<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration No. 333-80545
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 11, 1999)
[Hertz Logo]
The Hertz Corporation
$500,000,000
8 1/4% Senior Notes due June 1, 2005
Interest payable June 1 and December 1
ISSUE PRICE: 99.630%
We will pay interest on the Notes semiannually in arrears on June 1 and December
1 of each year, commencing December 1, 2000. Interest will accrue from June 1,
2000. The Notes will mature and be redeemed at their principal amount on June 1,
2005. The Notes are not redeemable prior to their maturity unless certain events
occur involving U.S. taxation. See "Description of Notes -- Redemption for Tax
Reasons." The Notes will be offered and sold in multiples of U.S. $1,000.
NEITHER THE SEC 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>
- ---------------------------------------------------------------------------------------------------------
PRICE UNDERWRITING DISCOUNTS PROCEEDS TO
TO PUBLIC AND COMMISSIONS COMPANY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.630% .325% 99.305%
- ---------------------------------------------------------------------------------------------------------
Total $498,150,000 $1,625,000 $496,525,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
We have applied to list the Notes on the Luxembourg Stock Exchange in accordance
with the rules of the Luxembourg Stock Exchange.
We expect that delivery of the Notes will be made to investors on or about June
1, 2000, only through The Depository Trust Company, Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear System and
Clearstream Banking, societe anonyme.
JOINT BOOK-RUNNING MANAGERS
CHASE SECURITIES INC. J.P. MORGAN & CO.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BARCLAYS CAPITAL
BNP PARIBAS GROUP
DAIWA SBCM EUROPE LIMITED
DEUTSCHE BANC
ALEX. BROWN
SALOMON SMITH BARNEY
May 24, 2000
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Directors and Principal Executive Officers of the
Corporation............................................... S-3
Capitalization.............................................. S-4
Use of Proceeds............................................. S-4
Selected Consolidated Financial Data of the Corporation..... S-5
Description of Notes........................................ S-7
Certain United States Tax Documentation Requirements........ S-12
United States Taxation of Non-United States Persons......... S-13
Underwriting................................................ S-14
Listing and General Information............................. S-16
PROSPECTUS
Where You Can Find Additional Information................... 2
The Hertz Corporation....................................... 3
Use of Proceeds............................................. 3
Certain Relationships....................................... 4
Description of Debt Securities.............................. 5
Plan of Distribution........................................ 18
Legal Opinions.............................................. 19
Experts..................................................... 19
</TABLE>
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 assume that the information appearing in this
prospectus supplement and the prospectus, as well as information we previously
filed with the Securities and Exchange Commission and incorporated by reference,
is accurate as of the date on the front cover of this prospectus supplement
only. Our business, financial condition, results of operations and prospects may
have changed since that date.
Offers and sales of the Notes are subject to restrictions in relation to
the United Kingdom and Japan, details of which are set out in "Underwriting"
below. The distribution of this prospectus supplement and prospectus and the
offering of the Notes in certain other jurisdictions may also 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."
In connection with this issue, J.P. Morgan Securities Inc. may over-allot
or effect transactions which stabilize or maintain the market price of the Notes
at a level which might not otherwise prevail. Such stabilizing, if commenced,
may be discontinued at any time.
This prospectus supplement and prospectus may only be issued or passed on
in the United Kingdom to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)(Exemptions) Order
1996, as amended, or is a person to whom the prospectus supplement and
prospectus may otherwise lawfully be issued or passed on. This prospectus
supplement and prospectus should not be issued or distributed to persons in the
United Kingdom except to persons whose ordinary
S-2
<PAGE> 3
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business 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, as amended. 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 The Hertz
Corporation (the "Corporation"). We accept full responsibility for the accuracy
of the information contained in this prospectus supplement, the prospectus and
the documents incorporated by reference herein and confirm, having made all
reasonable inquiries that to the best of our knowledge and belief there are no
other facts the omission of which would make any statement herein and in the
documents incorporated by reference misleading in any material respect.
All references in this prospectus supplement to "U.S. dollars", "dollars",
"U.S. $", or "$" are to the currency of the United States of America.
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF THE CORPORATION
Frank A. Olson
Chairman of the Board of Directors
Craig R. Koch
President and Chief Executive Officer and Director
W. Wayne Booker
Director
Louis C. Burnett
Director
Michael T. Monahan
Director
Peter J. Pestillo
Director
John M. Rintamaki
Director
John M. Thompson
Director
Joseph A. Walker
Director
Brian J. Kennedy,
Executive Vice President, Marketing and Sales
Joseph R. Nothwang
Executive Vice President and President,
Vehicle Rental and Leasing, The Americas and Pacific
Gerald A. Plescia
Executive Vice President and President,
Hertz Equipment Rental Corporation
Paul J. Siracusa
Executive Vice President and
Chief Financial Officer
Robert J. Bailey
Senior Vice President, Quality Assurance
and Administration
Harold E. Rolfe
Senior Vice President, General Counsel and Secretary
Donald F. Steele
Senior Vice President, Employee Relations
Charles L. Shafer
Vice President and President,
Hertz Europe Limited
Claude B. Burgess
Vice President, Technology and e-Business
Richard J. Foti
Controller
Robert H. Rillings
Treasurer
S-3
<PAGE> 4
CAPITALIZATION
The following table sets forth the capitalization of the Corporation as of
March 31, 2000 (i) on an actual basis (first column), and (ii) as adjusted
(second column) to give effect to the offering of the Notes.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
---------- -----------
DOLLARS IN THOUSANDS
<S> <C> <C>
The Corporation's Debt:
Notes payable including commercial paper, etc............. $2,129,642 $1,629,642
Promissory notes.......................................... 3,141,051 3,141,051
Notes offered herein...................................... -- 500,000
Junior subordinated promissory notes...................... 399,896 399,896
Debt of the Corporation's subsidiaries...................... 1,075,004 1,075,004
---------- ----------
Total debt............................................. 6,745,593 6,745,593
---------- ----------
Stockholders' equity:
Class A Common Stock, $0.01 par value, 440,000,000 shares
authorized, 40,956,858 shares issued................... 410 410
Class B Common Stock, $0.01 par value, 140,000,000 shares
authorized, 67,310,167 shares issued................... 673 673
Additional capital paid-in................................ 982,271 982,271
Unamortized restricted stock grants....................... (7,464) (7,464)
Retained earnings......................................... 817,417 817,417
Accumulated other comprehensive income.................... (67,226) (67,226)
Treasury stock, at cost, 513,226 shares................... (20,708) (20,708)
---------- ----------
Total stockholders' equity............................. 1,705,373 1,705,373
---------- ----------
Total Capitalization................................... $8,450,966 $8,450,966
========== ==========
</TABLE>
There has been no material change in the capitalization of the Corporation other
than in the normal course of its business since March 31, 2000 to the date of
this prospectus supplement.
USE OF PROCEEDS
The net proceeds of $496,525,000 from the sale of the Notes will be added
to our general funds. We anticipate that the proceeds will be used for general
corporate purposes, potential acquisitions and to reduce short-term borrowings,
primarily commercial paper having an effective interest rate, which we expect to
range from approximately 6% to 6.50%.
S-4
<PAGE> 5
SELECTED CONSOLIDATED FINANCIAL DATA OF THE CORPORATION
(IN MILLIONS OF DOLLARS)
The following table presents selected consolidated financial information of
the Corporation, which is unaudited for the three months ended March 31, 2000
and 1999, and which (except for the ratio of earnings to fixed charges for the
three month periods ended March 31, 2000 and 1999) is extracted from the audited
financial statements for the years ended December 31, 1999, 1998, 1997, 1996 and
1995 and from the Corporation's unaudited Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000. The operating results for the three months ended
March 31, 2000 and 1999 include all adjustments (consisting only of normal
recurring adjustments) that the Corporation considers necessary for a fair
presentation of the results for such interim periods. The interim results are
not necessarily an indication of the results for the full year. The information
in the table and notes thereto should be read in conjunction with the financial
statements and the related notes thereto contained in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999 and its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31,
----------------------------- -------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------- ------------- ----------- ----------- ----------- ----------- -----------
DOLLARS IN MILLIONS (EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
REVENUES
Car rental.................. $ 898.8 $ 827.3 $ 3,728.5 $ 3,484.8 $ 3,329.9 $ 3,161.6 $ 2,911.7
Industrial and construction
equipment rental.......... 202.0 175.5 842.9 631.3 444.5 392.3 332.3
Car leasing................. 10.6 9.2 39.8 37.5 40.9 35.4 35.6
Other(a).................... 23.8 21.0 104.5 84.7 76.0 79.0 121.0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues.......... 1,135.2 1,033.0 4,715.7 4,238.3 3,891.3 3,668.3 3,400.6
----------- ----------- ----------- ----------- ----------- ----------- -----------
EXPENSES
Direct operating............ 539.0 488.3 2,120.7 1,948.8 1,849.1 1,812.6 1,741.1
Depreciation of revenue
earning equipment(b)...... 304.0 276.7 1,240.8 1,078.0 979.6 892.7 803.9
Selling, general and
administrative............ 109.6 108.7 452.4 439.8 417.1 407.7 376.2
Interest, net of interest
income of $3.5, $2.5,
$12.2, $11.5, $13.8, $10.4
and $16.8................. 89.3 77.2 341.4 306.3 302.2 298.8 307.1
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses.......... 1,041.9 950.9 4,155.3 3,772.9 3,548.0 3,411.8 3,228.3
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income
taxes..................... 93.3 82.1 560.4 465.4 343.3 256.5 172.3
Provision for taxes on
income(c)................. 37.0 33.3 224.4 188.4 141.7 97.9 67.1
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.................. 56.3 48.8 336.0 277.0 201.6 158.6 105.2
=========== =========== =========== =========== =========== =========== ===========
Earnings Per Share(d)
Basic..................... $ .52 $ .45 $ 3.11 $ 2.56 $ 1.86 $ 1.47 $ .97
=========== =========== =========== =========== =========== =========== ===========
Diluted................... $ .52 $ .45 $ 3.10 $ 2.55 $ 1.86 $ 1.46 $ .97
=========== =========== =========== =========== =========== =========== ===========
Weighted average number of
shares outstanding
Basic..................... 107,848,781 107,889,681 107,968,511 108,067,850 108,227,916 108,227,916 108,227,916
Diluted................... 108,102,461 108,396,939 108,558,338 108,561,352 108,630,236 108,630,236 108,630,236
Ratio of earnings to fixed
charges(e)................ 1.8 1.8 2.3 2.2 1.9 1.7 1.4
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
S-5
<PAGE> 6
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31,
----------------------------- -------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------- ------------- ----------- ----------- ----------- ----------- -----------
DOLLARS IN MILLIONS (EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA AT END OF
PERIOD
Total assets................ $ 10,360.0 $ 9,293.0 $ 10,136.7 $ 8,872.6 $ 7,435.5 $ 7,649.2 $ 6,656.6
Total debt.................. 6,745.6 6,069.1 6,602.2 5,759.8 4,715.7 5,091.8 4,297.5
Stockholders' equity........ 1,705.4 1,418.4 1,674.0 1,393.8 1,136.2 989.4 836.3
Ratio of total debt to
stockholders' equity...... 4.0 4.3 3.9 4.1 4.2 5.1 5.1
</TABLE>
- ---------------
(a) Includes fees from licensees (other than expense reimbursement from
licensees), revenue from claim management and telecommunications services.
