Payment of any interest on Subordinated
Debt Securities will be made to the Person in whose name such Subordinated
Debt Securities are registered at the close of business on the Regular Record
Date for such interest, except in the case of Defaulted Interest. The Regular
Record Date for the interest payable on any Interest Payment Date shall be the
15th day (whether or not a Business Day) next preceding such Interest Payment
Date. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent. (Section 2.3)
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Any monies deposited with the Subordinated Trustee or any Paying Agent or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any Subordinated Debt Securities and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of the Company, be repaid to
the company and the holder of such Subordinated Debt Securities shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof. (Section 10.3)
Modification of Indenture
From time to time, the Company and the Subordinated Trustee may, without the
consent of the holders of Subordinated Debt Securities, amend, waive or
supplement the Subordinated Indenture for specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies (provided that
any such action does not materially adversely affect the interest of the
holders of the Subordinated Debt Securities, or the holders of the Trust
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Subordinated Indenture under the Trust
Indenture Act. The Subordinated Indenture contains provisions permitting the
Company and the Subordinated Trustee, with the consent of the holders of not
less than a majority in principal amount of the outstanding Subordinated Debt
Securities, to modify the Subordinated Indenture in a manner affecting the
rights of the holders of the Subordinated Debt Securities; provided that no
such modification may, without the consent of the holder of each outstanding
Subordinated Debt Security so affected, (i) change the stated maturity of the
Subordinated Debt Securities, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon (other than
deferrals of the payments of interest during any Extension Period as described
in any applicable Prospectus Supplement) or reduce the premium payable upon
the redemption thereof, or impair any right to institute suit for the
enforcement of any such payment, or adversely affect the subordination
provisions of the Subordinated Indenture or any right to convert any
Subordinated Debt Securities or (ii) reduce the percentage of principal amount
of Subordinated Debt Securities, the holders of which are required to consent
to any such modification of the Subordinated Indenture, provided that, so long
as any of the Trust Preferred Securities remain outstanding, (a) no such
modification may be made that adversely affects the holders of such Trust
Preferred Securities in any material respect, and no termination of the
Subordinated Indenture may occur, and no waiver of any Subordinated Debt
Securities Event of Default or compliance with any covenant under the
Subordinated Indenture may be effective, without the prior consent of the
holders of at least a majority in aggregate liquidation amount of the Trust
Preferred Securities then outstanding unless and until the principal of and
any premium on the Subordinated Debt Securities and all accrued and unpaid
interest thereon has been paid in full and (b) where a consent under the
Subordinated Indenture would require the consent of each holder of
Subordinated Debt Securities, no such consent will be given by the Property
Trustee without the prior consent of each holder of the Trust Preferred
Securities. (Section 9.2)
Subordinated Debt Securities Events of Default
The Subordinated Indenture will provide that any one or more of the
following described events that has occurred and is continuing constitutes a
"Subordinated Debt Securities Event of Default" with respect to the
Subordinated Debt Securities:
(i) failure for 30 days to pay any interest on the Subordinated Debt
Securities, when due (subject to the deferral of any due date in the case
of an Extension Period);
(ii) failure to pay any principal or premium, if any, on the Subordinated
Debt Securities when due whether at maturity, upon redemption by
declaration or otherwise;
(iii) failure by the Company to deliver shares of Common Stock upon an
appropriate election by holders of Subordinated Debt Securities to convert
such Subordinated Debt Securities;
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(iv) failure to observe or perform certain other covenants contained in
the Subordinated Indenture for 90 days after written notice to the Company
from the Subordinated Trustee or to the Subordinated Trustee and the
Company from the holders of at least 25% in aggregate outstanding principal
amount of such Subordinated Debt Securities; or
(v) certain events in bankruptcy, insolvency or reorganization of the
Company. (Section 5.1)
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debt Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Subordinated Trustee or exercising any trust or power conferred on the
Subordinated Trustee consistent with the Subordinated Indenture. The
Subordinated Trustee or the holders of not less than 25% in aggregate
principal amount of the Subordinated Debt Securities then outstanding may
declare the principal due and payable immediately upon a Subordinated Debt
Securities Event of Default, and, should the Subordinated Trustee or the
holders of the Subordinated Debt Securities fail to make such declaration, the
holders of at least 25% in aggregate liquidation amount of the Trust Preferred
Securities then outstanding shall have such right. The holders of a majority
in aggregate outstanding principal amount of the Subordinated Debt Securities
may annul and rescind such declaration if the default (other than the non-
payment of the principal of the Subordinated Debt Securities which has become
due solely by such acceleration) has been cured or waived and a sum sufficient
to pay all matured installments of interest and principal due otherwise than
by acceleration has been deposited with the Subordinated Trustee and, should
the holders of the Subordinated Debt Securities fail to annul and rescind such
declaration, the holders of a majority in aggregate liquidation amount of the
Trust Preferred Securities then outstanding shall have such right. (Section
5.2)
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debt Securities affected thereby may, on behalf of the holders of
all the Subordinated Debt Securities, waive any past default, except a default
in the payment of principal or interest (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Subordinated
Trustee) or a default in respect of a covenant or provision which under the
Subordinated Indenture cannot be modified or amended without the consent of
the holder of each outstanding Subordinated Debt Security and, should the
holders of the Subordinated Debt Securities fail to annul such declaration and
waive such default, the holders of a majority in aggregate liquidation amount
of the Trust Preferred Securities shall have such right. (Sections 5.2 and
5.13) The Company is required to file annually with the Subordinated Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Subordinated Indenture.
