<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 1995
REGISTRATION STATEMENT NO. 33-58625
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MCDONALD'S CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6794 36-2361282
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NUMBER)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
ONE MCDONALD'S PLAZA
OAK BROOK, ILLINOIS 60521
(708) 575-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
SHELBY YASTROW
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
MCDONALD'S CORPORATION
ONE MCDONALD'S PLAZA
OAK BROOK, ILLINOIS 60521
(708) 575-6178
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
DONALD G. LUBIN ALAN L. BELLER
SONNENSHEIN NATH & ROSENTHAL CLEARY, GOTTLIEB, STEEN & HAMILTON
8000 SEARS TOWER ONE LIBERTY PLAZA
CHICAGO, ILLINOIS 60606 NEW YORK, NEW YORK 10006
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MCDONALD'S CORPORATION
CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(B) OF REGULATION S-K)
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER LOCATION IN PROSPECTUS
-------------------- ----------------------
<S> <C>
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus...... Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus..... Inside Front Cover Page; Table of Contents;
Available Information; Incorporation of
Certain Documents by Reference
3. Risk Factors, Ratio of
Earnings to Fixed Charges and Inside Front Cover Page; Prospectus Summa-
Other Information............. ry; Capitalization; Selected Consolidated
Financial Data; Certain Considerations Re-
lating to the Exchange Offer and the Deben-
tures; McDonald's Corporation; Price Range
of Depositary Shares and Dividends
4. Terms of the Transaction...... Prospectus Summary; Price Range of Deposi-
tary Shares and Dividends; The Exchange Of-
fer; Description of Debentures; Description
of Depositary Shares; Description of Series
E Preferred Stock; Certain United States
Federal Income Tax Considerations; Certain
United States Federal Tax Considerations
for Non-United States Persons
5. Pro Forma Financial
Information................... Capitalization
6. Material Contacts with the
Company Being Acquired........ *
7. Additional Information
Required for Reoffering by
Persons and Parties Deemed to
be Underwriters............... *
8. Interests of Named Experts and
Counsel....................... Legal Matters; Experts
9. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................... *
10. Information with Respect to S- Incorporation of Certain Documents by Ref-
3 Registrants................. erence
11. Incorporation of Certain
Information by Reference...... Incorporation of Certain Documents by Ref-
erence
12. Information with Respect to S-
2 or S-3 Registrants.......... *
13. Incorporation of Certain
Information by Reference...... *
14. Information with Respect to
Registrants Other than S-3 or
S-2 Registrants............... *
15. Information with Respect to S-
3 Companies................... *
16. Information with Respect to S-
2 or S-3 Companies............ *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER LOCATION IN PROSPECTUS
-------------------- ----------------------
<S> <C>
17. Information with Respect to
Companies other than S-3 or S-2
Companies....................... *
18. Information if Proxies, Consents
or Authorizations are to be
Solicited....................... *
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange Incorporation of Certain Documents by Ref-
Offer........................... erence; The Exchange Offer
</TABLE>
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*Not applicable.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 31, 1995
MCDONALD'S CORPORATION
OFFER TO EXCHANGE
QUARTERLY INCOME DEBT SECURITIES (QUIDS*)
( % SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025)
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF 7.72% CUMULATIVE PREFERRED STOCK,
SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
McDonald's Corporation, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with this Prospectus, constitute the "Exchange
Offer"), to exchange up to $450,000,000 aggregate principal amount of
debentures designated as its % Subordinated Deferrable Interest Debentures
due 2025 (the "Debentures") for up to 18,000,000 (the "Amount Sought") of the
20,000,000 outstanding Depositary Shares (the "Depositary Shares"), each
representing 1/2,000 of a share of 7.72% Cumulative Preferred Stock, Series E
(the "Series E Preferred Stock"), of the Company. The Debentures are offered in
minimum denominations of $25 and integral multiples thereof, and the Series E
Preferred Stock has a liquidation preference of $25 per Depositary Share. The
Exchange Offer will be effected on a basis of $25 principal amount of
Debentures for each Depositary Share validly tendered and accepted for
exchange. Dividends accumulated after , 1995 will not be paid on
Series E Preferred Stock for which Depositary Shares have been accepted for
exchange in the Exchange Offer. In lieu thereof, holders of Debentures will be
entitled to interest from , 1995 at a rate of 7.72% per annum through
the Expiration Date.
THE EXCHANGE OFFER IS SUBJECT TO THE CONDITION THAT A MINIMUM OF 4,000,000
DEPOSITARY SHARES SHALL HAVE BEEN TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION OF THE EXCHANGE OFFER. THE EXCHANGE OFFER IS ALSO SUBJECT TO CERTAIN
ADDITIONAL CONDITIONS.
The Company will accept for exchange Depositary Shares validly tendered and
not withdrawn up to the Amount Sought prior to 5:00 p.m., New York City time,
on , 1995, or if extended by the Company, in its sole discretion, the
latest date and time to which the Exchange Offer is extended (the "Expiration
Date"). The Exchange Offer will expire on the Expiration Date. Tenders of
Depositary Shares may be withdrawn at any time prior to the Expiration Date
and, unless accepted for exchange by the Company, may be withdrawn at any time
after forty business days after the date of this Prospectus. If the number of
Depositary Shares tendered for exchange is greater than the Amount Sought the
Depositary Shares tendered will be subject to proration. Depositary Shares not
exchanged because of proration will be returned.
The Company will pay to Soliciting Dealers (as defined herein) designated by
the registered or beneficial owner, as appropriate, of Depositary Shares a
solicitation fee of $0.50 per Depositary Share validly tendered and accepted
for exchange pursuant to the Exchange Offer, subject to certain conditions.
Soliciting Dealers are not entitled to a solicitation fee for Depositary Shares
beneficially owned by such Soliciting Dealer. See "The Exchange Offer--Dealer
Managers and Soliciting Dealers".
SEE "CERTAIN CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE
DEBENTURES" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE DEBENTURES,
INCLUDING IN THE CASE OF THE DEBENTURES THE PERIOD AND CIRCUMSTANCES DURING AND
UNDER WHICH PAYMENT OF INTEREST MAY BE DEFERRED AND CERTAIN RELATED UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
(Cover continued on next page)
*An application has been filed by Goldman, Sachs & Co. with the United States
Patent and Trademark Office for the QUIDS service mark.
----------
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
MORGAN STANLEY & CO. SALOMON BROTHERS INC
INCORPORATED
----------
The date of this Prospectus is , 1995
<PAGE>
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER WHETHER TO TENDER ANY OR ALL OF ITS DEPOSITARY SHARES.
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares if any of the
conditions to the Exchange Offer is not satisfied. See "The Exchange Offer--
Expiration Date; Extensions; Amendments; Termination" and "--Conditions of the
Exchange Offer".
The Debentures will mature on , 2025 and will bear interest at an
annual rate of % from the first day following the Expiration Date (the "Issue
Date"). Interest will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing , 1995, provided
that, so long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by
public announcement given in accordance with New York Stock Exchange, Inc.
("NYSE") rules (or the rules of any other applicable self-regulatory
organization) at any time during the term of the Debentures, to extend the
interest payment period from time to time for a period not exceeding 20
consecutive quarterly interest payment periods (each, an "Extension Period").
No interest shall be due and payable during an Extension Period, but at the end
of each Extension Period the Company shall pay all interest then accrued and
unpaid on the Debentures, together with interest thereon, compounded quarterly,
at the interest rate on the Debentures. Upon the termination of any Extension
Period and the payment of all interest then due, the Company may commence a new
Extension Period. After prior notice by public announcement given in accordance
with NYSE rules (or the rules of any other applicable self-regulatory
organization), the Company also may prepay at any time all or any portion of
the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths throughout the term of the
Debentures. The Company has no current intention of exercising its right to
extend any interest payment period and believes that such an extension is
unlikely. However, should the Company determine to exercise such right in the
future, the market price of the Debentures is likely to be adversely affected.
See "Certain Considerations Relating to the Exchange Offer and the Debentures"
and "Description of Debentures--Interest" and "--Option to Extend Interest
Payment Period".
The Debentures will be redeemable at the option of the Company at any time on
or after December 3, 1997 (which is the same date on or after which the Series
E Preferred Stock is redeemable at the option of the Company), in whole or in
part, at a redemption price of 100% of the principal amount of the Debentures
redeemed, plus an amount equal to accrued and unpaid interest to the redemption
date. See "Description of Debentures--Redemption".
The Debentures will be unsecured obligations of the Company and will be
subordinate to all existing and future Senior Indebtedness (as defined herein)
of the Company, but senior to all preferred stock (the "Preferred Stock") and
common stock (the "Common Stock") of the Company. As of March 31, 1995,
outstanding Senior Indebtedness of the Company aggregated approximately $3.9
billion. See "Description of Debentures--Subordination".
For United States federal income tax purposes, the exchange of Depositary
Shares for Debentures will, depending upon each particular exchanging holder's
facts and circumstances, be treated as either an exchange in which gain or loss
is recognized or as a dividend, and the Debentures will be treated as having
been issued with original issue discount. For a discussion of these and other
United States federal income tax considerations relevant to the Exchange Offer,
see "Certain United States Federal Income Tax Considerations" and "Certain
United States Federal Tax Considerations for Non-United States Persons".
The Depositary Shares are listed and traded on the NYSE under the symbol
"MCDPRE". On , 1995, the last trading day prior to the commencement of
the Exchange Offer, the last reported sale price of the Depositary Shares on
the NYSE Composite Tape was $ per Depositary Share. Holders of Depositary
Shares are urged to obtain current market quotations for the Depositary Shares.
To the extent that Depositary Shares are tendered and accepted for exchange
pursuant to the Exchange Offer, the trading market for untendered Depositary
Shares may be adversely affected. However, the Depositary Shares should
continue to be listed on the NYSE following the consummation of the Exchange
Offer. The Debentures constitute a new issue of securities with no established
trading market. While the Debentures have been approved for listing on the
NYSE, subject to official notice of issuance, there can be no assurance that an
active market for the Debentures will develop.
2
<PAGE>
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc (the "Dealer Managers") are acting as Dealer Managers
for the Exchange Offer. The Dealer Managers have agreed to use their best
efforts to solicit the exchange of Depositary Shares pursuant to the Exchange
Offer. First Chicago Trust Company of New York (the "Exchange Agent") is acting
as Exchange Agent for the Exchange Offer and D.F. King & Co., Inc. (the
"Information Agent") is acting as Information Agent in connection with the
Exchange Offer.
Questions and requests for assistance may be directed to the Dealer Managers
or the Information Agent, as set forth on the back cover of this Prospectus.
Requests for additional copies of this Prospectus, the Letter of Transmittal
and the Notice of Guaranteed Delivery may be directed to the Information Agent.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES OF
WHICH INFORMATION IS GIVEN HEREIN. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR
WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS (AS DEFINED BELOW) OF
DEPOSITARY SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. HOWEVER, THE COMPANY MAY, AT ITS DISCRETION, TAKE SUCH ACTION AS
IT MAY DEEM NECESSARY TO MAKE THE EXCHANGE OFFER IN ANY SUCH JURISDICTION AND
EXTEND THE EXCHANGE OFFER TO HOLDERS OF DEPOSITARY SHARES IN SUCH JURISDICTION.
IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE
EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE EXCHANGE OFFER IS
BEING MADE ON BEHALF OF THE COMPANY BY THE DEALER MANAGERS OR ONE OR MORE
REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.
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, Suite 1300, 7 World Trade
Center, 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 has filed with the Commission a Registration Statement on Form S-
4 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Exchange Offer and the Debentures. The
Company will file an Issuer Tender Offer Statement on Schedule 13E-4 (the
"Schedule 13E-4") with the Commission under the Exchange Act, which includes
certain additional information relating to the Exchange Offer. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the Schedule 13E-4, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement and the Schedule 13E-4.
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.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
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. 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 securities offered hereby 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, 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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST
OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS DESCRIBED ABOVE, OTHER
THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM MCDONALD'S INVESTOR RELATIONS SERVICE CENTER, MCDONALD'S
CORPORATION, KROC DRIVE, OAK BROOK, ILLINOIS 60521, TELEPHONE: (708) 575-7428.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 4
Prospectus Summary........................................................ 5
Certain Considerations Relating to the Exchange Offer and the Debentures.. 13
McDonald's Corporation.................................................... 15
Capitalization............................................................ 16
Selected Consolidated Financial Data...................................... 17
Price Range of Depositary Shares and Dividends............................ 18
The Exchange Offer........................................................ 18
Description of Debentures................................................. 28
Description of Depositary Shares.......................................... 33
Description of Series E Preferred Stock................................... 34
Certain United States Federal Income Tax Considerations................... 36
Certain United States Federal Tax Considerations for Non-United States
Persons.................................................................. 40
Legal Matters............................................................. 42
Experts................................................................... 42
</TABLE>
4
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the detailed information contained elsewhere in this Prospectus or
by documents incorporated by reference in this Prospectus.
THE COMPANY AND THE DEPOSITARY SHARES
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 arrangements,
by franchisees who are independent third parties, or by affiliates operating
under joint venture agreements between the Company or its subsidiaries and
local businesspeople.
The Company's principal executive offices are located at One McDonald's
Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000.
The Depositary Shares were initially offered to the public on November 25,
1992 and were issued on December 3, 1992.
SPECIAL CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE DEBENTURES
In addition to the other information contained in this Prospectus, which
should be read carefully, holders should consider the following factors prior
to deciding whether or not to tender Depositary Shares in exchange for
Debentures in the Exchange Offer:
. The annual interest rate on the Debentures will be % as compared with
the annual dividend rate of 7.72% on the Series E Preferred Stock. To
facilitate reporting for income tax purposes, interest on the Debentures
will be payable on March 31, June 30, September 30 and December 31 of
each year, beginning , 1995, as compared with dividends on the
Series E Preferred Stock which are payable on the first day of March,
June, September and December of each year. See "Comparison of Debentures
and Series E Preferred Stock" below.
. The Debentures will rank senior to the Series E Preferred Stock as to
payment in respect thereof and as to the distribution of assets upon
liquidation. However, the Debentures will be unsecured obligations of the
Company and will be (as the Series E Preferred Stock is) subordinate in
right to payment to all existing and future Senior Indebtedness of the
Company. In addition, the Debentures will be (as the Series E Preferred
Stock is) effectively subordinated to all obligations of the Company's
subsidiaries. See "Certain Considerations Relating to the Exchange Offer
and the Debentures--Subordination of Debentures".
. Participation in the Exchange Offer will be a taxable event. The
consequences of the Exchange Offer and holding Debentures in lieu of
Depositary Shares may vary depending upon the holder's particular facts
and circumstances. Accordingly, holders are advised to consult with their
own tax advisors for guidance with respect to their particular facts and
circumstances. See "Certain Considerations Relating to the Exchange Offer
and the Debentures--Exchange Will Be a Taxable Event", "--Continued
Accrual of Interest Income for Federal Income Tax Purposes in Event of
Interest Deferral", "Certain United States Federal Income Tax
Considerations" and "Certain United States Federal Tax Considerations for
Non-United States Persons".
. There has not been any public market for the Debentures. While the
Debentures have been approved for listing on the NYSE, subject to
official notice of issuance, there can be no assurance that an active
market for the Debentures will develop or be sustained in the future on
such exchange. See "Certain Considerations Relating to the Exchange Offer
and the Debentures--Listing and Trading of Debentures and Depositary
Shares".
5
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Series E Preferred Stock represented by
the Depositary Shares with the Debentures. The potential cash flow benefit to
the Company arises because interest payable on the Debentures will be
deductible by the Company as it accrues for United States federal income tax
purposes, while dividends payable on the Series E Preferred Stock are not
deductible. See "The Exchange Offer--Purpose of the Exchange Offer".
THE EXCHANGE OFFER; SECURITIES OFFERED
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company hereby offers to exchange up to $450,000,000
aggregate principal amount of Debentures for up to 18,000,000 of the 20,000,000
outstanding Depositary Shares, each representing 1/2,000 of a share of Series E
Preferred Stock. Exchanges will be effected on a basis of $25 principal amount
of Debentures (the minimum permitted denomination) for each Depositary Share
validly tendered and accepted for exchange in the Exchange Offer. If the number
of Depositary Shares tendered for exchange is greater than the Amount Sought
the Depositary Shares tendered will be subject to proration. See "The Exchange
Offer--Terms of the Exchange Offer" and "--Proration".
The Exchange Offer is subject to the condition that a minimum of 4,000,000
Depositary Shares shall have been tendered and not withdrawn prior to the
Expiration Date (the "Minimum Condition"). The Exchange Offer is also subject
to certain additional conditions. See "The Exchange Offer--Terms of the
Exchange Offer" and "--Conditions of the Exchange Offer".
The Debentures will mature on , 2025 and will bear interest at an
annual rate of % from the Issue Date or from the most recent interest payment
date to which interest has been paid or duly provided for. Interest will be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, commencing , 1995, provided that, so long as the Company
shall not be in default in the payment of interest on the Debentures, the
Company shall have the right, upon prior notice by public announcement given in
accordance with NYSE rules (or the rules of any other applicable self-
regulatory organization) at any time during the term of the Debentures, to
extend the interest payment period from time to time for a period not exceeding
20 consecutive quarterly interest payment periods. As a consequence, quarterly
interest payments on the Debentures would be deferred, but would continue to
accrue with interest thereon compounded quarterly at the rate of interest on
the Debentures. The Company has no current intention of exercising its right to
extend any interest payment period and believes that such an extension is
unlikely. However, should the Company determine to exercise such right in the
future, the market price of the Debentures is likely to be adversely affected.
See "Certain Considerations Relating to the Exchange Offer and the Debentures",
"Description of Debentures--Interest" and "--Option to Extend Interest Payment
Period".
The Debentures will be redeemable at the option of the Company at any time on
or after December 3, 1997 (which is the same date on or after which the Series
E Preferred Stock is redeemable at the option of the Company), in whole or in
part, at a redemption price of 100% of the principal amount of the Debentures
redeemed, plus an amount equal to accrued and unpaid interest to the redemption
date. The Debentures will not be subject to mandatory redemption, and no
sinking fund will be established for the payment of the Debentures. See
"Description of Debentures--Redemption".
6
<PAGE>
Dividends accumulated after , 1995 will not be paid on Series E
Preferred Stock for which Depositary Shares have been accepted for exchange in
the Exchange Offer. In lieu thereof, holders of record of the Debentures will
be entitled to interest at a rate of 7.72% per annum from , 1995 through
the Expiration Date, payable at the time of the first interest payment on the
Debentures. The Debentures will be issued pursuant to an indenture, to be dated
as of , 1995, between the Company and First Fidelity Bank, National
Association, as trustee. See "Description of Debentures--Interest" and "--The
Trustee".
EXPIRATION DATE; WITHDRAWALS
The Company will accept for exchange Depositary Shares, validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on , 1995, or if
extended by the Company, in its sole discretion, the latest date and time to
which the Exchange Offer is extended. The Exchange Offer will expire on the
Expiration Date. Tenders of Depositary Shares pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date and, unless accepted
for exchange by the Company, may be withdrawn at any time after forty business
days after the date of this Prospectus. See "The Exchange Offer--Expiration
Date; Extensions; Amendments; Termination" and "--Withdrawal of Tenders".
EXTENSIONS, AMENDMENTS AND TERMINATION
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares if any of the
conditions to the Exchange Offer is not satisfied. See "The Exchange Offer--
Expiration Date; Extensions; Amendments; Termination" and "--Conditions of the
Exchange Offer".
PROCEDURES FOR TENDERING
Each holder of Depositary Shares wishing to accept the Exchange Offer must
(i) properly complete and sign the Letter of Transmittal or a photocopy thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a photocopy thereof) in accordance with the instructions contained
herein and therein, together with any required signature guarantees, or an
Agent's Message (as hereinafter defined) in connection with a book-entry
transfer of Depositary Shares, together with any other required documents, and
deliver the same to First Chicago Trust Company of New York, as Exchange Agent,
at either of its addresses set forth in "The Exchange Offer--Exchange Agent and
Information Agent" and either (a) cause depositary receipts for the Depositary
Shares to be received by the Exchange Agent at such address or (b) cause such
Depositary Shares to be transferred pursuant to the procedures for book-entry
transfer described herein and a confirmation of such book-entry transfer to be
received by the Exchange Agent, in each case prior to the Expiration Date or
(ii) comply with the guaranteed delivery procedures described herein.
DEPOSITARY RECEIPTS, LETTERS OF TRANSMITTAL AND OTHER REQUIRED DOCUMENTS SHOULD
BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY, THE DEALER MANAGERS
OR THE INFORMATION AGENT. See "The Exchange Offer--General" and "--Procedures
for Tendering".
Holders of Depositary Shares who are not registered holders of, and who seek
to tender such Depositary Shares should (i) obtain a properly completed Letter
of Transmittal for such Depositary Shares from the registered holder with
signatures guaranteed by an Eligible Institution (as hereinafter defined), or
(ii) obtain and include with the Letter of Transmittal depositary receipts for
Depositary Shares properly endorsed for transfer by the registered holder or
accompanied by a stock power from the registered holder with signatures on the
endorsement or written instrument or instruments of transfer guaranteed by an
Eligible Institution or (iii) effect a record transfer of such Depositary
Shares
7
<PAGE>
and comply with the requirements applicable to registered holders for tendering
Depositary Shares prior to the Expiration Date. See "The Exchange Offer--
Procedures for Tendering".
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
Any beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Depositary Shares should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on its own behalf, such owner
must, prior to completing and executing a Letter of Transmittal and delivering
its Depositary Shares, either make appropriate arrangements to register
ownership of the Depositary Shares in such owner's name or obtain a properly
completed stock power from the registered holder. The transfer of registered
ownership may take considerable time and may not be able to be completed prior
to the Expiration Date and, accordingly, may prohibit a transferring beneficial
owner from participating in the Exchange Offer. See "The Exchange Offer--
Procedures for Tendering--Signature Guarantees".
GUARANTEED DELIVERY PROCEDURES
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Depositary Shares to reach the Exchange Agent before
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering--Guaranteed Delivery".
ACCEPTANCE OF DEPOSITARY SHARES AND DELIVERY OF DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer, including
the reservation by the Company of the right to withdraw or terminate the
Exchange Offer and certain other rights, the Company will accept for exchange
Depositary Shares up to the Amount Sought that are properly tendered in the
Exchange Offer and not withdrawn prior to the Expiration Date. Subject to such
terms and conditions, the Debentures issued pursuant to the Exchange Offer will
be delivered as promptly as practicable following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer" and "--Expiration Date;
Extensions; Amendments; Termination".
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the aggregate number of Depositary Shares validly
tendered and not properly withdrawn (including Depositary Shares tendered by
the guaranteed delivery procedures), the Company does not expect that it would
be able to announce the final results of such proration until approximately
seven business days after the Expiration Date. Preliminary results of proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Depositary Shares may obtain such preliminary
information from the Dealer Managers or Information Agent and may also be able
to obtain such information from their brokers. The Company will not issue any
Debentures in exchange for any Depositary Shares accepted for exchange pursuant
to the Exchange Offer, or return Depositary Shares delivered to the Exchange
Agent but not tendered, or return Depositary Shares tendered but not accepted
for exchange because of proration, until the final proration factors are known.
See "The Exchange Offer--Proration".
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Depositary Shares for Debentures pursuant to the Exchange
Offer will be a taxable event. Depending on each exchanging holder's particular
facts and circumstances, the exchange may be treated as (i) a transaction in
which gain or loss will be recognized in an amount
8
<PAGE>
equal to the difference between the fair market value of the Debentures
received in the exchange and the exchanging holder's tax basis in the
Depositary Shares surrendered or (ii) a distribution taxable as a dividend in
an amount not in excess of the fair market value of the Debentures received by
such exchanging holder. If a holder does not own, either directly or
indirectly, any Common Stock immediately after the Expiration Date of the
Exchange Offer, a holder's exchange of Depositary Shares for Debentures
pursuant to the Exchange Offer should be treated as a sale or exchange of such
Depositary Shares for United States federal income tax purposes. All holders of
the Depositary Shares are advised to consult their own tax advisors regarding
the United States federal, state, local and foreign tax consequences of the
exchange of the Depositary Shares for the Debentures. See "Certain United
States Federal Income Tax Considerations" and "Certain United States Federal
Tax Considerations for Non-United States Persons".
Because the Company has the right to extend any interest payment for a period
not exceeding 20 consecutive quarterly interest payment periods, the Debentures
will be treated as issued with "original issue discount" for United States
federal income tax purposes. In the event an Extension Period occurs, holders
of the Debentures would continue under the original issue discount rules to
include original issue discount in gross income as it accrues for United States
federal income tax purposes. As a result, a holder would include such amounts
in gross income without receiving current cash interest payments. A holder that
disposes of its Debentures prior to the record date for payment of interest at
the end of an Extension Period will not receive cash from the Company related
to such interest because such interest will be paid to the holder of record on
such record date, regardless of who the holders of record may have been on
other dates during the Extension Period. See "Certain United States Federal
Income Tax Considerations--Interest and Original Issue Discount on Debentures".
UNTENDERED DEPOSITARY SHARES
Holders of Depositary Shares who do not tender their Depositary Shares in the
Exchange Offer or whose Depositary Shares are not accepted for exchange will
continue to hold such Depositary Shares and will be entitled to all the rights
and preferences, and will be subject to all of the limitations, applicable
thereto. The Company expects that the Depositary Shares will continue to be
listed on the NYSE following the consummation of the Exchange Offer. See
"Certain Considerations Relating to the Exchange Offer and Debentures--Listing
and Trading of Debentures and Depositary Shares".
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
in connection with the Exchange Offer. D. F. King & Co., Inc. has been retained
by the Company to act as Information Agent for the Exchange Offer. QUESTIONS
AND REQUESTS FOR ASSISTANCE, REQUESTS FOR ADDITIONAL COPIES OF THIS PROSPECTUS
OR OF THE LETTER OF TRANSMITTAL AND REQUESTS FOR THE NOTICE OF GUARANTEED
DELIVERY SHOULD BE DIRECTED TO D. F. KING & CO., INC. AT (800) 628-8536. The
addresses and telephone numbers of the Exchange Agent and Information Agent are
set forth in "The Exchange Offer--Exchange Agent and Information Agent".
DEALER MANAGERS
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc have been retained as Dealer Managers to solicit
exchanges of Depositary Shares for Debentures. Questions with respect to the
Exchange Offer may be directed to Goldman, Sachs & Co. at (800) 828-3182. See
"The Exchange Offer--Dealer Managers and Soliciting Dealers".
SOLICITING DEALER FEES AND EXPENSES
The expenses of soliciting tenders of Depositary Shares will be borne by the
Company. Subject to the receipt of a properly completed and duly executed
Letter of Transmittal or Notice of Solicited
9
<PAGE>
Tenders as described herein, the Company will pay to any Soliciting Dealer (as
hereinafter defined) a solicitation fee of $0.50 per Depositary Share tendered
and accepted for exchange pursuant to the Exchange Offer. See "The Exchange
Offer--Dealer Managers and Soliciting Dealers".
COMPARISON OF DEBENTURES AND SERIES E PREFERRED STOCK
The following is a brief summary comparison of certain of the principal terms
of the Debentures and the Series E Preferred Stock represented by the
Depositary Shares.
<TABLE>
<CAPTION>
DEBENTURES SERIES E PREFERRED STOCK
---------- ------------------------
<S> <C> <C>
Interest/Dividend Rate.. % annual interest from and 7.72% annual dividend, payable
including the Issue Date (7.72% quarterly out of funds legally
per annum for the period from available therefor on March 1,
through the Expiration June 1, September 1 and December
Date) payable quarterly in ar- 1 of each year, when, as and if
rears on March 31, June 30, Sep- declared by the Company's Board
tember 30 and December 31 of of Directors (the "Board of Di-
each year, commencing , rectors"). All dividends on the
1995, subject to the Company's Series E Preferred Stock have
right to extend the interest been paid to date. In the event
payment period from time to time dividends are not paid on a div-
for a period not exceeding 20 idend payment date in the fu-
consecutive quarterly interest ture, holders would not be enti-
payment periods, as described tled to receive interest on any
herein. At the end of each Ex- dividend arrearages. The Company
tension Period the Company shall may not declare or pay dividends
pay to the holders all interest on the Common Stock or any other
then accrued and unpaid, class of stock ranking junior to
together with interest thereon, the Series E Preferred Stock un-
compounded quarterly at the rate less all dividends on the Series
of interest on the Debentures. E Preferred Stock have been
During any Extension Period, the paid.
Company may not declare or pay
dividends on, or redeem, pur-
chase or acquire, any of its
capital stock. The Company has
no current intention of exercis-
ing its right to extend an in-
terest payment period and be-
lieves that such an extension is
unlikely.
Maturity; Sinking Fund.. , 2025. There is no manda- Not applicable. There is no man-
tory redemption or sinking fund datory redemption or sinking
for the Debentures. fund for the Series E Preferred
Stock.
Optional Redemption..... Redeemable at the option of the Redeemable at the option of the
Company at any time on or after Company at any time on or after
December 3, 1997, in whole or in December 3, 1997, in whole or in
part, at a redemption price of part, at a redemption price
100% of the principal amount of equal to the liquidation prefer-
the Debentures redeemed, plus an ence of the Series E Preferred
amount equal to accrued and un- Stock (equal to $25 per Deposi-
paid interest to the redemption tary Share) redeemed, plus an
date. amount equal to accrued and un-
paid dividends to the redemption
date.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
DEBENTURES SERIES E PREFERRED STOCK
---------- ------------------------
<S> <C> <C>
Events of Default;
Acceleration of Events of Default under the In- Not applicable. However, hold-
Maturity................ denture include: default for ers of the outstanding shares
thirty days in payment of any of the Series E Preferred
interest installment when due; Stock, voting together as a
default for ten days in payment class with the holders of all
of principal, at maturity or on other series of Preferred Stock
redemption or otherwise, when entitled to receive cumulative
due; default for sixty days af- preferred dividends, are enti-
ter notice to the Company by tled to elect two members of
the Trustee, or to the Company the Board of Directors (the au-
and the Trustee by the holders thorized number of directors
of at least 25% in principal not to be increased for this
amount of the Debentures then purpose) in the event that div-
outstanding in the performance idends payable on the Series E
of any other covenant or war- Preferred Stock or on any other
ranty in the Indenture; and series of Preferred Stock are
certain events of bankruptcy, in arrears and unpaid in an
insolvency or reorganization of amount equal to or exceeding
the Company. If an Event of De- the amount payable on such se-
fault shall have occurred and ries of Preferred Stock for six
be continuing, either the quarterly dividend periods,
Trustee or the holders of 25% whether or not consecutive.
in principal amount of the De-
bentures then outstanding may
declare the principal of all
the Debentures to be due and
payable, subject to prior pay-
ment to holders of Senior In-
debtedness. As of March 31,
1995, outstanding Senior In-
debtedness aggregated approxi-
mately $3.9 billion.
Subordination........... Subordinate to all existing and Subordinate to claims of credi-
future Senior Indebtedness of tors, including holders of the
the Company, but senior to all Company's outstanding debt se-
issued and outstanding Pre- curities and the Debentures, on
ferred Stock, including the Se- a parity with all other issued
ries E Preferred Stock, and to and outstanding Preferred Stock
the Common Stock. As of March of the Company, and senior to
31, 1995, outstanding Senior all issued and outstanding Com-
Indebtedness of the Company ag- mon Stock. Effectively subordi-
gregated approximately $3.9 nate to all obligations of the
billion. Effectively subordi- Company's subsidiaries.
nate to all obligations of the
Company's subsidiaries.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
DEBENTURES SERIES E PREFERRED STOCK
---------- ------------------------
<S> <C> <C>
Voting Rights........... None. None, except in certain circum-
stances.
Restrictions on
Consolidation, Merger,
Conveyance, Transfer or
Lease................... The Company shall not consoli- None.
date with or merge into any
other Person (other than an af-
filiate) or convey, transfer or
lease all or substantially all
of its properties and assets to
any Person (other than an af-
filiate) as an entirety, and
the Company shall not permit
any Person to consolidate with
or merge into the Company or
convey, transfer or lease its
properties and assets unless
certain conditions are met.
New York Stock Exchange The Debentures have been ap-
Listing................. proved for listing on the NYSE, The Depositary Shares are
subject to official notice of listed on the NYSE under the
issuance. symbol "MCDPRE". The Series E
Preferred Stock has not been
and will not be listed on the
NYSE.
Dividends-Received Interest paid to corporate Dividends paid to corporate
Deduction............... holders will not be eligible holders are eligible for the
for the dividends-received de- dividends-received deduction
duction for corporate holders. for corporate holders. The div-
idends-received deduction is
not applicable to individual
holders.
Minimum Denominations... $25 per Debenture. $25 per Depositary Share.
</TABLE>
12
<PAGE>
CERTAIN CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE DEBENTURES
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered prior to deciding whether
or not to tender Depositary Shares in exchange for Debentures in the Exchange
Offer:
EXCHANGE WILL BE A TAXABLE EVENT
The exchange of Depositary Shares for Debentures pursuant to the Exchange
Offer will be a taxable event for United States federal income tax purposes.
Depending on each exchanging holder's particular facts and circumstances, the
exchange may be treated as (i) a transaction in which gain or loss will be
recognized in an amount equal to the difference between the fair market value
of the Debentures received in the exchange and the exchanging holder's tax
basis in the Depositary Shares surrendered or (ii) a distribution taxable as a
dividend in an amount not in excess of the fair market value of the Debentures
received by such exchanging holder. If a holder does not own, either directly
or indirectly, any Common Stock immediately after the Expiration Date of the
Exchange Offer, a holder's exchange of Depositary Shares for Debentures
pursuant to the Exchange Offer should be treated as a sale or exchange of such
Depositary Shares for United States federal income tax purposes. All holders of
Depositary Shares are advised to consult their own tax advisors regarding the
United States federal, state, local and foreign tax consequences of the
exchange of Depositary Shares. See "Certain United States Federal Income Tax
Considerations" and "Certain United States Federal Tax Considerations for Non-
United States Persons".
