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REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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 OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION OR CODE NUMBER)
ORGANIZATION) 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)
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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 OF SERVICE)
COPIES TO:
DONALD G. LUBIN ALAN L. BELLER
SONNENSCHEIN NATH & ROSENTHAL CLEARY, GOTTLIEB, STEEN & HAMILTON
8000 SEARS TOWER ONE LIBERTY PLAZA
CHICAGO, ILLINOIS 60606 NEW YORK, NEW YORK 10006
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: On the Issue
Date, as described in the attached Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT OFFERING PRICE(2) FEE
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Subordinated Deferrable
Interest Debentures.... $450,000,000 N/A $459,000,000 $158,277
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(1) Represents the maximum aggregate principal amount of Debentures to be
issued pursuant to the Exchange Offer, based upon the number of Depositary
Shares subject to the Exchange Offer and the principal amount of Debentures
issuable in exchange for each such Depositary Share in the Exchange Offer.
(2) Determined pursuant to Rule 457(f)(1) solely for the purpose of calculating
the registration fee, on the basis of the average of the high and low
prices reported as of April 10, 1995 on the New York Stock Exchange
Composite Tape for the Depositary Shares.
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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.
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MCDONALD'S CORPORATION
CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(B) OF REGULATION S-K)
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FORM S-4 ITEM NUMBER LOCATION IN PROSPECTUS
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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............ *
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FORM S-4 ITEM NUMBER LOCATION IN PROSPECTUS
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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
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*Not applicable.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 APRIL 14, 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
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THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1995, UNLESS THE OFFER IS EXTENDED.
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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 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".
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.
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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.
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The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
MORGAN STANLEY & CO. SALOMON BROTHERS INC
INCORPORATED
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The date of this Prospectus is , 1995
<PAGE>
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 1, June 1,
September 1 and December 1 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 an 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 Depositary
Shares are first 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 December 31, 1994,
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 Company expects that the
Depositary Shares will 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 application has been made
to list the Debentures on the NYSE, subject to approval and 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
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 has been filed with the Commission (File No. 1-5231) pursuant to the
Exchange Act and is 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
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PAGE
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Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 4
Prospectus Summary........................................................ 5
Certain Considerations Relating to the Exchange Offer and the Debentures.. 12
McDonald's Corporation.................................................... 14
Capitalization............................................................ 15
Selected Consolidated Financial Data...................................... 16
Price Range of Depositary Shares and Dividends............................ 17
The Exchange Offer........................................................ 17
Description of Debentures................................................. 27
Description of Depositary Shares.......................................... 32
Description of Series E Preferred Stock................................... 33
Certain United States Federal Income Tax Considerations................... 35
Certain United States Federal Tax Considerations for Non-United States
Persons.................................................................. 39
Legal Matters............................................................. 41
Experts................................................................... 41
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4
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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
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.
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 Depositary Shares. See
"Comparison of Debentures and Series E Preferred Stock" below.
. The Debentures will rank senior to the Depositary Shares 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 Depositary Shares are) subordinate in right to payment to
all existing and future Senior Indebtedness of the Company. In addition,
the Debentures will be (as the Depositary Shares are) 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 as a Taxable Event", "--No Cash Payments
During Extension Period to Pay Accrued Tax Liability", "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
Company intends to list the Debentures on the NYSE, 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
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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 "--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 1, June 1, September 1 and December 1 of
each year (which are the same dates as those on which dividends on the Series E
Preferred Stock are payable, as, when and if declared), 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 at any one time. 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 are 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--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--Withdrawal of
Tenders" and "--Expiration Date; Extensions; Amendments; Termination".
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 facsimile thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile 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.
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 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 issued as of the Issue Date and 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 of 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.
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 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.
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 NOTICES 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.
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
Notice of Solicited Tenders as described herein,
9
<PAGE>
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 1, June 1, Sep- declared by the Company's Board
tember 1 and December 1 of each of Directors (the "Board of Di-
year, commencing , 1995, rectors"). All dividends on the
subject to the Company's right Series E Preferred Stock have
to extend the interest payment been paid to date. In the event
period from time to time for a dividends are not paid on a div-
period not exceeding 20 consecu- idend payment date in the fu-
tive quarterly interest payment ture, holders would not be enti-
periods, as described herein. At tled to receive interest on any
the end of each Extension Period dividend arrearages. The Company
the Company shall pay to the may not declare or pay dividends
holders all interest then ac- on the Common Stock or any other
crued and unpaid, together with class of stock ranking junior to
interest thereon, compounded the Series E Preferred Stock un-
quarterly at the rate of inter- less all dividends on the Series
est on the Debentures. During E Preferred Stock have been
any Extension Period, the Com- paid.
pany may not declare or pay div-
idends on, or redeem, purchase
or acquire, any of its capital
stock. The Company has no cur-
rent intention of exercising its
right to extend an interest pay-
ment period and believes 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>
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 Decem- of the Company, and senior to
ber 31, 1994, outstanding Se- all issued and outstanding Com-
nior Indebtedness of the Com- mon Stock. Effectively subordi-
pany aggregated approximately nate to all obligations of the
$3.9 billion. Effectively sub- Company's subsidiaries.
ordinate to all obligations of
the Company's subsidiaries.
Voting Rights........... None. None, except in certain circum-
stances.
New York Stock Exchange Application has been made to
Listing................. list the Debentures on the The Depositary Shares are
NYSE. listed on the NYSE under the
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>
11
<PAGE>
CERTAIN CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE DEBENTURES
In addition to the other information contained in this Prospectus, the
following factors should be carefully considered prior to deciding whether or
not to tender Depositary Shares in exchange for Debentures in the Exchange
Offer:
EXCHANGE AS 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. See "Certain
United States Federal Income Tax Considerations" and "Certain United States
Federal Tax Considerations for Non-United States Persons". 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.
RIGHT OF COMPANY 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.
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.
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
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
12
<PAGE>
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. See "Description of
Debentures--Option to Extend Interest Payment Period".
NO CASH PAYMENTS DURING EXTENSION PERIOD TO PAY ACCRUED TAX LIABILITY
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. 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 December 31, 1994, 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 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 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 expects that its acceptance
for exchange of the Amount Sought pursuant to the Exchange Offer will not cause
the remaining Depositary Shares to be delisted from the NYSE.
There has not been any public market for the Debentures. While the Company
intends to list the Debentures on the NYSE, there can be no assurance that an
active market for the Debentures will develop or be sustained in the future on
such exchange. Listing will depend upon the satisfaction of the NYSE's listing
requirements with respect to the Debentures, including requirements as to the
principal amount and distribution of the Debentures. 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.
13
<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 December 31, 1994, there were 15,205
restaurants worldwide, of which 9,744 were located in the United States and
5,461 in 78 other countries. An additional 196 restaurants were under
construction at December 31, 1994, including 132 outside the United States.
At December 31, 1994, 69% of McDonald's restaurants were operated by
independent franchisees, 20% 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.
14
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of December 31, 1994 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 December 31, 1994
appearing in the "Actual" column of the following table is derived from the
Company's audited consolidated financial statements as of and for the year
ended December 31, 1994, incorporated by reference herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------
(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............................... $ 1,046.9 $ 1,046.9 $ 1,046.9
Current maturities of long-term debt........ 368.3 368.3 368.3
--------- --------- ---------
Total short-term debt................... 1,415.2 1,415.2 1,415.2
Long-term debt(1)--
Long-term obligations....................... 2,935.4 2,935.4 2,935.4
Subordinated debentures due 2025............ 250.0 450.0
--------- --------- ---------
Total long-term debt.................... 2,935.4 3,185.4 3,385.4
--------- --------- ---------
Total debt(2)........................... 4,350.6 4,600.6 4,800.6
Shareholders' equity(1)--
Preferred stock, no par value
Authorized 165 million shares; issued 11.2
million shares........................... 674.2 424.2 224.2
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.................. 286.0 286.0 286.0
Guarantee of ESOP Notes(2).................. (234.4) (234.4) (234.4)
Retained earnings........................... 8,625.9 8,625.9 8,625.9
Foreign currency translation adjustment..... (114.9) (114.9) (114.9)
--------- --------- ---------
9,329.1 9,079.1 8,879.1
Common Stock in treasury, at cost; 136.6
million shares............................. (2,443.7) (2,443.7) (2,443.7)
--------- --------- ---------
Total shareholders' equity.............. 6,885.4 6,635.4 6,435.4
--------- --------- ---------
Total capitalization.......................... $11,236.0 $11,236.0 $11,236.0
========= ========= =========
</TABLE>
- --------
(1) For additional information concerning debt and Shareholders' equity, see
the Company's audited consolidated financial statements and accompanying
Financial Comments as of December 31, 1994, as incorporated by reference
herein. There has been no material change in the capitalization of the
Company and its consolidated subsidiaries since December 31, 1994.
(2) Included in total debt at December 31, 1994 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 $66.9 million at December 31,
1994.
