<PAGE>
RULE NO.424(b)(2)
REGISTRATION NO. 33-60939
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 28, 1995)
U.S.$584,662,000
MCDONALD'S CORPORATION
MEDIUM-TERM NOTES, SERIES E
DUE FROM 184 DAYS TO 60 YEARS FROM DATE OF ISSUE
---------------
McDonald's Corporation (the "Company" or "McDonald's") may from time to time
offer its Medium-Term Notes, Series E (the "Notes") with an aggregate initial
public offering price or purchase price of up to $584,662,000, or the
equivalent thereof in one or more other currencies or composite currencies
including European Currency Units ("ECU"), subject to reduction as a result of
the sale of other Debt Securities. In addition to the Notes in bearer form
("Bearer Notes") being offered hereby outside the United States, the Company
may from time to time offer Notes in registered form ("Registered Notes") in
the United States. A separate Prospectus Supplement will be used for any such
offering of Registered Notes. Any Registered Notes sold will reduce
correspondingly the principal amount of Bearer Notes that may be sold
hereunder. See "Plan of Distribution."
Each Bearer Note will not, in connection with its original issuance, or
during the period of 40 days after its Original Issue Date, be offered, sold
or delivered, directly or indirectly, within the United States or to U.S.
Persons, except to the extent permitted under U.S. Treasury regulations. See
"Plan of Distribution." All Bearer Notes that have the same Original Issue
Date and otherwise identical terms will be represented initially by a
Temporary Global Note to be delivered to a common depositary outside the
United States for Euroclear and Cedel. Beneficial interests in a Temporary
Global Note will be exchangeable for beneficial interests in a Permanent
Global Note or for individual Bearer Notes only in the manner and upon
compliance with the procedures described under "Description of Bearer Notes--
Denomination, Form and Transfer."
Payments in respect of Bearer Notes will be made without deduction for
United States withholding taxes to the extent described herein. Each Bearer
Note may be redeemed in whole, at the redemption price thereof, if certain
events occur involving United States withholding taxes or information
reporting requirements. See "Tax Redemption" and "Special Tax Redemption"
under "Description of Bearer Notes."
Each Bearer Note will mature on any day 184 days from its Original Issue
Date and may be subject to redemption at the option of the Company, or to
repayment at the option of the Holder, prior to Stated Maturity. Each Bearer
Note will be denominated in the currency designated by the Company (the
"Specified Currency"). See "Currency Risks." Each Bearer Note will bear
interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case
of certain Original Issue Discount Notes, or at a floating rate (a "Floating
Rate Note") determined by reference to the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the
Treasury Rate or any other Base Rate, as selected by the initial purchaser and
agreed to by the Company, adjusted by the Spread and/or Spread Multiplier, if
any, applicable to such Note. A Bearer Note may be issued as an indexed note
(an "Indexed Note") the interest amount (an "Interest Indexed Note") or
principal amount (a "Principal Indexed Note" and, together with Interest
Indexed Notes, "Indexed Notes") payable at Maturity of which will be
determined by reference to a designated stock, currency, commodity or other
index or will otherwise be determined by application of a formula. See
"Description of Bearer Notes--Indexed Notes." The Specified Currency, any
applicable interest rate or interest rate formula, any applicable index
formula, reset provisions, Issue Price, Stated Maturity, any Interest Payment
Dates, any redemption and repayment provisions and certain other terms
applicable to each Bearer Note will be established at the Original Issue Date
of such Bearer Note and set forth in a pricing supplement to this Prospectus
Supplement (a "Pricing Supplement").
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes, other than in the case of Original Issue Discount Notes,
will be payable each February 15 and August 15 and at Maturity. Interest on
Floating Rate Notes will be payable on the dates determined at the time of
issuance and set forth in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, Bearer
Notes will be issued only in minimum denominations of U.S.$25,000 and any
larger amount that is an integral multiple of U.S.$5,000 or, in the case of a
Bearer Note having a Specified Currency other than U.S. dollars, in the
minimum denominations set forth in the applicable Pricing Supplement.
Application has been made to list the Bearer Notes on the Luxembourg Stock
Exchange. Unlisted Bearer Notes may also be issued as indicated in the
applicable Pricing Supplement.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PRO-
SPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO PUBLIC(1) AGENTS' COMMISSION(2) PROCEEDS TO THE COMPANY(2)(3)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................ 100% .125% to .750% 99.875% to 99.250%
---------------------------------------------------------------------------------------------------------------
Total(4)................ U.S.$584,662,000 U.S.$730,828 to U.S.$4,384,965 U.S.$583,931,173 to U.S.$580,277,035
---------------------------------------------------------------------------------------------------------------
</TABLE>
-------------------------------------------------------------------------------
(1) The Notes will be issued at 100% of their principal or, in the case of
Principal Indexed Notes, face amount, unless otherwise specified in the
applicable Pricing Supplement.
(2) The Company will pay a commission to Merrill Lynch International Limited,
Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley &
Co. International Limited or Salomon Brothers International Limited or
others, each as agent (collectively the "Agents"), in the form of a
discount, ranging from .125% to .750%, depending upon the Stated Maturity
of the Note, of the principal or, in the case of Principal Indexed Notes,
face amount of any Note with a Stated Maturity of 184 days to 30 years
sold through such Agent. Commissions with respect to Notes with Stated
Maturities in excess of 30 years which are sold through an Agent will be
negotiated between the Company and such Agent at the time of such sale.
The Company may also sell Notes to any Agent as principal. 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 to be
agreed upon at the time of sale and may be resold by such Agent to one or
more investors and other purchasers at a fixed public offering price or at
varying prices relating to prevailing market prices at the time or times
of resale to be determined by such Agent.
(3) Before deducting expenses payable by the Company estimated to be $425,000,
including reimbursement of certain of the Agents' expenses.
(4) Or the equivalent thereof in other currencies or composite currencies
(including ECU).
---------------
The Bearer Notes are being offered on a continuous basis by the Company
through the Agents, which have agreed to use their reasonable best efforts to
solicit orders to purchase Bearer Notes. The Company may sell Bearer Notes at
a discount to any Agent for its own account or for resale to one or more
investors at a fixed public offering price or at varying prices relating to
prevailing market prices at the time or times of resale, to be determined by
such Agent. The Company also may arrange for such Bearer Notes to be sold
through any Agent acting as an underwriter or may sell Bearer Notes directly
to investors on its own behalf. There can be no assurance that the maximum
amount of Bearer Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for any Bearer Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or any Agent may reject any order to purchase Bearer
Notes, whether or not solicited, in whole or in part. See "Plan of
Distribution."
---------------
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY & CO.
INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
---------------
The date of this Prospectus Supplement is August 4, 1995.
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
Supplement (including the accompanying Pricing Supplement) or the Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or any underwriter or agent. This
Prospectus Supplement (including the accompanying Pricing Supplement) and the
Prospectus 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 in such jurisdiction. The delivery of
this Prospectus Supplement (including the accompanying Pricing Supplement) or
the Prospectus does not imply that the information herein or therein is correct
as of any time subsequent to their respective dates. Investors are advised to
read this Prospectus Supplement (including the accompanying Pricing Supplement)
together with the Prospectus and the documents incorporated by reference herein
and therein.
References herein to "U.S. dollars" or "$" are to the lawful currency of the
United States of America.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
--------------------- ----
<S> <C>
Incorporation of Certain Documents
by Reference...................... S-2
McDonald's Corporation............. S-3
Summary Consolidated Financial
Data.............................. S-4
Capitalization of McDonald's
Corporation....................... S-5
Description of Bearer Notes........ S-6
Currency Risks..................... S-23
Taxation in the United States...... S-26
Plan of Distribution............... S-27
General Information................ S-29
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS PAGE
---------- ----
<S> <C>
Available Information.............. 2
Incorporation of Certain Documents
by Reference...................... 2
McDonald's Corporation............. 3
Use of Proceeds.................... 3
Ratio of Earnings to Fixed Charges. 3
Description of Debt Securities..... 4
Limitations on Issuance of Bearer
Securities........................ 11
Plan of Distribution............... 12
Legal Matters...................... 13
Experts............................ 13
</TABLE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the United States
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, as amended by the Company's Form 10-K/A filed on June
27, 1995; and
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act ((which include the Company's annual reports on Form
10-K (including the portions of the Company's annual report to shareholders
incorporated by reference therein) and quarterly reports on Form 10-Q)
subsequent to the date of the Prospectus and prior to the termination of the
offering of the Debt Securities (including the Notes)) referred to in the
Prospectus shall be deemed to be incorporated by reference herein. Any
statement contained in the Prospectus, this Prospectus Supplement or a document
incorporated or deemed incorporated by reference herein shall be deemed to be
modified or superseded for purposes hereof to the extent that a statement
contained in this Prospectus Supplement or the Prospectus or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part hereof.
S-2
<PAGE>
Copies of any documents incorporated herein by reference will be available
without charge at the office of Banque Generale du Luxembourg S.A. (the
"Listing Agent"), 27 Avenue Monterey, L-2951, Luxembourg, Luxembourg. Any
person receiving a copy of this Prospectus Supplement may obtain, without
charge, upon written or oral request, a copy of any document incorporated by
reference herein, except for the exhibits to such documents (unless such
exhibits are specifically incorporated by reference in such documents). Written
or telephone requests for any such document should be directed to Merrill Lynch
International Limited, Ropemaker Place, 25 Ropemaker Street, London, England
EC2Y 9LY, telephone: 876-3995.
This Prospectus Supplement may be used for the offer, sale and listing of
Bearer Notes with an aggregate initial offering price of up to
U.S.$584,662,000, or the equivalent thereof in other currencies, subject to
reduction as a result of the sale of other Debt Securities. Pursuant to the
Euro Distribution Agreement, the Company will represent to the Agents that as
of the Original Issue Date of any Bearer Note, neither the Prospectus nor any
amendment thereof or supplement thereto will contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has undertaken in connection with the listing
of the Bearer Notes on the Luxembourg Stock Exchange that, so long as any
Bearer Notes remain outstanding and listed on such Exchange, in the event of
any material adverse change in the business or financial condition of the
Company that is not reflected in the Prospectus as then amended or
supplemented, the Company will prepare an amendment or supplement to the
Prospectus or publish a new Prospectus for use in connection with any
subsequent offering and listing by the Company of Bearer Notes.
MCDONALD'S CORPORATION
McDonald's Corporation and its subsidiaries develop, operate, franchise and
service a worldwide system of restaurants which prepare, assemble, package and
sell a limited menu of value-priced foods. These restaurants are operated by
the Company and its subsidiaries or, under the terms of franchise agreements,
by franchisees who are independent third parties, or by affiliates operating
under joint venture agreements between the Company or its subsidiaries and
local businesspeople.
McDonald's restaurants offer a substantially uniform menu consisting of
hamburgers and cheeseburgers, including the Big Mac and Quarter Pounder with
Cheese sandwiches, the Filet-O-Fish, McGrilled Chicken and McChicken
sandwiches, french fries, Chicken McNuggets, salads, shakes, sundaes and cones
made with low fat frozen yogurt, pies, cookies and a limited number of soft
drinks and other beverages. In addition, the restaurants sell a variety of
products during limited promotional time periods. McDonald's restaurants
operating in the United States are open during breakfast hours and offer a full
breakfast menu including the Egg McMuffin and the Sausage McMuffin with Egg
sandwiches, hotcakes and sausage; three varieties of biscuit sandwiches; Apple-
Bran muffins; and cereals. McDonald's restaurants in many countries around the
world offer many of these same products as well as other products and limited
breakfast menus. The Company tests new products on an ongoing basis.
McDonald's restaurants are located in all fifty of the United States and the
District of Columbia, and in many foreign locations, principally Japan, Canada,
Germany, England, Australia and France. At March 31, 1995, there were 15,370
restaurants worldwide, of which 9,795 were located in the United States and
5,575 in 78 other countries. An additional 327 restaurants were under
construction at March 31, 1995, including 228 outside the United States.
At March 31, 1995, 68% of McDonald's restaurants were operated by independent
franchisees, 21% were operated by the Company and its subsidiaries and 11% were
operated by affiliates (entities in which the Company and/or its subsidiaries
have an equity interest of 50% or less and in which the remaining equity
interest generally is owned by a local resident).
The Company's principal executive offices are located at One McDonald's
Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000.
S-3
<PAGE>
MCDONALD'S CORPORATION
SUMMARY CONSOLIDATED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
----------------- -------------------------------------------------
1995(2) 1994(2) 1994 1993 1992 1991 1990
-------- -------- --------- --------- --------- --------- ---------
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE OF COMMON STOCK DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Systemwide sales
(unaudited)(3)......... $6,671.6 $5,709.2 $25,987.4 $23,586.9 $21,885.4 $19,928.2 $18,758.9
======== ======== ========= ========= ========= ========= =========
Income statement data:
Sales by Company-
operated restaurants. 1,511.6 1,244.7 5,792.6 5,157.2 5,102.5 4,908.5 5,018.9
Revenues from
franchised
restaurants.......... 649.7 551.3 2,528.2 2,250.9 2,030.8 1,786.5 1,620.7
-------- -------- --------- --------- --------- --------- ---------
Total revenues........ 2,161.3 1,796.0 8,320.8 7,408.1 7,133.3 6,695.0 6,639.6
Income before
provision for income
taxes................ 435.1 377.4 1,886.6 1,675.7 1,448.1 1,299.4 1,246.3
Net income............ 280.7 243.4 1,224.4 1,082.5 958.6 859.6 802.3
======== ======== ========= ========= ========= ========= =========
Balance sheet data:
Shareholders' equity
at end of period..... $7,246.6 $6,462.8 $ 6,885.4 $ 6,274.1 $ 5,892.4 $ 4,835.1 $ 4,182.3
Long-term debt at end
of period............ 3,986.4 3,560.0 2,935.4 3,489.4 3,176.4 4,267.4 4,428.7
Total assets at end of
period............... 14,213.5 12,183.1 13,591.9 12,035.2 11,681.2 11,349.1 10,667.5
======== ======== ========= ========= ========= ========= =========
Per share of Common
Stock:(4)..............
Net income............ $ 0.39 $ 0.33 $ 1.68 $ 1.45 $ 1.30 $ 1.17 $ 1.10
Dividends declared.... 0.06 0.05 0.23 0.21 0.20 0.18 0.17
======== ======== ========= ========= ========= ========= =========
Other data:
Ratio of earnings to
fixed charges(5)..... 4.66 4.70 5.26 4.86 3.96 3.53 3.48
======== ======== ========= ========= ========= ========= =========
Number of restaurants
at end of period:
Operated by
franchisees........ 10,477 9,886 10,458 9,832 9,237 8,735 8,131
Operated by the
Company............ 3,143 2,741 3,083 2,699 2,551 2,547 2,643
Operated by
affiliates......... 1,750 1,491 1,664 1,462 1,305 1,136 1,029
-------- -------- --------- --------- --------- --------- ---------
Total restaurants. 15,370 14,118 15,205 13,993 13,093 12,418 11,803
======== ======== ========= ========= ========= ========= =========
</TABLE>
--------
(1) The summary Income statement data, Balance sheet data and Number of
restaurants data should be read in conjunction with the audited
consolidated financial statements and accompanying Financial comments and
the unaudited condensed consolidated financial statements and accompanying
Financial comments of the Company in the documents incorporated by
reference herein. See "Incorporation of Certain Documents by Reference."
