<PAGE> 1
Pursuant to Rule 424(b)(2)
Registration Nos. 33-52855 and 33-51972
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 17, 1994
$174,000,000
RAYONIER INC.
SERIES B MEDIUM-TERM NOTES
DUE 9 MONTHS OR MORE FROM DATE OF ISSUE
------------------------
The Company may offer from time to time its Series B Medium-Term Notes, due
9 months or more from the date of issue (the "Notes"), as selected by the
purchaser and agreed to by the Company, at an aggregate initial public offering
price not to exceed U.S. $174,000,000.
The Notes will be denominated in U.S. dollars. The Notes may be issued with
the principal amount thereof payable at maturity, or the amount of interest
payable on an interest payment date, to be determined by reference to an index
(e.g., currencies, composite currencies, commodities or financial or
non-financial indices) ("Indexed Notes"), as specified in the applicable Pricing
Supplement. The index (if any), interest rate (if any), issue price and maturity
date of any Note will be set forth in a pricing supplement (a "Pricing
Supplement") to this Prospectus Supplement. Notes may also be issued as
Amortizing Notes (as defined herein), as disclosed herein. See "Description of
Notes."
Unless otherwise specified in the applicable Pricing Supplement, the Notes,
except Zero Coupon Notes (as defined), will bear interest at a fixed rate or
rates (a "Fixed Rate Note") or at a floating rate (a "Floating Rate Note")
determined by reference to the Commercial Paper Rate, the Prime Rate, LIBOR, the
Treasury Rate, the CD Rate, the Federal Funds Rate or such other interest rate
formula as set forth in the Pricing Supplement, as adjusted by the Spread or
Spread Multiplier, if any, applicable to such Notes (as such terms are defined
herein). Interest rates and interest rate formulas are subject to change by the
Company, but no such change will affect any Notes already issued or as to which
an offer to purchase has been accepted by the Company. Unless otherwise
specified in the applicable Pricing Supplement, interest on the Fixed Rate Notes
will be payable on each May 15 and November 15 and at Maturity (as defined
herein). Interest on the Floating Rate Notes will be payable on the dates
specified therein and in the applicable Pricing Supplement. Zero Coupon Notes
will not bear interest.
Unless a redemption commencement date (a "Redemption Commencement Date") or
a repayment date (a "Repayment Date") is specified in the applicable Pricing
Supplement, the Notes will not be redeemable or repayable prior to their Stated
Maturity. If a Redemption Commencement Date or a Repayment Date is so specified,
the Notes will be redeemable at the option of the Company, or repayable at the
option of the holder (the "Holder"), or both (as specified therein) at any time
after such date (or for a limited period) as described herein and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
offered hereby will be issued in global or definitive form in a minimum
denomination of U.S. $1,000, and integral multiples of $1,000 in excess thereof,
as specified in the applicable Pricing Supplement. If Notes are issued in global
form, a global Note representing Book-Entry Notes will be registered in the name
of the nominee of The Depository Trust Company, which will act as Depositary.
Interests in Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to
participants' interests) and its participants. Except as described herein under
"Description of Notes -- Book-Entry System", owners of beneficial interests in a
global Note will not be considered the Holders thereof and will not be entitled
to receive physical delivery of Notes in definitive form, and no global Note
will be exchangeable except for another global Note of like denomination and
terms to be registered in the name of the Depositary or its nominee. See
"Description of Notes."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO
OR THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
--------------- ---------------- ----------------
<S> <C> <C> <C>
Per Note....................................... 100% .125% - .875% 99.875% - 99.125%
Total.......................................... $174,000,000 $217,500 - $1,522,500 $173,782,500 - $172,477,500
</TABLE>
- ---------------
(1) Notes will be issued at 100% of their principal amount, unless otherwise
specified in the applicable Pricing Supplement.
(2) The Company will pay the Agents a commission of from .125% to .875% of the
principal amount of any Notes, depending on maturity, for sales made through
them as agents of Notes with a maturity of less than 40 years; the
commission to be paid by the Company to the Agents on any sale of Notes with
a maturity of 40 years or more will be negotiated at the time of sale.
Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price
equal to 100% of the principal amount thereof less a percentage equal to the
commission applicable to an agency sale of a Note of identical maturity, and
may be resold by such Agent to investors or other purchasers at varying
prices relating to prevailing market prices at the time of resale to be
determined by such Agent. The Company has agreed to indemnify the Agents
against certain liabilities, including liabilities under the Securities Act
of 1933.
(3) Before deducting estimated expenses of $375,000 payable by the Company,
including certain expenses of the Agents to be reimbursed by the Company.
------------------------
Offers to purchase Notes are being solicited, on a reasonable efforts basis,
from time to time by the Agents on behalf of the Company. Notes may be sold to
the Agents on their own behalf at negotiated discounts. The Company may also
sell Notes to an Agent acting as principal for its own account for resale to one
or more investors and other purchasers at varying prices related to prevailing
market prices at the time of resale or otherwise, to be determined by such
Agent. The Company reserves the right to sell Notes directly on its own behalf.
The Company also reserves the right to withdraw, cancel or modify the offering
contemplated hereby without notice. No termination date for the offering of the
Notes has been established. The Company or the Agents may reject any order as a
whole or in part. The Notes are a new issue of securities with no established
trading market and will not be listed on any securities exchange. No assurance
can be given as to the existence or liquidity of the secondary market for the
Notes. See "Supplemental Plan of Distribution."
LAZARD FRERES & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MAY 27, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
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USE OF PROCEEDS
Except as otherwise provided in the applicable Pricing Supplement, the net
proceeds from the sale of the Notes will be added to the Company's general funds
and will be used for general corporate purposes, including, but not limited to,
additions to working capital and capital expenditures and the repayment of loans
under bank credit agreements and other short-term debt. Pending such use, the
net proceeds may be used to make short-term investments.
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<PAGE> 4
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the accompanying Prospectus, to which description reference is hereby made. The
following description of the Notes will apply to the Notes unless otherwise
specified in the applicable Pricing Supplement.
The Notes will be issued under an Indenture dated September 1, 1992, as
supplemented and amended (the "Indenture"), between the Company and Bankers
Trust Company, a New York banking corporation (the "Trustee"). The Notes
constitute a new series for purposes of the Indenture and are limited in amount
as set forth on the cover page hereof, less an amount equal to the aggregate
initial offering price of any other Debt Securities (as defined in the
Prospectus) issued from time to time after the date of this Prospectus
Supplement. For a description of the rights attaching to different series of
Debt Securities under the Indenture, see "Description of the Debt Securities" in
the Prospectus.
Unless previously redeemed, a Note will mature on a date ("Stated
Maturity"), 9 months or more from its date of issue, that is specified on the
face thereof and in the applicable Pricing Supplement. As used herein, the term
"Market Day" means (a) with respect to any Note (other than any LIBOR Note), any
Business Day, and (b) with respect to any LIBOR Note, any such Business Day on
which dealings in deposits in U.S. dollars are transacted in the London
interbank market. The term "Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in The City
of New York generally are authorized or obligated by law or executive order to
close. Each Note will be denominated in U.S. dollars.
Purchasers of the Notes are required to pay for them by delivery of the
requisite amount of U.S. dollars to an Agent, unless other arrangements have
been made. Payments on the Notes will be made in U.S. dollars. See "Payment of
Principal and Interest".
Each Note will be represented by either a global security (a "Global
Security") registered in the name of a nominee of the Depositary (each such Note
represented by a Global Security being herein referred to as a "Book-Entry
Note") or a certificate issued in definitive registered form, without coupons (a
"Certified Note"), as set forth in the applicable Pricing Supplement. Except as
set forth under "Book-Entry System" below, Book-Entry Notes will not be issuable
in certificated form. So long as the Depositary or its nominee, as the case may
be, is the registered owner of any Global Security, the Depositary or its
nominee, as the case may be, will be considered the sole Holder of the
Book-Entry Note or Notes represented by such Global Security for all purposes
under the Indenture and the Book-Entry Notes. See "Book-Entry System" below.
Certificated Notes may be presented for registration of transfer or
exchange at the Corporate Trust and Agency Group of Bankers Trust Company in the
Borough of Manhattan, The City of New York.
Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of any Note will be U.S. $1,000 and integral multiples
of U.S. $1,000 in excess thereof.
Notes will be sold in individual issues of Notes having such interest rate
or interest rate formula, if any, Stated Maturity and date of original issuance
as shall be selected by the initial purchasers and agreed to by the Company.
Unless otherwise indicated in the applicable Pricing Supplement, each Note will
bear interest at either (i) a fixed rate (a "Fixed Rate Note"), which may be
zero in the case of Notes issued at a discount from the principal amount payable
at maturity thereof (a "Zero Coupon Note") or (ii) a floating rate (a "Floating
Rate Note") determined by reference to the interest rate formula which may be
adjusted by adding or subtracting the Spread or multiplying by the Spread
Multiplier (such terms as defined in "-- Floating Rate Notes" below).
The Notes may be issued as Original Issue Discount Notes. An Original Issue
Discount Note is a Note, including any Zero Coupon Note, which is issued at a
price lower than the principal amount thereof and which
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<PAGE> 5
provides that upon redemption or acceleration of the maturity thereof an amount
less than the principal thereof shall become due and payable. In the event of
redemption or acceleration of the maturity of an Original Issue Discount Note,
the amount payable to the Holder of such Note upon such redemption or
acceleration will be determined in accordance with the terms of the Note, but
will be an amount less than the amount payable at the Stated Maturity of such
Note. In addition, a Note issued at a discount may, for U.S. Federal income tax
purposes, be considered an original issue discount note, regardless of the
amount payable upon redemption or acceleration of maturity of such Note. See
"United States Federal Taxation" below.
Notes may be issued from time to time as Amortizing Notes. "Amortizing
Notes" are Notes for which payments of principal and interest are made in
installments over the life of the Note. Interest on each Amortizing Note will
be, unless otherwise specified in the applicable Pricing Supplement, computed on
the basis of a 360-day year of twelve 30-day months. Payments with respect to
Amortizing Notes will be applied first to interest due and payable thereon and
then to the reduction of the unpaid principal amount thereof. A table setting
forth repayment information in respect of each Amortizing Note will be provided
in the applicable Pricing Supplement.
Indexed Notes may be issued with the principal amount payable at maturity,
or the amount of interest payable on an interest payment date, to be determined
by reference to a currency exchange rate, composite currency, commodity price or
other financial or nonfinancial index as set forth in the applicable Pricing
Supplement. Holders of Indexed Notes may receive a principal amount at maturity
that is greater than, equal to or less than the face amount of such Notes
depending upon the value at maturity of the applicable index. Information as to
the methods for determining the principal amount payable at maturity or the
amount of interest payable on an interest payment date, as the case may be, any
currency or commodity market to which principal or interest is indexed, foreign
exchange risks and certain additional tax considerations with respect to Indexed
Notes will be set forth in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund and, unless a Redemption Commencement
Date or a Repayment Date is specified in the applicable Pricing Supplement, will
not be redeemable or repayable prior to their Stated Maturity. If a Redemption
Commencement Date is so specified with respect to any Note, the applicable
Pricing Supplement will also specify one or more redemption prices (expressed as
a percentage of the principal amount of such Note) ("Redemption Price") and the
redemption period or periods ("Redemption Periods") during which such Redemption
Prices shall apply. Unless otherwise specified in the Pricing Supplement, any
such Note shall be redeemable at the option of the Company or repayable at the
option of the Holder thereof (as specified in such Pricing Supplement) at any
time on or after such specified Redemption Commencement Date or Repayment Date,
as the case may be, or, with respect to redeemed Notes, for a limited period (as
specified in such Pricing Supplement) at the specified Redemption Price
applicable to the Redemption Period during which such Note is to be redeemed,
together with interest accrued to the redemption date. Notice of redemption
shall be given not later than 30 days, and not earlier than 60 days, prior to
the date fixed for redemption. With respect to the redemption of Global
Securities, the Depositary advises that if less than all of the Notes with like
tenor and terms are to be redeemed, the particular interests (in integral
multiples of $1,000) in the Book-Entry Notes representing the Notes to be
redeemed shall be selected by the Depositary's impartial lottery procedures.