(Section 10.5)
In case a Subordinated Debt Securities Event of Default shall occur and be
continuing as to the Subordinated Debt Securities, the Property Trustee will
have the right to declare the principal of and the interest on the
Subordinated Debt Securities and any other amounts payable under the
Subordinated Indenture to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Subordinated Debt Securities.
Consolidation, Merger, Sale of Assets and Other Transactions
The Subordinated Indenture will provide that the Company shall not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and no
Person shall consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless (i) in case the Company consolidates with or merges into another Person
or conveys, transfers or leases its properties and assets substantially as an
entirety to any Person, the successor Person is organized under the laws of
the United States or any state or the District of Columbia, and such successor
Person expressly assumes the Company's obligations on the Subordinated Debt
Securities and under
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the Subordinated Indenture; (ii) immediately after giving effect thereto, no
Subordinated Debt Securities Event of Default, and no event which, after
notice or lapse of time or both, would become a Subordinated Debt Securities
Event of Default, shall have happened and be continuing; (iii) such
transaction is permitted under the Trust Agreement (as defined herein) and the
Trust Guarantee and does not give rise to any breach or violation of the Trust
Agreement or the Trust Guarantee; and (iv) certain other conditions as
prescribed in the Subordinated Indenture are met. (Section 8.1)
The general provisions of the Subordinated Indenture do not afford holders
of the Subordinated Debt Securities protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Subordinated Debt Securities.
Expenses of the Alcoa Trust
Pursuant to the Subordinated Indenture, the Company will pay all of the
costs, expenses or liabilities of the Alcoa Trust, other than obligations of
the Alcoa Trust to pay to the holders of any Trust Preferred Securities or
Trust Common Securities the amounts due such holders pursuant to the terms of
the Trust Preferred Securities or Trust Common Securities. (Secion 10.9)
Satisfaction and Discharge
The Subordinated Indenture will provide that when, among other things, all
Subordinated Debt Securities not previously delivered to the Subordinated
Trustee for cancellation (i) have become due and payable or (ii) will become
due and payable at their stated maturity within one year or are to be properly
called for redemption within one year, and the Company deposits or causes to
be deposited with the Subordinated Trustee trust funds, in trust, for the
purpose and in an amount in the currency or currencies in which the
Subordinated Debt Securities are payable sufficient to pay and discharge the
entire indebtedness on the Subordinated Debt Securities not previously
delivered to the Subordinated Trustee for cancellation, for the principal and
premium, if any, and interest to the date of the deposit or to the stated
maturity, as the case may be, then the Subordinated Indenture will cease to be
of further effect (except as to the Company's obligations to pay all other
sums due pursuant to the Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will
be deemed to have satisfied and discharged the Subordinated Indenture.
(Section 4.1)
Subordination
In the Subordinated Indenture, the Company has covenanted and agreed that
any Subordinated Debt Securities issued thereunder will be subordinate and
junior in right of payment to all Senior Debt (as defined below) of the
Company whether now existing or hereinafter incurred. Upon any payment or
distribution of assets of the Company to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Senior Debt before the Property Trustee, on behalf
of the holders of the Subordinated Debt Securities, will be entitled to
receive or retain any payment in respect of the principal of and premium, if
any, or interest, if any, on the Subordinated Debt Securities. (Sections 12.1
and 12.2)
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration) before the holders
of Subordinated Debt Securities will be entitled to receive or retain any
payment in respect of the principal of or premium, if any, or interest, if
any, on the Subordinated Debt Securities. (Section 12.1)
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No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to
Senior Debt, or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. (Section 12.3)
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, Subordinated Debt Securities, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (iv)
every obligation of such Person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital
lease obligation of such Person; and (vi) every obligation of the type
referred to in clauses (i) through (v) of another Person and all dividends of
another person the payment of which, in either case, such Person has
guaranteed or for which such Person is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt of
the Company, whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debt
Securities.
The Subordinated Indenture will place no limitation on the amount of
additional Senior Debt that may be incurred by the Company.
Governing Law
The Subordinated Indenture and the Subordinated Debt Securities will be
governed by and construed in accordance with the laws of the State of New
York. (Section 1.12)
Information Concerning the Subordinated Trustee
The Chase Manhattan Bank is the trustee under the Subordinated Indenture.
The Subordinated Trustee is under no obligation to exercise any of the powers
vested in it by the Subordinated Indenture at the request of any holder of
Subordinated Debt Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Subordinated Trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of
its duties if the Subordinated Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it. The Company and certain of
its subsidiaries maintain deposit accounts and conduct other banking
transactions, including borrowing in the ordinary course of business, with The
Chase Manhattan Bank.
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DESCRIPTION OF WARRANTS
The Company may issue, together with any Senior Debt Securities offered by
any Prospectus Supplement or separately, Warrants for the purchase of other
Senior Debt Securities. The Warrants are to be issued under Warrant Agreements
(each a "Warrant Agreement") to be entered into between the Company and a bank
or trust company, as Warrant Agent (the "Warrant Agent"), all as set forth in
the Prospectus Supplement relating to the particular issue of Warrants. A copy
of the form of Warrant Agreement, including the form of Warrant Certificates
representing the Warrants (the "Warrant Certificates"), reflecting the
alternative provisions to be included in the Warrant Agreements that will be
entered into with respect to particular offerings of Warrants, is filed with
the Commission and incorporated by reference as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Warrant
Agreement and the Warrant Certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Warrant Agreement and the Warrant Certificates,
respectively.