(2) The financial information presented for the three months ended March 31,
1995 and 1994 is unaudited. In the opinion of the Company, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
have been included.
(3) Systemwide sales represent sales by all Company-operated, franchised and
affiliated restaurants.
(4) Per share of Common Stock data has been restated to reflect a two-for-one
Common Stock split which was effected in the form of a stock dividend
distributed on June 24, 1994, to common shareholders of record on June 7,
1994.
(5) The ratios of earnings to fixed charges shown above have been computed on a
total enterprise basis. Earnings represent income before provision for
income taxes and fixed charges. Fixed charges consist of interest on all
indebtedness, amortization of debt issuance costs and discount or premium
relating to any indebtedness, and such portion of rental charges (after
reduction for related sublease income) considered to be representative of
the interest component in the particular case.
S-4
<PAGE>
CAPITALIZATION OF MCDONALD'S CORPORATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries at March 31, 1995 and as adjusted to give effect to
the issuance on June 13, 1995 of bonds totaling DM125 million and the
application of the proceeds of that issuance.
<TABLE>
<CAPTION>
MARCH 31, 1995
---------------------
AS
OUTSTANDING ADJUSTED
----------- ---------
(IN MILLIONS)
<S> <C> <C>
Short-term debt, including current portion of long-
term debt............................................ $ 499.8 $ 499.8
Long-term debt, less current portion.................. 3,986.4 3,910.3(1)
DM125,000,000 bonds, 3.25% due 2000................... -- 80.9(2)
Shareholders' equity(3)............................... 7,246.6 7,246.6
--------- ---------
Total capitalization(3)(4)............................ $11,732.8 $11,737.6
========= =========
</TABLE>
--------
(1) Reflects the application of the net proceeds of U.S.$76.1 million from the
issuance of DM125 million bonds.
(2) Principal less unamortized discount translated at June 27, 1995 foreign
exchange rate. There has not been a material change in this rate subsequent
to June 27, 1995.
(3) At March 31, 1995, the Company had 1.25 billion authorized shares of Common
Stock, without par value, of which 830.3 million were issued and 694.8
million were outstanding. In addition, at March 31, 1995 the Company had
165.0 million authorized shares of preferred stock, without par value, of
which 11.2 million were issued and outstanding. There has been no material
change in the consolidated capitalization of the Company since March 31,
1995.
(4) The capitalization table presented above does not reflect the exchange
offer of the Company's Preferred Stock, Series E for 8.35% subordinated
deferrable interest debentures due 2025. The exchange offer was completed
on June 30, 1995 and was effective as of July 1, 1995. The transaction will
be recorded as an increase in debt and a reduction in Shareholders' equity
of approximately $129 million. The transaction has no effect on the
consolidated capitalization of the Company.
S-5
<PAGE>
DESCRIPTION OF BEARER NOTES
The following description of the particular terms of the Bearer Notes (to the
extent not superseded in the applicable Pricing Supplement) supplements, and to
the extent inconsistent therewith replaces, the description of the general
terms and provisions of the Debt Securities set forth in the Prospectus, to
which description reference is hereby made.
GENERAL
The Notes are to be issued as a series of Debt Securities under the Indenture
limited to an aggregate initial public offering price or purchase price of
$584,662,000 or the equivalent thereof in one or more foreign or composite
currencies, including ECU, subject to reduction as a result of the sale of
other Debt Securities. The U.S. dollar equivalent of the public offering price
or purchase price of a Bearer Note denominated in a Specified Currency other
than U.S. dollars will be determined by an agent designated by the Company,
which initially shall be Morgan Guaranty Trust Company of New York, 60 Victoria
Embankment, London, England EC4Y-OJP (the "Principal Paying Agent"), on the
basis of the noon buying rate in The City of New York for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York (the "Market Exchange Rate") for such Specified Currency on
the Business Day (as defined below) immediately prior to the applicable issue
date; provided, however, that in the case of ECU, the Market Exchange Rate
shall be the rate of exchange determined by the Commission of the European
Communities (or any successor thereof) as published in the Official Journal of
the European Communities, or any successor publication, on the Business Day
immediately preceding the applicable issue date.
The Notes will consist of Bearer Notes and Registered Notes, each of which
will be offered on a continuous basis. In connection with their original
issuance and during the period of 40 days after their Original Issue Dates,
Bearer Notes will not be offered, sold or delivered, directly or indirectly, to
a U.S. Person or to any person within the United States, except to the extent
permitted under U.S. Treasury regulations, as more fully set forth under "Plan
of Distribution." As used herein, "United States" means the United States of
America and its possessions, and "U.S. Person" means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source. A separate Prospectus Supplement will describe the terms of any
such Registered Notes.
Payments in respect of Bearer Notes will be made without deduction for United
States withholding taxes to the extent described under "Payment of Additional
Amounts" below. Each Bearer Note may be redeemed at the Redemption Price
applicable thereto, if certain events occur involving United States withholding
taxes or information reporting requirements. See "Tax Redemption" and "Special
Tax Redemption" below. Other than in such event, Bearer Notes may not be
redeemed by the Company prior to Stated Maturity (as defined below) unless
otherwise specified in the applicable Pricing Supplement. See "Optional
Redemption, Repayment and Repurchase" below. Unless otherwise specified in the
applicable Pricing Supplement, the Bearer Notes will not be subject to any
sinking fund.
Each Bearer Note will mature at par (unless otherwise specified in the
applicable Pricing Supplement) on any day from 184 days to 60 years from its
Original Issue Date (as defined below), as selected by the purchaser and agreed
to by the Company. Each Bearer Note may also be subject to redemption at the
option of the Company, or to repayment at the option of the Holder, at a price
specified in the applicable Pricing Supplement prior to its Stated Maturity.
Each Floating Rate Note will mature on an Interest Payment Date for such Note.
The Pricing Supplement relating to a Bearer Note will describe the following
terms: (i) the Specified Currency for such Note (and, if the Specified Currency
is other than U.S. dollars, certain other terms relating
S-6
<PAGE>
to such Note and such Specified Currency, including the authorized
denominations of such Note); (ii) whether such Note is a Fixed Rate Note, a
Floating Rate Note or an Indexed Note; (iii) the price (expressed as a
percentage of the aggregate principal (or, in the case of a Principal Indexed
Note, face) amount thereof) at which such Note will be issued (the "Issue
Price"); (iv) the date on which such Note will be issued (the "Original Issue
Date"); (v) the date on which such Note will mature (the "Stated Maturity");
(vi) if such Note is a Fixed Rate Note, the rate per annum at which such Note
will bear interest, if any, and the dates on which interest will be payable if
other than February 15 and August 15; (vii) if such Note is a Floating Rate
Note, the Base Rate, the Initial Interest Rate, the Interest Reset Period, the
Interest Payment Dates, the Index Maturity, the Maximum Interest Rate, if any,
the Minimum Interest Rate, if any, the Spread and/or Spread Multiplier, if any
(all as defined below), and any other terms relating to the particular method
of calculating the interest rate for such Note; (viii) whether such Note is an
Original Issue Discount Note (as defined below); (ix) if such Note is an
Indexed Note, the manner in which the principal amount of such Note payable at
Stated Maturity will be determined; (x) whether such Note may be redeemed at
the option of the Company, or repaid at the option of the Holder, prior to
Stated Maturity as described under "Optional Redemption, Repayment and
Repurchase" below, and, if so, the provisions relating to such redemption or
repayment, including, in the case of an Original Issue Discount Note or Indexed
Note, the information necessary to determine the amount due upon redemption or
repayment; and (xi) any other terms of such Note not inconsistent with the
provisions of the Indenture under which such Note will be issued.
Except as described herein, the Indenture does not contain any covenants
specifically designed to protect Holders of the Notes against a reduction in
the creditworthiness of the Company in the event of a highly leveraged
transaction or to prohibit other transactions that may adversely affect Holders
of the Notes.
"Business Day" with respect to any Bearer Note means any day, other than a
Saturday or Sunday, that is (i) neither a legal holiday nor a day on which
banking institutions are authorized or required by law, regulation or executive
order to be close in (a) The City of New York, (b) the City of Chicago, (c)
London, England, (d) the place in which such Note or any coupon relating
thereto is presented for payment or (e) if the Specified Currency for such Note
is other than U.S. dollars, the principal financial center of the country
issuing such Specified Currency (which, in the case of ECU, shall be
Luxembourg); (ii) if the Specified Currency for such Note is ECU, not a day
designated as an ECU Non-Settlement Day by the ECU Banking Association (or
otherwise generally regarded in the ECU interbank market as a day on which
payments in ECU shall not be made) and (iii) if such Note is a LIBOR Note (as
defined below), a London Business Day (as defined below). "London Business Day"
means any day (i) if the Index Currency (as defined below) is other than ECU,
on which dealings in such Index Currency are transacted in the London interbank
market or (ii) if the Index Currency is ECU, that is not designated as an ECU
Non-Settlement Day by the ECU Banking Association (or otherwise generally
regarded in the ECU interbank market as a day on which payments in ECU shall
not be made).
"Maturity," when used with respect to any Note, means the date on which the
principal of such Note or an installment of principal becomes due and payable
as provided therein or in the Indenture, whether at Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Original Issue Discount Note" means (i) a Bearer Note, including any such
Bearer Note whose interest rate is zero, that has a stated redemption price at
Stated Maturity that exceeds its Issue Price by at least 0.25% of its aggregate
principal amount, multiplied by the number of full years from the Original
Issue Date to the Stated Maturity for such Bearer Note and (ii) any other
Bearer Note designated by the Company as issued with original issue discount
for United States federal income tax purposes.
DENOMINATION, FORM AND TRANSFER
The minimum aggregate principal amount of Bearer Notes that may be purchased
is U.S.$25,000 (or, unless otherwise set forth in the applicable Pricing
Supplement, the approximate equivalent thereof in other currencies). Unless
otherwise specified in the applicable Pricing Supplement, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a Specified Currency other than
U.S. dollars will be set forth in the applicable Pricing Supplement.
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All Bearer Notes that have the same Original Issue Date and otherwise
identical terms will be represented initially by interests in a temporary
Global Security in bearer form, without coupons (a "Temporary Global Note"), to
be deposited with a common depositary in London (the "Depositary") for Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"), for
credit to the accounts designated by or on behalf of the purchasers thereof. On
or after the 40th day following the issuance of a Temporary Global Note (the
"Exchange Date"), and subject to the receipt of a Certificate of Non-U.S.
Beneficial Ownership, beneficial interests in that Temporary Global Note will
be exchangeable for interests in a definitive Global Security in bearer form,
without coupons (a "Permanent Global Note"), in a denomination equal to the
aggregate principal amount of all interests in the Temporary Global Note so
exchanged. A "Certificate of Non-U.S. Beneficial Ownership" is a certificate,
delivered on the Exchange Date or on any Interest Payment Date prior to the
Exchange Date, to the effect that the beneficial interest to which the
certificate relates is owned by a person that is not a U.S. Person or is owned
by or through a financial institution in compliance with applicable U.S.
Treasury regulations. Each Permanent Global Note will be deposited with the
Depositary for credit to the account or accounts designated by or on behalf of
the beneficial owner or owners thereof. If the beneficial owner of a Bearer
Note represented by an interest in a Permanent Global Note gives 30 days'
notice to the Principal Paying Agent for such Note through either Euroclear or
Cedel, such Permanent Global Note shall be exchanged in its entirety, at no
expense to the beneficial owners of interests therein, for definitive
individual Bearer Notes, with appropriate coupons attached, in any authorized
denomination or denominations. No Bearer Note will be delivered in or to the
United States. References herein to "Bearer Notes" shall, except where
otherwise indicated, include interests in a Temporary or Permanent Global Note
as well as individual Bearer Notes and any appurtenant coupons.
Transfers of interests in a Temporary or Permanent Global Note will be made
by Euroclear or Cedel in accordance with their customary operating procedures.
Title to individual Bearer Notes and coupons will pass by physical delivery.
The bearer of each coupon, whether or not the coupon is attached to an
individual Bearer Note, shall be subject to and bound by all the provisions
contained in the individual Bearer Note to which such coupon relates. The
bearer of any individual Bearer Note and any coupon may, to the fullest extent
permitted by applicable law, be treated at all times by all persons and for all
purposes as the absolute owner of such Note or coupon, as the case may be,
regardless of any notice of ownership, theft or loss or of any writing thereon.
The following legend will appear on each Permanent Global Note and on all
individual Bearer Notes and any coupons: "Any United States Person who holds
this obligation will be subject to limitations under the United States income
tax laws, including the limitations provided in Sections 165(j) and 1287(a) of
the Internal Revenue Code." The sections referred to in the legend provide
that, with certain exceptions, a United States taxpayer that holds an interest
in a Global Security or an individual Bearer Note or coupon will not be
permitted to deduct any loss, and will not be eligible for capital gain
treatment with respect to any gain, realized on a sale, exchange, redemption or
other disposition of an interest in such Global Security or such individual
Bearer Note or coupon. See "Limitations on Issuance of Bearer Securities" in
the accompanying Prospectus.
Bearer Notes may not be exchanged for Registered Notes.
PAYMENTS AND PAYING AGENTS
Unless otherwise specified in the applicable Pricing Supplement and except,
under certain circumstances, for Bearer Notes having Specified Currencies other
than U.S. dollars, payments of the principal of and any premium and interest on
a Bearer Note will be made only in the Specified Currency for such Note. See
"Currency Risks" below.
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Principal or interest on each Temporary Global Note will be paid to each of
Euroclear and Cedel with respect to that portion of such temporary Global Note
held for its account, but only upon receipt as of the relevant Interest Payment
Date of a Certificate of Non-U.S. Beneficial Ownership and upon notation
thereon of such payment. Each of Euroclear and Cedel will undertake in such
circumstances to credit such interest received by it to the respective accounts
having an interest in such Temporary Global Note.
The principal of and any premium or interest on each Permanent Global Note
will be paid to each of Euroclear and Cedel with respect to that portion of
such Permanent Global Note held for its account upon notation thereon of such
payment. Each of Euroclear and Cedel will undertake in such circumstances to
credit such principal, premium and interest received by it to the respective
accounts having an interest in such Permanent Global Note. All such payments
will be made to Euroclear and Cedel in immediately available funds.