(b) For 1999, 1998, 1997, 1996 and 1995 includes net credits of $29.6 million,
$14.5 million, $3.3 million, $23.2 million and $6.4 million, respectively,
and for the three months ended March 31, 2000 and 1999 includes net credits
of $8.5 million and $6.6 million, respectively, primarily from net proceeds
received in excess of book value on the disposal of revenue earning
equipment. Effective January 1, 1997 and January 1, 2000, certain estimated
useful lives being used to compute the provision for depreciation of revenue
earning equipment used in the industrial and construction equipment rental
business were increased to reflect changes in the estimated residual values
to be realized upon disposal of the equipment. As a result of this change,
depreciation of revenue earning equipment for the year 1997 and for the
three months ended March 31, 2000 decreased by $10.4 million and $3.7
million, respectively.
(c) Includes credits of $13.9 million for the year 1996 resulting from
adjustments made to tax accruals in connection with tax audit evaluations
and the effects of prior years' tax-sharing arrangements between the
Corporation and its former parent companies, UAL Corporation and RCA
Corporation. For the year 1995, includes $6.5 million of credits relating to
foreign taxes which were offset against U.S. income tax liabilities.
(d) The basic and diluted earnings per share for the years ended December 31,
1996 and 1995 assumes that the weighted average shares outstanding during
1997 were outstanding for the corresponding periods in 1996 and 1995.
(e) Earnings have been calculated by adding interest expense and the portion of
rentals estimated to represent the interest factor to income before income
taxes. Fixed charges include interest charges (including capitalized
interest) and the portion of rentals estimated to represent the interest
factor.
S-6
<PAGE> 7
DESCRIPTION OF NOTES
GENERAL
The Corporation will issue the Notes as a series of Senior Debt Securities
under the Indenture, dated as of December 1, 1994 (the "Indenture") between the
Corporation and First Union National Bank (formerly First Fidelity Bank,
National Association), as Trustee (the "Trustee"). The Indenture is more fully
described in the accompanying Prospectus.
The Corporation will pay interest on the Notes at the annual rate of 8 1/4%
on June 1 and December 1 of each year, commencing December 1, 2000, to the
persons in whose names the Notes are registered at the close of business on the
May 15 and November 15 (whether or not a Business Day) immediately preceding the
Interest Payment Date. The amount of interest payable to holders of record of
the Notes on December 1, 2000 will be $20,625,000 ($41.25 per $1,000 principal
amount of Notes). The Notes will mature on June 1, 2005 and are not redeemable
prior to their maturity unless certain events occur involving U.S. taxation. See
"--Redemption for Tax Reasons." The Notes will not have the benefit of any
sinking fund. Holders of the Notes do not have any right to elect an early
payment of the Notes. Any money paid by the Corporation to the Trustee or any
paying agent for payment of principal of or interest on the Notes which remains
unclaimed for two years will be repaid to the Corporation and thereafter the
holders will look only to the Corporation for payment thereof as an unsecured
creditor.
The Corporation may, without the consent of the holders of the Notes, issue
additional notes having the same ranking and the same interest rate, maturity
and other terms as the Notes. Any additional notes, together with the Notes,
will constitute a single series of Notes under the Indenture. No additional
notes may be issued if an Event of Default has occurred with respect to the
Notes.
BOOK-ENTRY SYSTEM
The Notes will be offered and sold in principal amounts of U.S.$1,000 or
multiples thereof. The Notes will be issued in the form of one or more fully
registered Global Notes (the "Global Notes") which will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the "Depository" or
"DTC") and registered in the name of Cede & Co., the Depository'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 Depository. Investors may elect to hold
interests in the Global Notes through either the Depository or Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euroclear System
("Euroclear") or Clearstream Banking, societe anonyme (formerly Cedelbank)
("Clearstream, Luxembourg"), if they are participants of such systems, or
indirectly through organizations which are participants in such systems.
Euroclear and Clearstream, Luxembourg will hold interests on behalf of their
participants through customers' securities accounts in Euroclear's and
Clearstream, Luxembourg'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 Depository. The Chase Manhattan Bank
will act as depositary for Euroclear, and Citibank, N.A. will act as depositary
for Clearstream, Luxembourg (in such capacities, 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 Depository or to a successor of the
Depository or its nominee.
Euroclear advises that it was created in 1968 to hold securities for its
participants ("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 (the "Euroclear Operator"), under contract with Euroclear
Clearance Systems S.C., a Belgian cooperative corporation (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
S-7
<PAGE> 8
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.
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
(collectively, 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 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.
Clearstream, Luxembourg advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream, Luxembourg holds
securities for its participating organizations ("Clearstream, Luxembourg
Participants") and facilitates the clearance and settlement of securities
transactions between Clearstream, Luxembourg Participants through electronic
book-entry changes in accounts of Clearstream, Luxembourg Participants, thereby
eliminating the need for physical movement of certificates. Clearstream,
Luxembourg provides to Clearstream, Luxembourg Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream, Luxembourg interfaces with domestic markets in several countries.
As a professional depositary, Clearstream, Luxembourg is subject to regulation
by the Luxembourg Monetary Institute. Clearstream, Luxembourg Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters. Indirect
access to Clearstream, Luxembourg is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream, Luxembourg Participant, either directly or
indirectly.
Distributions with respect to the Notes held beneficially through
Clearstream, Luxembourg will be credited to cash accounts of Clearstream,
Luxembourg Participants in accordance with its rules and procedures, to the
extent received by the U.S. Depositary for Clearstream, Luxembourg.
Holders of the Notes will be able to receive payments on, and effect
transfers of, the Notes at the offices of Banque Generale de Luxembourg, or its
successor as paying agent in Luxembourg with respect to the Notes. The
Corporation has appointed Banque Generale de Luxembourg as paying agent and
transfer agent in Luxembourg (the "Luxembourg Paying and Transfer Agent") with
respect to the Notes in definitive form, and as long as the Notes are listed on
the Luxembourg Stock Exchange, the Corporation will maintain a paying agent and
transfer agent in Luxembourg and any change in the Luxembourg paying agent and
transfer agent will be published in Luxembourg. See "-- Notice to Holders".
When used with respect to any particular place of payment where the
principal of and interest on the Notes are payable, "Business Day" means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that place of payment are authorized or obligated by law
to be closed.
S-8
<PAGE> 9
Individual certificates in respect of Notes will not be issued in exchange
for the Global Notes, except in very limited circumstances. If Euroclear,
Clearstream, Luxembourg or DTC notifies the Corporation that it is unwilling or
unable to continue as a clearing system in connection with the Global Notes or,
in the case of DTC only, DTC ceases to be a clearing agency registered under the
Exchange Act, and in each case a successor clearing system is not appointed by
the Corporation within 90 days after receiving such notice from Euroclear,
Clearstream, Luxembourg or DTC or on the Corporation's becoming aware that DTC
is no longer so registered, the Corporation 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.
Title to book-entry interests in the Notes will pass by book-entry
registration of the transfer within the records of Euroclear, Clearstream,
Luxembourg or DTC, as the case may be, in accordance with their respective
procedures. Book-entry interests in the Notes may be transferred within
Euroclear and within Clearstream, Luxembourg and between Euroclear and
Clearstream, Luxembourg in accordance with procedures established for these
purposes by Euroclear and Clearstream, Luxembourg. 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 between
Euroclear and Clearstream, Luxembourg and DTC may be effected in accordance with
procedures established for this purpose by Euroclear, Clearstream, Luxembourg
and DTC.
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 Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Euroclear Participants and/or
Clearstream, Luxembourg Participants will occur in the ordinary way in
accordance with the applicable rules and operating procedures of Euroclear and
Clearstream, Luxembourg 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 Depository on the one hand, and directly or indirectly through
Euroclear or Clearstream, Luxembourg Participants, on the other, will be
effected in the Depository in accordance with the Depository rules on behalf of
the relevant European international clearing system by its U.S. Depository;
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 (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 or receiving Notes in the Depository, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to the Depository. Euroclear Participants and Clearstream, Luxembourg
Participants may not deliver instructions directly to their respective U.S.
Depositaries.
Because of time-zone differences, credits of Notes received in Euroclear or
Clearstream, Luxembourg 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 Depository settlement date. Such credits or any
transactions in such Notes settled during such processing will be reported to
the relevant Euroclear or Clearstream, Luxembourg Participants on such business
day. Cash received in Euroclear or Clearstream, Luxembourg as a result of sales
of Notes by or through a Euroclear Participant or Clearstream, Luxembourg
Participant to a DTC Participant will be received with value on the Depository
settlement date but will be available in the relevant Euroclear or Clearstream,
Luxembourg cash account only as of the business day following settlement in the
Depository.
Although the Depository, Euroclear and Clearstream, Luxembourg have agreed
to the foregoing procedures in order to facilitate transfers of Notes among
participants of the Depository, Euroclear and Clearstream, Luxembourg, they are
under no obligation to perform or continue to perform such procedures and such
procedures may be changed or discontinued at any time.
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<PAGE> 10
PAYMENT OF ADDITIONAL AMOUNTS
The Corporation will, subject to the exceptions and limitations set forth
below, pay as additional interest on the Notes such additional amounts as are
necessary in order that the net payment by the Corporation or a paying agent of
the principal of and interest on the Notes to a holder who is a non-United
States person (as defined below), after deduction for any present or future tax,
assessment or governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, will not be less than the amount provided in the Notes
to be then due and payable, provided, however, that the foregoing obligation to
pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in a trade or business
in the United States or having or having had a permanent establishment
in the United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax; or
(d) being or having been a "10-percent shareholder" of the
Corporation as defined in section 871(h)(3) of the United States
Internal Revenue Code or any successor provision;
(2) to any holder that is not the sole beneficial owner of the Notes,
or a portion thereof, or that is a fiduciary or partnership, but only to
the extent that a beneficiary or settlor with respect to the fiduciary, a
beneficial owner or member of the partnership would not have been entitled
to the payment of an additional amount had the beneficiary, settlor,
beneficial owner or member received directly its beneficial or distributive
share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Notes, if
compliance is required by statute, by regulation of the United States
Treasury Department or by an applicable income tax treaty to which the
United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to a tax, assessment or government charge that is imposed
otherwise than by withholding by the Corporation or a paying agent from the
payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or similar tax, assessment or other governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Notes, if such payment can be made without such withholding by any
other paying agent, or;
(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
The Notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "-- Payment of Additional
Amounts" and under the heading "-- Redemption for Tax Reasons" the Corporation
shall not be required to make any payment with respect to any tax, assessment or
governmental charge imposed by any government or a political subdivision or
taxing authority thereof or therein.
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<PAGE> 11
As used under this heading "-- Payment of Additional Amounts" and under the
headings "--Redemption for Tax Reasons", "Certain United States Tax
Documentation Requirements" and "United States Taxation of Non-United States
Persons" the term "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction. "United States person" means any
individual who is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any state thereof or the District of Columbia (other than a
partnership that is not treated as a United States person under any applicable
Treasury regulations), any estate the income of which is subject to United
States federal income taxation regardless of its source, or any trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in the Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date that elect to continue to be treated as United States persons
will also be a United States person. "Non-United States person" means a person
who is not a United States person.
REDEMPTION FOR TAX REASONS
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this prospectus supplement, the
Corporation becomes or will become obligated to pay additional amounts as
described herein under the heading "Payment of Additional Amounts" or (b) any
act is taken by a taxing authority of the United States on or after the date of
this prospectus supplement, whether or not such act is taken with respect to the
Corporation or any affiliate, that results in a substantial probability that the
Corporation will or may be required to pay such additional amounts, then the
Corporation may, at its option, redeem, as a whole, but not in part, the Notes
on not less than 30 nor more than 60 days' prior notice at a redemption price
equal to 100% of their principal amount, together with interest accrued thereon
to the date fixed for redemption; provided that the Corporation determines, in
its business judgment, that the obligation to pay such additional amounts cannot
be avoided by the use of reasonable measures available to it, not including
substitution of the obligor under the Notes. No redemption pursuant to (b) above
may be made unless the Corporation shall have received an opinion of independent
counsel to the effect that an act taken by a taxing authority of the United
States results in a substantial probability that it will or may be required to
pay the additional amounts described herein under the heading "Payment of
Additional Amounts" and the Corporation shall have delivered to the Trustee a
certificate, signed by a duly authorized officer, stating that based on such
opinion the Corporation is entitled to redeem the Notes pursuant to their terms.