(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.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE OF
COMMON STOCK DATA)
<S> <C> <C> <C> <C> <C>
Systemwide sales
(unaudited)(2).............. $25,987.4 $23,586.9 $21,885.4 $19,928.2 $18,758.9
========= ========= ========= ========= =========
INCOME STATEMENT DATA:
Sales by Company operated
restaurants............... $ 5,792.6 $ 5,157.2 $ 5,102.5 $ 4,908.5 $ 5,018.9
Revenues from franchised
restaurants............... 2,528.2 2,250.9 2,030.8 1,786.5 1,620.7
--------- --------- --------- --------- ---------
Total revenues............. 8,320.8 7,408.1 7,133.3 6,695.0 6,639.6
Income before provision for
income taxes.............. 1,886.6 1,675.7 1,448.1 1,299.4 1,246.3
Net income................. 1,224.4 1,082.5 958.6 859.6 802.3
========= ========= ========= ========= =========
BALANCE SHEET DATA:
Shareholders' equity at end
of
period.................... $ 6,885.4 $ 6,274.1 $ 5,892.4 $ 4,835.1 $ 4,182.3
Long-term debt at end of
period.................... 2,935.4 3,489.4 3,176.4 4,267.4 4,428.7
Total assets at end of
period.................... 13,591.9 12,035.2 11,681.2 11,349.1 10,667.5
========= ========= ========= ========= =========
PER SHARE OF COMMON STOCK:(3)
Net income................. $ 1.68 $ 1.45 $ 1.30 $ 1.17 $ 1.10
Dividends declared......... 0.23 0.21 0.20 0.18 0.17
Book value (4)............. 9.20 8.12 7.39 6.73 5.82
========= ========= ========= ========= =========
OTHER DATA:
Ratio of earnings to fixed
charges(5)................ 5.26 4.86 3.96 3.53 3.48
========= ========= ========= ========= =========
Number of restaurants at
end of
period:
Operated by franchisees.. 10,458 9,832 9,237 8,735 8,131
Operated by the Company.. 3,083 2,699 2,551 2,547 2,643
Operated by affiliates... 1,664 1,462 1,305 1,136 1,029
--------- --------- --------- --------- ---------
Total restaurants........ 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 of the Company in the
documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference".
(2) Systemwide sales represent sales by all Company-operated, franchised and
affiliated restaurants.
(3) 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.
(4) Book value represents total Shareholders' equity excluding Preferred Stock
and the portion of the guarantee of ESOP Notes related to Preferred Stock.
(5) The ratios of earnings to fixed charges shown above have been computed on a
total enterprise basis. Earnings represent income before provision for
income taxes and fixed charges. Fixed charges consist of interest on all
indebtedness, amortization of debt issuance costs and discount or premium
relating to any indebtedness, and such portion of rental charges (after
reduction for related sublease income) considered to be representative of
the interest component in the particular case.
16
<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
Board of Directors nor the Company 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
17
<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" are 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 that the Company is offering to
exchange for the Debentures represent 90% of the Depositary Shares that are
outstanding. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered Holders as of , 1995.
18
<PAGE>
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 remitting 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.
19
<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 number of Depositary Shares 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 number of Depositary Shares sought for exchange,
will depend upon the facts and circumstances, including the relative
materiality of the change or waiver. With respect to a change in the number of
Depositary Shares 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 thereof. See "--Withdrawal of
Tenders".
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 facsimile thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile 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 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
20
<PAGE>
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 ON OR BEFORE 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, 525 Washington Boulevard, Jersey
City, New Jersey 07310, telephone (201) 222-4707, 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 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
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.
21
<PAGE>
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 is 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, 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
22
<PAGE>
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")
exchanges, 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 Exchange
Agent 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 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 Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Depositary Shares 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, legal
representatives, successors, assigns, executors and administrators 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 the address set forth in the Letter of Transmittal. 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 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) that such Holder is withdrawing
his election to have such Depositary Shares exchanged, and (iv) 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.
The Exchange Agent will return the properly
23
<PAGE>
withdrawn Depositary Shares promptly following receipt of notice of withdrawal.
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. 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 Issue 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;
(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.
The Company expressly reserves the right to terminate or amend the Exchange
Offer if any of the foregoing conditions is not satisfied on the Issue Date.
See "--Exchange Date; Extension; Amendment; Termination".
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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
P. O. Box 2564, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2565
By Facsimile Transmission:
(For Eligible Institutions Only):
(201) 222-4720 or
(201) 222-4721
Confirm Receipt 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 for any
Depositary Shares tendered, 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, who
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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 such fee
shall be payable to a Soliciting Dealer in respect of Depositary Shares
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 on the Notice of Solicited Tenders (included in
the materials provided to brokers and dealers). No such fee shall be payable to
a Soliciting Dealer with respect to the tender of 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" or the
Notice of Solicited Tenders accompanying such tender designates such Soliciting
Dealer. No such 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 such fee shall be payable to a Soliciting Dealer unless the
Soliciting Dealer returns a Notice of Solicited Tenders to the Exchange Agent
within five NYSE trading days after the Expiration Date. No such 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 and legal fees, and the fees and
expenses of the Exchange Agent, the Information Agent and the Trustee under the
Indenture, are estimated to be approximately $800,000.
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 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
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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 any integral
multiples of $25 in excess 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 1, June 1,
September 1 and December 1 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 February 15,
May 15, August 15 or November 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 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
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"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 option 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 (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 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,
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there could be multiple Extension Periods of varying lengths throughout the
term of the Debentures. The Company believes that the extension of a 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 February 15, May 15, August 15 or November 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 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
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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 December 31, 1994 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 and 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. (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 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
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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. (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.
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)
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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
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.
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.
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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.
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 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.
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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.
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
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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 DEPOSITARY SHARES FOR DEBENTURES AND OF THE
OWNERSHIP AND DISPOSITION OF DEBENTURES RECEIVED IN THE EXCHANGE OFFER IN LIGHT
OF THEIR OWN PARTICULAR CIRCUMSTANCES.
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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.
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
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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 the distribution is
taxable as a dividend to a corporate holder, (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.
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 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
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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.
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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.
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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. 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.
41
<PAGE>
Facsimile copies 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
P.O. Box 2564, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2565
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 222-4720 or
(201) 222-4721
Confirm Receipt 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 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) 236-4723 (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) 221-7203 ext. 3738 (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 (set forth on page II-4 of this Regis-
tration Statement)
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
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
</TABLE>
- --------
* Exhibit 12.1 above was previously filed as Exhibit 12 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 and is
incorporated herein by reference.
**To be filed by Amendment.
II-1
<PAGE>
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.
(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.
II-2
<PAGE>
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 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 14TH DAY OF APRIL, 1995.
McDONALD'S CORPORATION
/s/ Jack M. Greenberg
By___________________________________
Jack M. Greenberg
Vice Chairman, Chief Financial
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack M. Greenberg, Michael L. Conley, Shelby
Yastrow and Carleton D. Pearl, and each of them, his true and lawful attorneys-
in-fact and agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated and on the 14th day of April, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Hall Adams, Jr. Director
___________________________________________
Hall Adams, Jr.
/s/ Robert M. Beavers, Jr. Senior Vice President and Director
___________________________________________
Robert M. Beavers, Jr.
/s/ James R. Cantalupo President and Chief Executive Officer--
___________________________________________ McDonald's International and Director
James R. Cantalupo
/s/ Gordon C. Gray Director
___________________________________________
Gordon C. Gray
/s/ Jack M. Greenberg Vice Chairman, Chief Financial Officer and
___________________________________________ Director
Jack M. Greenberg
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Donald R. Keough Director
___________________________________________
Donald R. Keough
/s/ Donald G. Lubin Director
___________________________________________
Donald G. Lubin
/s/ Andrew J. McKenna Director
___________________________________________
Andrew J. McKenna
/s/ Michael R. Quinlan Chairman, Chief Executive Officer and
___________________________________________ Director
Michael R. Quinlan
/s/ Edward H. Rensi President and Chief Executive Officer--
___________________________________________ McDonald's U.S.A. and Director
Edward H. Rensi
/s/ Terry Savage Director
___________________________________________
Terry Savage
/s/ Paul D. Schrage Senior Executive Vice President, Chief
___________________________________________ Marketing Officer and Director
Paul D. Schrage
/s/ Ballard F. Smith Director
___________________________________________
Ballard F. Smith
Director
___________________________________________
Roger W. Stone
/s/ Robert N. Thurston Director
___________________________________________
Robert N. Thurston
/s/ Fred L. Turner Senior Chairman and Director
___________________________________________
Fred L. Turner
/s/ B. Blair Vedder, Jr. Director
___________________________________________
B. Blair Vedder, Jr.
/s/ Michael L. Conley Senior Vice President and Controller
___________________________________________
Michael L. Conley
</TABLE>
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.
<PAGE>
"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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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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(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
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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.
- -----------------------------------------------
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).
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(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: June 1, September 1, December 1 and March 1
Regular Record Dates: May 15, August 15, November 15 and February 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 June 1,
September 1, December 1 and March 1 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 May 15, August 15, November 15 or February
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>
Exhibit 5
April , 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,
Shelby Yastrow
<PAGE>
[LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL]
Sheldon I. Fink
(312) 876-8107
April 14, 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 Registration Statement (Form S-4) filed with
the United States Securities and Exchange Commission by McDonald's on April 14,
1995 under the Securities Act of 1933 relating to the Exchange Offer. 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 originals of all documents submitted to us as
copies or
<PAGE>
[SONNENSCHEIN NATH & ROSENTHAL]
Shelby Yastrow, Esq.