A payment in respect of an individual Bearer Note or any coupon will be made
only against surrender of such Note or coupon at the offices of such Paying
Agents (as defined below) outside the United States as the Company may from
time to time appoint. At the direction of the Holder of such a Note or coupon,
and subject to applicable laws and regulations, such payments will be made by
check drawn on a bank in The City of New York mailed to an address outside the
United States furnished by such Holder or, at the option of such Holder, by
wire transfer (pursuant to written instructions supplied by such Holder) to an
account maintained by the payee with a bank located outside the United States.
No payment in respect of an individual Bearer Note or coupon will be made upon
presentation of such Note or coupon at any office or agency of the Trustee or
any other paying agency maintained by the Company in the United States, nor
will any such payment be made by transfer to an account, or mailed to an
address, in the United States. Notwithstanding the foregoing, if U.S. dollar
payments in respect of Bearer Notes or any coupons at the offices of all Paying
Agents outside the United States become illegal or are effectively precluded
because of the imposition of exchange controls or similar restrictions on the
full payment or receipt of such amounts in U.S. dollars, the Company will
appoint an office or agency (which may be the Trustee) in the United States at
which such payments may be made.
Payments of principal, premium (if any) and interest (if any) with respect to
Notes denominated and payable in ECU will be made at the specified office of a
Paying Agent outside the United States by credit or transfer to an ECU account
specified by the payee. Payments in a component currency (if required, as set
forth under "Currency Risks--Payment Currency" below) will be made in the
Payment Currency (as defined below) at the specified office of a Paying Agent
in the country of the Payment Currency or, if none or at the option of the
holder, at the specified office of any Paying Agent outside the United States
either by a check drawn on, or by transfer to an account specified by the payee
with, a bank in the financial center of the country of the Payment Currency.
Payments will be subject in all cases to any fiscal or other laws and
regulations applicable thereto, but without prejudice to the provisions
regarding taxation discussed below.
The specified office of the Trustee and the names and offices of the initial
paying agents (each, including its successors, a "Paying Agent") are set forth
on the back cover of this Prospectus Supplement. The Company reserves the right
at any time to vary or terminate the appointment of any Paying Agent and to
appoint additional or other Paying Agents and to approve any change in the
office through which any Paying Agent acts, provided that there will at all
times be a Paying Agent (which may be the Trustee) in at least one city in
Europe, which, so long as the Bearer Notes are listed on the Luxembourg Stock
Exchange and the rules of the exchange so require, shall include (or be)
Luxembourg. Notice of any such termination or appointment and of any changes in
the specified offices of a Trustee or any Paying Agent will be given to the
Holders of Bearer Notes in accordance with "Notices" below.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described under "Description of Debt Securities--Events of
Default" in the Prospectus, the amount of principal due and payable with
respect to such Note shall be limited to the aggregate principal amount of such
Note multiplied by the sum of its Issue
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Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the Original Issue Date to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
Interest payments in respect of Bearer Notes will equal the amount of
interest accrued from and including the immediately preceding Interest Payment
Date in respect of which interest has been paid or duly made available for
payment (or from and including the date of issue, if no interest has been paid
with respect to the applicable Note) to but excluding the related Interest
Payment Date or Maturity, as the case may be.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum stated on the face thereof and in the applicable Pricing
Supplement until the principal amount thereof is paid or made available for
payment. Unless otherwise set forth in the applicable Pricing Supplement,
interest on each Fixed Rate Note will be payable semiannually in arrears on
each February 15 and August 15 and at Maturity. Each payment of interest in
respect of an Interest Payment Date shall include interest accrued through the
day before 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.
Any payment of principal, premium or interest required to be made in respect
of a Fixed Rate Note on a date that is not a Business Day for such Note need
not be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) for such Note at the initial
interest rate set forth on the face thereof and in the applicable Pricing
Supplement (the "Initial Interest Rate"). Thereafter, the interest rate on such
Note for each Interest Reset Period (as defined below) will be determined by
reference to an interest rate basis (the "Base Rate"), plus or minus the
Spread, if any, and/or multiplied by the Spread Multiplier, if any. The
"Spread" is the number of basis points (one basis point equals one one-
hundredth of a percentage point) that may be specified in the applicable
Pricing Supplement as being applicable to such Note, and the "Spread
Multiplier" is the percentage that may be specified in the applicable Pricing
Supplement as being applicable to such Note. The applicable Pricing Supplement
will designate one or more of the following Base Rates as applicable to a
Floating Rate Note: (i) the CD Rate (a "CD Rate Note"), (ii) the CMT Rate (a
"CMT Rate Note"), (iii) the Commercial Paper Rate (a "Commercial Paper Rate
Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note"), (v) LIBOR (a
"LIBOR Note"), (vi) the Prime Rate (a "Prime Rate Note"), (vii) the Treasury
Rate (a "Treasury Rate Note") or (viii) such other Base Rate or formula as is
set forth in such Pricing Supplement and in such Note. The "Index Maturity" for
any Note is the period of maturity of the instrument, obligation or index from
which the Base Rate is calculated.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate").
Notwithstanding any Maximum Interest Rate that may be applicable to any
Floating Rate Note, the interest rate on a Floating Rate Note will in no event
be higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application. The Notes will be
governed by the law of the State of New York and, under such law, the maximum
rate of interest, with certain exceptions, is 25% per annum on a simple
interest basis.
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The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, the Principal Paying Agent shall
be the Calculation Agent for each Bearer Note.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note, and the first day of each Interest Reset Period
being an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under "Treasury Rate Notes"); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes that reset quarterly, the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes that reset
semiannually, the third Wednesday of each of the two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, the third Wednesday of one month of each year
specified in the applicable Pricing Supplement. If an Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that, in the case of a LIBOR Note, if such Business Day is in the
next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from
and including the Original Issue Date or the last date to which interest has
been paid or duly provided for, as the case may be, to but excluding the
applicable Interest Payment Date or Maturity, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, with respect
to a Floating Rate Note, accrued interest shall be calculated by multiplying
the principal amount of such Note (or, in the case of an Indexed Note, unless
otherwise specified in the applicable Pricing Supplement, the face amount of
such Indexed Note) by an accrued interest factor. Such accrued interest factor
will be computed by adding the interest factors calculated for each day in the
period 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 without rounding) for each such
day shall be computed by dividing the interest rate in effect on such day by
360, in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds
Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days
in the year, in the case of Treasury Rate Notes or CMT Rate Notes. For purposes
of making the foregoing calculation, the interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation on Floating
Rate Notes will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, interest will be payable, in the case of Floating Rate Notes
that 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
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each
year specified in the applicable Pricing Supplement (each such day being
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an "Interest Payment Date") and, in each case, at Maturity. If an Interest
Payment Date (other than at Maturity) with respect to any Floating Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding Business Day, except that, in the
case of a LIBOR Note, if such Business Day would fall in the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day.
If the Maturity of a Floating Rate Note falls on a day that is not a Business
Day, the required payment of principal, premium (if any) and/or interest will
be made on the next succeeding Business Day as if made on the date such payment
was due, and no interest shall accrue on such payment for the period from and
after Maturity to the date of such payment on the next succeeding Business Day.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide to such Holder the interest rate then in
effect, and, if determined, the interest rate that will become effective on the
next Interest Reset Date, with respect to such Floating Rate Note. In addition,
such information will be communicated to the Luxembourg Stock Exchange and will
be made available at the offices of the Principal Paying Agent in London and at
the Luxembourg Stock Exchange.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System. "Composite Quotations" means the
daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
CD RATE NOTES
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread and/or
Spread Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period, as determined by the Calculation Agent
for such CD Rate Note, shall be the rate as of the second Business Day prior to
the Interest Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement, as published in
H.15(519) under the heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on
such CD Rate Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement 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 yet
published in either H.15(519) or Composite Quotations, then the "CD Rate" for
such Interest Reset Period will be calculated by the Calculation Agent for such
CD Rate Note and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date,
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Note for negotiable certificates of deposit of major money market banks
(in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity designated in the Pricing Supplement in
a denomination of $5,000,000; provided, however, that if the three dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "CD Rate" for such Interest Reset Period
will be the CD Rate in effect on such CD Rate Determination Date, or, if none,
the Initial Interest Rate.
The "Calculation Date" pertaining to any CD Rate Determination Date shall be
the earlier of (i) the tenth calendar day after such CD Rate Determination Date
or, if such day is not a Business Day, the next succeeding Business Day or (ii)
the Business Day immediately preceding the applicable Interest Payment Date or
Maturity, as the case may be.
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COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread and/or Spread Multiplier, if any, specified in such Note
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Note as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper". In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in 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, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial
Paper Rate Note for commercial paper of the specified Index Maturity placed for
an industrial issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized statistical rating agency; provided, however, that if the
three dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate" for
such Interest Reset Period will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Determination Date, or, if none, the Initial Interest
Rate.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = __________________ X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the period for which accrued interest is being
calculated.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the earlier of (i) the tenth calendar day after such Commercial
Paper Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or Maturity, as the case may be.
FEDERAL FUNDS RATE NOTES
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread and/or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" for each Interest Reset Period shall be the effective rate on the
second Business Day immediately prior to the Interest Reset Date for such
Interest Reset Period (a "Federal Funds Rate 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 3:00 p.m., New York City
time, on the Calculation Date (as defined below) pertaining to
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such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate
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 yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be the arithmetic mean of the rate, as of 9:00 a.m., New York City
time, on the Federal Funds Rate Determination Date for the last transaction of
not less than $5,000,000 in overnight federal funds arranged by each of three
leading brokers of federal funds transactions in the City of New York selected
by the Calculation Agent for such Federal Funds Rate Note; provided, however,
that if the brokers selected as aforesaid by the Calculation Agent are not
quoting as set forth above, the "Federal Funds Rate" for such Interest Reset
Period will be the Federal Funds Rate in effect on such Federal Funds Rate
Determination Date, or, if none, the Initial Interest Rate.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the earlier of (i) the tenth calendar day after such Federal
Funds Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or Maturity, as the case may be.
LIBOR NOTES
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread and/or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each Interest Reset Period will be determined by the Calculation Agent for such
LIBOR Note as follows:
(i) On the second London Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Interest Determination Date"), the
Calculation Agent for such LIBOR Note will determine (a) if "LIBOR Reuters"
is specified in the applicable Pricing Supplement, the arithmetic mean of
the offered rates (unless the specified Designated LIBOR Page by its terms
provides only for a single rate, in which case such single rate shall be
used) for deposits in the Index Currency having the Index Maturity
designated in the applicable Pricing Supplement, commencing on the second
London Business Day immediately following such LIBOR Interest Determination
Date, that appear on the Designated LIBOR Page specified in the applicable
Pricing Supplement as of 11:00 a.m., London time, on such LIBOR Interest
Determination Date, if at least two such offered rates appear (unless, as
aforesaid, only a single rate is required) on such Designated LIBOR Page,
or (b) if "LIBOR Telerate" is specified in the applicable Pricing
Supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified
as the method for calculating LIBOR, the rate for deposits in the Index
Currency having the Index Maturity designated in the applicable Pricing
Supplement commencing on the second London Business Day immediately
following such LIBOR Interest Determination Date that appears on the
Designated LIBOR Page specified in the applicable Pricing Supplement as of
11:00 a.m., London time, on such LIBOR Interest Determination Date. If
fewer than two such offered rates appear, or if no such rate appears, as
applicable, LIBOR in respect of the related LIBOR Determination Date will
be determined in accordance with the provisions described in clause (ii)
below.
(ii) With respect to a LIBOR Note and an Interest Reset Period to which
this clause (ii) applies, the Calculation Agent will request the principal
London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent, to provide the
Calculation Agent with its offered quotation for deposits in the Index
Currency for the period of the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, to prime
banks in the London interbank market at approximately 11:00 a.m., London
time, on such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in such Index Currency in
such market at such time. If at least two such quotations are provided,
LIBOR determined on such
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LIBOR Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR determined on
such LIBOR Interest Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center selected by the Calculation Agent
for loans in the Index Currency to leading European banks, having the Index
Maturity designated in the applicable Pricing Supplement commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, LIBOR determined as of such
LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR
Interest Determination Date.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
specified in the applicable Pricing Supplement or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service for the purpose of displaying the London
interbank rates of major banks for the applicable Index Currency.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars, Italian lire and ECU, the Principal Financial Center shall be The City
of New York, Milan and Luxembourg, respectively.
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Treasury Rate and the Spread
and/or Spread Multiplier, if any, specified in such Note and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the auction
held on the Treasury Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Pricing
Supplement, as such rate shall be published in H.15(519) under the heading
"U.S. Government Securities-Treasury bills-auction average (investment)" or, in
the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date (as defined below) pertaining to such Treasury
Rate Determination 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) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that
the results of the 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 on such
Treasury Rate Determination Date, then the "Treasury Rate" for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury
Rate Note and shall be a 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 Rate
Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of Treasury
bills with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting bid rates as mentioned in this sentence, then
the "Treasury Rate" for such Interest Reset Period will be the Treasury Rate in
effect on such Treasury Rate Determination Date, or, if none, the Initial
Interest Rate.
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The "Treasury Rate Determination Date" for each Interest Reset Period will be
the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally 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 Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the earlier of (i) the tenth calendar day after such Treasury Rate
Determination Date or, if such a day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity, as the case may be.
PRIME RATE NOTES
Each Prime Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Prime Rate and the Spread and/or
Spread Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" for each Interest Reset Period will be determined by the Calculation
Agent as of the second Business Day prior to the Interest Reset Date for such
Interest Reset Period (a "Prime Rate Determination Date") and shall be the rate
published in H.15(519) under the heading "Bank Prime Loan." In the event that
such rate is not published prior to 9 a.m., New York City time, on the
Calculation Date (as defined below), then the "Prime Rate" for such Interest
Reset Period shall be determined by the Calculation Agent and shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime
rate or base lending rate as in effect for that Prime Rate Determination Date.
If fewer than four such rates but more than one such rate appear on the Reuters
Screen NYMF Page for the Prime Rate Determination Date, the "Prime Rate" will
be determined by the Calculation Agent and will be the arithmetic mean of the
prime 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
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation
Agent on the basis of the rates furnished in The City of New York by the
appropriate number of substitute banks or trust companies organized and doing
business under the laws of the United States, or any State thereof, having
total equity capital of at least U.S. $500,000,000 and being subject to
supervision or examination by Federal or State authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks selected as aforesaid are not quoting as mentioned in this sentence, the
Prime Rate for such Interest Reset Period will be the Prime Rate in effect on
such Prime Rate Determination Date, or, if none, the Initial Interest Rate.
"Reuters Screen NYMF Page" means 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).