COMPANY HAS RIGHT TO DEFER PAYMENT OF INTEREST
So long as the Company shall not be in default in the payment of interest on
the Debentures, the Company shall have the right under the Indenture, upon
prior notice by public announcement given in accordance with NYSE rules (or the
rules of any other applicable self-regulatory organization) at any time during
the term of the Debentures, to extend any interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest payment
periods. No interest shall be due and payable during an Extension Period, but
on the interest payment date occurring at the end of each Extension Period, the
Company shall pay to the holders of record on the record date for such interest
payment date (regardless of who the holders of record may have been on other
dates during the Extension Period) all accrued and unpaid interest on the
Debentures, together with interest thereon, compounded quarterly at the rate of
interest on the Debentures.
Prior to the termination of any Extension Period, the Company may further
extend such Extension Period; provided that such Extension Period, together
with all such previous and further extensions thereof, may not exceed 20
consecutive quarterly interest payment periods. Upon the termination of any
Extension Period and the payment of all interest then due, the Company may
commence a new Extension Period. After prior notice given by public
announcement in accordance with NYSE rules (or the rules of any other
applicable self-regulatory organization), the Company may also prepay at any
time all or a portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths
throughout the term of the Debentures. See "Description of Debentures--Option
to Extend Interest Payment Period".
The Company has no current intention of exercising its right to extend any
interest payment period and believes that such an extension is unlikely.
INTEREST DEFERRAL LIKELY TO HAVE ADVERSE EFFECT ON MARKET PRICE OF DEBENTURES
As described above, the Company has the right to extend an interest payment
period from time to time for a period not exceeding 20 consecutive quarterly
interest payment periods. In the event that the Company exercises its right to
cause an Extension Period, or in the event the Company thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Debentures is likely to be adversely
affected. In addition, as a result of
13
<PAGE>
such rights, the market price of the Debentures may be more volatile than other
debt instruments with original issue discount that do not have such rights. A
holder that disposes of its Debentures during an Extension Period, therefore,
may not receive the same return on its investment as a holder that continues to
hold its Debentures. See "Description of Debentures--Option to Extend Interest
Payment Period".
CONTINUED ACCRUAL OF INTEREST INCOME FOR FEDERAL INCOME TAX PURPOSES IN EVENT
OF INTEREST DEFERRAL
Because the Company has the right to extend any interest payment for a period
not exceeding 20 consecutive quarterly interest payment periods, the Debentures
will be treated as issued with "original issue discount" for United States
federal income tax purposes, meaning that, in most cases for federal income tax
purposes, a holder of Debentures will be required to include in such holder's
gross income interest on the Debentures whether or not such holder actually
receives cash amounts in respect of such interest. Generally, all of a holder's
taxable interest income with respect to the Debentures will be accounted for as
"original issue discount" and actual distributions of stated interest will not
be separately reported as taxable income. In the event an Extension Period
occurs, holders of the Debentures would be required to continue under the
original issue discount rules to include in such holder's gross income original
issue discount as it accrues during such Extension Period notwithstanding that
such holder would not receive current cash interest payments. A holder that
disposes of its Debentures prior to the record date for payment of interest at
the end of an Extension Period will not receive cash from the Company related
to such interest because such interest will be paid to the holder of record on
such record date, regardless of who the holders of record may have been on
other dates during the Extension Period. The extent to which such a holder
would receive a return on the Debentures for the period it held such Debentures
will depend on the market for the Debentures at the time of disposition. See
"Certain United States Federal Income Tax Considerations--Interest and Original
Issue Discount on Debentures".
SUBORDINATION OF DEBENTURES
The Debentures will be unsecured obligations of the Company and will be
subordinate to all existing and future Senior Indebtedness of the Company. As
of March 31, 1995, outstanding Senior Indebtedness of the Company aggregated
approximately $3.9 billion. There are no terms of the Debentures or the
Indenture (as hereinafter defined) that limit the Company's ability to incur
additional indebtedness, including indebtedness that ranks senior to or pari
passu with the Debentures. The Debentures also effectively will be subordinate
to all obligations of the Company's subsidiaries. See "Description of
Debentures--Subordination".
LISTING AND TRADING OF DEBENTURES AND DEPOSITARY SHARES
The Debentures constitute a new series of securities with no established
trading market. While the Debentures have been approved for listing on the
NYSE, subject to official notice of issuance, there can be no assurance that an
active market for the Debentures will develop or be sustained in the future on
such exchange. Although the Dealer Managers have indicated to the Company that
they intend to make a market in the Debentures as permitted by applicable laws
and regulations, they are not obligated to do so and may discontinue any such
market making activities at any time without notice. Accordingly, no assurance
can be given as to the liquidity of, or trading for, the Debentures.
The Exchange Offer will reduce the number of Depositary Shares that might
otherwise trade publicly and will reduce the number of holders of Depositary
Shares, which could adversely affect the liquidity and market value of the
Depositary Shares not tendered and exchanged in the Exchange Offer. The Company
anticipates that there will be a sufficient number of Depositary Shares
outstanding and publicly traded following the consummation of the Exchange
Offer to ensure a continued trading market in the Depositary Shares. Based on
the published guidelines of the NYSE, the Company's acceptance for exchange of
the Amount Sought pursuant to the Exchange Offer should not cause the remaining
Depositary Shares to be delisted from the NYSE.
14
<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 arrangements,
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.
15
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of March 31, 1995 and as adjusted to give effect
to the Exchange Offer (assuming that either 50% or 90% of the outstanding
Depositary Shares, 10,000,000 and 18,000,000 Depositary Shares, respectively,
are exchanged). The financial data as of March 31, 1995 appearing in the
"Actual" column of the following table is derived from the Company's unaudited
condensed consolidated financial statements as of and for the period ended
March 31, 1995, incorporated by reference herein.
<TABLE>
<CAPTION>
MARCH 31, 1995
-------------------------------
(U.S. DOLLARS IN MILLIONS)
ACTUAL AS ADJUSTED(3)
--------- --------------------
ASSUMING ASSUMING
50% 90%
EXCHANGE EXCHANGE
--------- ---------
<S> <C> <C> <C>
Short-term debt(1)--
Notes payable............................... $ 433.6 $ 433.6 $ 433.6
Current maturities of long-term debt........ 66.2 66.2 66.2
--------- --------- ---------
Total short-term debt................... 499.8 499.8 499.8
Long-term debt(1)--
Long-term obligations....................... 3,986.4 3,986.4 3,986.4
Subordinated debentures due 2025............ 250.0 450.0
--------- --------- ---------
Total long-term debt.................... 3,986.4 4,236.4 4,436.4
--------- --------- ---------
Total debt(2)........................... 4,486.2 4,736.2 4,936.2
Shareholders' equity(1)--
Preferred stock, no par value
Authorized 165 million shares; issued 11.2
million shares........................... 673.2 423.2 223.2
Common Stock, no par value
Authorized 1.25 billion shares; issued
830.3 million shares..................... 92.3 92.3 92.3
Additional paid-in capital.................. 300.1 300.1 300.1
Guarantee of ESOP Notes(2).................. (234.2) (234.2) (234.2)
Retained earnings........................... 8,853.0 8,853.0 8,853.0
Foreign currency translation adjustment..... (50.4) (50.4) (50.4)
--------- --------- ---------
9,634.0 9,384.0 9,184.0
Common Stock in treasury, at cost; 135.5
million shares............................. (2,387.4) (2,387.4) (2,387.4)
--------- --------- ---------
Total shareholders' equity.............. 7,246.6 6,996.6 6,796.6
--------- --------- ---------
Total capitalization.......................... $11,732.8 $11,732.8 $11,732.8
========= ========= =========
</TABLE>
- --------
(1) For additional information concerning debt and Shareholders' equity, see
the Company's unaudited condensed consolidated financial statements and
accompanying financial comments as of March 31, 1995, and the Company's
audited consolidated financial statements and accompanying financial
comments as of December 31, 1994, all as incorporated by reference herein.
There has been no material change in the capitalization of the Company and
its consolidated subsidiaries since March 31, 1995.
(2) Included in total debt at March 31, 1995 were $159.5 million of 7.5% ESOP
Notes Series A, and $83.3 million of 7.2% ESOP Notes Series B
(collectively, the "ESOP Notes"), issued by the Leveraged Employee Stock
Ownership Plan, with payments through 2004 and 2006, respectively, which
are guaranteed by the Company. The Company has agreed to repurchase the
ESOP Notes upon the occurrence of certain events. The Company also has
guaranteed certain foreign affiliate loans of $60.9 million at March 31,
1995.
(3) Assuming a 50% exchange, the Debentures that will be issued are expected to
have an aggregate principal amount of $250 million and are assumed to have
an aggregate fair market value of approximately $250 million as of the
Issue Date. Assuming a 90% exchange, the Debentures that will be issued are
expected to have an aggregate principal amount of $450 million and are
assumed to have an aggregate fair market value of approximately $450
million as of the Issue Date. The difference, if any, between the aggregate
principal amount and the aggregate fair market value of the Debentures will
be classified as debt premium or discount. The difference, if any, between
the aggregate fair market value of the Debentures and the aggregate
carrying value of the Series E Preferred Stock will be recorded in
Additional paid-in capital. To the extent the actual aggregate fair market
value of the Debentures at the Issue Date differs from the assumed amount,
the debt premium or discount and Additional paid-in capital accounts will
change accordingly.
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS 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 (unau-
dited)(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 oper-
ated
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 provi-
sion for income tax-
es.................... 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
Book value(5).......... 9.69 8.38 9.20 8.12 7.39 6.73 5.82
========= ========= ========= ========= ========= ========= =========
Other data:
Ratio of earnings to
fixed charges(6)...... 4.66 4.70 5.26 4.86 3.96 3.53 3.48
========= ========= ========= ========= ========= ========= =========
Number of restaurants
at end of
period:
Operated by franchi-
sees................ 10,477 9,886 10,458 9,832 9,237 8,735 8,131
Operated by the Com-
pany................ 3,143 2,741 3,083 2,699 2,551 2,547 2,643
Operated by affili-
ates................ 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 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) Book value represents total Shareholders' equity excluding Preferred Stock
and the portion of the guarantee of ESOP Notes related to Preferred Stock.
(6) 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.
17
<PAGE>
PRICE RANGE OF DEPOSITARY SHARES AND DIVIDENDS
The Depositary Shares are listed and traded on the NYSE under the symbol
"MCDPRE". The following table sets forth the high and low closing sales prices
of the Depositary Shares on the NYSE Composite Tape and the cash dividends per
Depositary Share paid in the fiscal quarters indicated.
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PER DEPOSITARY SHARE
------ ------ --------------------
<S> <C> <C> <C>
1992: 4th Quarter (from December 23, 1992)... 25 5/8 25 1/4 $ 0
1993: 1st Quarter............................ 26 5/8 25 1/2 0.4717
2nd Quarter............................... 27 26 0.4825
3rd Quarter............................... 27 1/4 26 0.4825
4th Quarter............................... 27 7/8 26 3/8 0.4825
1994: 1st Quarter............................ 27 1/2 25 3/8 0.4825
2nd Quarter............................... 26 1/8 24 5/8 0.4825
3rd Quarter............................... 25 7/8 24 5/8 0.4825
4th Quarter............................... 24 5/8 22 7/8 0.4825
1995: 1st Quarter............................ 25 5/8 24 1/4 0.4825
2nd Quarter (through April 13, 1995)...... 25 5/8 25 1/4
</TABLE>
On April 13, 1995, the last full NYSE trading day prior to the initial filing
of the Registration Statement, the last reported sales price of the Depositary
Shares on the NYSE Composite Tape was $25 1/2 per Depositary Share. On
, 1995, the last full NYSE trading day prior to the commencement of
the Exchange Offer, the last reported sale price of the Depositary Shares on
the NYSE Composite Tape was $ per Depositary Share. There can be no
assurance as to the prices at which the Depositary Shares may trade following
the Exchange Offer. The exchange of Depositary Shares pursuant to the Exchange
Offer will reduce the number of Depositary Shares that might otherwise trade
publicly and the number of holders of Depositary Shares and, depending on the
number of Depositary Shares exchanged, could adversely affect the liquidity and
market value of the remaining Depositary Shares held by the public. HOLDERS OF
DEPOSITARY SHARES ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
DEPOSITARY SHARES.
THE EXCHANGE OFFER
GENERAL
Participation in the Exchange Offer is voluntary and Holders should carefully
consider whether to tender their Depositary Shares thereunder. Neither the
Company nor its Board of Directors makes any recommendation to Holders as to
whether to tender or refrain from tendering Depositary Shares pursuant to the
Exchange Offer. Holders of the Depositary Shares are urged to consult their
financial and tax advisors in making their own decisions on what action to take
in light of their own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect to the
Exchange Offer means (i) any person in whose name any Depositary Shares are
registered on the books of the Company, (ii) any other person who has obtained
a properly completed stock power from the registered holder or (iii) any person
whose Depositary Shares are held of record by The Depository Trust Company
("DTC") who desires to deliver such Depositary Shares by book-entry transfer at
DTC.
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Series E Preferred Stock represented by
the Depositary Shares with the Debentures. The
18
<PAGE>
potential cash flow benefit to the Company arises because interest payable on
the Debentures (whether paid currently or deferred under the terms of the
Debentures) will be deductible by the Company as it accrues for United States
federal income tax purposes, while dividends payable on the Series E Preferred
Stock are not deductible.
The Series E Preferred Stock represented by the Depositary Shares exchanged
pursuant to the Exchange Offer will be retired. The Company will take all
actions necessary to restore such retired Preferred Stock to the status of
authorized but unissued Preferred Stock which may thereafter be reissued.
Except as described herein, the Company has no present plans or intentions to
make acquisitions of or offers for the Depositary Shares or the Series E
Preferred Stock. The Company will continue to monitor the market for the
Depositary Shares outstanding after the expiration of the Exchange Offer and
reserves the right, in its sole discretion, subject to applicable law, to
acquire and to make offers for Depositary Shares subsequent to the Expiration
Date for cash or in exchange for other securities, by optional redemption of
the Series E Preferred Stock or otherwise. The terms of any such acquisitions
or offers may differ from the terms of the Exchange Offer. Such acquisitions or
offers, if any, may depend upon, among other things, the market price of the
Depositary Shares, and general economic and market conditions.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company will exchange up to $450,000,000 aggregate
principal amount of Debentures for Depositary Shares up to the Amount Sought.
The Debentures are offered in minimum denominations of $25 and integral
multiples thereof, and the Series E Preferred Stock has a liquidation
preference of $25 per Depositary Share. The Exchange Offer will be effected on
a basis of $25 principal amount of Debentures for each Depositary Share validly
tendered and accepted for exchange. Upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal, the Company will
accept Depositary Shares validly tendered and not withdrawn as promptly as
practicable after the Expiration Date unless the Exchange Offer has been
withdrawn or terminated. The Company will not accept Depositary Shares for
exchange prior to the Expiration Date.
The Exchange Offer is subject to the Minimum Condition, which requires that a
minimum of 4,000,000 Depositary Shares be tendered to the Company pursuant to
the Exchange Offer and not withdrawn prior to the Expiration Date. The Exchange
Offer is subject to certain additional conditions. See "--Conditions of the
Exchange Offer".
The Company expressly reserves the right, in its sole discretion, to delay
acceptance for exchange of Depositary Shares tendered under the Exchange Offer
or the exchange of the Debentures for the Depositary Shares accepted for
exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which
require that the Company consummate the Exchange Offer or return the Depositary
Shares deposited by or on behalf of the Holders thereof promptly after the
termination or withdrawal of the Exchange Offer), or to withdraw or terminate
the Exchange Offer and not accept any Depositary Shares at any time in the
event that the Minimum Condition or any of the other conditions described under
"--Conditions of the Exchange Offer" is not satisfied. In all cases, except to
the extent waived by the Company, delivery of Debentures in exchange for the
Depositary Shares accepted for exchange pursuant to the Exchange Offer will be
made only after timely receipt by the Exchange Agent of Depositary Shares (or
confirmation of book-entry transfer thereof), a properly completed and duly
executed Letter of Transmittal (or an Agent's Message in connection with a
book-entry transfer) and any other documents required thereby.
As of the date of this Prospectus, there were 20,000,000 Depositary Shares
outstanding. The 18,000,000 Depositary Shares for which the Company is offering
to exchange Debentures represent
19
<PAGE>
90% of the Depositary Shares that are outstanding. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered holders of
Depositary Shares as of , 1995.
The Company shall be deemed to have accepted validly tendered Depositary
Shares (or defectively tendered Depositary Shares with respect to which the
Company has waived such defect) when, as and if the Company has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering Holders for the purpose of receiving the Debentures
from the Company and delivering such Debentures to tendering Holders. Upon the
terms and subject to the conditions of the Exchange Offer, delivery of
Debentures in exchange for Depositary Shares will be made as promptly as
practicable after the Expiration Date.
Holders of Depositary Shares will not have any appraisal or dissenters'
rights under the Delaware General Corporation Law in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
Holders who tender Depositary Shares in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Depositary Shares pursuant to the Exchange Offer. See "--Fees and Expenses;
Transfer Taxes".
PRORATION
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, if the Amount Sought or fewer Depositary Shares have
been validly tendered and not withdrawn on or prior to the Expiration Date, the
Company will exchange Debentures for all such Depositary Shares. If more
Depositary Shares than the Amount Sought have been validly tendered and not
withdrawn on or prior to the Expiration Date, the Company will exchange
Debentures for Depositary Shares from each tendering Holder on a pro rata
basis, subject to adjustment to avoid the exchange of fractional Depositary
Shares.
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the aggregate number of Depositary Shares validly
tendered and not properly withdrawn (including Depositary Shares tendered by
the guaranteed delivery procedures described in "--Procedures for Tendering"),
the Company does not expect that it would be able to announce the final results
of such proration until approximately seven business days after the Expiration
Date. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Depositary Shares
may obtain such preliminary information from the Dealer Managers or the
Information Agent and may also be able to obtain such information from their
brokers. The Company will not issue any Debentures in exchange for any
Depositary Shares accepted for exchange pursuant to the Exchange Offer, or
return Depositary Shares delivered to the Exchange Agent but not tendered, or
return Depositary Shares tendered but not accepted for exchange because of
proration, until the final proration factors are known.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on , 1995, unless the
Company, in its sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended.
The Company reserves the right to extend the Exchange Offer in its sole
discretion at any time and from time to time by giving oral or written notice
to the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the Exchange Offer, all
Depositary Shares previously tendered pursuant to the Exchange Offer and not
withdrawn will remain subject to the Exchange Offer.
20
<PAGE>
The Company expressly reserves the right to (i) amend or modify the terms of
the Exchange Offer in any manner and (ii) withdraw or terminate the Exchange
Offer and not accept for exchange any Depositary Shares if any of the
conditions to the Exchange Offer is not satisfied. If the Company makes a
material change in the terms of the Exchange Offer (including an increase or
decrease in the consideration offered or the Amount Sought in the Exchange
Offer) or if it waives a material condition of the Exchange Offer, the Company
will extend the Exchange Offer. The minimum period for which the Exchange Offer
will be extended following a material change or waiver, other than a change in
the Amount Sought, will depend upon the facts and circumstances, including the
relative materiality of the change or waiver. With respect to a change in the
Amount Sought, the offer will be extended for a minimum of ten business days
(within the meaning of Regulation 14E under the Exchange Act) following public
announcement of such change. Any withdrawal or termination of the Exchange
Offer will be followed as promptly as practicable by public announcement
thereof. In the event the Company withdraws or terminates the Exchange Offer,
it will give immediate notice to the Exchange Agent, and all Depositary Shares
theretofore tendered pursuant to the Exchange Offer will be returned promptly
to the tendering Holders.
ACCUMULATED DIVIDENDS AND INTEREST ON DEBENTURES
The Debentures will bear interest at an annual rate of % from and including
the Issue Date or from the most recent interest payment date to which interest
has been paid or duly provided for. Dividends accumulated after ,
1995 will not be paid on Series E Preferred Stock for which Depositary Shares
have been accepted for exchange in the Exchange Offer. In lieu thereof, holders
of Debentures will be entitled to interest at a rate of 7.72% per annum (equal
to the indicated dividend rate on the Series E Preferred Stock) from and
including , 1995 through the Expiration Date, payable at the time of the
first interest payment on the Debentures. See "Description of Debentures--
Interest".
PROCEDURES FOR TENDERING
The tender of Depositary Shares by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
Each Holder of Depositary Shares wishing to accept the Exchange Offer must
(i) properly complete and sign the Letter of Transmittal or a photocopy thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a photocopy thereof) in accordance with the instructions contained
herein and therein, together with any required signature guarantees, or an
Agent's Message (as hereinafter defined) in connection with a book-entry
transfer of Depositary Shares, together with any other required documents, and
deliver the same to the Exchange Agent, at either of its addresses set forth in
"--Exchange Agent and Information Agent" and either (a) cause depositary
receipts for the Depositary Shares to be received by the Exchange Agent at such
address or (b) cause such Depositary Shares to be transferred pursuant to the
procedures for book-entry transfer described below and a confirmation of such
book-entry transfer to be received by the Exchange Agent, in each case prior to
the Expiration Date or (ii) comply with the guaranteed delivery procedures
described below.
Each Holder that delivers depositary receipts evidencing Depositary Shares to
the Exchange Agent will receive Debentures in certificate form if accepted for
exchange by the Company in the Exchange Offer. Similarly, each Holder that
transfers Depositary Shares pursuant to the procedures for book-entry transfer
to the Exchange Agent will receive Debentures in book-entry form if accepted
for exchange by the Company in the Exchange Offer.
LETTERS OF TRANSMITTAL, DEPOSITARY RECEIPTS FOR THE DEPOSITARY SHARES AND ANY
OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO
THE COMPANY, THE DEALER
21
<PAGE>
MANAGERS OR THE INFORMATION AGENT. THE METHOD OF DELIVERY OF DEPOSITARY
RECEIPTS FOR THE DEPOSITARY SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED HEREIN, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SENT BY MAIL,
IT IS RECOMMENDED THAT THE HOLDERS USE PROPERLY INSURED REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
Holders of Depositary Shares who are not registered holders of, and who seek
to tender Depositary Shares should (i) obtain a properly completed Letter of
Transmittal for such Depositary Shares from the registered holder with
signatures guaranteed by an Eligible Institution (as hereinafter defined), or
(ii) obtain and include with the Letter of Transmittal depositary receipts for
Depositary Shares properly endorsed for transfer by the registered holder or
accompanied by a stock power from the registered holder with signatures on the
endorsement or written instrument or instruments of transfer guaranteed by an
Eligible Institution or (iii) effect a record transfer of such Depositary
Shares and comply with the requirements applicable to registered holders for
tendering Depositary Shares prior to the Expiration Date. Any Depositary Shares
properly tendered prior to the Expiration Date accompanied by a properly
completed Letter of Transmittal for such Depositary Shares will be transferred
of record by the registrar either prior to or as of the Expiration Date at the
discretion of the Company. The registrar has no obligation to transfer, and the
Company has no obligation to cause the registrar to transfer, any Depositary
Shares from the name of the registered holder thereof if the Company does not
accept for exchange any of the Depositary Shares so tendered.
If a Holder desires to tender Depositary Shares but is unable to locate the
depositary receipts evidencing such shares to be tendered, such Holder should
write to or telephone First Chicago Trust Company of New York, as Depositary
(the "Depositary") under the Deposit Agreement (the "Deposit Agreement") among
the Company, the Depositary and the holders from time to time of depositary
receipts evidencing the Depositary Shares, Suite 4687, P.O. Box 2591, Jersey
City, New Jersey 07303-2591, telephone (800) 621-7825, about procedures for
obtaining replacement depositary receipts evidencing Depositary Shares and
arranging for indemnification.
Signature Guarantees. If tendered Depositary Shares are registered in the
name of the signer of the Letter of Transmittal and the Debentures to be issued
in exchange therefor are to be issued (and any untendered Depositary Shares are
to be reissued) in the name of, and returned to, the registered holder (which
term, for the purposes described herein, shall include any participant in DTC
whose name appears on a security listing as the owner of Depositary Shares),
the signature of such signer need not be guaranteed. If the tendered Depositary
Shares are registered in the name of someone other than the signer of the
Letter of Transmittal, such tendered Depositary Shares must be endorsed or
accompanied by written instruments of transfer in form satisfactory to the
Company and duly executed by the registered holder, and the signature on the
endorsement or instrument of transfer must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or The New York Stock Exchange Medallion Signature Guarantee Program or the
Stock Exchange Medallion Program (any of the foregoing hereinafter referred to
as an "Eligible Institution"). If the Debentures and/or Depositary Shares not
exchanged are to be issued in the name of a person other than the registered
holder or delivered to an address other than that of the registered holder
appearing on the register for the Depositary Shares, the signature on the
Letter of Transmittal must be guaranteed by an Eligible Institution. Any
beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Depositary Shares should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on its own behalf, such owner
must, prior to completing and executing a Letter of Transmittal and delivering
its Depositary
22
<PAGE>
Shares, either make appropriate arrangements to register ownership of the
Depositary Shares in such owner's name or obtain a properly completed stock
power from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date and, accordingly, may prohibit a transferring beneficial owner from
participating in the Exchange Offer.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish accounts
with respect to the Depositary Shares at DTC for the purpose of facilitating
the Exchange Offer and, subject to the establishment thereof, any financial
institution that is a participant in DTC's system may make book-entry delivery
of Depositary Shares by causing DTC to transfer such Depositary Shares into the
Exchange Agent's account with respect to the Depositary Shares in accordance
with DTC's Automated Tender Offer Program ("ATOP") procedures for such book-
entry transfers. However, the exchange for the Depositary Shares so tendered
will only be made after timely confirmation (a "Book-Entry Confirmation") of
such book-entry transfer of Depositary Shares into the Exchange Agent's
account, and timely receipt by the Exchange Agent at either of its addresses
set forth on the back cover of this Prospectus of a Letter of Transmittal,
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message (as such term is defined below) and any other documents
required by the Letter of Transmittal. Delivery of documents to DTC in
accordance with its procedures does not constitute delivery to the Exchange
Agent.
The term "Agent's Message" means a message, transmitted by DTC and received
by the Exchange Agent and forming a part of a Book-Entry Confirmation, which
states that DTC has received an express acknowledgement from a participant
tendering Depositary Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such participant.
Guaranteed Delivery. If a Holder desires to accept the Exchange Offer and
time will not permit such Holder's Letter of Transmittal, Depositary Shares or
other required documents to reach the Exchange Agent before the Expiration Date
or the procedure for book-entry transfer cannot be completed on a timely basis,
a tender may be effected if the Exchange Agent has received at its office,
prior to the Expiration Date, a letter, a telegram or facsimile transmission
from an Eligible Institution setting forth the name and address of the
tendering Holder, the name(s) in which the Depositary Shares are registered
and, if the Depositary Shares are held in depositary receipt form, the
depositary receipt number of the Depositary Shares to be tendered, and stating
that the tender is being made thereby and guaranteeing that within five NYSE
trading days after the date of execution of such letter, telegram or facsimile
transmission by the Eligible Institution, the Depositary Shares in proper form
for transfer together with a properly completed and duly executed Letter of
Transmittal (and any other required documents), or a confirmation of book-entry
transfer of such Depositary Shares into the Exchange Agent's account at DTC in
accordance with DTC's ATOP procedures (together with an Agent's Message and all
other required documents), will be delivered by such Eligible Institution.
Unless the Depositary Shares being tendered by the above-described method are
deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents) or a confirmation of book-entry transfer of such
Depositary Shares into the Exchange Agent's account at DTC in accordance with
DTC's ATOP procedures (together with an Agent's Message and all other required
documents) is received, the Company may, at its option, reject the tender.
Copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from
the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of Depositary Shares
will be determined by the Company,
23
<PAGE>
whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders not in proper form or the
acceptance for exchange of which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any defect
or irregularity in the tender of any Depositary Shares, and the Company's
interpretation of the terms and conditions of the Exchange Offer (including the
Instructions in the Letter of Transmittal) will be final and binding. None of
the Company, the Exchange Agent, the Dealer Managers, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Tenders of Depositary Shares involving any irregularities will be deemed not
to have been made until such irregularities have been cured or waived.
Depositary Shares received by the Exchange Agent that are not validly tendered
and as to which the irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Depositary Shares will be credited to an account
maintained at DTC designated by the participant therein who so delivered such
Depositary Shares), unless otherwise requested by the Holder in the Letter of
Transmittal, as promptly as practicable after the Expiration Date or the
withdrawal or termination of the Exchange Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Depositary Shares for exchange (the "Transferor") tenders
for exchange, assigns and transfers the Depositary Shares to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Depositary Shares to be assigned,
transferred and exchanged. The Transferor specifically authorizes the
Depositary to withdraw under the Deposit Agreement the Series E Preferred Stock
underlying any tendered Depositary Shares, and to tender such underlying Series
E Preferred Stock in the Exchange Offer. The Transferor represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Depositary Shares and the underlying Series E Preferred Stock and to
acquire Debentures issuable upon the exchange of such tendered Depositary
Shares, and that, when the same are accepted for exchange, the Company will
acquire good, marketable and unencumbered title to the tendered Depositary
Shares and the Series E Preferred Stock underlying the tendered Depositary
Shares, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor also warrants that it will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Depositary Shares and the
underlying Series E Preferred Stock or transfer ownership of such Depositary
Shares on the account books maintained by DTC. All authority conferred by the
Transferor will survive the death, bankruptcy or incapacity of the Transferor
and every obligation of the Transferor shall be binding upon the heirs,
executors, administrators, personal representatives, successors and assigns of
such Transferor.
WITHDRAWAL OF TENDERS
Tenders of Depositary Shares pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for exchange by
the Company, may be withdrawn at any time after 40 business days after the date
of this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange
Agent at either of the addresses set forth in this Prospectus. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Depositary
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Shares to be withdrawn, (ii) if the Depositary Shares are held in depositary
receipt form, the depositary receipt numbers of the Depositary Shares to be
withdrawn, (iii) the number of Depositary Shares delivered for exchange, (iv) a
statement that such Holder is withdrawing its election to have such Depositary
Shares exchanged, and (v) the name of the registered Holder of such Depositary
Shares, and must be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Depositary Shares being withdrawn. If Depositary Shares have been tendered
pursuant to the procedure for book-entry transfer, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawn Depositary Shares and otherwise comply with DTC's procedures. The
Exchange Agent will return properly withdrawn Depositary Shares promptly
(normally within five to seven business days) following receipt of notice of
withdrawal. All questions as to the validity of notice of withdrawal, including
time of receipt, will be determined by the Company, and such determination will
be final and binding on all parties. Withdrawals of tenders of Depositary
Shares may not be rescinded and any Depositary Shares withdrawn will thereafter
be deemed not to be validly tendered for purposes of the Exchange Offer.
Properly withdrawn Depositary Shares, however, may be retendered by following
the procedures therefor described elsewhere herein at any time prior to the
Expiration Date. See "--Procedures for Tendering".
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is subject to the satisfaction of certain conditions.
Notwithstanding any other provision of the Exchange Offer or any extension of
the Exchange Offer, the Company will not be required to accept Depositary
Shares or to issue Debentures in exchange therefor pursuant to the Exchange
Offer if, prior to the Expiration Date, a change or event occurs that is likely
to affect the Exchange Offer adversely, including, but not limited to, the
following:
(i) there shall have been instituted or threatened or be pending any
action or proceeding before or by any court or governmental agency or
instrumentality directly or indirectly relating to the Exchange Offer;
(ii) there shall have occurred any development in any pending action or
proceeding which would or might (a) prohibit, restrict or delay
consummation of the Exchange Offer or (b) impair the contemplated benefits
of the Exchange Offer;
(iii) there shall have occurred and be continuing any general suspension
of trading in, or limitation on prices for, securities on any national
securities exchange or interdealer quotation system (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index);
(iv) any statute, rule or regulation shall have been proposed or enacted,
or any action shall have been taken by any governmental authority, which
would or might (a) prohibit, restrict or delay consummation of the Exchange
Offer or (b) impair the contemplated benefits of the Exchange Offer to the
Company; or
(v) there shall have occurred any change, or development involving a
prospective change, which has had or may have an adverse effect on the
Exchange Offer, or may change the contemplated benefits of the Exchange
Offer to the Company or to holders of Depositary Shares or Debentures.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
conditions, or may be waived by the Company, in whole or in part at any time
and from time to time, in its sole discretion. The failure by the Company, at
any time, to exercise its rights with respect to any of these conditions will
not be deemed a waiver of any such conditions. Any determination by the Company
concerning the events set forth under this caption will be final and binding
upon all parties.
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The Company expressly reserves the right to terminate or amend the Exchange
Offer if any of the foregoing conditions is not satisfied on the Expiration
Date. See "--Exchange Date; Extension; Amendment; Termination".
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
for the Exchange Offer. Deliveries to the Exchange Agent should be as follows:
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
New York, New York 10005
P. O. Box 2559, Mail Suite 4660-McD
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notices of Guaranteed Delivery by Telephone:
(201) 222-4707
D. F. King & Co., Inc. has been retained as Information Agent. Questions and
requests for assistance regarding the Exchange Offer, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for the
Notice of Guaranteed Delivery may be directed to the Information Agent at 77
Water Street, New York, New York 10005, telephone (800) 628-8536 or (212) 269-
5550 (collect). The Information Agent may contact holders of Depositary Shares
by mail, telephone, telex, telegraph and personal interviews, and may request
brokers, dealers and other nominee holders to forward materials relating to the
Exchange Offer to beneficial owners.
The Company will pay the Exchange Agent and Information Agent reasonable and
customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith. The Company has
agreed to indemnify the Exchange Agent and the Information Agent against
certain liabilities, including certain liabilities under the federal securities
laws, in connection with the Exchange Offer. Neither the Information Agent nor
the Exchange Agent has been retained to make solicitations or recommendations
in connection with the Exchange Offer.
DEALER MANAGERS AND SOLICITING DEALERS
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc will act as Dealer Managers for the Company in
connection with the Exchange Offer. The Company has agreed to pay the Dealer
Managers, upon acceptance for exchange of Depositary Shares pursuant to the
Exchange Offer, a fee of $0.125 per Depositary Share exchanged in the Exchange
Offer. The Dealer Managers will also be reimbursed by the Company for their
reasonable out-of-pocket expenses, including attorneys' fees, and will be
indemnified against certain liabilities, including liabilities under the
federal securities laws, in connection with the Exchange Offer. The Dealer
Managers have rendered, are currently rendering and are expected to continue to
render, various investment banking and other advisory services to the Company.