April 14, 1995
Page 2
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>
[SONNENSCHEIN NATH & ROSENTHAL]
Shelby Yastrow, Esq.
April 14, 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>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of McDonald's
Corporation for the registration of $450,000,000 Subordinated Deferrable
Interest Debentures and to the incorporation by reference therein of our report
dated January 26, 1995, with respect to the consolidated financial statements of
McDonald's Corporation included in its Annual Report (Form 10-K) for the year
ended December 31, 1994, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
April 14, 1995
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
(Exact Name of Trustee as Specified in its Charter)
22-1147033
(I.R.S. Employer Identification No.)
101 NORTHSIDE PLAZA, ELKTON, MARYLAND
(Address of Principal Executive Offices)
21921
(Zip Code)
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
123 SOUTH BROAD STREET
PHILADELPHIA, PA 19109
ATTENTION: CORPORATE TRUST ADMINISTRATION
(215) 985-6000
(Name, address and telephone number of Agent for Service)
McDONALD'S CORPORATION
(Exact Name of Obligor as Specified in its Charter)
DELAWARE
(State or other jurisdiction of Incorporation or Organization)
36-2361282
(I.R.S. Employer Identification No.)
ONE McDONALD'S PLAZA, OAK BROOK, ILLINOIS
(Address of Principal Executive Offices)
60521
(Zip Code)
___% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
APPLICATION RELATES TO ALL SECURITIES REGISTERED PURSUANT
TO THE DELAYED OFFERING REGISTRATION STATEMENT
(TITLE OF INDENTURE SECURITIES)
<PAGE>
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS
SUBJECT:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank (3rd District)
Philadelphia, Pennsylvania 19106
Federal Deposit Insurance Corporation
Washington, D.C. 20429
B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF
THE TRUSTEE:
Not applicable - see answer to Item 13.
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION:
Not applicable - see answer to Item 13.
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE
IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE
OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING
ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION.
Not applicable - see answer to Item 13.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
<PAGE>
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE
OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE
OFFICER OF THE OBLIGOR:
Not applicable - see answer to Item 13.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE
OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR,
PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER:
Not applicable - see answer to Item 13.
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED
BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE
TRUSTEE:
Not applicable - see answer to Item 13.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH
THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY
OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE:
Not applicable - see answer to Item 13.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF
THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING STOCK OF THE OBLIGOR OR
(2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE
FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON:
Not applicable - see answer to Item 13.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING
50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE
TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON
ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE:
Not applicable - see answer to Item 13.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO
<PAGE>
THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
Not applicable - see answer to Item 13.
13. DEFAULTS BY THE OBLIGOR.
(A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
None.
(B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
None.
14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
Not applicable - see answer to Item 13.
15. Foreign trustee.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE TRUSTEE IS AUTHORIZED TO
ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT.
Not applicable - trustee is a national banking association
organized under the laws of the United States.
16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
X 1. Copy of Articles of Association of the trustee as now in effect.
- ---
___ 2. Copy of the Certificate of the Comptroller of the Currency date dated
January 11, 1994, evidencing the authority of the trustee to transact
business.*
___ 3. Copy of the Certification of Fiduciary Powers of the trustee by the
Office of the Comptroller of the Currency dated July 24, 1992.*
X 4. Copy of existing by-laws of the trustee.
- ---
___ 5. Copy of each indenture referred to in Item 4, if the obligor is in
default.
-Not Applicable.
X 6. Consent of the trustee required by Section 321(b) of the Act.
- ---
X 7. Copy of report of condition of the trustee at the close of business on
- --- December 31, 1994, published pursuant to the requirements of its
supervising authority.
<PAGE>
___ 8. Copy of any order pursuant to which the foreign trustee is authorized to
act as sole trustee under indentures qualified or to be qualified under
the Act.
- Not Applicable
___ 9. Consent to service of process required of foreign trustees pursuant to
Rule 10a-4 under the Act.
- Not Applicable
_____________________
*Previously filed with the Securities Exchange Commission on February 11,
1994 as an Exhibit to Form T-1 in connection with Registration Statement Number
22-73340 and incorporated herein by reference
NOTE
The trustee disclaims responsibility for the accuracy or completeness of
information contained in this Statement of Eligibility and Qualification not
known to the trustee and not obtainable by it through reasonable investigation
and as to which information it has obtained from the obligor and has had to rely
or will obtain from the principal underwriters and will have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Fidelity Bank, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this Statement of Eligibility and Qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Philadelphia and Commonwealth of Pennsylvania, on the 4th day of April,
1995.
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
By: s/John H. Clapham
John H. Clapham
Asst. Vice President
<PAGE>
EXHIBIT 1
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
BYLAWS
------
ADOPTED: JANUARY 10, 1994; AMENDED APRIL 19, 1994
______________________________
ARTICLE I
---------
Meetings of Shareholders
------------------------
Section 1.1. Annual Meeting. The regular annual meeting of the
shareholders for the election of directors and transaction of whatever other
business may properly come before the meeting, shall be held at the Main Office
of the Association, or such other place as the Board of Directors may designate,
at 10:00 A.M., on the second Thursday of April of each year or such other time
within 90 days as may be set by the Board of Directors. If, from any cause, an
election of directors is not made on the said day, the Board of Directors shall
order the election to be held on some subsequent day, as soon thereafter as
practicable, according to the provisions of the law; and notice thereof shall be
given in the manner herein provided for the annual meeting.
Section 1.2. Special Meetings. Except as otherwise specifically provided
by statute, special meetings of the shareholders may be called for any purpose
at any time by the Board of Directors or by any one or more shareholders owning,
in the aggregate, not less than twenty-five percent of the stock of the
Association.
Section 1.3. Notice of Meetings. Notice of Annual and Special meetings
shall be mailed, postage prepaid, at least ten days prior to the date thereof,
addressed to each shareholder at his address appearing on the books of the
Association; but any failure to mail such notice, or any irregularity therein,
shall not affect the validity of such meeting, or of any of the proceedings
thereat. A shareholder may waive any such notice.
Section 1.4. Organization of Meetings. The Chairman shall preside at all
meetings of shareholders. In his absence, the President, or a director
designated by the Chairman shall preside at such meeting.
<PAGE>
Section 1.5. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid only
for one meeting to be specified therein, and any adjournments of such meeting.
Proxies shall be dated and shall be filed with the records of the meeting.
Section 1.6. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of Association.
ARTICLE II
----------
Directors
---------
Section 2.1. Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
Section 2.2. Number. The Board shall consist of not less than five nor
more than twenty-five persons, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of the full Board or by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full Board may not increase the number
of directors to a number which: (a) exceeds by more than two the number of
directors last elected by shareholders where such number was fifteen or less;
and (b) to a number which exceeds by more than four the number of directors last
elected by shareholders where such number was sixteen or more, but in no event
shall the number of directors exceed twenty-five.
<PAGE>
Section 2.3. Organization Meeting. A meeting shall be held for the
purpose of organizing the new Board and electing and appointing officers of the
Association for the succeeding year on the day of the Annual Meeting of
Shareholders or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not be
a quorum present, the directors present may adjourn the meeting, from time to
time, until a quorum is obtained.
Section 2.4. Regular Meetings. The regular meetings of the Board shall be
held on such days and time as the directors may, by resolution, designate; and
written notice of any change thereof shall be sent to each member. When any
regular meeting of the Board falls upon a legal holiday, the meeting shall be
held on such other day as the Board may designate.
Section 2.5. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board, or President, or at the request of three or
more directors. Each director shall be given notice of each special meeting,
except the organization meeting, at least one day before it is to be held by
facsimile, telephone, telegram, letter or in person. Any director may waive any
such notice.
Section 2.6. Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less number
may adjourn any meeting, from time to time, and the meeting may be held, as
adjourned without further notice.
Section 2.7. Term of Office and Vacancy. Directors shall hold office for
one year and until their successors are elected and have qualified. No person
shall stand for election as a director of this Association if at the date of his
election he will have passed his seventieth birthday; provided, however, this
prohibition shall not apply to persons who are active officers of this
Association, an affiliate bank, or its parent corporation, or a former chief
executive officer of the Association. No person, who is not an officer or former
officer of this Association, an affiliate bank, or its parent corporation and
who has discontinued the principal position or activity the person held when
initially elected, shall be recommended to the shareholders for reelection;
provided, however, that exceptions may be made because of a
<PAGE>
change in principal position or activity which would be compatible with
continued service to this Association. No person elected as a director may
exercise any of the powers of his office until he has taken the oath of office
as prescribed by law. When any vacancy occurs among the directors, the remaining
members of the Board, in accordance with the laws of the United States, may
appoint a director to fill such vacancy at any regular meeting of the Board, or
at a special meeting called for that purpose.
Section 2.8. Nominations. Nominations for election to the Board may be
made by the Executive Committee or by any stockholder of any outstanding class
of capital stock of the Association entitled to vote for the election of
directors.
Section 2.9. Communications Equipment. Any or all directors may
participate in a meeting of the Board by means of conference telephone or any
means of communication by which all persons participating in the meeting are
able to hear each other.