The "Calculation Date" pertaining to a Prime Rate Determination Date will be
the earlier of (i) the tenth calendar day after such Prime Rate Determination
Date or, if such day is not a Business Day, the next succeeding Business Day or
(ii) the Business Day immediately preceding the applicable Interest Payment
Date or Maturity as the case may be.
CMT RATE NOTES
Each CMT Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CMT Rate and the Spread and/or
Spread Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, the "CMT
Rate" for each Interest Reset Period as determined by the Calculation Agent for
such CMT Rate Note shall be the rate (i) in the case where the Designated CMT
Telerate Page (as defined below) is 7055, as of the second Business Day prior
to the Interest Reset Date for such Interest Reset Period (a "CMT Determination
Date") or (ii) in the case where the Designated CMT Telerate Page is 7052, for
the week or the month, as specified in the applicable Pricing Supplement, ended
immediately preceding the week in which the CMT Determination Date occurs, in
either case, for the Index Maturity specified in the applicable Pricing
Supplement, as displayed on the Designated CMT Telerate Page under the caption
". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15
. . . Mondays Approximately 3:45 P.M." If such rate is no longer displayed on
the relevant page, or if not displayed by 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CMT Determination Date,
then the "CMT Rate" for such Interest Reset Period shall be such treasury
constant maturity rate for the Index Maturity specified in the applicable
Pricing Supplement as published in the relevant H.15(519) opposite the caption
"U.S. Government Securities, Treasury Constant Maturities". If such rate is no
longer published, or if not published by 3:00 p.m., New York City time, on the
Calculation Date relating to such CMT Determination Date, then the "CMT Rate"
for such Interest Reset Period shall be such treasury constant maturity rate
for the Index Maturity specified in the applicable Pricing Supplement (or other
United States Treasury rate for such Index Maturity) as may then be published
by either the Board of Governors of the Federal Reserve System or the United
States Department of Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided by
3:00 p.m., New York City time, on the Calculation Date relating to such CMT
Determination Date, then the "CMT Rate" for the Interest Reset Period shall be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 p.m., New York City time, on the CMT Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The City
of New York (which may include the Agents or their affiliates) selected by the
Calculation Agent (from five such Reference Dealers selected by the Calculation
Agent and eliminating the higher quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity
of approximately the Index Maturity specified in the applicable Pricing
Supplement and a remaining term to maturity of not less than such Index
Maturity minus one year. If the Calculation Agent cannot obtain three such
Treasury Note quotations, the "CMT Rate" for such Interest Reset Period shall
be calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the CMT Determination Date of
three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for the Treasury Notes with
an original maturity of the number of years that is the next highest to the
Index Maturity specified in the applicable Pricing Supplement and a remaining
term to maturity closest to the Index Maturity specified in the applicable
Pricing Supplement and in an amount of at least $100 million. If three or four
(and not five) of such Reference Dealers are quoting as described above, then
the CMT Rate will be based on the arithmetic mean of the offer prices obtained
and neither the highest nor the lowest of such quotes will be eliminated;
provided, however, that if fewer than three Reference Dealers selected by the
Calculation Agent are quoting as described herein, the "CMT Rate" will be the
CMT Rate in effect on such CMT Determination Date, or, if none, the Initial
Interest Rate. If two Treasury Notes with an original maturity as described in
the second preceding sentence have remaining terms to maturity equally close to
the Index Maturity specified in the applicable Pricing Supplement, the quotes
for the Treasury Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of
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displaying Treasury Constant Maturities as reported in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
The "Calculation Date" pertaining to any CMT Determination Date shall be the
earlier of (i) the tenth calendar day after such CMT Determination Date or, if
such day is not a Business Day, the next succeeding Business Day or (ii) the
Business Day immediately preceding the applicable Interest Payment Date or
Maturity, as the case may be.
INDEXED NOTES
The Company may from time to time offer Notes ("Indexed Notes") the principal
amount payable at Stated Maturity of which (the "Indexed Principal Amount") or
the interest amount payable on which is determined by reference to a measure
(the "Index") which will be related to (i) the rate of exchange between the
Specified Currency for such Note and the other currency or composite currency
(the "Indexed Currency") specified in the applicable Pricing Supplement (such
Indexed Notes, "Currency Indexed Notes"); (ii) the difference in the price of a
specified commodity (the "Indexed Commodity") on specified dates (such Indexed
Notes, "Commodity Indexed Notes"), (iii) the difference in the level of a
specified stock index (the "Stock Index"), which may be based on U.S. or
foreign stocks, on specified dates (such Indexed Notes, "Stock Indexed Notes")
or (iv) such other objective price or economic measures as are described in the
applicable Pricing Supplement. The manner of determining the Indexed Principal
Amount of an Indexed Note, and historical and other information concerning the
Indexed Currency, Indexed Commodity, Stock Index or other price or economic
measures used in such determination, will be set forth in the applicable
Pricing Supplement, together with information concerning tax consequences to
the holders of such Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, interest on
an Indexed Note will be payable by the Company based on the amount designated
in the applicable Pricing Supplement as the "Face Amount" of such Indexed Note.
The applicable Pricing Supplement will describe whether the principal amount of
the related Indexed Note that would be payable upon redemption or repayment
prior to Stated Maturity will be the Face Amount of such Indexed Note, the
Indexed Principal Amount of such Indexed Note at the time of redemption or
repayment, or another amount described in such Pricing Supplement.
An investment in Indexed Notes entails significant risks that are not
associated with similar investment in a conventional fixed-rate debt security.
Indexation of the interest rate of such a Note may result in an interest rate
that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid. Indexation of the principal of and/or premium on such a Note may result
in an amount of principal and/or premium payable in respect thereof that is
less than the original purchase price of such Note if allowed pursuant to the
terms thereof, including the possibility that no such amount will be paid. The
secondary market for such Notes will be affected by a number of factors,
independent of the credit worthiness of the Company and the value of the
Indexed Currency, the Indexed Commodity or the Stock Index, including the
volatility of the Indexed Currency, the Indexed Commodity or the Stock Index,
the time remaining to the maturity of such Notes, the amount outstanding of
such Notes and market interest rates. The value of the Indexed Currency, the
Indexed Commodity or the Stock Index depends on a number of interrelated
factors, including economic, financial and political events, over which the
Company has no control. Additionally, if the formula used to determine the
amount of principal, premium and/or interest payable with respect to such Notes
contains a multiple or leverage factor, the effect of any change in the Indexed
Currency, the Indexed Commodity or the Stock Index will be increased. The
historical experience of the relevant Indexed Currency, Indexed Commodity or
Stock Index should not be taken as an indication of future performance of such
Indexed Currency, Indexed Commodity or Stock Index during the term of any
Indexed Note. The credit ratings assigned to the Company's medium-term note
program are a reflection of the Company's credit status and are in no way a
reflection of the potential impact of the factors discussed above, or any other
factors, on the market value of Indexed Notes. Accordingly, prospective
investors should consult their own financial and legal advisors as to the risks
entailed by an investment in Indexed Notes and the suitability of such Notes in
light of such prospective investors' particular circumstances.
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OTHER PROVISIONS; ADDENDA
Any provisions with respect to any Bearer Note, including the determination
of a Base Rate, the calculation of the interest rate applicable to a Floating
Rate Note, and the specification of one or more Base Rates, the Interest
Payment Dates, the Stated Maturity or any other variable term relating thereto,
may be modified as specified under "Other Provisions" on the face of such Note
or in an Addendum relating thereto, if so specified on the face of such Note
and in the applicable Pricing Supplement.
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be 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. Further information concerning additional terms and provisions of
Amortizing Notes will be specified in the applicable Pricing Supplement. A
table setting forth repayment information in respect of each Amortizing Note
will be included in the applicable Pricing Supplement and set forth in each
such Note.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Bearer Note will indicate either that
such Note cannot be redeemed (other than as provided under "Tax Redemption" and
"Special Tax Redemption" below) prior to Stated Maturity or that such Note will
be redeemable at the option of the Company, in whole or in part, and the date
or dates (each an "Optional Redemption Date") on which such Note may be
redeemed and the price (the "Redemption Price") at which (together with accrued
interest to such Optional Redemption Date) such Note may be redeemed on each
such Optional Redemption Date. The Company may exercise such option with
respect to a Bearer Note by notifying the Trustee and the Principal Paying
Agent for such Note at least 45 days prior to any Optional Redemption Date. At
least 30 but not more than 60 days prior to Optional Redemption Date, the
Trustee or the Principal Paying Agent shall provide notice of such redemption
to the record Holder of such Bearer Note in accordance with "Notices" below. In
the event of redemption of a Bearer Note in part only, a new Note or Notes for
the unredeemed portion thereof shall be issued to the record Holder thereof
upon the cancellation thereof. Bearer Notes redeemed prior to Stated Maturity
must be presented for payment together with all unmatured coupons, if any,
appertaining thereto, failing which the amount of any missing unmatured coupon
will be deducted from the sum due for payment. Unless otherwise specified in
the applicable Pricing Supplement, the Bearer Notes will not be subject to any
sinking fund.
The Pricing Supplement relating to each Bearer Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid
(each an "Optional Repayment Date") and the price (the "Optional Repayment
Price") at which (together with accrued interest to such Optional Repayment
Date) such Note may be repaid on each such Optional Repayment Date.
In order for a Bearer Note to be repaid, the Principal Paying Agent must
receive the Bearer Note at least 30 but not more than 45 days prior to an
Optional Repayment Date. Any tender of a Bearer Note for repayment shall be
irrevocable. The repayment option may be exercised by the Holder of a Bearer
Note for less than the entire principal amount of such Note, provided that the
principal amount of such Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, such Bearer Note shall be
cancelled and a new Note or Notes for the remaining principal amount thereof
shall be issued to the Holder of such repaid Note.
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TAX REDEMPTION
If the Company determines that, as a result of any change in or amendment to
the laws (or any regulations or rulings promulgated thereunder) of the United
States or of any political subdivision or taxing authority thereof or therein
affecting taxation, or any change in official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment is enacted or becomes effective (regardless of when
announced) on or after the applicable Original Issue Date, the Company has or
will become obligated to pay Additional Amounts (as defined below) with respect
to the Bearer Notes as described herein under "Payment of Additional Amounts",
and such obligation cannot be avoided by the Company taking reasonable measures
available to it, then the Company may, at its option, redeem the Bearer Notes,
as a whole but not in part, at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price (the "Redemption
Price"), calculated without premium, equal to 100% of the principal amount of
the Bearer Notes, together with accrued interest to the date fixed for
redemption; provided, however, that if the Bearer Notes are Original Issue
Discount Notes, the Redemption Price for each such Bearer Note shall be limited
to the sum of (i) the aggregate principal amount of such Note multiplied by its
Issue Price (expressed as a percentage of the aggregate principal amount) and
(ii) the original issue discount accrued on such Note from the Original Issue
Date to the date fixed for redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of notice of redemption).
Notice of redemption will be given by the Company not less than 30 nor more
than 60 days prior to the date fixed for redemption, which date and the
Redemption Price will be specified in such notice.
SPECIAL TAX REDEMPTION
If the Company shall determine that any payment made outside the United
States by the Company or any of its Paying Agents in respect of any Bearer Note
of a series or coupon appertaining thereto (an "Affected Security") would,
under any present or future laws or regulations of the United States, be
subject to any certification, identification, documentation, information or
other reporting requirement of any kind, the effect of which requirement is the
disclosure to the Company, any paying agent or any governmental authority of
the nationality, residence or identity of a beneficial owner of such Affected
Security that is a United States Alien (as defined herein under "Payment of
Additional Amounts") (other than such a requirement (a) that would not be
applicable to a payment made by the Company or any of its Paying Agents (i)
directly to the beneficial owner or (ii) to a custodian, nominee or other agent
of the beneficial owner, or (b) that can be satisfied by such custodian,
nominee or other agent certifying to the effect that such beneficial owner is a
United States Alien, provided that in each case referred to in clauses (a)(ii)
and (b) payment by such custodian, nominee or agent to such beneficial owner is
not otherwise subject to any such requirement), the Company shall, at its
election, either redeem the Affected Securities, as a whole, at the Redemption
Price, or, if the conditions of the second succeeding paragraph are satisfied,
pay the Additional Amounts specified in such paragraph. The Company shall make
such determination and election as soon as practicable and publish prompt
notice thereof (the "Determination Notice") stating the effective date of such
certification, documentation, identification, information or other reporting
requirement, whether the Company has elected to redeem the Affected Securities
or pay the Additional Amounts specified in the second succeeding paragraph and
(if applicable) the last date by which the redemption of the Affected
Securities must take place, as provided in the next succeeding sentence. If the
Company elects to redeem the Affected Securities, such redemption shall take
place on such date, not later than one year after the publication of the
Determination Notice, as the Company shall elect by notice to the Principal
Paying Agent at least 60 days prior to the date fixed for redemption. Notice of
such redemption of the Affected Securities will be given to the Holders of the
Affected Securities not more than 60 nor less than 30 days prior to the date
fixed for redemption. Notwithstanding the foregoing, the Company will not so
redeem the Affected Securities if the Company shall subsequently determine, not
less than 30 days prior to the date fixed for redemption, that subsequent
payments on the Affected Securities would not be subject to any such
certification, identification, documentation, information or other reporting
requirement, in which case the Company shall publish prompt notice of such
determination and any earlier redemption notice shall be revoked and of no
further effect.
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Each notice referred to in the preceding paragraphs shall be given in the
manner described below under "Notices."