The Pricing Supplement relating to each Note will describe the following
terms: (i) the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Note will be issued; (ii) the date on which such
Note will be issued; (iii) the date on which such Note will mature; (iv) whether
such Note is a Fixed Rate Note or a Floating Rate Note; (v) if such Note is a
Fixed Rate Note, the rate per annum at which such Note will bear interest, if
any, and the interest payment date or dates, if different from those set forth
below under "Fixed Rate Notes"; (vi) if such Note is a Floating Rate Note, the
interest rate basis (the "Interest Rate Basis") for each such Floating Rate Note
which will be (a) the Commercial Paper Rate, in which case such Note will be a
Commercial Paper Rate Note, (b) the Prime Rate, in which case such Note will be
a Prime Rate Note, (c) the London InterBank Offered Rate ("LIBOR"), in which
case such Note will be a LIBOR Note, (d) the Treasury Rate, in which case such
Note will be a Treasury Rate Note, (e) the CD Rate, in which case such Note will
be a CD Rate Note, (f) the Federal Funds Rate, in which case such
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Note will be a Federal Funds Rate Note, or (g) such other interest rate formula
as is set forth in such Pricing Supplement, and, if applicable, the Calculation
Agent, the Index Maturity, the Spread or Spread Multiplier, the Maximum Interest
Rate, the Minimum Interest Rate, the Initial Interest Rate, the Floating Rate
Note Interest Payment Dates, the Regular Record Dates, the Calculation Date, the
Interest Determination Date and the Interest Reset Date (as such terms are
defined herein) with respect to such Floating Rate Note; (vii) whether such Note
is an Original Issue Discount Note, and, if so, the yield to maturity; (viii)
whether such Note is an Indexed Note, and, if so, the principal amount thereof
payable at maturity, or the amount of interest payable on an interest payment
date, as determined by reference to the applicable index, in addition to certain
other information relating to the Indexed Note; (ix) whether such Note may be
redeemed at the option of the Company, or repaid at the option of the holder,
prior to the Stated Maturity and, if so, the provisions relating to such
redemption or repayment; (x) whether such Note will be issued initially as a
Book-Entry Note or a Certificated Note; and (xi) any other terms of such Note
not inconsistent with the provisions of the Indenture.
FIXED RATE NOTES
Each Fixed Rate Note (except any Zero Coupon Note) will bear interest from
its date of issue or from the most recent Interest Payment Date to which
interest on such Note has been paid or duly provided for at the fixed rate per
annum stated on the face thereof and in the applicable Pricing Supplement until
the principal thereof is paid or made available for payment. Unless otherwise
specified in the applicable Pricing Supplement, interest on such Fixed Rate
Notes will be payable semiannually on each May 15 and November 15 (each an
"Interest Payment Date") and at maturity or upon earlier redemption or
repayment. Each payment of interest in respect of an Interest Payment Date will
include interest accrued to but excluding such Interest Payment Date. Interest
on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve
30-day months. Interest will be payable on each Interest Payment Date and at
maturity as specified below under "-- Payment of Principal and Interest."
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its date of issue or from
the most recent Floating Rate Note Interest Payment Date (as defined herein) to
which interest on such Note has been paid or duly provided for, unless the
applicable Interest Reset Dates are daily or weekly, in which case from the day
following the most recent Regular Record Date to which interest on such Note has
been paid or duly provided for, at the rate per annum determined pursuant to the
interest rate formula stated therein and in the applicable Pricing Supplement
until the principal thereof is paid or made available for payment. Interest will
be payable on each Floating Rate Note Interest Payment Date and at maturity as
specified below under "-- Payment of Principal and Interest."
The interest rate for each Floating Rate Note will be determined by
reference to an interest rate formula which may be adjusted by adding or
subtracting the Spread, if any, or multiplying by the Spread Multiplier, if any
(both terms as defined below). A Floating Rate Note may also have either or both
of the following: (a) a maximum interest rate limitation, or ceiling, on the
rate of interest which may accrue during any interest period (a "Maximum
Interest Rate"); and (b) a minimum interest rate limitation, or floor, on the
rate of interest which may accrue during any interest period (a "Minimum
Interest Rate"). The "Spread" is the number of basis points specified in the
applicable Pricing Supplement as being applicable to the interest rate for such
Note, and the "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as being applicable to the interest rate for such Note.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable Pricing Supplement. Unless otherwise
provided in the applicable Pricing Supplement, Bankers Trust Company will be the
calculation agent (the "Calculation Agent") with respect to the Floating Rate
Notes.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (each an "Interest Reset Date"), as
specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing
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Supplement, the Interest Reset Date will be, in the case of Floating Rate Notes
which reset daily, each Business Day; in the case of Floating Rate Notes (other
than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes which reset weekly, the Tuesday of each week; in the
case of Floating Rate Notes which reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December; in the case of Floating Rate
Notes which reset semi-annually, the third Wednesday of two months of each year
as specified in the applicable Pricing Supplement; and in the case of Floating
Rate Notes which reset annually, the third Wednesday of one month of each year
as specified in the applicable Pricing Supplement; provided, however, that (a)
the interest rate in effect from the date of issue to the first Interest Reset
Date with respect to a Floating Rate Note will be the Initial Interest Rate (as
set forth in the applicable Pricing Supplement) and (b) unless otherwise
specified in the applicable Pricing Supplement, the interest rate in effect for
the ten days immediately prior to maturity of a Note will be that in effect on
the tenth day preceding such maturity. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Market Day with
respect to such Floating Rate Note, the Interest Reset Date for such Floating
Rate Note shall be postponed to the next day that is a Market Day with respect
to such Floating Rate Note, except that in the case of a LIBOR Note, if such
Market Day is in the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Market Day.
The "Interest Determination Date" pertaining to an Interest Reset Date for
a Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), for a Prime Rate Note (the "Prime Rate Interest Determination Date"),
for a LIBOR Note (the "LIBOR Interest Determination Date"), for a CD Rate Note
(the "CD Rate Interest Determination Date") and for a Federal Funds Rate Note
(the "Federal Funds Rate Interest Determination Date") will be the second Market
Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a Treasury Rate Note (the "Treasury
Interest Determination Date") will be the day of the week in which such Interest
Reset Date falls on which Treasury bills would normally be auctioned. Treasury
bills are usually sold at auction on the Monday of each week, unless that day is
a legal holiday, in which case the auction is usually held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week. If an auction date
shall fall on any Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first Market Day immediately following
such auction date.
All percentages resulting from any calculations referred to in this
Prospectus Supplement will be rounded upwards, if necessary, to the next higher
one hundred-thousandth of a percentage point (e.g., 9.876541% (or .09876541)
being rounded to 9.87655% (or .0987655)), and all U.S. dollar amounts used in or
resulting from such calculations will be rounded to the nearest cent (with
one-half cent or more being rounded upwards).
In addition to any maximum interest rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on the
Floating Rate Notes will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application. Under present New York law the maximum rate of interest is 25% per
annum on a simple interest basis, with certain exceptions. The limit may not
apply to Floating Rate Notes in which U.S. $2,500,000 or more has been invested.
The Calculation Agent will calculate the interest rate with respect to each
Interest Reset Date on or before the applicable Calculation Date (as defined
below). Upon the request of the Holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect, and, if
determined, the interest rate which will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. The Calculation Agent's
determination of any interest rate will be final and binding in the absence of
manifest error.
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COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any), and will be payable on the dates, specified on the face of
the Commercial Paper Rate Note and in the applicable Pricing Supplement. Unless
otherwise indicated in the applicable Pricing Supplement, the "Calculation Date"
pertaining to a Commercial Paper Interest Determination Date will be the tenth
day after such Commercial Paper Interest Determination Date or, if any such day
is not a Market Day, the next succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Reset Date, the
Money Market Yield (calculated as described below) of the per annum rate (quoted
on a bank discount basis) for the relevant Commercial Paper Interest
Determination Date for commercial paper having the specified Index Maturity as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "Commercial Paper". In the event that such rate
is not published at or prior to 9:00 A.M., New York City time, on the relevant
Calculation Date, then the Commercial Paper Rate with respect to such Interest
Reset Date shall be the Money Market Yield of such rate on such Commercial Paper
Interest Determination Date for commercial paper having the specified Index
Maturity as published by the Federal Reserve Bank of New York in its daily
statistical release, "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication published by the Federal Reserve Bank
of New York ("Composite Quotations") under the heading "Commercial Paper". If by
3:00 P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, the Commercial Paper Rate
with respect to such Interest Reset Date shall be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
per annum rates (quoted on a bank discount basis), as of 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date, of three
leading dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the specified Index Maturity placed
for an industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency; provided, however, that if fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the Commercial Paper Rate with respect to such Interest Reset
Date will be the Commercial Paper Rate in effect on such Commercial Paper
Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
<TABLE>
<S> <C>
Money Market Yield = 100 X 360 X D
-----------
360-(D X M)
</TABLE>
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal calculated to seven decimal places,
without rounding; and "M" refers to the actual number of days in the interest
period for which interest is being calculated.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any), and
will be payable on the dates specified on the face of the Prime Rate Note and in
the applicable Pricing Supplement. Unless otherwise indicated in the applicable
Pricing Supplement, the "Calculation Date" pertaining to a Prime Rate Interest
Determination Date will be the tenth day after such Prime Rate Interest
Determination Date or, if any such day is not a Market Day, the next succeeding
Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Reset Date, the rate set forth for the
relevant Prime Rate Interest Determination Date in H.15(519) under the heading
"Bank Prime Loan". In the event that such rate is not published prior to 9:00
A.M., New York City time, on the relevant Calculation Date, then the Prime Rate
with respect to such
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Interest Reset Date will be the arithmetic mean (determined by the Calculation
Agent) of the rates of interest publicly announced by each bank that appears on
the display designated as page "NYMF" on the Reuters Monitor Money Rates Service
(or such other page as may replace the NYMF page on that service for the purpose
of displaying prime rates or base lending rates of major United States banks)
("Reuters Screen NYMF Page") as such bank's prime rate or base lending rate as
in effect for such Prime Rate Interest Determination Date. If fewer than four
such rates appear on the Reuters Screen NYMF Page on such Prime Rate Interest
Determination Date, the Prime Rate with respect to such Interest Reset Date will
be the arithmetic mean (determined by the Calculation Agent) of the prime rates
or base lending rates (quoted on the basis of the actual number of days in the
year divided by a 360-day year) as of the close of business on such Prime Rate
Interest Determination Date by three major banks in The City of New York
selected by the Calculation Agent; provided, however, that if fewer than three
banks selected as aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, the Prime Rate with respect to such Interest Reset Date will be
the Prime Rate in effect on such Prime Rate Interest Determination Date.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any), and will be
payable on the dates specified on the face of the LIBOR Note and in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, the "Calculation Date" with respect to a LIBOR Interest
Determination Date will be the tenth day after such LIBOR Interest Determination
Date or, if any such day is not a Market Day, the next succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR,
with respect to any Interest Reset Date, will be determined by the Calculation
Agent in accordance with the following provisions:
(i) On the relevant LIBOR Interest Determination Date, LIBOR will be
determined on the basis of the offered rates for deposits of not less than
U.S. $1,000,000 having the specified Index Maturity, commencing on the
second Market Day immediately following such LIBOR Interest Determination
Date, which appear on the Designated LIBOR Page (as defined herein) as of
11:00 A.M., London time. "Designated LIBOR Page" means "LIBOR Telerate,"
which shall be the display designated as page "3750" on the Dow Jones
Telerate Service (or such other page as may replace page "3570" on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks), unless "LIBOR Reuters" is designated in the
applicable Pricing Supplement, in which case "Designated LIBOR Page" means
the display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on such service or
such other service as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates of major
banks). If at least two such offered rates appear on the Designated LIBOR
Page, LIBOR with respect to such Interest Reset Date will be the arithmetic
mean of such offered rates as determined by the Calculation Agent. If fewer
than two offered rates appear, LIBOR with respect to such Interest Reset
Date will be determined as described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates for the applicable Index Maturity appear on
the Designated LIBOR Page as described in (i) above, LIBOR will be
determined on the basis of the rates at approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date at which deposits in U.S.