Section 2.10. Action Without Meeting. Any action required or permitted to
be taken by the Board or committee thereof by law, the Association's Articles of
Association, or these Bylaws may be taken without a meeting, if, prior or
subsequent to the action, all members of the Board or committee shall
individually or collectively consent in writing to the action. Each written
consent or consents shall be filed with the minutes of the proceedings of the
Board or committee. Action by written consent shall have the same force and
effect as a unanimous vote of the directors, for all purposes. Any certificate
or other documents which relates to action so taken shall state that the action
was taken by unanimous written consent of the Board or committee without a
meeting.
ARTICLE III
-----------
Committees of the Board
-----------------------
Section 3.1. Executive Committee. The Board may by resolution adopted by
a majority of the entire Board designate an Executive Committee consisting of
the Chairman of the Board, the President, and not less than two other directors.
Subject to the national banking laws and the
<PAGE>
Association's Articles of Association, the Executive Committee may exercise all
the powers of the Board of Directors with respect to the affairs of the
Association, except that the Executive Committee may not:
1. (a) exercise such powers while a quorum of the Board of Directors is
actually convened for the conduct of business,
(b) exercise any power specifically required to be exercised by at
least a majority of all the directors,
(c) act on matters committed by the Bylaws or resolution of the Board
of Directors to another committee of the board, or
(d) amend or repeal any resolution theretofore adopted by the Board of
Directors which by its terms is amendable or repealable only by the Board;
2. amend the Articles of Association or make, alter or repeal any Bylaw of
the Association;
3. elect or appoint any director, create or fill any vacancies in the
Board of Directors or remove any director, or authorize or approve any change in
the compensation of any officer of the Association who is also a director of the
Association;
4. authorize or approve issuance or sale or contract for sale of shares of
stock of the Association, or determine the designation and relative rights,
preferences and limitations of a class or series of shares;
5. adopt an agreement of merger or consolidation, or submit to shareholders
any action that requires shareholder approval, including any recommendation to
the shareholders concerning the sale, lease or exchange of all or substantially
all the Association's property and assets, a dissolution of the Association or a
revocation of a previously approved dissolution; or
6. authorize an expenditure by the Association in excess of $10 million for
any one item or group of related items.
The committee shall hold regular meetings at such times as the members shall
agree and whenever called by the chairman of the committee. A majority of the
committee shall constitute a quorum for the transaction of business. The
committee shall keep a record of its proceedings and shall
<PAGE>
report these proceedings to the Board at the regular meetings thereof. The
committee shall serve as the nominating committee for nominations to the Board.
The committee shall provide oversight on all Community Reinvestment Act ("CRA")
matters pertaining to the Association. The committee shall also be responsible
for monitoring the CRA activities of the Association on an on-going basis and
making periodic reports on such CRA activity to the Board.
Section 3.2. Chairman of the Executive Committee. The Board may designate
one of its members to be Chairman of the Executive Committee who shall preside
at the meetings thereof and shall perform such duties as the Board shall assign
to him from time to time.
Section 3.3. Audit Committee. The Board shall appoint a committee of
three or more persons exclusive of the officers of this Association which
committee shall be known as the Audit Committee. It shall be the duty of this
committee at least once in every twelve months to examine the affairs of the
Association, and determine whether it is in a sound and solvent condition and to
recommend to the Board such changes in the manner of doing business, etc., as
may seem to be desirable. The committee may cause such examination to be made in
its behalf and under its supervision by outside accountants and may also use the
services of any other persons either inside or outside the Association to assist
in its work. The results of each examination shall be reported in writing to the
Board.
Section 3.4. Audit of Trust Department. The Audit Committee shall, at
least once during each calendar year and within fifteen months of the last such
audit make suitable audits of the Trust Department or cause suitable audits to
be made by auditors responsible only to the Board, and at such time shall
ascertain whether the department has been administered in accordance with law,
Part 9 of the Regulations of the Comptroller of the Currency, and sound
fiduciary principles. In lieu of such periodic audit the Audit Committee, at the
election of the Board, may conduct or cause to be conducted by auditors
responsible only to the Board an adequate continuous audit system adopted by the
Board. A written report of such periodic or continuous audit shall be made to
the Board.
<PAGE>
Section 3.5. Other Committees. The Board may appoint from time to time
other committees composed of one or more persons each, for such purposes and
with such powers as the Board may determine. The Chairman of the Board shall
have the power to designate another person to serve on any committee during the
absence or inability of any member thereof so to serve.
Section 3.6. Directors' Emeritus. The Board may designate one or more
persons to serve as Director Emeritus. Such Director Emeritus shall have the
right to attend any and all meetings of the Board, but shall have no vote at
such meetings. A person designated as Director Emeritus may serve in that
capacity for a period of three years.
Section 3.7. Alternate Committee Members. The Board may, from time to
time, appoint one or more, but no more than three persons to serve as alternate
members of a committee, each of whom shall be empowered to serve on that
committee in place of a regular committee member in the event of the absence or
disability of that committee member. An alternate committee member shall, when
serving on a committee, have all of the powers of a regular committee member.
Alternate committee members shall be notified of, and requested to serve at, a
particular meeting or meetings, or for particular periods of time, by or at the
direction of the chairman of the committee or the Chairman of the Board.
ARTICLE IV
----------
Officers
--------
Section 4.1a. Appointment. The senior officers of this Association shall
be chosen by the Board and shall be the Chairman of the Board, one or more Vice
Chairmen, the President, the Chief Financial Officer and such other officers as
in the judgment of the Board may be from time to time required. The Chairman of
the Board and the President shall be chosen from the Directors. The Board may
designate a person to serve as secretary of all meetings of the Board and of the
shareholders and the persons so designated shall keep accurate minutes of such
meetings.
<PAGE>
Section 4.1b. Other Officers. The Chairman, the President, the Chief
Executive Officer, any Vice Chairman or any Senior Executive Vice President may
appoint such other officers with such titles and duties as he may designate.
Section 4.2. Term of Office. The officers who are required by the
articles of association or the bylaws to be members of the Board shall hold
their respective offices until the Organization meeting of the Board following
the annual meeting of shareholders or until their respective successors shall
have been elected, unless they shall resign, become disqualified or be removed
from office. Each other officer shall hold office at the pleasure of the Board.
Any officer may be removed at any time by the Board.
Section 4.3. Chairman of the Board. The chairman of the board shall be
designated as Chairman of the Board. He shall preside at all meetings of the
stockholders and directors and he shall be a member of all committees of the
Board except the Audit Committee. He shall have such other powers and perform
such other duties as may be prescribed from time to time by the Board. He shall
be subject only to the direction and control of the Board.
Section 4.4. President. The president shall be the chief executive
officer of the Association and he shall be designated as President and Chief
Executive Officer. In the absence of the Chairman the President shall preside at
all meetings of the Board. The President shall be a member of each committee of
the Board except the Audit Committee. He shall have the powers and perform the
duties conferred or imposed upon the President by the national banking laws, and
he shall have such other powers and perform such other duties as may from time
to time be imposed upon or assigned to him by the Board.
Section 4.5. Chief Financial Officer. The Chief Financial Officer shall
have such title as may be designated by the Board and he shall be responsible
for all monies, funds and valuables of this Association,
<PAGE>
provide for the keeping of proper records of all transactions of the
Association, report to the Board at each regular meeting the condition of the
Association, submit to the Board, when requested, a detailed statement of the
income and expenses, be responsible for the conduct and efficiency of all
persons employed under him, and perform such other duties as may be from time to
time assigned to him by the Board.
Section 4.6. Other Officers. All other officers shall respectively
exercise such powers and perform such duties as generally pertain to their
several offices, or as may be conferred upon or assigned to them by the Board,
the Chairman of the Board or the President.
Section 4.7. Bond. Each officer and employee, if so required by the Board,
shall give bond with surety to be approved by the Board, conditioning for the
honest discharge of his duties as such officer or employee. In the discretion
of the Board, such bonds may be individual, schedule or blanket form, and the
premiums may be paid by the Association.
ARTICLE V
---------
Trust Department
----------------
Section 5.1. Trust Department. There shall be a department of the
Association known as the Trust Department which shall perform the fiduciary
responsibilities of the Association.
Section 5.2. Trust Officer. There shall be a Trust Officer of this
Association whose duties shall be to manage, supervise and direct all the
activities of the Trust Department. Such persons shall do or cause to be done
all things necessary or proper in carrying on the business of the Trust
Department in accordance with the provisions of law and applicable regulations;
and shall act pursuant to opinion of counsel where such opinion is deemed
necessary. Opinions of counsel shall be retained on file in connection with all
important matters pertaining to fiduciary activities. The Trust Officer shall
be responsible for all assets and documents held by the Association in
connection with fiduciary matters.
<PAGE>
The Trust Officer shall perform such other duties and possess such other powers
as from time to time shall be delegated to him by the Chief Executive Officer,
the Board, the Executive Committee or these bylaws. The President may appoint
such other officers of the Trust Department as it may deem necessary or
advisable with such duties as may be assigned and with such titles as may be
designated.
Section 5.3. Trust Investment. Funds held in a fiduciary capacity shall
be invested in accordance with the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the character
and class of the investments to be made and does not vest in the Association a
discretion in the matter, funds held pursuant to such instrument shall be
invested in investments in which corporate fiduciaries may invest under local
law.