APPLICABLE LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York, United States of America.
NOTICE TO HOLDERS
Notices to holders of the Notes will be published in newspapers in The City
of New York, in London, and, so long as the Notes are listed on the Luxembourg
Stock Exchange, in Luxembourg. It is expected that publication will be made in
The City of New York in The Wall Street Journal, in London in the Financial
Times and in Luxembourg in the Luxemburger Wort. Any such notice shall be deemed
to have been given on the date of such publication or, if published more than
once, on the date of the first such publication.
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CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of the Notes will generally be subject to the 30% United
States federal withholding tax that generally applies to payments of interest on
a registered form debt obligation issued by a United States person, unless one
of the following steps is taken to obtain an exemption from or reduction of the
tax:
EXEMPTION FOR NON-UNITED STATES PERSONS (IRS FORM W-8BEN)
A beneficial owner of the Notes that is a non-United States person (other
than certain persons that are related to the Corporation through stock ownership
as described in clauses (x)(a) and (b) of Paragraph (i) under the "United States
Taxation of Non-United States Persons -- Income and Withholding Tax") can obtain
an exemption from the withholding tax by providing a properly completed IRS Form
W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding). Copies of IRS Form W-8BEN may be obtained from the Luxembourg
listing agent. If the information shown on Form W-8BEN changes, a new Form
W-8BEN must be filed within 30 days of the change.
EXEMPTION FOR NON-UNITED STATES PERSONS WITH EFFECTIVELY CONNECTED INCOME (IRS
FORM W-8ECI)
A beneficial owner of the Notes that is a non-United States person,
including a non-United States corporation or bank with a United States branch,
that conducts a trade or business in the United States with which interest
income on the Notes is effectively connected, can obtain an exemption from the
withholding tax by providing a properly completed IRS Form W-8ECI (Certificate
of Foreign Person's Claim for Exemption From Withholding on Income Effectively
Connected With the Conduct of a Trade or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-UNITED STATES PERSONS ENTITLED TO THE BENEFITS
OF A TREATY
(IRS FORM W-8BEN)
A beneficial owner of the Notes that is a non-United States person entitled
to the benefits of an income tax treaty to which the United States is a party
can obtain an exemption from or reduction of the withholding tax (depending on
the terms of the treaty) by providing a properly completed IRS Form W-8BEN.
EXEMPTION FOR UNITED STATES PERSONS (IRS FORM W-9)
A beneficial owner of the Notes that is a United States person can obtain a
complete exemption from the withholding tax by providing a properly completed
IRS Form W-9 (Request for Taxpayer Identification Number and Certification).
UNITED STATES FEDERAL INCOME TAX REPORTING PROCEDURE
A beneficial owner of the Notes or its agent is required to submit the
appropriate IRS Form under applicable procedures to the person through which the
owner directly holds the Notes. For example, if the beneficial owner is listed
directly on the books of Euroclear or Clearstream, Luxembourg as the holder of
the Notes, the IRS Form must be provided to Euroclear or Clearstream,
Luxembourg, as the case may be. Each other person through which the Notes are
held must submit, on behalf of the beneficial owner, the IRS Form (or in certain
cases a copy thereof) under applicable procedures to the person through which it
holds the Notes, until the IRS Form is received by the United States person who
would otherwise be required to withhold United States federal income tax from
interest on the Notes. For example, in the case of Notes held through Euroclear
or Clearstream, Luxembourg, the IRS Form (or a copy thereof) must be received by
the U.S. Depositary of such clearing agency. Applicable procedures include
additional certification requirements, described in clause (x)(c)(B) of
paragraph (i) under "United States Taxation of Non-United States
Persons -- Income and Withholding Tax", if a beneficial owner of the Notes
provides an IRS Form W-8BEN to a securities clearing organization, bank or other
financial institution that holds the Notes on its behalf.
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<PAGE> 13
Regulations recently issued by the Internal Revenue Service (the "IRS"),
which will be effective for payments made after December 31, 2000, make certain
modifications to the certification procedures applicable to non-United States
persons. Prospective investors should consult their tax advisors regarding the
certification requirements for non-United States persons.
Each holder of the Notes that is not a United States person should be aware
that if it does not properly provide the required IRS Form, or if the IRS Form
(or, if permissible, a copy of such form) is not properly transmitted to and
received by the United States person otherwise required to withhold United
States federal income tax, interest on the Notes may be subject to United States
withholding tax at a 30% rate and the holder (including the beneficial owner)
will not be entitled to any additional amounts from the Corporation described
under the heading "Description of Notes -- Payment of Additional Amounts" with
respect to such tax. Such tax, however, may in certain circumstances be allowed
as a refund or as a credit against such holder's United States federal income
tax. The foregoing does not deal with all aspects of federal income tax
withholding that may be relevant to non-United States holders of the Notes.
Investors are advised to consult their own tax advisors for specific advice
concerning the ownership and disposition of the Notes.
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
INCOME AND WITHHOLDING TAX
Under United States federal tax law as of the date of this prospectus
supplement, and subject to the discussion of backup withholding below:
(i) payments of principal and interest on the Notes that are
beneficially owned by a non-United States person will not be subject to
United States federal withholding tax; provided, that in the case of
interest, (x)(a) the beneficial owner does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Corporation entitled to vote, (b) the beneficial owner is not a
controlled foreign corporation that is related to the Corporation through
stock ownership, and (c) either (A) the beneficial owner of the Notes
certifies (generally on IRS Form W-8BEN) to the person otherwise required
to withhold United States federal income tax from such interest, under
penalties of perjury, that it is not a United States person and provides
its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and
holds the Notes certifies to the person otherwise required to withhold
United States federal income tax from such interest, under penalties of
perjury, that such statement has been received from the beneficial owner by
it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof; (y) the beneficial owner is
entitled to the benefits of an income tax treaty under which the interest
is exempt or reduced from United States federal withholding tax and the
beneficial owner of the Notes or such owner's agent provides an IRS Form
W-8BEN claiming the exemption or reduced tax rate; or (z) the beneficial
owner conducts a trade or business in the United States to which the
interest is effectively connected and the beneficial owner of the Notes or
such owner's agent provides an IRS Form W-8ECI, provided that in each such
case, the relevant certification or IRS Form is delivered pursuant to
applicable procedures and is properly transmitted to the person otherwise
required to withhold United States federal income tax, and none of the
persons receiving the relevant certification or IRS Form has actual
knowledge that the certification or any statement on the IRS Form is false;
(ii) a non-United States person will not be subject to United States
federal income tax on any gain realized on the sale, exchange or redemption
of the Notes unless the gain is effectively connected with the beneficial
owner's trade or business in the United States or, in the case of an
individual, the holder is present in the United States for 183 days or more
in the taxable year in which the sale, exchange or redemption occurs and
certain other conditions are met; and
(iii) the Notes owned by an individual who at the time of death is not
a citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if the
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Corporation entitled
to vote and the income on the Notes would not have been effectively
connected with a U.S. trade or business of the individual.
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<PAGE> 14
Interest on the Notes that is effectively connected with the conduct of a
trade or business in the United States by a holder of the Notes who is a
non-United States person, although exempt from United States withholding tax,
may be subject to United States income tax as if such interest were earned by a
United States person.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest made on the Notes and the proceeds of the sale of the
Notes within the United States to non-corporate holders of the Notes, and
"backup withholding" at a rate of 31% will apply to such payments if the holder
fails to provide an accurate taxpayer identification number in the manner
required or to report all interest and dividends required to be shown on its
federal income tax returns.
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by the Corporation or a paying agent to a non-United
States person on the Notes if, in the case of interest, the IRS Form described
in clause (y) or (z) in paragraph (i) under "-- Income and Withholding Tax" has
been provided under applicable procedures, or, in the case of interest or
principal, the certification described in clause (x)(c) in paragraph (i) under
"-- Income and Withholding Tax" and a certification that the beneficial owner
satisfies certain other conditions have been supplied under applicable
procedures, provided that the payor does not have actual knowledge that the
certifications are incorrect.
Payments of the proceeds from the sale of the Notes made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale of
the Notes to or through the United States office of a broker are subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies that it is a non-United States person and that it satisfies
certain other conditions or otherwise establishes an exemption from information
reporting and backup withholding.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 2000, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against a holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on the Notes beneficially owned by a non-United States person will
be reported annually on IRS Form 1042S, which must be filed with the IRS and
furnished to such beneficial owner.
UNDERWRITING
The Corporation and the underwriters for the offering named below have
entered into an underwriting agreement and a pricing agreement with respect to
the Notes. Subject to certain conditions, each underwriter has severally agreed
to purchase the principal amount of Notes indicated in the following table. The
underwriters have agreed to purchase all of the Notes, if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Chase Securities Inc. ...................................... $125,050,000
J.P. Morgan Securities Inc. ................................ 125,050,000
Banc of America Securities LLC.............................. 35,700,000
Banc One Capital Markets, Inc. ............................. 35,700,000
Barclays Capital Inc. ...................................... 35,700,000
Daiwa SBCM Europe Limited................................... 35,700,000
Deutsche Bank Securities Inc. .............................. 35,700,000
Paribas Corporation......................................... 35,700,000
Salomon Smith Barney, Inc. ................................. 35,700,000
------------
Total............................................. $500,000,000
============
</TABLE>
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<PAGE> 15
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 .225% of the principal amount of the
Notes, that the underwriters may allow, and such dealers may reallow, a
concession not in excess of .20% of such principal amount on sales to certain
other dealers, and that after the 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 agreed that they will not offer, sell or deliver any
of the Notes, directly or indirectly, or distribute this prospectus supplement
or the accompanying prospectus or any other offering material relating to the
Notes, in or from any jurisdiction except under circumstances that will to the
best knowledge and belief of each underwriter result in compliance with the
applicable laws and regulations thereof and which will not impose any
obligations on the Corporation except as set forth in the underwriting agreement
and the pricing agreement.
The Notes have not been and will not be registered under the Securities and
Exchange Law of Japan (the "Securities and Exchange Law"). 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, regulations and ministerial guidelines 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 (as amended); (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 (as amended) or is a person
to whom such document may otherwise lawfully be issued or passed on.
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 Corporation 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.
S-15
<PAGE> 16
It is expected that delivery of the Notes will be made against payment
therefor on or about June 1, 2000, which is the fifth business day following the
date of this prospectus supplement (such settlement cycle being herein referred
to as "T+5"). Purchasers of Notes should note that the ability to settle
secondary market trades of the Notes effected on the date of pricing and the
succeeding business days may be affected by the T+5 settlement.
In the ordinary course of their respective businesses, the underwriters and
their respective affiliates have engaged and may in the future engage in
investment banking and/or general financing and banking transactions with the
Corporation and its affiliates.
LISTING AND GENERAL INFORMATION
1. Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Restated Certificate
of Incorporation, as amended, and By-Laws of the Corporation and a legal notice
(Notice Legale) relating to the issuance of the Notes will have been deposited
prior to listing with the Chief Registrar of the District Court of Luxembourg
(Greffier en Chef du Tribunal d'Arrondissement de et a Luxembourg), where these
documents may be examined and copies may be obtained on request.