The Prospectus Supplement will describe the terms of the Warrants, the
Warrant Agreement relating to the Warrants and the Warrant Certificates
representing the Warrants, including the following: (1) the designation,
aggregate principal amount and terms of the Senior Debt Securities purchasable
upon exercise of the Warrants; (2) the designation and terms of any related
Senior Debt Securities with which the Warrants are issued and the number of
Warrants issued with each such Senior Debt Security; (3) the date, if any, on
and after which the Warrants and the related Senior Debt Securities will be
separately transferable; (4) the principal amount of Senior Debt Securities
purchasable upon exercise of one Warrant and the price at which such principal
amount of Senior Debt Securities may be purchased upon such exercise; (5) the
date on which the right to exercise the Warrants shall commence and the date
(the "Expiration Date") on which such right shall expire; and (6) whether the
Warrants represented by the Warrant Certificates will be issued in registered
or bearer form, and if registered, where they may be transferred and
registered.
If the Senior Debt Securities purchasable upon exercise of the Warrants are
issuable in bearer form, such Warrants shall not be offered nor constitute an
offer to, and Bearer Senior Debt Securities issuable upon exercise of such
Warrants shall not be issued to, United States persons other than to offices
outside the United States of certain United States financial institutions.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations and Warrants may be exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement. Prior to the exercise of their Warrants, holders of Warrants will
not have any of the rights of Holders of the Senior Debt Securities
purchasable upon such exercise and will not be entitled to payments of
principal of (and premium, if any) or interest, if any, on the Senior Debt
Securities purchasable upon such exercise.
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DESCRIPTION OF PREFERRED STOCK
The Company's Articles of Incorporation, as amended (the "Articles"),
authorize the issuance of two classes of preferred stock, 660,000 shares of
$3.75 Cumulative Preferred Stock, par value $100.00 per share ("Class A
Stock") and 10,000,000 shares of Class B Serial Preferred Stock, par value
$1.00 per share ("Class B Stock"). As of June 30, 1998, there were 557,649
shares of Class A Stock outstanding and no shares of Class B Stock
outstanding. No additional shares of Class A Stock may be issued. The Company
initiated an ongoing program to purchase and retire shares of Class A Stock in
1989.
The following description of Class B Stock sets forth certain general terms
and provisions of the series of Class B Stock to which any Prospectus
Supplement may relate. The specific terms of a particular series of Class B
Stock will be described in the Prospectus Supplement relating to such series
of the Class B Stock offered pursuant thereto. If so indicated in the
Prospectus Supplement relating thereto, the terms of any such series of Class
B Stock may differ from the terms set forth below. The description of Class B
Stock set forth below and the description of the terms of a particular series
of Class B Stock set forth in the Prospectus Supplement relating thereto do
not purport to be complete and are qualified in their entirety by reference to
the Company's Articles and the Statement with Respect to Shares relating to
such series of Class B Stock, which will be filed or incorporated by reference
as an exhibit to the Registration Statement of which this Prospectus is a
part.
General
The Board of Directors of the Company has the authority to issue shares of
Class B Stock in one or more series and to fix the specific number of shares
and, subject to the Articles, the relative rights and preferences of any such
series so established; provided that all shares of preferred stock shall be
identical except as to the following relative rights and preferences, any of
which may vary between different series: (i) the rate of dividend (including
the date from which dividends shall be cumulative and, with respect to the
Class B Stock, whether such dividend rate shall be fixed or variable and the
methods, procedures and formulas for the recalculation or periodic resetting
of any variable dividend rate); (ii) the price at, and the terms and
conditions on, which shares may be redeemed; (iii) the amounts payable on
shares in the event of voluntary or involuntary liquidation; (iv) sinking fund
provisions for the redemption or purchase of shares in the event shares of any
series of preferred stock are issued with sinking fund provisions; and (v) the
terms and conditions on which the shares of any series may be converted in the
event the shares of any series are issued with the privilege of conversion.
Each share of any series of Class B Stock shall be identical with all other
shares of any such series, except as to the date from which dividends shall be
cumulative.
The Prospectus Supplement will set forth the following specific terms
regarding the series of Class B Stock offered thereby: (i) the designation,
number of shares and liquidation preference per share; (ii) the initial public
offering price; (iii) the dividend rate or rates, or the method of determining
the dividend rate or rates; (iv) the index, if any, upon which the amount of
dividends, if any, is determined; (v) the dates on which dividends, if any,
will accrue and be payable, that such dividends will be cumulative, and the
designated record dates for determining the holders entitled to such
dividends; (vi) any redemption or sinking fund provisions; (vii) any
conversion or exchange provisions; (viii) provisions for issuance of global
securities; (ix) the currency (which may be composite currency) in which
payment of dividends, if any, shall be payable if other than United States
dollars; (x) voting rights, if any, (except as otherwise required by law); and
(xi) any additional terms, preferences or rights and qualifications,
limitations or restrictions thereof.
The shares of Class B Stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the Class B Stock will be specified in the Prospectus Supplement
relating thereto.
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Dividends
The holders of Class A Stock are entitled to receive, when and as declared
by the Board of Directors of the Company, out of funds legally available
therefor, cumulative cash dividends at the annual rate of $3.75 per share,
payable quarterly on the first day of January, April, July and October in each
year.
The holders of the Class B Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of
funds legally available therefor, cumulative cash or other dividends at such
rate or rates and on such dates as the Board of Directors determines in
respect of such series and will be set forth in the Prospectus Supplement
relating to such series of Class B Stock. Such rates may be fixed or variable
or both. No dividends may be declared in respect of any dividend period on any
series of Class B Stock, unless all accrued dividends and the current quarter
yearly dividend on Class A Stock shall have been paid in full or
contemporaneously are declared and set apart. In the event that full
cumulative dividends on shares of a series of Class B Stock have not been
declared and paid or set apart when due, dividends thereon shall be declared
and paid pro rata to the holders of such series entitled thereto. No interest
shall be payable in respect of any dividend payment on the Class A Stock or
the Class B Stock which may be in arrears.