If and so long as the certification, identification, documentation,
information or other reporting requirement referred to in the second preceding
paragraph would be fully satisfied by payment of a backup withholding tax or
similar charge, the Company may elect to pay as Additional Amounts such amounts
as may be necessary so that every net payment made outside the United States
following the effective date of such requirement by the Company or any of its
Paying Agents in respect of any Affected Security of which the beneficial owner
is a United States Alien (but without any requirement that the nationality,
residence or identity of such beneficial owner be disclosed to the Company, any
Paying Agent or any governmental authority), after deduction or withholding for
or on account of such backup withholding tax or similar charge will not be less
than the amount provided for in such Affected Security to be then due and
payable. However, the Company may elect not to pay such Additional Amounts in
respect of any backup withholding tax or similar charge, which (a) would not be
applicable to a payment of principal of or interest on any Affected Security
made by the Company or any one of its Paying Agents (i) directly to the
beneficial owner or to a custodian, nominee or other agent of the beneficial
owner of such Affected Security or (ii) if such custodian, nominee or other
agent were to certify to the effect that such beneficial owner is a United
States Alien or (b) is imposed as a result of presentation of such Affected
Security for payment more than 10 days after the date on which such payment
became due and payable or on which payment thereof is duly provided for,
whichever occurred later. In the event the Company elects to pay any Additional
Amounts pursuant to this paragraph, the Company shall have the right to redeem
the Affected Securities at any time pursuant to the applicable provisions of
the second preceding paragraph, without reducing the Redemption Price for
applicable withholding taxes. If the Company elects to pay Additional Amounts
pursuant to this paragraph and the condition specified in the first sentence of
this paragraph should no longer be satisfied, then the Company shall redeem the
Affected Securities pursuant to the applicable provisions of the second
preceding paragraph. Any redemption payments made by the Company pursuant to
the two immediately preceding sentences shall be subject to the continuing
obligation of the Company to pay additional interest pursuant to this
paragraph. (Section 3.05)
PAYMENT OF ADDITIONAL AMOUNTS
The Company will, subject to the exceptions and limitations set forth below,
pay such additional amounts (the "Additional Amounts") to the Holder of any
Bearer Note or of any coupon that is a United States Alien as may be necessary
in order that every net payment on such Bearer Note or coupon, after deduction
or withholding for or on account of any present or future tax, assessment or
other governmental charge imposed by the United States (or any political
subdivision or taxing authority thereof or therein) upon, or as a result of,
such payment, will not be less than the amount provided for in such Bearer Note
or coupon to be then due and payable. However, the Company will not be required
to make any such payment of Additional Amounts to any such Holder for or on
account of:
(a) any tax, assessment or other governmental charge which would not have
been so imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Holder, if such Holder is an estate, a trust, a partnership or a
corporation) and the United States, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being or
having been engaged in a trade or business or present therein or having, or
having had, a permanent establishment therein or (ii) such Holder's past or
present status as a personal holding company, foreign personal holding
company, private foundation or other tax exempt organization in each case
with respect to the United States or as a corporation that accumulates
earnings to avoid United States federal income tax;
(b) any estate, inheritance, gift, sales, transfer or personal property
tax or any similar tax, assessment or other governmental charge;
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(c) any tax, assessment or other governmental charge imposed by reason of
the presentation by the Holder of any such Bearer Note or coupon for
payment on a date more than 10 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payments on or in respect of any Bearer
Note or coupon;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal of or interest
on any Bearer Note or coupon, if such payment can be made without such
withholding by any other Paying Agent in Western Europe;
(f) any tax, assessment or other governmental charge that would not have
been imposed but for the failure to comply with any certification,
identification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of such Bearer Note or
coupon if, without regard to any tax treaty, such compliance is required by
statute or by regulation of the United States or of any political
subdivision or taxing authority thereof or therein as a precondition to
relief or exemption from such tax, assessment or other governmental charge;
(g) any tax, assessment or other governmental charge imposed by reason of
such Holder's past or present status as (i) a controlled foreign
corporation that is related to the Company through stock ownership or (ii)
the actual or constructive owner of 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote; or
(h) any combination of items (a), (b), (c), (d), (e), (f) or (g);
nor shall Additional Amounts be paid with respect to any payment in respect of
a Bearer Note or coupon to a United States Alien Holder that is a fiduciary or
partnership or other than the sole beneficial owner of such Bearer Note or
coupon to the extent that a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or a beneficial owner would not have
been entitled to such Additional Amounts had such beneficiary, settlor, member
or beneficial owner been the Holder of the Bearer Note or coupon.
The term "United States Alien" means any Person that, for United States
federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust or
foreign partnership one or more of the members of which, for United States
federal income tax purposes, is a foreign corporation, a non-resident alien
individual or a non-resident alien fiduciary of a foreign estate or trust.
(Section 4.13)
REPLACEMENT OF BEARER NOTES AND COUPONS
If an individual Bearer Note or coupon is mutilated, destroyed, stolen or
lost it may be replaced at the specified office of the Principal Paying Agent
in London; or, so long as the Bearer Notes are listed on the Luxembourg Stock
Exchange, at the specified office of the Paying Agent in Luxembourg, upon
payment by the claimant of such expenses as may be incurred in connection
therewith and, in the case of destruction, theft or loss, on such terms as to
evidence thereof and indemnity as the Company, the Trustee or any paying agent
may reasonably require. Mutilated or defaced Bearer Notes or coupons must be
surrendered before replacements will be issued.
NOTICES
All notices to Holders of Bearer Notes will be deemed to have been duly given
if published on two Business Days in a leading London daily newspaper (which is
expected to be the Financial Times) and, so
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<PAGE>
long as the Bearer Notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, in Luxembourg in a newspaper of general
circulation in Luxembourg (which is expected to be the Luxemburger Wort). Such
notices shall be deemed to have been given on the date of the first such
publication.
UNCLAIMED MONIES
All monies paid by the Company to a Paying Agent for the payment of principal
of or any premium or interest on any Bearer Note or for any coupon which remain
unclaimed at the end of two years after such payments shall have become due and
payable will be repaid to the Company, at its request, and the Holder of such
Note or coupon will thereafter look only to the Company for payment, such
payment to be made only outside the United States.
GOVERNING LAW
The Notes will be governed by, and construed in accordance with, the laws of
the State of New York, without regard to the conflicts of law rules of such
State.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Bearer Note having a Specified Currency other than the
currency of the country in which a purchaser is resident or the currency
(including ECU and any other such composite currency) in which a purchaser
conducts its business or activities (the "home currency") entails significant
risks that are not associated with a similar investment in a security
denominated in the home currency. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the home
currency and such Specified Currency and the possibility of the imposition or
modification of foreign exchange controls with respect to such Specified
Currency. Such risks generally depend on factors over which the Company has no
control, such as economic and political events and the supply of and demand for
the relevant currencies. In recent years, rates of exchange for certain
currencies have been highly volatile, and such volatility may occur in the
future. Fluctuations in any particular exchange rate that have occurred in the
past, however, are not necessarily indicative of fluctuations in the rate that
may occur during the term of any Bearer Note. Depreciation of the Specified
Currency for a Bearer Note against the relevant home currency would result in a
decrease in the effective yield (on a U.S. dollar basis) of such Note below its
coupon rate and, in certain circumstances, could result in a loss to the
investor on a home currency basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments in respect of Bearer Notes
denominated in such currency. At present, the Company has identified the
following currencies in which payments of principal, premium and/or interest on
Bearer Notes may be made: Australian dollars, Canadian dollars, Danish kroner,
Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU. However,
the Company may determine at any time to issue Bearer Notes with Specified
Currencies other than those listed. There can be no assurances that exchange
controls will not restrict or prohibit payments of principal, premium and/or
interest in any Specified Currency. Even if there are no actual exchange
controls, it is possible that, on a payment date with respect to any particular
Bearer Note, the currency in which amounts then due in respect of such Note are
payable would not be available to the Company. In that event, the Company will
pay such amounts in the manner set forth under "Payment Currency" below.
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<PAGE>
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN BEARER NOTES DENOMINATED IN A CURRENCY OTHER
THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN BEARER NOTES DENOMINATED IN A CURRENCY OTHER THAN THE PURCHASER'S
HOME CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Any Pricing Supplement relating to Bearer Notes having a Specified Currency
other than U.S. dollars will contain certain information concerning historical
exchange rates for such currency against the U.S. dollar, a brief description
of such currency and any material exchange controls affecting such currency,
and any other material information concerning such currency.
VALUE OF ECU
Subject to the provisions set forth under "Payment Currency" below, the value
of the ECU is equal to the value of the European Currency Unit that is at
present used as the unit of account of the European Communities (the "EC") and
which is at present valued on the basis of specified amounts of the currencies
of twelve member countries of the EC as shown below.
Pursuant to Council Regulation (EEC) No. 3320/94 dated December 22, 1994, the
ECU is at present composed of the sum of the following currency amounts:
<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
German mark............. 0.6242
Pound sterling.......... 0.08784
French franc............ 1.332
Italian lire............ 151.80
Dutch guilder........... 0.2198
Belgian franc........... 3.301
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Luxembourg franc........ 0.130
Danish krone............ 0.1976
Irish pound............. 0.008552
Greek drachma........... 1.440
Spanish peseta.......... 6.885
Portuguese escudo....... 1.393
</TABLE>
The EC may change this definition of the ECU, including by making changes in
the foregoing components, which will cause the basis for the valuation of a
Bearer Note denominated in ECU to change accordingly.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Bearer Note is required
to be made in a Specified Currency other than U.S. dollars and such currency is
unavailable to the Company due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available to the Company or so used. The
amounts so payable on any date in such currency shall be converted into U.S.
dollars on the basis of the most recently available Market Exchange Rate for
such currency or as otherwise indicated in the applicable Pricing Supplement.
Any payment in respect of such Note made under such circumstances in U.S.
dollars will not constitute an Event of Default under the Indenture under which
such Note shall have been issued. Notwithstanding the foregoing, if a Specified
Currency is unavailable to the Company solely because it is no longer lawful in
the country of issue to make the relevant payment in that currency because that
currency has been replaced by the ECU or other currency of the European Union
pursuant to the Treaty establishing the European Community, the amounts so
payable in respect of such Note shall, beginning with the date such replacement
becomes effective, be made in ECU or such other currency; the amounts so
payable on any date shall be
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<PAGE>
converted into ECU or such other currency on the basis of the conversion rate
officially in effect in the European Union on the effective date of such
replacement.
If payment in respect of a Bearer Note is required to be made in ECU and the
ECU is not then used in the European Monetary System, then the Trustee for such
Note shall, without liability on its part, choose a component currency (the
"Payment Currency") of the ECU in which all payments in respect of such Note
and any related coupons shall be made until the ECU is again so used. Notice of
the Payment Currency selected by such Trustee shall be given in accordance with
"Description of Bearer Notes--Notices" above. The amount of each payment in
such Payment Currency shall be computed on the basis of the equivalent of the
ECU in that currency, determined as described below, as of the fourth
Luxembourg business day prior to the date on which such payment is due. Any
payment in respect of such Note made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture under
which such Note shall have been issued.
Notwithstanding the foregoing, on the first Luxembourg business day on which
the ECU is no longer used in the European Monetary System, each Trustee shall,
without liability on its part, choose a Payment Currency in which all payments
in respect of Bearer Notes and coupons for which such Trustee serves as Trustee
denominated in ECU having a due date prior thereto but not yet presented for
payment are to be made. The amount of each payment in such Payment Currency
shall be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first Luxembourg business day. Any
payment in respect of such Notes made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture under
which such Notes shall have been issued.
The equivalent of the ECU in the relevant Payment Currency as of any date
(the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange
on the following basis. The component currencies of the ECU for this purpose
(the "Components") shall be the currency amounts that were components of the
ECU when the ECU was most recently used in the European Monetary System or for
the settlement of transactions by public institutions of or within the EC. The
equivalent of the ECU in the Payment Currency shall be calculated by, first,
aggregating the U.S. dollar equivalents of the Components, and then, using the
rate used for determining the U.S. dollar equivalent of the Components in the
Payment Currency as set forth below, calculating the equivalent in the Payment
Currency of such aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components for each series of
Bearer Notes shall be determined by the Luxembourg Stock Exchange on the basis
of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time
on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one
or more major banks, selected by the Trustee for such Notes (with the approval
of the Company), in the country of issue of the Component in question.
If the official unit of any component currency of the ECU is altered by way
of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which
shall be equal to the amount of the former component currency divided by the
number of currencies into which that currency was divided.
If no direct quotations are available for a Component on a Day of Valuation
from any of the banks selected by the Trustee (with the approval of the
Company) for this purpose, because foreign exchange markets are closed in the
country of issue of that Component, or for any other reason, in computing the
U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall
(except as provided below) use the most recent direct quotations for such
Component obtained by it; provided that such most recent quotations may be used
only if they were prevailing in the country of issue not more than two
Luxembourg
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<PAGE>
business days before such Day of Valuation. Beyond such period of two
Luxembourg business days, the Luxembourg Stock Exchange shall determine the
U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such Component and for the U.S.
dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as
obtained by the Luxembourg Stock Exchange from one or more major banks,
selected by such Trustee (with the approval of the Company), in a country other
than the country of issue of such Component. Notwithstanding the foregoing,
within such period of two Luxembourg business days, the Luxembourg Stock
Exchange shall determine the U.S. dollar equivalent of such Component on the
basis of such cross rates if such Trustee and the Company judge that the
equivalent so calculated is more representative than the U.S. dollar equivalent
calculated on the basis of such most recent direct quotations. Unless otherwise
specified by such Trustee, if there is more than one market for dealing in any
component currency by reason of foreign exchange regulations or for any other
reason, the market to be referred to in respect of such currency shall be that
upon which a non-resident issuer of securities denominated in such currency
would purchase such currency in order to make payments in respect of such
securities.
All determinations referred to above made by the Trustee or the Luxembourg
Stock Exchange shall be at their respective sole discretion (except to the
extent expressly provided herein that any determination made by a Trustee is
subject to the approval of the Company) and shall, in the absence of manifest
error, be conclusive for all purposes and binding on holders of Bearer Notes,
and such Trustee shall have no liability therefor.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of the
State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York
provides, however, that an action based upon an obligation denominated in a
currency other than U.S. dollars will be rendered in the foreign currency of
the underlying obligation and converted into U.S. dollars at the rate of
exchange prevailing on the date of the entry of the judgment or decree.
TAXATION IN THE UNITED STATES
Under current United States federal income and estate tax law, (a) payment on
a Bearer Note or coupon by the Company or any paying agent to a holder that is
a United States Alien will not be subject to withholding of United States
federal income tax, provided that, with respect to payments of interest, the
holder does not actually or constructively own ten percent or more of the
combined voting power of all classes of stock of the Company and is not a
controlled foreign corporation related to the Company through stock ownership;
(b) a holder of a Bearer Note or coupon that is a United States Alien will not
be subject to United States federal income tax on gain realized on the sale,
exchange or redemption of such Note or coupon, provided that such holder does
not have a connection with or status with respect to the United States
described in clause (a) under "Payment of Additional Amounts"; (c) a beneficial
owner of a Bearer Note or coupon that is a United States Alien will not be
required to disclose its nationality, residence or identity to the Company, a
paying agent (acting in its capacity as such) or any United States governmental
authority in order to receive payment on such Note or coupon from the Company
or a paying agent outside the United States; and (d) a Bearer Note or coupon
will not be subject to United States federal estate tax as a result of the
death of a holder who is not a citizen or resident of the United States at the
time of death, provided that such holder did not at the time of death actually
or constructively own ten percent or more of the combined voting power of all
classes of stock of the Company and, at the time of such holder's death,
payments of interest on such Note or coupon would not have been effectively
connected with the conduct by such holder of a trade or business in the United
States.
United States information reporting requirements and backup withholding tax
will not apply to payments on a Bearer Note or coupon made outside the United
States by the Company or any paying agent
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<PAGE>
(acting in its capacity as such) to a holder that is a United States Alien.