2. Copies of the Restated Certificate of Incorporation, as amended, and
By-Laws of the Corporation, annual, quarterly and current reports of the
Corporation, the Indenture, the prospectus, the legal notice relating to the
issuance of the Notes and the documents incorporated by reference in the
prospectus supplement and the prospectus will be available free of charge at the
office of the Paying Agent in Luxembourg during the term of the Notes and so
long as any of the Notes are listed on the Luxembourg Stock Exchange. In
addition, copies of these reports may be obtained at the Luxembourg Paying and
Transfer Agent's office.
3. The independent public accountants of the Corporation are
PricewaterhouseCoopers LLP.
4. The Notes will be issued pursuant to resolutions of the Board of
Directors of the Corporation dated June 11, 1999, and a resolution of the
Special Committee of the Board of Directors of the Corporation, approved on May
26, 2000.
5. Save as disclosed in this prospectus supplement, the prospectus, and the
documents incorporated by reference herein, there has been no material adverse
change in the consolidated financial position of the Corporation since the date
of the last audited financial statements.
6. The Corporation is not involved in, and has no knowledge of any threat
of, any litigation, administrative proceedings or arbitration which is or may be
material in the context of the issue of the Notes.
7. The Corporation was incorporated on April 19, 1967.
8. The Notes have been accepted for clearance through Euroclear and
Clearstream, Luxembourg. The common code assigned to the Notes is 011228674. The
International Security Identification Number (ISIN) allocated to the Notes is
US428040BP39. The CUSIP number is 428040BP3. With the exception of the T+5
settlement cycle described under "Underwriting", transactions will normally be
effected for settlement not earlier than three days after the date of the
transaction.
9. In May 1998, the European Commission presented to the Council of
Ministers of the European Union a proposal to oblige member states of the
European Union ("Member States" and each a "Member State") to adopt either a
"withholding tax system" or an "information reporting system" in relation to
interest, discounts and premiums. It is unclear whether this proposal will be
adopted, and if it is adopted, whether it will be adopted in its current form.
The "withholding tax system" would require a paying agent established in a
Member State to withhold tax at a minimum rate of 20% from any interest,
discount or premium paid to an individual resident in another Member State
unless such an individual presents a certificate obtained from the tax
authorities of the Member State in which he is resident confirming that those
authorities are aware of the payment due to that individual. The "information
reporting system" would require a Member State to supply, to the other Member
States, details of any payment of interest, discount or premium made by paying
agents within its jurisdiction to an individual resident in another Member
State. For these purposes, the term "paying agent" is widely defined and
includes an agent who collects interest, discounts or premiums on behalf of an
individual beneficially entitled thereto. If this proposal is adopted, it will
not apply to payments of interest, discounts and premiums made before January 1,
2001.
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<PAGE> 17
PROSPECTUS
[HERTZ LOGO]
THE HERTZ CORPORATION
------------------------
DEBT SECURITIES
We may offer from time to time by means of this prospectus up to
$1,500,000,000 principal amount of our unsecured debt securities. These
securities may be senior, senior subordinated or junior subordinated in priority
of payment. The specific terms will be determined at the time of sale. We may
issue the securities in one or more series, with the same or various maturities,
at or above par or with original issue discount, and in fully registered or
book-entry form.
PROSPECTUS SUPPLEMENT
A supplement to this prospectus for each offering of securities will
contain the specific information and terms for that offering.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
Our principal executive offices are located at 225 Brae Boulevard, Park
Ridge, New Jersey 07656-0713. Our telephone number is (201) 307-2000.
We may offer the securities directly or through underwriters, agents or
dealers. The Supplement for an Offering of securities will describe the plan of
distribution for that offering. See also "Plan of Distribution" below for
additional information.
JUNE 11, 1999
<PAGE> 18
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). You may read
and copy our filed reports, proxy statements and other information at the SEC's
Public Reference Rooms at (a) 450 Fifth Street, N.W., Washington, D.C. 20549;
(b) Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and (c) Seven World Trade Center, New York, New York 10048. You can
also request copies of these documents, upon payment of a duplicating fee, by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the SEC's Public Reference Rooms. Our SEC
filings are also available to the public on the SEC's Internet site
(http://www.sec.gov). Information about our company is also available to the
public from our website (http://www.hertz.com).
We have filed a registration statement on Form S-3 with the SEC covering
the securities described in this prospectus. For further information about us
and those securities, you should refer to our registration statement and its
exhibits. We have summarized certain key provisions of contracts and other
documents that we refer to in this prospectus. Because a summary may not contain
all the information that is important to you, you should review the full text of
the document. We have included copies of these documents as exhibits to our
registration statement.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to another document that we file with the SEC. The information
incorporated by reference is an important part of this prospectus. Information
that we file later with the SEC will automatically update and supersede any
information that is already on file . We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), until we sell all of the securities.
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
and
- Our Current Reports on Form 8-K dated January 21, 1999, February 5, 1999,
March 24, 1999, April 15, 1999, April 28, 1999 and May 20, 1999.
You may request a copy of these filings (other than exhibits) at no cost,
by writing or telephoning us at 225 Brae Boulevard, Park Ridge, New Jersey
07656-0713, (201) 307-2000.
You should rely only on the information contained or incorporated by
reference in this prospectus, any prospectus supplement or any pricing
supplement. We have not authorized anyone to provide you with any other
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus, any accompanying prospectus supplement or any document incorporated
by reference is accurate as of any date other than the date on the front of the
document.
2
<PAGE> 19
THE HERTZ CORPORATION
We and our affiliates and independent licensees operate what we believe is
the largest car rental business in the world based upon revenues and volume of
rental transactions and one of the largest industrial and construction equipment
rental businesses in the United States based upon revenues. Our "Hertz" brand
name is recognized worldwide as a leader in quality rental and leasing services
and products. We and our affiliates and independent licensees, rent and lease
cars and light trucks, rent industrial and construction equipment and operate
our other businesses from over 6,000 locations throughout the United States and
about 140 foreign countries and jurisdictions.
Ford Motor Company ("Ford") beneficially owns (i) 49.6% of our outstanding
Class A Common Stock (which has one vote per share) and (ii) 100% of our
outstanding Class B Common Stock (which has five votes per share). The common
stock beneficially owned by Ford represents in the aggregate 94.5% of the
combined voting power of all of our outstanding common stock. Accordingly, Ford
is able to direct the election of all of the members of our Board of Directors
and to exercise a controlling influence over our business and affairs.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be added to our
general funds. We anticipate that the proceeds will be used for general
corporate purposes, potential acquisitions and to reduce short-term borrowings.
We expect to issue additional long-term and short-term debt. You should expect
the proportionate amounts of each to vary from time to time as a result of our
business requirements, market conditions and other factors.
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CERTAIN RELATIONSHIPS
In February 1997, Ford extended to us a line of credit of $500 million
which currently expires June 30, 2000. This line of credit has an evergreen
feature that provides on an annual basis for automatic one-year extensions of
the expiration date, unless timely notice is provided by Ford at least one year
prior to the then scheduled expiration date. At December 31, 1998, we had $250
million of outstanding loans from Ford.
Over the three years ended December 31, 1998, on a weighted average basis,
approximately 64% of the cars acquired by us for our U.S. car rental fleet, and
approximately 23% of the cars that we acquired for our international fleet, were
manufactured by Ford. During 1998, approximately 63% of the cars that we
acquired domestically were manufactured by Ford. The percentage of Ford cars
that we acquired for our U.S. car rental fleet is expected to remain at these or
higher levels in the future. In 1998, approximately 26% of the cars that we
acquired for our international fleet were manufactured by Ford, which
represented the largest percentage of any automobile manufacturer in that year.
See Note 9 to the "Notes to Consolidated Financial Statements" in our Annual
Report on Form 10-K for the year ended December 31, 1998.
We have entered into a car supply agreement with Ford (the "Car Supply
Agreement"). The Car Supply Agreement commenced on September 1, 1997 for a
period of ten years. Under the Car Supply Agreement, we have agreed with Ford to
negotiate in good faith on an annual basis with respect to the supply of cars.
Ford has agreed to supply to us and we have agreed to purchase from Ford, for
each car model year during the term of the agreement (i.e., the 1998 model year
through the 2007 model year), (a) the lesser of 150,000 cars or 55% of our fleet
requirements for our car rental business conducted in the United States; (b) 35%
of our fleet requirements for our car rental business conducted in Europe; and
(c) 55% of our fleet requirements for our car rental business conducted other
than in the United States and Europe. For each model year, at least 50% of the
cars supplied by Ford are required to be non-risk cars. The Car Supply Agreement
also provides that, for each model year, Ford must strive to offer car fleet
programs to us on terms and conditions that are competitive with terms and
conditions for the supply of cars then being offered by other automobile
manufacturers to us and other daily car rental companies. In addition, for each
model year, Ford must supply cars to us on terms and conditions that are no less
favorable than those offered by Ford to other daily car rental companies,
excluding franchised Ford vehicle dealers who rent cars.
We have entered into a joint advertising agreement with Ford (the "Joint
Advertising Agreement"). The Joint Advertising Agreement commenced on September
1, 1997 for a period of ten years. Under the Joint Advertising Agreement, Ford
has agreed to pay us one-half of our advertising costs, up to a limit of $39
million for the first year and, for each year thereafter, a limit equal to the
prior year's limit adjusted for inflation, subject to a ceiling. In addition, if
for any fiscal year, one-half of our advertising costs exceed such limit and we
have purchased from Ford a percentage of our car fleet requirements for our car
rental business conducted in the United States for the corresponding model year
(the "Ford Vehicle Share") equal to 58% or more, then Ford will pay to us
additional amounts for such excess advertising costs. To be eligible for cost
reimbursement under the Joint Advertising Agreement, the advertising must meet
certain conditions, including the condition that it indicates that we feature
Ford vehicles in a manner and with a prominence that is reasonably satisfactory
to Ford. The Joint Advertising Agreement further provides that if the Ford
Vehicle Share for any model year is less than 55%, Ford will not be obligated to
pay us any amount for our advertising costs for that year, except to the extent
that our failure to achieve a 55% Ford Vehicle Share is attributable to (a)
Ford's failure to supply a sufficient quantity of cars for us to achieve a 55%
Ford Vehicle Share or (b) the fact that the terms and conditions of Ford's car
fleet programs offered to us were not competitive with the terms and conditions
for the supply of cars offered by other automobile manufacturers to us and other
daily car rental companies. In no event, however, will Ford be required to pay
any amount for our advertising costs for any year if the Ford Vehicle Share for
the corresponding model year is less than 40%.
See "The Hertz Corporation" above for information relating to Ford's
controlling influence over our business and affairs. See also the "Notes to
Consolidated Financial Statements" in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1998 for additional information relating to
transactions involving Ford and us.
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DESCRIPTION OF DEBT SECURITIES
We will issue the Senior Debt Securities under an indenture, dated as of
December 1, 1994 (the "Senior Indenture"), between us and First Union National
Bank (formerly First Fidelity Bank, National Association), as Trustee (the
"Senior Trustee"). We will issue the Senior Subordinated Debt Securities under
an indenture, dated as of June 1, 1989 (the "Senior Subordinated Indenture"),
between us and The Bank of New York, as Trustee (the "Senior Subordinated
Trustee"). We will issue the Junior Subordinated Debt Securities under an
indenture, dated as of July 1, 1993 (the "Junior Subordinated Indenture"),
between us and Citibank, N.A., as trustee (the "Junior Subordinated Trustee").
The Senior Subordinated Indenture and the Junior Subordinated Indenture are
referred to in this prospectus collectively as the "Subordinated Indentures,"
the Senior Subordinated Debt Securities and the Junior Subordinated Debt
Securities are referred to in this prospectus collectively as the "Subordinated
Debt Securities," and the Senior Subordinated Trustee and the Junior
Subordinated Trustee are referred to in this prospectus collectively as the
"Subordinated Trustees."