dollars having the specified Index Maturity are offered to prime banks in
the London interbank market by four major banks in the London interbank
market selected by the Calculation Agent commencing on the second Market
Day immediately following such LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000 that
in the Calculation Agent's judgment is representative for a single
transaction in such market at such time (a "Representative Amount"). The
Calculation Agent will request the principal London office of each of such
banks to provide a quotation of its rate. If at least two such quotations
are provided, LIBOR with respect to such Interest Reset Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR with respect to such Interest
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Reset Date will be the arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such LIBOR Interest Determination Date
by three major banks in The City of New York, selected by the Calculation
Agent, for loans in U.S. dollars to lending European banks having the
specified Index Maturity commencing on the Interest Reset Date and in a
Representative Amount; provided, however, that if fewer than three banks
selected as aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, LIBOR with respect to such Interest Reset Date will be the
LIBOR in effect on such LIBOR Interest Determination Date.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
and will be payable on the dates specified on the face of the Treasury Rate Note
and in the applicable Pricing Supplement. Unless otherwise specified in the
applicable Pricing Supplement, the "Calculation Date" with respect to a Treasury
Interest Determination Date will be the tenth day after such Treasury Interest
Determination Date or, if any such day is not a Market Day, the next succeeding
Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Reset Date, the rate for the auction
on the relevant Treasury Interest Determination Date of direct obligations of
the United States ("Treasury Bills") having the specified Index Maturity as
published in H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Auction Average (Investment)" or, if not so published by 9:00 A.M., New
York City time, on the relevant Calculation Date, the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) for such auction as otherwise
announced by the United States Department of the Treasury. In the event that the
results of such auction of Treasury bills having the specified Index Maturity
are not published or reported as provided above by 3:00 P.M., New York City
time, on such Calculation Date, or if no such auction is held by the relevant
Interest Determination Date, then the Treasury Rate shall be the rate set forth
in H.15(519) for the relevant Treasury Rate Interest Determination Date for the
specified Index Maturity under the heading "U.S. Government Securities/Treasury
Bills/Secondary Market". In the event such rate is not so published by 3:00
P.M., New York City time, on the relevant Calculation Date, the Treasury Rate
with respect to such Interest Reset Date shall be calculated by the Calculation
Agent and shall be the yield to maturity (expressed as a bond equivalent, on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates as of approximately
3:30 P.M., New York City time, on such Treasury Interest Determination Date, of
three leading primary United States government securities dealers in The City of
New York selected by the Calculation Agent for the issue of Treasury bills with
a remaining maturity closest to the specified Index Maturity; provided, however,
that if fewer than three dealers selected as aforesaid by the Calculation Agent
are quoting as mentioned in this sentence, the Treasury Rate with respect to
such Interest Reset Date will be the Treasury Rate in effect on such Treasury
Interest Determination Date.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any), and will
be payable on the dates specified on the face of the CD Rate Note and in the
applicable Pricing Supplement. Unless otherwise indicated in the applicable
Pricing Supplement, the "Calculation Date" pertaining to a CD Rate Interest
Determination Date will be the tenth day after such CD Rate Interest
Determination Date or, if such day is not a Market Day, the next succeeding
Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Reset Date, the rate for the relevant CD
Rate Interest Determination Date for negotiable certificates of deposit having
the specified Index Maturity as published in H.15(519) under the heading "CDs
(Secondary Market)". In the event that such rate is not published prior to 9:00
A.M., New York City time, on the relevant Calculation Date, then the CD Rate
with respect to such Interest Reset Date shall be the rate on such CD Rate
Interest Determination Date for negotiable certificates of deposit having the
specified Index
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Maturity as published in Composite Quotations under the heading "Certificates of
Deposit". If by 3:00 P.M., New York City time, on such Calculation Date such
rate is not published in either H.15(519) or Composite Quotations, the CD Rate
with respect to such Interest Reset Date shall be calculated by the Calculation
Agent and shall be the arithmetic mean of the secondary market offered rates, as
of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers of negotiable U.S. dollar certificates of
deposit in the City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks with a
remaining maturity closest to the specified Index Maturity in a denomination of
U.S. $5,000,000; provided, however, that if fewer than three dealers selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
the CD Rate with respect to such Interest Reset Date will be the CD Rate in
effect on such CD Rate Interest Determination Date.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any), and will be payable on the dates specified on the face of
the Federal Funds Rate Note and in the applicable Pricing Supplement. Unless
otherwise indicated in the applicable Pricing Supplement, the "Calculation Date"
pertaining to a Federal Funds Interest Determination Date will be the tenth day
after such Federal Funds Interest Determination Date or, if such day is not a
Market Day, the next succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Reset Date, the rate on the
relevant Federal Funds Interest Determination Date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)". In the
event that such rate is not published prior to 9:00 A.M., New York City time, on
the relevant Calculation Date, then the Federal Funds Rate with respect to such
Interest Reset Date will be the rate on such Federal Funds Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate". If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not published in either H.15(519) or Composite
Quotations, the Federal Funds Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be the arithmetic mean of
the rates, as of 9:00 A.M., New York City time, on such Federal Funds Interest
Determination Date, for the last transaction in overnight Federal Funds arranged
by three leading brokers and Federal Funds transactions in The City of New York
selected by the Calculation Agent; provided, however, that if fewer than three
brokers selected as aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the Federal Funds Rate with respect to such Interest Reset
Date will be the Federal Funds Rate in effect on such Federal Funds Interest
Determination Date.
PAYMENT OF PRINCIPAL AND INTEREST
Payments of principal of (and premium, if any) and interest on all Fixed
Rate Notes and Floating Rate Notes will be made in U.S. dollars. If specified in
the applicable Pricing Supplement, the amount of principal payable on the Notes
therein described will be determined by reference to an index or formula
described in such Pricing Supplement.
Interest will be payable to the person in whose name a Note is registered
(which in the case of Global Securities representing Book-Entry Notes will be
the Depositary or a nominee of the Depositary) at the close of business on the
Regular Record Date next preceding each Interest Payment Date; provided,
however, that interest payable at maturity will be payable to the person to whom
principal shall be payable (which in the case of Global Securities representing
Book-Entry Notes will be the Depositary or a nominee of the Depositary). The
first payment of interest on any Note originally issued between a Regular Record
Date and an Interest Payment Date will be made on the Interest Payment Date
following the next succeeding Regular Record Date to the Holder on such next
succeeding Regular Record Date. Unless otherwise indicated in the applicable
Pricing Supplement, the "Regular Record Date" with respect to any Floating Rate
Note shall be the date 15 calendar days prior to each Interest Payment Date,
whether or not such date shall be a Business
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Day, and the "Regular Record Date" with respect to any Fixed Rate Note shall be
the May 1 and November 1 next preceding the May 15 and November 15 Interest
Payment Dates.
Unless otherwise indicated in the applicable Pricing Supplement, and except
as provided below, interest will be payable, in the case of Floating Rate Notes
which reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year (as
indicated in the applicable Pricing Supplement); in the case of Floating Rate
Notes which reset quarterly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes which reset
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and in the case of Floating Rate Notes which
reset annually, on the third Wednesday of the month specified in the applicable
Pricing Supplement (each a "Floating Rate Note Interest Payment Date"), and in
each case, at maturity.
Payments of interest on any Fixed Rate Note or Floating Rate Note with
respect to any Interest Payment Date or Floating Rate Note Interest Payment Date
will include interest accrued to but excluding such Interest Payment Date or
Floating Rate Note Interest Payment Date; provided, however, that if the
Interest Reset Date with respect to any Floating Rate Note are daily or weekly,
interest payable on such Note on any Interest Payment Date, unless otherwise
specified in the applicable Pricing Supplement, will include interest accrued to
and including the next preceding Regular Record Date, except that at maturity or
earlier redemption or repayment, the interest payable will include interest
accrued to, but excluding, the maturity, redemption or repayment date.
With respect to a Floating Rate Note, accrued interest from the date of
issue or from the last date to which interest has been paid is calculated by
multiplying the face amount of such Floating Rate Note by an accrued interest
factor. Such accrued interest factor is computed by adding the interest factor
calculated for each day from the date of issue, or from the last date to which
interest has been paid, to but excluding the date for which accrued interest is
being calculated. Unless otherwise specified in the applicable Pricing
Supplement, the interest factor (expressed as a decimal calculated to seven
decimal places) for each such day is computed by dividing the interest rate
(expressed as a decimal calculated to seven decimal places) applicable to such
date by 360, in the case of Commercial Paper Rate Notes, Prime Rate Notes, LIBOR
Notes, CD Rate Notes or Federal Funds Rate Notes, or by the actual number of
days in the year, in the case of Treasury Rate Notes. Interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date for any Floating Rate Note would otherwise be
a day that is not a Market Day, unless such Interest Payment Date is also the
date of maturity, such Interest Payment Date shall be the next day that is a
Market Day, except that, in the case of a LIBOR Note, if such Market Day is in
the next succeeding calendar month, such Interest Payment Date shall be the next
preceding Market Day. If the date of maturity for any Fixed Rate Note or
Floating Rate Note or any Interest Payment Date for any Fixed Rate Note falls on
a day which is not a Market Day, payment of principal and any premium and
interest with respect to such Note will be paid on the next succeeding Market
Day, with the same force and effect as if made on such date and no interest on
such payment will accrue from and after such date.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the principal of (and premium, if any) and any interest due with respect to any
Certificated Note at maturity will be made in immediately available funds upon
surrender of such Note at the Corporate Trust and Agency Group of Bankers Trust
Company in the Borough of Manhattan, The City of New York; provided that the
Certificated Note is presented to the Paying Agent in time for the Paying Agent
to make such payments in such funds in accordance with its normal procedures.
Payments of interest with respect to Certificated Notes to be made other than at
maturity will be made by check mailed to the address of the person entitled
thereto as it appears in the security register (or by wire transfer to those
persons holding Notes with an aggregate principal amount of greater than $5
million) to such account as may have been appropriately designated by such
Person in time for the Paying Agent to make such payment in accordance with its
normal procedures.
The total amount of any principal, premium, if any, and interest due on any
Global Security representing one or more Book-Entry Notes on any Interest
Payment Date or at maturity will be made available to the
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Trustee on such date. As soon as possible thereafter, the Trustee will make such
payments to The Depository Trust Company, New York, New York (the "Depositary").
The Depositary will allocate such payments to each Book-Entry Note represented
by such Global Security and make payments to its participants in accordance with
its existing operating procedures. Neither the Company nor the Trustee shall
have any responsibility or liability for such payments by the Depositary. So
long as the Depositary or its nominee is the registered owner of any Global
Security, the Depositary or its nominee, as the case may be, will be considered
the sole Holder of the Book-Entry Note or Notes represented by such Global
Security for all purposes under the Indenture and the Book-Entry Notes. The
Company understands, however, that under existing industry practice, the
Depositary will authorize the persons on whose behalf it holds a Global Security
to exercise certain rights of Holders of Securities. See "-- Book-Entry System."
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes bearing interest (if any) at the same
rate or pursuant to the same formula, having the same date of issuance,
redemption provisions, if any, Stated Maturity and other terms will be
represented by a single Global Security. Each Global Security representing
Book-Entry Notes will be deposited with, or on behalf of, the Depositary located
in the Borough of Manhattan, The City of New York, and will be registered in the
name of the Depositary or a nominee of the Depositary. Currently, the Depositary
accepts deposits of Global Securities denominated in U.S. dollars only.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit the accounts of its participants held with
it with the respective principal or face amounts of the Book-Entry Notes
represented by such Global Security. Such accounts shall be designated by the
Agents (as defined herein) with respect to Book-Entry Notes or by the Company if
such Notes are offered and sold directly by the Company. Ownership of beneficial
interests in a Global Security will be limited to participants and to persons
that have accounts with the Depositary ("Participants") or persons that may hold
interests through Participants. Ownership interests in a Global Security will be
shown on, and the transfer of that ownership interest will be effected only
through, records maintained by the Depositary or its nominee (with respect to a
Participant's interest) for such Global Security and records maintained by
Participants (with respect to interests of persons other than Participants).
Payment of principal of and any premium and interest on Book-Entry Notes
represented by any such Global Security will be made to the Depositary or its
nominee, as the case may be, as the sole registered owner and the sole Holder of
the Book-Entry Notes represented thereby for all purposes under the Indenture.
Neither the Company or the Trustee, nor any agent of the Company or the Trustee,
will have any responsibility or liability for any aspect of the Depositary's
records relating to or payments made on account of beneficial ownership
interests in a Global Security representing any Book-Entry Notes or for
maintaining, supervising or reviewing any of the Depositary's records relating
to such beneficial ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest on any Global Security, the
Depositary or its nominee will immediately credit, on its book-entry
registration and transfer system, the accounts of Participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of the Depositary or its
nominee. Payments by Participants to owners of beneficial interests in a Global
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for customer accounts registered in "street name", and will be the sole
responsibility of such Participants.