In the event that full cumulative dividends on any class or series of Class
A Stock or Class B Stock (including dividends for the current quarter yearly
dividend period for shares of Class A Stock) have not been declared and paid
or set apart when due, the Company may not declare or pay any dividends on, or
make other distributions on or make payment on account of the purchase,
redemption, or other retirement, of Common Stock. No restriction applies to
the repurchase or redemption of Class A Stock or Class B Stock by the Company
while there is any arrearage in the payment of dividends or any applicable
sinking fund installments on such stock.
Redemption
At the option of its Board of Directors at any time, the Company may redeem
the whole or any part of the Class A Stock, at par, plus accrued dividends.
Notice of redemption must be given by publication in daily newspapers of
general circulation in New York City and in Pittsburgh, Pennsylvania; and by
mail to each record holder not less than 30 days nor more than 60 days prior
to the date fixed for redemption. In case of a redemption of a part only of
the Class A Stock at the time outstanding, the shares to be redeemed shall be
selected pro rata or by lot as determined by the Board of Directors of the
Company.
If notice of redemption has been given, from and after the redemption date
for the shares of Class A Stock called for redemption (unless default shall be
made by the Company in providing money for the payment of the redemption price
of the shares so called for redemption), dividends on the shares of Class A
Stock so called for redemption will cease to accrue, such shares will no
longer be deemed to be outstanding, and all rights of the holders thereof as
shareholders of the Company (except the right to receive the redemption price)
will cease. Upon surrender in accordance with such notice of the certificates
representing any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Company will so require and the
notice shall so state), the redemption price referred to above will be paid
out of funds provided by the Company. If fewer than all of the shares
represented by any such certificate are redeemed, a new certificate will be
issued representing the unredeemed shares without cost to the holder thereof.
All shares of Class A Stock so redeemed shall be cancelled and shall not be
reissued.
The terms and conditions under which the whole or any part of any series of
the Class B Stock may be redeemed shall be established by the Board of
Directors prior to the issuance thereof. Unless otherwise determined by the
Board of Directors, all shares of Class B Stock so redeemed or otherwise
acquired by the Company shall be returned to the status of authorized but
unissued shares.
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Liquidation Preference
Upon any liquidation, dissolution or winding up of the Company, the holders
of Class A Stock shall be entitled to receive out of the assets of the Company
available for distribution to shareholders the full respective preferential
amounts to which they are entitled before any distribution of assets is made
to or set apart for the holders of Class B Stock. The holders of shares of
each series of Class B Stock shall be entitled to receive out of the assets of
the Company available for distribution to shareholders the full respective
preferential amounts to which they are entitled before any distribution of
assets is made to or set apart for the holders of Common Stock, with respect
to the Class B Stock, plus all dividends which have accrued on such series of
Class B Stock and have not been paid or declared and a sum sufficient for
payment thereof set apart, an amount described in the Prospectus Supplement
relating to such series of Class B Stock. If, in any case of any such
liquidation, dissolution or winding up of the Company, the assets of the
Company or the proceeds thereof shall be insufficient to pay in full the
amounts payable with respect to shares of each series of Class B Stock, the
holders of shares of such series of Class B Stock will share ratably in any
such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of shares of such series of Class B Stock of the full preferential
amounts to which they are entitled, the holders of shares of such series of
Class B Stock will not be entitled to any further participation in any
distribution of assets by the Company, unless otherwise provided in the
Prospectus Supplement. A consolidation or merger of the Company with one or
more corporations shall not be deemed to be a liquidation, dissolution or
winding up of the Company.
Conversion and Exchange Rights
The terms, if any, on which shares of any series of Class B Stock are
convertible into or exchangeable for Common Stock will be set forth in the
Prospectus Supplement relating thereto. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at
the option of the Company, in which the number of shares of Common Stock to be
received by the holders of Class B Stock would be calculated according to the
market price of Common Stock as of a time stated in the Prospectus Supplement.
Voting Rights
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Class B Stock, or except as expressly required by
applicable law, the holders of Class B Stock will not be entitled to vote.
Pennsylvania law requires that holders of outstanding shares of a particular
class or series be entitled to vote as a class on an amendment to the Articles
that would (i) authorize the Board of Directors to fix and determine the
relative rights and preferences as between series of any preferred stock or
special class of stock; (ii) change the preferences, limitations or other
special rights of the shares of a class or series adverse to that class or
series; (iii) authorize a new class or series of shares having a preference as
to dividends or assets which is senior to shares of a particular class or
series; or (iv) increase the number of authorized shares of any particular
class or series having a preference as to dividends or assets which is senior
in any respect to the shares of such class or series.
The Board of Directors, pursuant to the Company's Articles, may limit or
eliminate the voting rights applicable to any series of Class B Stock prior to
the issuance of such series, except as otherwise required by law. Any one or
more series of the Class B Stock may be issued with such additional voting
rights, exercisable only during certain extended periods of dividend
arrearages, as the Board of Directors may determine to be required to qualify
the series for listing on a recognized stock exchange. Such rights may only be
granted if there are no shares of Class A Stock outstanding.
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On matters on which holders of such series and holders of any other series
of Class B Stock are entitled to vote as a single class, each full share of
any series of the Class B Stock shall be entitled to one vote. Therefore, the
voting power of such series will depend on the number of shares in such
series, not the liquidation preference or initial offering price of the shares
of such series of the Class B Stock.