For more information you should refer to the Senior Indenture, the Senior
Subordinated Indenture and the Junior Subordinated Indenture that we have filed
as exhibits to the Registration Statement of which this prospectus forms a part.
The Senior Indenture, the Senior Subordinated Indenture and the Junior
Subordinated Indenture are sometimes referred to collectively as the
"Indentures" and the Senior Trustee, the Senior Subordinated Trustee and the
Junior Subordinated Trustee are sometimes referred to collectively as the
"Trustees."
The following summaries of certain provisions of the Indentures are not
complete and are subject to and are qualified in their entirety by reference to
all the provisions of the Indentures, including the definitions contained in the
Indentures of certain terms. References to Sections apply to each Indenture,
except:
- references to sections included under the caption "Subordination of
Senior Subordinated Debt Securities" apply to the Senior Subordinated
Indenture only,
- references to sections included under the caption "Subordination of
Junior Subordinated Debt Securities" apply to the Junior Subordinated
Indenture only,
- references to sections included under the caption "Certain
Covenants -- Dividend Restrictions and Limitations on Certain Loans and
Advances" apply to the Subordinated Indentures only, and
- as otherwise expressly provided.
The following sets forth certain general terms and provisions of the Senior Debt
Securities, the Senior Subordinated Debt Securities and the Junior Subordinated
Debt Securities (together the "Debt Securities") offered in this prospectus.
Further terms of the Debt Securities shall be set forth in applicable prospectus
supplements.
GENERAL
The Debt Securities to be offered by this prospectus are limited to
$1,500,000,000 in aggregate principal amount. However, the Indentures do not
limit the amount of Debt Securities which we can issue and provide that we can
issue additional securities under the Indentures up to the aggregate principal
amount which we may authorize from time to time. (Section 301)
While the covenants contained in each Indenture may provide limited
protection to debt holders in the event of a highly leveraged transaction
involving us, the Indentures do not prohibit the incurrence of additional
Senior, Senior Subordinated or Junior Subordinated Debt. Subject to certain
exceptions described below under "Limitations on Secured Debt," outstanding Debt
Securities and other qualified indebtedness shall be secured equally and
ratably, subject to applicable priorities of payment, with any additional
Secured Debt incurred by us. (Section 1004) Unless otherwise indicated in the
applicable prospectus supplement, the Debt Securities will not have the benefit
of any covenant requiring redemption or repurchase of the Debt Securities by us,
or adjustment to any terms of the Debt Securities, upon any change in control or
recapitalization that we may undergo.
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You should refer to the applicable prospectus supplement for the following
terms of the particular series of Debt Securities being offered:
1. the designation and any limitation on the aggregate principal amount of
the series;
2. whether the securities are Senior Debt Securities, Senior Subordinated
Debt Securities, or Junior Subordinated Debt Securities;
3. the currency or currencies for which Debt Securities may be purchased
and currency or currencies in which principal and any interest may be
payable;
4. if the currency for which Debt Securities may be purchased or in which
principal and any interest may be payable is at the purchaser's
election, the manner in which such an election may be made;
5. the percentage of principal amount at which the series will be issued;
6. the date or dates on which the principal of the series will be payable;
7. the rate or rates per annum, if any, at which the series will bear
interest or the method of calculating the rate or rates per annum;
8. the date or dates from which any interest will accrue and the times at
which any interest will be payable;
9. the place or places where the principal and interest, if any, on Debt
Securities of the series shall be payable;
10. the terms, if any, on which Debt Securities of the series may be
redeemed at our option;
11. our obligation, if any, to redeem, purchase or repay Debt Securities of
the series;
12. the minimum denomination in which Debt Securities of the series will be
issued;
13. if other than the principal amount, the portion of the principal amount
of the Debt Securities of the series that will be payable upon a
declaration of acceleration of the maturity of the Debt Securities;
14. whether the Debt Securities of the series may be issuable in the form
of one or more global securities; and
15. any other special terms.
We may issue Debt Securities as discounted Debt Securities, bearing no
interest or interest at a rate which at the time of issuance is below market
rates, to be sold at a substantial discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any such discounted Debt Securities will be described in the applicable
prospectus supplement.
We will issue the Debt Securities only in registered form without coupons,
and the Debt Securities will be our unsecured obligations. The Senior Debt
Securities will rank on a parity with other senior debt securities of ours. The
Senior Subordinated Debt Securities will rank on a parity with our other senior
subordinated debt securities and be subordinated in right of payment to the
prior payment in full of our Senior Indebtedness (as defined in the Senior
Subordinated Indenture), as described below under "Subordination of Senior
Subordinated Debt Securities." The Junior Subordinated Debt Securities will rank
on a parity with our other junior subordinated debt securities and be
subordinated in right of payment to the prior payment in full of our Senior
Indebtedness (as defined in the Junior Subordinated Indenture). When used in
connection with Junior Subordinated Debt Securities, Senior Indebtedness
includes Senior Debt Securities and Senior Subordinated Debt Securities, as
described under "Subordination of Junior Subordinated Debt Securities."
Unless otherwise provided in the applicable prospectus supplement relating
to a particular series of Debt Securities, principal, premium, if any, and
interest, if any, will be payable at an office or agency to be maintained by us
in such place or places described in the applicable prospectus supplement. We
currently contemplate this place to be in The City of New York, except that, at
our option, interest may be paid by check mailed to the person entitled to the
interest. You may present the Debt Securities to the corporate trust office of
the applicable
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Trustee for registration of transfer or exchange. Senior Debt Securities of any
series subject to repayment prior to their stated maturity at the option of the
Holder may be so repaid by submitting the appropriate form to the place of
payment specified in the terms of the debt security and as provided in the
applicable prospectus supplement. You may exchange Debt Securities of a
particular series for a like aggregate amount of Debt Securities of such series
of other authorized denominations without service charge, except for any tax or
other governmental charge that may be imposed. (Sections 301, 302, 305 and 1002)
BOOK-ENTRY
If so indicated in the applicable prospectus supplement, upon issuance, all
Debt Securities will be represented by one or more fully registered global
securities (the "Global Notes"). In any such case, The Depository Trust Company
(the "Depository"), New York, New York, will act as securities depository for
the issue of Debt Securities. These Debt Securities will be issued as
fully-registered Global Notes registered in the name of Cede & Co., which is the
Depository's partnership nominee. One fully-registered Global Note will be
issued for each issue of Debt Securities, in the aggregate principal amount of
the issue, and will be deposited with the Depository; provided, however, that if
the aggregate principal amount of any issue exceeds $200 million, one Global
Note will be issued with respect to each $200 million of principal amount and an
additional Global Note will be issued with respect to any remaining principal
amount of the issue.
The Depository has advised us as follows:
The Depository 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 Depository holds securities
that its participants ("Participants") deposit with the Depository. The
Depository also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations.
The Depository is owned by a number of its Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc. Access to the Depository's
book-entry system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to the Depository and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Debt Securities represented by one or more Global Notes
under the Depository's book-entry system must be made by or through
Participants, which will receive a credit for the Debt Securities on the
Depository's records. The ownership interest of each actual purchaser of
each Debt Security (a "Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from the Depository of their purchases,
but each Beneficial Owner is expected to receive written confirmation
providing details of the transaction, as well as periodic statements of its
holdings, from the Participant or Indirect Participant through which the
Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Debt Securities will be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests
in any Debt Securities, except in the event that use of the book-entry
system for the Debt Securities is discontinued.
To facilitate subsequent transfers, all Debt Securities represented by
one or more Global Notes deposited by Participants with the Depository will
be registered in the name of Cede & Co. The deposit of one or more Global
Notes with the Depository and their registration in the name of Cede & Co.
effect no change in beneficial ownership. The Depository will have no
knowledge of the actual Beneficial Owners of any Debt Securities
represented by Global Notes; the Depository records will reflect only the
identity of the Participants to whose accounts the Debt Securities
represented by any Global Notes are credited,
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which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depository to
Participants, by Participants to Indirect Participants, and by Participants
and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Neither the Depository
nor Cede & Co. will consent or vote with respect to any Debt Securities
represented by one or more Global Notes.
Principal and interest payments on the Debt Securities represented by
one or more Global Notes will be made to the Depository. The Depository's
practice is to credit Participants' accounts on the payable date in
accordance with their respective holdings shown on the Depository's records
unless the Depository has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
Participant and not of the Depository, or us, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to the Depository will be our responsibility,
disbursement of such payments to Participants shall be the responsibility
of the Depository, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Participants and Indirect
Participants.
The Depository may discontinue providing its services as securities
depository with respect to any issue of Debt Securities represented by one
or more Global Notes at any time by giving reasonable notice to us. Under
such circumstances, in the event that a successor securities depository is
not obtained, definitive certificates representing Debt Securities will be
required to be printed and delivered. We may decide to discontinue use of
the system of book-entry transfers through the Depository (or a successor
securities depository). In such event definitive certificates representing
Debt Securities will be printed and delivered.
Management at the Depository is aware that some computer applications,
systems, and the like for processing data ("Systems") that are dependent
upon calendar dates, including dates before, on, and after January 1, 2000,
may encounter "Year 2000 problems." The Depository has informed its
Participants, Indirect Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a
program so that its Systems, as the same relate to the timely payment of
distributions, (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within the
Depository, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, the Depository's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, the Depository's ability to perform properly its services is
also dependent upon other parties, including but not limited to issuers and
their agents, as well as the Depository's Participants, Indirect
Participants and third party vendors from whom the Depository licenses
software and hardware, and third party vendors on whom the Depository
relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others.
The Depository has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom the Depository acquires
services to: (i) impress upon them the importance of such services being
Year 2000 compliant; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, the Depository is in the process of developing such contingency
plans as it deems appropriate.
According to the Depository, the foregoing information with respect to
the Depository has been provided to the Industry for informational purposes
only and is not intended to serve as a representation, warranty, or
contract modification of any kind.
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The information in this section concerning the Depository's book-entry
system has been obtained from sources that we believe to be reliable, but we
take no responsibility for its accuracy.