A Global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor Depositary or any nominee of such successor. A Global
Security representing Book-Entry Notes is exchangeable only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time the Depositary ceases to
be a clearing agency under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Company does not appoint a successor Depositary (in any
case in which the Company may appoint a
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successor Depositary), within 90 days after the Company receives notice or
becomes aware of such unwillingness, inability or ineligibility, (ii) the
Company executes and delivers to the Trustee a Company Order that all such
Global Securities shall be exchangeable for definitive Notes in registered form,
or (iii) there shall have occurred and be continuing an Event of Default with
respect to the Notes represented by such Global Security. Unless otherwise
specified in the applicable Pricing Supplement, any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
Certificated Notes issuable in denominations of $1,000 and integral multiples of
$1,000 in excess thereof and registered in such names as the Depositary holding
such Global Security shall direct. Subject to the foregoing, the Global Security
is not exchangeable, except for a Global Security of like denomination to be
registered in the name of the Depositary or its nominee.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole Holder of Book-Entry Notes
represented by such Global Security for the purposes of receiving payment on the
Notes, receiving notices and for all other purposes under the Indenture and the
Notes. Except as provided above, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the Holders thereof for any purpose
under the Indenture. Accordingly, each person owning a beneficial interest in
such a Global Security must rely on the procedures of the Depositary and, if
such person is not a Participant, on the procedures of the Participant through
which such person owns its interest, to exercise any rights of a Holder under
the Indenture. The Company understands that under existing industry practices,
in the event that the Company requests any action of Holders or that an owner of
a beneficial interest in such a Global Security desires to give or take any
action which a Holder is entitled to give or take under the Indenture, the
Depositary would authorize the Participants holding the relevant beneficial
interests to give or take such action, and such Participants would authorize
beneficial owners owning through such Participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Agents), banks, trust companies, clearing corporations, and certain other
organizations some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
UNITED STATES FEDERAL TAXATION
The following is a summary of the principal United States Federal tax
consequences resulting from the beneficial ownership of Notes by certain
persons. This summary does not purport to consider all the possible tax
consequences of the purchase, ownership or disposition of the Notes and is not
intended to reflect the individual tax position of any beneficial owner. It
deals only with Notes held as capital assets. Moreover, except as expressly
indicated, it deals only with initial purchasers and not beneficial owners with
a special tax status or special tax situations, such as dealers in securities or
currencies, Notes held as a hedge against currency risks or as part of a
straddle with other investments or as part of a "synthetic security" or other
integrated investment (including a "conversion transaction") comprised of a Note
and one or more other investments, or situations in which the functional
currency of the beneficial owner is not the U.S. dollar. Except to the extent
discussed below under "Non-U.S. Holders," this summary may not be applicable to
non-U.S. persons not subject to United States Federal income tax on their
worldwide income. The summary is based upon the United States Federal tax laws
and regulations as now in effect and as currently interpreted and does not take
into account possible changes in such tax laws or such interpretations, which
may be applied
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retroactively. It does not include any description of the tax laws of any state,
local or foreign governments that may be applicable to the Notes or holders
thereof. Persons considering the purchase of Notes should consult their own tax
advisors concerning the application of the United States Federal tax laws to
their particular situations as well as any consequences to them under the laws
of any other taxing jurisdiction.
U.S. HOLDERS
PAYMENTS OF INTEREST
In general, interest on a Note (other than certain payments on a Discount
Note, as defined and described below under "Original Issue Discount"), will be
taxable to a beneficial owner who or which is (i) a citizen or resident of the
United States, (ii) a corporation created or organized under the laws of the
United States or any State thereof (including the District of Columbia) or (iii)
a person otherwise subject to United States Federal income taxation on its
worldwide income (a "U.S. Holder") as ordinary income at the time it is received
or accrued, depending on the holder's method of accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the United States Federal income tax
consequences to holders of Notes issued with original issue discount ("OID").
The basic rules for reporting OID are contained in the Internal Revenue Code of
1986, as amended (the "Code"). On February 2, 1994, the Treasury Department
published final regulations (the "OID Regulations"), which expand and illustrate
the rules provided by the Code. The OID Regulations are effective for debt
instruments issued on or after April 4, 1994, and a taxpayer generally may rely
upon the OID Regulations for debt instruments issued after December 21, 1992.
General. A Note will be treated as issued with OID (a "Discount Note") if
the excess of the Note's "stated redemption price at maturity" over its issue
price is greater than a de minimis amount (set forth in the Code and the OID
Regulations). Generally, the issue price of a Note (or any Note that is part of
an issue of Notes) will be the first price at which a substantial amount of
Notes that are part of such issue of Notes are sold. Under the OID Regulations,
the "stated redemption price at maturity" of a Note is the sum of all payments
provided by the Note that are not payments of "qualified stated interest". A
"qualified stated interest" payment includes any stated interest payment on a
Note that is unconditionally payable at least annually at a single fixed rate
(or at certain floating rates) that appropriately takes into account the length
of the interval between stated interest payments. The Pricing Supplement will
state whether a particular issue of Notes will constitute Discount Notes.
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is de minimis, then such excess constitutes "de minimis
OID." Under the OID Regulations, unless the election described below under
"Election to Treat All Interest as Original Issue Discount" is made, such a Note
will not be treated as issued with OID (in which case the following paragraphs
under "Original Issue Discount" will not apply), and a U.S. Holder of such a
Note will recognize capital gain with respect to such de minimis OID as stated
principal payments on the Note are made. The amount of such gain with respect to
each such payment will equal the product of the total amount of the Note's de
minimis OID and a fraction, the numerator of which is the amount of the
principal payment made and the denominator of which is the stated principal
amount of the Note.
In certain cases, Notes that bear stated interest and are issued at par may
be deemed to bear OID for Federal income tax purposes, with the result that the
inclusion of interest in income for Federal income tax purposes may vary from
the actual cash payments of interest made on such Notes, generally accelerating
income for cash method taxpayers. Under the OID Regulations, a Note may be a
Discount Note where (i) a Note bearing interest at a floating rate (a "Floating
Rate Note") provides for a maximum interest rate or a minimum interest rate that
is reasonably expected as of the issue date to cause the yield on the debt
instrument to be significantly less, in the case of a maximum rate, or more, in
the case of a minimum rate, than the expected yield determined without the
maximum or minimum rate, as the case may be; (ii) a Floating Rate Note provides
for a significant front-loading or back-loading of interest; or (iii) a Note
bears interest at a floating rate in combination with one or more floating or
fixed rates. Notice will be given in the
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applicable Pricing Supplement if the Company determines that a particular Note
will be a Discount Note. Unless specified in the applicable Pricing Supplement,
Floating Rate Notes will not be Discount Notes.
The Code and the OID Regulations provide rules that require a U.S. Holder
of a Discount Note having a maturity of more than one year from its date of
issue to include OID in gross income before the receipt of cash attributable to
such income, without regard to the holder's method of accounting for tax
purposes. The amount of OID includible in gross income by a U.S. Holder of a
Discount Note is the sum of the "daily portions" of OID with respect to the
Discount Note for each day during the taxable year or portion of the taxable
year in which the U.S. Holder holds such Discount Note ("accrued OID"). The
daily portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. Under the OID
Regulations, accrual periods with respect to a Note may be any set of periods
(which may be of varying lengths) selected by the U.S. Holder as long as (i) no
accrual period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on the first day or final day of an
accrual period.
The amount of OID allocable to an accrual period equals the excess of (a)
the product of the Discount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
Special rules apply for calculating the amount of OID allocable to an accrual
period for Floating Rate Notes. The "adjusted issue price" of a Discount Note at
the beginning of the first accrual period is the issue price and at the
beginning of any accrual period thereafter is (x) the sum of the issue price of
such Discount Note, the accrued OID for each prior accrual period (determined
without regard to the amortization of any acquisition premium or bond premium,
which are discussed below), and the amount of any qualified stated interest on
the Note that has accrued prior to the beginning of the accrual period but is
not payable until a later date, less (y) any prior payments on the Discount Note
that were not qualified stated interest payments. If a payment (other than a
payment of qualified stated interest) is made on the first day of an accrual
period, then the adjusted issue price at the beginning of such accrual period is
reduced by the amount of the payment. If a portion of the initial purchase price
of a Note is attributable to interest that accrued prior to the Note's issue
date, the first stated interest payment on the Note is to be made within one
year of the Note's issue date and such payment will equal or exceed the amount
of pre-issuance accrued interest, then the Note's issue price may be computed by
excluding the amount of pre-issuance accrued interest, in which case a portion
of the first stated interest payment will be treated as a return of the excluded
pre-issuance accrued interest and not as an amount payable on the Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Note (other than any
payment of qualified stated interest) over the Note's adjusted issue price as of
the beginning of such final accrual period. In addition, if an interval between
payments of qualified stated interest on a Note contains more than one accrual
period, than the amount of qualified stated interest payable at the end of such
interval is allocated pro rata (on the basis of their relative length) between
the accrual periods contained in the interval.
A U.S. Holder of a Discount Note generally will have to include in income
increasingly greater amounts of OID over the life of the Note.
Acquisition Premium. A U.S. Holder that purchases a Note (including a
purchase at its original issuance) for an amount in excess of its adjusted issue
price but less than or equal to the sum of all amounts payable on the Note after
the purchase date, other than payments of qualified stated interest (any such
excess being "acquisition premium"), and that does not make the election
described below under "Original Issue Discount -- Election To Treat All Interest
as Original Issue Discount", is permitted to reduce the daily portions of OID by
a fraction, the numerator of which is the excess of the U.S. Holder's purchase
price for the Note over the Note's adjusted issue price, and the denominator of
which is the excess of the sum of all amounts payable on the Note after the
purchase date, other than payments of qualified stated interest over the
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Note's issue price. Alternatively, a U.S. Holder may elect to compute OID
accruals as described under "Original Issue Discount -- General" above, treating
the U.S. Holder's purchase price as the issue price.
Optional Redemption. If the Company has an option to redeem a Note, or the
Holder has an option to cause a Note to be repurchased, prior to the Note's
stated maturity, such option will be presumed to be exercised if, by utilizing
any date on which such Note may be redeemed or repurchased as the maturity date
and the amount payable on such date in accordance with the terms of such Note as
the stated redemption price at maturity, the yield on the Note would be (i) in
the case of an option of the Company, lower than its yield to stated maturity,
or (ii) in the case of an option of the Holder, higher than its yield to state
maturity. If such option is not in fact exercised when presumed to be exercised,
the Note would be treated solely for OID purposes as if it were redeemed or
repurchased, and a new Note were issued, on the presumed exercise date for an
amount equal to the Note's adjusted issue price on that date.
Short-Term Notes. Under the Code, special rules apply with respect to OID
on Notes that mature one year or less from the date of issuance ("Short-Term
Notes"). In general, an individual or other cash basis U.S. Holder of a
Short-Term Note is not required to accrue OID for United States Federal income
tax purposes unless such holder elects to do so. Accrual basis U.S. Holders and
certain other U.S. Holders, including banks, regulated investment companies,
dealers in securities and cash basis U.S. Holders who so elect, are required to
accrue original issue discount on Short-Term Notes on either a straight-line
basis or under the constant yield method (based on daily compounding), at the
election of the U.S. Holder. In the case of a U.S. Holder not required and not
electing to include OID in income currently, any gain realized on the sale or
retirement of the Short-Term Note will be ordinary income to the extent of the
OID accrued on a straight-line basis (unless an election is made to accrue the
original issue discount under the constant yield method) through the date of
sale or retirement. U.S. Holders who are not required and do not elect to accrue
OID on Short-Term Notes will be required to defer deductions for interest on
borrowings allocable to Short-Term Notes in an amount not exceeding the deferred
income until the deferred income is realized.
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of "acquisition discount", if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price. Acquisition discount
will be treated as accruing on a ratable basis or, at the election of the
holder, on a constant yield basis.