Information reporting requirements and backup withholding tax also will not
apply to any payment on a Bearer Note or coupon outside the United States by a
foreign office of a custodian, nominee or other agent of the beneficial owner
of such Note or coupon, provided that such custodian, nominee or agent (i) is
not a U.S. Person, (ii) derives less than 50% of its gross income for certain
periods from the conduct of a trade or business in the United States and (iii)
is not a controlled foreign corporation as to the United States (a person
described in (i), (ii) and (iii) hereinafter a "foreign controlled person").
Payment in respect of a Bearer Note or coupon outside the United States to the
beneficial owner thereof by a foreign office of any custodian, nominee or agent
that is not a foreign controlled person will not be subject to backup
withholding tax, but will be subject to information reporting requirements
unless such custodian, nominee or agent has documentary evidence in its records
that the beneficial owner is a United States Alien or the beneficial owner
otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will not apply
to any payment of the proceeds of the sale of a Bearer Note or coupon effected
outside the United States by a foreign office of a "broker" (as defined in
applicable Treasury regulations), provided that such broker is a foreign
controlled person. Payment of the proceeds of the sale of a Bearer Note or
coupon effected outside the United States by a foreign office of any broker
that is not a foreign controlled person will not be subject to backup
withholding tax, but will be subject to information reporting requirements
unless such broker has documentary evidence in its records that the beneficial
owner is a United States Alien and certain other conditions are met, or the
beneficial owner otherwise establishes an exemption.
These backup withholding and information reporting rules are under review by
the United States Treasury, and their application to the Bearer Notes and
coupons could be changed prospectively by future regulations.
PLAN OF DISTRIBUTION
The Bearer Notes are being offered on a continuous basis by the Company
through the Agents, which have agreed to use their reasonable best efforts to
solicit orders to purchase Bearer Notes. Initial purchasers may propose certain
terms of the Bearer Notes, but the Company will have the right to accept orders
to purchase Bearer Notes and may reject proposed purchases in whole or in part.
The Agents shall have the right, in their discretion reasonably exercised, to
reject any proposed purchase of Bearer Notes in whole or in part. The Company
will pay any Agent a commission of from .125% to .750% of the principal amount
of Bearer Notes with a Stated Maturity of 184 days to 30 years sold through
such Agent, depending upon Stated Maturity. Commissions with respect to Notes
with Stated Maturities in excess of 30 years which are sold through an Agent
will be negotiated between the Company and such Agent at the time of such sale.
The Company may arrange for Bearer Notes to be sold through any Agent acting
as underwriter or may sell Bearer Notes directly to investors on its own
behalf. In the case of sales made directly by the Company, no commission or
discount in lieu thereof will be paid or allowed. The Company also may sell
Bearer Notes to any Agent as principal for its own account at a price to be
agreed upon at the time of sale. Such Notes may be resold by such Agent to one
or more investors at a fixed public offering price or at prevailing market
prices, or at prices related thereto, at the time of such resale, as determined
by such Agent. Unless otherwise specified in the applicable Pricing Supplement,
any Bearer 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 of
the principal amount equal to the commission applicable to an agency sale (as
described below) of a Note of identical maturity.
Any Agent may sell Bearer Notes it has purchased from the Company as
principal to other dealers for resale to investors and other purchasers, and
may allow any portion of the discount received in connection with such purchase
from the Company to such dealers. After the initial public offering of Bearer
Notes, the public offering price (in the case of Bearer Notes to be resold at a
fixed public offering price), the concession and the discount may be changed.
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<PAGE>
In compliance with United States federal income tax laws and regulations, the
Company and the Agent have agreed that in connection with the original issuance
of any Bearer Note or during the period of 40 days after the Original Issue
Date of such Note they will not offer, sell or deliver such Note, directly or
indirectly, to a U.S. Person or to any person within the United States, except
to the extent permitted under U.S. Treasury regulations. Under those
regulations, Bearer Notes may be offered and sold during that period to
international organizations, foreign central banks and to foreign branches of
U.S. financial institutions that satisfy requirements prescribed by the
regulations.
The Bearer Notes have not been and will not be registered under the
Securities and Exchange Law of Japan. The Company and the Agents will agree not
to offer or sell any Bearer Note directly or indirectly in Japan or to
residents of Japan or for the benefit of any Japanese person (which term as
used herein means any person resident in Japan, including any corporation or
other entity organized under the laws of Japan) or to others for reoffering or
resale directly or indirectly in Japan or to any Japanese person except in
accordance with applicable laws, regulations and ministerial guidelines, if
any, of Japan taken as a whole.
Each Agent will represent and agree that (i) it has not offered or sold and
will not offer or sell, prior to the date six months after their date of issue,
any Notes, having a maturity of one year or greater, to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purpose of their businesses or otherwise in circumstances that have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom; and (iii) it has only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of any Notes to a person
who is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
There can be no assurance as to the existence of a secondary market for any
Bearer Notes, or that any Bearer Notes will be sold.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act. The Company has agreed
to indemnify the Agents against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments that the Agents may be
required to make in respect thereof.
In addition to the Bearer Notes being offered through the Agents as described
herein, Registered Notes that may have terms identical or similar to the terms
of the Bearer Notes may be concurrently offered by the Company on a continuous
basis in the United States (as defined in the Prospectus) pursuant to a
distribution agreement with affiliates of the Agents. Pursuant to such
distribution agreement, such affiliates may also purchase Registered Notes as
principal for their own account or for resale, and the Company may make direct
sales of Registered Notes on its own behalf. Any Registered Notes so offered
and sold will reduce correspondingly the maximum aggregate principal amount of
Bearer Notes that may be offered by this Prospectus Supplement and the
accompanying Prospectus.
In the ordinary course of their respective businesses, affiliates of J.P.
Morgan Securities Ltd. have engaged, and may in the future engage, in normal
commercial banking transactions with the Company and certain of its
subsidiaries.
S-28
<PAGE>
GENERAL INFORMATION
Application has been made to list the Bearer Notes on the Luxembourg Stock
Exchange. In connection with such listing, the Restated Certificate of
Incorporation and By-Laws of the Company and a legal notice relating to the
issuance of the Bearer Notes have been deposited with the Chief Registrar of
the District Court of Luxembourg, where copies may be obtained upon request.
The issuance of the Notes was authorized by actions of the Board of Directors
of the Company on April 18, 1991, August 21, 1991 and November 15, 1994.
So long as any Bearer Notes are listed on the Luxembourg Stock Exchange,
copies of the Pricing Supplements for such Notes, the Registration Statement
(and the documents incorporated by reference therein), the annual and quarterly
reports of the Company, Restated Certificate of Incorporation and By-Laws of
the Company, the Indenture for such series of Notes and the distribution
agreement between the Company and the Agents will be available for inspection
at the office of the Listing Agent or at the office of the Principal Paying
Agent for such Notes in Luxembourg during the term of the Bearer Notes. In
addition, copies of such annual and quarterly reports and such Pricing
Supplements may be obtained at such offices.
Except as otherwise disclosed herein, the Company is not involved in any
litigation or arbitration proceedings relating to claims or amounts which it
believes will be material in the context of the issue of the Bearer Notes and
is not aware that any such litigation or arbitration proceedings are pending or
threatened.
As of the date of this Prospectus Supplement, there has been no material
adverse change in the financial position of the Company since the date of the
latest audited financial statements contained or incorporated by reference in
the accompanying Prospectus.
The Bearer Notes have been accepted for clearance through Euroclear and
Cedel.
S-29
<PAGE>
PROSPECTUS
$584,662,000
MCDONALD'S CORPORATION
DEBT SECURITIES
McDonald's Corporation (the "Company") intends to issue from time to time in
one or more series its unsecured debt securities ("Debt Securities") with an
aggregate initial public offering price or purchase price of up to
$584,662,000, or the equivalent thereof in one or more foreign or composite
currencies, including the European Currency Unit ("ECU"). Debt Securities of
each series will be offered on terms to be determined at the time of sale. Debt
Securities may be sold for U.S. dollars or for one or more foreign or composite
currencies, and the principal of, premium, if any, and any interest on Debt
Securities may be payable in U.S. dollars or in one or more foreign or
composite currencies. Debt Securities of a series may be issuable as individual
securities in registered form without coupons ("Registered Securities"), in
bearer form with or without coupons attached ("Bearer Securities") or as one or
more global securities in registered or bearer form (each a "Global Security").
The specific designation, aggregate principal (or, if principal payable is
determined by reference to an index, face) amount, the currency in which the
principal, premium, if any, and any interest are payable, the rate (or method
of calculation) and the time and place of payment of any interest, authorized
denominations, maturity, offering price, any redemption terms and any other
specific terms of the Debt Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement (as
supplemented with respect to Notes of any series by any pricing supplement
relating thereto, a "Prospectus Supplement").
The Debt Securities may be sold by the Company directly, through agents
designated from time to time, through dealers or one or more underwriters, or
through a syndicate of underwriters managed by one or more underwriters. If
underwriters or agents are involved in any offering of Debt Securities, the
names of the underwriters or agents will be set forth in the applicable
Prospectus Supplement. If an underwriter, agent or dealer is involved in any
offering of Debt Securities, the underwriter's discount, agent's commission or
dealer's purchase price will be set forth in, or may be calculated from the
information set forth in, the applicable Prospectus Supplement, and the net
proceeds to the Company from such offering will be the public offering price of
such Debt Securities less such discount, in the case of an offering through an
underwriter, or the purchase price of such Debt Securities less such
commission, in the case of an offering through an agent, and less, in each
case, the other expenses of the Company associated with the issuance and
distribution of such Debt Securities. See "Plan of Distribution" for specific
details.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is July 28, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the Commission: New York Regional Office, Seven World Trade Center,
13th Floor, New York, New York 10048 and Chicago Regional Office, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60661; and copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information can also be inspected at the
offices of the New York Stock Exchange and Chicago Stock Exchange. The Company
is not required to, and will not, provide an annual report or any other
periodic report to any holder of its debt securities unless specifically
requested by such holder.
The Company has filed with the Commission a Registration Statement on Form S-
3 (such Registration Statement, together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the Debt Securities. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted from this Prospectus
in accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
A Company franchisee provides food services exclusively to United States
government personnel stationed at the United States naval station in Guantanamo
Bay, Cuba. This statement is made pursuant to the disclosure requirements of
Florida law and is accurate as of the date of this Prospectus. Investors may
obtain current information by contacting the Florida Department of Banking and
Finance, The Capitol, Tallahassee, Florida 32399-0350, telephone: (904) 488-
9805.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission (File No. 1-5231)
pursuant to the Exchange Act and are incorporated herein by reference and made
a part of this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, as amended by the Company's Form 10-K/A filed on
June 27, 1995; and
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering of the Debt Securities shall be deemed to be incorporated 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 shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, in the
accompanying Prospectus Supplement, in an applicable Pricing Supplement or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the documents
described above, other than certain exhibits to such documents. Written or
telephone requests should be directed to: McDonald's Shareholder Services,
McDonald's Corporation, Kroc Drive, Oak Brook, Illinois 60521, (708) 575-7428.
----------------
References herein to "U.S. dollars", "dollars" or "$" are to the lawful
currency of the United States of America.
2
<PAGE>
MCDONALD'S CORPORATION
McDonald's Corporation and its subsidiaries develop, operate, franchise and
service a worldwide system of restaurants which prepare, assemble, package and
sell a limited menu of value-priced foods. These restaurants are operated by
the Company and its subsidiaries or, under the terms of franchise agreements,
by franchisees who are independent third parties, or by affiliates operating
under joint venture agreements between the Company or its subsidiaries and
local businesspeople.
McDonald's restaurants offer a substantially uniform menu consisting of
hamburgers and cheeseburgers, including the Big Mac and Quarter Pounder with
Cheese sandwiches, the Filet-O-Fish, McGrilled Chicken and McChicken
sandwiches, french fries, Chicken McNuggets, salads, shakes, sundaes and cones
made with low fat frozen yogurt, pies, cookies and a limited number of soft
drinks and other beverages. In addition, the restaurants sell a variety of
products during limited promotional time periods. McDonald's restaurants
operating in the United States are open during breakfast hours and offer a full
breakfast menu including the Egg McMuffin and the Sausage McMuffin with Egg
sandwiches, hotcakes and sausage; three varieties of biscuit sandwiches; Apple-
Bran muffins; and cereals. McDonald's restaurants in many countries around the
world offer many of these same products as well as other products and limited
breakfast menus. The Company tests new products on an ongoing basis.
McDonald's restaurants are located in all fifty of the United States and the
District of Columbia, and in many foreign locations, principally Japan, Canada,
Germany, England, Australia and France. At March 31, 1995, there were 15,370
restaurants worldwide, of which 9,795 were located in the United States and
5,575 in 78 other countries. An additional 327 restaurants were under
construction at March 31, 1995, including 228 outside the United States.
At March 31, 1995, 68% of McDonald's restaurants were operated by independent
franchisees, 21% were operated by the Company and its subsidiaries and 11% were
operated by affiliates (entities in which the Company and/or its subsidiaries
have an equity interest of 50% or less and in which the remaining equity
interest generally is owned by a local resident).
The Company's principal executive offices are located at One McDonald's
Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debt
Securities for general corporate purposes, which may include debt refinancings
and capital expenditures such as the acquisition and development of McDonald's
restaurants. Specific allocations of net proceeds for such purposes have not
been made at this time. The amount and timing of any such debt refinancings or
capital expenditures will depend upon the Company's requirements and the
availability of other funds to the Company.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------- ------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........... 4.66 4.70 5.26 4.86 3.96 3.53 3.48
</TABLE>
The ratios of earnings to fixed charges shown above have been computed on a
total enterprise basis. Earnings represent income before provision for income
taxes and fixed charges. Fixed charges consist of interest on all indebtedness,
amortization of debt issuance costs and discount or premium relating to any
indebtedness, and such portion of rental charges (after reduction for related
sublease income) considered to be representative of the interest component in
the particular case.
3
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture dated as of March 1,
1987, and any indentures supplemental thereto (collectively, the "Indenture"),
between the Company and First Fidelity Bank, National Association (formerly
Fidelity Bank, National Association), as Trustee (the "Trustee"). The following
statements with respect to the Debt Securities are summaries of the detailed
provisions of the Indenture, a copy of which is filed as an exhibit to the
Registration Statement. References in italics are to sections of the Indenture.
Wherever particular provisions of the Indenture are referred to, such
provisions are incorporated by reference as a part of the statements made, and
the statements are qualified in their entirety by such reference. As used under
this caption, the term "Debt Securities" includes the debt securities being
offered by this Prospectus and all other debt securities issued from time to
time by the Company under the Indenture.