ARTICLE VI
----------
Stock Certificates and Transfers
--------------------------------
Section 6.1. Stock Certificates. Ownership of capital stock of the
Association shall be evidenced by certificates of stock signed by the Chairman
or President, and the Secretary, or an Assistant Secretary. Each certificate
shall state upon its face that the stock is transferable only upon the books of
the Association by the holder thereof, or by duly authorized attorney, upon the
surrender of such certificate, and shall meet the requirements of Section 5139,
United States Revised Statutes, as amended.
Section 6.2. Transfers. The stock of this Association shall be assignable
and transferable only on the books of this Association, subject to the
restrictions and provisions of the national banking laws; and a transfer book
shall be provided in which all assignments and transfers of stock shall be made.
When stock is transferred, the certificates thereof shall be returned to the
Association, canceled, preserved and new certificates issued.
<PAGE>
Section 6.3. Dividends. Dividends shall be paid to the shareholders in
whose names the stock shall stand at the close of business on the day next
preceding the date when the dividends are payable, provided, however, that the
directors may fix another date as a record date for the determination of the
shareholders entitled to receive payment thereof.
ARTICLE VII
-----------
Increase of Stock
-----------------
Section 7.1. Capital Stock. Shares of the capital stock of the
Association, which have been authorized but not issued, may be issued from time
to time for such consideration, not less than the par value thereof, as may be
determined by the Board.
ARTICLE VIII
------------
Corporate Seal
--------------
Section 8.1. Seal. The seal, an impression of which appears below, is the
seal of the Association as adopted by the Board of Directors:
[Seal]
The Chairman of the Board, the Vice Chairman, the President, Senior
Executive Vice President, Executive Vice President, Senior Vice President, Vice
President, each Assistant Vice President, the Chief Financial Officer, the
Secretary, each Assistant Secretary, each Trust Officer, each Assistant Trust
Officer or each Assistant Cashier, shall have the authority to affix the
corporate seal of this Association and to attest to the same.
ARTICLE IX
----------
Miscellaneous Provisions
------------------------
Section 9.1. Fiscal Year. The fiscal year of the Association shall be the
calendar year.
<PAGE>
Section 9.2. Execution of Instruments. All agreements, contracts,
indentures, mortgages, deeds, conveyances, transfers, certificates,
declarations, receipts, discharges, releases, satisfactions, settlements,
petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and
other instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the Board,
or any Vice Chairman, or the President, or Senior Executive Vice President, or
Executive Vice President, or Senior Vice President, or Vice President, or
Assistant Vice President, or Chief Financial Officer, or the Secretary, or
Assistant Secretary, or, if in connection with the exercise of fiduciary powers
of the Association, by any of said officers or by any Trust Officer or Assistant
Trust Officer, to the extent authorized by the corporate policy of the
Association, as adopted and modified from time to time. Any such instruments may
also be executed, acknowledged, verified, delivered, or accepted in behalf of
the Association in such other manner and by such other officers as the Board may
from time to time direct.
Section 9.3. Records. The organization papers of this Association, the
articles of association, the bylaws and any amendments thereto, the proceedings
of all regular and special meetings of the shareholders and of the directors,
the returns of the judges of elections, and the reports of the committees of
directors shall be recorded in an appropriate minute book, and the minutes of
each meeting shall be signed by the Secretary or any other officer appointed to
act as secretary of the meeting.
Section 9.4. Banking Hours. This Association and its branch offices shall
be open on such days and during such hours as shall be fixed from time to time
by the Board.
Section 9.5. Voting Shares of Other Corporations. The Chairman, any Vice
Chairman, the President, or any Vice President is authorized to vote, represent
and exercise on behalf of this Association all rights incident to any and all
shares of stock of any other corporation standing in the
<PAGE>
name of the Association. The authority granted herein may be exercised by such
officers in person or by proxy or by power of attorney duly executed by said
officer.
ARTICLE X
---------
Bylaws
------
Section 10.1. Inspection. A copy of the Bylaws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
Section 10.2. Amendments. These Bylaws may be changed or amended at any
regular or special meeting of the Board by the vote of a majority of the
Directors.
<PAGE>
EXHIBIT 4
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
-----------------------------------------
ARTICLES OF ASSOCIATION
-----------------------
(EFFECTIVE NOVEMBER 29, 1994)
For purposes of organizing an Association to carry on the business of
banking under the laws of the United States, the undersigned do enter into the
following Articles of Association:
FIRST. The title of this Association shall be First Fidelity Bank,
National Association.
SECOND. The Main Office of the Association shall be in Elkton, County of
Cecil, State of Maryland. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five persons, the exact number to be fixed
and determined from time to time by resolution of a majority of the full Board
of Directors or by resolution of the shareholders at any annual or special
meeting thereof. Each Director, during the full term of his directorship, shall
own a minimum of (a) $1,000 par value of stock of this Association or (b)
preferred or common stock of First Fidelity Bancorporation having (i) aggregate
par value equal to or greater than $1,000, (ii) aggregate shareholders' equity
equal to or greater than $1,000 or (iii) aggregate fair market value equal to or
greater than $1,000. Any vacancy in the Board of Directors may be filled by
action of the Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders the purpose
of which shall be the election of Directors and the transaction of whatever
other business may be brought before said meeting. It shall be held at the main
office or other convenient place as the Board of Directors may designate, on the
day of each year specified therefor in the By-laws, but if no election is held
on that day, it may be held on any subsequent day according to such lawful rules
as may be presented by the Board of Directors.
<PAGE>
FIFTH. (A) General. The amount of capital stock of this Association
shall be (i) 25,000,000 shares of common stock of the par value of twenty
dollars ($20.00) each (the "Common Stock") and (ii) 160,540 shares of preferred
stock of the par value of one dollar ($1.00) each (the "Non-Cumulative Preferred
Stock"), having the rights, privileges and preferences set forth below, but said
capital stock may be increased or decreased from time to time in accordance with
the provisions of the laws of the United States.
(B) Terms of the Non-Cumulative Preferred Stock.
1. General. Each share of Non-Cumulative Preferred Stock shall be
identical in all respects with the other shares of Non-Cumulative Preferred
Stock. The authorized number of shares of Non-Cumulative Preferred Stock may
from time to time be increased or decreased (but not below the number then
outstanding) by the Board of Directors. Shares of Non-Cumulative Preferred Stock
redeemed by the Association shall be canceled and shall revert to authorized but
unissued shares of Non-Cumulative Preferred Stock.
2. Dividends.
(a) General. The holders of Non-Cumulative Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, but
only out of funds legally available therefor, non-cumulative cash dividends at
the annual rate of $83.75 per share, and no more, payable quarterly on the first
days of December, March, June and September, respectively, in each year with
respect to the quarterly dividend period (or portion thereof) ending on the day
preceding such respective dividend payment date, to shareholders of record on
the respective date, not exceeding fifty days preceding such dividend payment
date, fixed for that purpose by the Board of Directors in advance of payment of
each particular dividend. Notwithstanding the foregoing, the cash dividend to be
paid on the first dividend payment date after the initial issuance of Non-
Cumulative Preferred Stock and on any dividend payment date with respect
<PAGE>
to a partial dividend period shall be $83.75 per share multiplied by the
fraction produced by dividing the number of days since such initial issuance or
in such partial dividend period, as the case may be, by 360.
(b) Non-cumulative Dividends. Dividends on the shares of Non-Cumulative
Stock shall not be cumulative and no rights shall accrue to the holders of
shares of Non-Cumulative Preferred Stock by reason of the fact that the
Association may fail to declare or pay dividends on the shares of Non-Cumulative
Preferred Stock in any amount in any quarterly dividend period, whether or not
the earnings of the Association in any quarterly dividend period were sufficient
to pay such dividends in whole or in part, and the Association shall have no
obligation at any time to pay any such dividend.