For purposes of determining the amount of OID subject to these rules, the
OID Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Note's stated redemption price at maturity.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Any U.S. Holder that holds a Note issued after April 4, 1994, may elect to
include in gross income all interest that accrues on a Note using the constant
yield method described above under the heading "Original Issue
Discount -- General," with the modifications described below. For purposes of
this election, interest includes stated interest, OID, de minimis OID, market
discount (described below under "Notes Purchased at a Market Discount"),
acquisition discount, de minimis market discount and unstated interest, as
adjusted by any amortizable bond premium (described below under "Notes Purchased
at a Premium") or acquisition premium.
In applying the constant yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing U.S.
Holder's adjusted basis in the Note immediately after its acquisition, the issue
date of the Note will be the date of its acquisition by the electing U.S.
Holder, and no payments on the Note will be treated as payments of qualified
stated interest. This election will generally apply only to the Note with
respect to which it is made and may not be revoked without the consent of the
Internal Revenue Service (the "IRS"). If this election is made with respect to a
Note with amortizable bond premium, then the electing U.S. Holder will be deemed
to have elected to apply amortizable bond premium against interest with respect
to all debt instruments with amortizable bond premium (other than debt
instruments the interest on which is excludible from gross income) held by such
electing U.S. Holder as of the
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beginning of the taxable year in which the Note with respect to which the
election is made or thereafter acquired. The deemed election with respect to
amortizable bond premium may not be revoked without the consent of the IRS.
If the election described above to apply the constant yield method to all
interest on a Note is made with respect to a Market Discount Note, as defined
below, then the electing U.S. Holder will be treated as having made the election
discussed below under "Notes Purchased at a Market Discount" to include market
discount in income currently over the life of all such debt instruments held or
thereafter acquired by such U.S. Holder. The deemed election with respect to
market discount may not be revoked without the consent of the IRS.
NOTES PURCHASED AT A PREMIUM
Under the Code, a U.S. Holder that purchases a Note for an amount in excess
of the sum of all amounts payable on the Note after the purchase date, other
than qualified stated interest, will not be subject to the OID rules and may
elect to treat such excess as "amortizable bond premium", in which case the
amount of qualified stated interest required to be included in the U.S. Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to such year. Any election to amortize bond premium shall apply to all
bonds (other than bonds the interest on which is excludible from gross income)
held by the U.S. Holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the U.S. Holder, and is irrevocable
without the consent of the IRS. See also "Original Issue Discount -- Election to
Treat All Interest as Original Issue Discount".
NOTES PURCHASED AT A MARKET DISCOUNT
A Note, other than a Short-Term Note, will be treated as issued at a market
discount (a "Market Discount Note") if the amount for which a U.S. Holder
purchased the Note is less than the Note's issue price (or, in the case of Notes
with OID, the sum of the Note's issue price and the aggregate amount of OID
includible in the income of all prior holders), subject to a de minimis rule
similar to the rule relating to de minimis OID described under "Original Issue
Discount -- General".
In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Note. Such an election applies to all debt
instruments with market discount acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder
elects to accrue such market discount on a constant yield to maturity basis.
Such an election shall apply only to the Note with respect to which it is made
and is irrevocable. A U.S. Holder of a Market Discount Note who does not elect
to include market discount in income currently generally will be required to
defer deductions for interest on borrowings allocable to such Note in an amount
not exceeding the accrued market discount on such Note until the maturity or
disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
PURCHASE, SALE, AND RETIREMENT OF THE NOTES
General. A U.S. Holder's tax basis in a Note will generally be its cost,
increased by the amount of any OID or market discount (or acquisition discount,
in the case of a Short-Term Note) included in the U.S. Holder's income with
respect to the Note and the amount, if any, of income attributable to de minimus
OID included in the U.S. Holder's income with respect to the Note, and reduced
by the sum of (i) the amount of any payments that are not qualified stated
interest payments, and (ii) the amount of any amortizable bond premium applied
to reduce interest on the Note. A U.S. Holder generally will recognize gain or
loss on the sale or retirement of a Note equal to the difference between the
amount realized on the sale or retirement and
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<PAGE> 19
the tax basis of the Note. Except to the extent described above under "Original
Issue Discount -- Short Term Notes" or "Market Discount", and except to the
extent attributable to accrued but unpaid interest, gain or loss recognized on
the sale or retirement of a Note generally will be capital gain or loss and will
be long-term capital gain or loss if the Note was held for more than one year.
INDEXED NOTES
The applicable Pricing Supplement will contain a discussion of any special
United States Federal income tax rules with respect to Indexed notes.
NON-U.S. HOLDERS
Under the U.S. Federal income tax laws in effect on the date of this
Prospectus Supplement and subject to the discussion of backup withholding below,
payments of principal (and premium, if any) and interest, including OID, by the
Company or it agent (acting in its capacity as such) to any Non-U.S. Holder will
not be subject to U.S. Federal withholding tax; provided, in the case of
interest, including OID, that (i) such Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote, (ii) such Non-U.S. Holder is not a
controlled foreign corporation for U.S. tax purposes that is related to the
Company through stock ownership, and (iii) either (A) the beneficial owner of
the Note certifies to the Company or its agent, under penalties of perjury, on
Form W-8, Certificate of Foreign Status, that it is a Non-U.S. Holder and
provides its name and address, or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and that holds the
Note certifies to the Company or its agent under penalties of perjury that such
statement has been received from the beneficial owner by it or by a financial
institution and furnishes the payor with a copy thereof. A certificate described
in this paragraph is effective only with respect to payments of interest made to
the certifying Non-U.S. Holder in the calendar year of issuance and the two
immediately succeeding calendar years.
In the event that the above requirements are not met, certain Non-U.S.
Holders of Notes may nevertheless be entitled to a reduced rate of withholding
under a bilateral tax treaty with the United States. Any Non-U.S. Holder
claiming entitlement to such a reduced rate of withholding must certify to the
Company or its agent (i) that such holder is a Non-U.S. Holder and (ii) that
such Non-U.S. Holder is entitled to the benefits of a specific bilateral tax
treaty, and must provide its name and address.
In no event shall the Company be obligated in any manner to reimburse any
Non-U.S. Holder of a Note for any withholding or other tax imposed, including
any related interest or penalties, or otherwise gross-up or increase interest
payments to take into account any withholding or other tax, including any
interest or penalties thereon.
If a Non-U.S. Holder of a Note is engaged in a trade or business in the
United States and interest, including OID, on the Note is effectively connected
with the conduct of such trade or business, such Non-U.S. Holder, although
exempt from the withholding tax discussed in the third preceding paragraph, may
be subject to U.S. Federal income tax on such interest, and OID, in the same
manner as if it were a U.S. Holder. In lieu of the certificate described in the
third preceding paragraph, such Non-U.S. Holder must provide the payor with a
properly executed IRS Form 4224 to claim an exemption from U.S. Federal
withholding tax. In addition, if such Non-U.S. Holder is a foreign corporation,
it may be subject to a branch profits tax equal to 30% of its effectively
connected earnings and profits for the taxable year, subject to adjustments.
Interest (including OID) on a Note will be included in earnings and profits if
such interest (or OID) is effectively connected with the Non-U.S. Holder's U.S.
trade or business. Certain Non-U.S. Holders of a Note may be entitled to a
reduced rate of branch profits tax under a bilateral tax treaty with the United
States.
Any capital gain or market discount realized upon the sale, exchange,
retirement or other disposition of a Note by a Non-U.S. Holder will not be
subject to U.S. Federal income or withholding taxes if (i) such gain is not
effectively connected with a U.S. trade or business of the Non-U.S. Holder and
(ii) in the case of an individual, such Non-U.S. Holder is not present in the
United States for 183 days or more in the taxable year of the sale, exchange,
retirement or disposition.
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<PAGE> 20
Notes held by an individual who is neither a citizen nor a resident of the
United States for U.S. Federal income tax purposes at the time of such
individual's death will not be subject to U.S. Federal estate tax provided that
the income from such Notes was not or would not have been effectively connected
with a U.S. trade or business of such individual and that such individual
qualified for the exemption from U.S. Federal withholding tax (without regard to
the certification requirements) that is described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the U.S.
Holder's name, address and taxpayer identification number (either the U.S.
Holder's Social Security number or its employer identification number, as the
case may be), the aggregate amount of principal and interest paid (including
OID, if any, that accrues) to that U.S. Holder during the calendar year and the
amount of tax withheld, if any. This obligation, however, does not apply with
respect to certain U.S. Holders, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
In the event that a U.S. Holder subject to the reporting requirements
described above fails to supply its correct taxpayer identification number in
the manner required or underreports its tax liability with respect to interest,
the Company, its agents or paying agents or a broker may be required to "backup"
withhold a tax equal to 31% of each payment of interest (including OID) and
principal (and premium, if any) on the Notes. This tax is not an additional tax
and may be credited against the U.S. Holder's U.S. Federal income tax liability,
provided that the required information is furnished to the IRS.
Under current Treasury regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a Non-U.S. Holder of a Note with respect to which
the Non-U.S. Holder has provided required certification that it is not a U.S.
Holder as set forth in clause (iii) in the first paragraph under "Non-U.S.
Holders" above, or has otherwise established an exemption (provided that neither
the Company nor such agent has actual knowledge that the holder is a U.S. Holder
or that the conditions of any exemption are not in fact satisfied).
Payment of the proceeds from the sale of a Note 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 U.S. person, a controlled foreign
corporation for U.S. tax purposes or a foreign person 50% or more of whose gross
income from all sources for the three-year period ending with the close of its
taxable year preceding the payment was effectively connected with a U.S. trade
or business, information reporting may apply to such payments. Payment of the
proceeds from a sale of a Note to or through the U.S. office of a broker is
subject to information reporting and backup withholding unless the holder or
beneficial owner certifies as to its taxpayer identification number or otherwise
establishes an exemption from information reporting and backup withholding.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. FEDERAL OR OTHER TAX LAWS.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Distribution
Agreement, dated May 27, 1994, the Notes are being offered on a continuing basis
by the Company through Lazard Freres & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc (the "Agents"), who have agreed to use reasonable
efforts to solicit purchases of the Notes. The Company will have the sole right
to accept offers to purchase Notes and may reject any proposed purchase of Notes
as a whole or in part. The Agents shall have the right, in their discretion
reasonably exercised, to reject any offer to purchase Notes, as a whole or in
part. The Company will
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<PAGE> 21
pay the Agents a commission of from .125% to .875% of the principal amount of
Notes, depending upon maturity, for sales made through them as Agents of Notes
with a maturity of less than 40 years; the commission to be paid by the Company
to the Agents on any sale of Notes with a maturity of 40 years or more will be
negotiated at the time of sale.
The Company may also sell Notes to the Agents as principals for their own
accounts at a discount to be agreed upon at the time of sale, or the purchasing
Agents may receive from the Company a commission or discount equivalent to that
set forth on the cover page hereof in the case of any such principal transaction
in which no other discount is agreed. Such Notes may be resold at prevailing
market prices, or at prices related thereto, at the time of such resale, as
determined by the Agents. The Company reserves the right to sell Notes directly
on its own behalf. No commission will be payable on any Notes sold directly by
the Company.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer will not be in excess of 66 2/3% of the
discount to be received by such Agent from the Company. Unless otherwise
indicated in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage equal to the commission applicable to
any agency sale of a Note of identical maturity, and may be resold by the Agent
to investors and other purchasers 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 or may be resold to certain
dealers as described above. After the initial public offering of Notes to be
resold to investors and other purchasers on a fixed public offering price basis,
the public offering price, concession and discount may be changed.
In addition, the Company may appoint additional agents from time to time.
The name of any such additional agent and details as to the arrangements between
such agent and the Company will be set forth in the applicable Pricing
Supplement.
The Agents, as agents or principals, may be deemed to be underwriters
within the meaning of the Securities Act of 1933 (the "Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Act. The Company had agreed to reimburse the Agents for
certain expenses.
Lazard Freres & Co., Morgan Stanley & Co. Incorporated and Salomon Brothers
Inc have performed various investment banking services for the Company and may
perform such services in the future.
Notes may also be sold at the price to the public set forth herein to
dealers who may resell to investors. Such dealers may be deemed to be
Underwriters within the meaning of the Act.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange, but has been advised by the Agents that the Agents
intend to make a market in the Notes, as permitted by applicable laws and
regulations. The Agents are not obligated to do so, however, and the Agents may
discontinue making a market at any time without notice. No assurance can be
given as to the existence or liquidity of any trading market for the Notes.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by John B.