The Dealer Managers have received, and will continue to receive, customary
compensation from the Company for such services.
The Company will pay a solicitation fee of $0.50 per Depositary Share (the
"Solicitation Fee") for any Depositary Shares tendered by physically delivering
depositary receipts which are accepted for exchange and exchanged pursuant to
the Exchange Offer and covered by a Letter of Transmittal which designates, as
having solicited and obtained the tender, the name of (i) any broker or dealer
in
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securities, including each Dealer Manager in its capacity as a broker or
dealer, which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (iii) any
bank or trust company (each of which is referred to herein as a "Soliciting
Dealer"). No Solicitation Fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
Holder unless the Letter of Transmittal accompanying such tender designates
such Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer
must return a Notice of Solicited Tenders (included in the materials provided
to brokers and dealers) to the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date in order to receive a
Solicitation Fee. No Solicitation Fee shall be payable to a Soliciting Dealer
in respect of Depositary Shares (i) beneficially owned by such Soliciting
Dealer or (ii) registered in the name of such Soliciting Dealer unless such
Depositary Shares are held by such Soliciting Dealer as nominee and such
Depositary Shares are being tendered for the benefit of one or more beneficial
owners identified on the Letter of Transmittal or the Notice of Solicited
Tenders. No Solicitation Fee shall be payable to the Soliciting Dealer with
respect to the tender of Depositary Shares by the Holder of record, for the
benefit of the beneficial owner, unless the beneficial owner has designated
such Soliciting Dealer.
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
Other than as described above, the Company will not pay any solicitation fees
to any broker, dealer, bank, trust company or other person for any Depositary
Shares exchanged in connection with the Exchange Offer. The Company will
reimburse such persons for customary handling and mailing expenses incurred in
connection with the Exchange Offer.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Depositary Shares will be borne by
the Company. For compensation to be paid to the Dealer Managers and Soliciting
Dealers see "--Dealer Managers and Soliciting Dealers". The total cash
expenditures to be incurred by the Company in connection with the Exchange
Offer, other than fees payable to the Dealer Managers and Soliciting Dealers,
but including the expenses of the Dealer Managers, a debt structuring fee paid
to Goldman, Sachs & Co., printing, accounting, legal and listing fees, and the
fees and expenses of the Exchange Agent, the Information Agent and the Trustee
under the Indenture, are estimated to be approximately $1,000,000.
Holders of the Depositary Shares accepted in the Exchange Offer will not be
required to pay transfer taxes for exchanges pursuant to the Exchange Offer
that do not constitute a transfer, but are responsible for paying any transfer
taxes in connection with exchanges constituting a transfer. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE COMPANY'S SECURITIES
The Company has been advised by its directors and executive officers that no
directors or executive officers of the Company own any Depositary Shares. Based
upon the Company's records and upon information provided to the Company by its
directors and executive officers, neither the Company nor, to the Company's
knowledge, any of its associates, subsidiaries, directors, executive
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officers or any associate of any such director or executive officer has engaged
in any transactions involving Depositary Shares during the 40 business days
preceding the date hereof. Except as described herein, neither the Company nor,
to the Company's knowledge, any of its directors or executive officers is a
party to any contract, arrangement, understanding or relationship relating
directly or indirectly to the Exchange Offer with any other person with respect
to any securities of the Company.
DESCRIPTION OF DEBENTURES
GENERAL
The Debentures constitute debt securities to be issued under an Indenture
(the "Indenture"), to be dated as of the Issue Date, between the Company and
First Fidelity Bank, National Association, as trustee (the "Trustee"). The
following statements with respect to the Debentures are summaries and are
subject to the detailed provisions of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the Indenture, a copy of the form of
which has been filed as an exhibit to the Registration Statement. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Debentures and the Indenture, including the definitions
therein of certain terms capitalized and not otherwise defined in this
Prospectus. Wherever references are made to particular provisions of the
Indenture or terms defined therein, such provisions or definitions are
incorporated by reference as part of the statements made and such statements
are qualified in their entirety by such references.
The Debentures will be unsecured, subordinated obligations of the Company,
will be limited in aggregate principal amount to the aggregate principal amount
of Debentures issued in the Exchange Offer and will mature on ,
2025. The Debentures will be issued in fully registered form, without coupons,
and will be available in minimum denominations of $25 and integral multiples
thereof.
The Indenture does not contain any provisions that would limit the ability of
the Company to incur additional indebtedness or that would afford holders of
the Debentures protection in the event of a highly leveraged or similar
transaction involving the Company.
INTEREST
The Debentures will bear interest at an annual rate of % from the Issue
Date or from the most recent interest payment date to which interest has been
paid or duly provided for. In addition, holders of record of the Debentures
will be entitled to interest at a rate of 7.72% per annum from , 1995
through the Expiration Date, in lieu of dividends accumulating after
, 1995 on the Series E Preferred Stock for which Depositary Shares have been
accepted for exchange, payable at the time of the first interest payment on the
Debentures. Interest will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year commencing , 1995, provided
that so long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by
public announcement given in accordance with NYSE rules (or the rules of any
other applicable self-regulatory organization) at any time during the term of
the Debentures, to extend the interest payment period from time to time for a
period not exceeding 20 consecutive quarterly interest payment periods.
Interest will continue to accrue on the Debentures during an Extension Period
and will compound quarterly, at the rate of interest on the Debentures, to the
extent permitted by applicable law. See "--Option to Extend Interest Payment
Period". Interest payable on any Debenture that is punctually paid or duly
provided for on any Interest Payment Date shall be paid to the person in whose
name such Debenture is registered at the close of business on the March 15,
June 15, September 15 or December 15, respectively, preceding such Interest
Payment Date (each, a "Record Date"). Interest will be computed on the basis of
a 360-day year of twelve 30-day months and, for any period shorter than a full
calendar month, on the basis of the actual number of
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days elapsed in such period. (Section 310 of the Indenture.) If any date on
which interest is payable on the Debentures is not a Business Day, the payment
of interest due on such date may be made on the next succeeding Business Day
(and without any interest or other payment in respect of such delay). A
"Business Day" shall mean any day other than a day on which banking
institutions in the City of New York or in Philadelphia, Pennsylvania are
authorized or required by law to close.
Payments in respect of the Debentures will be made at the office or agency of
the Company maintained for that purpose in the City of New York (which, unless
changed, shall be a corporate trust office or agency of the Trustee). However,
at the option of the Company, payments of interest on the Debentures may be
made by checks mailed by the Trustee to the holders entitled thereto at their
registered addresses. Interest payable on any Debenture that is not punctually
paid or duly provided for on any Interest Payment Date shall forthwith cease to
be payable to the person in whose name such Debenture is registered on the
relevant Record Date, and such defaulted interest will instead be payable to
the person in whose name such Debenture is registered on the special record
date or other specified date determined in accordance with the Indenture;
provided, however, that interest shall not be considered payable by the Company
on any Interest Payment Date falling within an Extension Period unless the
Company has elected to make a full or partial payment of interest accrued on
the Debentures on such Interest Payment Date. (Section 307 of the Indenture.)
In the event the Company fails at any time to make any payment of interest or
principal on the Debentures when due (after giving effect to any grace period
for payment thereof as described in "--Events of Default, Notice and Certain
Rights on Default") or the Company exercises its right to extend the interest
payment period for an Extension Period as described in "--Option to Extend
Interest Payment Period", the Company will not, until all defaulted interest on
the Debentures and all interest accrued on the Debentures during an Extension
Period and all principal then due and payable on the Debentures shall have been
paid in full, (i) declare, set aside or pay any dividend or distribution on any
capital stock of the Company (except for dividends or distributions in shares
of its capital stock or in rights to acquire shares of its capital stock), or
(ii) repurchase, redeem or otherwise acquire any shares of its capital stock
(except by conversion into or exchange for shares of its capital stock and
except for a redemption, purchase or other acquisition of shares of its capital
stock made for the purpose of any employee incentive plan or benefit plan of
the Company or any of its affiliates). (Section 1010 of the Indenture.)
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest on
the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules (which require, among other
things, immediate release to the wire services and the press and prior
notification to the NYSE if such release is made shortly before opening or
during market hours) or the rules of any other applicable self-regulatory
organization, at any time during the term of the Debentures, prior to an
Interest Payment Date as provided below, to extend the interest payment period
from time to time to another Interest Payment Date by one or more quarterly
periods, not to exceed 20 consecutive quarterly interest payment periods from
the last Interest Payment Date to which interest was paid in full. No interest
shall be due and payable during an Extension Period, but on the Interest
Payment Date occurring at the end of each Extension Period the Company shall
pay to the holders of record on the Record Date for such Interest Payment Date
(regardless of who the holders of record may have been on other dates during
the Extension Period) all accrued and unpaid interest on the Debentures,
together with interest thereon. Interest will continue to accrue on the
Debentures during an Extension Period and will compound quarterly, at the rate
specified for the Debentures, to the extent permitted by applicable law. Prior
to the termination of any Extension Period, the Company may pay all or any
portion of the interest accrued on the Debentures on any Interest Payment Date
to holders of record on the Record Date for such Interest Payment Date or from
time to time further extend the
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interest payment period, provided that any such Extension Period together with
all such previous and further extensions thereof may not exceed 20 quarterly
interest payment periods. If the Company shall elect to pay all of the interest
accrued on the Debentures on an Interest Payment Date during an Extension
Period, such Extension Period shall automatically terminate on such Interest
Payment Date. Upon the termination of any Extension Period and the payment of
all amounts of interest then due, the Company may commence a new Extension
Period, subject to the above requirements. Consequently, there could be
multiple Extension Periods of varying lengths throughout the term of the
Debentures. The Company believes that the extension of any quarterly interest
payment period on the Debentures is unlikely.
The Company has no current intention of exercising its right to defer any
interest payment period. However, in the event the Company determines to extend
an interest payment period, or in the event the Company thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Debentures is likely to be adversely
affected. In addition, as a result of such rights, the market price of the
Debentures may be more volatile than other debt instruments with original issue
discount that do not have such rights. A holder that disposes of its Debentures
during an Extension Period, therefore, may not receive the same return on its
investment as a holder that continues to hold its Debentures.
The Company shall cause the Trustee to give holders of the Debentures prior
notice, by public announcement given in accordance with NYSE rules (or the
rules of any other applicable self-regulatory organization) and by mail to all
such holders, of (i) the Company's election to initiate an Extension Period and
the duration thereof, (ii) the Company's election to extend any Extension
Period beyond the Interest Payment Date on which such Extension Period is then
scheduled to terminate, and the duration of such extension, and (iii) the
Company's election to make a full or partial payment of interest accrued on the
Debentures on any Interest Payment Date during any Extension Period and the
amount of such payment. In no event shall such notice be given less than five
Business Days prior to the March 15, June 15, September 15 or December 15 next
preceding the applicable Interest Payment Date.
SUBORDINATION
The Indenture provides that, unless otherwise provided in a supplemental
indenture, the Debentures will be subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding as of the date of the Indenture or thereafter incurred. (Section
1201 of the Indenture.)
No payment of principal of (including redemption payments), or interest on,
the Debentures may be made if any Senior Indebtedness is not paid when due, any
applicable grace period with respect to such default has ended and such default
has not been cured or waived, or if the maturity of any Senior Indebtedness has
been accelerated because of a default. (Section 1202 of the Indenture.) Upon
any distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all principal of,
and interest due or to become due on, all Senior Indebtedness must be paid in
full before the holders of the Debentures are entitled to receive or retain any
payment. (Section 1203 of the Indenture.) The rights of the holders of the
Debentures will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Debentures are paid in full.
(Section 1204 of the Indenture.)
The term "Senior Indebtedness" of the Company means the principal of,
premium, if any, interest on, and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of the Indenture or
thereafter incurred, created or assumed: (i) all indebtedness or obligations of
the Company evidenced by notes, debentures, bonds or other securities or
financial instruments; (ii) all indebtedness or obligations of others of the
kinds described in the preceding clause (i) assumed by
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or guaranteed in any manner by the Company, including through an agreement to
purchase, contingent or otherwise; and (iii) all renewals, extensions or
refundings of indebtedness or obligations of the kinds described in either of
the preceding clauses (i) or (ii); unless, in the case of any particular
indebtedness, renewal, extension or refunding, the instrument creating or
evidencing the same or the assumption or guarantee of the same expressly
provides that such indebtedness, renewal, extension or refunding is not
superior in right of payment to or is pari passu with the Debentures; provided,
however, that Senior Indebtedness shall not include amounts owed to trade
creditors in the ordinary course of business. (Section 101 of the Indenture.)
The Debentures will be effectively subordinated to all obligations of the
Company's subsidiaries.
On March 31, 1995 approximately $3.9 billion of Senior Indebtedness was
outstanding. There is no restriction under the Indenture on the creation of
additional indebtedness, including Senior Indebtedness, by the Company,
including indebtedness owed by the Company to subsidiaries.
REDEMPTION
The Debentures will not be subject to any mandatory redemption, sinking fund
or other obligation of the Company to amortize, redeem or retire the
Debentures, and will not be redeemable prior to December 3, 1997. On or after
such date, the Company has the option to redeem the Debentures in whole or in
part, at a redemption price of 100% of the principal amount of the Debentures
redeemed plus an amount equal to accrued and unpaid interest to the redemption
date.
If less than all the outstanding Debentures are to be redeemed, the Trustee,
not more than 60 days prior to the redemption date, will select those
Debentures to be redeemed by lot, meaning that the Trustee will divide all
outstanding Debentures into units of $25 in principal amount and randomly
select by computer to be redeemed such number of units representing, in the
aggregate, the total principal amount of Debentures subject to redemption. Each
$25 portion of the principal amount of any Debenture will have an equal
probability of being redeemed as any other $25 portion of the principal amount
of the same or any other Debenture, without regard to the aggregate principal
amount of such Debenture. (Section 1104 of the Indenture.)
After the redemption date, interest will cease to accrue on the Debentures
called for redemption and all rights of the holders of such Debentures will
terminate, except the right to receive the redemption price.
VOTING RIGHTS
The holders of the Debentures will have no voting rights as such.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE BY THE COMPANY
The Indenture provides that the Company shall not consolidate with or merge
into any other Person (other than an affiliate) or convey, transfer or lease
all or substantially all of its properties and assets to any Person (other than
an affiliate) as an entirety, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless: (i)
in case the Company shall consolidate with or merge into another Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust organized and validly
existing under the laws of the United States of America, any state thereof or
the District of Columbia and shall expressly assume, by supplemental indenture,
all the obligations of the Company
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under the Debentures and the Indenture; (ii) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred
and be continuing; and (iii) certain other conditions are met. In the event a
successor assumes the obligations of the Company, such successor shall succeed
to and be substituted for the Company under the Indenture and under the
Debentures and all obligations of the Company thereunder shall terminate.
(Article 8 of the Indenture.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, either the Trustee or the holders of 25% in
principal amount of the Debentures then outstanding may, by written notice to
the Company (and to the Trustee, if notice is given by such holders of
Debentures), declare the principal of all the Debentures to be due and payable,
subject to prior payment to holders of Senior Indebtedness. As of March 31,
1995, outstanding Senior Indebtedness aggregated approximately $3.9 billion.
(Section 502 of the Indenture.)
Events of Default are defined in the Indenture as being: default for thirty
days in payment of any interest installment when due; default for ten days in
payment of principal, at maturity or on redemption or otherwise, on the
Debentures when due; default for sixty days after notice to the Company by the
Trustee, or to the Company and the Trustee by the holders of at least 25% in
principal amount of the Debentures then outstanding, in the performance of any
other covenant or warranty in the Indenture; and certain events of bankruptcy,
insolvency or reorganization of the Company. (Section 501 of the Indenture.)
The Indenture provides that the Trustee shall, within ninety days after the
occurrence of a default with respect to the Debentures, give to the holders of
the Debentures notice of such uncured default known to it; provided that,
except in the case of default in payment on the Debentures the Trustee may
withhold the notice if and so long as the board of directors of the Trustee, a
specified committee thereof, or a Responsible Officer (as defined in the
Indenture) in good faith determines that withholding such notice is in the
interests of the holders. (Section 602 of the Indenture.)
The Indenture provides that the holders of a majority in principal amount of
the Debentures then outstanding may 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, provided that such
direction shall not be in conflict with any law or the Indenture and the
Trustee may take any other action not inconsistent with such direction.
(Section 512 of the Indenture.) The right of any holder of Debentures to
institute any proceeding for any remedy under the Indenture (except the right
to enforce payment of the principal of and interest on its Debentures when due)
is subject to certain conditions precedent, including a request to the Trustee
by the holders of not less than 25% in principal amount of Debentures then
outstanding to take action, and an offer to the Trustee of reasonable
indemnification against liabilities incurred by it in so doing (Sections 507
and 508 of the Indenture.)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions
and covenants of the Indenture. (Section 1004 of the Indenture.)
The holders of a majority in principal amount of the Debentures then
outstanding by notice to the Trustee may waive, on behalf of the holders of all
the Debentures, any past default and its consequences except a default in the
payment of the principal of or interest on any of the Debentures. (Section 513
of the Indenture.)
AGREED TAX TREATMENT
The Debentures provide that each holder of a Debenture, each person that
acquires a beneficial ownership interest in a Debenture and the Company agree
that for United States federal, state and local tax purposes that such
Debenture constitutes and will be treated as indebtedness.
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MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debentures in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants of the
Company by such successor to the Company; (ii) to add to the covenants of the
Company or surrender any right or power of the Company; (iii) to add additional
Events of Default; or (iv) to cure any ambiguity, to correct or supplement any
inconsistent provisions in the Indenture or to make any other provisions with
respect to matters or questions arising under the Indenture which shall not be
inconsistent with the provisions of the Indenture, provided that such action
shall not adversely affect the interests of the holders of the Debentures.
(Section 901 of the Indenture.)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in principal amount of
the Debentures then outstanding, to enter into supplemental indentures adding
any provisions to or changing or eliminating any of the provisions of the
Indenture or modifying the rights of the holders, except that no such
supplemental indenture may, without the consent of each holder, (i) change the
date for payment of the principal of, or any installment of interest on, any
Debenture or reduce the principal amount thereof or the rate of interest
thereon or change the place of payment where, or the coin or currency in which,
any Debenture or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the date for
payment thereof or modify the provisions of the Indenture with respect to the
subordination of the Debentures in a manner adverse to the holders; (ii) reduce
the percentage in principal amount of the Debentures outstanding, the consent
of whose holders is required for any such supplemental indenture, or the
consent of whose holders is required for any waiver provided for in the
Indenture; or (iii) modify the provisions relating to waiver of certain
defaults or any of the foregoing provisions. (Section 902 of the Indenture.)
GOVERNING LAW
The Indenture and the Debentures are governed by the internal laws of the
State of Illinois.
THE TRUSTEE
First Fidelity Bank, National Association is the Trustee under the Indenture.
First Fidelity Bank, National Association, is also Trustee under that certain
Indenture dated as of March 1, 1987 relating to certain Senior Indebtedness of
the Company.
DESCRIPTION OF DEPOSITARY SHARES
The Depositary Shares were initially offered to the public on November 25,
1992 and were issued on December 3, 1992.
Each Depositary Share represents ownership of 1/2,000 of a share of the
Series E Preferred Stock. The shares of Series E Preferred Stock represented by
the Depositary Shares are on deposit with First Chicago Trust Company of New
York, as Depositary, under the Deposit Agreement. The depositary receipts
issued pursuant to the Deposit Agreement evidence the Depositary Shares.
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
is entitled, in proportion to the 1/2,000 of a share of the Series E Preferred
Stock represented by such Depositary Share, to all the rights and preferences
of the Series E Preferred Stock represented thereby (including dividend,
voting, redemption and liquidation rights). Since each share of Series E
Preferred Stock is entitled to one vote on matters on which the Series E
Preferred Stock is entitled to vote, each Depositary Share, in effect, is
entitled to 1/2,000 of a vote, rather than one full vote, per Depositary Share
on such matters.
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In addition to acting as Depositary and as Exchange Agent for the Exchange
Offer, First Chicago Trust Company of New York is also the transfer agent and
registrar for the Depositary Shares, the Series E Preferred Stock, certain
other series of Preferred Stock, and the Common Stock. The Company and certain
subsidiaries of the Company maintain deposits and conduct other banking
transactions with affiliates of First Chicago Trust Company of New York in the
ordinary course of business.
DESCRIPTION OF SERIES E PREFERRED STOCK
The description of certain provisions of the Series E Preferred Stock set
forth below does not purport to be complete and is subject to and qualified in
its entirety by reference to the Certificate of Designations, Preferences and
Rights relating to the Series E Preferred Stock which is filed as an exhibit to
the Registration Statement and is incorporated herein by reference.
GENERAL
The Series E Preferred Stock ranks as to payment of dividends and
distribution of assets on a parity with the Company's Series B ESOP Convertible
Preferred Stock, Series C ESOP Convertible Preferred Stock and Series D
Preferred Stock (which are the only series of Preferred Stock currently
outstanding) and prior to the Common Stock. If shares of the Company's Series A
Junior Participating Preferred Stock (the "Junior Preferred") are issued, the
Series E Preferred Stock will rank prior to the Junior Preferred as to the
payment of dividends and on a parity with the Junior Preferred as to
distribution of assets.
DIVIDENDS
Holders of shares of Series E Preferred Stock are entitled to receive, when,
as and if declared by the Board of Directors out of any funds legally available
for that purpose, cumulative cash dividends on the liquidation preference per
share of the Series E Preferred Stock at an annual rate of 7.72% (equivalent to
$1.93 per Depositary Share). Dividends on the Series E Preferred Stock are
payable quarterly on the first day of March, June, September and December in
each year. Each such dividend is payable to holders of record as they appear in
the stock records of the Company at the close of business on such record dates,
not exceeding 60 days preceding the payment dates thereof, as fixed by the
Board of Directors. Dividends accrue from the date of original issuance.
Accrued dividends bear no interest. The amount of dividends payable for any
period greater than or less than a full dividend period are computed on the
basis of twelve 30-day months and a 360-day year.
No dividend will be declared or paid on the shares of any series of Preferred
Stock ranking on a parity with the Series E Preferred Stock as to payment of
dividends unless at the same time a dividend in like proportion (whether full
or pro rata) to the respectively designated dividend amounts is declared or
paid on the shares of Series E Preferred Stock. The holders of the Series E
Preferred Stock are entitled to receive dividends before any dividends are
declared and paid or set apart for payment upon the Common Stock or the Junior
Preferred. The Company shall not declare and pay any dividend on the Common
Stock or on any other class of stock ranking junior to the Series E Preferred
Stock (collectively, "the Junior Stock") unless all accrued and unpaid
dividends with respect to the Series E Preferred Stock and any other series of
Preferred Stock having cumulative dividend rights at the time such dividends
are payable have been paid, provided, however, that the foregoing restriction
shall not prohibit the Company from paying dividends on Junior Stock in shares
of Junior Stock.
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series E Preferred Stock will be
entitled to receive, out of assets of the Company
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available for distribution to stockholders, $50,000 per share of Series E
Preferred Stock (equivalent to $25 per Depositary Share), plus an amount equal
to accrued and unpaid dividends for the then current dividend period and all
dividend periods prior thereto.
Holders of the Series E Preferred Stock (if any shares thereof are then
issued and outstanding) are entitled to payment of the above liquidation price,
out of the available assets of the Company, in preference to the holders of
Junior Stock upon liquidation, dissolution or winding up. The holders of the
Common Stock will be entitled to receive, ratably, assets of the Company
available for payment to stockholders remaining after payment in full of the
preferential amounts on the Series E Preferred Stock. The Company's Restated
Certificate of Incorporation provides that the sale, conveyance, exchange or
transfer of all or substantially all of the property or assets of the Company
or a consolidation or merger of the Company with one or more corporations shall
not be deemed to be a liquidation, dissolution or winding up of the Company.
REDEMPTION
The Series E Preferred Stock is not redeemable prior to December 3, 1997. The
Series E Preferred Stock will be redeemable at the option of the Company in
whole or in part, at any time on and after December 3, 1997, upon not less than
30 nor more than 90 days' notice, for cash at a redemption price per share of
Series E Preferred Stock of $50,000 (equivalent to $25 per Depositary Share),
plus an amount equal to accrued and unpaid dividends to the redemption date.
There is no restriction on the Company's ability to redeem or repurchase shares
of the Series E Preferred Stock when dividends on the Series E Preferred Stock
are in arrears.
VOTING RIGHTS
The Series E Preferred Stock has no voting rights except as set forth below
or as otherwise provided by law.
The holders of the outstanding shares of the Series E Preferred Stock, voting
together as a class with the holders of any other series of Preferred Stock
entitled to receive cumulative preferred dividends, are entitled to elect two
directors to the Board of Directors (the authorized number of directors not to
be increased for this purpose) in the event that dividends payable on the
Series E Preferred Stock or any such other series of Preferred Stock are in
arrears and unpaid in an amount equal to or exceeding the amount payable on
such series of Preferred Stock for six quarterly dividend periods, whether or
not consecutive. Any such right to elect members of the Board of Directors
shall continue until all unpaid dividends upon all such series of Preferred
Stock shall have been paid in full. Upon payment in full of all unpaid
dividends upon all such series of Preferred Stock, the aforesaid voting rights
shall terminate (subject to re-vesting in the event of a subsequent arrearage)
and the term of office of the two directors elected pursuant to such voting
rights shall terminate.
The Company's Restated Certificate of Incorporation provides that, without
the vote or consent of the holders of at least a majority of the then
outstanding shares of Preferred Stock (including the Series E Preferred Stock),
irrespective of series, the Company may not: (i) adopt any amendment to the
Company's Restated Certificate of Incorporation or take any other action which
in any material respect adversely affects any preference, power, special right,
or other term of the Preferred Stock (including the Series E Preferred Stock)
or the holders thereof, (ii) create or issue any class of stock entitled to any
preference over the Preferred Stock (including the Series E Preferred Stock) as
to the payment of dividends or the distribution of capital assets, (iii)
increase the aggregate number of shares constituting the authorized Preferred
Stock, or (iv) create or issue any other class of stock entitled to any
preference on a parity with the Preferred Stock as to the payment of dividends
or the distribution of capital assets.
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Under current provisions of the Delaware General Corporation Law, the holders
of issued and outstanding Preferred Stock (including the Series E Preferred
Stock) are entitled to vote as a class upon a proposed amendment to the
Company's Restated Certificate of Incorporation (whether or not entitled to
vote thereon by the Company's Restated Certificate of Incorporation), with the
consent of a majority of said class being required to increase or decrease the
aggregate number of authorized shares of Preferred Stock, increase or decrease
the par value of Preferred Stock, or alter or change the powers, preferences or
special rights of the Preferred Stock as to affect them adversely. If any
proposed amendment would alter or change the powers, preferences or special
rights of one or more series of Preferred Stock (including the Series E
Preferred Stock) so as to affect the holders of such series adversely, but
would not so affect the holders of all series of outstanding Preferred Stock,
then only the shares of the series so affected by the amendment would be
considered a separate class for the purpose of determining who is entitled to
vote on the proposed amendment.
Voting rights of the holders of Preferred Stock and Common Stock are non-
cumulative. On any item in which the holders of the Series E Preferred Stock
are entitled to vote, such holders shall be entitled to one vote for each share
of Series E Preferred Stock held.
CONVERSION
The Series E Preferred Stock is not convertible into shares of any other
class or series of capital stock (or any other security) of the Company.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States federal
income tax considerations relevant to an exchange of Depositary Shares for
Debentures and the ownership and disposition of Debentures by persons acquiring
Debentures pursuant to the Exchange Offer. To the extent it relates to matters
of law or legal conclusions, this summary constitutes the opinion of
Sonnenschein Nath & Rosenthal, special tax counsel to the Company. This summary
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, Internal Revenue Service ("IRS") rulings, official
pronouncements and judicial decisions, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect, or
different interpretations. This summary is applicable only to holders who are
United States persons for United States federal income tax purposes and who
hold Depositary Shares as a capital asset and who will hold Debentures as
capital assets. For a discussion of certain material United States federal
income and estate tax considerations that may be relevant to non-United States
persons, see "Certain United States Federal Tax Considerations for Non-United
States Persons".
This summary does not discuss all the tax consequences that may be relevant
to a particular holder in light of the holder's particular circumstances and it
is not intended to be applicable in all respects to all categories of
investors, some of whom--such as insurance companies, tax-exempt persons,
financial institutions, regulated investment companies, dealers in securities
or currencies, persons that hold Depositary Shares or the Debentures received
in the exchange as a position in a "straddle", as part of a "synthetic
security", "hedge", "conversion transaction" or other integrated investment or
persons whose functional currency is other than United States dollars--may be
subject to different rules not discussed below. In addition, this summary does
not address any state, local or foreign tax considerations that may be relevant
to a holder's decision to exchange Depositary Shares for Debentures pursuant to
the Exchange Offer.
ALL HOLDERS OF DEPOSITARY SHARES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE EXCHANGE OF
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DEPOSITARY SHARES FOR DEBENTURES AND OF THE OWNERSHIP AND DISPOSITION OF
DEBENTURES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
EXCHANGE OF DEPOSITARY SHARES FOR DEBENTURES
Characterization of the Exchange. An exchange of Depositary Shares for
Debentures pursuant to the Exchange Offer will be a taxable transaction for
United States federal income tax purposes and may also be a taxable transaction
under applicable state, local and foreign tax laws. The United States federal
income tax consequences to a particular exchanging holder may vary depending
upon the holder's particular circumstances. If a holder does not own, either
directly or indirectly under the attribution rules described below, any Common
Stock immediately after the Expiration Date of the Exchange Offer, a holder's
exchange of Depositary Shares for Debentures pursuant to the Exchange Offer
should be treated as a sale or exchange of such Depositary Shares for United
States federal income tax purposes. See "Section 302 Tests" and "Attribution"
below.
Under Section 302 of the Code, a holder's exchange of Depositary Shares for
Debentures pursuant to the Exchange Offer will be treated as a "sale or
exchange" of such Depositary Shares for United States federal income tax
purposes (rather than as a distribution by the Company with respect to the
Depositary Shares held by the exchanging holder) if the holder can satisfy
either (i) the "complete redemption" test or (ii) the "not essentially
equivalent to a dividend" test (each test as described below under "Section 302
Tests").
If either of the above tests is satisfied, and the exchange of the Depositary
Shares for Debentures is therefore treated as a "sale or exchange" of such
Depositary Shares for United States federal income tax purposes, the exchanging
holder will recognize gain or loss equal to the difference between the fair
market value of the Debentures received by the holder pursuant to the Exchange
Offer and the holder's tax basis in the Depositary Shares surrendered pursuant
to the Exchange Offer. Any such gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if the Depositary Shares have been held
for more than one year. The exchanging holder's tax basis in the Debentures
received in the exchange will equal the fair market value of such Debentures at
the time of the exchange and the holding period for such Debentures will begin
on the day after the day on which the Debentures are acquired by such holder.
If neither of the above tests is satisfied, the holder would be treated as
having received a dividend to the extent the distribution of the Debentures is
treated as made from the Company's earnings and profits for United States
federal income tax purposes. Such amount would be includible in gross income as
an ordinary item in its entirety (without reduction for the tax basis of the
Depositary Shares exchanged pursuant to the Exchange Offer), no loss would be
recognized, and the holder's basis in the Depositary Shares exchanged pursuant
to the Exchange Offer would be added to such holder's basis in its remaining
Depositary Shares or other stock that it owns in the Company, if any. To the
extent the fair market value of the Debentures received by the holder pursuant
to the Exchange Offer exceeds the amount of the dividend computed above, such
holder's basis will be reduced by the amount of such excess. Any amounts in
excess of such basis will be treated as capital gain. The holding period for
the Debentures will begin on the day after the day on which the Debentures are
acquired by the exchanging holder.
Section 302 Tests. The receipt of Debentures by an exchanging holder will be
a "complete redemption" if immediately after the Expiration Date of the
Exchange Offer either (i) the holder does not own, actually or constructively,
any Depositary Shares or other stock of the Company or (ii) the holder (a) does
not actually own any Depositary Shares or other stock of the Company, (b)
constructively owns Depositary Shares or other stock of the Company only by
reason of the family attribution rules of Section 318(a)(1) of the Code and (c)
waives such constructive ownership by complying with the procedures described
in Section 302(c) of the Code.
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The receipt of Debentures by an exchanging holder will be "not essentially
equivalent to a dividend" if the holder's exchange of Depositary Shares for
Debentures pursuant to the Exchange Offer results in a "meaningful reduction"
in the holder's interest in the Company. The exchange of Depositary Shares for
Debentures by a holder that does not own, either directly or indirectly under
the attribution rules, any Common Stock immediately after the Expiration Date
of the Exchange Offer should qualify as "not essentially equivalent to a
dividend" regardless of proration in the Exchange Offer. Also, a holder who
owns only a small amount of Common Stock would probably satisfy the "not
essentially equivalent to a dividend" test notwithstanding proration in the
Exchange Offer. Holders of Depositary Shares expecting to rely upon the "not
essentially equivalent to a dividend" test should consult their own tax
advisors as to its application in their particular situation.
Attribution. In determining whether either of the tests under Section 302 of
the Code is satisfied, a holder must take into account not only the Depositary
Shares and other stock of the Company which are actually owned by the holder,
but also Depositary Shares and other stock of the Company which are
constructively owned by the holder under Section 318 of the Code. Under Section
318 of the Code, a holder may constructively own Depositary Shares and other
stock of the Company actually owned, and in some cases constructively owned, by
certain related individuals or entities, and Depositary Shares and other stock
of the Company which the holder has the right to acquire by exercise of an
option or by conversion. Contemporaneous dispositions or acquisitions of
Depositary Shares by a holder or related individuals or entities may be deemed
to be part of a single integrated transaction which will be taken into account
in determining whether any of the tests under Section 302 of the Code has been
satisfied.
Each holder should be aware that because proration may occur in the Exchange
Offer, even if all the Depositary Shares actually and constructively owned by a
holder are tendered pursuant to the Exchange Offer, fewer than all of such
Depositary Shares may be purchased by the Company. Thus, proration may affect
whether a holder's exchange of Depositary Shares for Debentures pursuant to the
Exchange Offer will meet any of the tests under Section 302 of the Code.