(c) Payment of Dividends. So long as any share of Non-Cumulative
Preferred Stock remains outstanding, no dividend whatsoever shall be paid or
declared and no distribution made on any junior stock other than a dividend
payable in junior stock, and no shares of junior stock shall be purchased,
redeemed or otherwise acquired for consideration by the Association, directly or
indirectly (other than as a result of a reclassification of junior stock, or the
exchange or conversion of one junior stock for or into another junior stock, or
other than through the use of the proceeds of a substantially contemporaneous
sale of other junior stock), unless all dividends on all shares of Non-
Cumulative Preferred Stock and non-cumulative Preferred Stock ranking on a
parity as to dividends with the shares of Non-Cumulative Preferred Stock for the
most recent dividend period ended prior to the date of such payment or
declaration shall have been paid in full and all dividends on all shares of
cumulative Preferred Stock ranking on a parity as to dividends with the shares
of Non-Cumulative Preferred Stock for the most recent dividend period ended
prior to the date of such payment or declaration shall have been paid in full
and all dividends on all shares of Non-Cumulative Stock (not withstanding that
dividends on such stock are cumulative) for all
<PAGE>
past dividend periods shall have been paid in full. Subject, to the foregoing,
and not otherwise, such dividends (payable in cash, stock or otherwise) as may
be determined by the Board of Directors may be declared and paid on any junior
stock from time to time out of any funds legally available therefor, and the
Non-Cumulative Stock shall not be entitled to participate in any such dividends,
whether payable in cash, stock or otherwise. No dividends shall be paid or
declared upon any shares of any class or series of stock of the Association
ranking on a parity (whether dividends on such stock are cumulative or non-
cumulative) with the Non-Cumulative Preferred Stock in the payment of dividends
for any period unless at or prior to the time of such payment or declaration all
dividends payable on the Non-Cumulative Preferred Stock for the most recent
dividend period ended prior to the date of such payment or declaration shall
have been paid in full. When dividends are not paid in full, as aforesaid, upon
the Non-Cumulative Preferred Stock and any other series of Preferred Stock
ranking on a parity as to dividends (whether dividends on such stock are
cumulative or non-cumulative) with the Non-Cumulative Preferred Stock, all
dividends declared upon the Non-Cumulative Preferred Stock and any other series
of Preferred Stock ranking on a parity as to dividends with the Non-Cumulative
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share on the Non-Cumulative Preferred Stock and such other
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Non-Cumulative Preferred Stock (but without
any accumulation in respect of any unpaid dividends for prior dividend periods
on the shares of Non-Cumulative Stock) and such other Preferred Stock bear to
each other. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on the Non-Cumulative Preferred
Stock which may be in arrears.
3. Voting. The holders of Non-Cumulative Preferred Stock shall not have
any right to vote for the election of directors or for any other purpose.
<PAGE>
4. Redemption.
(a) Optional Redemption. The Association, at the option of the Board of
Directors, may redeem the whole or any part of the shares of Non-Cumulative
Preferred Stock at the time outstanding, at any time or from time to time after
the fifth anniversary of the date of original issuance of the Non-Cumulative
Preferred Stock, upon notice given as hereinafter specified, at the redemption
price per share equal to $1,000 plus an amount equal to the amount of accrued
and unpaid dividends from the immediately preceding dividend payment date (but
without any accumulation for unpaid dividends for prior dividend periods on the
shares of Non-Cumulative Preferred Stock) to the redemption date.
(b) Procedures. Notice of every redemption of shares of Non-Cumulative
Preferred Stock shall be mailed by first class mail, postage prepaid, addressed
to the holders of record of the shares to be redeemed at their respective last
addresses as they shall appear on the books of the Association. Such mailing
shall be at least 10 days and not more than 60 days prior to the date fixed for
redemption. Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the shareholder
receives such notice, and failure duly to give such notice by mail, or any
defect in such notice, to any holder of shares of Non-Cumulative Preferred Stock
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Non-Cumulative Preferred Stock.
In case of redemption of a part only of the shares of Non-Cumulative
Preferred Stock at the time outstanding the redemption may be either pro rata or
by lot or by such other means as the Board of Directors of the Association in
its discretion shall determine. The Board of Directors shall have full power and
authority, subject to the provisions herein contained, to prescribe the terms
and conditions upon which shares of the Non-Cumulative Preferred Stock shall be
redeemed from time to time.
<PAGE>
If notice of redemption shall have been duly given, and, if on or before the
redemption date specified therein, all funds necessary for such redemption shall
have been set aside by the Association, separate and apart from its other funds,
in trust for the pro rata benefit of the holders of the shares called for
redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such redemption date cease
and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
If such notice of redemption shall have been duly given or if the
Association shall have given to the bank or trust company hereinafter referred
to irrevocable authorization promptly to give such notice, and, if on or before
the redemption date specified therein, the funds necessary for such redemption
shall have been deposited by the Association with such bank or trust company in
trust for the pro rata benefit of the holders of the shares called for
redemption, then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from and after the
time of such deposit, all shares so called for redemption shall no longer be
deemed to be outstanding and all rights with respect to such shares shall
forthwith cease and terminate, except only the right of the holders thereof to
receive from such bank or trust company at any time after the time of such
deposit the funds so deposited, without interest. The aforesaid bank or trust
company shall be organized and in good standing under the laws of the United
States of America or any state thereof, shall have capital, surplus and
undivided profits aggregating at least $50,000,000 according to its last
published statement of condition, and shall be identified in the notice of
redemption. Any interest accrued on such funds shall be
<PAGE>
paid to the Association from time to time. In case fewer than all the shares of
Non-Cumulative Preferred Stock represented by a stock certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
Any funds so set aside or deposited, as the case may be, and unclaimed at
the end of the relevant escheat period under applicable state law from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Association, after which repayment the holders of the shares so called for
redemption shall look only to the Association for payment thereof.
5. Liquidation.
-----------
(a) Liquidation Preference. In the event of any voluntary liquidation,
dissolution or winding up of the affairs of the Association, the holders of Non-
Cumulative Preferred Stock shall be entitled, before any distribution or payment
is made to the holders of any junior stock, to be paid in full an amount per
share equal to an amount equal to $1,000 plus an amount equal to the amount of
accrued and unpaid dividends per share from the immediately preceding dividend
payment date (but without any accumulation for unpaid dividends for prior
dividend periods on the shares of Non-Cumulative Preferred Stock) per share to
such distribution or payment date (the "liquidation amount").
In the event of any involuntary liquidation, dissolution or winding up of
the affairs of the Association, then, before any distribution or payment shall
be made to the holders of any junior stock, the holders of Non-Cumulative
Preferred Stock shall be entitled to be paid in full an amount per share equal
to the liquidation amount.
If such payment shall have been made in full to all holders of shares of
Non-Cumulative Preferred Stock, the remaining assets of the Association shall be
distributed among the holders of junior stock, according to their respective
rights and preferences and in each case according to their respective numbers of
shares.
<PAGE>
(b) Insufficient Assets. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Association are insufficient to pay such liquidation amount on all outstanding
shares of Non-Cumulative Preferred Stock, then the holders of Non-Cumulative
Preferred Stock shall share ratably in any distribution of assets in proportion
to the full amounts to which they would otherwise be respectively entitled.
(c) Interpretation. For the purposes of this paragraph 5, the
consolidation or merger of the Association with any other corporation or
association shall not be deemed to constitute a liquidation, dissolution or
winding up of the Association.
6. Preemptive Rights. The Non-Cumulative Preferred Stock is not entitled
to any preemptive, subscription, conversion or exchange rights in respect of any
securities of the Association.
7. Definitions. As used herein with respect to the Non-Cumulative
Preferred Stock, the following terms shall have the following meanings:
(a) The term "junior stock" shall mean the Common Stock and any other class
or series of shares of the Association hereafter authorized over which the Non-
Cumulative Preferred Stock has preference or priority in the payment of
dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Association.
(b) The term "accrued dividends", with respect to any share of any class or
series, shall mean an amount computed at the annual dividend rate for the class
or series of which the particular share is a part, from, if such share is
cumulative, the date on which dividends on such share became cumulative to and
including the date to which such dividends are to be accrued, less the aggregate
amount of all dividends theretofore paid thereon and, if such share is non-
cumulative, the relevant date designated to and including the date to which such
dividends are accrued, less the aggregate amount of all dividends theretofore
paid with respect to such period.
<PAGE>
(c) The term "Preferred Stock" shall mean all outstanding shares of all
series of preferred stock of the Association as defined in this Article Fifth of
the Articles of Association, as amended, of the Association.
8. Restriction on Transfer. No shares of Non-Cumulative Preferred Stock,
or any interest therein, may be sold, pledged, transferred or otherwise disposed
of without the prior written consent of the Association. The foregoing
restriction shall be stated on any certificate for any shares of Non-Cumulative
Preferred Stock.
9. Additional Rights. The shares of Non-Cumulative Preferred Stock shall
not have any relative, participating, optional or other special rights and
powers other than as set forth herein.
SIXTH. The Board of Directors shall appoint one of its members President
of this Association, who shall be Chairperson of the Board, unless the Board
appoints another director to be the Chairperson. The Board of Directors shall
have the power to appoint one or more Vice Chairmen and Vice Presidents and such
other officers and employees as may be required to transact the business of this
Association.
The Board of Directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all By-laws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place permitted by law, but subject to
the approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association to
any other location, without the approval of the
<PAGE>
shareholders, but subject to the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any one or more
shareholders owning, in the aggregate, not less than 25 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting, to each shareholder of record at his address as shown
upon the books of this Association.
TENTH. (A) Indemnification of Directors.
The Association shall, to the fullest extent permitted by applicable
banking, corporate and other law and regulation, indemnify any person who is or
was a director of the Association from and against any and all expenses,
liabilities or other losses arising in connection with any action, suit, appeal
or other proceeding, by reason of the fact that such person is or was serving as
a director of the Association and may, to the fullest extent permitted by
applicable banking, corporate and other law and regulation, advance monies to
such persons for expenses incurred in defending any such action, suit, appeal or
other proceeding on such terms as the Association's Board of Directors shall
determine and as are required by applicable banking, corporate and other law or
regulation or interpretation by the applicable banking regulators. The
Association may purchase insurance for the purpose of indemnifying such persons
and/or reimbursing the Association upon payment of indemnification to such
persons to the extent that indemnification is authorized by the preceding
sentences, except that insurance coverage and corporate indemnification shall
not be available in connection with a formal order by a court or
<PAGE>
judicial or governmental body assessing civil money penalties against such
person or in the event that such coverage or indemnification would be prohibited
by applicable banking, corporate and other law or regulation.