Canning, Corporate Secretary and Associate General Counsel of the Company, and
for the Agents by Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York
10019. The opinions of John B. Canning and Cravath, Swaine & Moore will be
conditioned upon, and subject to certain assumptions regarding, future actions
required to be taken by the Company and the Trustee in connection with the
issuance and sale of any particular Note, the specific terms of Notes and other
matters which may affect the validity of Notes but which cannot be ascertained
on the date of such opinion.
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PROSPECTUS
$274,000,000
RAYONIER INC.
DEBT SECURITIES
- ---------------
Rayonier Inc. ("Rayonier" or the "Company") may offer or issue from time to time
its unsecured debt securities consisting of notes, debentures or other evidences
of indebtedness (the "Debt Securities") in an aggregate principal amount of up
to $274,000,000 (or, if Debt Securities are issued at an original issue
discount, such greater amount as shall result in aggregate proceeds of
$274,000,000 to the Company). The Debt Securities may be offered as separate
series in amounts, at prices and on terms to be determined in light of market
conditions at the time of sale and set forth in an accompanying supplement to
this Prospectus (each a "Prospectus Supplement").
The terms of each series of Debt Securities, including, where applicable, the
specific designation, aggregate principal amount, authorized denominations,
maturity, interest rate or rates (which may be fixed or variable) and time or
times of payment of any interest, any terms for optional or mandatory redemption
or payment of additional amounts or any sinking fund provisions, any initial
public offering price, the proceeds to the Company and any other specific terms
in connection with the offering and sale of such series (the "Offered
Securities") will be set forth in a Prospectus Supplement.
The Debt Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If agents, dealers or underwriters are involved in the sale of
the Debt Securities, the names of such agents, dealers or underwriters and any
applicable agents' commissions, dealers' purchase price or underwriters'
discounts will be set forth in a Prospectus Supplement. The net proceeds to the
Company from such sale will also be set forth in a Prospectus Supplement.
Each Prospectus Supplement will state whether the Offered Securities will be
listed on any securities exchange. If the Offered Securities are not listed on
any national securities exchange, there can be no assurance that there will be a
secondary market for the Offered Securities.
The Debt Securities may be issued only in registered form, and may be issued in
temporary or definitive global form.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Debt Securities unless
accompanied by a Prospectus Supplement.
May 17, 1994
<PAGE> 23
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND A PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, AGENT OR DEALER. THIS PROSPECTUS
AND A PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND/OR A PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
Rayonier is subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; Seven World Trade Center, New York, New
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material may also be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, copies of such material
and the information about the Company are available for inspection at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
Rayonier has filed with the Commission a registration statement (together
with all amendments and exhibits thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Act"), with respect to the Debt
Securities. This Prospectus does not contain all the information set forth in
the Registration Statement and reference is hereby made to the Registration
Statement for further information with respect to the Company and the Debt
Securities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There is hereby incorporated in this Prospectus by reference the following
document filed by Rayonier with the Commission under the Exchange Act:
(a) Annual Report on Form 10-K for the year ended December 31, 1993;
and
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1994.
All documents filed by Rayonier pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein, or in the
accompanying Prospectus Supplement, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein, or in an accompanying Prospectus
Supplement, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Rayonier will furnish without charge to each person to whom a copy of this
Prospectus is delivered, upon request, a copy of any of the documents
incorporated herein by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents).
Requests should be directed to Corporate Secretary, Rayonier Inc., 1177 Summer
Street, Stamford, Connecticut 06905-5529. Telephone requests may be directed to
(203) 348-7000.
2
<PAGE> 24
RAYONIER INC.
Rayonier Inc. ("Rayonier" or the "Company") is a leading international
forest products company primarily engaged in the trading, merchandising and
manufacture of logs, timber and wood products, and in the production and sale of
high value added specialty pulps. Rayonier owns, leases or controls
approximately 1.5 million acres of timberland in the United States and New
Zealand. In addition, Rayonier operates three pulp mills and two lumber
manufacturing facilities in the United States.
Rayonier traces its origin to the founding of Rainier Pulp and Paper
Company in Shelton, Washington, in 1926. With the consolidation of several pulp
companies in 1937, the Company became "Rayonier Incorporated," a corporation
whose stock was publicly traded on the New York Stock Exchange until Rayonier
became a wholly owned subsidiary of ITT Corporation ("ITT") in 1968. On February
28, 1994, ITT distributed, as a special dividend, all of the Common Shares of
Rayonier to the holders of ITT Common Stock and Series N Preferred Stock. In
connection with the distribution, the Company changed its name from ITT Rayonier
Incorporated to Rayonier Inc. and became a publicly traded company listed on the
New York Stock Exchange under the symbol "RYN."
The principal subsidiaries of the Company are Rayonier Timberlands, L.P.
("RTLP"), Rayonier Timberlands Operating Company, L.P. ("RTOC") and Rayonier New
Zealand Limited ("RNZ").
Rayonier is a North Carolina corporation with its principal executive
offices at 1177 Summer Street, Stamford, CT 06905-5529 and its telephone number
is (203) 348-7000.
TIMBER AND WOOD PRODUCTS
Rayonier owns, buys and harvests timber stumpage, and purchases delivered
logs, in North America and New Zealand for subsequent sale into export markets
(primarily to Japan, Korea and China), as well as to domestic lumber and pulp
mills. Rayonier also produces dimension and specialty lumber products for
residential construction and industrial uses.
Rayonier participates in the worldwide timber and wood products business in
three specific ways:
Log Trading and Merchandising -- The Company harvests logs from Company
owned parcels and from third party parcels on which the Company has acquired
cutting rights and purchases logs on the open market. The Company then
subsequently packages and sells these logs throughout the world.
Timberlands Management and Stumpage (Standing Timber) Sales -- The Company
manages owned, leased and otherwise controlled timber properties and, after
scientifically growing and nurturing the trees to their economic peak, sells the
cutting rights to the timber on these properties at market prices through
auction or negotiation.
Wood Products Sales -- The Company manufactures and sells lumber products
for construction and other uses both domestically and in international markets.
In the United States, the Company manages timberlands and sells timber
stumpage (cutting rights to standing timber) directly through RTLP, a publicly
traded master limited partnership. Rayonier and Rayonier Forest Resources
Company ("RFR"), a wholly owned subsidiary, are the general partners of RTLP.
Rayonier also owns 74.7% of the Class A Limited Partnership Units, the remaining
25.3% being publicly held. Class A Units participate principally in the
revenues, expenses and cash flow associated with RTLP's sales of timber through
December 31, 2000 and to a significantly lesser extent in subsequent periods.
RTLP's sales of timber after that date as well as cash flow associated with land
management activities before and after that date are principally allocable to
the Class B Limited Partnership Units, all of which have been retained by
Rayonier. RTLP, through RTOC owns, leases and manages timberlands in the
Southeastern and Northwestern United States previously owned or leased by the
Company, sells timber stumpage from such timberlands and from time to time
purchases and sells timberlands. RTLP's timberlands provide a major source of
wood used in the Company's other businesses.
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<PAGE> 25
On May 15, 1992, the Company, through RNZ, purchased for approximately $197
million from the New Zealand government forest assets consisting primarily of
Crown Forest licenses providing the right to utilize approximately 250,000 acres
of New Zealand plantation forests for a minimum period of 35 years. Most of
these timberlands consist of radiata pine trees, with a planting-to-harvesting
time of approximately 27 years, well-suited for the highest quality lumber and
panel products. These trees typically produce up to twice as much fiber per
acre, per year as the most productive commercial tree species in the United
States. Rayonier intends to grow and harvest the New Zealand timber for both
domestic New Zealand uses and for export primarily to Pacific Rim markets.
SPECIALTY PULP PRODUCTS
The Company is a leading specialty manufacturer of chemical cellulose,
often called dissolving pulp, from which customers produce a wide variety of
products, principally textile, industrial and filtration fibers, plastics and
other chemical intermediate industrial products. Rayonier believes that it is
one of the world's largest manufacturers of high grade chemical cellulose. The
Company also manufactures fluff pulps that customers use to produce diapers and
other sanitary products, and specialty paper pulps used in the manufacture of
products such as filters and decorative laminates.
Rayonier manufactures its specialty pulp products to customers'
specifications. Approximately half of Rayonier's pulp sales are to export
customers, with the more important overseas markets being Western Europe and
Japan.
The Company manufactures more than 25 different grades of pulp. The Company
owns and operates three wood pulp mills which have an aggregate annual capacity
of approximately 826,000 metric tons. Rayonier's wood pulp production facilities
are able to manufacture a broad mix of products to meet customers' needs. The
Company owns wood pulp production facilities in Jesup, Georgia; Fernandina
Beach, Florida; and Port Angeles, Washington. The Jesup facility, a kraft mill
that began operations in 1954 and was subsequently significantly expanded and
modernized, today accounts for approximately 530,000 metric tons of annual wood
pulp production capacity, or 64 percent of Rayonier's current total. The
Fernandina Beach facility began operations in 1939 and accounts for
approximately 146,000 metric tons of annual wood pulp production capacity, or 18
percent of Rayonier's current total. The Port Angeles facility began operations
in 1929 and accounts for approximately 150,000 metric tons of annual wood pulp
production capacity, or 18 percent of Rayonier's current total.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Debt
Securities will be used as set forth in the applicable Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods indicated.
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,1994 YEAR ENDED DECEMBER 31,
-------------- -----------------------------------------------------
1993 1992 1991 1990 1989
------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
7.30x 5.25x * 5.37x 13.04x 11.52x
-----
</TABLE>
- ---------------
* Earnings were inadequate to cover total fixed charges and preferred dividend
requirement by $106 million. For the year ended December 31, 1992, the
Company's loss from continuing operations before the cumulative effect of
accounting changes was $81 million, including a provision of $180 million,
pre-tax ($115 million net of tax), for the loss on disposal of assets along
with the costs for severance, demolition and other closedown items associated
with the disposition of the Grays Harbor pulp mill and vanillin plant, and the
associated Grays Harbor Paper Company (the "Grays Harbor Complex"). Excluding
the effects of such provision, the ratio of earnings to fixed charges would
have been 3.98x.
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<PAGE> 26
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before cumulative effect
of accounting changes, adjusted to eliminate undistributed earnings or losses of
a joint venture accounted for under the equity method, minority interest in
consolidated partnerships, amortization of capitalized interest, the provision
for income taxes and fixed charges. Fixed charges comprise interest on long-term
and short-term debt, amortization of debt discount and debt expense, and the
portion of rentals deemed representative of the interest factor and preferred
dividends.
DESCRIPTION OF THE DEBT SECURITIES
As specified in the Prospectus Supplement, the Debt Securities will be
issued under either an indenture, dated as of September 1, 1992, as supplemented
and amended, between Rayonier and Bankers Trust Company, a New York banking
corporation, as Trustee, or an indenture to be dated as of April 1, 1994,
between Rayonier and Chemical Bank, a New York banking corporation, as Trustee,
copies of which indentures are filed as exhibits to the Registration Statement
of which this Prospectus is a part. The indentures are hereafter referred to
respectively as the "Indenture," and Bankers Trust Company and Chemical Bank are
hereafter referred to respectively as the "Trustee." The Indentures are the same
in all material respects. The statements under this caption are brief summaries
of certain provisions of the Indenture, do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Indenture, including the definitions therein of certain terms.
Whenever particular sections of the Indenture or terms that are defined in the
Indenture are referred to herein or in a Prospectus Supplement, it is intended
that such sections or defined terms shall be incorporated by reference herein or
therein, as the case may be.
The Debt Securities may be issued by Rayonier from time to time in one or
more series. The particular terms of each series of Offered Securities will be
described in the Prospectus Supplement or Prospectus Supplements relating to
such series.