Corporate Holder Dividend Treatment. To the extent a corporate holder's
exchange of Depositary Shares is taxable as a dividend, (i) it will be eligible
for a dividends-received deduction (subject to the minimum holding period
requirements under Section 246(c) of the Code and other applicable limitations)
and (ii) it will be subject to the "extraordinary dividend" provisions of the
Code which, if applicable, would require a corporate shareholder to reduce its
tax basis (and possibly recognize gain) in any stock of the Company held by it
by the nontaxed portion of any such dividend. Under recently proposed
legislation, however, a corporate holder that otherwise would receive a
dividends-received deduction with respect to the exchange would instead
generally be required to treat the exchange as a "sale or exchange." The
proposed legislation would apply to transactions effected after May 3, 1995.
Corporate holders are advised to consult their tax advisors regarding the
possible implications of the proposed legislation.
INTEREST AND ORIGINAL ISSUE DISCOUNT ON DEBENTURES
The following discussion addresses only the tax treatment of holders of
Debentures that acquired the Debentures pursuant to the Exchange Offer and thus
does not address the tax treatment of holders of the Debentures that purchase
the Debentures in the secondary market. In accordance with Sections 1271
through 1275 of the Code and the final Treasury Regulations promulgated
thereunder (the "OID Regulations"), a debt instrument bears original issue
discount ("OID") if its "stated redemption price at maturity" exceeds its
"issue price" by more than a de minimis amount. The issue price of the
Debentures will be their fair market value at the time of the exchange. The
stated redemption price at maturity of a debt instrument generally includes all
amounts payable other than "qualified stated interest" (i.e., payments that are
unconditionally required to be paid at least annually at a single fixed rate
over the term of the instrument). Because the Company has the right to elect to
extend any interest
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payment for a period not exceeding 20 consecutive quarterly interest payment
periods, none of the payments of stated interest on the Debentures will
constitute qualified stated interest. Thus, the Debentures will have OID in an
amount equal to the excess of all payments required to be made under the
Debentures over their issue price. A holder will be required to include OID in
income on a current basis, based on a constant yield method and in accordance
with the detailed requirements of the OID Regulations, regardless of such
holder's regular method of accounting. As a result, during any period in which
the Company has elected to extend the interest payment period a holder will be
required to include OID in income but will not receive a corresponding cash
distribution. A holder will not recognize any income upon the receipt of a
payment of stated interest on a Debenture; instead, a holder's basis in the
Debentures will be increased by the amount of OID includible in income and
reduced by all payments made on the Debentures.
Because the fair market value of the Debentures on the date of the exchange
may not equal their principal amount, the yield on the Debentures may differ
from the stated interest rate on the Debentures. To the extent the yield on the
Debentures exceeds the stated interest rate, the amount of OID includible in
income for a holder of Debentures in each quarter would exceed the cash amount
of the interest payment for that quarter. The Company will provide each non-
corporate holder of the Debentures with reports of the amount of OID includible
in income on Form 1099 OID. The calculations of OID income accruals on the
Debentures will also be available to the public in IRS Publication 1212.
Under the OID Regulations, in computing the yield to maturity of an
instrument the issuer is deemed to elect to exercise any unconditional option
available to it under the instrument if doing so will minimize the yield on the
instrument. If the issuer does not exercise such an option, then, solely for
purposes of determining the accrual of OID, the yield and maturity of the
instrument are redetermined by treating the instrument as reissued for an
amount equal to its adjusted issue price. Based on current market prices and
the advice of the lead Dealer-Manager, the Company expects the issue price of
the Debentures to exceed their stated principal amount. If such expectation
proves to be correct, the Company intends to assume, solely for purposes of
calculating OID on the Debentures, that the Company will exercise its right to
redeem the Debentures in 1997. If the Company does not in fact elect to redeem
the Debentures in 1997, the OID Regulations would require that OID be
recomputed, in accordance with that changed fact. In addition, if, contrary to
the Company's expectation, the issue price of the Debentures is less than their
stated principal amount, the calculation of OID would differ from that
described above. The aggregate amount of OID on the Debentures would be higher
and the timing of inclusions of such OID may be affected by the unconditional
option rule. The results of the Company's determinations will be reflected in
the information provided to non-corporate holders on Form 1099 OID.
A portion of the stated interest paid on the Debentures on the first Interest
Payment Date will be attributable to the period preceding the Issue Date. No
portion of such interest payable on such Interest Payment Date will be eligible
for the dividends-received deduction.
SALE OR REDEMPTION OF DEBENTURES
Generally, a sale or redemption of Debentures will result in taxable gain or
loss equal to the difference between the amount realized and the holder's tax
basis in the Debentures. Such gain or loss will be long-term capital gain or
loss if the Debentures are held for more than one year.
BACKUP WITHHOLDING
A holder of Depositary Shares or Debentures may be subject to backup
withholding at a rate of 31% with respect to dividends or interest (including
OID) on, or the proceeds of a sale, exchange, or redemption of such Depositary
Shares or Debentures as the case may be, unless (i) such holder is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable backup withholding rules.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES PERSONS
The following is a general summary of the material United States federal
income and estate tax considerations relevant to the exchange of Depositary
Shares for Debentures by non-United States persons and the ownership and
disposition by non-United States persons acquiring Debentures pursuant to the
Exchange Offer. To the extent it relates to matters of law or legal conclusions
this summary constitutes the opinion of Sonnenschein Nath & Rosenthal, special
tax counsel to the Company. This summary is based on the Code, Treasury
Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, IRS rulings, official pronouncements and judicial
decisions, all as in effect on the date hereof and all of which are subject to
change, possibly with retroactive effect, or different interpretations. This
summary does not discuss all the tax consequences that may be relevant to a
particular holder that is a non-United States person in light of the holder's
particular circumstances and it is not intended to be applicable in all
respects to all categories of non-United States persons, some of whom--such as
foreign governments and certain international organizations--may be subject to
special rules not discussed below. In addition, this summary does not address
any state, local or foreign tax considerations that may be relevant to a
holder's decision to exchange Depositary Shares for Debentures pursuant to the
Exchange Offer. For a discussion of certain United States federal income tax
considerations, some of which may also be relevant to non-United States
persons, see "Certain United States Federal Income Tax Considerations".
As used herein, "non-United States person" means any person who, for United
States federal income tax purposes, is neither (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any State or of any
of its territories or possessions or (iii) a domestic trust or estate.
ALL HOLDERS OF DEPOSITARY SHARES THAT ARE NON-UNITED STATES PERSONS ARE
ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE UNITED STATES FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE EXCHANGE OF DEPOSITARY SHARES
FOR DEBENTURES AND THE OWNERSHIP AND DISPOSITION OF DEBENTURES RECEIVED IN THE
EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF DEPOSITARY SHARES FOR DEBENTURES
Subject to the discussion of backup withholding below, if a holder that is a
non-United States person certifies, in a manner and under arrangements
satisfactory to the Company or other withholding agent, that the exchange of
Depositary Shares for Debentures by such holder qualifies as a "sale or
exchange", rather than as a dividend (see "Certain United States Federal Income
Tax Considerations--Exchange of Depositary Shares for Debentures", above), the
Company or such withholding agent will not withhold United States federal
income tax on the issuance of Debentures to such holder. Such a holder
generally will not be subject to United States federal income tax in respect of
gain recognized on such exchange unless (i) such gain is effectively connected
with a trade or business conducted by such non-United States person within the
United States (in which case the branch profits tax may also apply if the
holder is a foreign corporation), (ii) in the case of a non-United States
person that is an individual, such holder is present in the United States for a
period or periods aggregating 183 days or more in the taxable year of the
exchange and certain other conditions are satisfied, or (iii) the Company is or
has been a "United States real property holding corporation" for United States
federal income tax purposes at any time during the five-year period ending on
the date of the exchange and, at any time during such five-year period, the
holder either actually or constructively owned more than five percent of the
Depositary Shares. The Company believes that it has not been a United States
real property holding corporation at any time during the five-year period
preceding the date of this Prospectus and does not anticipate becoming a United
States real property holding corporation in the future.
40
<PAGE>
If a non-United States holder exchanges Depositary Shares for Debentures and
does not certify, in a manner satisfactory to the Company or other withholding
agent, that such exchange qualifies as a "sale or exchange" of the Depositary
Shares, United States federal withholding tax will be withheld from the gross
proceeds to such holder in an amount equal to 30% of such proceeds (including
Debentures that such holder would otherwise have received) unless (i) such
holder is eligible for a reduced withholding tax rate with respect to dividend
income under the provisions of an income tax treaty and duly establishes its
entitlement to the reduced rate, in which case the tax will be withheld at the
reduced rate, (ii) such income is effectively connected with a trade or
business conducted by such non-United States holder in the United States (and
such holder provides a Form 4224 to the withholding agent), or (iii) such
holder establishes that it is exempt from such tax (e.g., by providing the
appropriate form certifying its status as a foreign government). A holder that
is a non-United States person that is engaged in a trade or business in the
United States generally will be taxed at ordinary United States federal income
tax rates on a net income basis (and may be subject to the branch profits tax)
with respect to such dividend.
If the Company collects U.S. withholding tax on the exchange of Depositary
Shares for Debentures, a non-United States holder may be eligible to obtain a
refund of such tax from the IRS if it establishes that the exchange does not
give rise to dividend income, as described above under "Certain United States
Federal Income Tax Considerations--Exchange of Depositary Shares for
Debentures" or otherwise establishes a complete or partial exemption from such
withholding tax.
PAYMENTS ON DEBENTURES
Subject to the discussion of backup withholding below, payments of principal
and interest (including OID) on a Debenture by the Company or its agent (in its
capacity as such) to a beneficial owner that is a non-United States person will
not be subject to United States federal withholding tax; provided that (a) such
person does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote,
(b) such person is not a controlled foreign corporation that is related to the
Company actually or constructively through stock ownership and (c) either (i)
the beneficial owner certifies to the Company or its agent, under penalties of
perjury, that it is not a United States person and provides its name and
address on Form W-8 or its equivalent or (ii) a qualifying securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business and that holds the
Debenture certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or by a
qualifying intermediary and furnishes the payor with a copy thereof.
If a beneficial owner of a Debenture who is a non-United States person is
engaged in a trade or business within the United States and interest (including
OID) on the Debenture is effectively connected with the conduct of such trade
or business, such beneficial owner may be subject to United States federal
income tax on such interest (including OID) at ordinary United States federal
income tax rates on a net basis (in which case the branch profits tax may also
apply if the holder is a foreign corporation).
SALE OR EXCHANGE OF DEBENTURES
Subject to the discussion of backup withholding below, any capital gain
realized upon a sale or exchange of a Debenture (including upon retirement of a
Debenture) by a beneficial owner who is a non-United States person ordinarily
will not be subject to United States federal income tax unless (i) such gain is
effectively connected with a trade or business conducted by such non-United
States person within the United States (in which case the branch profits tax
may also apply if the holder is a foreign corporation) or (ii) in the case of a
non-United States person that is an individual, such holder is present in the
United States for a period or periods aggregating 183 days or more in the
taxable year of the sale or exchange and certain other conditions are met.
41
<PAGE>
FEDERAL ESTATE TAXES
Debentures beneficially owned by an individual who at the time of death is
neither a citizen nor a resident of the United States will not be subject to
United States federal estate tax as a result of such individual's death,
provided that (i) such holder did not at the time of death actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company and (ii) at the time of death the income from the
Debentures would not have been effectively connected with the conduct by such
individual of a trade or business within the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 OID and backup withholding at a rate
of 31% will not apply to payments of principal and interest (including OID)
made by the Company or a paying agent to a non-United States holder on a
Debenture if the certification described in clause (c) under "--Payments on
Debentures" above is received. However, interest (including OID) on a Debenture
owned by a holder that is a non-United States person will be required to be
reported annually on IRS Form 1042S.
Payments of the proceeds of the sale by a holder that is a non-United States
person of a Debenture made to or through a foreign office of a broker will not
be subject to information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign corporation for United
States federal tax purposes or a foreign person 50% or more of whose gross
income is effectively connected with a United States trade or business for a
specified three-year period, information reporting may apply to such payments.
Payments of the proceeds of the sale of a Debenture to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the holder certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
LEGAL MATTERS
The validity of the Debentures 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.
Sonnenschein Nath & Rosenthal, Chicago, Illinois, will act on behalf of the
Company as special tax counsel. Donald G. Lubin, a partner and Chairman of
Sonnenschein Nath & Rosenthal, is a director of the Company and owns, and holds
options to purchase, shares of the Company's Common Stock. Certain legal
matters will be passed upon for the Dealer Managers by Cleary, Gottlieb, Steen
& Hamilton, New York, New York. From time to time, Cleary, Gottlieb, Steen &
Hamilton provides legal services to the Company.
EXPERTS
The consolidated financial statements of McDonald's Corporation 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 are 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.
42
<PAGE>
Duly executed photocopies of the Letter of Transmittal will be accepted.
Letters of Transmittal, depositary receipts evidencing Depositary Shares and
any other required documents should be sent by each holder of Depositary Shares
or his broker, dealer, commercial bank, trust company or other nominee to the
Exchange Agent at one of the addresses as set forth below:
The Exchange Agent Is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
New York, New York 10005
P.O. Box 2559, Mail Suite 4660-McD
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notices of Guaranteed Delivery by Telephone:
(201) 222-4707
The Information Agent Is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 628-8536 (Toll-Free)
(212) 269-5550 (Call Collect)
Any questions or requests for assistance or additional copies of this
Prospectus and the Letter of Transmittal or Notices of Guaranteed Delivery
may be directed to the Information Agent at its telephone number and
location set forth above. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning
the Exchange Offer.
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
85 Broad Street World Financial Center
New York, New York 10004 North Tower
(800) 828-3182 (Toll-Free) New York, New York 10281
(212) 236-4565 (Call Collect)
MORGAN STANLEY & CO.
INCORPORATED SALOMON BROTHERS INC
1251 Avenue of the Americas Seven World Trade Center
New York, New York 10020 New York, New York 10048
(800) 422-6464 ext. 6620 (Toll-Free)
(800) 558-3745 (Toll-Free)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "GCL") provides for
indemnification of directors and officers against any legal liability (other
than liability arising from derivative suits) if the director or officer acted
in good faith and in a manner that he or she reasonably believed to be in or
not opposed to the best interests of the corporation. In criminal actions, the
director or officer must also have had no reasonable cause to believe that his
or her conduct was unlawful. A corporation may indemnify a director or officer
in a derivative suit if the director or officer acted in good faith and in a
manner that he or she reasonably believed to be in or not opposed to the best
interests of the corporation unless the director or officer is found liable to
the corporation (in which case a court may permit indemnity for such director
or officer to the extent it deems proper).
Article V of the Company's By-Laws provides that the Company shall indemnify
and hold harmless each director and officer to the fullest extent permitted
under the GCL, provided that the person seeking indemnification has met the
applicable standard of conduct set forth in the By-Laws. Such indemnification
could cover all expenses as well as liabilities and losses incurred by
directors and officers. The Board of Directors has the authority by resolution
to provide for other indemnification of directors and officers as it deems
appropriate.
The By-Laws further provide that the Company may maintain insurance at its
expense to protect any director or officer against any expenses, liabilities or
losses, whether or not the Company would have the power to indemnify such
director or officer against such expenses, liabilities or losses under the GCL.
Pursuant to this provision, the Company maintains insurance against any
liability incurred by its directors and officers in defense of any action in
which they are made parties by reason of their positions as directors and
officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S> <C>
4.1 Form of Indenture between McDonald's Corporation and First
Fidelity Bank, National Association, as Trustee
4.2 Form of Subordinated Deferrable Interest Debenture
5.1 Opinion and Consent of Shelby Yastrow, Senior Vice Presi-
dent, General Counsel and Secretary of the Company
8.1 Tax Opinion and Consent of Sonnenschein Nath & Rosenthal
12.1** Statement re: Computation of Ratios of Earnings to Fixed
Charges
23.1* Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Shelby Yastrow, Senior Vice President, General
Counsel and Secretary of the Company, included in Exhibit
5.1
23.3 Consent of Sonnenschein Nath & Rosenthal, included in Ex-
hibit 8.1
24.1* Powers of Attorney
25.1* Statement of Eligibility and Qualification on Form T-1 of
First Fidelity Bank, National Association, as Trustee
99.1 Form of Dealer Manager Agreement
99.2* Form of Exchange Agent Agreement
99.3 Form of Letter of Transmittal
99.4 Form of Notice of Guaranteed Delivery
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S> <C>
99.5 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees
99.6 Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees to their clients
99.7 Form of Letter to holders of Depositary Shares
99.8 Certificate of Designations, Preferences and Rights relat-
ing to the Series E Preferred Stock
</TABLE>
- --------
*Previously filed.
** Exhibit 12.1 above was previously filed as Exhibit 12 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 and is
incorporated herein by reference.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual reports pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(e) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(f) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(g) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(h) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 20 of this
Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE VILLAGE OF OAK BROOK, AND STATE OF ILLINOIS, ON THE 31ST DAY
OF MAY, 1995.
McDONALD'S CORPORATION
/s/ Jack M. Greenberg
By___________________________________
Jack M. Greenberg
Vice Chairman, Chief Financial
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement has been signed below
by the following persons in the capacities indicated and on the 31st day of
May, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director
___________________________________________
Hall Adams, Jr.
* Senior Vice President and Director
___________________________________________
Robert M. Beavers, Jr.
* President and Chief Executive Officer--
___________________________________________ McDonald's International and Director
James R. Cantalupo
* Director
___________________________________________
Gordon C. Gray
/s/ Jack M. Greenberg Vice Chairman, Chief Financial Officer and
___________________________________________ Director
Jack M. Greenberg
* Director
___________________________________________
Donald R. Keough
* Director
___________________________________________
Donald G. Lubin
* Director
___________________________________________
Andrew J. McKenna
* Chairman, Chief Executive Officer and
___________________________________________ Director
Michael R. Quinlan
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* President and Chief Executive Officer--
___________________________________________ McDonald's U.S.A. and Director
Edward H. Rensi
* Director
___________________________________________
Terry Savage
* Senior Executive Vice President, Chief
___________________________________________ Marketing Officer and Director
Paul D. Schrage
* Director
___________________________________________
Ballard F. Smith
Director
___________________________________________
Roger W. Stone
* Director
___________________________________________
Robert N. Thurston
* Senior Chairman and Director
___________________________________________
Fred L. Turner
* Director
___________________________________________
B. Blair Vedder, Jr.
* Senior Vice President and Controller
___________________________________________
Michael L. Conley
</TABLE>
/s/ Jack M. Greenberg
*By__________________________________
Jack M. Greenberg
(Attorney-in-Fact)
II-5
<PAGE>
- --------------------------------------------------------------------------------
MCDONALD'S CORPORATION
Issuer
to
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
Trustee
Indenture
Dated as of , 1995
$__,000,000
___% Subordinated Deferrable Interest Debentures due 2025
- --------------------------------------------------------------------------------
<PAGE>
McDONALD'S CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of , 1995
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
- ----------------------------- -----------------
<S> <C>
(S)310 (a)(1)................................... 609
(a)(2)................................... 609
(a)(3)................................... Not Applicable
(a)(4)................................... Not Applicable
(a)(5)................................... 609
(b)...................................... 608
(c)...................................... Not Applicable; 610
(S)311 (a)...................................... 613
(b)...................................... 613
(b)(2)................................... 613
(c)...................................... Not Applicable
(S)312 (a)...................................... 701; 702(a)
(b)...................................... 702(b)
(c)...................................... 702(b)
(S)313 (a)...................................... 703(a)
(b)...................................... 703(b)
(c)...................................... 703(a)
(d)...................................... 703(b)
(S)314 (a)...................................... 704; 1004
(b)...................................... Not Applicable
(c)(1)................................... 102
(c)(2)................................... 102
(c)(3)................................... Not Applicable
(d)...................................... Not Applicable
(e)...................................... 102
(f)...................................... Not Applicable
(S)315 (a)...................................... 601(a)
(b)...................................... 602; 703
(c)...................................... 601(b)
(d)...................................... 601(c)
(d)(1)................................... 601(c)(i)
(d)(2)................................... 601(c)(ii)
(d)(3)................................... 601(c)(iii)
(e)...................................... 514
(S)316 (a)(1)(A)................................ 512
(a)(1)(B)................................ 513
(a)(2)................................... Not Applicable
(b)...................................... 508
(c)...................................... 114
(S)317 (a)(1)................................... 503
(a)(2)................................... 504
(b)...................................... 1003
(S)318 (a)...................................... 107
</TABLE>
___________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE ONE. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION................................................ 1
SECTION 101. Definitions............................................................................................ 1
SECTION 102. Compliance Certificates and Opinions................................................................... 4
SECTION 103. Form of Documents Delivered to Trustee................................................................. 5
SECTION 104. Acts of Holders........................................................................................ 5
SECTION 105. Notices, Etc., to Trustee and Company.................................................................. 6
SECTION 106. Notice to Holders; Waiver.............................................................................. 6
SECTION 107. Conflict with Trust Indenture Act...................................................................... 7
SECTION 108. Effect of Headings and Table of Contents............................................................... 7
SECTION 109. Successors and Assigns................................................................................. 7
SECTION 110. Separability Clause.................................................................................... 7
SECTION 111. Benefits of Indenture.................................................................................. 7
SECTION 112. Governing Law.......................................................................................... 7
SECTION 113. Legal Holidays......................................................................................... 7
SECTION 114. Record Date for Vote or Consent of Holders............................................................. 7
SECTION 115. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability.... 8
ARTICLE TWO. FORM OF SECURITIES..................................................................................... 8
SECTION 201. Forms Generally........................................................................................ 8
ARTICLE THREE. THE SECURITIES....................................................................................... 8
SECTION 301. Title and Terms........................................................................................ 8
SECTION 302. Denominations.......................................................................................... 9
SECTION 303. Execution, Authentication, Delivery And Dating......................................................... 9
SECTION 304. Temporary Securities................................................................................... 9
SECTION 305. Registration, Registration of Transfer and Exchange.................................................... 10
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities....................................................... 10
SECTION 307. Payment of Interest; Interest Rights Preserved......................................................... 11
SECTION 308. Persons Deemed Owners.................................................................................. 12
SECTION 309. Cancellation........................................................................................... 12
SECTION 310. Computation of Interest................................................................................ 12
ARTICLE FOUR. SATISFACTION AND DISCHARGE............................................................................ 12
SECTION 401. Satisfaction and Discharge of Indenture................................................................ 12
SECTION 402. Application of Trust Money............................................................................. 13
ARTICLE FIVE. REMEDIES.............................................................................................. 13
SECTION 501. Events of Default...................................................................................... 13
SECTION 502. Acceleration of Maturity............................................................................... 14
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee........................................ 14
SECTION 504. Trustee May File Proofs of Claim....................................................................... 15
SECTION 505. Trustee May Enforce Claims Without Possession of Securities............................................ 15
SECTION 506. Application of Money Collected......................................................................... 15
SECTION 507. Limitation on Suits.................................................................................... 16
SECTION 508. Unconditional Right Of Holders To Receive Principal And Interest....................................... 16
SECTION 509. Restoration of Rights and Remedies..................................................................... 16
SECTION 510. Rights and Remedies Cumulative......................................................................... 17
SECTION 511. Delay or Omission Not Waiver........................................................................... 17
SECTION 512. Control by Holders..................................................................................... 17
SECTION 513. Waiver of Past Defaults................................................................................ 17
SECTION 514. Undertaking for Costs.................................................................................. 17
SECTION 515. Waiver of Stay or Extension Laws....................................................................... 18
ARTICLE SIX. THE TRUSTEE............................................................................................ 18
SECTION 601. Certain Duties and Responsibilities.................................................................... 18
SECTION 602. Notice of Defaults..................................................................................... 19
SECTION 603. Certain Rights of Trustee.............................................................................. 19
SECTION 604. Not Responsible for Recitals or Issuance of Securities................................................. 20
SECTION 605. May Hold Securities.................................................................................... 20
SECTION 606. Money Held in Trust.................................................................................... 20
SECTION 607. Compensation and Reimbursement......................................................................... 20
SECTION 608. Disqualification; Conflicting Interest................................................................. 21
SECTION 609. Corporate Trustee Required; Eligibility................................................................ 21
SECTION 610. Resignation and Removal; Appointment of Successor...................................................... 21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 611. Acceptance of Appointment by Successor................................................................. 22
SECTION 612. Merger, Conversion, Consolidation or Succession to Business............................................ 22
SECTION 613. Preferential Collection of Claims Against Company...................................................... 22
SECTION 614. Appointment of Authenticating Agent.................................................................... 23
ARTICLE SEVEN. HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY..................................................... 24
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.............................................. 24
SECTION 702. Preservation of Information, Communication to Holders.................................................. 24
SECTION 703. Reports by Trustee..................................................................................... 24
SECTION 704. Reports by Company..................................................................................... 25
ARTICLE EIGHT. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................................................. 25
SECTION 801. Company May Consolidate, Etc. Only on Certain Terms.................................................... 25
SECTION 802. Successor Substituted for Company...................................................................... 26
ARTICLE NINE. SUPPLEMENTAL INDENTURES............................................................................... 26
SECTION 901. Supplemental Indentures Without Consent Of Holders..................................................... 26
SECTION 902. Supplemental Indentures With Consent Of Holders........................................................ 26
SECTION 903. Execution of Supplemental Indentures................................................................... 27
SECTION 904. Effect of Supplemental Indentures ..................................................................... 27
SECTION 905. Conformity with Trust Indenture Act.................................................................... 27
SECTION 906. Reference in Securities to Supplemental Indentures..................................................... 27
ARTICLE TEN. COVENANTS.............................................................................................. 28
SECTION 1001. Payment of Principal and Interest..................................................................... 28
SECTION 1002. Maintenance of Office or Agency....................................................................... 28
SECTION 1003. Money For Security Payments To Be Held In Trust....................................................... 28
SECTION 1004. Statements of Officers of Company as to Default....................................................... 29
SECTION 1005. Existence............................................................................................. 29
SECTION 1006. Maintenance of Properties............................................................................. 30
SECTION 1007. Payment of Taxes and Other Claims..................................................................... 30
SECTION 1008. Further Instruments and Acts.......................................................................... 30
SECTION 1009. Waiver of Certain Covenants........................................................................... 30
SECTION 1010. Limitation on Dividends and Capital Stock Acquisitions................................................ 30
ARTICLE ELEVEN. REDEMPTION OF SECURITIES............................................................................ 31
SECTION 1101. Right of Redemption................................................................................... 31
SECTION 1102. Applicability of Article.............................................................................. 31
SECTION 1103. Election to Redeem; Notice to Trustee................................................................. 31
SECTION 1104. Selection by Trustee of Securities to be Redeemed..................................................... 31
SECTION 1105. Notice of Redemption.................................................................................. 31
SECTION 1106. Deposit of Redemption Price........................................................................... 32
SECTION 1107. Securities Payable on Redemption Date................................................................. 32
SECTION 1108. Securities Redeemed in Part........................................................................... 32
ARTICLE TWELVE. SUBORDINATION OF DEBENTURES......................................................................... 33
SECTION 1201. Securities Subordinate to Senior Indebtedness......................................................... 33
SECTION 1202. Payment Over of Proceeds Upon Default................................................................. 33
SECTION 1203. Payment Over of Proceeds Upon Dissolution, Etc........................................................ 33
SECTION 1204. Subrogration to Rights of Holders of Senior Indebtedness.............................................. 34
SECTION 1205. Trustee to Effectuate Subordination................................................................... 35
SECTION 1206. Notice to Trustee..................................................................................... 35
SECTION 1207. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights.................. 36
SECTION 1208. Trustee Not Fiduciary for Holders of Senior Indebtedness.............................................. 36
SECTION 1209. No Waiver of Subordination Provisions................................................................. 36
SECTION 1210. Defeasance of this Article Twelve..................................................................... 36
ARTICLE THIRTEEN. DEFEASANCE AND COVENANT DEFEASANCE................................................................ 36
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.......................................... 36
SECTION 1302. Defeasance and Discharge.............................................................................. 37
SECTION 1303. Covenant Defeasance................................................................................... 37
SECTION 1304. Conditions to Defeasance or Covenant Defeasance....................................................... 37
SECTION 1305. Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions... 39
SECTION 1306. Reinstatement......................................................................................... 39
</TABLE>
<PAGE>
INDENTURE, dated as of , 1995, between McDonald's Corporation, a
Delaware corporation (the "Company"), having its principal office at One
McDonald's Plaza, Oak Brook, Illinois 60521, and First Fidelity Bank, National
Association, Philadelphia, Pennsylvania, as Trustee (the "Trustee").
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(e) unless otherwise specifically stated herein, the words "Article"
and "Section" refer to an Article and Section, respectively, of this
Indenture.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a day on which banking institutions
in the City of New York, New York or the City of Philadelphia, Pennsylvania are
authorized or required by law to close.
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"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture and thereafter "Company" shall mean such
successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman, its President or any Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
Philadelphia, Pennsylvania, at which at any particular time its corporate trust
business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof including, for
all purposes of this instrument, the provisions of the Trust Indenture Act that
are deemed to be a part of and govern this instrument.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Maturity," when used with respect to any Security, means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Vice Chairman, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel reasonably
acceptable to the Trustee which may include the General Counsel, any Associate
General Counsel or any Assistant General Counsel employed by the Company.
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"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
and
(c) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Company proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture,
including as applicable without duplication, any accrued interest due upon such
redemption pursuant to the terms of this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the February 15, May 15, August 15 or November 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Responsible Officer," when used with respect to the Trustee, means any
vice president, any assistant vice president, any corporate trust officer or any
other officer within the Trustee's Corporate
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Trust Office customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular trust matter, any other officer, to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Securities" means the ___% Subordinated Deferrable Interest Debentures due
2025 of the Company authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective meaning
specified in Section 305.
"Senior Indebtedness" means the principal of, premium, if any, interest on,
and any other payment due pursuant to any of the following, whether outstanding
at the date of execution of this Indenture or thereafter incurred, created or
assumed: (a) all indebtedness or obligations of the Company evidenced by notes,
debentures, bonds or other securities or financial instruments; (b) all
indebtedness or obligations of others of the kinds described in the preceding
clause (a) assumed by or guaranteed in any manner by the Company, including
through an agreement to purchase, contingent or otherwise; and (c) all renewals,
extensions or refundings of indebtedness or obligations of the kinds described
in either of the preceding clauses (a) or (b); unless, in the case of any
particular indebtedness, renewal, extension or refunding, the instrument
creating or evidencing the same or the assumption or guarantee of the same
expressly provides that such indebtedness, renewal, extension or refunding is
not superior in right of payment to or is pari passu with the Securities;
provided, however, that Senior Indebtedness shall not include amounts owed to
trade creditors in the ordinary course of business.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
905; provided that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"U.S. Government Obligations" has the meaning specified in Section 1304.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
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<PAGE>
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether or not, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company, stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
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<PAGE>
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be provided
in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
action is made upon such Security. Without limiting the foregoing, a Holder
entitled hereunder to give or take any action hereunder with regard to any
particular Security may do so with regard to all or any part of the principal
amount of such Security or by one or more duly appointed agents each of which
may do so pursuant to such appointment with regard to all or any different part
of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Administration, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company,
addressed to it at the address of its principal office specified in the
first paragraph of this instrument attention: Treasurer with a copy to the
Controller, or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
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SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, such provisions of the Trust Indenture Act
shall be deemed to apply to this Indenture as so modified, or if excluded shall
not be deemed to apply to this Indenture, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal 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 the Interest Payment
Date or Redemption Date, or at the Stated Maturity, provided that no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be, if such payment is made
or duly provided for on the next succeeding Business Day.
SECTION 114. Record Date for Vote or Consent of Holders.
The Company (or, in the event deposits have been made pursuant to Articles
Four or Thirteen or after the occurrence of an Event of Default the Trustee has
called for action by the Holders, the Trustee) may set a record date for
purposes of determining the identity of Holders entitled to vote or consent to
any action by vote or consent authorized or permitted under this Indenture,
which record date shall be the later of ten days prior to the first solicitation
of such vote or consent or the date of the most recent list of Holders furnished
to the Trustee pursuant to Section 701 hereof prior to such solicitation. If a
record date is fixed, those persons who were Holders of Securities at such
record date (or their duly designated proxies), and only those persons, shall be
entitled to take such action by vote or consent or to revoke any
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vote or consent previously given, whether or not such persons continue to be
Holders after such record date.
SECTION 115. Incorporators, Stockholders, Officers and Directors of the Company
- --------------------------------------------------------------------------------
Exempt from Individual Liability.
---------------------------------
No recourse under or upon any obligation, covenant or agreement of this
Indenture or any indenture supplemental hereto or of any Security, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director, as such past, present or future,
of the Company or of any successor Person, either directly or through the
Company or any successor Person, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that this Indenture and the obligations issued
hereunder are solely corporate obligations, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors, as such, of the Company or of any successor
Person, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Securities or implied therefrom;
and that any and all such personal liability of every name and nature, either at
common law or in equity or by constitution or statute, of, and any and all such
rights and claims against, every such incorporator, stockholder, officer or
director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Securities or implied therefrom are
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issuance of such Securities.
ARTICLE TWO
FORM OF SECURITIES
SECTION 201. Forms Generally.
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The Securities and the Trustee's certificates of authentication shall be in
substantially the forms set forth in Exhibit A, which is part of this Indenture,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution thereof, with the consent of the
Trustee.
The definitive Securities relating thereto shall be printed, lithographed
or engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution thereof,
with the consent of the Trustee.
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
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The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to $___,000,000, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Sections 304, 305, 306, 906 or
1108.
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The Securities shall be known and designated as the "____% Subordinated
Deferrable Interest Debentures due 2025" of the Company. Their Stated Maturity
shall be __________ , 2025 and they shall bear interest at the rate of ____% per
annum, from and including the date of issuance thereof until maturity or earlier
redemption, payable quarterly in arrears on June 1, September 1, December 1 and
March 1 commencing June 1, 1995, until the principal thereof is paid or made
available for payment.
The principal of and interest on the Securities shall be payable at the
office or agency of the Company in the Borough of Manhattan, the City of New
York maintained for such purpose and at any other office or agency maintained by
the Company for such purpose; provided, however, that at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.
SECTION 302. Denominations.
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The Securities shall be issuable only in registered form without coupons
and only in denominations of $25 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery And Dating.