So long as any shares of Class A Stock or Class B Stock remain outstanding,
without the consent of the holders of at least a majority of the outstanding
Class A Stock and Class B Stock, voting as a class, the Company shall not (i)
authorize any additional class of stock or increase the authorized number of
shares of the Class A Stock or Class B Stock or any class of stock ranking on
a parity with the Class A Stock or Class B Stock, as the case may be, as to
dividends or assets or (ii) merge or consolidate with any other corporation if
the corporation surviving or resulting from such merger or consolidation would
have any authorized class of stock ranking senior to or on a parity with the
Class A Stock or Class B Stock except the same number of shares of stock with
the same rights and preferences as the authorized stock of the corporation
immediately preceding such merger or consolidation.
So long as any shares of Class A Stock or Class B Stock remain outstanding,
without the consent of the holders of at least two-thirds of the outstanding
Class A Stock and Class B Stock, the Company shall not (i) make any change in
the rights and preferences of the Class A Stock or Class B Stock so as to
affect such stock adversely (provided, however, that if any such change would
affect any series of Class A Stock or Class B Stock adversely as compared with
the effect thereof upon any other series of Class A Stock or Class B Stock, no
such change shall be made without the additional consent of the holders of at
least two-thirds of the outstanding shares of such series of Class A Stock or
Class B Stock), (ii) authorize any additional class of stock or increase the
authorized number of shares of any class of stock ranking senior to the Class
A Stock or Class B Stock as to dividends or assets or (iii) sell or otherwise
part with control of all or substantially all of its property or business or
voluntarily liquidate, dissolve or wind up its affairs.
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 600,000,000 shares of Common Stock, par
value $1.00 per share. As of June 30, 1998, there were 164,798,342 shares of
Common Stock outstanding. In addition, as of such date, there were 14,124,241
shares of Common Stock issued and held in the treasury of the Company and an
aggregate of 23,229,499 shares of Common Stock reserved for issuance under
various incentive plans.
Dividend Rights
The holders of Common Stock are entitled to receive dividends, when and as
declared by the Board of Directors, but no dividend shall be declared or paid
on the Common Stock so long as any preferred stock remains outstanding, unless
all dividends accrued on all classes of the Company's preferred stock and the
current quarter yearly dividend on the Class A Stock shall have been paid or
declared and a sum sufficient for payment therefor set apart.
Voting Rights
The holders of Common Stock are entitled to one vote per share.
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Liquidation Rights
Upon any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, after payments to holders of preferred stock of such
amount as shall have been fixed by the Board of Directors, plus accrued
dividends, the remaining assets of the Company shall belong to and be divided
among the holders of Common Stock. The consolidation or merger of the Company
with or into any other corporation or corporations or a share exchange or
division involving the Company pursuant to applicable law will not be deemed a
liquidation, dissolution or winding up of the Company under the Company's
Articles.
Preemptive or Other Subscription Rights
The holders of Common Stock have no right to participate in any right of
subscription to any increased or additional capital stock of the Company.
Conversion and Other Rights
The Common Stock does not have any conversion, redemption or sinking fund
provisions applicable thereto and is not liable to further call or assessment
by the Company. All outstanding shares of Common Stock are fully paid and non-
assessable.
Other Matters
The Articles of the Company provide for a classified Board of Directors with
staggered three year terms, establish special shareholder voting requirements
to remove directors and establish certain procedures relating to the
nomination of directors, filling of vacancies and the vote required to amend
or repeal any of these provisions. The Articles also prohibit the Company's
payment of "green-mail," that is, payment of a premium in purchasing shares of
its Common Stock from a present or recent holder of 5% or more of the Common
Stock, except with the approval of a majority of the disinterested
shareholders. This provision and the classified board provision may be amended
or repealed only with the affirmative vote of at least 80% of the Common
Stock. In addition, the Articles limit or eliminate to the fullest extent
permitted by Pennsylvania law as from time to time in effect the personal
liability of the Company's directors for monetary damages, and authorize the
Company, except as prohibited by law, to indemnify directors, officers,
employees and others against liabilities and expenses incurred by them in
connection with the performance of their duties to the Company. The classified
Board article provision and the anti-"greenmail" provision may have certain
anti-takeover effects.
The Company is governed by certain "anti-takeover" provisions in the
Pennsylvania Business Corporation Law (the "PCBL"). Chapter 25 of the PBCL
contains several anti-takeover provisions that apply to registered
corporations such as the Company. Section 2538 of the PBCL provides that if an
interested shareholder of a registered corporation (together with others
acting jointly or in concert therewith and affiliates thereof) (i) is to be a
party to a merger or consolidation, a share exchange or certain sales of
assets involving such corporation or a subsidiary thereof; (ii) is to receive
a disproportionate amount of any of the securities of any corporation
surviving or resulting from a division of such corporation; (iii) is to be
treated differently from others holding shares of the same class in a
voluntary dissolution of such corporation; or (iv) is to have his or her
percentage of voting or economic share interest in such corporation materially
increased relative to substantially all other shareholders in a
reclassification, then the transactions being proposed must be approved by the
affirmative vote of the holders of shares representing at least a majority of
the votes that all shareholders (other than the interested shareholder) are
entitled to cast with respect to such transaction, excluding all such voting
shares beneficially owned by such interested shareholder. Such special voting
requirement does not apply if the transaction being proposed has been approved
in a prescribed manner by such corporation's board of directors or certain
other conditions (including the amount of consideration to be paid to certain
shareholders) are satisfied or the transaction involves certain subsidiaries.