GENERAL
The Debt Securities offered pursuant to this Prospectus will be limited to
$274,000,000 aggregate principal amount (or, if any Debt Securities are issued
at original issue discount, such greater amount as shall result in proceeds of
$274,000,000 to the Company). Debt Securities may be issued under the Indenture
from time to time in separate series up to the aggregate amount from time to
time authorized by the Company for each series.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Offered Securities: (1) the title of the
Offered Securities; (2) the aggregate principal amount of the Offered
Securities; (3) the date on which the principal of the Offered Securities will
mature; (4) the rate or rates (or, if subject to adjustment, the manner for
determining such rates) at which the Offered Securities shall bear interest, if
any, the date or dates from which any such interest shall accrue, the Interest
Payment Dates on which any such interest shall be payable, and the Regular
Record Date for any interest payable on any Interest Payment Date; (5) the place
or places where, subject to the terms of the Indenture as described below under
"Payment and Paying Agents," the principal of (and premium, if any) and interest
on the Offered Securities will be payable and where, subject to the terms of the
Indenture as described below under "Denominations, Registration and Transfer,"
the Offered Securities may be presented for registration of transfer or exchange
and the place or places where notices and demands to or upon the Company in
respect of the Offered Securities and the Indenture may be made ("Place of
Payment"); (6) any period or periods within or date or dates on which, the price
or prices at which and the terms and conditions upon which Offered Securities
may be redeemed, in whole or in part, at the option of the Company; (7) the
obligation or the right, if any, of the Company to redeem, purchase or repay the
Offered Securities prior to the Stated Maturity pursuant to any sinking fund,
amortization or analogous provisions or at the option of a Holder thereof or of
the Company and the date or dates on which, the period or periods within which,
the price or prices at which and the terms and conditions upon which the Offered
Securities shall be redeemed, purchased or repaid, in whole or in part, pursuant
to such obligation; (8) the denominations in which any Offered Securities shall
be issued if other than
5
<PAGE> 27
$1,000 or any integral multiple thereof; (9) any addition to, or modification or
deletion of, any Event of Default or any covenant of the Company specified in
the Indenture with respect to the Offered Securities; (10) if other than the
principal amount thereof, the portion of the principal amount of the Offered
Securities which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to the Indenture; (11) any index or indices used to
determine the amount of payments of principal of and premium, if any, on the
Offered Securities and the manner in which such amounts will be determined; and
(12) any other terms of the Offered Securities not inconsistent with the
provisions of the Indenture. (Section 3.01.)
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise set forth in the Prospectus Supplement for the Offered
Securities, the Debt Securities will be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. Debt
Securities of any series will be exchangeable for other Debt Securities of the
same issue and series, of any authorized denominations, of a like aggregate
principal amount, of the same Original Issue Date and Stated Maturity and
bearing the same interest rate. (Section 3.05.)
Debt Securities may be presented for exchange as provided above, and may be
presented for registration of transfer (with the form of transfer endorsed
thereon, or a satisfactory written instrument of transfer, duly executed), at
the office of the Securities Registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to any series of Debt
Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. The Company has appointed the Trustee as Securities
Registrar. (Section 3.05.) If a Prospectus Supplement refers to any transfer
agents (in addition to the Securities Registrar) initially designated by the
Company with respect to any series of Debt Securities, the Company may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, provided that the
Company maintains a transfer agent in each Place of Payment for such series. The
Company may at any time designate additional transfer agents with respect to any
series of Debt Securities. (Section 10.02.)
In the event of any redemption, neither the Company nor the Trustee shall
be required to (i) issue, register the transfer of, or exchange Debt Securities
of any series during a period beginning at the opening of business 15 days
before the day of selection for redemption of Debt Securities of that series and
ending at the close of business on the day of mailing of the relevant notice of
redemption or (ii) transfer or exchange any Debt Security so selected for
redemption, except, in the case of any Debt Security being redeemed in part, any
portion thereof not to be redeemed. (Section 3.05.)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (a "Global Security") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such series. Global Securities may be
issued only in fully registered form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a Global Security may not be transferred except
as a whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary ("Participants"). Such accounts shall be
designated by the agents,
6
<PAGE> 28
underwriters or dealers with respect to such Debt Securities or by the Company
if such Debt Securities are offered and sold directly by the Company. Ownership
of beneficial interests in a Global Security will be limited to Participants or
persons that may hold interests through Participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities.
Payments of principal of (and premium, if any) and interest on individual
Debt Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. None of the Company, the Trustee for such Debt Securities, any
Paying Agent, or the Securities Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interest of the Global Security
for such Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Security held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
If a Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of such series represented by one or more Global Securities and, in
such event, will issue individual Debt Securities of such series in exchange for
the Global Security or Securities representing such series of Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company, the Trustee
and the Depositary for such Global Security, receive individual Debt Securities
of such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Debt
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery of individual Debt Securities of
the series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name.
Individual Debt Securities of such series so issued will be issued in
denominations, unless otherwise specified by the Company, of $1,000 and integral
multiples thereof.
7
<PAGE> 29
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Debt Securities will
be made at the office of the Trustee in the City of New York or at the office of
such Paying Agent or Paying Agents as the Company may designate from time to
time in an applicable Prospectus Supplement, except that at the option of the
Company payment of any interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Securities
Register or (ii) by transfer to an account maintained by the Person entitled
thereto as specified in the Securities Register, provided that proper transfer
instructions have been received by the Trustee or any Paying Agent, as the case
may be, by the Regular Record Date. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any interest on Debt Securities will be made
to the Person in whose name such Debt Security is registered at the close of
business on the Regular Record Date for such interest, except in the case of
Defaulted Interest. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent; however, the Company will
at all times be required to maintain a Paying Agent in each Place of Payment for
each series of Debt Securities. (Sections 3.01, 3.07 and 10.02.)
Any moneys deposited with the Trustee or any Paying Agent, or then held by
the Company in trust, for the payment of the principal of (and premium, if any)
or interest on any Debt Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall, at the request of the Company, be repaid to the Company, and the Holder
of such Debt Security shall thereafter look, as a general unsecured creditor,
only to the Company for payment thereof. (Section 10.03.)
REDEMPTION
Unless otherwise indicated in an applicable Prospectus Supplement, Debt
Securities will not be subject to any sinking fund and will not be redeemable
prior to their Stated Maturity.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless (i) in case the Company consolidates with or
merges into another corporation or conveys, transfers or leases its properties
and assets substantially as an entirety to any Person, the successor corporation
is organized under the laws of the United States of America or any state or the
District of Columbia, and such successor corporation expressly assumes the
Company's obligations on the Debt Securities issued under the Indenture; (ii)
immediately after giving effect thereto, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and (iii) certain other conditions as
prescribed in the Indenture are met.
The Indenture provides that in the event of any conveyance, transfer or
lease in accordance with the preceding paragraph, the Company shall be
discharged from all obligations and covenants under the Indenture and the Debt
Securities and may be dissolved and liquidated.
The Indenture also provides that if, upon any consolidation or merger of
the Company with or into any other corporation, or upon any conveyance, transfer
or lease of its properties and assets substantially as an entirety to any
Person, any of the property or assets of the Company or of any Restricted
Subsidiary would thereupon become subject to any mortgage, lien or pledge, the
Company, prior to or simultaneously with such consolidation, merger, conveyance,
transfer or lease will secure the Debt Securities equally and ratably with any
other obligations of the Company or any Restricted Subsidiary then entitled
thereto, by a direct lien on all such property and assets prior to all liens
other than any theretofore existing thereon.
8
<PAGE> 30
COVENANTS
The Indenture contains covenants including, among others, the following:
Limitations on Liens
The Indenture provides that the Company will not, nor will it permit any
Restricted Subsidiary to, issue, assume or guarantee any indebtedness for money
borrowed if such indebtedness is secured by a Lien upon any Principal Property
of the Company or any Restricted Subsidiary or on any shares of stock of any
Restricted Subsidiary (whether such Principal Property or shares of stock are
now owned or hereafter acquired) without in any such case effectively providing
that the Debt Securities of any series Outstanding which are entitled to the
benefits of such provision of the Indenture (together with, if the Company shall
so determine, any other Indebtedness of or guaranteed by the Company or such
Restricted Subsidiary entitled thereto, subject to applicable priority of
payment) shall be secured equally and ratably with or prior to such
Indebtedness, except that the foregoing restriction shall not apply to
(i) Liens on property or shares of stock of any corporation existing
at the time such corporation becomes a Restricted Subsidiary;
(ii) Liens on property existing at the time of acquisition thereof, or
Liens on property which secure the payment of the purchase price of such
property, or Liens on property which secure indebtedness incurred or
guaranteed for the purpose of financing the purchase price of such property
or the construction of such property (including improvements to existing
property), which indebtedness is incurred or guaranteed within 180 days
after the latest of such acquisition or completion of such construction or
commencement of operation of such property; provided that such Lien shall
not extend to or cover any property of the Company or any Restricted
Subsidiary other than such property hereafter acquired or previously
unimproved property theretofore owned and the principal amount of Funded
Debt secured by such Lien shall not exceed (a) in the case of any
timberlands or pollution control facility, 100% of the lesser of (i) the
cost of such acquisition, construction or improvement of such property to
the Company or such Restricted Subsidiary or (ii) the fair value of such
acquisition, construction or improvement of such property at the time of
such acquisition, construction or improvement, and (b) in the case of any
other type of property, 75% of the lesser of (i) the cost of such
acquisition, construction or improvement of such property to the Company or
such Restricted Subsidiary or (ii) the fair value of such acquisition,
construction or improvement of such property at the time of such
acquisition, construction or improvement;
(iii) Liens securing indebtedness owing by any Restricted Subsidiary
to the Company or a wholly owned Restricted Subsidiary;
(iv) Liens on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Restricted
Subsidiary or at the time of a purchase, lease or other acquisition of the
properties of a corporation or other Person as an entirety or substantially
as an entirety by the Company or a Restricted Subsidiary;
(v) Liens on property of the Company or a Restricted Subsidiary in
favor of the United States of America or any State thereof or any agency,
instrumentality or political subdivision thereof, or in favor of any other
country, or any political subdivision thereof, to secure any indebtedness
incurred or guaranteed for the purpose of financing all or any part of the
purchase price or the cost of construction of the property subject to such
Liens within 180 days after the latest of the acquisition, completion of
construction or commencement of operation of such property; and
(vi) any extension renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in
the foregoing clauses (i) to (v), inclusive, provided however, that the
principal amount of such indebtedness secured thereby shall not exceed the
principal amount of such indebtedness so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to all or a part of the
9
<PAGE> 31
property which secured the Lien so extended, renewed or replaced (plus
improvements and construction on such property).
Notwithstanding the above, the Company and one or more Restricted
Subsidiaries may, without securing the Debt Securities, issue, assume or
guarantee secured indebtedness which would otherwise be subject to the foregoing
restrictions, provided that after giving effect thereto the aggregate amount of
such indebtedness issued pursuant to such exception at such time and the
aggregate Value of Sale and Lease-Back Transactions (other than those in
connection with which the Company has voluntarily retired Funded Debt in
compliance with the provisions described below under "Limitation on Sale and
Lease-Back Transactions") does not at any one time exceed 10% of Consolidated
Net Tangible Assets. In computing the aggregate amount of indebtedness
outstanding for purposes of the foregoing sentence, there shall not be included
in the calculation any indebtedness issued, assumed or guaranteed pursuant to
clauses (i) through (vi) above. (Section 10.08.)
Limitation on Sale and Lease-Back Transactions
The Indenture provides that the Company shall not and, shall not permit any
Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction with
respect to any Principal Property with any person (other than the Company or a
Restricted Subsidiary) unless either (a) the Company or such Restricted
Subsidiary would be entitled, pursuant to the provisions set forth above under
"Limitation on Liens," to incur Funded Debt in a principal amount equal to or
exceeding the Value of such Sale and Lease-Back Transaction secured by a Lien on
the Principal Property to be leased without equally and ratably securing the
Debt Securities, or (b) the Company, during the four-month period after the
effective date of such transaction, applies to the voluntary retirement of its
Funded Debt an amount equal to the greater of: (1) the net proceeds of the sale
of the Principal Property leased in such transaction or (2) the fair market
value in the good faith opinion of the Board of Directors of the Company of the
Principal Property at the time such transaction was entered into. (Section
10.09.)
Certain Definitions
"Consolidated Net Tangible Assets" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities (excluding any thereof which are by their
terms extendible or renewable at the option of the obligor thereon to a time
more than 12 months after the time as of which the amount thereof is being
computed) and (ii) all segregated goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent balance sheet of the Company and its consolidated
Subsidiaries and prepared in accordance with generally accepted accounting
principles.
"Funded Debt" means all indebtedness for borrowed money having a maturity
of more than 12 months from the date as of which the amount thereof is to be
determined or having a maturity of less than 12 months but by its terms being
renewable or extendible beyond 12 months from such date at the option of the
borrower.
"Lien" means any mortgage, pledge, lien, encumbrance or security interest
of any kind.