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The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile. Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities. At any time and from
time to time after the execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order shall
authenticate and deliver such Securities as in this Indenture provided and not
otherwise. Each Security shall be dated the date of its authentication. No
Security shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Security a certificate
of authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.
SECTION 304. Temporary Securities.
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Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities with the consent of the Trustee.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive
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Securities of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
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The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register maintained in such office and in any other office or agency
designated pursuant to Section 1002 being herein sometimes collectively referred
to as the "Security Register" in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided. Upon surrender for registration of transfer of
any Security at an office or agency of the Company designated pursuant to
Section 1002 for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and of a
like aggregate principal amount. At the option of the Holder, Securities may be
exchanged for other Securities of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive. All
Securities issued upon any registration of transfer or exchange of Securities
shall be the valid obligations of the Company evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange. Every Security
presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing. No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, or 1108. The Company shall not be
required (a) to issue, register the transfer of or exchange any Security during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities selected for redemption under
Section 1104 and ending at the close of business on the day of such mailing, or
(b) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
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If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity, as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
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Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
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Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name the Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date notwithstanding the fact that such Holder was a Holder on
such regular Record Date, and such Defaulted Interest may be paid by the Company
at its election, as provided in Clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and no less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following Clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after
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notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered in the Securities Register as
the owner of such Security for the purpose of receiving payment of principal of
and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or repurchase shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of by the Trustee and a
certificate of destruction delivered to the Company.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day year
of twelve 30-day months, and for any period shorter than a full calendar month
on the basis of the actual number of days elapsed in such period.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities and rights of the Trustee herein expressly provided for), and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and delivered (other than
(x) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (y) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the
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entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and interest to the date of such
deposit (in the case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 305, 306, 607, 608, 702, 1001, 1002 and
1003 shall survive until the Securities are no longer Outstanding and the
obligations of the Company in Section 607 shall survive termination of this
Indenture.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment either directly or through any Paying Agent (including
the Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal and interest for whose payment such
money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default," whenever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
occasioned by the provisions of Article Thirteen or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(b) default in the payment of principal of any Security at its Maturity,
and continuance of such default for a period of 10 days; or
(c) default in the payment of the Redemption Price in respect of any
Security on the Redemption Date therefor in accordance with the provisions of
Article Eleven, and continuance of such default for a period of 10 days; or
(d) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state
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bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or
order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the entry of decree or order for
relief in respect of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.
SECTION 502. Acceleration of Maturity.
If an Event of Default (other than an Event of Default specified in clause
(e) or (f) of Section 501) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable, by a notice in writing to the Company (and to the Trustee if given
by Holders), and such principal shall become immediately due and payable. If an
Event of Default specified in clause (e) or (f) of Section 501 occurs, all
unpaid principal and accrued interest on the Securities then outstanding shall
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on any Security
when such interest comes due and payable and such default continues for a
period of 30 days, or
(b) default is made in the payment of the principal of any Security at
the Maturity thereof, including payment of the Redemption Price on any
Redemption Date, and in each case such default continues for a period of 10
days,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest, and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and on
any overdue interest, at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
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If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem
appropriate to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable and to take any
and all actions authorized under the Trust Indenture Act or any other
applicable laws as may be appropriate in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Subject to Article Thirteen, any money collected by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
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FIRST: To the payment of all amounts due the Trustee under Section 607;
and
SECOND: To the payment of the amounts then due and unpaid for principal of
and interest on the Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities for principal
and interest, respectively; and
THIRD: To the payment of the remainder, if any, to whomsoever may be
lawfully entitled thereto, or as a court of competent jurisdiction may direct.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder,
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right Of Holders To Receive Principal and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and (subject to Section 307) interest on such
Security on the respective Stated Maturities expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment and such rights shall not be impaired without
the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
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SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default in the payment
of the principal of or interest on any Security. Upon any such waiver, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder
for the endorsement of the payment of the principal of or interest on any
Security on or after the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date).
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SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture, and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of negligence, bad faith or wilful misconduct on
its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith or willful misconduct, except that
(i) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
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that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder, the Trustee
shall transmit by mail to all Holders, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of or interest
on any Security, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
For the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in the Securities, except the Trustee's certificates
of authentication, shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it from time to time hereunder
except as otherwise agreed in writing with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to any action or failure to
act by the Trustee that breaches the applicable standard of care relating
thereto; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred unless incurred in connection with any
action or failure to act by the Trustee that breaches the applicable
standard of care relating thereto, arising out of or in connection with the
acceptance or administration of the trust hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in clauses (e) and (f) of Section 501, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
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SECTION 608. Disqualification; Conflicting Interest.
The Trustee shall be subject to the provisions of (S) 310(b) of the Trust
Indenture Act. Nothing herein shall prevent the Trustee from filing with the
SEC the application referred to in the penultimate paragraph of (S) 310(b) of
the Trust Indenture Act.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder who satisfies the
requirements of paragraphs (1), (2) and (5) of (S) 310 of the Trust Indenture
Act and which shall be a corporation organized and doing business under the laws
of the United States of America, any state thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(i) The Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (x) the Company may remove the Trustee, or (y)
subject to Section 514, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company
shall promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such
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vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to all Holders as
their names and addresses appear in the Security Register. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective, the retiring Trustee shall be released from all
obligations for future actions under this Indenture and such successor Trustee,
without any further act, deed or conveyance, shall become vested, with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly, vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or convened or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by, the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
The Trustee shall comply with (S) 311(a) of the Trust Indenture Act,
excluding any creditor relationship listed in (S) 310(b) of the Trust Indenture
Act. A trustee who has resigned or been removed shall be subject to (S) 311(a)
of the Trust Indenture Act to the extent indicated therein.
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SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which shall be
authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $100,000,000 and subject to supervision or examination
by federal or state authority. If such Authenticating Agent publishes reports
of condition at least annually pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment is made pursuant to this Section, the Securities may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
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This is one of the Securities described in the within mentioned Indenture.
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
As Trustee
By:
---------------------------
As Authenticating Agent
By:
---------------------------
Authorized Signatory
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE
AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
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The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
10 Business Days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information, Communications to Holders.
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(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) Holders may communicate pursuant to (S) 312(b) of the Trust Indenture
Act with other Holders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of (S) 312 (c) of the Trust Indenture Act.
SECTION 703. Reports by Trustee.
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(a) If such report is required by (S) 313 of the Trust Indenture Act,
within 60 days after each May 15, beginning with the May 15 following the date
of this Indenture, the Trustee shall mail to each Holder a brief report as of
such May 15 that complies with (S) 313 (a) of the Trust Indenture Act. The
Trustee also shall comply with (S) 313(b)(2), (c) and (d) of the Trust Indenture
Act.
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with
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the Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
SECTION 704. Reports by Company.
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The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, in the manner and to the extent
provided in Subsection 703(a), such summaries of any information, documents
and reports required to be filed by the Company pursuant to paragraphs (a)
and (b) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc. Only on Certain Terms.
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The Company shall not consolidate with or merge into any other Person
(other than an Affiliate) or convey, transact or lease all or substantially all
of its properties and assets to any Person (other than an Affiliate)
substantially as an entirety, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(a) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
organized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered by the
successor corporation to the Trustee in form satisfactory to the Trustee,
the due and punctual payment of the principal of and interest on all the
Securities and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing;
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(c) such consolidation, merger, conveyance, transfer or lease does not
materially affect the validity or enforceability of the Securities; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture, comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Substituted for Company.
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Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of all or substantially
all the properties and assets of the Company in accordance with Section 801, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent Of Holders.
- ----------------------------------------------------------------
Without the consent of any Holders, the Company and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities in accordance with Article Eight; or
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default; or
(d) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions of
this Indenture, provided such action pursuant to this Clause (d) shall not
adversely affect the interests of the Holders in any material respect.
SECTION 902. Supplemental Indentures With Consent Of Holders.
- -------------------------------------------------------------
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
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(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Security or reduce the principal amount thereof or the
rate of interest thereon or change the place of payment where, or the coin
or currency in which, any Security or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof or, in the case of redemption, on
or after the Redemption Date or modify the provisions of this Indenture
with respect to the subordination of the Securities in a manner adverse to
the Holders, or
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or
(c) modify any of the provisions of this Section or Section 513 or
Section 1009, except to increase any percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
- --------------------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel of the Company stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
- -----------------------------------------------
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and, subject to
Section 902, every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
- -------------------------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
- ----------------------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered to the Trustee in
exchange for Outstanding Securities.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest.
The Company covenants and agrees that it will duly and punctually pay the
principal of and interest on the Securities and the Redemption Price, if any,
each in accordance with the terms of the Securities and this Indenture.
To the extent permitted by applicable law, the Company shall pay interest
on overdue amounts at the rate set forth in the Securities, and it shall pay
interest on overdue interest at the same rate compounded quarterly (to the
extent that the payment of such interest shall be legally enforceable), which
interest on overdue interest shall accrue from the date such amounts became
overdue.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the City of New York
an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The Borough of Manhattan, the City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1003. Money For Security Payments To Be Held In Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to each due date of the principal of or interest on any Securities, deposit with
a Paying Agent a sum sufficient to pay the principal or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions
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of this Section, that such Paying Agent will:
(a) hold all sums held by it for the paying of the principal of or
interest on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such paying by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company Request or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security, shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in New York, New York and Philadelphia, Pennsylvania,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining, will be repaid to the
Company.
SECTION 1004. Statements of Officers of Company as to Default.
(a) The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof (but no later
than the time of filing of the annual report of the Company with the Trustee
pursuant to Section 704), an Officers' Certificate, stating whether or not to
the best knowledge of the signers thereof the Company is in compliance with all
conditions and covenants hereunder, without regard to any period of grace or
requirement of notice provided hereunder. If the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge. The Officers' Certificate need not comply with Section 102
hereof.
(b) The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within five Business Days of its
becoming aware of any such default or Event of Default.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if its
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
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SECTION 1006. Maintenance of Properties.
The Company will cause all properties material to the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company, may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times while any Securities are
Outstanding; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any such properties
if such discontinuance is, in the judgment of the Company, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 1007. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (b)
all material lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company or any Subsidiary,
in each case material to the Company and its Subsidiaries taken as a whole;
provided, however, that the Company, shall not be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been made.
SECTION 1008. Further Instruments and Acts.
Upon reasonable request of the Trustee, the Company will execute and
deliver such further instruments and perform such further acts as may be
reasonably necessary, or proper to carry out more effectively the purposes of
this Indenture, including, but not limited to, any reporting requirements
relating to original issue discount for purposes of federal income taxation.
SECTION 1009. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in this Article Ten (other than Sections 1001
through 1005, inclusive), if before the time for such compliance the Holders of
at least a majority (or such greater amount as may be specified in any such
term, provision or condition) in principal amount of the Outstanding Securities
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
SECTION 1010. Limitation on Dividends and Capital Stock Acquisitions.
The Company covenants and agrees that, if at any time it has failed to make
any payment of interest or principal on the Securities when due (after giving
effect to any grace period for payment thereof as provided in Section 501), or
the Company exercises its option to extend the interest payment period as
provided for in the Securities, the Company will not, until all defaulted
interest on the Securities and all interest accrued on the Debentures during an
Extension Period (as described in the Debentures) and all principal, then due
and payable on the Securities shall have been paid in full, (a) declare, set
aside or pay any dividend or distribution on any capital stock of the Company
(except for dividends or distributions in shares of its capital stock or rights
to acquire shares of its capital stock) ; or
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(b) repurchase, redeem, or otherwise acquire any shares of its capital stock
(except: (i) by conversion into or exchange for shares of its capital stock; or
(ii) for a redemption, purchase or other acquisition of shares of its capital
stock made for the purpose of any employee incentive plan or benefit plan of the
Company or any of its Affiliates).
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
The Securities may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time on or after December 3, 1997, at the
Redemption Price of 100% of the principal amount, together with accrued interest
to the Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company shall be made in
accordance with the provisions of this Indenture.
SECTION 1103. Election to Redeem; Notice to Trustee.
In case of any redemption at the election of the Company, the Company
shall, at least 45 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed.
SECTION 1104. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot and which may provide for the selection for
redemption of portions (equal to $25 or any integral multiple thereof) of the
principal amount of Securities of a denomination larger than $25.
The Trustee shall promptly notify the Company and each Security Registrar
in writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address, appearing in the
Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
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(c) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption, the principal
amounts) of the particular Securities to be redeemed,
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption the principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Security.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
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ARTICLE TWELVE
SUBORDINATION OF DEBENTURES
SECTION 1201. Securities Subordinate to Senior Indebtedness.
Unless otherwise provided in a supplemental indenture, the Company
covenants and agrees, and each Holder of Securities issued hereunder by his
acceptance thereof likewise covenants and agrees, that all Securities shall be
issued subject to the provisions of this Article Twelve; and each Holder of a
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment of the principal of or interest on all Securities issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred.
No provision of this Article Twelve shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 1202. Payment Over of Proceeds Upon Default.
In the event and during the continuation of any default in the payment of
principal or interest or any other payment due on any Senior Indebtedness
specified in the instrument evidencing such Senior Indebtedness, unless and
until such default shall have been cured or waived or shall have ceased to
exist, and in the event that the maturity of any Senior Indebtedness has been
accelerated because of a default, then no payment shall be made by the Company
with respect to the principal (including redemption payments) of or interest on
the Securities.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by the
preceding paragraphs of this Section 1202, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the Holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the Holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee within 90 days of such payment
of the amounts then due and owing on the Senior Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid to the Holders of
Senior Indebtedness.
SECTION 1203. Payment Over of Proceeds Upon Dissolution, Etc.
Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full, or payment thereof provided for
in money in accordance with its terms, before any payment is made on account of
the principal or interest on the Securities; and upon any such dissolution or
winding-up or liquidation or reorganization any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
would be entitled, except for the provisions of this Article Twelve, shall be
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by the
Holders of the Securities or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Company) or their representative or
representatives, or to the
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trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness, before any payment
or distribution is made to the Holders of Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Securities before all Senior Indebtedness is paid
in full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
For purposes of this Article Twelve, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Twelve with
respect to the Securities to the payment of all Senior Indebtedness which may at
the time be outstanding; provided that (a) the Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (b) the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Eight hereof shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 1203 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
Eight hereof. Nothing in Section 1202 or in this Section 1203 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 607.
SECTION 1204. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the rights of
the Holders of the Securities shall be subrogated to the rights of the holders
of Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal and interest on the Securities shall be paid in full; and, for the
purposes of such subrogation, no payment or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article Twelve, and no payment over pursuant to the provisions of this
Article Twelve, to or for the benefit of the holders of Senior Indebtedness by
Holders of the Securities or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness. It is understood that the provisions of this Article
Twelve are and are intended solely for the purposes of defining the relative
rights of the Holders of the Securities, on the one hand, and the holders of the
Senior Indebtedness on the other hand.
Nothing contained in this Article Twelve or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Company other than the
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holders of the Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Twelve of the holders of Senior Indebtedness
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article Twelve, the Trustee, subject to the provisions of Article Six, and
the Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution, winding-
up, liquidation or reorganization, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation
trustee, agent or other person making such payment or distribution, delivered to
the Trustee or to the Holders of the Securities, for the purposes of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount hereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Twelve.
SECTION 1205. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee in his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article Twelve and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 1206. Notice to Trustee.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company which would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article Twelve. Notwithstanding the provisions of
this Article Twelve or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment of monies to or by the Trustee in respect of
the Securities pursuant to the provisions of this Article Twelve, unless and
until a Responsible Officer of the Trustee shall have received written notice
thereof at the Corporate Trust Office of the Trustee from the Company or a
holder or holders of Senior Indebtedness or from any trustee therefor; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Article Six, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
the notice provided for in this Section 1206 at least two Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of or
interest on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date.
The Trustee, subject to the provisions of Article Six, shall be entitled to
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article Twelve, the Trustee may
request such person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
Twelve, and if such evidence is not furnished the Trustee may defer any payment
to such person pending judicial determination as to the right of such person to
receive such payment.
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SECTION 1207. Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article Twelve in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article Twelve shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607.
SECTION 1208. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee in its capacity as Trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and,
subject to the provisions of Article Six, the Trustee shall not be liable to any
holder of Senior Indebtedness if it shall in good faith mistakenly pay over or
deliver to holders of Securities, the Company or any other person money or
assets to which any holder of Senior Indebtedness shall be entitled by virtue of
this Article Twelve or otherwise.
SECTION 1209. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other person.
SECTION 1210. Defeasance of this Article Twelve.
The subordination of the Securities provided by this Article Twelve is
expressly made subject to the provisions for Defeasance or Covenant Defeasance
in Article Thirteen hereof and, anything herein to the contrary notwithstanding,
upon the effectiveness of any such Defeasance or Covenant Defeasance, the
Securities then outstanding shall thereupon cease to be subordinated pursuant to
this Article Twelve.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option, at any time, elect to have either Section
1302 or Section 1303 applied to the Outstanding Securities upon compliance with
the conditions set forth below in this Article Thirteen.
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SECTION 1302. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 1301
applicable to this Section 1302, the Company shall be deemed to have been
discharged from its obligations with respect to the Outstanding Securities
(including the provisions of Article Twelve hereof) on the date the conditions
set forth below are satisfied (hereinafter, "Defeasance"). For this purpose,
such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (a) the rights of Holders of Outstanding Securities to
receive, solely from the trust fund described in Section 1304 and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Securities when such payments are due, (b) the Company's obligations
with respect to such Securities under Section 305, 306, 702, 1002 and 1003, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder, and
(d) this Article Thirteen.
Subject to compliance with this Article Thirteen, the Company may exercise
its option under this Section 1302 notwithstanding the prior exercise of its
option under Section 1303.
SECTION 1303. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 1301
applicable to this Section 1303, the Company shall be released from its
obligations under Sections 1006, 1007 and 1008, and the provisions of Article
Twelve hereof shall not constitute an Event of Default, and such Sections and
Article shall no longer apply with respect to or for the benefit of the Company,
the Securities, the Holders of Securities and the holders of Senior Indebtedness
on and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Company may omit to comply with and shall have no liability, in respect of
any term, condition or limitation set forth in any such Sections or Article
whether directly or indirectly by reason of any reference elsewhere herein to
any such Sections or Article or by reason of any reference in such Sections or
Article to any other provision herein or in any other document, but the
remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 1302
or Section 1303 to the Outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article Thirteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (i)
U.S. dollars in an amount, or (ii) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms and without further reinvestment thereof
will provide, not later than one Business Day before the due date of any
payment, U.S. dollars in an amount, or (iii) a combination thereof in an
aggregate amount, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee or other qualifying trustee to pay and discharge,
the principal of and each installment of interest on the Securities on the
Stated Maturity of such principal or installment of interest on the day on
which such payments are due and payable in accordance with the terms of
this Indenture and of such Securities. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States of America for the payment of which its full faith and credit
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is pledged or (y) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended) as custodian with
respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt;
provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository
receipt.
(b) In the case of an election under Section 1302, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Services a ruling or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that the
Holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred.
(c) In the case of an election under Section 1303, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit
and Covenant Defeasance had not occurred.
(d) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit, in
the case of an election under Section 1302 or 1303.
(e) At the time of such Defeasance or Covenant Defeasance: (i) no
default in the payment of all or a portion of principal or interest in
respect of any Senior Indebtedness shall have occurred and be continuing,
and no event of default with respect to any Senior Indebtedness shall have
occurred and be continuing and shall have resulted in such Senior
Indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable and (ii)(x) no
other event of default with respect to any Senior Indebtedness shall have
occurred and be continuing permitting the holders of such Senior
Indebtedness (or a trustee on behalf of the holders thereof) to declare
such Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, (y) no judicial proceeding
shall be pending with respect to any such event of default and (z) the
Company and the Trustee shall not have received a notice with respect to
any such event of default from any holder of Senior Indebtedness (or their
representative or representatives) or, in the case of either clause (i) or
clause (ii) above, each such default or event of default shall have been
cured or waived or shall have ceased to exist.
(f) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default shall have occurred and be continuing
on the date of such deposit or, insofar as subsections 501(e) and (f) are
concerned, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
-38-
<PAGE>
(g) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest as defined in Section 608 and for purposes
of the Trust Indenture Act with respect to any securities of the Company.
(h) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(i) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
present provided for relating to either the Defeasance under Section 1302
or the Covenant Defeasance under Section 1303 (as the case may be) have
been complied with.
(j) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company Act of 1940, as
amended.
(k) the subordination provisions of Article Twelve shall no longer
apply to the Securities upon such Defeasance or Covenant Defeasance.
SECTION 1305. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee -- collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal and interest, but such money need not be
segregated from other funds except to the extent required by law. Money so held
in trust, to the extent allocated for the payment of Securities shall not be
subject to the provisions of Article Twelve.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law, is
for the account of the Holders of the Outstanding Securities.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally, recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount hereof which would then be
required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance.
The provisions for subordination of the Securities set forth in Article
Twelve are hereby expressly made subject to the provisions for Defeasance or
Covenant Defeasance in this Article Thirteen and, anything herein to the
contrary notwithstanding, upon the effectiveness of such Defeasance or Covenant
Defeasance, such Securities shall thereupon cease to be so subordinated.
SECTION 1306. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money in accordance
with Section 1302 or 1303 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article Thirteen until
-39-
<PAGE>
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1302 or 1303; provided, however, that if the Company
makes any payment of principal of or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
McDONALD'S CORPORATION
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
ATTEST:
___________________________________
Name: _____________________________
Title: ____________________________
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as
Trustee
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
ATTEST:
___________________________________
Name: _____________________________
Title: ____________________________
-40-
<PAGE>
Exhibit A
[FORM OF FACE OF DEBENTURE]
McDonald's Corporation
% Subordinated Deferrable Interest Debenture due 2025
No............. $...........
McDonald's Corporation, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to), for value
received hereby promises to pay to __________________ or registered assigns, the
principal sum of___________________ DOLLARS, on , 2025.
Interest Payment Dates: September 30, December 31, March 31 and
June 30
Regular Record Dates: September 15, December 15, March 15 and June 15
Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, McDonald's Corporation has caused this instrument
to be signed in its corporate name by its Chairman of the Board or its President
or one of its Vice Presidents, manually or in facsimile, and a facsimile of its
corporate seal to be imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.
Dated: McDonald's Corporation
By:___________________
Seal
Attest:
By:__________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
First Fidelity Bank, National Association as
Trustee
By:____________________
Authorized Signatory
Dated:_________________
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
McDONALD'S CORPORATION
% Subordinated Deferrable Interest Debenture due 2025
Indenture. This Debenture is one of a duly authorized issue of
Securities of the Company designated as its % Subordinated Deferrable Interest
Debentures due 2025 (herein called the "Debenture"), limited in aggregate
principal amount to $ ,000,000, issued and to be issued under an Indenture,
dated as of , 1995 (herein called the "Indenture") between the Company and
First Fidelity Bank, National Association, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Debentures and of the terms upon which the
Debentures are, and are to be, authenticated and delivered.
Interest. The Company promises to pay interest on said principal sum
from [ ] or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, quarterly in arrears on September
30, December 31, March 31 and June 30 in each year commencing [ ] at
the rate of 7.72% per annum from [ ] to but excluding [ , 1995]
and from and after [ , 1995] at the rate of % per annum until maturity
or earlier redemption. If any date on which interest is payable on this
Debenture is not a Business Day, the payment of interest due on such date may be
made on the next succeeding Business Day (and without any interest or other
payment in respect of such delay). The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Debenture (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the September 15, December 15,
March 15 or June 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Debenture (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Debentures
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which Debentures may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
Extension of Interest Payment Period. Notwithstanding anything
contained in the Indenture to the contrary, the Company shall have the right at
any time during the term of the Debentures, so long as the Company is not in
default in the payment of interest on the Debentures, to extend the interest
payment period for an Extension Period (as defined below). Except as provided
in the next succeeding sentence, no interest shall be due and payable during an
Extension Period, but at the end of each Extension Period the Company shall pay
all interest then accrued and unpaid on the Debentures, together with interest
thereon, compounded quarterly, at the rate of % per annum, to the extent
permitted by law. Prior to the termination of any Extension Period, the Company
may (a) on any Interest Payment Date pay all or any portion of the interest
accrued on the Debentures as provided on the face hereof to Holders of record on
the Regular Record Date for such Interest Payment Date or (b) from time to time
further extend the interest payment period as provided in the last sentence of
this paragraph, provided that any
2
<PAGE>
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 calendar quarters from the last date to which
interest on the Debentures was paid in full. If the Company shall elect to pay
all of the interest accrued on the Debentures on an Interest Payment Date during
an Extension Period, such Extension Period shall automatically terminate on such
Interest Payment Date. Upon the termination of any Extension Period and the
payment of all amounts of interest then due, the Company may select a new
Extension Period, subject to the above requirements. The Company shall cause the
Trustee to give notice to the Holders in the manner provided in the Indenture,
not less than five Business Days prior to the earlier of (i) the May 15, August
15, November 15 or February 15 next preceding the applicable Interest Payment
Date and (ii) the date on which the Company or the Trustee is required to give
notice to the New York Stock Exchange or other applicable self-regulatory
organization of the Regular Record Date and the payment date for such related
interest payment period, of
(x) the Company's election to initiate an Extension Period and the
duration thereof,
(y) the Company's election to extend any Extension Period beyond the
Interest Payment Date on which such Extension Period is then scheduled to
terminate, and the duration of such extension, and
(z) the Company's election to make a full or partial payment of
interest accrued on the Debentures on any Interest Payment Date during any
Extension Period and the amount of such payment.
The Term "Extension Period" means the period from and including the
Interest Payment Date next following the date of any notice of extension of the
interest payment period on the Debentures given pursuant to the last sentence of
the preceding paragraph (or, in the case of any further extension of the
interest payment period pursuant to the third sentence of the preceding
paragraph before the payment in full of all accrued interest on the Debentures,
the Interest Payment Date to which interest was paid in full) to but excluding
the Interest Payment Date to which payment of interest on the Debentures is so
extended, after giving affect to any further extensions of the interest payment
period on the Debentures pursuant to the third sentence of the preceding
paragraph; provided that no Extension Period shall exceed 20 consecutive
quarters from the last date to which interest on the Debentures was paid in
full; and provided, further, that any Extension Period shall end on an Interest
Payment Date. Notwithstanding the foregoing, in no event shall any Extension
Period exceed the final Stated Maturity of the principal of the Debentures.
Method of Payment. Payment of the principal of and interest on this
Debenture will be made at the office or agency of the Company in the Borough of
Manhattan, the City of New York, or at any other office or agency maintained by
the Company for such purpose, in such coin or currency of the United States of
America at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company, payment of interest
may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Debenture Register.
Paying Agent and Security Registrar. Initially, the Trustee will act
as Security Registrar through its office at 123 South Broad Street,
Philadelphia, Pennsylvania 19109, and the Company has appointed the Trustee to
act as Paying Agent through its office or agency in New York, New York.
Redemption The debentures may be redeemed, at the option of the
Company, in whole or in part (in denominations of $25 or integral multiples
thereof), on any date on or after December 3, 1997, upon not less than 30 nor
more than 60 days' notice mailed to the registered Holder thereof at a
Redemption Price of 100% of the principal amount, together with accrued
3
<PAGE>
interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Debentures, or one or more Predecessor
Debentures, of record at the close of business on the relevant Regular Record
Dates referred to on the face hereof, all as provided in the Indenture.
In event of redemption of this Debenture in part only, a new Debenture
or Debentures for the unredeemed portion thereof will be issued in the name of
the Holder thereof upon the cancellation hereof.
Subordination. The Company and each Holder, by acceptance hereof,
agrees that the payment of the principal of and interest on the Debentures is
subordinated, to the extent and in the manner provided in the Indenture, to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, authorizes and expressly directs the
Trustee on his behalf to take such action as may be necessary or appropriate in
the discretion of the Trustee to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for such purpose.
Indebtedness. The Company and, by its acceptance of this Debenture or
a beneficial interest herein, the Holder of, and any Person that acquires a
beneficial interest in, this Debenture agree that for United States federal,
state and local tax purposes it is intended that this Debenture constitute
indebtedness.
Defaults and Remedies. If an Event of Default shall occur and be
continuing, the principal of all the Debentures may be declared due and payable
in the manner and with the effect provided in the Indenture.
Amendments and Waivers. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the
Debentures under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Debentures at the time Outstanding, on behalf of the Holders of all
Debentures, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debenture shall be conclusive
and binding upon such Holder and upon all future Holders of this Debenture and
of any Debenture issued upon the registration of transfer hereof or exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.
Obligation Absolute. No reference herein to the Indenture and no
provision of this Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Debenture at the times, place and rate, and in
the coin or currency, herein prescribed.
Denominations. The Debentures are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Debentures are exchangeable for a like aggregate principal amount of Debentures
of a different authorized denomination, as requested by the Holder surrendering
the same and upon surrender of the Debenture for registration of transfer at the
office or agency of the Company in New York, the Company will execute, and the
Trustee will authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Debentures, of authorized denominations and of a
like aggregate principal amount and tenor. Every Debenture surrendered for
registration of transfer or exchange will, if required by the Company, the
Security Registrar and the Trustee duly executed
4
<PAGE>
by the Holder hereof or his attorney duly authorized in writing. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Persons Deemed Owners. Prior to due presentment of this Debenture for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Debenture is registered
in the Security Register as the owner hereof for all purposes, whether or not
this Debenture is overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
No Recourse Against Others. No recourse for the payment of the
principal of or interest on this Debenture, or for any claim based hereon or on
the Indenture and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, or because of the creation of any indebtedness represented
hereby, shall be had against any incorporator, stockholder, officer or director,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Governing Law. This Debenture will be governed by and construed in
accordance with the internal laws of the State of Illinois.
Terms. All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
5
<PAGE>
[FORM OF FACE OF DEBENTURE]
McDonald's Corporation
% Subordinated Deferrable Interest Debenture due 2025
No............. $...........
McDonald's Corporation, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to), for value
received hereby promises to pay to __________________ or registered assigns, the
principal sum of___________________ DOLLARS, on , 2025.
Interest Payment Dates: September 30, December 31, March 31 and
June 30
Regular Record Dates: September 15, December 15, March 15 and June 15
Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, McDonald's Corporation has caused this instrument
to be signed in its corporate name by its Chairman of the Board or its President
or one of its Vice Presidents, manually or in facsimile, and a facsimile of its
corporate seal to be imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.
Dated: McDonald's Corporation
By:___________________
Seal
Attest:
By:__________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
First Fidelity Bank, National Association as
Trustee
By:____________________
Authorized Signatory
Dated:_________________
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
McDONALD'S CORPORATION
% Subordinated Deferrable Interest Debenture due 2025
Indenture. This Debenture is one of a duly authorized issue of
Securities of the Company designated as its % Subordinated Deferrable Interest
Debentures due 2025 (herein called the "Debenture"), limited in aggregate
principal amount to $ ,000,000, issued and to be issued under an Indenture,
dated as of , 1995 (herein called the "Indenture") between the Company and
First Fidelity Bank, National Association, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Debentures and of the terms upon which the
Debentures are, and are to be, authenticated and delivered.
Interest. The Company promises to pay interest on said principal sum
from [ ] or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, quarterly in arrears on September
30, December 31, March 31 and June 30 in each year commencing [ ] at
the rate of 7.72% per annum from [ ] to but excluding [ , 1995]
and from and after [ , 1995] at the rate of % per annum until maturity
or earlier redemption. If any date on which interest is payable on this
Debenture is not a Business Day, the payment of interest due on such date may be
made on the next succeeding Business Day (and without any interest or other
payment in respect of such delay). The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Debenture (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the September 15, December 15,
March 15 or June 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Debenture (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Debentures
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which Debentures may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
Extension of Interest Payment Period. Notwithstanding anything
contained in the Indenture to the contrary, the Company shall have the right at
any time during the term of the Debentures, so long as the Company is not in
default in the payment of interest on the Debentures, to extend the interest
payment period for an Extension Period (as defined below). Except as provided
in the next succeeding sentence, no interest shall be due and payable during an
Extension Period, but at the end of each Extension Period the Company shall pay
all interest then accrued and unpaid on the Debentures, together with interest
thereon, compounded quarterly, at the rate of % per annum, to the extent
permitted by law. Prior to the termination of any Extension Period, the Company
may (a) on any Interest Payment Date pay all or any portion of the interest
accrued on the Debentures as provided on the face hereof to Holders of record on
the Regular Record Date for such Interest Payment Date or (b) from time to time
further extend the interest payment period as provided in the last sentence of
this paragraph, provided that any
2
<PAGE>
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 calendar quarters from the last date to which
interest on the Debentures was paid in full. If the Company shall elect to pay
all of the interest accrued on the Debentures on an Interest Payment Date during
an Extension Period, such Extension Period shall automatically terminate on such
Interest Payment Date. Upon the termination of any Extension Period and the
payment of all amounts of interest then due, the Company may select a new
Extension Period, subject to the above requirements. The Company shall cause the
Trustee to give notice to the Holders in the manner provided in the Indenture,
not less than five Business Days prior to the earlier of (i) the May 15, August
15, November 15 or February 15 next preceding the applicable Interest Payment
Date and (ii) the date on which the Company or the Trustee is required to give
notice to the New York Stock Exchange or other applicable self-regulatory
organization of the Regular Record Date and the payment date for such related
interest payment period, of
(x) the Company's election to initiate an Extension Period and the
duration thereof,
(y) the Company's election to extend any Extension Period beyond the
Interest Payment Date on which such Extension Period is then scheduled to
terminate, and the duration of such extension, and
(z) the Company's election to make a full or partial payment of
interest accrued on the Debentures on any Interest Payment Date during any
Extension Period and the amount of such payment.
The Term "Extension Period" means the period from and including the
Interest Payment Date next following the date of any notice of extension of the
interest payment period on the Debentures given pursuant to the last sentence of
the preceding paragraph (or, in the case of any further extension of the
interest payment period pursuant to the third sentence of the preceding
paragraph before the payment in full of all accrued interest on the Debentures,
the Interest Payment Date to which interest was paid in full) to but excluding
the Interest Payment Date to which payment of interest on the Debentures is so
extended, after giving affect to any further extensions of the interest payment
period on the Debentures pursuant to the third sentence of the preceding
paragraph; provided that no Extension Period shall exceed 20 consecutive
quarters from the last date to which interest on the Debentures was paid in
full; and provided, further, that any Extension Period shall end on an Interest
Payment Date. Notwithstanding the foregoing, in no event shall any Extension
Period exceed the final Stated Maturity of the principal of the Debentures.