SUBORDINATION OF SENIOR SUBORDINATED DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on the Senior
Subordinated Debt Securities is expressly subordinated in right of payment, as
set forth in the Senior Subordinated Indenture, to payment when due of all our
Senior Indebtedness, as the term is defined with respect to the Senior
Subordinated Debt Securities. (Section 1401) "Senior Indebtedness" is used under
this caption "Subordination of Senior Subordinated Debt Securities" as defined
in the Senior Subordinated Indenture. "Senior Indebtedness" is defined in the
Senior Subordinated Indenture as
(a) our outstanding indebtedness listed on Schedule A to the Senior
Subordinated Indenture,
(b) any promissory notes (other than any referred to in the foregoing
clause (a)) issued by us pursuant to any agreement between us and any
bank or banks and any commercial paper issued by us,
(c) all indebtedness incurred by us after the date of the Senior
Subordinated Indenture for money borrowed which is, in our discretion,
specifically designated by us as superior to our subordinated debt
(senior debt) in the instruments evidencing said indebtedness at the
time of the issuance of such indebtedness,
(d) all indebtedness previously incurred by us outstanding at the date of
the Senior Subordinated Indenture for money borrowed which is, in our
discretion, specifically designated by us as Senior Indebtedness for
the purposes of the Senior Subordinated Indenture at the date of the
Senior Subordinated Indenture (all of such indebtedness is set forth on
Schedule B attached to the Senior Subordinated Indenture),
(e) our indebtedness for money borrowed from or guaranteed to persons,
firms or corporations which engage in lending money, including, without
limitation, banks, trust companies, insurance companies and other
financing institutions and charitable trusts, pension trusts and other
investing organizations, evidenced by notes or similar obligations,
unless such indebtedness shall, in the instrument evidencing the same,
be specifically designated as not being superior to the Senior
Subordinated Debt Securities and
(f) any amendments, modifications, supplements, deferrals, renewals or
extensions of any such Senior Indebtedness. (Section 101)
No payment on account of principal, premium, if any, sinking fund, or
interest on the Senior Subordinated Debt Securities may be made, nor may any of
our property or assets be applied to the purchase or other acquisition or
retirement of the Senior Subordinated Debt Securities, unless full payment of
amounts then due for principal, premium, if any, sinking fund, and interest on
Senior Indebtedness has been made or duly provided for in money or money's
worth. No payment by us on account of principal, premium, if any, sinking fund,
or interest on the Senior Subordinated Debt Securities may be made, nor may any
of our property or assets be applied to the purchase or other acquisition or
retirement of the Senior Subordinated Debt Securities, if, at the time of such
payment or application or immediately after giving effect to such payment or
application,
(i) there exists under the Senior Indebtedness referred to in clause (a)
of the immediately preceding paragraph or any agreement pursuant to
which any such Senior Indebtedness is issued any default or any
condition, event or act, which with notice or lapse of time, or both,
would constitute a default or
(ii) there exists under any other Senior Indebtedness or any agreement
pursuant to which such other Senior Indebtedness is issued any event
of default permitting the holders of such other Senior Indebtedness
(or a trustee on behalf of such holders) to accelerate the maturity of
such Senior Indebtedness; provided, however, that in the case of such
an event of default (other than in payment of such other Senior
Indebtedness when due) the foregoing provisions of this clause (ii)
will not prevent any such payment or application for a period longer
than 90 days after the date on which the
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holders of such Senior Indebtedness (or such trustee) shall have first
obtained written notice of such event of default from us or the holder
of any Senior Subordinated Debt Securities, if the maturity of such
other Senior Indebtedness is not so accelerated within such 90 day
period. (Section 1402)
Subject to the foregoing, if there shall have occurred any Event of Default
on the Senior Subordinated Debt Securities as described below under "Events of
Default and Notice," other than with respect to certain events of bankruptcy,
insolvency or reorganization, then unless and until either such Event of Default
shall have been cured or waived or shall have ceased to exist or the principal
of, premium, if any, and interest on all Senior Indebtedness shall have been
paid in full in money or money's worth, no payment shall be made by us on
account of the principal of, premium, if any, or interest on the Senior
Subordinated Debt Securities or on account of the purchase or other acquisition
of Senior Subordinated Debt Securities, except
- payments at the expressed maturity of the Senior Subordinated Debt
Securities, subject to the next paragraph,
- current interest payments as provided in the Senior Subordinated Debt
Securities,
- payments for the purpose of curing any such Event of Default, and
- payments pursuant to the required sinking fund for the Senior
Subordinated Debt Securities. (Section 1402)
Upon any payment or distribution of our assets to creditors in the event of
our dissolution or winding-up or total or partial liquidation or reorganization
or similar proceeding relating to us or our property, whether voluntary or
involuntary and whether or not we are a party to the proceeding, or in
bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due upon all Senior Indebtedness must be paid in
full before the holders of the Senior Subordinated Debt Securities are entitled
to receive or retain any assets so paid or distributed. Subject to the payment
in full of all Senior Indebtedness, the holders of the Senior Subordinated Debt
Securities are to be subrogated to the rights of holders of Senior Indebtedness
to receive payments or distributions of our assets or other payments applicable
to Senior Indebtedness to the extent of the application to Senior Indebtedness
of moneys or other assets which would have been received by the holders of the
Senior Subordinated Debt Securities but for the subordination provisions
contained in the Senior Subordinated Indenture until the Senior Subordinated
Debt Securities are paid in full. (Sections 1403 and 1405)
At December 31, 1998, the outstanding principal amount of Senior
Indebtedness aggregated approximately $4,846 million. We expect to issue from
time to time additional indebtedness constituting Senior Indebtedness and senior
subordinated debt (see "Use of Proceeds"). None of the Indentures prohibits or
limits us from incurring additional Senior Indebtedness.
By reason of the subordination provisions contained in the Senior
Subordinated Indenture, in the event of insolvency, our creditors who are
holders of Senior Indebtedness, as well as certain of our general creditors, may
recover more, ratably, than the holders of the Senior Subordinated Debt
Securities.
SUBORDINATION OF JUNIOR SUBORDINATED DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on the Junior
Subordinated Debt Securities is expressly subordinated in right of payment, as
set forth in the Junior Subordinated Indenture, to payment when due of all our
Senior Indebtedness, as the term is defined with respect to the Junior
Subordinated Debt Securities. (Section 1401) "Senior Indebtedness" is defined in
the Junior Subordinated Indenture as:
- any promissory notes issued by us pursuant to any agreement between us
and any bank or banks and any commercial paper issued by us,
- all our existing and future indebtedness for borrowed money (including
guarantees by us of indebtedness for borrowed money of others),
- all our obligations specified on Schedule A to the Junior Subordinated
Indenture,
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- our indebtedness for money borrowed from or guaranteed to persons, firms
or corporations which engage in lending money, including, without
limitation, banks, trust companies, insurance companies and other
financing institutions and charitable trusts, pension trusts and other
investing organizations, evidenced by notes or similar obligations,
unless such indebtedness shall, in the instrument evidencing the same, be
specifically designated as not being superior to the Junior Subordinated
Debt Securities of any series,
- all our other existing and future obligations (including but not limited
to (x) obligations under interest rate and currency swaps, caps, collars,
options and similar arrangements and (y) our guarantees of obligations of
others) that are designated in the instruments evidencing said
obligations as being superior in right of payment to the Junior
Subordinated Debt Securities, and
- any amendments, modifications, supplements, deferrals, renewals or
extensions of any such Senior Indebtedness; provided, that Senior
Indebtedness shall not include the Junior Subordinated Debt Securities of
any series. (Section 101)
No payment on account of principal, premium, if any, sinking fund, or
interest on the Junior Subordinated Debt Securities may be made, nor may any of
our property or assets be applied to the purchase or other acquisition or
retirement of the Junior Subordinated Debt Securities, unless full payment of
amounts then due for principal, premium, if any, sinking fund, and interest on
Senior Indebtedness has been made or duly provided for in money or money's
worth. No payment by us on account of principal, premium, if any, sinking fund,
or interest on the Junior Subordinated Debt Securities may be made, nor may any
of our property or assets be applied to the purchase or other acquisition or
retirement of the Junior Subordinated Debt Securities, if, at the time of such
payment or application or immediately after giving effect to such payment or
application, there exists under any Senior Indebtedness or any agreement
pursuant to which such Senior Indebtedness is issued any event of default
permitting the holders of such Senior Indebtedness (or a trustee on behalf of
such holders) to accelerate its maturity; provided, however, that in the case of
such an event of default (other than in payment of such Senior Indebtedness when
due) the foregoing provisions of this sentence will not prevent any such payment
or application for a period longer than 90 days after the date on which the
holders of such Senior Indebtedness (or such trustee) shall have first obtained
written notice of such event of default from us or the holder of any Junior
Subordinated Debt Securities, if the maturity of such Senior Indebtedness is not
so accelerated within such 90 day period. (Section 1402)
Subject to the foregoing, if there shall have occurred any Event of Default
on the Junior Subordinated Debt Securities as described below under "Events of
Default and Notice," other than with respect to certain events of bankruptcy,
insolvency or reorganization, then unless and until either such Event of Default
shall have been cured or waived or shall have ceased to exist or the principal
of, premium, if any, and interest on all Senior Indebtedness shall have been
paid in full in money or money's worth, no payment shall be made by us on
account of the principal of, premium, if any, or interest on the Junior
Subordinated Debt Securities or on account of the purchase or other acquisition
of Junior Subordinated Debt Securities, except:
- payments at the expressed maturity of the Junior Subordinated Debt
Securities (subject to the next paragraph),
- current interest payments as provided in the Junior Subordinated Debt
Securities,
- payments for the purpose of curing any such Event of Default, and
- payments pursuant to the required sinking fund for the Junior
Subordinated Debt Securities. (Section 1402)
Upon any payment or distribution of our assets to creditors in the event of
our dissolution or winding-up or total or partial liquidation or reorganization
or similar proceeding relating to us or our property, whether voluntary or
involuntary and whether or not we are a party to such proceeding, or in
bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due upon all Senior Indebtedness must be paid in
full before the holders of the Junior Subordinated Debt Securities are entitled
to receive or retain any assets so paid or distributed. Subject to the payment
in full of all Senior Indebtedness, the holders
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of the Junior Subordinated Debt Securities are to be subrogated to the rights of
holders of Senior Indebtedness to receive payments or distributions of our
assets or other payments applicable to Senior Indebtedness to the extent of the
application to Senior Indebtedness of moneys or other assets which would have
been received by the holders of the Junior Subordinated Debt Securities but for
the subordination provisions contained in the Junior Subordinated Indenture
until the Junior Subordinated Debt Securities are paid in full. (Sections 1403
and 1405)
At December 31, 1998, Junior Subordinated Debt (as defined in the Junior
Subordinated Indenture) aggregated approximately $400 million and Senior
Indebtedness (as defined in the Junior Subordinated Indenture) aggregated
approximately $4,846 million. We expect to issue from time to time additional
indebtedness constituting Senior Indebtedness (see "Use of Proceeds"). None of
the Indentures prohibits or limits us from incurring additional Senior
Indebtedness.
By reason of the subordination provisions contained in the Junior
Subordinated Indenture, in the event of insolvency, our creditors who are
holders of Senior Indebtedness, as well as certain of our general creditors, may
recover more, ratably, than the holders of the Junior Subordinated Debt
Securities.
CERTAIN COVENANTS
Dividend Restrictions. Each Subordinated Indenture provides that we may
not:
- declare or pay any dividend or make any other distribution (other than
dividends or distributions made in our capital stock) on or in respect of
any of our capital stock,
- purchase, redeem or otherwise acquire for value any shares of our capital
stock, except shares acquired upon the conversion of those shares into
other shares of our capital stock, or
- permit any Restricted Subsidiary to purchase, redeem or otherwise acquire
for value any shares of our capital stock;
if immediately afterwards the aggregate amount of all such dividends,
distributions, purchases, redemptions, acquisitions or payments (other than
dividends or distributions payable in shares of our capital stock) during the
period from and after December 31, 1985, plus the amount of total investments in
Unrestricted Subsidiaries made during that period, would exceed the sum of (1)
$185,000,000 plus (or minus in the case of a deficit), (2) our consolidated net
income (or net loss), which includes our Restricted Subsidiaries earned
subsequent to December 31, 1985, plus (3) the aggregate net proceeds received by
us in respect of the issue, sale or exchange after December 31, 1985, of (i) any
shares of our capital stock and any rights or warrants entitling the holders to
purchase or subscribe for shares of such capital stock, or (ii) any of our
indebtedness which is converted into shares of our capital stock after December
31, 1985. (Section 1007)
The foregoing will not prohibit us from paying any management,
administrative, general overhead or similar charge to any of our controlling
stockholders or other Affiliates, or paying to any member of the same
consolidated group for tax purposes any amounts in lieu of taxes. (Section 1007)
Limitations on Mergers. The Indentures provide that we may not consolidate
with, merge into, or sell, convey or transfer our properties and assets
substantially as an entirety to, another Person, if, as a result of such action,
any property owned by us or a Restricted Subsidiary immediately prior to such
action would become subject to any Security Interest, unless:
- (x) in the case of the Senior Indenture, the Senior Debt Securities
(equally and ratably with any of our other indebtedness then entitled to
such Security Interest) shall be secured by a prior lien on such
property, (y) in the case of the Senior Subordinated Indenture, the
Senior Subordinated Debt Securities (equally and ratably with any of our
other indebtedness then entitled to such Security Interest) shall be
secured equally and ratably with (or prior to) the debt secured by such
Security Interest or (z) in the case of the Junior Subordinated
Indenture, the Junior Subordinated Debt Securities (equally and ratably
with any of our other indebtedness entitled to such Security Interest)
shall be secured equally and ratably with (or prior to) the debt secured
by such Security Interest or
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- such Security Interest would otherwise be permitted under the Indentures.