(B) Indemnification of Officers, Employees and Agents.
The Association shall indemnify any person who is or was an officer,
employee or agent of the Association or who is or was a director, general
partner, trustee or principal of another entity serving as such at the request
of the Association from and against any and all expenses, liabilities or other
losses arising in connection with any action, suit, appeal or other proceeding,
by reason of the fact that such person is or was serving as an officer, employee
or agent of the Association or as a director of another entity at the request of
the Association, to the extent authorized by the corporate policy of the
Association, as adopted and modified from time to time by the shareholders of
the Association, except to the extent that such indemnification would be
prohibited by applicable banking, corporate and other law or regulation. The
Association may advance monies to such persons for expenses incurred in
defending any such action, suit, appeal or other proceeding in accordance with
the corporate policy of the Association, as adopted and modified from time to
time by the shareholders of the Association, under such terms and procedures as
are required by applicable banking, corporate and other law or regulation or
interpretation by the applicable banking regulators, except to the extent that
such advancement would be prohibited by applicable banking, corporate and other
law or regulation. The Association may purchase insurance for the purpose of
indemnifying such persons and/or reimbursing the Association upon payment of
indemnification to such person to the extent that indemnification is authorized
by the preceding sentence, except that insurance coverage and corporate
indemnification shall not be available in connection with a formal order by a
court or judicial or governmental body assessing civil money penalties against
such person or in the event that such coverage or
<PAGE>
indemnification would be prohibited by applicable banking, corporate and other
law or regulation.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, and in connection with the proposed issue of McDonald's Corporation
___% Subordinated Deferrable Interest Debentures Due 2025, First Fidelity Bank,
National Association, hereby consents that reports of examinations by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
By: s/John H. Clapham
-----------------
John H. Clapham
Asst. Vice President
Philadelphia, Pennsylvania
April 4, 1995
<PAGE>
REPORT OF CONDITION EXHIBIT 7
Consolidating domestic and foreign subsidiaries of the First Fidelity Bank,
National Association of Elkton in the state of Maryland, at the close of
business on December 31, 1994, published in response to call made by Comptroller
of the Currency, under title 12, United States Code, Section 161. Charter Number
33869 Comptroller of the Currency Northeastern District.
STATEMENT OF RESOURCES AND LIABILITIES
ASSETS
<TABLE>
<CAPTION>
Thousand of Dollars
-------------------
<S> <C> <C>
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin............. 1,874,295
Interest-bearing balances...................................... 36,317
Securities:
Hold-to-maturity securities.................................... 3,462,859
Available-for-sale securities.................................. 3,706,862
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of it
Edge and Agreement subsidiaries, and in IBFs:
Federal funds sold............................................. 50,675
Securities purchased under agreements to resell................ 203,126
Loans and lease financing receivables:
Loan and leases, net of unearned income............. 22,100,657
LESS: Allowance for loan and lease losses........... 541,497
LESS: Allocated transfer risk reserve............... 0
Loans and leases, net of unearned income, allowance, and
reserve......................................................... 21,559,160
Assets held in trading accounts.................................. 110,494
Premises and fixed assets (including capitalized leases)......... 396,471
Other real estate owned.......................................... 139,614
Investment in unconsolidated subsidiaries and associated
companies....................................................... 13,437
Customer's liability to this bank on acceptances outstanding..... 214,824
Intangible assets................................................ 723,798
Other assets..................................................... 919,499
Total assets..................................................... 33,411,431
LIABILITIES
Deposits:
In domestic offices.......................................... 25,886,619
Noninterest-bearing............................. 4,763,670
Interest-bearing................................ 21,122,949
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.................................................... 1,168,536
Noninterest-bearing............................. 16,305
Interest-bearing................................ 1,152,231
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and IBFs
Federal fund purchased....................................... 1,072,325
Securities sold under agreements to repurchase............... 1,326,503
Demand notes issued to the U.S. Treasury......................... 0
Trading liabilities.............................................. 0
Other borrowed money:
With original maturity of one year or less................... 18,265
With original maturity of more than one year................. 635
Mortgage indebtedness and obligations under capitalized leases... 17,550
Bank's liability on acceptances executed and outstanding......... 217,893
Subordinated notes and debentures................................ 175,000
Other liabilities................................................ 530,207
Total liabilities................................................ 30,413,533
Limited-life preferred stock and related surplus................. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus.................... 160,540
Common Stock..................................................... 452,156
Surplus.......................................................... 1,300,080
Undivided profits and capital reserves........................... 1,159,362
Net unrealized holding gains (losses) on available-for-sale
securities...................................................... (74,240)
Cumulative foreign currency translation adjustments.............. 0
Total equity capital............................................. 2,997,898
Total liabilities, limited-life preferred stock and equity
capital......................................................... 33,411,431
</TABLE>
<PAGE>
EXCHANGE AGENT AGREEMENT
_________________, 1995
First Chicago Trust Company of New York
525 Washington Boulevard - Suite 4660
3rd Floor - Tenders & Exchanges
Jersey City, NJ 07310
Dear Sirs:
In connection with the offer to exchange (the "Exchange Offer") by McDonald's
Corporation ("McDonald's") of ___% 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, holders of Depositary Shares ("Holders") have the
option to receive in exchange for depositary receipts evidencing Depositary
Shares owned and tendered by them, one $25 Debenture for each Depositary Share
(the "Exchange Rate").
The Exchange Offer will expire on _____________, 1995, or if extended by the
Company, the latest date and time to which extended (the "Expiration Date").
The Debentures will be issued as promptly as practicable after the Expiration
Date. The day following the Expiration Date will hereinafter be referred to as
the "Issue Date".
This will confirm McDonald's appointment of First Chicago Trust Company of New
York as the Exchange Agent (the "Exchange Agent") and, in that capacity,
authorization to act as agent for Holders for the purpose of receiving from
McDonald's the Debentures to be issued in exchange for Depositary Shares and
transmitting same to the Holders upon satisfaction of conditions set forth
herein. Your duties, liabilities and rights as Exchange Agent are set forth
herein.
McDonald's has delivered or will deliver to you (i) a copy of the Letter of
Transmittal to be sent to Holders, (ii) copies of all other documents or
materials to be forwarded to Holders, and (iii) a certified copy of resolutions
adopted by the Board of Directors of McDonald's authorizing the Exchange Offer.
McDonald's understands that you have prepared in your role as depositary of the
Depositary Shares (i) a list showing the names and addresses of all Holders as
of the close of business on ____________, 1995, the number of Depositary Shares
held by each Holder as of the close of business on such date and (ii) a list of
depositary receipts (giving depositary receipt numbers) representing Depositary
Shares which have been or are, as of such date, lost, stolen, destroyed or
replaced or restricted as to transfer (noting the text of the restrictive
legends
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 2
applicable thereto) or with respect to which a stop transfer order has been
noted (such lists being herein referred to as the "Lists").
As directed by McDonald's, the Exchange Agent will mail to certain holders of
record (a) a notice advising such holders of the Exchange Offer and the
applicable terms thereof, (b) a form of Letter of Transmittal with instructions,
(c) and a self-addressed return envelope.
In carrying out your duties as Exchange Agent, you are to act in accordance with
the following:
1. Examination of Materials Delivered by Holders.
---------------------------------------------
You are to examine Letters of Transmittal, depositary receipts evidencing
Depositary Shares and other documents delivered or mailed to you by or for
Holders, in order to ascertain, to the extent reasonably determined by you,
whether:
(a) the Letters of Transmittal appear to be duly executed and properly
completed in accordance with the instructions set forth therein;
(b) the depositary receipts evidencing Depositary Shares appear to be
properly surrendered and, if appropriate, endorsed for transfer;
(c) the other documents, if any, used in the exchange appear to be duly
executed, properly completed and in the proper form; and
(d) the depositary receipts evidencing Depositary Shares are free of
restrictions on transfer or stop orders except as set forth on the
Lists.
In the event that you ascertain that any Letter of Transmittal or other
document has been improperly completed or executed, that any of the
depositary receipts evidencing Depositary Shares are not in proper form or
some other irregularity exists, you shall attempt to resolve promptly the
irregularity and may use your best efforts to contact the appropriate
Holder by whatever means of communication you deem most expedient in order
to correct the irregularity and, upon consultation with McDonald's, shall
endeavor to take such other reasonable action as may be necessary to cause
such irregularity to be corrected; and the determination of any questions
referred to McDonald's or its counsel by you as to the validity, form and
eligibility, as well as the proper completion or execution of the Letters
of Transmittal and other documents, shall be final and binding and you may
rely thereon as provided in Section 10(e) hereof. Any costs of contacting
Holders for the purpose of correcting irregularities shall be incurred for
the account of McDonald's.
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 3
2. Exchange of Depositary Shares.
-----------------------------
As soon as practicable after the Issue Date and after surrender to you of
all depositary receipts evidencing Depositary Shares registered to a
particular record holder or holders (and only after surrender of all such
depositary receipts) and the return of a properly completed and signed
Letter of Transmittal relating thereto, you shall cause to be issued and
distributed to the Holder(s) in whose name such depositary receipts were
registered Debentures in the number determined by reference to the Exchange
Rate, registered in the name of such Holder(s).