Method of Payment. Payment of the principal of and interest on this
Debenture will be made at the office or agency of the Company in the Borough of
Manhattan, the City of New York, or at any other office or agency maintained by
the Company for such purpose, in such coin or currency of the United States of
America at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company, payment of interest
may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Debenture Register.
Paying Agent and Security Registrar. Initially, the Trustee will act
as Security Registrar through its office at 123 South Broad Street,
Philadelphia, Pennsylvania 19109, and the Company has appointed the Trustee to
act as Paying Agent through its office or agency in New York, New York.
Redemption The debentures may be redeemed, at the option of the
Company, in whole or in part (in denominations of $25 or integral multiples
thereof), on any date on or after December 3, 1997, upon not less than 30 nor
more than 60 days' notice mailed to the registered Holder thereof at a
Redemption Price of 100% of the principal amount, together with accrued
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interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Debentures, or one or more Predecessor
Debentures, of record at the close of business on the relevant Regular Record
Dates referred to on the face hereof, all as provided in the Indenture.
In event of redemption of this Debenture in part only, a new Debenture
or Debentures for the unredeemed portion thereof will be issued in the name of
the Holder thereof upon the cancellation hereof.
Subordination. The Company and each Holder, by acceptance hereof,
agrees that the payment of the principal of and interest on the Debentures is
subordinated, to the extent and in the manner provided in the Indenture, to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, authorizes and expressly directs the
Trustee on his behalf to take such action as may be necessary or appropriate in
the discretion of the Trustee to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for such purpose.
Indebtedness. The Company and, by its acceptance of this Debenture or
a beneficial interest herein, the Holder of, and any Person that acquires a
beneficial interest in, this Debenture agree that for United States federal,
state and local tax purposes it is intended that this Debenture constitute
indebtedness.
Defaults and Remedies. If an Event of Default shall occur and be
continuing, the principal of all the Debentures may be declared due and payable
in the manner and with the effect provided in the Indenture.
Amendments and Waivers. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the
Debentures under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Debentures at the time Outstanding, on behalf of the Holders of all
Debentures, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debenture shall be conclusive
and binding upon such Holder and upon all future Holders of this Debenture and
of any Debenture issued upon the registration of transfer hereof or exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.
Obligation Absolute. No reference herein to the Indenture and no
provision of this Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Debenture at the times, place and rate, and in
the coin or currency, herein prescribed.
Denominations. The Debentures are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Debentures are exchangeable for a like aggregate principal amount of Debentures
of a different authorized denomination, as requested by the Holder surrendering
the same and upon surrender of the Debenture for registration of transfer at the
office or agency of the Company in New York, the Company will execute, and the
Trustee will authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Debentures, of authorized denominations and of a
like aggregate principal amount and tenor. Every Debenture surrendered for
registration of transfer or exchange will, if required by the Company, the
Security Registrar and the Trustee duly executed
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by the Holder hereof or his attorney duly authorized in writing. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Persons Deemed Owners. Prior to due presentment of this Debenture for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Debenture is registered
in the Security Register as the owner hereof for all purposes, whether or not
this Debenture is overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
No Recourse Against Others. No recourse for the payment of the
principal of or interest on this Debenture, or for any claim based hereon or on
the Indenture and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, or because of the creation of any indebtedness represented
hereby, shall be had against any incorporator, stockholder, officer or director,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Governing Law. This Debenture will be governed by and construed in
accordance with the internal laws of the State of Illinois.
Terms. All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
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May 31, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: McDonald's Corporation
Registration Statement on Form S-4
----------------------------------
Gentlemen:
In my capacity as Senior Vice President, General Counsel and Secretary of
McDonald's Corporation, a Delaware corporation (the "Company"), I have
supervised and participated in the legal proceedings and matters in connection
with the Registration Statement on Form S-4 (the "Registration Statement") that
the Company has filed under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the offer to exchange for up to 18,000,000 of the
Company's outstanding Depositary Shares (the "Depositary Shares"), each
representing 1/2,000 of a share of 7.72% Cumulative Preferred Stock, Series E,
the Company's Subordinated Deferrable Interest Debentures (the "Debentures") to
be issued under an Indenture (the "Indenture") between the Company and First
Fidelity Bank, National Association, as trustee, all as more fully described in
the Registration Statement to which this opinion is an exhibit.
I advise you that in my opinion:
1. The Company is a corporation duly organized and existing under and by
virtue of the laws of the State of Delaware and has adequate corporate power to
own and operate its property and to transact the business in which it is
engaged.
<PAGE>
Securities and Exchange Commission
Page 2
2. When (a) the Registration Statement has become effective under the
Securities Act, and provided no stop order shall have been issued by the
Securities and Exchange Commission (the "Commission") relating thereto, (b) the
Debentures are qualified for issuance and exchange (or exempt) under the
securities laws of the states in which offered for exchange, (c) the Indenture
has been qualified under the Trust Indenture Act of 1939, as amended, and duly
authorized, executed, and delivered by the parties thereto, and (d) Certificates
for the Debentures have been approved by the Board of Directors of the Company
or a duly authorized committee thereof, and executed on behalf of the Company,
by an authorized officer and countersigned, then upon the issuance and exchange
of the Debentures in the manner contemplated by the Registration Statement, the
Debentures will constitute legal, valid and binding obligations of the Company
enforceable in accordance with their terms and entitled to all of the benefits
of the Indenture, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, moratorium and other laws affecting the enforceability
of creditors' rights and general principles of equity.
I am aware that I am named in the Registration Statement as counsel for the
Company and hereby consent to such use of my name and the filing of this opinion
with the Commission as an exhibit to the Registration Statement.
Very truly yours,
/s/ Shelby Yastrow
<PAGE>
[LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL]
Sheldon I. Fink
(312) 876-8107
May 31, 1995
Shelby Yastrow, Esq.
Senior Vice President
McDonald's Corporation
One McDonald's Plaza
Oak Brook, IL 60521
Dear Mr. Yastrow:
You have engaged our Firm to act as special tax counsel to McDonald's
Corporation ("McDonald's") in connection with the offer (the "Exchange Offer")
by McDonald's to exchange Subordinated Deferrable Interest Debentures due 2025
(the "Debentures") for up to 18,000,000 Depositary Shares each representing
1/2,000 of a share of 7.72% Cumulative Preferred Stock, Series E, of McDonald's
(the "Depositary Shares"). In particular, you have requested our opinion
relating to certain material United States federal income tax considerations
relevant to a United States person which is a holder of Depositary Shares and
which exchanges those Depositary Shares for Debentures pursuant to the Exchange
Offer and relevant to a holder of Debentures after the Exchange Offer. You have
also requested our opinion as to certain material United States federal income
and estate tax considerations that may be relevant to non-United States Persons
in connection with such Exchange Offer.
In rendering the opinion set forth below, we have examined and relied upon
the information set forth in the Pre-Effective Amendment No. 1 to Form S-4
Registration Statement under the Securities Act of 1933, filed with the United
States Securities and Exchange Commission by McDonald's on May 31, 1995,
relating to the Exchange Offer (the "Registration Statement"). We have examined
and relied upon originals, copies or specimens, certified or otherwise
identified to our satisfaction, of the Registration Statement and of such
certificates, corporate records and other documents, agreements and instruments
as we have deemed necessary to form a basis for such opinion, but we have not
taken further action to independently verify the accuracy or completeness of
such certificates, records, documents, agreements and instruments. In
connection with such examination, we have assumed (a) the genuineness of all
signatures, (b) the authenticity of all certificates, records, documents,
agreements, and instruments (herein called "documents") submitted to us as
originals, (c) the conformity to
<PAGE>
Shelby Yastrow, Esq.
May 31, 1995
Page 2
originals of all documents submitted to us as copies or specimens, and (d) the
authenticity of the originals of such documents submitted to us as copies or
specimens.
We further have assumed the due authorization, execution and delivery of
all documents submitted to us and the validity and enforceability of each such
document in accordance with its terms.
Based upon and subject to the foregoing, the statements set forth in the
Registration Statement under the headings "Certain United States Federal Income
Tax Considerations" and "Certain United States Federal Tax Considerations For
Non-United States Persons", to the extent that they constitute matters of law or
legal conclusions with respect to the Federal law of the United States,
accurately reflects and constitutes and is consistent with the legal opinion of
our Firm.
Our opinion is based on the Internal Revenue Code of 1986, as amended,
Treasury Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, Internal Revenue Service rulings, official
pronouncements and judicial decisions, all as in effect on the date of this
opinion and all of which are subject to change, possibly with retroactive
effect, or different interpretations.
Our opinion does not discuss all the United States federal tax consequences
that may be relevant to the Exchange Offer or subsequent events in light of a
Debenture holder's or a holder of Depositary Shares' particular circumstances,
and it is not intended to be applicable in all respects to all categories of
investors. In particular, our opinion does not address any special rules that
may be applicable to insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons which hold Depositary Shares or Debentures received in the
exchange as a position in a "straddle," as part of a "synthetic security,"
"hedge," "conversion transaction" or other integrated investment, or persons
whose functional currency is other than United States dollars. In addition, our
opinion does not address any state, local or foreign tax considerations. As
indicated in the Registration Statement, all holders of Depositary Shares should
consult their own tax advisors regarding the United States federal, state, local
and foreign tax consequences of the proposed exchange and of the ownership and
disposition of Debentures received in the exchange in light of their own
particular circumstances.
<PAGE>
Shelby Yastrow, Esq.
May 31, 1995
Page 3
We are furnishing this opinion to you solely for the purpose of providing
an opinion which may be used, circulated, quoted or otherwise referred to by you
as part of the filing of the above-referenced Registration Statement with the
United States Securities and Exchange Commission, and our opinion is not to be
relied upon or used for any other purpose without our prior written consent. We
are aware that we are named in the Registration Statement as special tax counsel
for the Company and hereby consent to the use of our name and the filing of this
opinion with the Securities and Exchange Commission as an exhibit to the
Registration Statement.
This opinion is rendered on the date hereof and we have no continuing
obligation hereunder to inform you of changes of law subsequent to the date
hereof.
Very truly yours,
/s/ SONNENSCHEIN NATH & ROSENTHAL
1168993
<PAGE>
DEALER MANAGERS AGREEMENT
May , 1995
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1209
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
As Dealer Managers
Ladies and Gentlemen:
McDonald's Corporation, a Delaware corporation (the "Company"), plans
to make an offer, upon the terms and subject to the conditions referred to below
(the "Exchange Offer"), for up to 18,000,000 outstanding Depositary Shares (the
"Depositary Shares"), each representing one-two-thousandth (1/2,000) of a share
of its 7.72% Cumulative Preferred Stock, Series E ($25 liquidation preference
per Depositary Share) (the "Series E Preferred Stock"), in exchange for %
Subordinated Deferrable Interest Debentures due 2025 (the "Debentures") of the
Company to be issued under an indenture (the "Indenture") between the Company
and First Fidelity Bank, National Association, as trustee (the "Trustee"), on
the basis of $25 principal amount of Debentures for each Depositary Share. The
Debentures are further described in the Prospectus referred to below. The
exchange of Depositary Shares for Debentures pursuant to the Exchange Offer
<PAGE>
is referred to herein as the "Exchange". The date of the Exchange is referred to
herein as the "Exchange Date".
The Company hereby confirms its agreement with Goldman, Sachs & Co.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Salomon Brothers Inc (collectively, the "Dealer
Managers") as follows:
1. EXCHANGE OFFER MATERIALS
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-4 (File No. 33-58625) in
respect of the Debentures issuable pursuant to the Exchange Offer and such
registration statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, have been declared effective by the Commission
in such form; no other document with respect to such registration statement
(other than the Schedule 13E-4, as hereinafter defined) has heretofore been
filed with the Commission; and no stop order suspending the effectiveness of
such registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. The various parts of such
registration statement, including all exhibits thereto and including the
documents incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration statement
became effective, each as amended at the time such part of the registration
statement became effective, is hereinafter called the "Registration Statement";
and the final prospectus, in the form included in the Registration Statement at
the time it became effective, is hereinafter called the "Prospectus", except
that, if the prospectus first filed by the Company pursuant to Rule 424(b) under
the Securities Act shall differ from the Prospectus, the term "Prospectus" shall
refer to the prospectus first filed pursuant to Rule 424(b); any reference
herein to the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 11 of Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), as of the date of
such Prospectus; and any reference to any amendment or supplement to the
Prospectus shall be deemed to refer to and include any documents filed after the
date of such Prospectus under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in such Prospectus; and any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement.
(b) The Company has also prepared and filed with the Commission under
the Exchange Act and the rules and regulations promulgated thereunder an Issuer
Tender Offer Statement on Schedule 13E-4 with respect to the Exchange Offer
(including the exhibits thereto and any documents incorporated by reference
therein, the "Schedule 13E-4"; all references in this Agreement to the Schedule
13E-4 as the same may be amended hereafter shall include all exhibits filed
together with any amendments thereto).
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<PAGE>
(c) The Company has furnished, or will promptly furnish, to you three
signed copies of each of the Registration Statement and the Schedule 13E-4, all
amendments or supplements thereto and any other filings with the Commission in
connection with the Exchange Offer, whether filed before or after the
Registration Statement became effective, and copies of all exhibits and
documents filed therewith or incorporated therein by reference.
(d) The Registration Statement and the Prospectus, and the related
letter from the Dealer Managers to securities dealers, commercial banks, trust
companies and other nominees, letter to beneficial owners of the Depositary
Shares, letter of transmittal to be used by holders tendering Depositary Shares
pursuant to the Exchange Offer (the "Letter of Transmittal") and notice of
guaranteed delivery, and any newspaper announcements, press releases and other
offering materials and information as the Company may use or prepare or approve
or authorize in writing for use in connection with the Exchange Offer, including
the Schedule 13E-4, each as amended or supplemented from time to time, are
referred to herein collectively as the "Exchange Offer Materials".
(e) The Company shall commence the Exchange Offer as soon as
practicable after the execution and delivery hereof by publicly announcing its
commencement and shall distribute by mail, or cause to be mailed on its behalf,
copies of the Prospectus, the related Letter of Transmittal, together with a
return envelope, and such of the other Exchange Offer Materials as may be
required or as the Company may elect to furnish to each holder of record of
Depositary Shares (the date of the commencement of such distribution being
herein called the "Commencement Date"). The Company shall use its best efforts
to cause copies of such material and a return envelope to be mailed to each
person who becomes a holder of record of any Depositary Shares. The Dealer
Managers shall not have any obligation to cause any Exchange Offer Materials to
be transmitted generally to the holders of Depositary Shares.
2. APPOINTMENT OF DEALER MANAGERS
(a) The Company hereby appoints you as Dealer Managers in connection
with the Exchange Offer and authorizes each of you to act on its behalf in
accordance with this Agreement and the terms of the Exchange Offer Materials to
solicit acceptances of the Exchange Offer.
(b) The Company has approved the Exchange Offer and the Exchange Offer
Materials and authorizes you and any other securities dealer or any commercial
bank or trust company to use the Exchange Offer Materials in connection with the
solicitation of tenders.
(c) In soliciting tenders, no such securities broker or dealer,
commercial bank or trust company shall be deemed to act as the agent of the
Dealer Managers or the Company; and you, as Dealer Managers, shall not be deemed
the agent of any other securities broker or dealer or of any commercial bank or
trust company. In soliciting
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<PAGE>
tenders, you, as Dealer Managers, shall act as independent contractors and shall
not be deemed to act as agents of the Company, and the Company shall not be
deemed to act as agent of the Dealer Managers. Nothing contained in this
Agreement shall constitute the Dealer Managers partners or joint venturers with
the Company or any of its subsidiaries.
(d) The Company authorizes the Dealer Managers to communicate with any
exchange agent (the "Exchange Agent") and any information agent (the
"Information Agent") appointed by the Company to act in such capacity in
connection with the Exchange Offer with respect to matters relating to the
Exchange Offer.
3. SOLICITATION OF TENDERS
(a) The Dealer Managers agree to use best efforts to solicit tenders
of Depositary Shares pursuant to the Exchange Offer.
(b) The Company shall furnish or cause to be furnished to the Dealer
Managers, as soon as practicable after the date hereof, cards or lists or copies
thereof showing the names of persons, to the extent known to the Company, who
were the holders of record of Depositary Shares as of a recent date, together
with their addresses, and the number of Depositary Shares held by each of them.
The Company also shall use its best efforts to advise you from day to day during
the period of the Exchange Offer as to any transfers of record of Depositary
Shares. Additionally, the Company shall advise you, to the extent known and
available to the Company, of the names and addresses of beneficial owners of
Depositary Shares. Except as otherwise provided herein, you agree to use such
information only in connection with the Exchange Offer and not to furnish such
information to any other person except in connection with the Exchange Offer.
(c) The Company shall advise you, or cause the Exchange Agent to
advise you, at 5:00 P.M., New York City time, or as promptly as practicable
thereafter, daily (or more frequently if requested), by telephone (to be
followed by written confirmation) or facsimile transmission, as of 4:00 P.M. (or
as of the time of such request) on such day with respect to Depositary Shares
tendered as follows: (i) the number of Depositary Shares validly tendered on
such day; (ii) the number of Depositary Shares validly tendered represented by
depositary receipts physically held by the Exchange Agent (or for which the
Exchange Agent has received confirmation of receipt of book-entry transfer into
the Exchange Agent's account at a book-entry transfer facility pursuant to the
procedures set forth in the Exchange Offer) on such day; (iii) the number of
Depositary Shares validly tendered by Notices of Guaranteed Delivery on such
day; (iv) the number of Depositary Shares properly withdrawn on such day; and
(v) the cumulative totals as of such date of the number of Depositary Shares in
categories (i) through (iv) above. The Company shall also furnish to you, or
cause the Exchange Agent to furnish to you, such other information with respect
to the tendering holders of Depositary Shares as you may reasonably require from
time to time.
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<PAGE>
4. COVENANTS OF THE COMPANY
The Company covenants and agrees with you that:
(a) The Company will notify you, promptly after it receives notice
thereof, of the time when the Registration Statement, or any amendment thereof,
has been filed or becomes effective, or any amendment or supplement to the
Prospectus or any amendment to the Schedule 13E-4 or any amended or additional
Exchange Offer Materials shall have been filed, of the receipt of any comments
from the Commission relating to the Exchange Offer, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Prospectus or any of the other Exchange Offer Materials, of the suspension
of the qualification of the Debentures for offering or exchange in connection
with the Exchange Offer in any jurisdiction, of any request by the Commission to
amend or supplement the Registration Statement, the Prospectus, the Schedule
13E-4 or the other Exchange Offer Materials or for additional information or of
the institution or threatening of any proceedings for any such purpose. The
Company will also inform you, promptly after it receives notice thereof, of any
litigation or other administrative proceeding with respect to the Exchange
Offer.
(b) The Company will furnish each Dealer Manager with as many copies
of the Exchange Offer Materials as it may reasonably request in connection with
the Exchange Offer, during the period of the Exchange Offer. The Company will
cause all amendments and supplements filed with the Commission to be distributed
to holders of record of Depositary Shares as may be required by the Securities
Act and the Exchange Act and the rules and regulations of the Commission
thereunder. During the period referred to in the second sentence of paragraph
(c) below, the Company will deliver to each Dealer Manager, without charge, such
number of copies of the Prospectus and the other Exchange Offer Materials (as
supplemented or amended) as such Dealer Manager may reasonably request. During
the period referred to in the second sentence of paragraph (c) below, before
amending or supplementing the Registration Statement, the Prospectus, the
Schedule 13E-4 or the other Exchange Offer Materials, or preparing or approving
any other Exchange Offer Materials, the Company will furnish you with a copy of
each such proposed amendment or supplement or other material and agrees not to
use any such proposed amendment or supplement or other material which shall be
reasonably disapproved by you after reasonable notice thereof.
(c) The Company will comply in all material respects with the
Securities Act and the Exchange Act and the rules and regulations of the
Commission thereunder in connection with the Exchange Offer Materials, the
Exchange Offer and the transactions contemplated hereby and thereby. If, at any
time during the period when, in the opinion of your counsel, a prospectus is
required to be delivered by the Securities Act or the Exchange Act and the rules
and regulations promulgated thereunder in connection with the Exchange Offer any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus or any of the other Exchange Offer Materials
in order that the Prospectus or other Exchange Offer Materials will not include
an untrue
5
<PAGE>
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, or if it shall be necessary for any other reason
during such period to amend or supplement the Registration Statement, the
Schedule 13E-4 or the Prospectus or any of the other Exchange Offer Materials in
order to comply with applicable law, the Company will notify you and either
terminate the Exchange Offer or promptly prepare and furnish, at its own
expense, to you and file with the Commission, if required, such amendment or
supplement, as may be necessary so that the statements in the Prospectus or
other Exchange Offer Materials, as amended or supplemented, will not, in the
light of the circumstances under which they were made, be misleading or so that
the Registration Statement, the Prospectus, the Schedule 13E-4 or such other
Exchange Offer Materials comply with applicable law.
(d) The Company will make every reasonable effort to qualify the
Debentures for offering and sale under the securities or Blue Sky laws of such
United States jurisdictions as you shall reasonably request and will comply with
such law so as to permit the continuance of sales and dealings therein in such
jurisdiction for so long as may be necessary to complete the distribution of the
Debentures pursuant to the Exchange Offer; provided that, in connection
therewith, the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction. The
Company will pay all expenses (including reasonable fees and disbursements of
counsel) in connection with the determination of the jurisdictions in which
qualification is necessary (the "Blue Sky Survey"), as well as such
qualification.
(e) As soon as practicable, the Company will make generally available
to its securityholders an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 under the Securities Act, and,
not later than 45 days after the end of the 12-month period beginning at the end
of each fiscal quarter of the Company (other than the last fiscal quarter of any
fiscal year) during which the effective date of any post-effective amendment to
the Registration Statement occurs, not later than 90 days after the end of the
fiscal year beginning at the end of each last fiscal quarter of any fiscal year
of the Company during which the effective date of any post-effective amendment
to the Registration Statement occurs, and not later than 90 days after the end
of each fiscal year of the Company during which any Debentures were issued, the
Company will make generally available to its securityholders an earnings
statement covering such 12-month period or such fiscal year, as the case may be,
that will satisfy the provisions of such Section 11(a) and Rule 158.
(f) The Company shall promptly give you notice of any change of the
expiration date of the Exchange Offer, of the occurrence of any event which
could cause the Company to withdraw, rescind, modify or amend the Exchange Offer
and of any consummation of the Exchange Offer.
(g) The Company will promptly after the date hereof, in the event it
has not already done so, file an application for the listing of the Debentures
on the New York
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<PAGE>
Stock Exchange ("NYSE") and will use its best efforts to cause the Debentures to
be duly authorized for listing thereon, subject to official notice of issuance,
and to be registered under the Exchange Act.
(h) Between the date of this Agreement and the consummation of the
Exchange Offer, the Company will not, without your prior written consent, (i)
offer, sell or enter into any agreement to sell in a public offering any debt
securities of the Company substantially similar in currency, maturity and other
material terms (including, without limitation, the level of subordination and
interest payment terms) to the Debentures, other than (A) the Debentures
pursuant to the Exchange Offer, (B) debt securities issued for consideration
other than cash and (C) commercial paper in the ordinary course of business or
(ii) offer to purchase or exchange any Depositary Shares otherwise than pursuant
to the Exchange Offer.
(i) The Company shall promptly give the Dealer Managers notice of any
change of the record date with respect to the Depositary Shares and notice of
any change in the Expiration Date.
5. COMPENSATION AND EXPENSES
(a) The Company shall pay you, as compensation for your services to
the Company hereunder, a cash fee equal to 0.50% of the aggregate liquidation
preference value of all Depositary Shares tendered and exchanged, payable
concurrently with the acceptance of Depositary Shares by the Company pursuant to
the Exchange Offer or other termination of the Exchange Offer. Such fee shall
be shared equally between the Dealer Managers and shall be paid by certified or
official bank check or in immediately available funds.
(b) The Company agrees to pay to each Soliciting Dealer (as defined
herein) a solicitation fee of $0.50 per Depositary Share for any Depositary
Shares tendered by physically delivering depositary receipts which are accepted
for exchange and exchanged pursuant to the Exchange Offer and covered by a
Letter of Transmittal which designates, as having solicited and obtained the
tender, the name of (i) any dealer or broker in securities, including the Dealer
Managers in their capacity as a dealer or broker, which is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. ("NASD"), (ii) any foreign dealer or broker not eligible for
membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (iii) any bank or trust company (each of which
is referred to herein as a "Soliciting Dealer"). If tendered Depositary Shares
are being delivered by book-entry transfer made to an account maintained by the
Exchange Agent with The Depository Trust Company, the Soliciting Dealer will be
required to return a Notice of Solicited Tenders to the Exchange Agent within
five New York Stock Exchange trading days after the Expiration Date in order to
receive such solicitation fee. No solicitation fee shall be payable to a
Soliciting Dealer with respect to depositary receipts evidencing Depositary
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Shares tendered physcially by a holder unless the Letter of Transmittal
accompanying such tender designates such Soliciting Dealer as such in the box
captioned "Solicited Tenders". No solicitation fee shall be payable to a
Soliciting Dealer in respect of Depositary Shares (i) beneficially owned by such
Soliciting Dealer or (ii) registered in the name of such Soliciting Dealer
unless such Depositary Shares are held by such Soliciting Dealer as nominee and
such Depositary Shares are being tendered for the benefit of one or more
beneficial owners identified on the Letter of Transmittal or Notice of Solicited
Tenders. No solicitation fee shall be payable to a Soliciting Dealer with
respect to the tender of Depositary Shares by a holder unless the Letter of
Transmittal or Notice of Solicited Tenders accompanying such tender designates
such Soliciting Dealer in accordance with the terms thereof. No solicitation
fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is
required for any reason to transfer any portion of such fee to a depositing
holder (other than itself). No Soliciting Dealer shall be deemed to be the
agent of the Company.
(c) Whether or not any Depositary Shares are tendered pursuant to the
Exchange Offer, the Company covenants and agrees to pay or cause to be paid the
following: (i) the fees for the registration of the Debentures under the
Securities Act, (ii) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the Exchange Offer, the negotiation
and delivery of the accountants' letters referred to in Section 8(h) hereof and
all other expenses incurred by the Company in connection with the preparation
and filing of the Registration Statement, the Prospectus, the Schedule 13E-4 and
the other Exchange Offer Materials and any amendments or supplements to any of
the foregoing, and the cost of furnishing copies thereof to the Dealer Managers,
the Exchange Agent and the holders of the Depositary Shares, (iii) your
reasonable out-of-pocket expenses, (iv) the reasonable fees and disbursements of
your counsel, (v) all expenses (including the reasonable fees and disbursements
of counsel) payable pursuant to Section 4(d) in connection with the Blue Sky
Survey, (vi) the fees and expenses of the Exchange Agent and the Information
Agent and any agent of the Exchange Agent or the Information Agent and the fees
and disbursements of counsel for the Exchange Agent and the Information Agent in
connection with the Exchange Offer, (vii) the listing fees incident to the
listing of the Debentures on the NYSE and any fees charged by rating agencies
for the rating of the Debentures, (viii) all costs and expenses incurred in the
preparation, printing, mailing and publishing of the Prospectus, the
Registration Statement, the Schedule 13E-4, the other Exchange Offer Materials,
this Agreement, the Exchange Agent Agreement (as defined below), the Indenture,
the Debentures, the Blue Sky Survey and all other documents relating to the
Exchange Offer and any amendments or supplements thereto, (ix) all fees payable
to securities dealers (including you), commercial banks, trust companies and
nominees as reimbursement of their customary mailing and handling expenses
incurred in forwarding the Exchange Offer Materials to their customers, all fees
and expenses of any forwarding agent, all advertising charges and any applicable
transfer taxes payable by the Company in connection with the Exchange Offer, (x)
the delivery of the Debentures to be issued pursuant to the Exchange Offer, (xi)
the fees and expenses of the Trustee, including fees and disbursements of
counsel for the Trustee in connection with the Indenture and the Debentures,
(xii) all other
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costs and expenses incident to the Exchange Offer or to the performance by the
Company of its obligations hereunder which are not otherwise specifically
provided for in this Section and (xiii) expenses incurred by you as a result of
presenting testimony or evidence, or preparing to present testimony or evidence,
in connection with any court or administrative proceeding arising out of or in
connection with the Exchange Offer.
6. REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to each of the Dealer Managers
that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Securities Act, the Exchange Act and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the Commission
thereunder and do not or will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the date of the
Prospectus and as of the applicable filing date as to any amendment or
supplement thereto, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by a
Dealer Manager expressly for use therein;
(b) The Schedule 13E-4, as originally filed and subsequently amended,
the other Exchange Offer Materials and any amendment or supplement thereto
conform, or will conform, in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission thereunder; and none of the Schedule 13E-4, the
other Exchange Offer Materials or any amendment or supplement thereto includes,
or will include, 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; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished to
the Company in writing by a Dealer Manager expressly for use therein;
(c) The documents incorporated by reference in the Prospectus or the
Schedule 13E-4, when they became effective or were filed with the Commission, as
the case may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
any further documents so filed and incorporated by reference in the Prospectus
or the Schedule 13E-4 or any further amendment or supplement thereto, when such
documents become effective or are filed with the
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Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and
(d) Unless the Exchange Offer shall have been withdrawn or terminated
in accordance with the terms thereof, the Company has agreed to accept
Depositary Shares for exchange in accordance with and subject to the terms and
conditions of the Exchange Offer; and the Company has made, or has caused the
Exchange Agent to make, appropriate arrangements with The Depository Trust
Company and any other "qualified" registered securities depository, as may be
necessary to allow for the book-entry movement of tendered Depositary Shares and
the Debentures between depository participants and the Exchange Agent.
7. INDEMNITY
(a) The Company will indemnify and hold harmless each Dealer Manager
and each person, if any, who controls any Dealer Manager within the meaning of
the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Dealer Manager or such controlling
person may become subject under the Securities Act, the Exchange Act or
otherwise: (i) insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (A) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, the Schedule 13E-4 or the other Exchange
Offer Materials or in any amendment or supplement to any of the foregoing, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Dealer Manager specifically for use in the preparation thereof, or (B) a
withdrawal, rescission, termination or modification of, or a failure to make or
consummate, the Exchange Offer; and (ii) in connection with its acting as Dealer
Manager with respect to the Exchange Offer or which arise in connection with any
other matter referred to in this Agreement, subject to the limitations set forth
in the separate letter agreement, dated the date hereof, between the Company and
the Dealer Managers. The Company also will reimburse each Dealer Manager and
each such controlling person for any legal or other expenses reasonably incurred
by such Dealer Manager or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
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(b) Each Dealer Manager severally agrees to indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of either the Securities Act or the Exchange Act, and each of its
directors and officers who has signed the Registration Statement, against any
losses, claims, damages or liabilities to which the Company, any such
controlling person or any such director or officer may become subject, under the
Securities Act, the Exchange Act or otherwise, to the same extent as the
foregoing indemnity from the Company to each Dealer Manager, but only with
reference to written information relating to such Dealer Manager furnished to
the Company by such Dealer Manager specifically for use in the preparation of
the documents referred to in the foregoing indemnity. The Company acknowledges
that the statements set forth in the tenth paragraph of the cover page of the
Prospectus and under the heading "The Exchange Offer - Dealer Managers and
Soliciting Dealers" of the Prospectus constitute the only information furnished
in writing by the several Dealer Managers for inclusion in the Prospectus, and
the several Dealer Managers confirm that such statements are correct. This
indemnity agreement will be in addition to any liability which any Dealer
Manager may otherwise have.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt by such indemnified party of notice from the indemnifying
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Dealer Managers in the case of subparagraph
(a), representing the indemnified parties under subparagraph (a) or (b), as the
case may be, who are parties to such action), (ii) the
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indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of such action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; provided, further, that with respect to legal and other
expenses incurred by an indemnified party for which an indemnifying party shall
be liable hereunder, all such legal fees and expenses shall be reimbursed by the
indemnifying party as they are incurred. No indemnifying party shall, without
the prior written consent of the indemnified party, which shall not be
unreasonably withheld, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment does not include
a statement as to, or an admission of, fault, culpability or a failure to act,
by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in clause (a)(i) of this
Section is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy or otherwise, the
Company and the Dealer Managers shall contribute to such losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same). For such losses referred to
in clause (i) of paragraph (a) of this Section, each of the Company, on the one
hand, and the Dealer Managers, on the other hand, shall contribute in such
proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by the Company, on the one hand, and the Dealer
Managers, on the other hand, in the matters contemplated by this Agreement;
provided, however, that in no case shall any Dealer Manager be responsible for
any amount in excess of the benefits received (or anticipated to be received) by
such Dealer Manager. The relative benefits to the Company, on the one hand, and
the Dealer Managers, on the other hand, in connection with the matters
contemplated by this Agreement shall be deemed to be in the same proportion as
the maximum aggregate value of the consideration proposed to be paid by the
Company to acquire the Depositary Shares pursuant to the Exchange Offer bears to
the maximum aggregate fee proposed to be paid to such Dealer Managers pursuant
to Section 5(a) of this Agreement as a result of the acquisition of the
Depositary Shares pursuant to the Exchange Offer. For purposes of this Section,
each person who controls a Dealer Manager within the meaning of the Securities
Act shall have the same rights to contribution as such Dealer Manager, and each
person who controls the Company within the meaning of either the Securities Act
or the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clause (i) of
this paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this paragraph (d), notify such party or parties from
whom contribution may be sought, but the
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omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this paragraph (d).
8. CONDITIONS OF OBLIGATIONS
Your respective obligations to act as Dealer Managers hereunder shall
be subject, in your discretion, to the conditions that:
(a) All representations, warranties and other statements of the
Company contained herein or in certificates of any officer of the Company
delivered pursuant to the provisions hereof are now, and on the
Commencement Date, the expiration date of the Exchange Offer and on the
Exchange Date shall be, true and correct.
(b) The Company at all times during the Exchange Offer shall have
performed all of its obligations hereunder theretofore required to be
performed.