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Section 2555 of the PBCL may apply to a transaction between a registered
corporation and an interested shareholder thereof, notwithstanding that
Section 2538 is also applicable. Section 2555 prohibits such a corporation
from engaging in a business combination with an interested shareholder unless:
(i) the board of directors of such corporation gives prior approval to the
proposed transaction or gives prior approval to the interested shareholder's
acquisition of 20% of the shares entitled to vote in an election of directors
of such corporation, (ii) the interested shareholder owns at least 80% of the
stock of such corporation entitled to vote in an election of directors and, no
earlier than three months after such interested shareholder reaches such 80%
level, the majority of the remaining shareholders approve the proposed
transaction and shareholders receive a minimum "fair price" for their shares
in the transaction and the other conditions of Section 2556 of the PBCL are
met, (iii) holders of all outstanding common stock approve the transaction,
(iv) no earlier than 5 years after the interested shareholder acquired the
20%, a majority of the remaining shares entitled to vote in an election of
directors approve the transaction, or (v) no earlier than 5 years after the
interested shareholder acquired the 20%, a majority of all the shares approve
the transaction, all shareholders receive a minimum fair price for their
shares, and certain other conditions are met.
The Company's Articles also provide that the Company may not engage in any
stock repurchases at prices greater than the current fair market value from an
interested shareholder. Under the PBCL, when a person or group of persons
acting in concert holds 20% of the shares of a registered corporation entitled
to vote in the election of directors (a "Control Group"), on the occurrence of
the transaction that makes the group a control group, any other shareholder of
the registered corporation who objects can, under procedures set forth in the
statute, require the Control Group to purchase his or her shares at "fair
value," as defined in the PBCL.
The PBCL also contains certain provisions applicable to a registered
corporation such as the Company which, under certain circumstances, permit a
corporation to redeem "control shares," as defined in the PBCL, remove the
voting rights of control shares and require the disgorgement of profits by a
"controlling person," as defined in the PBCL.
The transfer agent and registrar for the Common Stock is First Chicago Trust
Company of New York.
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DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST GUARANTEE
Trust Preferred Securities
The Declaration pursuant to which the Alcoa Trust is organized will be
replaced by an Amended and Restated Trust Agreement (the "Trust Agreement")
which will authorize the Trustees of the Alcoa Trust to issue on behalf of the
Alcoa Trust one series of Trust Preferred Securities and one series of Trust
Common Securities (together, the "Trust Securities"). The Trust Preferred
Securities will be issued to the public pursuant to the Registration Statement
of which this Prospectus forms a part, and the Trust Common Securities will be
issued directly or indirectly to the Company.
The Trust Preferred Securities will have such terms, including dividends,
redemption, voting, conversion, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Trust Agreement or made part of the Trust Agreement by the Trust Indenture
Act. Reference is made to the applicable Prospectus Supplement relating to the
Trust Preferred Securities of the Alcoa Trust for specific terms, including
(i) the distinctive designation of Trust Preferred Securities, (ii) the number
of Trust Preferred Securities issued by the Alcoa Trust, (iii) the annual
dividend rate (or method of determining such rate) for Trust Preferred
Securities issued by the Alcoa Trust and the date or dates upon which such
dividends shall be payable, (iv) whether dividends on Trust Preferred
Securities issued by the Alcoa Trust shall be cumulative, and, in the case of
Trust Preferred Securities having such cumulative dividend rights, the date or
dates or method of determining the date or dates from which dividends on Trust
Preferred Securities issued by the Alcoa Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the assets of the Alcoa Trust to
the holders of Trust Preferred Securities of the Alcoa Trust upon voluntary or
involuntary dissolution, winding-up or termination of the Alcoa Trust, (vi)
the terms and conditions, if any, under which Trust Preferred Securities of
the Alcoa Trust may be converted into shares of capital stock of the Company,
including the conversion price per share and the circumstances, if any, under
which any such conversion right shall expire, (vii) the terms and conditions,
if any, upon which the related series of the Subordinated Debt Securities of
the Company may be distributed to holders of Trust Preferred Securities of the
Alcoa Trust, (ix) the obligation, if any, of the Alcoa Trust to purchase or
redeem Trust Preferred Securities issued by the Alcoa Trust and the price or
prices at which, the period or periods within which and the terms and
conditions upon which Trust Preferred Securities issued by the Alcoa Trust
shall be purchased or redeemed, in whole or in part, pursuant to such
obligation, (x) the voting rights, if any, of Trust Preferred Securities
issued by the Alcoa Trust in addition to those required by law, including the
number of votes per Trust Preferred Security and any requirement for the
approval by the holders of Trust Preferred Securities, as a condition to
specified action or amendments to the Trust Agreement, and (xi) any other
relevant rights, preferences, privileges, limitations or restrictions of Trust
Preferred Securities issued by the Alcoa Trust consistent with the Trust
Agreement or with applicable law. Pursuant to the Trust Agreement, the
Property Trustee will own the Subordinated Debt Securities of the Company
purchased by the Alcoa Trust for the benefit of the holders of the Trust
Preferred Securities and the Trust Common Securities. The payment of dividends
out of money held by the Alcoa Trust, and payments upon redemption of Trust
Preferred Securities or liquidation of the Alcoa Trust, will be guaranteed by
the Company to the extent described under "--Trust Guarantee."