If any depositary receipts evidencing Depositary Shares, or any Debentures
are to be issued in a name other than that is which the depositary receipt
evidencing Depositary Shares surrendered in exchange therefore is
registered, it shall be a condition of the issuance or exchange thereof
that the depositary receipt so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to you any transfer or other taxes required, or shall
establish to your satisfaction that such tax has been paid or is not
payable.
Depositary receipts and Debentures to be delivered by mail shall be
forwarded by first class mail under the Exchange Agent's blanket surety
bond, which McDonald's understands protects McDonald's and the Exchange
Agent from loss or liability arising by virtue of the non-receipt or non-
delivery of such depositary receipts and Debentures. It is understood that
the market value of securities in any one shipment sent by first class mail
under this procedure will not be in excess of $500,000. In the event the
market value shall exceed $500,000 the envelope shall be mailed by
registered mail and shall be insured separately for the replacement value
of its contents at the time of mailing.
3. Lost, Stolen or Destroyed Depositary Receipts.
---------------------------------------------
In the event that any Holder of depositary receipts evidencing Depositary
Shares claims that such depositary receipts are lost, stolen or destroyed,
the Exchange Agent shall mail to such Holder an affidavit of loss and an
indemnity bond. The Exchange Agent shall make the distribution of
Debentures only upon receipt of a properly completed affidavit of loss and
an indemnity bond.
4. Reports.
-------
The Exchange Agent shall advise McDonald's and the Dealer Managers of the
Exchange Offer, at 5:00 P.M., New York City time, or as promptly as
practicable thereafter, daily (or more frequently if requested), by
telephone 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
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 4
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 Exchange Agent
shall also furnish such other information with respect to the tendering
holders of Depositary Shares as the Company may reasonably require from
time to time.
Reports given pursuant to this Section shall be directed to the following:
For McDonald's For the Dealer Managers
-------------- -----------------------
McDonald's Corporation Goldman, Sachs & Co.
Carleton D. Pearl Greg Power
Vice President and Treasurer Associate
Telephone: (708) 575-6127 Telephone: (212) 902-8378
Facsimile: (708) 575-5211 Facsimile: (212) 902-0659
5. Internal Revenue Service Filings.
--------------------------------
You shall arrange to comply with all requirements under the tax laws of the
United States, including those relating to missing Tax Identification
Numbers, and shall file any appropriate reports with the Internal Revenue
Service (the "IRS") on behalf of McDonald's (e.g., Forms 1099B, etc.).
McDonald's will provide in writing any fair market value of the Debentures
to be reflected in such filings.
6. Copies of Documents.
-------------------
You shall take such action at McDonald's expense as may from time to time
be reasonably requested by McDonald's to furnish copies of the Letter of
Transmittal to persons designated by McDonald's.
7. Preservation of Documents.
-------------------------
Letters of Transmittal and telegrams, facsimile transmissions and other
materials submitted to you shall be preserved by you until delivered to or
otherwise disposed of in accordance with McDonald's instructions at or
prior to the termination hereof.
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 5
8. Maintenance of Records.
----------------------
You will keep and maintain complete and accurate ledgers showing all shares
exchanged by you and payments made by you. You are authorized to cooperate
with and furnish information to any organization or its legal
representatives designated from time to time by McDonald's in any manner
reasonably requested by any of them in connection with the Exchange Offer.
9. Delivery of Surrendered Depositary Receipts.
-------------------------------------------
All depositary receipts evidencing Depositary Shares surrendered to you
shall be retained by you and following exchange therefor shall be forwarded
to McDonald's, or elsewhere as directed by McDonald's.
10. Exchange Agent's Duties and Obligations.
---------------------------------------
As Exchange Agent, you:
(a) will have no duties or obligations other than those specifically set
forth herein, or as may subsequently be agreed to in writing by you
and McDonald's;
(b) will be regarded as making no representations or warranties and having
no responsibilities regarding the validity, sufficiency, value or
genuineness of any depositary receipts evidencing Depositary Shares
surrendered to you or the Depositary Shares represented thereby
delivered by you; will not be required or requested to make any
representations as to the validity, value or genuineness of such
depositary receipts evidencing Depositary Shares, or the Depositary
Shares; and will not be responsible in any manner whatsoever for the
correctness of the statements made herein or in any document furnished
to you by McDonald's;
(c) will not be obligated to institute or defend any action, suit or legal
proceeding in connection with the Exchange Offer, or your duties
hereunder, or take any other action which might in your judgment
involve, or result in, expense or liability to you, unless McDonald's
shall first furnish you an indemnity satisfactory to you;
(d) may rely on, and shall be protected in acting upon, any certificate,
instrument, opinion, representation, notice, letter, telegram or other
document delivered to you and believed by you to be genuine and to
have been signed by the proper party or parties;
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 6
(e) may rely on, and shall be protected in acting upon, written or oral
instructions given by any officer of, or any party authorized by an
officer of McDonald's with respect to any matter relating to your
actions as Exchange Agent;
(f) may upon prior agreement, consult with counsel satisfactory to you
(including counsel for McDonald's) and the advice or opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by you hereunder in
good faith and in accordance with such advice or opinion of such
counsel;
(g) may retain an agent or agents of your choice to assist you in
performing your duties and obligations hereunder, at your cost and
without relieving you of any liability hereunder; and
(h) will furnish to the Dealer Managers of the Exchange Offer,
certificates, dated the date of commencement of the Exchange Offer and
the Issue Date, of an appropriate officer of the Exchange Agent, in
form and substance satisfactory to McDonald's, 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 this
Agreement;
(ii) this Agreement has been duly authorized, executed and delivered
by the Exchange Agent; and
(iii) this Agreement constitutes a valid and binding obligation of
the Exchange Agent.
11. Indemnification of Exchange Agent.
---------------------------------
McDonald's hereby covenants and agrees to reimburse, indemnify and hold you
harmless from and against any and all claims, actions, judgments, damages,
losses, liabilities, costs, transfer or other taxes, and expenses
(including without limitation reasonable attorney's fees and expenses)
which, without negligence or willful misconduct on your part, may be paid,
incurred or suffered by you, or to which you may become subject, arising
out of or incident to this Agreement or the administration of your duties
hereunder, or arising out of or incident to your compliance with the
instructions set forth herein or with any instructions delivered to you
pursuant hereto, or as a result of defending yourself against any claim or
liability resulting from your actions as Exchange Agent, including any
claim against you by any tendering Holder, which covenant and agreement
shall survive the
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 7
termination hereof. You hereby represent that you will notify McDonald's by
letter or by facsimile confirmed by letter, of any receipt by you of a
written assertion of a claim against you, or any action commenced against
you, within ten (10) business days after your receipt of written notice of
such assertion or your having been served with the summons or other first
legal process giving information as to the nature and basis of any such
assertion or your having been served with the summons or other first legal
process giving information as to the nature and basis of any such action.
At its election, McDonald's will assume the conduct of your defense in any
such action or claim at its sole cost and expense. In the event that
McDonald's elects to assume the defense of any such action or claim and
confirms to you in writing that the indemnity provided for in this Section
11 applies to such action or claim, McDonald's shall not be liable for the
fees and expenses of any counsel thereafter retained by you.
12. Compensation and Expenses.
-------------------------
For services rendered as Exchange Agent hereunder, your fees and reimbursed
expenses are approved as set forth in Schedule A to this Agreement.
13. Notices.
-------
Except as otherwise provided herein, no notice, instruction or other
communication by one party shall be binding upon the other party unless
hand-delivered or sent by certified mail, return receipt requested. Notice
to you shall be sent or delivered to your above-noted address or such other
addresses as you shall hereafter designate in writing. Notice to
McDonald's shall be sent or delivered to:
McDonald's Corporation
One McDonald's Plaza
Oak Brook, Illinois 60521
Attention: Treasurer, with a copy to the Controller
14. Governing Law: Successors and Assigns.
--------------------------------------
This Agreement shall be construed and enforced in accordance with the
internal laws of the State of Illinois, and shall inure to the benefit of,
and the obligations created hereby shall be binding upon, the successors
and assigns of the parties hereto.
<PAGE>
First Chicago Trust Company of New York
______________, 1995
Page 8
Please confirm your acceptance of the arrangements herein provided by signing
and returning to us the enclosed duplicates of this Agreement.
Very truly yours,
McDONALD'S CORPORATION
By: ______________________
Name: ______________________
Title: ______________________
Agreed to and Accepted as of ________________, 1995.
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: _______________________
Name: Ralph Persico
Title: Customer Service Officer
<PAGE>
SCHEDULE A
Item Unit Fee
- ---- --------
Accept and process clean items $8.00 per Letter of Transmittal
Process legal/defective $8.00 per item
Guarantee delivery items $15.00 per item
Withdrawal items $15.00 per item
Forms 1099-B $.50 per form
Extensions of Offer $5,000 per extension
Minimum Fee $10,000
Out-of-Pocket Expenses
- ----------------------
Out-of-Pocket expenses for postage, insurance, stationary, printing, telephone,
etc., are in addition to the foregoing. These expenses will be billed on a cost
basis.