(c) The Registration Statement shall have become effective on or prior
to the Commencement Date; any Prospectus required to be filed with the
Commission shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Securities Act and in accordance with
Section 4(c) hereof; and, at all times during the Exchange Offer, no stop
order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the Commission, and all requests
for additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction; and there shall not have
been, at any time during the Exchange Offer, any temporary restraining
order or injunction issued restraining or enjoining the Dealer Managers
from acting in their respective capacities as dealer managers with respect
to the Exchange Offer.
(d) Shelby Yastrow, Senior Vice President, General Counsel and
Secretary of the Company, shall have furnished to you, as Dealer Managers,
his written opinion, on the Commencement Date and the Exchange Date, dated
the date of delivery thereof, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own its properties
and conduct its business as described in the Prospectus.
(ii) The Indenture has been (or, in the case of the opinion dated
the Commencement Date, when executed will be) duly authorized,
executed and delivered by the Company and the Trustee, is (or will be)
duly qualified under
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the Trust Indenture Act, and is (or will be) a valid and legally
binding obligation of the Company enforceable in accordance with its
terms, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, moratorium and other laws affecting the
enforceability of creditors' rights and general principles of equity.
(iii) The Debentures have been duly and validly authorized by
all necessary corporate action and, when duly executed on behalf of
the Company, duly authenticated by the Trustee or the Trustee's
authenticating agent, and duly delivered on the Exchange Date in
exchange for the Depositary Shares as set forth in the Registration
Statement will constitute legal, valid and binding obligations of the
Company enforceable in accordance with their terms and entitled to all
the benefits of the Indenture, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, moratorium and other
laws affecting the enforceability of creditors' rights and general
principles of equity.
(iv) The Indenture and the Debentures conform as to legal matters
with the statements made concerning them in the Prospectus, and such
statements accurately set forth the provisions thereof required to be
set forth in the Prospectus.
(v) This Agreement has been validly authorized, executed and
delivered on behalf of the Company.
(vi) The Exchange Agent Agreement has been validly authorized,
executed and delivered on behalf of the Company.
(vii) The Registration Statement and any amendments thereto have
become effective under the Securities Act, and to the best of the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any part thereof, as amended, has
been issued and no proceedings for that purpose have been instituted
or are pending or contemplated under the Securities Act, and the
Registration Statement, the Schedule 13E-4, the Prospectus, and each
amendment thereof or supplement thereto (except for the financial
statements and other financial data included therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Securities Act, the Exchange Act
and the Trust Indenture Act and the respective rules thereunder; such
counsel has no reason to believe that any of (i) the Registration
Statement at the time such Registration Statement became effective, or
if an amendment to the Registration Statement or any report of the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act has been filed with the Commission subsequent to the effectiveness
of the Registration Statement, then at the time such
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amendment became effective or at the time of the most recent such
filing, or (ii) the Prospectus as of its date and the date of such
opinion or any amendment or supplement thereto or (iii) the Schedule
13E-4 or any amendment or supplement thereto contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; the descriptions in the Registration
Statement, the Schedule 13E-4 and the Prospectus of statutes, legal
and governmental proceedings and contracts and other documents are
accurate and fairly present the information required to be shown; and
such counsel does not know of any legal or governmental proceedings
required to be described in the Prospectus which are not described as
required, nor any contracts or documents of a character required to be
described in the Registration Statement, the Schedule 13E-4 or the
Prospectus or to be filed as exhibits to the Registration Statement or
Schedule 13E-4 which are not described and filed as required.
(viii) Any Prospectus required to be filed with the Commission
was filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules and
regulations under the Securities Act.
(ix) The making and consummation of the Exchange Offer has been
validly authorized on the part of the Company.
(x) The performance by the Company of its obligations under this
Agreement, the Indenture and the Exchange Agent Agreement, the making
and consummation of the Exchange Offer, the issuance and delivery of
the Debentures pursuant to the Exchange Offer, the compliance of the
Company with all of the provisions of this Agreement, the Indenture
and the Exchange Agent Agreement and the consummation of the
transactions herein and therein contemplated will not result in a
breach of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust or other agreement or
instrument to which, to the knowledge of such counsel, the Company is
a party; or the Restated Certificate of Incorporation or By-Laws of
the Company as presently in effect; or, to the knowledge of such
counsel, any order, rule or regulation applicable to the Company of
any court or any federal or state regulatory body or administrative
agency or other governmental body having jurisdiction over the Company
or its properties.
(xi) No authorization, approval, consent, or other action of any
governmental authority or agency is required in connection with the
distribution of the Debentures pursuant to the Exchange Offer except
such as may be required under the Securities Act or under state
securities or Blue Sky laws.
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(xii) Each of the Significant Subsidiaries (as hereinafter
defined) of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation with power and authority to own its
properties and conduct its business as described in the Prospectus,
and the Company and each of its Significant Subsidiaries are qualified
as foreign corporations in all jurisdictions in which their ownership
or lease of property requires such qualification, except where such
failure to be so qualified cannot be reasonably expected to have a
material adverse effect on the financial condition of the Company and
its consolidated subsidiaries, considered as a whole.
(xiii) All issued and outstanding shares of capital stock of
each Significant Subsidiary of the Company (except McDonald's
Deutschland, Inc.) have been validly authorized and issued, are fully
paid and nonassessable and, to the best of the knowledge and belief of
such counsel after reasonable inquiry, are owned by the Company
directly or indirectly through one or more Significant Subsidiaries
(except McDonald's Australia Limited and McDonald's Property Company
Limited, of which the Company directly or indirectly owns a majority
of the capital stock), free from any liens, claims or encumbrances.
(xiv) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not result in a breach of
any of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to
which, to the knowledge of such counsel, any of the Company's
Significant Subsidiaries is a party, or the certificate of
incorporation or by-laws of any of the Company's Significant
Subsidiaries as presently in effect or, to the knowledge of such
counsel, any order, rule or regulation applicable to any of the
Company's Significant Subsidiaries of any court or of any federal or
state regulatory body or administrative agency or other governmental
body having jurisdiction over any of the Company's Significant
Subsidiaries or their properties.
In rendering such opinion, such counsel may indicate that he is a
member of the bar of the State of Illinois and that his opinion is limited to
the federal law of the United States of America, the laws of the State of
Illinois and the General Corporation Law of the State of Delaware. For purposes
of this Section 8(d), the term "Significant Subsidiaries" shall mean the list of
the Company's domestic and foreign subsidiaries appearing in Exhibit 21 (or any
successor exhibit) to the Company's most recently filed Annual Report on Form
10-K as of the Commencement Date, the expiration date of the Exchange Offer or
the Exchange Date, as the case may be.
(e) Sonnenschein Nath & Rosenthal, special tax counsel for the
Company, shall have furnished to you, as Dealer Managers, their written opinion,
on the Commencement Date and the Exchange Date, dated the date of delivery
thereof, to the
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effect that the statements in the Prospectus under the captions "Certain United
States Federal Income Tax Considerations" and "Certain United States Federal Tax
Considerations for Non-United States Persons", insofar as such statements
constitute a summary of the legal matters or documents referred to therein,
fairly summarize in all material respects the matters referred to therein with
respect to such legal matters and documents. In rendering such opinion, such
counsel may indicate that they are members of the bar of the State of Illinois
and that their opinion is limited to the federal law of the United States of
America.
(f) The Exchange Agent shall have furnished to you, as Dealer
Managers, certificates, dated the Commencement Date and the Exchange Date, of an
appropriate officer of the Exchange Agent, in form and substance satisfactory to
you, to the effect that:
(i) the Exchange Agent has been incorporated and is validly
existing as a trust company in good standing under the laws of the
State of New York, with full power, authority and legal right under
such law to execute, deliver and carry out the terms of the Exchange
Agent Agreement;
(ii) the Exchange Agent Agreement has been duly authorized,
executed and delivered by the Exchange Agent; and
(iii) the Exchange Agent Agreement constitutes a valid and
binding obligation of the Exchange Agent.
(g) Cleary, Gottlieb, Steen & Hamilton, counsel for the Dealer
Managers, shall have furnished to you, as Dealer Managers, such opinion or
opinions, on the Commencement Date and the Exchange Date, dated the date of
delivery thereof, with respect to this Agreement, the Registration Statement,
the Prospectus and other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters.
(h) You shall have received a letter from Ernst & Young LLP, dated the
effective date of the Registration Statement and the Exchange Date, addressed to
you substantially in the form heretofore approved by you.
(i) (i) The Registration Statement, the Schedule 13E-4 and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act and
the Exchange Act and the rules and regulations thereunder and in all material
respects shall conform to the requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder and none of the
Registration Statement, the Schedule 13E-4 or the Prospectus, as they may then
be amended or supplemented, shall contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) the Company shall have complied
with all
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agreements and satisfied all conditions hereunder on its part to be performed
and satisfied at or prior to the Commencement Date and the Exchange Date and
(iii) the other representations and warranties of the Company set forth in this
Agreement shall be accurate as though expressly made at and as of the
Commencement Date and the Exchange Date.
(j) On or after the date hereof, there shall not have occurred any
general suspension of trading in securities on the NYSE; there shall not have
been established by the NYSE or by the Commission or by any federal or New York
State agency or by the decision of any court any limitation on prices for such
trading or any restrictions on the distribution of securities; all to such a
degree as would in your judgment materially adversely affect the Exchange Offer,
or if there shall have been such a drastic change in general economic, political
or financial conditions as would in your judgment materially adversely affect
the Exchange Offer.
(k) On the Exchange Date, the Debentures shall have been duly listed,
subject to notice of issuance, on the NYSE.
(l) The Exchange Agent Agreement shall be in full force and effect.
(m) The Company shall have furnished or caused to be furnished to you
on the Commencement Date and the Exchange Date a certificate of officers of the
Company, satisfactory to you, as to the matters set forth in subsections (c) and
(i) of this Section 8, and as to such other matters as you may reasonably
request.
9. MISCELLANEOUS
(a) This Agreement is made solely for the benefit of the Dealer
Managers, the Company and any officer, partner, director or controlling person
referred to in Section 7 hereof, and their respective successors, assigns and
legal representatives, and no other person shall acquire or have any right under
or by virtue of this Agreement.
(b) Except as otherwise expressly provided in this Agreement, whenever
notice is required by the provisions of this Agreement to be given to (i) the
Company, such notice shall be in writing addressed to the Company, at the
address set forth in the Registration Statement, Attention: Corporate
Secretary; and (ii) to the Dealer Managers, such notice shall be in writing
addressed to each of the Dealer Managers at their respective addresses set forth
on the cover page of this Agreement, Attention: Registration Department.
(c) This Agreement and the separate letter agreement, dated the date
hereof, between the Company and the Dealer Managers, contain the entire
understanding of the parties with respect to the Dealer Managers acting in such
capacity in connection with the Exchange Offer, superseding all prior
agreements, understandings and negotiations with respect to such activities by
the Dealer Managers. In the event that any
18
<PAGE>
provision hereof shall be determined to be invalid or unenforceable in any
respect, such determination shall not affect such provision in any other respect
or any other provision hereof, which shall remain in full force and effect. Any
right to trial by jury with respect to any action or proceedings arising in
connection with or as a result of either your engagement or any matter referred
to in this Agreement is hereby waived by the parties hereto. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. This Agreement may be executed in any number of separate counterparts,
each of which shall be an original, but all such counterparts shall together
constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a duplicate of this letter, whereupon it
will become a binding agreement between the Company and the Dealer Managers.
Very truly yours,
McDONALD'S CORPORATION
By: ___________________________________
Name:
Title:
The undersigned hereby
confirms that the foregoing
Agreement, as of the date
thereof, correctly sets forth
the agreement among the Company
and the undersigned.
_________________________________
(GOLDMAN, SACHS & CO.)
MERRILL LYNCH, PIERCE, FENNER AND
SMITH INCORPORATED
By: _____________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By: _____________________________
Name:
Title:
19
<PAGE>
SALOMON BROTHERS INC
By: _____________________________
Name:
Title:
20
<PAGE>
MCDONALD'S CORPORATION
LETTER OF TRANSMITTAL
FOR DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
List below (or on a separate signed schedule affixed hereto) the Depositary
Shares (as defined below) to which this Letter of Transmittal relates.
DESCRIPTION OF DEPOSITARY SHARES TENDERED
(SEE INSTRUCTIONS 1 AND 2)
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
NAME(S) AND ADDRESS(ES) OF NUMBER OF
REGISTERED HOLDER(S) DEPOSITARY SHARES
(PLEASE FILL IN EXACTLY AS DEPOSITARY REPRESENTED BY NUMBER OF
NAME(S) APPEAR(S) ON DEPOSITARY RECEIPT DEPOSITARY DEPOSITARY SHARES
RECEIPT(S)) NUMBER(S)* RECEIPT(S)* TENDERED**
- --------------------------------------------------------------------------------------------
<C> <S>
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
TOTAL DEPOSITARY SHARES
- --------------------------------------------------------------------------------------------
</TABLE>
*Need not be completed by Holders delivering Depositary Shares by book-entry
transfer.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full number of Depositary Shares represented by the tendered depositary
receipts.
Letters of Transmittal (or photocopies thereof) duly executed, depositary
receipts evidencing Depositary Shares and any other required documents should
be sent by each Holder (as defined below) of Depositary Shares, or its broker,
dealer, commercial bank, trust company or other nominee, to the Exchange Agent
at one of the addresses as set forth below.
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
P.O. Box 2559, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2559
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED. QUESTIONS AND REQUESTS
FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO D. F. KING & CO., INC., THE INFORMATION AGENT
FOR THE EXCHANGE OFFER, AT 77 WATER STREET, NEW YORK, NEW YORK 10005, TELEPHONE
(800) 628-8536 (TOLL-FREE) OR (212) 269-5550 (COLLECT).
<PAGE>
This Letter of Transmittal (or a photocopy hereof), duly executed, must
accompany depositary receipts evidencing Depositary Shares (as defined below)
to be forwarded herewith pursuant to the procedures set forth in the Prospectus
(as defined below) under the caption "The Exchange Offer--Procedures for
Tendering". If depositary receipts for tendered Depositary Shares are
registered in different names, it will be necessary to complete, sign and
submit as many separate copies of this Letter of Transmittal as there are
different registrations of Depositary Shares.
Eligible Institutions (as defined below) may also use this Letter of
Transmittal if delivery of Depositary Shares is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company ("DTC"). If such delivery is to be made, this Letter of Transmittal
need not be physically delivered; provided, however, that an Agent's Message is
received and tenders of Depositary Shares have been effected in accordance with
DTC's Automated Tender Offer Program ("ATOP") procedures and the other
procedures set forth in the Prospectus under the caption "The Exchange Offer--
Procedures for Tendering--Book Entry Transfer".
The term "Agent's Message" means a message, transmitted by DTC and received
by the Exchange Agent and forming a part of a Book-Entry Confirmation (as
defined in the Prospectus), which states that DTC has received an express
acknowledgment from a participant tendering Depositary Shares that are the
subject of such Book-Entry Confirmation, that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal, and that the
Company may enforce the Letter of Transmittal against such participant. Unless
the context requires otherwise, the term "Holder" for purposes of this Letter
of Transmittal means any person in whose name any Depositary Shares are
registered on the books of the Company or any other person who has obtained a
properly completed stock power from the registered holder or any person whose
Depositary Shares are held of record by DTC who desires to deliver such
Depositary Shares by book-entry transfer at DTC.
Holders who cannot deliver their Depositary Shares and all other documents
required hereby to the Exchange Agent prior to the Expiration Date, or comply
with book-entry procedures on a timely basis, may tender their Depositary
Shares according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering--
Guaranteed Delivery".
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: __________________________________________
The Depository Trust Company Account Number: ____________________________
Transaction Code Number: ________________________________________________
[_]CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ________________________________________
Date of Execution of Notice of Guaranteed Delivery: _____________________
Name of Eligible Institution that Guaranteed Delivery: __________________
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Name of Tendering Institution: __________________________________________
The Depository Trust Company Account Number: ____________________________
Transaction Code Number: ________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
To First Chicago Trust Company of New York:
The undersigned acknowledges receipt of the Prospectus dated , 1995
(the "Prospectus") of McDonald's Corporation (the "Company") which, together
with this Letter of Transmittal (the "Letter of Transmittal"), constitutes the
Company's offer (the "Exchange Offer") to exchange up to $450,000,000 of its
% Subordinated Deferrable Interest Debentures due 2025 (the "Debentures")
for up to 18,000,000 (the "Amount Sought") Depositary Shares (the "Depositary
Shares"), each representing 1/2,000 of a share of 7.72% Cumulative Preferred
Stock, Series E (the "Series E Preferred Stock"), of the Company. The
undersigned understands that exchanges will be made on a basis of $25 principal
amount of Debentures (the minimum permitted denomination) for each Depositary
Share (which has a liquidation preference of $25 per Depositary Share) validly
tendered and accepted for exchange in the Exchange Offer.
Subject to, and effective upon, the acceptance for exchange of the Depositary
Shares tendered herewith in accordance with the terms of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms or
conditions of any such extension or amendment), the undersigned hereby tenders
for exchange, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Depositary Shares and the underlying
Series E Preferred Stock. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that said Exchange Agent acts as the
agent of the undersigned in connection with the Exchange Offer) to (a) deliver
depositary receipts for such Depositary Shares, or transfer ownership of such
Depositary Shares on the account books maintained by DTC, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of the Company, (b) present such Depositary Shares for registration
and transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Depositary
Shares, all in accordance with the terms of the Exchange Offer.
The undersigned authorizes First Chicago Trust Company of New York, as
Depositary (the "Depositary") under that certain Deposit Agreement dated as of
November 25, 1992 by and among the Company, the Depositary and the holders from
time to time of depositary receipts evidencing the Depositary Shares, to
withdraw and tender to the Company the Series E Preferred Stock evidenced by
the Depositary Shares tendered hereby.
The undersigned represents and warrants that it has full power and authority
to tender, exchange, assign and transfer the Depositary Shares tendered hereby
and the underlying Series E Preferred Stock and to acquire the Debentures
issuable upon the exchange of such tendered Depositary Shares in accordance
with the terms of the Exchange Offer, and that, when the same are accepted for
exchange, the Company will acquire good, marketable and unencumbered title to
the tendered Depositary Shares and the underlying Series E Preferred Stock,
free and clear of all liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer thereof,
and the same will not be subject to any adverse claims. The undersigned also
warrants that it will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of tendered
Depositary Shares and the underlying Series E Preferred Stock or transfer
ownership of such Depositary Shares on the account books maintained by DTC. The
undersigned further represents that it has read and agreed to all of the terms
and conditions of the Exchange Offer.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death, bankruptcy or incapacity of the
undersigned and every obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, successors
and assigns of the undersigned. Except as provided in the Exchange Offer, this
tender is irrevocable.
The undersigned understands that tenders of Depositary Shares pursuant to any
one of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto
3
<PAGE>
will constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer, including the undersigned's representation and warranty that
(i) the undersigned has a net long position in the Depositary Shares being
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) the tender of such Depositary Shares
complies with Rule 14e-4. The Company's acceptance for exchange of Depositary
Shares tendered pursuant to the Exchange Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Exchange Offer.
The undersigned understands that the Company may (i) amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares, if any of the
conditions to the Exchange Offer is not satisfied, including (without
limitation) if fewer than 4,000,000 Depositary Shares are tendered. The
undersigned further understands that if more Depositary Shares than the Amount
Sought have been validly tendered and not withdrawn, the Company also may
accept for exchange, pro rata with Depositary Shares tendered by other Holders,
fewer than all of the Depositary Shares tendered hereby. In either event, the
undersigned understands that depositary receipts for any Depositary Shares not
tendered or not exchanged will be returned to the undersigned.
SOLICITED TENDERS
(TO BE COMPLETED ONLY FOR TENDERS OF DEPOSITARY SHARES MADE BY PHYSICALLY
DELIVERING DEPOSITARY RECEIPTS)
(SEE INSTRUCTION 3)
The Company will pay to any Soliciting Dealer, as defined in Instruction 3,
a solicitation fee of $0.50 per Depositary Share for each Depositary Share
tendered, accepted for exchange and exchanged pursuant to the Exchange Offer.
A registered holder may designate a Soliciting Dealer below ONLY if
depositary receipts for tendered Depositary Shares physically accompany this
Letter of Transmittal. The undersigned represents that the Soliciting Dealer
which solicited and obtained this tender is (Please print):
Name of Firm: ________________________________________________________________
Name of Individual Broker or Financial Consultant: ___________________________
Identification Number (if known): ____________________________________________
Address (Include Zip Code): __________________________________________________
______________________________________________________________________________
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with its
solicitation of tenders of Depositary Shares pursuant to the Exchange Offer;
(ii) it is entitled to such compensation for such solicitation under the
terms and conditions of the Exchange Offer; (iii) in soliciting tenders of
Depositary Shares, it has used no soliciting materials other than those
furnished by the Company; and (iv) if it is a foreign broker or dealer not
eligible for membership in the National Association of Securities Dealers,
Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations.
If tendered Depositary Shares are being delivered by book-entry transfer
made to an account maintained by the Exchange Agent with DTC, the Soliciting
Dealer must return a Notice of Solicited Tenders to the Exchange Agent to
receive a solicitation fee.
4
<PAGE>
TENDERING HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 4, 5 AND 8)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
---------------------------------------- Date: ________________________, 1995
---------------------------------------- Date: ________________________, 1995
SIGNATURE(S) OF HOLDER(S)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
depositary receipt(s) for Depositary Shares or by any person(s) authorized to
become registered holder(s) by endorsements and documents transmitted
herewith or, if the Depositary Shares are held of record by DTC, the person
in whose name such Depositary Shares are registered on the books of DTC. If
signature above is by a trustee, executor, administrator, guardian, attorney-
in-fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, complete the following (Please print):
Name(s): _____________________________________________________________________
Capacity (full title): _______________________________________________________
Address (Include Zip Code): __________________________________________________
------------------------------------------------------------------------------
Telephone Number: ___________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 5 AND 6)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
Title: _______________________________________________________________________
Address (Include Zip Code): __________________________________________________
Name of Firm: ________________________________________________________________
Telephone Number: ___________________________________________________________
Date: ________________________________________________________________________
5
<PAGE>
SPECIAL ISSUANCE
INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if the
Debentures to be issued in exchange
for Depositary Shares accepted for
exchange, or depositary receipts
for Depositary Shares not tendered
or not accepted for exchange, are
to be issued or reissued, in the
name of someone other than the
undersigned.
Issue
[_] Debentures and/or
[_] depositary receipts to:
Name(s):____________________________
------------------------------------
Address (Include Zip Code):
------------------------------------
------------------------------------
Taxpayer Identification No. ________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if the
Debentures to be issued in exchange
for Depositary Shares accepted for
exchange, or depositary receipts
for Depositary Shares not tendered
or not accepted for exchange, are
to be sent to someone other than
the undersigned or to the
undersigned at an address other
than that appearing above under
"Description of Depositary Shares
Tendered."
Mail
[_] Debentures and/or
[_] depositary receipts to:
Name(s):____________________________
------------------------------------
Address (Include Zip Code):
------------------------------------
------------------------------------
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Depositary Shares are
accepted for exchange is required to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9.
If a holder is an individual, the TIN is the holder's social security number.
If the Exchange Agent is not provided with the correct TIN, the holder may be
subject to a penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such holder with respect to Debentures acquired
pursuant to the Exchange Offer may be subject to backup withholding.
If backup withholding applies, the Exchange Agent is required to withhold 31%
of all payments made to the holder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
To prevent backup withholding on payments that are made to a holder with
respect to Debentures, the holder is required to notify the Company of his or
its correct TIN by completing the Form below, certifying that the TIN provided
on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and
that (i) the holder has not been notified by the Internal Revenue Service that
the holder is subject to backup withholding as a result of a failure to report
all interest or dividends or (ii) the Internal Revenue Service has notified the
holder that the holder is no longer subject to backup withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. A corporation must, however, complete the Substitute Form W-9,
including providing its TIN (unless it is a foreign corporation that does not
have a TIN) and indicating that it is exempt from backup withholding, in order
to establish its exemption from backup withholding. A foreign corporation or
individual, or other foreign person, must submit a statement (i.e., Form W-8 or
substitute), signed under penalties of perjury, attesting to such person's
status as a non-United States person. Such statements can be obtained from the
Exchange Agent.
6
<PAGE>
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Social Security Number
SUBSTITUTE PART 1--PLEASE
PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
FORM W-9 OR __________________________
DEPARTMENT OF THE Employer Identification Number
TREASURY --------------------------------------------------------
INTERNAL REVENUE PART 2--I am not subject to backup
SERVICE withholding because (i) I am exempt FOR PAYEES
from backup withholding, or (ii) I EXEMPT FROM
have not been notified by the IRS BACKUP
that I am subject to backup WITHHOLDING
withholding as a result of a failure
to report all interest or dividends,
or (iii) the IRS has notified me
that I am no longer subject to
backup withholding. (YOU MUST CROSS
OUT THIS PART 2 IF YOU ARE CURRENTLY
SUBJECT TO BACKUP WITHHOLDING
BECAUSE OF UNDERREPORTING OF
INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.)
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION
NUMBER (TIN)
Write "EXEMPT"
if you are ex-
empt from
backup with-
holding.
--------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF
PERJURY, I CERTIFY THAT THE PART 3--
INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE.
Awaiting TIN
SIGNATURE ___________DATE ___________ [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
CERTIFICATE OF TAXPAYER AWAITING TIN
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
----------------------------------------- --------------------------------
SIGNATURE DATE
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND DEPOSITARY RECEIPTS. Depositary
receipts for all physically delivered Depositary Shares, or confirmation of any
book-entry transfer to the Exchange Agent's account at DTC of Depositary Shares
tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal, and any other documents required
by this Letter of Transmittal, or an Agent's Message in connection with a book-
entry transfer, must be received by the Exchange Agent at either of the
addresses set forth herein prior to the Expiration Date (as defined in the
Prospectus).
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, DEPOSITARY RECEIPTS FOR
THE DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS
AT THE ELECTION AND RISK OF THE HOLDER AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SENT BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE PROPERLY INSURED REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
Holders who cannot deliver their Depositary Shares and all other required
documents to the Exchange Agent prior to the Expiration Date, or comply with
book-entry transfer procedures on a timely basis, may tender their Depositary
Shares pursuant to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering--Guaranteed
Delivery".
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by executing a copy of this Letter of
Transmittal, shall waive any right to receive notice of the acceptance of the
Depositary Shares for exchange.
2. PARTIAL TENDERS. If less than the entire number of Depositary Shares
evidenced by a submitted depositary receipt are tendered, the tendering Holder
must fill in the number of Depositary Shares tendered in the box entitled
"Number of Depositary Shares Tendered". A newly issued depositary receipt for
Depositary Shares submitted but not tendered, together with any tendered
Depositary Shares that were not accepted for exchange because of proration or
otherwise, will be returned without expense to the tendering Holder as soon as
practicable following the Expiration Date (or, in the case of Depositary Shares
tendered by book-entry transfer, such Depositary Shares will be credited to an
account maintained at DTC), subject to delays, if any, resulting from
proration. All Depositary Shares delivered to the Exchange Agent will be deemed
to have been tendered unless otherwise indicated.
3. SOLICITED TENDERS. The Company will pay a solicitation fee of $0.50 per
Depositary Share (the "Solicitation Fee") for any Depositary Shares tendered by
physically delivering depositary receipts which are accepted for exchange and
exchanged pursuant to the Exchange Offer and covered by this Letter of
Transmittal which designates, in the box captioned "Solicited Tenders," as
having solicited and obtained the tender, the name of (i) any broker or dealer
in securities, including each Dealer Manager in its capacity as a dealer or
broker, which is a member of any national securities exchange or of the NASD,
(ii) any foreign broker or dealer not eligible for membership in the NASD which
agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders
outside the United States to the same extent as though it were an NASD member,
or (iii) any bank or trust company (each of which is referred to herein as a
"Soliciting Dealer"). No Solicitation Fee shall be payable to a Soliciting
Dealer with respect to the tender of depositary receipts evidencing Depositary
Shares by a Holder unless the Letter of Transmittal accompanying such tender
designates such Soliciting Dealer as such in the box captioned "Solicited
Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer
must return a Notice of Solicited Tenders to the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date in order to receive
a Solicitation Fee. No Solicitation Fee shall be payable to a Soliciting Dealer
in respect of Depositary Shares (i) beneficially owned by such Soliciting
Dealer or (ii) registered in the name of such Soliciting Dealer unless such
Depositary Shares are held by such Soliciting Dealer as nominee and such
Depositary Shares are being tendered for the benefit of one or more beneficial
owners identified on the Letter of Transmittal or the Notice of Solicited
Tenders. No Solicitation Fee shall be payable to the Soliciting Dealer with
respect to the tender of Depositary Shares by the Holder of record, for the
benefit of the beneficial owner, unless the beneficial owner has designated
such Soliciting Dealer.
8
<PAGE>
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
4. SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL. If this Letter of Transmittal
is signed by the registered holder(s) of the Depositary Shares tendered hereby,
the signature(s) must correspond with the name(s) as written on the face of the
depositary receipts for the Depositary Shares, without alteration, enlargement
or any change whatsoever. When this Letter of Transmittal is signed by the
registered holder(s) of Depositary Shares tendered hereby, no endorsements of
certificates or separate written instruments of transfer or exchange are
required.
If any of the Depositary Shares tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal. If
depositary receipts for tendered Depositary Shares are registered in different
names, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Depositary Shares.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution (as defined below), provided the Depositary Shares are
tendered: (i) by a registered holder of such Depositary Shares who has not
completed either of the boxes entitled "Special Issuance Instructions" or
"Special Delivery Instructions"; or (ii) for the account of an Eligible
Institution.
5. WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this
Letter of Transmittal is signed by a person other than the registered holder(s)
of the Depositary Shares tendered hereby, such Depositary Shares must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to the Company and duly executed by the registered
holder(s), in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on the depositary receipts for the Depositary Shares.
If this Letter of Transmittal, any depositary receipts or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on depositary receipts or signatures on separate written
instruments of transfer or exchange required by this Instruction 5 must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program or The New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (any of the
foregoing hereinafter referred to as an "Eligible Institution").
6. SPECIAL ISSUANCE INSTRUCTIONS AND SPECIAL DELIVERY INSTRUCTIONS. If the
Debentures to be issued in exchange for the Depositary Shares and/or depositary
receipts for Depositary Shares not tendered or not accepted for exchange, are
to be issued or reissued in the name of someone other than the tendering Holder
or are to be sent to someone other than the tendering Holder or to the
tendering Holder at an address other than that shown above, the tendering
Holder must fill in the information in the appropriate box of this Letter of
Transmittal and have its signature guaranteed by an Eligible Institution as
provided in Instruction 5.
7. TRANSFER TAXES. The Company will pay any transfer taxes with respect to
the transfer and exchange of Depositary Shares to it or its order pursuant to
the Exchange Offer. If, however, the Debentures due in respect of the
Depositary Shares accepted for exchange are to be issued to, or (in the
circumstances permitted hereby) if depositary receipts for Depositary Shares
not tendered or not exchanged are to be registered in the name of, any person
other than the person(s) signing this Letter of Transmittal, the amount of any
transfer taxes (whether imposed on the registered holder or such person)
payable on account of the transfer to such person will be billed directly to
such person in respect of the Depositary Shares accepted for exchange if
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
not submitted.
9
<PAGE>
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the depositary receipts evidencing
Depositary Shares listed in this Letter of Transmittal.
8. SUBSTITUTE FORM W-9. Except as described under "Important Tax
Information," federal income tax laws require each tendering holder to provide
the Exchange Agent (as Payor) with a correct taxpayer identification number
("TIN") on the Substitute Form W-9 which is provided herein, and to indicate
whether or not the holder is not subject to backup withholding by crossing out
Part 2 on the Substitute Form W-9 if the holder is currently subject to backup
withholding. Failure to provide the information on the Form W-9 or to cross out
Part 2 of the Form W-9 (if applicable) may subject the tendering holder to 31%
federal income tax withholding on payments made to the holder. The box in Part
3 of the Form W-9 may be checked if the tendering holder has not been issued a
TIN and has applied for a TIN or intends to apply for a TIN in the near future.
If the box in Part 3 is checked and the holder has not provided a TIN within
sixty (60) days, the Company will withhold 31% on all such payments thereafter
until a TIN is provided to the Company.
9. WITHHOLDING ON FOREIGN HOLDERS IN CONNECTION WITH THE EXCHANGE OFFER.
United States federal income tax generally will be withheld from the gross
proceeds payable to a holder that is a non-United States person (a "foreign
holder") (including Debentures that such foreign holder would otherwise be
entitled to receive) unless such foreign holder provides the Exchange Agent
with a Foreign Holder Certification, in form and substance satisfactory to the
Company, in which such holder certifies that such holder's exchange of
Depositary Shares for Debentures pursuant to the Exchange Offer qualifies as a
sale or exchange, rather than as a dividend, for federal income tax purposes
(as described in "Certain United States Federal Tax Considerations for Non-
United States Persons--Exchange of Depositary Shares for Debentures" in the
Prospectus) and such holder agrees that it will provide additional information
to the Company if necessary to demonstrate such qualification and that it will
reimburse the Company if it is determined that federal withholding tax was due.
The withholding rate is ordinarily 30% unless the foreign holder is eligible
for a reduced tax treaty rate with respect to dividend income, in which case
withholding will be made at the reduced treaty rate, or the foreign holder
otherwise establishes to the satisfaction of the withholding agent that such
holder is exempt from tax on such exchange (e.g., by certifying to the
withholding agent on IRS Form 8709 as to such holder's status as a foreign
government). For this purpose, a non-United States person is any person that is
not (i) an individual citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or (iii) any
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income. Copies of the Foreign Holder
Certification are available from the Exchange Agent. A holder's status as a
foreign holder and eligibility for a tax treaty reduced rate of withholding
will be determined by reference to the holder's address and to any outstanding
certificates (i.e., Form W-8 or substitute) or statements concerning
eligibility for a reduced rate of withholding, unless facts and circumstances
indicate that reliance is not warranted. EACH FOREIGN HOLDER SHOULD CONSULT
WITH ITS TAX ADVISOR REGARDING THE FOREGOING.
A holder that exchanges Depositary Shares for Debentures on behalf of a
beneficial owner that is a non-United States person will be responsible for
determining whether and what rate of withholding is required on such exchange
and for obtaining any required forms or certifications from such beneficial
owner.