Certain United States Federal income tax considerations applicable to an
investment in Trust Preferred Securities will be described in the Prospectus
Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, the Alcoa
Trust will also issue one series of Trust Common Securities. The Trust
Agreement will authorize the Regular Trustees of the Alcoa Trust to issue on
behalf of the Alcoa Trust one series of Trust Common Securities having such
terms, including dividends, conversion, redemption, voting, liquidation rights
or such restrictions as shall be set forth therein. Except as otherwise
provided in the Prospectus Supplement relating to the Trust Preferred
Securities, the terms of the Trust Common Securities issued by the Alcoa Trust
will be
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substantially identical to the terms of the Trust Preferred Securities issued
by the Alcoa Trust, and the Trust Common Securities will rank pari passu, and
payments will be made thereon pro rata with the Trust Preferred Securities,
except that, upon an event of default under the Trust Agreement, the rights of
the holders of the Trust Common Securities to payment in respect of dividends
and payments upon liquidation, redemption and otherwise will be subordinated
to the rights of the holders of the Trust Preferred Securities. Except in
certain limited circumstances, the Trust Common Securities will also carry the
right to vote and appoint, remove or replace any of the Trustees of the Alcoa
Trust. All of the Trust Common Securities of the Alcoa Trust will be directly
or indirectly owned by the Company.
The Company and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions, including borrowings in the ordinary
course of business, with the Property Trustee.
Trust Guarantee
Set forth below is a summary of information concerning the Trust Guarantee
which will be executed and delivered by the Company for the benefit of the
holders of Trust Preferred Securities. The accompanying Prospectus Supplement
will describe any significant differences between the actual terms of the
Trust Guarantee and the summary below. The following summary does not purport
to be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Trust Guarantee, which is filed
with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus forms a part.
General. The Company will irrevocably and unconditionally agree, to the
extent set forth in the Trust Guarantee, to pay in full, to the holders of
Trust Preferred Securities, the Trust Guarantee Payments (as defined below)
(except to the extent paid by the Alcoa Trust), as and when due, regardless of
any defense, right of set-off or counterclaim which the Alcoa Trust may have
or assert. The following payments with respect to the Trust Preferred
Securities to the extent not paid by the Alcoa Trust (the "Trust Guarantee
Payments") will be subject to the Trust Guarantee (without duplication): (i)
any accrued and unpaid dividends which are required to be paid on the Trust
Preferred Securities, to the extent the Alcoa Trust shall have funds legally
available therefor, (ii) the redemption price, including all accrued and
unpaid dividends (the "Redemption Price"), payable out of funds legally
available therefor, with respect to any Trust Preferred Securities called for
redemption by the Alcoa Trust and (iii) upon a liquidation of the Alcoa Trust
(other than in connection with the distribution of Subordinated Debt
Securities of the Company to the holders of the Trust Preferred Securities or
the redemption of all of the Trust Preferred Securities issued by the Alcoa
Trust), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid dividends on the Trust Preferred Securities to the date of
payment and (b) the amount of assets of the Alcoa Trust remaining available
for distribution to holders of Trust Preferred Securities in liquidation of
the Alcoa Trust. The Company's obligation to make a Trust Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to
the holders of Trust Preferred Securities or by causing the Alcoa Trust to pay
such amounts to such holders.
Covenants of the Company. In the Trust Guarantee, the Company will covenant
that, so long as any Trust Preferred Securities issued by the Alcoa Trust
remain outstanding, if there shall have occurred any event that would
constitute an event of default under the Trust Guarantee or the Trust
Agreement, then (a) the Company shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its Common Stock (other than (i) purchases or
acquisitions of shares of Common Stock in connection with the satisfaction by
the Company of its obligations under any employee benefit plan, (ii) as a
result of a reclassification of the Company's Common Stock or the exchange or
conversion of one class or series of the Company's Common Stock for another
class or series of the Company's Common Stock, (iii) the purchase of
fractional interests in shares of the Company's Common Stock pursuant to the
conversion
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or exchange provisions of such Common Stock of the Company or the security
being converted or exchanged or (iv) purchases or acquisitions of shares of
Common Stock to be used in connection with acquisitions of Common Stock by
shareholders pursuant to the Company's dividend reinvestment plan) or make any
guarantee payments with respect to the foregoing and (b) the Company shall not
make any payment of principal or premium, if any, on or repurchase any debt
securities (including guarantees) other than at stated maturity issued by the
Company which rank pari passu with or junior to the Subordinated Debt
Securities.
Amendment and Assignment. Except with respect to any changes which do not
adversely affect the rights of holders of Trust Preferred Securities (in which
case no vote will be required), the Trust Guarantee with respect to the Trust
Preferred Securities may be changed only with the prior approval of the
holders of not less than a majority in liquidation amount of the outstanding
Trust Preferred Securities. The manner of obtaining any such approval of
holders of the Trust Preferred Securities will be as set forth in an
accompanying Prospectus Supplement. All guarantees and agreements contained in
the Trust Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Company and shall inure to the benefit of the
holders of the Trust Preferred Securities then outstanding.
Termination of the Trust Guarantee. The Trust Guarantee will terminate as to
the Trust Preferred Securities issued by the Alcoa Trust (a) upon full payment
of the redemption price of all Trust Preferred Securities of the Alcoa Trust,
(b) upon distribution of the Subordinated Debt Securities of the Company held
by the Alcoa Trust to the holders of the Trust Preferred Securities of the
Alcoa Trust or (c) upon full payment of the amounts payable in accordance with
the Trust Agreement upon liquidation of the Alcoa Trust. The Trust Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of Trust Preferred Securities issued by the Alcoa Trust
must restore payment of any sums paid under such Trust Preferred Securities or
such Trust Guarantee. The subordination provisions of the Subordinated Debt
Securities and the Trust Guarantee, respectively, will provide that in the
event payment is made on the Subordinated Debt Securities or the Trust
Guarantee in contravention of such provisions, such payments will be paid over
to the holders of Senior Debt.