(Section 803) (See "Limitations on Secured Debt")
Limitations on Certain Loans and Advances. Each Subordinated Indenture
provides that we may not, and may not permit any Restricted Subsidiary to, make
any loan or advance to any Person owning more than 50% of our outstanding voting
stock or to any Affiliate of such Person (other than us or a Restricted
Subsidiary) if the aggregate outstanding amount of our Senior Debt and its
Restricted Subsidiaries exceeds 400% of Consolidated Net Worth and Subordinated
Debt, as defined in the applicable Indenture. (Section 1005) The term Senior
Debt for purposes of this limitation shall mean Senior Indebtedness when
referring to the Senior Subordinated Indenture or the Junior Subordinated
Indenture as the term is used in each such Indenture.
Limitations on Secured Debt. Each Indenture provides that we will not at
any time create, incur, assume or guarantee, and will not cause, suffer or
permit a Restricted Subsidiary to create, incur, assume or guarantee, any
Secured Debt without making effective provisions whereby the Debt Securities
then outstanding under such Indenture and any other indebtedness of or
guaranteed by us or such Restricted Subsidiary then entitled to such guarantee,
subject to applicable priorities of payment, shall be secured by the Security
Interest securing such Secured Debt equally and ratably with any and all other
obligations and indebtedness so secured (subject, however, to applicable
priorities of payment) so long as such Secured Debt remains outstanding;
provided, however, that the foregoing prohibition will not apply to:
(a) any Security Interest in favor of us or a Restricted Subsidiary;
(b) Security Interests existing on December 1, 1994 in the case of Senior
Debt Securities, Security Interests existing on June 1, 1989 in the case
of Senior Subordinated Debt Securities and Security Interests existing
on July 1, 1993 in the case of Junior Subordinated Debt Securities;
(c) Security Interests existing on property at the time it is acquired by
us or a Restricted Subsidiary, provided such Security Interest is
limited to all or part of the property so acquired;
(d) (i) any Security Interest existing on the property of or on the
outstanding shares or indebtedness of a corporation at the time
such corporation shall become a Restricted Subsidiary, or
(ii) subject to the provisions referred to above under "Limitations on
Mergers," any Security Interest on property of a corporation
existing at the time such corporation is merged into or
consolidated with us or a Restricted Subsidiary or at the time of a
sale, lease or other disposition of the properties of a corporation
as an entirety or substantially as an entirety to us or a
Restricted Subsidiary, provided, in each such case, that such
Security Interest does not extend to any property owned prior to
such transaction by us or any Restricted Subsidiary which was a
Restricted Subsidiary prior to such transaction;
(e) mechanics', materialmen's, carriers' or other like liens, arising in
the ordinary course of business;
(f) certain tax liens or assessments, and certain judgment liens;
(g) certain Security Interests in favor of the United States of America or
any state or any agency of the United States of America;
(h) Security Interests on Business Equipment;
(i) in the case of property (other than Rental Equipment) acquired after
December 1, 1994 as it pertains to Senior Debt Securities, after June 1,
1989, as it pertains to Senior Subordinated Debt Securities and after
July 1, 1993, as it pertains to Junior Subordinated Debt Securities, by
us or any Restricted Subsidiary, any Security Interest which secures an
amount not in excess of the purchase price or fair value of such
property at the time of acquisition, whichever, in our opinion, shall be
less, provided that such Security Interest is limited to the property so
acquired;
(j) Security Interests on properties financed through tax-exempt municipal
obligations, provided that such Security Interest is limited to the
property so financed; or
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(k) any refunding, renewal, extension or placement (or successive
refunding, renewals, extensions, or replacements), in whole or in part,
of any Security Interest referred to in the foregoing clauses (a)
through (j), provided that the principal amount of indebtedness secured
in such refunding, renewal, extension or replacement does not exceed
that secured at the time by such Security Interest and that such
renewal, refunding, extension or replacement of such Security Interest
is limited to all or part of the same property subject to the Security
Interest being refunded, renewed, extended or replaced.
Notwithstanding the foregoing provisions, we and any one or more Restricted
Subsidiaries may issue, assume, or guarantee Secured Debt which would otherwise
be subject to the foregoing restrictions in an aggregate amount which, together
with all other Secured Debt of ours and of our Restricted Subsidiaries which
would otherwise be subject to the foregoing restrictions (not including Secured
Debt permitted to be secured under subparagraphs (a) through (k) above), and the
aggregate value of the Sale and Leaseback Transactions in existence at such time
(not including Sale and Leaseback Transactions the proceeds of which have been
or will be applied in accordance with subsection (b) under "Limitations on Sale
and Leaseback Transactions" below), do not at the time of incurrence exceed 10%
of Consolidated Net Worth and Subordinated Debt (as defined in the applicable
Indenture). (Section 1004)
Limitations on Sale and Leaseback Transactions. Each Indenture provides
that we may not, and may not permit any Restricted Subsidiary to, engage in any
Sale and Leaseback Transaction unless (a) we or such Restricted Subsidiary would
be entitled, without reference to the provisions of Section 1004 described in
subparagraphs (a) through (k) above, to incur Secured Debt in an amount equal to
the amount realized or to be realized upon the sale or transfer involved in such
Sale and Leaseback Transaction, secured by a Security Interest on the property
to be leased without equally and ratably securing the Debt Securities
outstanding under such Indenture as provided under "Limitations on Secured
Debt," or (b) we or a Restricted Subsidiary shall apply, within 120 days after
such sale or transfer, an amount equal to the fair value of the property so
leased (as determined by our Board of Directors) to the repayment of our Senior
Debt or Senior Debt of any Restricted Subsidiary (other than Senior Debt owed to
us or any Restricted Subsidiary) then prepayable, on a pro rata basis, according
to the respective principal amounts of Senior Debt then held by the various
holders of Senior Debt. (Senior Indenture Section 1005; Subordinated Indentures
Section 1006) The term Senior Debt for purposes of this limitation shall mean
Senior Indebtedness when referring to the Senior Subordinated Indenture or the
Junior Subordinated Indenture as the term is used in each such Indenture.
CERTAIN DEFINITIONS
"Business Equipment" shall mean all motor vehicles, tractors and trailers,
construction equipment, factory, commercial and office equipment and other
revenue-earning personalty owned, financed or otherwise held by or for us or any
of our Restricted Subsidiaries for rental, lease, sale or disposition in the
ordinary course of our business and our Restricted Subsidiaries, other than
Rental Equipment. "Consolidated Net Worth and Subordinated Debt" shall mean the
aggregate of:
- our capital and surplus accounts and the capital and surplus accounts of
our Restricted Subsidiaries, as shown in our most recent consolidated
balance sheet and our Restricted Subsidiaries, prepared in accordance
with generally accepted accounting principles, plus
- the aggregate outstanding principal amount of our Subordinated Debt (as
defined in the Indentures) and the aggregate principal amount of
Subordinated Debt of Restricted Subsidiaries, as reflected on the same
consolidated balance sheet.
"Principal Property" shall mean any building, structure or other facility
(including land or fixtures) owned by us or any Restricted Subsidiary having a
gross book value in excess of 2% of Consolidated Net Worth and Subordinated
Debt, other than any such building, structure or other facility which, in the
opinion of our Board of Directors, is not of material importance to the total
business conducted by us and our subsidiaries as an entirety. "Rental Equipment"
shall mean all automobiles owned, financed or otherwise held by us or any of our
Restricted Subsidiaries which, in the ordinary course of business, are offered
for rental within the United States of America for periods of less than 30 days.
"Restricted Subsidiary" shall mean certain of our identified
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Subsidiaries, and any other Subsidiaries designated after the date of the
Indentures as a Restricted Subsidiary by our Board of Directors, subject to
redesignation by the Board of Directors and to certain other restrictions. "Sale
and Leaseback Transaction" shall mean any sale or transfer by us or one or more
Restricted Subsidiaries (except a sale or transfer to us or one or more
Restricted Subsidiaries) of any Principal Property, made more than 180 days
after the later of the acquisition of such Principal Property or the completion
of construction or full commencement of operations of such Principal Property,
if such sale or transfer is made with the intention of, or as part of an
arrangement involving, the lease of such Principal Property to us or a
Restricted Subsidiary (with certain exceptions). "Secured Debt" shall mean all
indebtedness for borrowed money of ours or a Restricted Subsidiary which is
secured by a Security Interest upon any assets of ours or any Restricted
Subsidiary, including any capital stock or indebtedness of any Restricted
Subsidiary. "Security Interest" shall mean any mortgage, pledge, lien,
encumbrance, conditional sales contract, title retention agreement or other
similar arrangement which secures payment or performance of an obligation.
(Section 101)
MODIFICATION OF THE INDENTURES
Subject to certain exceptions, each Indenture contains provisions
permitting us and the Trustee, with the consent of the Holders of not less than
a majority in principal amount of all securities at the time outstanding, or of
the Holders of the then outstanding Debt Securities of each series to be
affected by such action, to modify the Indentures or any supplemental Indentures
or the rights of the Holders of all Debt Securities, or of the Debt Securities
of a particular series, as the case may be; provided that no such modification
shall (i) change the fixed maturity of the principal of, or any installment of
principal or interest on, any Debt Security, or reduce the principal amount of
any Debt Security or the rate of interest, if any, on such Debt Security, or
change the place of payment or the currency in which any Debt Security or the
interest, if any, on such Debt Security is payable, without the consent of the
Holder of each Debt Security affected, or (ii) reduce the aforesaid percentage
of Debt Securities the consent of the holders of which is required for any such
modification, without the consent of the Holder of each Debt Security affected.