A foreign holder may be eligible to obtain from the U.S. Internal Revenue
Service a refund of any tax withheld if such shareholder meets one of the two
tests for sale or exchange treatment described in "Certain United States
Federal Tax Considerations for Non-United States Persons--Exchange of
Depositary Shares for Debentures" in the Prospectus or otherwise is able to
establish that no tax (or a reduced amount of tax) was due.
10. WITHDRAWALS. Tenders of Depositary Shares pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date and, unless accepted
for exchange by the Company, may be withdrawn at any time after 40 business
days after the date of the Prospectus. To be effective, a written notice of
withdrawal delivered by mail, hand delivery or facsimile transmission must be
timely received by the Exchange Agent at either of the addresses set forth in
the Prospectus. The method of notification is at the risk and election of the
Holder. Any such notice of withdrawal must specify (i) the Holder named in the
Letter of Transmittal as having tendered
10
<PAGE>
Depositary Shares to be withdrawn, (ii) if the Depositary Shares are held in
depositary receipt form, the depositary receipt numbers of the Depositary
Shares to be withdrawn, (iii) the number of Depositary Shares delivered for
exchange, (iv) a statement that such Holder is withdrawing its election to have
such Depositary Shares exchanged, and (v) the name of the registered holder of
such Depositary Shares, and must be signed by the Holder in the same manner as
the original signature on this Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial
ownership of the Depositary Shares being withdrawn. If Depositary Shares have
been tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawn Depositary Shares and otherwise comply with DTC's
procedures. The Exchange Agent will return properly withdrawn Depositary Shares
promptly (normally within five to seven business days) following receipt of
notice of withdrawal. All questions as to the validity of notice of withdrawal,
including time of receipt, will be determined by the Company, and such
determination will be final and binding on all parties. Withdrawals of tenders
of Depositary Shares may not be rescinded and any Depositary Shares withdrawn
will thereafter be deemed not to be validly tendered for purposes of the
Exchange Offer. Properly withdrawn Depositary Shares, however, may be
retendered by following the procedures for tendering at any time prior to the
Expiration Date.
11. EXTENSIONS, AMENDMENTS AND TERMINATION. The Company expressly reserves
the right to (i) amend or modify the terms of the Exchange Offer in any manner
and (ii) withdraw or terminate the Exchange Offer and not accept for exchange
any Depositary Shares, if any of the conditions to the Exchange Offer is not
satisfied, including (without limitation) if fewer than 4,000,000 Depositary
Shares are tendered. The conditions of the Exchange Offer are for the sole
benefit of the Company and may be asserted by the Company regardless of the
circumstances giving rise to such conditions, or may be waived by the Company,
in whole or in part at any time and from time to time, in its sole discretion.
The failure by the Company, at any time, to exercise its rights with respect to
any of the conditions of the Exchange Offer will not be deemed a waiver of any
such conditions.
12. MUTILATED, LOST, STOLEN OR DESTROYED DEPOSITARY RECEIPTS. Any Holder
whose depositary receipts have been mutilated, lost, stolen or destroyed should
contact First Chicago Trust Company of New York, Suite 4687, P.O. Box 2591,
Jersey City, New Jersey 07303-2591, telephone (800) 621-7825.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. All questions relating to
the Exchange Offer, as well as requests for additional copies of the Prospectus
and this Letter of Transmittal, may be directed to D.F. King & Co., Inc., the
Information Agent for the Exchange Offer, at 77 Water Street, New York, New
York 10005, telephone (800) 628-8536 (toll-free) or (212) 269-5550 (collect).
14. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
Depositary Shares will be resolved by the Company, and such determination will
be final and binding on all parties. The Company reserves the absolute right to
reject any or all Letters of Transmittal or tenders that are not in proper form
or the acceptance of which would, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to the particular Depositary Shares covered by any
Letter of Transmittal or tendered pursuant to such letter. None of the Company,
the Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Company's interpretation of the
terms and conditions of the Exchange Offer shall be final and binding on all
parties.
15. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and not
otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A PHOTOCOPY THEREOF), DULY
EXECUTED, (TOGETHER WITH DEPOSITARY RECEIPTS FOR DEPOSITARY SHARES AND ALL
OTHER REQUIRED DOCUMENTS) OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
11
<PAGE>
MCDONALD'S CORPORATION
NOTICE OF GUARANTEED DELIVERY
FOR DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery or one substantially equivalent hereto may
be used by registered holders of outstanding Depositary Shares (the "Depositary
Shares"), each representing 1/2,000 of a share of 7.72% Cumulative Preferred
Stock, Series E, of McDonald's Corporation who wish to tender Depositary Shares
in exchange for McDonald's Corporation's % Subordinated Deferrable Interest
Debentures due 2025 upon the terms and subject to the conditions set forth in
the Prospectus dated , 1995 (the "Prospectus") of McDonald's
Corporation and the related Letter of Transmittal (the "Letter of Transmittal")
and, in each case, who cannot deliver their Depositary Shares and Letter of
Transmittal (and any other documents required by the Letter of Transmittal) to
First Chicago Trust Company of New York (the "Exchange Agent") prior to the
Expiration Date (as defined in the Prospectus) or comply with book-entry
procedures on a timely basis. This Notice of Guaranteed Delivery may be mailed,
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) to the
Exchange Agent for receipt prior to the Expiration Date as set forth below. See
"The Exchange Offer--Procedures for Tendering--Guaranteed Delivery" in the
Prospectus.
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
P.O. Box 2559, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
Eligible Institution, such signature guarantee must appear in the applicable
space provided on the Letter of Transmittal for guarantee of signatures.
<PAGE>
To First Chicago Trust Company of New York:
The undersigned hereby tenders to McDonald's Corporation the number of
Depositary Shares indicated below, upon the terms and subject to the conditions
contained in the Prospectus dated , 1995, of McDonald's Corporation
and the related Letter of Transmittal, receipt of which is hereby acknowledged.
DESCRIPTION OF DEPOSITARY SHARES TENDERED (PLEASE PRINT)
NAME(S) AND ADDRESS(ES) OF DEPOSITARY NUMBER OF NUMBER OF
REGISTERED HOLDER(S) RECEIPT DEPOSITARY DEPOSITARY
(PLEASE FILL IN EXACTLY AS NUMBER(S) SHARES SHARES
NAME(S) APPEAR(S) ON REPRESENTED BY TENDERED*
DEPOSITARY RECEIPT(S)) DEPOSITARY
RECEIPT(S)
- --------------------------------------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Total Depositary
Shares
- --------------------------------------------------------------------------------
* Unless otherwise indicated, the holder will be deemed to have tendered
the full number of Depositary Shares represented by the tendered
depositary receipts.
Signature(s) :________________________________________________________________
Date:__________________________________________
Telephone Number:______________________________
Name and address of Tendering Holder (if different than Registered Holder):___
------------------------------------------------------------------------------
IF DEPOSITARY SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER
Name of Tendering Institution:
-----------------------------------------
Account No. at The Depository Trust Company:
-----------------------------------------
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office,
branch, agency or correspondent in the United States, hereby guarantees (a)
that the above named person(s) "own(s)" the Depositary Shares tendered
hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of
1934, as amended, (b) that such tender of Depositary Shares complies with
Rule 14e-4 and (c) to deliver to the Exchange Agent, at one of its addresses
set forth above, the depositary receipts evidencing the Depositary Shares,
together with a properly completed and duly executed copy of the Letter of
Transmittal, with any required signature guarantees (or an Agent's Message
and a Book-Entry Confirmation for Depositary Shares tendered by book-entry
transfer), and any other documents required by the Letter of Transmittal
within five New York Stock Exchange trading days after the date of execution
of this Notice of Guaranteed Delivery.
------------------------------------ ------------------------------------
Name of Firm Authorized Signature
------------------------------------ ------------------------------------
Street Address Print Name
------------------------------------ ____________________________________
City/Stat_________________ZipeCode Title
Telephone Number: __________________ Date: ______________________________
DO NOT SEND DEPOSITARY RECEIPTS EVIDENCING DEPOSITARY SHARES WITH THIS NOTICE
OF GUARANTEED DELIVERY. DEPOSITARY RECEIPTS EVIDENCING DEPOSITARY SHARES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
MCDONALD'S CORPORATION
OFFER TO EXCHANGE
% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
In our capacity as Dealer Managers, we are enclosing materials relating to
the offer by McDonald's Corporation, a Delaware corporation (the "Company"), to
exchange up to $450,000,000 aggregate principal amount of its % Subordinated
Deferrable Interest Debentures due 2025 (the "Debentures") for up to 18,000,000
Depositary Shares (the "Depositary Shares"), each representing 1/2,000 of a
share of 7.72% Cumulative Preferred Stock, Series E, of the Company, upon the
terms and subject to the conditions set forth in the Prospectus, dated ,
1995 (the "Prospectus"), and in the related Letter of Transmittal (which
together constitute the "Exchange Offer").
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares, if any of the
conditions to the Exchange Offer is not satisfied, including (without
limitation) if fewer than 4,000,000 Depositary Shares are tendered.
We are asking you to contact your clients for whom you hold Depositary Shares
registered in your name (or in the name of your nominee) or who hold Depositary
Shares registered in their own names. Please bring the Exchange Offer to their
attention as promptly as possible.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER AS TO WHETHER TO TENDER ALL OR ANY DEPOSITARY SHARES. HOLDERS MUST
MAKE THEIR OWN DECISIONS AS TO WHETHER TO TENDER DEPOSITARY SHARES AND, IF SO,
HOW MANY DEPOSITARY SHARES TO TENDER.
The Company will pay a solicitation fee of $0.50 per Depositary Share (the
"Solicitation Fee") for any Depositary Shares tendered by physically delivering
depositary receipts which are accepted for exchange and exchanged pursuant to
the Exchange Offer and covered by a Letter of Transmittal which designates, as
having solicited and obtained the tender, the name of (i) any broker or dealer
in securities, including each Dealer Manager in its capacity as a broker or
dealer, which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (iii) any
bank or trust company (each of which is referred to herein as a "Soliciting
Dealer"). No Solicitation Fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
holder unless the Letter of Transmittal accompanying such tender designates
such Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer
must return a Notice of Solicited
<PAGE>
Tenders to the Exchange Agent within five New York Stock Exchange trading days
after the Expiration Date in order to receive a Solicitation Fee. No
Solicitation Fee shall be payable to a Soliciting Dealer in respect of
Depositary Shares (i) beneficially owned by such Soliciting Dealer or (ii)
registered in the name of such Soliciting Dealer unless such Depositary Shares
are held by such Soliciting Dealer as nominee and such Depositary Shares are
being tendered for the benefit of one or more beneficial owners identified on
the Letter of Transmittal or the Notice of Solicited Tenders. No Solicitation
Fee shall be payable to the Soliciting Dealer with respect to the tender of
Depositary Shares by the holder of record, for the benefit of the beneficial
owner, unless the beneficial owner has designated such Soliciting Dealer.
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
The Company will also, upon request, reimburse Soliciting Dealers for
reasonable and customary handling and mailing expenses incurred by them in
forwarding materials relating to the Exchange Offer to their customers. The
Company will pay all transfer taxes applicable to the exchange of Depositary
Shares pursuant to the Exchange Offer, subject to Instruction 7 of the Letter
of Transmittal.
Enclosed herewith for your information and for forwarding to your clients are
copies of the following documents:
1. The Prospectus dated , 1995;
2. The Letter of Transmittal to be used by holders of Depositary Shares
in accepting the Exchange Offer (duly executed photocopies of the Letter of
Transmittal may also be used);
3. The Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if the Depositary Shares or other required documents cannot be
delivered to the Exchange Agent by the Expiration Date or book-entry
procedures cannot be compiled with on a timely basis;
4. A form of letter which may be sent to your clients for whose accounts
you hold Depositary Shares registered in your name or in the name of your
nominee, with a form provided for obtaining such client's instructions with
regard to the Exchange Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to First Chicago Trust Company of New
York, the Exchange Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1995, UNLESS
THE EXCHANGE OFFER IS EXTENDED. PLEASE FURNISH COPIES OF THE ENCLOSED MATERIALS
TO YOUR CLIENTS FOR WHOM YOU HOLD DEPOSITARY SHARES REGISTERED IN YOUR NAME OR
IN THE NAME OF YOUR NOMINEE AS QUICKLY AS POSSIBLE.
In all cases, exchanges of Debentures for Depositary Shares pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
depositary receipts for all physically delivered Depositary Shares, or
confirmation of any book-entry transfer to the Exchange Agent's account at DTC
of Depositary Shares tendered by book-entry transfer, as well as a properly
completed and duly executed Letter of Transmittal, and any other documents
required by the Letter of Transmittal, or an Agent's Message (as defined in the
Prospectus) in connection with a book-entry transfer.
2
<PAGE>
The Exchange Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Depositary Shares residing in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be
in compliance with the laws of such jurisdiction.
Questions and requests for assistance with respect to the Exchange Offer or
for copies of the Prospectus and Letter of Transmittal may be directed to D.F.
King & Co., Inc., the Information Agent
for the Exchange Offer, at 77 Water Street, New York, New York 10005, telephone
(800) 628-8536 (toll-free) or (212) 269-5550 (collect).
Very truly yours,
Goldman, Sachs & Co.
Merrill Lynch & Co.
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE COMPANY, OR ANY AFFILIATE THEREOF, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
NOTICE OF SOLICITED TENDERS
(TO BE COMPLETED ONLY FOR TENDERS OF DEPOSITARY SHARES MADE BY BOOK-ENTRY
TRANSFER)
List below the number of Depositary Shares tendered by book-entry transfer
by each beneficial owner whose tender you have solicited. All Depositary
Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the table below. Any questions as to what constitutes beneficial
ownership should be directed to the Exchange Agent. If the space below is
inadequate, list the Beneficial Owners and the Depositary Shares tendered in a
separate signed schedule and affix the list to this Notice of Solicited
Tenders. Please do not complete the sections of the table headed "TO BE
COMPLETED ONLY BY THE EXCHANGE AGENT."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO, AND ALL QUESTIONS
CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO, THE
EXCHANGE AGENT. ALL NOTICES OF SOLICITED TENDERS MUST BE RECEIVED BY THE
EXCHANGE AGENT WITHIN FIVE NEW YORK STOCK EXCHANGE TRADING DAYS AFTER THE
EXPIRATION DATE.
<TABLE>
<CAPTION>
TO BE COMPLETED TO BE COMPLETED TO BE COMPLETED TO BE COMPLETED
BY THE BY THE ONLY BY THE ONLY BY THE
SOLICITING DEALER SOLICITING DEALER EXCHANGE AGENT EXCHANGE AGENT
- ----------------------------------------------------------------------------------
FEE
NUMBER OF NUMBER OF ($0.50 PER
BENEFICIAL DEPOSITARY SHARES VOI TICKET DEPOSITARY DEPOSITARY
OWNERS TENDERED* NUMBER* SHARES ACCEPTED SHARE)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Beneficial
Owner
No. 1
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 2
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 3
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 4
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 5
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 6
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 7
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 8
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 9
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 10
- ----------------------------------------------------------------------------------
Total
</TABLE>
*Must be completed in order to obtain payment of soliciting dealer fee.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Exchange
Agent, in its sole discretion, which determination will be final and binding.
Neither the Exchange Agent nor any other person will be under any duty to give
notification of any defects or irregularities in any Notice of Solicited
Tenders or incur any liability for failure to give such notification.
4
<PAGE>
The undersigned hereby confirms that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with its
solicitation of tenders of Depositary Shares pursuant to the Exchange Offer;
(ii) it is entitled to such compensation for such solicitation under the terms
and conditions of the Exchange Offer; (iii) in soliciting tenders of Depositary
Shares, it has used no soliciting materials other than those furnished by the
Company; and (iv) if it is a foreign broker or dealer not eligible for
membership in the NASD, it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations.
- ------------------------------------- -------------------------------------
Firm Name (Please print) Address (Include Zip Code)
- ------------------------------------- -------------------------------------
Authorized Signature
- ------------------------------------- -------------------------------------
Name and Title Telephone Number
5
<PAGE>
MCDONALD'S CORPORATION
OFFER TO EXCHANGE
% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
, 1995
To Our Clients:
We are enclosing for your consideration a Prospectus, dated , 1995,
of McDonald's Corporation (the "Company") and a related Letter of Transmittal
(which together constitute the "Exchange Offer") relating to the Company's
offer to exchange up to $450,000,000 aggregate principal amount of its %
Subordinated Deferrable Interest Debentures due 2025 (the "Debentures") for up
to 18,000,000 (the "Amount Sought") Depositary Shares (the "Depositary
Shares"), each representing 1/2,000 of a share of 7.72% Cumulative Preferred
Stock, Series E, of the Company.
The Company will exchange Debentures for all Depositary Shares validly
tendered and not withdrawn, up to the Amount Sought, upon the terms and subject
to the conditions of the Exchange Offer, including the provisions thereof
relating to proration. The Company expressly reserves the right to (i) extend,
amend or modify the terms of the Exchange Offer in any manner and (ii) withdraw
or terminate the Exchange Offer and not accept for exchange any Depositary
Shares, if any of the conditions to the Exchange Offer is not satisfied,
including (without limitation) if fewer than 4,000,000 Depositary Shares are
tendered.
WE ARE THE HOLDER OF RECORD OF DEPOSITARY SHARES HELD BY US FOR YOUR ACCOUNT.
A TENDER OF SUCH DEPOSITARY SHARES CAN BE MADE ONLY BY US AS THE RECORD HOLDER
AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO
YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER DEPOSITARY
SHARES HELD BY US FOR YOUR ACCOUNT.
If you wish to have us tender all or part of the Depositary Shares held by us
for your account pursuant to the terms and conditions of the Exchange Offer,
please complete, sign and return to us, by mail, courier or facsimile, the
attached instructions for beneficial owners of Depositary Shares in ample time
to permit us to submit a tender on your behalf.
If you do not wish to participate in the Exchange Offer, you need not take
any action.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER AS TO WHETHER TO TENDER ALL OR ANY DEPOSITARY SHARES. HOLDERS MUST
MAKE THEIR OWN DECISIONS AS TO WHETHER TO TENDER DEPOSITARY SHARES AND, IF SO,
HOW MANY DEPOSITARY SHARES TO TENDER.
Very truly yours,
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MCDONALD'S CORPORATION
INSTRUCTIONS WITH RESPECT TO
OFFER TO EXCHANGE
% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus dated , 1995, (the "Prospectus") of McDonald's Corporation
(the "Company") and a related Letter of Transmittal (which together constitute
the "Exchange Offer") relating to the offer by the Company to exchange up to
$450,000,000 aggregate principal amount of its % Subordinated Deferrable
Interest Debentures due 2025 for up to 18,000,000 Depositary Shares (the
"Depositary Shares"), each representing 1/2,000 of a share of 7.72% Cumulative
Preferred Stock, Series E, of the Company, upon the terms and subject to the
conditions set forth in the Exchange Offer. This will instruct you to tender
the number of Depositary Shares indicated below held by you for the account of
the undersigned, pursuant to the terms and subject to the conditions of the
Exchange Offer. In addition, this will confirm that you may make the
representations contained in the Letter of Transmittal on behalf of the
undersigned.
DEPOSITARY SHARES TO BE TENDERED
AGGREGATE NUMBER OF DEPOSITARY SHARES
HELD BY YOU FOR THE ACCOUNT OF THE NUMBER OF DEPOSITARY SHARES TENDERED*
UNDERSIGNED
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NAME(S) OF BENEFICIAL OWNER(S) (PLEASE PRINT)
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ADDRESS(ES) (INCLUDE ZIP CODE)
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TELEPHONE NUMBER
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EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
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SIGNATURE(S)
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DATE
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*Unless otherwise indicated, it will be assumed that all of the undersigned's
Depositary Shares are to be tendered.
PLEASE DESIGNATE BELOW ANY SOLICITING DEALER WHO SOLICITED YOUR TENDER
SOLICITED TENDERS
Name of Firm (Please print): ______________________________________________
Name of Individual Broker or Financial Consultant: ________________________
Identification Number (if known): _________________________________________
Address (Include Zip Code): _______________________________________________
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LOGO McDonald's Corporation
Kroc Drive
Oak Brook, Illinois 60521
, 1995
Dear Holder of McDonald's Depositary Shares:
McDonald's Corporation is offering the holders of its Depositary Shares,
each representing 1/2,000 of a share of 7.72% Cumulative Preferred Stock,
Series E, the opportunity to exchange those Depositary Shares for newly issued
% Subordinated Deferrable Interest Debentures. The exchange offer will be
effected on a basis of $25 principal amount of Debentures for each Depositary
Share. Both the Depositary Shares and the Debentures are redeemable at the
option of the Company on or after December 3, 1997.
The exchange of Debentures for Depositary Shares will improve the Company's
after-tax cash flow, as interest payable on the Debentures will be tax
deductible by the Company, while the dividends paid on the Depositary Shares
are not tax deductible.
We encourage you to carefully review the enclosed Prospectus, Letter of
Transmittal, and related documents for details on the exchange offer. We also
suggest that you speak with your tax advisor as participation in this exchange
offer will be a taxable event.
If you have any questions or need additional information, please contact
McDonald's Information Agent, D.F. King & Co., Inc. at 1-800-628-8536.
Sincerely,
LOGO
Michael R. Quinlan
Chairman and Chief Executive Officer
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
7.72% CUMULATIVE PREFERRED STOCK,
SERIES E
(LIQUIDATION PREFERENCE OF $50,000 PER SHARE)
OF
MCDONALD'S CORPORATION
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
------------------------------
McDonald's Corporation, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, does
hereby certify:
A resolution providing for and in connection with the issuance of preferred
stock of the Corporation, without par value, was duly adopted by the Preferred
Stock Committee (the "Preferred Stock Committee") of the Board of Directors of
the Corporation (the "Board of Directors"), pursuant to authority conferred on
the Preferred Stock Committee by the Board of Directors, and on the Board of
Directors (which fixed the voting rights with respect to the shares designated
herein) by the provisions of the Restated Certificate of Incorporation of the
Corporation, which Restated Certificate of Incorporation authorizes the issuance
of up to one hundred sixty-five million shares of Preferred Stock, without par
value, and which resolution provides as follows:
"RESOLVED, That the issuance of a series of Preferred Stock, without par
value, of the Corporation is hereby authorized and the designations, preferences
and privileges, relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof, in addition to those set
forth in the Restated Certificate of Incorporation of the Corporation, are
hereby fixed as follows:
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7.72% CUMULATIVE PREFERRED STOCK, SERIES E
SECTION 1. DESIGNATION AND AMOUNT.
----------------------
The shares of such series shall be designated as 7.72% Cumulative
Preferred Stock, Series E (the "Series E Preferred Stock"), and the number of
shares constituting the Series E Preferred Stock shall be 10,000. Shares of
Series E Preferred Stock shall have a liquidation preference of $50,000 per
share. The number of shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease shall reduce the number
of shares of Series E Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants issued by or upon the
conversion of any outstanding securities issued by the Corporation convertible
into Series E Preferred Stock.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
---------------------------
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to Series E
Preferred Stock with respect to dividends, the holders of shares of Series E
Preferred Stock, in preference to the holders of Common Stock and of any other
Junior Stock (as hereinafter defined in Section 4(B)), shall be entitled to
receive a cash dividend payable in an amount per share equal to $965.00 per
quarter and no more (such amount being referred to herein as the "Dividend
Amount"), which dividend shall be payable when, as and if declared by the Board
of Directors, out of funds legally available for that purpose, quarterly in
arrears on the first day of March, June, September and December in each year
(each such date being referred to herein as a "Dividend Payment Date"),
commencing on March 1, 1993. In the event that any Dividend Payment Date shall
occur on any day other than a "Business Day" (as hereinafter defined), the
dividend payment due on such Dividend Payment Date shall be paid on the Business
Day immediately preceding such Dividend Payment Date. The Board of Directors
may fix a record date for the determination of holders of shares of Series E
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof. For purposes of these resolutions,
"Business Day" shall mean each day that is not a Saturday, Sunday or a date on
which federally or state chartered banking institutions in Chicago, Illinois or
New York, New York are required or authorized to be closed.
(B) Dividends shall begin to accrue on outstanding shares of Series E
Preferred Stock from the date of original issuance of such shares and shall
accrue on a daily basis whether or not declared and whether or not the
Corporation shall have earnings or surplus out of which such dividends could be
paid at the time. Dividends accrued on the shares of Series E Preferred
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Stock for any period greater or less than a full quarterly period between
Dividend Payment Dates shall be computed on the basis of a 360-day year of
twelve 30-day months. Accrued but unpaid dividends shall not bear interest.
Accrued but unpaid dividends shall cumulate as of the Dividend Payment Date on
which they first become payable, but no interest shall accrue on such
accumulated but unpaid dividends.
(C) Dividends paid on the shares of Series E Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
SECTION 3. VOTING RIGHTS.
-------------
(A) Except as set forth herein, or as otherwise provided by law or in the
Restated Certificate of Incorporation, holders of Series E Preferred Stock shall
have no special voting rights and their consent shall not be required for taking
any corporate action. On those matters where voting rights are conferred herein,
by law or in the Restated Certificate of Incorporation, each share of Series E
Preferred Stock shall entitle the voter thereof to one vote. Any increase or
decrease in the authorized class of Preferred Stock shall not be deemed to alter
or change the powers, preferences, or special rights of the shares of Series E
Preferred Stock so as to affect them adversely within the meaning of the General
Corporation Law of the State of Delaware and no class vote shall be required to
authorize such increase or decrease.
(B) If at any time dividends payable on Series E Preferred Stock, or on any
one or more other series of Preferred Stock of the Corporation entitled to
receive cumulative preferred dividends, are in arrears and unpaid in an amount
equal to or exceeding the amount of dividends payable on such Series E Preferred
Stock and/or other series of Preferred Stock entitled to receive cumulative
dividends for six quarterly dividend periods, whether or not consecutive, the
holders of all outstanding shares of Preferred Stock entitled to receive
cumulative preferred dividends will have the exclusive right, voting separately
as a class, to elect two directors to the Board of Directors of the Corporation
at the next annual meeting of stockholders of the Corporation. The authorized
number of Directors shall not be increased for this purpose. Such voting right
will continue for such Preferred Stock until all dividends on Series E Preferred
Stock and on such other series have been paid in full, at which time such voting
right of the holders of such Preferred Stock will terminate, subject to re-
vesting in the event of a subsequent arrearage. Upon any termination of the
aforesaid voting right, the term of office of those directors elected by holders
of Preferred Stock voting separately as a class will terminate.
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SECTION 4. CERTAIN RESTRICTIONS.
--------------------
(A) So long as any Series E Preferred Stock shall be outstanding, no
dividend shall be declared and paid or set apart for payment on any other series
of stock ranking on a parity with Series E Preferred Stock as to dividends
("Parity Stock"), unless there shall also be or have been declared and paid or
set apart for payment on Series E Preferred Stock dividends for all dividend
payment periods of Series E Preferred Stock ending on or before the dividend
payment date of such Parity Stock, ratably in proportion to the respective
amounts of dividends on the Series E Preferred Stock accrued and unpaid through
the most recent such dividend payment period, and accrued and unpaid on such
Parity Stock through the dividend payment period on such Parity Stock ending on
such dividend payment date or such dividend payment date immediately preceding
such dividend payment period.
(B) So long as any Series E Preferred Stock shall be outstanding, in the
event that full cumulative dividends on the Series E Preferred Stock have not
been declared and paid or set apart for payment when due, the Corporation shall
not declare and pay or set apart for payment any dividends on Common Stock or
any other class of stock or series thereof of the Corporation ranking as to
dividends junior to Series E Preferred Stock (collectively, "Junior Stock")
until full cumulative and unpaid dividends on Series E Preferred Stock shall
have been paid or declared and set apart for payment; provided, however, that
the foregoing shall not apply to any dividend payable solely in any shares of
Junior Stock. Subject to the foregoing provisions of this Section 4, the Board
of Directors may declare and the Corporation may pay or set apart for payment
dividends on any Junior Stock or Parity Stock and the holders of shares of
Series E Preferred Stock shall not be entitled to share therein.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING UP.
--------------------------------------
(A) Upon any liquidation, dissolution or winding up of the Corporation,
either voluntary or involuntary, no distribution shall be made (i) to the
holders of shares of stock ranking junior to the Series E Preferred Stock as to
distributions in the event of any liquidation, dissolution or winding up of the
Corporation unless, prior thereto, the holders of shares of Series E Preferred
Stock shall have received $50,000 per share (such amount being referred to
herein as the "Liquidation Preference"), plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, as to the
date of such payment, or (ii) to the holders of shares of stock ranking on a
parity with the Series E Preferred Stock as to distributions in the event of any
liquidation, dissolution or winding up of the Corporation ("Parity Liquidation
Stock"), except distributions made ratably on Series E Preferred Stock and all
such Parity Liquidation Stock in proportion to the total amounts to which the
holders of all such shares are entitled
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upon such liquidation, dissolution or winding up. After payment of the full
amount to which they are entitled as provided by the foregoing provisions of
this Section 5(A), the holders of shares of Series E Preferred Stock shall not
be entitled to any further right or claim to any of the remaining assets of the
Corporation.
(B) Neither the merger or consolidation of the Corporation with or into any
other corporation or other entity, nor the merger or consolidation of any other
corporation or other entity with or into the Corporation, nor the sale, lease,
exchange or other transfer of all or any portion of the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 5.
(C) Written notice of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, stating the payment date or dates when, and
the place or places where, the amounts distributable to holders of Series E
Preferred Stock in such circumstances shall be payable, shall be made in
accordance with Section 9 below not less than 20 days prior to any payment date
stated therein, to the holders of Series E Preferred Stock, at their respective
addresses shown on the books of the Corporation or any transfer agent for the
Series E Preferred Stock; provided, however, that a failure to give notice as
provided herein or any defect therein shall not affect the Corporation's ability
to consummate a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation.
SECTION 6. REDEMPTION.
----------
The Series E Preferred Stock will not be redeemable prior to December 3,
1997. The Series E Preferred Stock will be redeemable, at the option of the
Corporation, in whole or in part, out of funds legally available therefor, at
any time, on or after December 3, 1997, upon not less than 30 nor more than 90
days notice, at a redemption price per share of Series E Preferred Stock equal
to the Liquidation Preference, plus an amount equal to accrued and unpaid
dividends to the redemption date. On or subsequent to the redemption date, upon
surrender of the certificates for any shares to be redeemed pursuant to the
provisions of this Section 6, the redemption price of such shares shall be paid
in cash. In the event that the redemption price is either paid or made
available for payment, then, notwithstanding that the certificate or
certificates evidencing any of the shares of the Series E Preferred Stock shall
not have been surrendered, all rights with respect to such shares shall
terminate, effective on the redemption date, and any such certificate shall
represent only the right to receive the redemption price, without interest, upon
surrender. No interest shall accrue on the redemption price after the
redemption date.
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SECTION 7. REACQUIRED SHARES.
-----------------
Any shares of Series E Preferred Stock acquired by the Corporation by
reason of the redemption of such shares as provided hereby, or otherwise
acquired, shall be retired and the Corporation shall take all actions necessary
to restore such shares to the status of authorized but unissued shares of
Preferred Stock, without par value, of the Corporation, which shares may
thereafter be reissued as part of a new series of such Preferred Stock or as
Series E Preferred Stock, as permitted by law.
SECTION 8. RANKING.
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The Series E Preferred Stock will rank on a parity as to payment of
dividends and distribution of assets upon liquidation, dissolution or winding
up, whether voluntary or involuntary, of the Corporation with the Corporation's
Series B ESOP Convertible Preferred Stock, Series C ESOP Convertible Preferred
Stock and Series D Preferred Stock (which are the only series of Preferred Stock
currently outstanding) and prior to the Corporation's Common Stock. The Series
E Preferred Stock will rank prior to the Corporation's Series A Junior
Participating Preferred Stock (the "Series A Preferred Stock") as to the payment
of dividends and on a parity with the Series A Preferred Stock as to
distribution of assets upon liquidation, dissolution or winding up, whether
voluntary or involuntary, if such Series A Preferred Stock is issued.
SECTION 9. MISCELLANEOUS.
-------------
(A) All notices referred to herein shall be in writing, and delivered
personally, sent by courier, or by registered or certified mail (postage
prepaid, return receipt requested) addressed: (i) if to the Corporation, to its
office at One McDonald's Plaza, Oak Brook, Illinois 60521 (Attention: Secretary)
or to the transfer agent designated by the Corporation or (ii) if to any holder
of Series E Preferred Stock, to such holder at the address of such holder as
listed in the stock record books of the Corporation or (iii) to such other
address as the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(B) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of Series E Preferred Stock or certificates representing such shares. The
Corporation shall not, however, be required to pay any such tax which may be
payable in respect of any transfer involved in the issuance or delivery of
shares of Series E Preferred Stock in a name other than the name in which such
shares of Series E Preferred Stock were registered, or in respect of any
payment to any person with respect to any such shares other than a payment to
the
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registered holder thereof, and shall not be required to make any such issuance,
delivery or payment unless and until the person otherwise entitled to such
issuance, delivery or payment has paid to the Corporation the amount of any such
tax or has established, to the satisfaction of the Corporation, that such tax
has been paid or is not payable.
(C) Unless otherwise provided in the Certificate of Designations,
Preferences and Rights, as the same may be amended, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation or
winding-up otherwise made upon the shares of Series E Preferred Stock and any
other stock ranking on a parity with Series E Preferred Stock with respect to
such dividend or distribution shall be made pro rata, so that amounts paid per
share on Series E Preferred Stock and such other stock shall in all cases bear
to each other the same ratio that the required dividends, distributions or
payments, as the case may be, then payable per share on the shares of the Series
E Preferred Stock and such other stock bear to each other.
(D) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for Series E Preferred Stock. Upon any such appointment
or discharge of a transfer agent, the Corporation shall send notice thereof in
accordance with Section 9(A) to each holder of record of Series E Preferred
Stock."
IN WITNESS WHEREOF, this Certificate of Designations, Preferences and
Rights is executed on behalf of the Corporation by its Vice President and
attested by its Assistant Secretary this 25th day of November, 1992.
McDONALD'S CORPORATION
/s/ Carleton D. Pearl
----------------------------------
By: Vice President
Attest:
/s/ Gloria Santona
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Assistant Secretary
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