Ranking of the Trust Guarantee. The Trust Guarantee will constitute an
unsecured obligation of the Company and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Company, (ii) pari passu
with the most senior preferred or preference stock, if any, hereafter issued
by the Company and with any guarantee hereafter entered into by the Company in
respect of any preferred or preference stock or interests of any affiliate of
the Company and (iii) senior to the Company's Common Stock. The Trust
Agreement will provide that each holder of Trust Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the Trust Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection. The Trust Guarantee will be deposited with the Property Trustee to
be held for the benefit of the Trust Preferred Securities. The Property
Trustee will have the right to enforce the Trust Guarantee on behalf of the
holders of the Trust Preferred Securities. The holders of not less than a
majority in aggregate liquidation amount of the Trust Preferred Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available in respect of the Trust Guarantee,
including the giving of directions to the Property Trustee. If the Property
Trustee fails to enforce the Trust Guarantee as above provided, any holder of
Trust Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under the Trust Guarantee, without first
instituting a legal proceeding against the Alcoa Trust, or any other person or
entity. The Trust Guarantee will not be discharged except by payment of the
Trust Guarantee Payments in full to the extent not paid by the Alcoa Trust,
and by complete performance of all obligations under the Trust Guarantee.
Governing Law. The Trust Guarantee will be, governed by and construed in
accordance with, the laws of the State of New York.
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PLAN OF DISTRIBUTION
The Company and/or the Alcoa Trust, as the case may be, may sell Offered
Securities to one or more underwriters for public offering and sale by them or
may sell Offered Securities to investors directly or through agents. Any such
underwriter or agent involved in the offer and sale of the Offered Securities
will be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company and/or the Alcoa Trust, as the case may be,
also may, from time to time, authorize underwriters acting as the Company's
and/or the Alcoa Trust's agents to offer and sell the Offered Securities upon
the terms and conditions as shall be set forth in any Prospectus Supplement.
In connection with the sale of Offered Securities, underwriters may be deemed
to have received compensation from the Company and/or the Alcoa Trust in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of Offered Securities for whom they may act as agent.
Underwriters may sell Offered Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed
from time to time) from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company and/or the Alcoa Trust to
underwriters or agents in connection with the offering of Offered Securities,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in an applicable Prospectus
Supplement. Underwriters, dealers and agents participating in the distribution
of the Offered Securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them on resale of
the Offered Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements with the Company and/or the Alcoa Trust, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Act, and to reimbursement by the Company
and/or the Alcoa Trust for certain expenses.
If so indicated in an applicable Prospectus Supplement, the Company and/or
the Alcoa Trust will authorize dealers acting as the Company's and/or the
Alcoa Trust's agents to solicit offers by certain institutions to purchase
Offered Securities from the Company and/or the Alcoa Trust at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the
date or dates stated in such Prospectus Supplement. Each Contract will be for
an amount not less than, and the aggregate amount of Offered Securities sold
pursuant to Contracts shall be not less nor more than, the respective amounts
stated in such 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 will in all cases be subject to the
approval of the Company and/or the Alcoa Trust. Contracts will not be subject
to any conditions except (i) the purchase by an institution of the Offered
Securities covered by its Contracts 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, and (ii) if the Offered Securities are being sold
to underwriters, the Company and/or the Alcoa Trust shall have sold to such
underwriters the total principal amount of the Offered Securities less the
principal amount thereof covered by Contracts. Agents and underwriters will
have no responsibility in respect of the delivery or performance of Contracts.
Each underwriter, dealer and agent participating in the distribution of any
Offered Securities which are issuable in bearer form will agree that it will
not offer, sell or deliver, directly or indirectly, Offered Securities in
bearer form in the United States or to United States persons (other than
qualifying
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financial institutions) during the restricted period (as defined in United
States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)).
All Offered Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Offered Securities are sold by the
Company and/or the Alcoa Trust for public offering and sale may make a market
in such Offered Securities, but such underwriters will not be obligated to do
so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the secondary market for any
Offered Securities.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Company Securities will be passed upon for the Company by
Denis A. Demblowski, Esq., Senior Counsel of the Company. The validity of the
Trust Preferred Securities will be passed upon for the Alcoa Trust by Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York, special counsel to the
Company and the Alcoa Trust. The validity of the Offered Securities will be
passed upon for any underwriters or agents by Cravath, Swaine & Moore, New
York, New York. Mr. Demblowski is a participant in the stock option plan and
various other employee benefit plans offered to employees of the Company.
EXPERTS
The consolidated financial statements and related schedules in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, incorporated
by reference in this Prospectus, have been incorporated herein by reference in
reliance upon the reports of PricewaterhouseCoopers LLP given upon their
authority as experts in auditing and accounting.
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PRINCIPAL OFFICE OF ALCOA INC.
Alcoa Corporate Center
201 Isabella Street
Pittsburgh, Pennsylvania 15212-5858
TRUSTEE AND PRINCIPAL PAYING AGENT
Chase Manhattan Trust Company, National Association
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15219
LUXEMBOURG PAYING AGENT & TRANSFER AGENT
Deutsche Bank Luxembourg S.A.
Boulevard F. D. Roosevelt 14
L-2450 Luxembourg
LEGAL ADVISORS
To Alcoa To the Underwriters
Thomas F. Seligson Cravath, Swaine & Moore
Counsel 825 Eighth Avenue
Alcoa Inc. New York, New York 10019
Alcoa Corporate Center
201 Isabella Street
Pittsburgh, Pennsylvania 15212-5858
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219
LISTING AGENT
Deutsche Bank Luxembourg S.A.
Boulevard F. D. Roosevelt 14
L-2450 Luxembourg