"Principal Property" means all timberlands, land, buildings, machinery and
equipment, and leasehold interests and improvements in respect of the foregoing,
which would be reflected on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with generally accepted accounting
principles, excluding all such tangible property located outside the United
States, Canada and New Zealand (including their respective territories and
possessions) and excluding any such property which, in the opinion of the Board
of Directors set forth in a Board Resolution, is not material to the Company and
its Subsidiaries taken as a whole.
"Restricted Subsidiary" is defined as any Subsidiary (a) substantially all
of the property of which is located in the United States, Canada or New Zealand
(including their respective territories and possessions) and which owns a
Principal Property; provided, however, that no Subsidiary shall be a
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<PAGE> 32
Restricted Subsidiary if pursuant to this clause (a) (i) the total assets of
such Subsidiary are less than 10% of the total assets of the Company and its
consolidated Subsidiaries (including such Subsidiary) in each case as set forth
on the most recent fiscal year-end balance sheets of such Subsidiary and the
Company and its consolidated Subsidiaries, respectively, and computed in
accordance with generally accepted accounting principles, or (ii) in the
judgment of the Board of Directors, as evidenced by a Board Resolution, the
Company determines that such Subsidiary is not material to the financial
condition of the Company and its Subsidiaries taken as a whole or (b) that is
designated as a Restricted Subsidiary by the Board of Directors, as evidenced by
a Board Resolution. As of the date of this Prospectus the subsidiaries of
Rayonier which meet the definition of Restricted Subsidiaries are RTLP, RTOC and
RNZ.
"Sale and Lease-Back Transaction" means any arrangement with any bank,
insurance company or other lender or investor, or to which any such lender or
investor is a party, providing for the leasing by the Company or a Restricted
Subsidiary for a period, including renewals, in excess of three years of any
Principal Property of the Company or a Restricted Subsidiary which has been or
is to be sold or transferred by the Company or a Restricted Subsidiary to such
lender or investor or to any person to which funds have been or are to be
advanced by such lender or investor on the security of such Principal Property.
"Subsidiary" means (i) any corporation of which at the time of
determination the Company and/or one or more Subsidiaries owns or controls
directly or indirectly more than 50% of the outstanding shares of voting stock
or (ii) any other Person (other than a corporation) in which the Company or one
or more Subsidiaries directly or indirectly owns or controls more than 50% of
the voting interests therein or otherwise has the power to direct the policies,
management and affairs thereof.
"Value" means, with respect to a Sale and Lease-Back Transaction, as of any
particular time, the amount equal to the greater of (i) the net proceeds of the
sale or transfer of the Principal Property leased pursuant to such Sale and
Lease-Back Transaction and (ii) the fair market value, in the good faith opinion
of the Board of Directors, of such Principal Property at the time of entering
into such Sale and Lease-Back Transaction, in either case divided first by the
number of full years of the term of the lease and then multiplied by the number
of full years of such term remaining at the time of determination, without
regard to any renewal or extension options contained in the lease.
MODIFICATION AND WAIVER
Modification and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of each series affected thereby;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby, (i)
change the Stated Maturity of the principal of, or any installment of interest
on, any Outstanding Debt Security; (ii) reduce the principal amount of, or the
rate of interest on or any premium payable upon the redemption of, or the amount
of principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity of, any Outstanding
Debt Security; (iii) change the Place of Payment, or the coin or currency in
which any Outstanding Debt Security or the interest thereon is payable; (iv)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Outstanding Debt Security after the Stated Maturity; or (v)
change the provisions of the Indenture relating to amendments of the Indenture
requiring the consent of the affected Holders for waiver of compliance with
certain provisions of the Indenture or waiver of past defaults. (Section 9.02.)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as the series is concerned, compliance by the Company
with certain restrictive covenants of the Indenture. (Section 10.10.) The
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of that series waive any
past default under the Indenture with respect to that series of Debt Securities,
except a default in the payment of the principal of (or premium, if any), or any
11
<PAGE> 33
interest on, or payment into any sinking fund on, any Debt Security of that
series or in respect of a provision which under the Indenture cannot be modified
or amended without the consent of the Holder of each Outstanding Debt Security
of that series affected. (Section 5.13.)
EVENTS OF DEFAULT
The Indenture provides that the following shall constitute Events of
Default with respect to any series of Debt Securities: (i) default for 30 days
in the payment of any interest when due; (ii) default in the payment of
principal (or premium, if any) at Maturity; (iii) default in the payment of any
sinking fund or analogous payments; (iv) default in the performance of any other
covenant in the Indenture for 60 days after written notice thereof; (v) certain
events in bankruptcy, insolvency or reorganization; (vi) acceleration of
indebtedness for borrowed money in excess of $10,000,000, which acceleration
shall not have been rescinded or annulled within 30 days after notice; or (vii)
any other Event of Default provided in the applicable Board Resolution or
supplemental indenture under which such series of Debt Securities is issued.
(Section 5.01.) The Company is required to furnish the Trustee annually with a
statement as to the fulfillment by the Company of its obligations under the
Indenture. (Section 10.06.) The Indenture provides that the Trustee may withhold
notice to the Holders of the Debt Securities of any default (except in respect
of the payment of principal or interest on the Debt Securities) if it considers
it in the interest of the Holders to do so. (Section 6.02.)
If an Event of Default with respect to Outstanding Debt Securities of any
series occurs and is continuing, then and in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
the Debt Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal shall become immediately due and
payable. However, at any time after a declaration or acceleration with respect
to Debt Securities of any series has been made, but before a judgment or decree
for payment of the money due has been obtained, the Holders of a majority in
principal amount of Outstanding Debt Securities of that series may, subject to
certain conditions, rescind and annul such declaration. (Section 5.02.)
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing the Trustee
shall be under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable security or indemnity.
(Section 6.03.) Subject to such provisions for the security or indemnification
of the Trustee, the Holders of a majority in principal amount of the Outstanding
Debt Securities of any series 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 that series. (Section 5.12.)
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to Debt Securities
of that series and unless the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and, within 60 days following the receipt of such notice, the Trustee
shall not have received from the Holders of a majority in principal amount of
the Outstanding Debt Securities of that series a direction inconsistent with
such request, and the Trustee shall have failed to institute such proceeding.
(Section 5.07.) However, the Holder of any Debt Security will have an absolute
right to receive payment of the principal of (and premium, if any) and interest
on such Debt Security on or after the due dates expressed in such Debt Security
and to institute a suit for the enforcement of any such payment. (Section 5.08.)
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<PAGE> 34
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS
The Company, at its option, either (a) will be discharged from any and all
obligations with respect to any series of Debt Securities (except for certain
obligations to register the transfer or exchange of Debt Securities, replace
stolen, lost or mutilated Debt Securities, maintain paying agencies and hold
moneys for payment in trust) or (b) will cease to be under any obligation to
comply with certain restrictive covenants of the Indenture with respect to any
Debt Securities, upon the deposit with the Trustee, in trust, of money or U.S.
government securities or securities of U.S. government agencies backed by the
full faith and credit of the U.S. government, or a combination thereof, which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all the principal
and interest on such series of Debt Securities on the dates such payments are
due in accordance with the terms of the Debt Securities. To exercise any such
option, no Event of Default or event which with notice or lapse of time would
become an Event of Default with respect to such series of Debt Securities shall
have occurred and be continuing. The Company is required to deliver to the
Trustee an opinion of counsel (i) to the effect that the deposit and related
defeasance would not cause the holders of the Debt Securities to recognize
income, gain or loss for Federal income tax purposes and, in the case of a
discharge pursuant to clause (a), accompanied by a ruling to such effect from
the United States Internal Revenue Service and (ii) with respect to certain
other matters. (Sections 4.01 and 4.03.)
CHANGES IN CONTROL AND HIGHLY LEVERAGED TRANSACTIONS
The Indenture does not contain provisions requiring redemption of the Debt
Securities by the Company, or adjustment to any terms of the Debt Securities,
upon any change in control of the Company.
Other than restrictions on Liens and Sale and Lease-Back Transactions
described under "Covenants" above, the Indenture does not contain any covenants
or other provisions designed to afford holders of the Debt Securities protection
in the event of a highly leveraged transaction involving the Company.
CONCERNING THE TRUSTEE
Bankers Trust Company and Chemical Bank, each a New York banking
corporation, will act as trustee for the Debt Securities issued under the
respective Indenture, and each acts as depositary for funds of, makes loans to,
and performs other services for, the Company and its subsidiaries in the normal
course of business.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (i) through underwriters or
dealers; (ii) directly to one or more purchasers; or (iii) through agents. The
Prospectus Supplement with respect to the Debt Securities being offered thereby
sets forth the terms of the offering of such Debt Securities, including the name
or names of any underwriters, the purchase price of such Debt Securities and the
proceeds to the Company 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 exchange on which such Debt Securities may be listed. Only
underwriters so named in the Prospectus Supplement are deemed to be underwriters
in connection with the Debt Securities offered thereby.
If underwriters are used in the sale, the 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
obligations of the underwriters to purchase such Debt Securities will be subject
to certain conditions precedent, and the underwriters will be obligated to
purchase all the Debt Securities of the series offered by the Company's
Prospectus Supplement if any of such Debt Securities are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
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<PAGE> 35
Debt Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offering
and sale of the Debt Securities will be named, and any commissions payable by
the Company to such agent will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agent is
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Debt Securities providing for payment and delivery on a
future date specified in the Prospectus Supplement. There may be limitations on
the minimum amount which may be purchased by any such institutional investor or
on the portion of the aggregate principal amount of the particular Debt
Securities which may be sold pursuant to such arrangements. Institutional
investors to which such offers may be made, when authorized, include commercial
and savings banks, insurance companies, pension funds, investment companies,
education and charitable institutions and such other institutions as may be
approved by the Company. The obligations of any such purchasers pursuant to such
delayed delivery and payment arrangements will not be subject to any conditions
except (i) the purchase by an institution of the particular Debt Securities
shall not at any time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (ii)
if the particular Debt Securities are being sold to underwriters, the Company
shall have sold to such underwriters the total principal amount of such Debt
Securities less the principal amount thereof covered by such arrangements. The
agents, underwriters or dealers soliciting such offers will not have any
responsibility with respect to the validity of such arrangements or the
performance of the Company or such institutional investors thereunder.
Underwriters, dealers and agents that participate in the distribution of
the Debt Securities may be deemed to be underwriters, and any discounts or
commissions received by them from the Company and any profit on the resale of
Debt Securities by them may be deemed to be underwriting discounts and
commissions, under the Act. Under agreements which may be entered into by the
Company, underwriters, dealers and agents who participate in the distribution of
Debt Securities may be entitled to indemnification by the Company against
certain civil liabilities, including liabilities under the Act, or to
contribution with respect to payments which the underwriters, dealers or agents
may be required to make with respect thereto. Underwriters, dealers and agents
may engage in transactions with, or perform services for, the Company or its
subsidiaries in the ordinary course of their respective businesses.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sales, at prices related to such prevailing market prices or at
negotiated prices.
The Prospectus Supplement with respect to the Offered Securities will state
whether the Offered Securities will be listed on any securities exchange. If the
Offered Securities are not listed on any national securities exchange, there can
be no assurance that there will be a secondary market for the Offered
Securities.
LEGAL MATTERS
Unless otherwise indicated in the Prospectus Supplement, the validity of
the Offered Securities will be passed upon for the Company by John B. Canning,
Esq., Corporate Secretary and Associate General Counsel of the Company, and for
the underwriters or agents, as the case may be, by Cravath, Swaine & Moore, 825
Eighth Avenue, New York, New York 10019.
EXPERTS
The audited financial statements and schedules incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, which have been
audited by Arthur Andersen & Co., independent public accountants, as indicated
in their report with respect thereto, are included herein upon the authority of
said firm as experts in giving said report.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Use of Proceeds....................... S-3
Description of Notes.................. S-4
United States Federal Taxation........ S-14
Supplemental Plan of Distribution..... S-20
Validity of Notes..................... S-21
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Rayonier Inc. ........................ 3
Use of Proceeds....................... 4
Ratio of Earnings to Fixed Charges.... 4
Description of the Debt Securities.... 5
Plan of Distribution.................. 13
Legal Matters......................... 14
Experts............................... 14
</TABLE>
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$174,000,000
RAYONIER INC.
SERIES B MEDIUM-TERM NOTES
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PROSPECTUS SUPPLEMENT
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LAZARD FRERES & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
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