(Section 902)
EVENTS OF DEFAULT AND NOTICE
The following events are defined in the Senior Indenture as Events of
Default with respect to the Senior Debt Securities of a particular series:
- failure for 30 days to pay interest on any Senior Debt Securities of such
series when due;
- failure to pay principal of any Senior Debt Securities of such series
when due at maturity thereof or otherwise, which failure shall continue
unremedied for 5 Business Days;
- failure to deposit any sinking fund payment when and as due, which
failure shall continue unremedied for 5 Business Days;
- the acceleration of any of our other indebtedness in excess of $25
million, including another series of Senior Debt Securities, under its
terms, if such acceleration is not rescinded or annulled within 10 days
after written notice of the acceleration to us;
- failure to perform any other covenant in the Senior Debt Securities of
such series within 90 days after written notice of the failure to us
specifying the failure and requiring its remedy;
- certain events of bankruptcy, insolvency or reorganization; and
- any other Event of Default provided with respect to the Senior Debt
Securities of such series. (Section 501)
We are required to file annually with the Senior Trustee an officer's
certificate as to the absence of certain defaults under the terms of the Senior
Indenture. (Section 1006)
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The following events are defined in each Subordinated Indenture as Events
of Default with respect to the Subordinated Debt Securities of a particular
series:
- failure for 30 days to pay interest on any Subordinated Debt Securities
of such series when due;
- failure to pay principal of any Subordinated Debt Securities of such
series when due at maturity;
- the acceleration of any of our other indebtedness in excess of $10
million, including another series of Subordinated Debt Securities, under
its terms, if such acceleration is not rescinded or annulled within 10
days after written notice of the acceleration to us;
- failure to perform any other covenant in the Subordinated Debt Securities
of such series or in the applicable Subordinated Indenture within 60 days
after written notice of the failure to us specifying the failure and
requiring its remedy;
- certain events of bankruptcy, insolvency or reorganization; and
- any other Event of Default provided with respect to the Subordinated Debt
Securities of such series. (Section 501)
We are required to file with each Trustee annually an officer's certificate as
to the absence of certain defaults under the terms of the applicable
Subordinated Indenture. (Section 1008)
Upon any Event of Default with respect to Debt Securities of a particular
series, the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Debt Securities of such series then outstanding may declare the
principal of all the Debt Securities of such series (or, in the case of any
series of discounted Debt Securities, such lesser principal amount as may be
provided for in such series of discounted Debt Securities) to be due and
payable. (Section 502)
Each Indenture provides that the Holders of not less than a majority in
principal amount of the Debt Securities of any series may on behalf of the
Holders of all of the Debt Securities of such series waive any past default
under such Indenture with respect to such series and its consequences, except a
default:
- in the payment of the principal of or interest, if any, on any of the
Debt Securities of such series or
- in respect of a covenant or provision of such Indenture which, under the
terms of such Indenture, cannot be modified or amended without the
consent of the Holders of all of the Debt Securities of such series
affected thereby.
The terms of the Senior Indenture do not permit any such waiver with respect to
Debt Securities of any such series subsequent to the acceleration of principal
thereof. (Section 513)
Each Indenture provides that the Trustee may withhold notice to the Holders
of the Debt Securities of any default (except a default in the payment of
principal or interest) if it determines that the withholding of such notice is
in the interest of the Holders of the Debt Securities. (Section 602)
Subject to provisions of each Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under such
Indenture at the request of any of the Holders of the Debt Securities issued
thereunder, unless they shall have offered to the Trustee reasonable indemnity.
(Sections 601(a) and 603(e)) Subject to such provisions for the indemnification
of the Trustee and to certain other limitations, the Holders of a majority in
principal amount of the Debt Securities of a particular series at the time
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of such series. (Section 512)
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DEFEASANCE OF DEBT SECURITIES
Unless the prospectus supplement relating to the applicable Senior Debt
Securities provides otherwise, we at our option:
(a) will be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Senior Debt Securities of such series,
and to have satisfied all our other obligations under such Senior Debt
Securities (except for obligations relating to the rights of Holders to
receive payments from the trust fund as described in the Senior
Indenture, certain obligations to register the transfer and exchange of
Senior Debt Securities, replace stolen, lost or mutilated Senior Debt
Securities, maintain paying agencies, hold moneys for payment in trust
and our obligations with respect to Global Securities and defeasance
and covenant defeasance generally); or
(b) shall be released from our obligations described above under "Certain
Covenants -- Limitations on Mergers," "-- Limitations on Secured Debt"
and "-- Limitations on Sale and Leaseback Transactions" with respect to
the outstanding Senior Debt Securities of such series, if we
irrevocably deposit or cause to be deposited with the Senior Trustee
money or U.S. Government Obligations or a combination of money or U.S.
Government Obligations sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification of its opinion delivered to the Senior Trustee,
to pay and discharge
(i) the principal of (and premium, if any) and interest, if any, on the
outstanding Senior Debt Securities of such series and
(ii) any mandatory sinking fund payments applicable to the outstanding
Senior Debt Securities of such series.
Among conditions to exercising any such option, we are required to deliver to
the Senior Trustee an opinion of counsel (which opinion shall state, in the case
of a defeasance described in clause (a) above, that (x) we have received from,
or there has been published by, the Internal Revenue Service a ruling, or (y)
since the date of the first issuance by us of Senior Debt Securities pursuant to
the Senior Indenture, there has been a change in the applicable Federal income
tax law) to the effect that the Holders of the outstanding Senior Debt
Securities of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance or covenant defeasance, as the
case may be, had not occurred. (Sections 1401, 1402, 1403 and 1404)
If we, at our option, deposit or cause to be deposited with the applicable
Subordinated Trustee as trust funds, for the purpose stated below, an amount, in
money or the equivalent in securities of the government which issued the
currency in which the Subordinated Debt Securities of any then outstanding
series are denominated or securities issued by government agencies backed by the
full faith and credit of such government, sufficient to pay and discharge the
entire indebtedness on the Subordinated Debt Securities of such series for
principal and interest, if any, to the date or dates of maturity of the
Subordinated Debt Securities of such series, and if we have paid or caused to be
paid all other sums payable by us under the Subordinated Indenture with respect
to such series, then the Subordinated Indenture will cease to be of further
effect with respect to such series (except as to our obligations to compensate,
reimburse and indemnify the Subordinated Trustee pursuant to the Subordinated
Indenture with respect to such series). We will be deemed to have satisfied and
discharged the Indenture with respect to such series; provided, however, that no
series of Subordinated Debt Securities may be so defeased unless all of the
securities of such series will become due and payable at their Stated Maturity
within one year of such defeasance. (Section 401) In the event of any such
defeasance, holders of such Subordinated Debt Securities would be able to look
only to such trust funds for payment of principal and premium, if any, and
interest, if any on their Subordinated Debt Securities.
With respect to the Subordinated Indentures, if government securities have
been deposited with the applicable Subordinated Trustee as trust funds, we, in
order to exercise our option, are required to deliver to the Trustee an opinion
of counsel to the effect that the deposit and related defeasance (a) will not
cause the holders of the Subordinated Debt Securities of such series to
recognize income, gain or loss for Federal
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income tax purposes and (b) will not result in the delisting of the Subordinated
Debt Securities of such series from any nationally-recognized exchange on which
they are listed, if any. (Section 401)
Unless the prospectus supplement relating to the applicable Subordinated
Debt Securities provides otherwise, we at our option (a) will be discharged from
any and all obligations in respect of such Subordinated Debt Securities (except
for certain obligations to register the transfer or exchange of Subordinated
Debt Securities, replace stolen, lost or mutilated Subordinated Debt Securities,
maintain paying agencies and hold moneys for payment in trust) or (b) need not
comply with certain restrictive covenants of the applicable Subordinated
Indenture (including all or some of those described above under "Certain
Covenants"), if there is deposited with the applicable Subordinated Trustee
money or, in the case of Subordinated Debt Securities denominated in U.S.
dollars, U.S. Government Obligations or, in the case of Subordinated Debt
Securities denominated in a foreign currency, Foreign Government Securities,
which through the payment of interest on, and principal of such Foreign
Government Securities in accordance with their terms will provide money (or a
combination of money and U.S. Government Obligations or Foreign Government
Securities, as the case may be) in an amount sufficient to pay in the currency,
currencies or currency unit or units in which such Subordinated Debt Securities
are payable all the principal of, and interest on, such Subordinated Debt
Securities on the dates such payments are due in accordance with the terms of
such Subordinated Debt Securities. Among conditions to our exercising any such
option, we are required to deliver to the applicable Subordinated Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the holders of such Subordinated Debt Securities to recognize income,
gain or loss for United States Federal income tax purposes, and that the holders
will be subject to United States Federal income tax in the same amounts, in the
same manner and at the same times as would have been the case if such deposit
and related defeasance had not occurred. (Section 403)
THE TRUSTEES
First Union National Bank (formerly First Fidelity Bank, National
Association) is the Senior Trustee under the Senior Indenture. The Chase
Manhattan Bank, formerly Chemical Bank (successor by merger to Manufacturers
Hanover Trust Company) is trustee under an Indenture dated as of April 1, 1986,
as amended by a First Supplemental Indenture dated as of April 2, 1990, pursuant
to which approximately $930 million aggregate principal amount of our senior
debt securities remained outstanding at December 31, 1998. The Bank of New York
is the Senior Subordinated Trustee under the Senior Subordinated Indenture.
Citibank, N.A. is the Junior Subordinated Trustee under the Junior Subordinated
Indenture. Each Trustee may act as depository for funds of, provide lines of
credit to and perform other services for, us and our subsidiaries in the normal
course of business.
PLAN OF DISTRIBUTION
We may sell the Debt Securities in any of four ways: (i) through
underwriters or dealers, (ii) directly to a limited number of institutional
purchasers or to a single institutional purchaser, (iii) through agents or (iv)
through a combination of any such methods of sale. The prospectus supplement
with respect to the Debt Securities of a particular series sets forth the terms
of the offering of such Debt Securities, including the name or names of any
underwriters or agents, the purchase price of such Debt Securities and the
proceeds to us from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such Debt Securities may be listed.
If underwriters are used in the sale of Debt Securities of a particular
series, such Debt Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The Debt Securities of a
particular series may be offered to the public through underwriting syndicates
represented by managing underwriters.
If so indicated in any prospectus supplement, we will authorize the
underwriters and agents to solicit offers by certain institutions to purchase
the Debt Securities described in such prospectus supplement from us at the
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public offering price set forth therein pursuant to Delayed Delivery Contracts
("Contracts"), which will provide for payment and delivery on the date stated in
such prospectus supplement. Each of the Contracts will be for an amount not less
than, and unless we otherwise agree the aggregate principal amount of Debt
Securities sold pursuant to Contracts shall be not more than, the respective
amounts stated in such prospectus supplement.
The underwriters, dealers and agents may be entitled, under agreements
which may be entered into with us, to indemnification by us against certain
civil liabilities, including liabilities under the Securities Act of 1933, or to
contribution to payments that the underwriters, dealers and agents may be
required to make in respect thereof.
LEGAL OPINIONS
Certain legal matters in connection with the Securities will be passed upon
for us by Harold E. Rolfe, Esq., 225 Brae Boulevard, Park Ridge, New Jersey, our
Senior Vice President, General Counsel and Secretary, and for any underwriters
or agents by Brown & Wood LLP, One World Trade Center, New York, New York.
EXPERTS
The consolidated financial statements and the related financial statement
schedule at December 31, 1998 and 1997 and for each of the three years in the
period ended December 31, 1998 included in the Annual Report on Form 10-K for
the year ended December 31, 1998, incorporated by reference in this prospectus
and in the Registration Statement of which this prospectus forms a part, have
been audited by PricewaterhouseCoopers LLP, independent accountants, at December
31, 1998 and 1997, and for each of the three years in the period ended December
31, 1998, as indicated in their report incorporated by reference herein. The
consolidated financial statements and the related financial statement schedule
referred to above have been incorporated by reference herein in reliance on the
report of PricewaterhouseCoopers LLP given on the authority of said firm as
experts in auditing and accounting.
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REGISTERED OFFICES OF THE CORPORATION
225 Brae Boulevard
Park Ridge, New Jersey 07656-0713
United States
AUDITORS
Independent Auditors
of the Corporation
PRICEWATERHOUSECOOPERS LLP
400 Campus Drive
P.O. Box 988
Florham Park, New Jersey 07932
United States
LEGAL ADVISORS TO THE UNDERWRITERS
(As to United States Law)
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048
United States
LISTING AGENT
BANQUE GENERALE DE LUXEMBOURG S.A.
50 Avenue J. F. Kennedy
L-2951 Luxembourg
TRUSTEE
FIRST UNION NATIONAL BANK
NJ 3201
Corporate Trust Administration
21 South Street, 3rd Floor
Morristown, New Jersey 07960
United States
PAYING AND TRANSFER AGENT IN LUXEMBOURG
BANQUE GENERALE DE LUXEMBOURG S.A.
50 Avenue J. F. Kennedy
L-2951 Luxembourg
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