GENERAL
The Debt Securities will be unsecured obligations of the Company, ranking
equally with all other unsecured and unsubordinated indebtedness for borrowed
money of the Company. Certain unsecured obligations of the Company may,
however, under certain circumstances, become secured by mortgages pursuant to
negative pledge covenants applicable to such obligations while the Debt
Securities remain unsecured.
Reference is made to the Prospectus Supplement for the terms of the series of
Debt Securities being offered thereby, including, where applicable: (i) the
title of such Debt Securities; (ii) the limit, if any, upon the aggregate
principal amount of such Debt Securities; (iii) the date or dates on which the
principal and premium, if any, of such Debt Securities is or are payable; (iv)
the rate or rates and/or the method of determination thereof, at which such
Debt Securities will bear interest, if any; the date or dates from which such
interest will accrue; the interest payment dates on which such interest will be
payable; and, in the case of Registered Securities, the record dates for the
interest payable on such interest payment dates; (v) whether such Debt
Securities are to be issued as Original Issue Discount Securities (as defined
below) and the amount of discount with which such Debt Securities will be
issued; (vi) the place or places where the principal of, and premium, if any,
and any interest on such Debt Securities will be payable; (vii) the price or
prices at which, the period or periods within which and the terms and
conditions upon which such Debt Securities may be redeemed in whole or in part,
at the option of the Company, pursuant to any sinking fund or otherwise; (viii)
the obligation, if any, of the Company to redeem or purchase such Debt
Securities pursuant to any sinking fund or analogous provisions or at the
option of a Holder and the price or prices at which, the period or periods
within which and the terms and conditions upon which such Debt Securities will
be redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation; (ix) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which such Debt Securities will be
issuable; (x) if other than the principal amount, the portion of the principal
amount of such Debt Securities which will be payable upon declaration of
acceleration of the maturity thereof pursuant to the Indenture; (xi) if other
than U.S. dollars, the coin, currency or currencies in which payment of the
principal of (and premium, if any) and interest, if any, on such Debt
Securities will be payable; (xii) if the principal of (and premium, if any) or
interest, if any, on such Debt Securities are to be payable, at the election of
the Company or a Holder, in a coin, currency or currencies other than that in
which the Debt Securities are stated to be payable, the period or periods
within which, and the terms and conditions upon which, such election may be
made; (xiii) if the amount of payments of principal of (and premium, if any) or
interest, if any, on such Debt Securities may be determined with reference to
an index based on a coin or currency or currencies other than that in which the
Debt Securities are stated to be payable, the manner in which such amount will
be determined; (xiv) any additional Events of Default provided for with respect
to such Debt Securities; (xv) provisions, if any, for the defeasance of such
Debt Securities; (xvi) whether such Debt Securities are to be issued in
registered or bearer form, with or without coupons; (xvii) whether such Debt
Securities are to be issued in whole or in part in the form of one or more
Global Securities and, if so, the identity of the Depositary (as defined below)
for such Global Security or Securities; (xviii) if any Debt Securities of the
series are to be issued as Bearer Securities or as one or more Global Debt
Securities
4
<PAGE>
representing individual Bearer Securities of the series; and (xix) any other
terms of such Debt Securities not inconsistent with the provisions of the
Indenture. (Section 2.02)
If Bearer Securities are issued, certain special considerations applicable to
such Bearer Securities, including limitations on their issuance, will be
described in the Prospectus Supplement relating thereto.
If the principal of (and premium, if any) or any interest on Debt Securities
of any series are payable in a foreign or composite currency, the restrictions,
elections, federal income tax consequences, specific terms and other
information with respect to such Debt Securities and such currency will be
described in the Prospectus Supplement relating thereto.
One or more series of Debt Securities may be sold at a discount below their
stated principal amount, bearing no interest or interest at a rate that at the
time of issuance is below market rates ("Original Issue Discount Securities").
Unless otherwise provided in the applicable Prospectus Supplement, the
principal of (and premium, if any) and any interest on Registered Securities
will be payable at the corporate trust office of the Trustee at Broad and
Walnut Streets, Philadelphia, Pennsylvania 19019; provided, however, that
payment of interest on Registered Securities may be made at the option of the
Company by check mailed to the Registered Holders thereof or, if so provided in
the applicable Prospectus Supplement, at the option of the Registered Holder by
wire transfer to an account designated by such Registered Holder. Provisions
with respect to the payment of principal of (and premium, if any) and any
interest on Bearer Securities or Global Securities will be set forth in the
applicable Prospectus Supplement. (Sections 2.02 and 4.01)
Unless otherwise provided in the applicable Prospectus Supplement, Registered
Securities may be transferred or exchanged at the office or agency maintained
by the Company for such purpose, subject to the limitations provided in the
Indenture, without the payment of any service charge, other than any tax or
governmental charge payable in connection therewith. (Section 2.05) Bearer
Securities will be transferable by delivery. Provisions with respect to the
exchange of Bearer Securities will be described in the applicable Prospectus
Supplement.
All moneys paid by the Company to the Trustee for the payment of principal of
(and premium, if any) or any interest on any Debt Security that remains
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company on demand, and
the Registered Holder of such Debt Security or any coupon appertaining thereto
will thereafter look only to the Company for payment thereof. (Section 12.05)
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 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 in either registered
or bearer form and in either temporary or definitive form. Unless and until it
is exchanged in whole or in part for individual Debt Securities, 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 such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor. (Sections 2.03 and 2.05)
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal (or, if the amount of principal payable is
5
<PAGE>
determined by reference to an index (a "Principal Indexed Security"), face)
amounts of the individual Debt Securities represented by such Global Security
to the accounts of institutions that have accounts with such Depositary
("participants"). The accounts to be credited shall be designated by the
underwriters of such Debt Securities or, if such Debt Securities are offered
and sold directly by the Company or through one or more agents, by the Company
or such agent or agents. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that may hold beneficial interests
through participants. Ownership of beneficial interests in a Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depositary for such Global Security (with
respect to participants' interests) and by participants or persons that hold
through participants (with respect to beneficial owners' interests). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities. 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 owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the Holder of the individual Debt Securities represented by
such Global Security for all purposes under the Indenture governing such Debt
Securities. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have any of the individual Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Debt
Securities and will not be considered the Holders thereof under the Indenture
governing such Debt Securities.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities" below, payments of principal of (and premium, if any) and
any interest on the Debt Securities represented by a Global Security will be
made to the Depositary or its nominee, as the case may be, as the Holder of
such Global Security. None of the Company, the Trustee, any paying agent or
transfer agent 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 interests in such Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. (Section 8.03)
The Company expects that the Depositary for Debt Securities of a series, upon
receipt of any payment of principal of (and premium, if any) or interest on a
definitive Global Security representing any of such Debt Securities, will
credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal (or, in
the case of a Principal Indexed Security, face) amount of such Global Security
as shown on the records of such Depositary. 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,"
and will be the responsibility of such participants. Receipt by owners of
beneficial interests in a temporary Global Security of payments of principal of
(and premium, if any) or interest on such Global Security will be subject to
the restrictions discussed under "Limitations on Issuance of Bearer Securities"
below.
If a Depositary of Debt Securities of a series is at any time unwilling or
unable to continue as Depositary and a successor Depositary is not appointed by
the Company within ninety days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security or Securities
representing such Debt Securities. In addition, the Company may at any time and
in its sole discretion determine not to have any Debt Securities of a 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. (Section 2.05)
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 and the
Depositary for such Global Security, receive individual Debt Securities in
exchange for such beneficial interest. 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
6
<PAGE>
equal in principal (or, in the case of a Principal Indexed Security, face)
amount to such beneficial interest and to have such Debt Securities registered
in its name (if the Debt Securities of such series are issuable as Registered
Securities). Individual Debt Securities of such series so issued will be issued
(a) in registered form in authorized denominations if the Debt Securities of
such series are issuable as Registered Securities, (b) in bearer form in
authorized denominations, with or without coupons attached, if the Debt
Securities of such series are issuable as Bearer Securities or (c) as either
Registered or Bearer Securities, if the Debt Securities of such series are
issuable in either form (Section 2.05). See, however, "Limitations on Issuance
of Bearer Securities" below for a description of certain restrictions on the
issuance of individual Bearer Securities in exchange for beneficial interests
in a Global Security.
CERTAIN COVENANTS OF THE COMPANY UNDER THE INDENTURE
The Indenture contains certain covenants described below which are applicable
to the Company with respect to any and all series of Debt Securities issued
thereunder. Specific covenants, if any, peculiar to a particular series of Debt
Securities to be offered hereby will be described in the Prospectus Supplement
relating thereto.
The Section 4.11 Covenant. The Company has agreed that (A) after the date of
the Indenture neither the Company nor any Restricted Subsidiary will create,
incur or assume any Real Property Mortgage, other than an Excepted Mortgage, as
security for Indebtedness of the Company or any subsidiary unless the Debt
Securities are equally and ratably secured with such Indebtedness, and (B) if
any Negative Pledge Mortgage is created, incurred or assumed by the Company or
any Restricted Subsidiary, the Company will, unless the "Section 4.11 Ratio" is
satisfied, if required by the Trustee, within 60 days deliver First Mortgages
on parcels of Real Property having a net book value of at least 125% of the
then unpaid principal amount of Debt Securities. The "Section 4.11 Ratio" is
satisfied if, after giving effect to the delivery of a Negative Pledge
Mortgage, the sum of (1) the unpaid principal amount of all Indebtedness of the
Company secured by Real Property Mortgages executed and delivered or assumed
after December 15, 1977 (other than those Excepted Mortgages listed in clauses
(ii), (iii), (iv) and (v) of the definition of Excepted Mortgage set forth
below) and (2) the unpaid principal amount of Funded Debt of Restricted
Subsidiaries incurred after December 15, 1977, does not exceed the greater of
$250,000,000 or 15% of Consolidated Capitalization. (Section 4.11)
The term "Consolidated Capitalization" means the total assets of the Company
and its Restricted Subsidiaries determined on a consolidated basis (but
exclusive of investments in, and loans and advances to, Unrestricted
Subsidiaries) less the total current liabilities of the Company and its
Restricted Subsidiaries determined on a consolidated basis. (Section 1.01)
The term "Excepted Mortgage" means any Real Property Mortgage which:
(i) secures Negative Pledge Debt;
(ii) is assumed or given in favor of the seller of Real Property when the
Company or any Restricted Subsidiary (or any predecessor thereof) acquires
(or acquired, in the case of such a predecessor) the Real Property;
(iii) must be created, incurred or assumed to permit the Company or any
Restricted Subsidiary to perform or comply with any contract or subcontract
made by it with, or at the request of, the United States of America, the
District of Columbia, any state or territory of the United States of
America, any political subdivision thereof, or any agency, department or
instrumentality of any thereof;
(iv) is a "Refunding Mortgage", that is, it secures Indebtedness
("Refunding Indebtedness") created, incurred or assumed in connection with
any extension, renewal, replacement or refunding of any Indebtedness
("Refunded Indebtedness") secured by any Real Property Mortgage; provided
that the Refunding Indebtedness shall not exceed the Refunded Indebtedness
and that the Refunding Mortgage shall not create a mortgage on any Real
Property other than that which secured the Refunded Indebtedness;
7
<PAGE>
(v) is a "Replacement Mortgage", that is, it is given in replacement of
another Real Property Mortgage ("Replaced Mortgage") to secure the same
Indebtedness; provided that the net book value of the Real Property covered
by the Replacement Mortgage does not exceed the net book value of the Real
Property covered by the Replaced Mortgage; or
(vi) secures Indebtedness (other than Indebtedness secured by an Excepted
Mortgage described under any other clause of this definition of "Excepted
Mortgage") which is created, incurred or assumed subsequent to December 15,
1977 if, immediately after giving effect thereto, the Section 4.11 Ratio is
satisfied. (Section 4.11)
The term "First Mortgages" means mortgages in recordable form securing the
Debt Securities and naming the Trustee as mortgagee, beneficiary, grantee or
secured party. First Mortgages shall be in form reasonably acceptable to the
Trustee and shall afford a first lien (except for encumbrances permitted by the
Indenture) on Real Property. At all times when First Mortgages are to be
delivered to or held by the Trustee pursuant to the Indenture, no less than 50%
of the net book value of the Real Property subject to such First Mortgages
shall be attributable to Real Property consisting of land, and buildings and
improvements located on land, owned in fee simple by the Company and/or its
subsidiaries, and up to 50% of the net book value of the Real Property subject
to such First Mortgages may be attributable to other Real Property. (Section
1.01)
The term "Funded Debt" means Indebtedness, whether secured or unsecured, if
such Indebtedness by its terms matures at, or is extendable or renewable at the
option of the obligor to, a date more than 12 months after the date of
determination of such Indebtedness. (Section 1.01)
The term "Funded Debt of Restricted Subsidiaries" means, at the date of
determination, the aggregate of Funded Debt of all Restricted Subsidiaries
other than Funded Debt:
(a) of any Restricted Subsidiary which is a guarantor of the Debt
Securities ("Guarantor")*, pursuant to a guaranty delivered to the Trustee
on or prior to such date of determination, provided such Funded Debt is not
secured by a Real Property Mortgage;
(b) which constitutes subordinated debt of Restricted Subsidiaries which,
if guaranteed by the Company or any Guarantor, is guaranteed solely
pursuant to a subordinated guaranty; or
(c) of Restricted Subsidiaries which have been acquired by the Company
after December 15, 1977, provided that such Funded Debt (i) is not
guaranteed by the Company or any Guarantor, (ii) is guaranteed pursuant to
a subordinated guaranty, or (iii) is Funded Debt of a Restricted Subsidiary
which was acquired by the Company not more than 60 days prior to such date
of determination. (Section 1.01)
The term "Indebtedness" means any and all obligations (other than obligations
of the Company to any Restricted Subsidiary or of any Restricted Subsidiary to
the Company or to any other Restricted Subsidiary and other than deferred
income taxes, security deposits by lessees and interim loans for construction)
incurred either for money borrowed or in connection with the acquisition of any
or all stock or assets of a corporation or other entity (whether by purchase,
merger or otherwise). (Section 1.01)
The term "Lease" means an original lease, a sublease or any lease under and
subsequent to a sublease. (Section 1.01)
The term "Mortgages" shall mean mortgages, deeds of trust, deeds to secure
debt and other similar instruments pursuant to which a lien on Real Property is
created in favor of, or title to Real Property is held by or transferred to a
Person for the benefit of, a Person as security for Indebtedness. (Section
1.01)
The term "Negative Pledge Debt" means Indebtedness of the Company or any
Restricted Subsidiary which (a) is not secured by a Real Property Mortgage on
the date of the Indenture or on the date of issuance
--------
* The Company is not obligated to cause any Restricted Subsidiary to become a
Guarantor, and does not presently intend to do so.
8
<PAGE>
of such Indebtedness, and (b) is issued pursuant to an instrument which
requires the Company, on the occurrence or nonoccurrence of an event specified
therein, to secure such Indebtedness with a Real Property Mortgage. (Section
4.11)
The term "Negative Pledge Mortgage" means any Real Property Mortgage
delivered to secure Negative Pledge Debt pursuant to one of the requirements
referred to in the definition of Negative Pledge Debt. (Section 4.11)
The term "Real Property" means land, Leases, buildings and improvements on
owned or leased land or leased premises, either owned in fee simple or leased
by the Company or one of its subsidiaries. (Section 1.01)
The term "Real Property Mortgage" shall mean a Mortgage upon or affecting
Real Property. (Section 1.01)
The term "Restricted Subsidiary" means any subsidiary which has not been
designated as an Unrestricted Subsidiary by the Company. The Company may
designate an Unrestricted Subsidiary as a Restricted Subsidiary at any time so
long as such subsidiary has not been a Restricted Subsidiary within 12 months
prior to such designation as a Restricted Subsidiary; provided, however, that
such change of designation does not result in an Event of Default under the
Indenture or an event which after notice or lapse of time, or both, would
constitute an Event of Default under the Indenture. (Section 1.01)
The term "Unrestricted Subsidiary" means any subsidiary which has been
designated an Unrestricted Subsidiary by the Company. The Company may designate
a Restricted Subsidiary as an Unrestricted Subsidiary at any time so long as
(i) such subsidiary has not been an Unrestricted Subsidiary within 12 months
prior to such designation as an Unrestricted Subsidiary, (ii) such change of
designation does not result in an Event of Default under the Indenture or an
event which after notice or lapse of time, or both, would constitute an Event
of Default under the Indenture, and (iii) such subsidiary does not own any real
property in the United States which is primarily used for the operation of a
McDonald's restaurant. (Section 1.01)
Other Covenants. The Indenture contains certain other covenants applicable
to all series of Debt Securities issued thereunder, including covenants
respecting the payment of taxes, maintenance of properties and other matters.
(Article Four)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than 66 2/3% in principal amount of
the Outstanding Debt Securities of all series issued under the Indenture which
are affected by the modification or amendment (voting as one class), to execute
supplemental indentures modifying the Indenture or any supplemental indenture,
provided that, without the consent of all Holders of then Outstanding Debt
Securities affected, no such modification shall extend the fixed maturity of
any Debt Securities, or reduce the principal amount thereof, or reduce the rate
or extend the time of payment of interest thereon, or reduce any premium
payable upon redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon
acceleration of the Stated Maturity thereof, or change the aforesaid percentage
of Debt Securities, the consent of Holders of which will be required for any
such modification. (Section 10.02) Generally, the principal amount of the Debt
Securities that is deemed "Outstanding" is the principal amount thereof, except
(a) as to Original Issue Discount Securities, it is the portion of the
principal amount thereof that then would be due and payable upon an
acceleration of the Stated Maturity thereof pursuant to an Event of Default;
and (b) as to Debt Securities denominated in a currency other than U.S.
dollars, it is the amount of U.S. dollars that could be obtained for such
principal amount on the basis of the spot rate of exchange for purchasing U.S.
dollars with such currency at or about the date of determination. (Section
1.01)
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<PAGE>
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to any series of Debt
Securities as being any one of the following events: (a) default for 30 days in
any payment of interest on such series; (b) default in any payment of principal
of (and premium, if any, on) such series when due; (c) default in the payment
of any sinking fund installment when due; (d) default in the performance of a
particular covenant applicable to that series after appropriate notice and
opportunity to cure such default, if any; (e) default for 60 days, after
appropriate notice, in the performance of any other covenants in the Indenture
(other than the Section 4.11 covenant and any other covenant included in the
Indenture solely for the benefit of a series of Debt Securities other than that
series), provided that such default shall not be an Event of Default if it
cannot with due diligence be cured within such 60-day period due to causes
beyond the control of the Company, unless the Company shall fail to proceed
promptly to cure such default and thereafter prosecute the curing of such
default with diligence and continuity; (f) default for 120 days after
appropriate notice in the performance of the Section 4.11 covenant; (g) a
default under any other indenture or instrument (including an Event of Default
with respect to a series of Debt Securities other than that series) under which
the Company has outstanding at the date of such default an aggregate principal
amount of Indebtedness in excess of 15% of Consolidated Capitalization,
provided that such Indebtedness shall have been accelerated so that such
Indebtedness shall be or become due and payable prior to the date on which the
same would otherwise have become due and payable; (h) default in the payment at
the maturity thereof of an aggregate principal amount of Indebtedness
(including such a default with respect to a series of Debt Securities other
than that series) in excess of 15% of Consolidated Capitalization; or (i)
certain events of bankruptcy, insolvency or reorganization. An Event of Default
with respect to a particular series of Debt Securities issued under the
Indenture does not necessarily constitute an Event of Default with respect to
any other series of Debt Securities issued thereunder. In case an Event of
Default under clause (a), (b), (c) or (d) shall occur and be continuing with
respect to any series of Debt Securities, the Trustee or the Holders of not
less than 25% in aggregate principal amount of Debt Securities then Outstanding
of such series may declare the entire principal (or, if the Debt Securities of
such series are Original Issue Discount Securities, the portion of the
principal amount specified in the terms of such series) of such series to be
due and payable. In case an Event of Default under clause (e), (f), (g), (h) or
(i) shall occur and be continuing, the Trustee or Holders of not less than 25%
in aggregate principal amount of all the Outstanding Debt Securities may
declare the entire principal (or, if any Debt Securities are Original Issue
Discount Securities, the portion of the principal amount specified in the terms
thereof) of Outstanding Debt Securities of all series to be due and payable.
Any Event of Default with respect to a particular series of Debt Securities (or
of all the Debt Securities, as the case may be) may be waived by the Holders of
a majority in aggregate principal amount of the Outstanding Debt Securities of
such series (or of all the Outstanding Debt Securities, as the case may be),
except in each case a failure to pay principal or premium, if any, or interest
on such Debt Securities. (Section 6.01; Section 6.06)
The Indenture requires the Company to file with the Trustee an Officers'
Certificate annually as to knowledge of any default under the terms of the
Indenture. (Section 4.06) The Indenture provides that the Trustee may withhold
notice to the Holders of the Debt Securities of any default (except in payment
of principal or premium, if any, or interest) if the Trustee considers it in
the interest of the Holders of the Debt Securities to do so. (Section 6.07)
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Indenture provides that 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 the Holders of the Debt Securities unless such Holders
shall have offered to the Trustee reasonable indemnity. (Sections 6.04, 7.01
and 7.02) Subject to such provisions regarding indemnification of and certain
other rights of the Trustee, the Indenture provides that the Holders of a
majority (voting as one class) in principal amount of the Outstanding Debt
Securities of any or all series affected will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee.
(Section 6.06) The Indenture provides that notwithstanding any other provisions
thereof, the right of any Holder to receive
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payment of the principal of (and premium, if any) and interest on the Debt
Securities or to institute suit for the enforcement thereof shall not be
impaired or affected without such Holder's consent. (Section 6.04)
DEFEASANCE
Unless otherwise provided in the Prospectus Supplement with respect to any
series of Debt Securities, the Company, at its option, (a) will be discharged
from any and all obligations in respect of such Debt Securities (except in each
case for certain obligations to register the transfer or exchange of such Debt
Securities, replace stolen, lost or mutilated Debt Securities, maintain paying
agencies and hold moneys for payment in trust) or (b) need not comply with
certain restrictive covenants of the Indenture (including those described under
"Certain Covenants of the Company Under the Indenture" above) and will not be
limited by any restrictions with respect to merger, consolidation or sales of
assets, in each case if the Company deposits with the Trustee, in trust, (x)
money or (y) U.S. Government Obligations or a combination of (x) and (y) 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 (including any mandatory sinking fund payments) of, if any, and
premium, if any, and interest on, such Debt Securities on the dates such
payments are due in accordance with the terms of such series. (Section 12.02)
In order to avail itself of either of the foregoing options, the Company must
provide to the Trustee an opinion of counsel or a ruling from, or published by,
the Internal Revenue Service, to the effect that Holders of the Debt Securities
of such series will not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of its option and will be
subject to Federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such option had not been
exercised. (Section 12.02) "U.S. Government Obligations" means generally (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof.
(Section 1.01) In addition, the Company can also obtain a discharge under the
Indenture with respect to all the Debt Securities of a series by depositing
with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption all of the Debt Securities of such series, provided that all of the
Debt Securities of such series are by their terms to become due and payable
within one year or are to be called for redemption within one year. No such
opinion of counsel or ruling from the Internal Revenue Service is required with
respect to a discharge pursuant to the immediately preceding sentence. In the
event of any discharge of Debt Securities pursuant to the terms of the
Indenture described above, the Holders of such Debt Securities will thereafter
be able to look solely to such trust fund, and not to the Company, for payments
of principal, premium, if any, and interest, if any. (Sections 12.01 and 12.02)
CONCERNING THE TRUSTEE
The Company, its subsidiaries and affiliates maintain banking relationships
(including the extension of credit) in the ordinary course of business with the
Trustee.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with U.S. federal income tax laws and regulations, the Company
and any underwriter, agent or dealer participating in the offering of any
Bearer Security will agree, in connection with the original issuance of such
Bearer Security and during the period of 40 days after the issue date of such
Bearer Security, not to offer, sell or deliver such Bearer Security, directly
or indirectly, to a U.S. Person or to any person within the United States,
except to the extent permitted under U.S. Treasury regulations.
Bearer Securities and any coupons attached thereto will bear a legend to the
following effect: "Any United States Person who holds this obligation will be
subject to limitations under the United States income
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tax laws, including the limitations provided in Sections 165(j) and 1287(a) of
the Internal Revenue Code." The sections referred to in the legend provide
that, with certain exceptions, a United States taxpayer that holds Bearer
Securities will not be allowed to deduct any loss, and will not be eligible for
capital gain treatment with respect to any gain, realized on a sale, exchange,
redemption or other disposition of such Bearer Securities.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States, or an estate or trust the income of which
is subject to United States federal income taxation regardless of its source.
Pending the availability of a definitive Global Security in bearer form or
individual Bearer Securities, as the case may be, Debt Securities that are
issuable as Bearer Securities may initially be represented by a single
temporary Global Security in bearer form, without interest coupons, to be
deposited with a common depositary in London for Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System
("Euroclear"), and Cedel Bank, societe anonyme ("Cedel") for credit to the
accounts designated by or on behalf of the purchasers thereof. Following the
availability of a definitive Global Security in bearer form, without coupons
attached, or individual Bearer Securities, with or without coupons, and subject
to any further limitations described in the applicable Prospectus Supplement,
the temporary Global Security will be exchangeable for interests in such
definitive Global Security or for such individual Bearer Securities,
respectively, only upon receipt of a Certificate of Non-U.S. Beneficial
Ownership. A "Certificate of Non-U.S. Beneficial Ownership" is a certificate to
the effect that a beneficial interest in a temporary Global Security is owned
by a person that is not a U.S. Person or is owned by or through a financial
institution in compliance with applicable U.S. Treasury regulations. No Bearer
Security will be delivered in or to the United States. If so specified in the
applicable Prospectus Supplement, interest on a temporary Global Security will
be paid to each of Euroclear and Cedel with respect to that portion of such
temporary Global Security held for its account, but only upon receipt as of the
relevant interest payment date of a Certificate of Non-U.S. Beneficial
Ownership.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii)
through agents. The applicable Prospectus Supplement will set forth the terms
of the offering of any Debt Securities, including the names of any underwriters
or agents, the purchase price of such Debt Securities and the net proceeds to
the Company from such sale, any underwriting discounts and other items
constituting underwriters' compensation or agents' commission, any initial
public offering price, any discounts or concessions allowed or reallowed or
paid to dealers, any securities exchanges on which such Debt Securities may be
listed and any restrictions on the sale and delivery of Debt Securities in
bearer form.
If underwriters or dealers are used in the sale, Debt Securities will be
acquired by such underwriters or dealers 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. Such Debt Securities may be offered to the public either
through underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Unless otherwise set forth in the applicable
Prospectus Supplement, 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 of such Debt Securities 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.
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 offer or
sale of Debt Securities will be named, and any
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commissions payable by the Company to such agent will be set forth, in the
applicable Prospectus Supplement. Unless otherwise indicated in the applicable
Prospectus Supplement, any such agent will act on a best efforts basis for the
period of its appointment.
Any underwriters, dealers or agents participating in the distribution of Debt
Securities may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Debt Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make in respect of
such liabilities. Agents and underwriters may be customers of, engage in
transactions with, or perform services for, the Company or its subsidiaries or
affiliates in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
the Debt Securities being offered hereby from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in the Prospectus Supplement. Each Contract will be for an
amount not less than, and unless the Company otherwise agrees the aggregate
principal (or face) amount of Debt Securities sold pursuant to Contracts shall
be not less nor more than, the respective amounts stated in the Prospectus
Supplement. Institutions with which Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions, but shall in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except that (i) the purchase by
an institution of the Debt Securities covered by its Contract shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Debt Securities
being offered hereby are being sold to underwriters, the Company shall have
sold to such underwriters the total principal (or face) amount of such Debt
Securities less the principal amount thereof covered by the Contracts.
LEGAL MATTERS
The legality of the Debt Securities offered hereby will be passed upon for
the Company by Shelby Yastrow, Senior Vice President, General Counsel and
Secretary of the Company. Mr. Yastrow is a full-time employee of the Company
and owns, and holds options to purchase, shares of the Company's Common Stock.
Certain legal matters will be passed on for any underwriters or agents by
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York
10006. From time to time Cleary, Gottlieb, Steen & Hamilton provides legal
services to the Company.
EXPERTS
The consolidated financial statements of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein, and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY
One McDonald's Plaza
Oak Brook, Illinois 60521
AUDITORS TO THE COMPANY
Ernst & Young LLP
233 S. Wacker Dr.
Chicago, Illinois 60606
LEGAL ADVISERS
To the Company To the Agents
Shelby Yastrow Cleary, Gottlieb, Steen & Hamilton
Senior Vice President, One Liberty Plaza
General Counsel and Secretary New York, New York 10006
McDonald's Corporation
One McDonald's Plaza
Oak Brook, Illinois 60521
TRUSTEE
First Fidelity Bank, National Association
Broad and Walnut Streets
Philadelphia, Pennsylvania 19109
PRINCIPAL PAYING AGENT
Morgan Guaranty Trust Company of New York
60 Victoria Embankment
London EC4Y OJP
PAYING AGENT
Banque Generale du Luxembourg S.A.
27 Avenue Monterey
L-2951 Luxembourg
Luxembourg
LISTING AGENT
Banque Generale du Luxembourg S.A.
27 Avenue Monterey
L-2951 Luxembourg
Luxembourg
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