<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
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MCDONALD'S CORPORATION
(NAME OF ISSUER)
DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
(TITLE OF CLASS OF SECURITIES)
580135 30 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
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 AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
JUNE 5, 1995
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$466,875,000 $93,375
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*Determined pursuant to Rule 0-11(a)(4) under the Securities Exchange Act of
1934, as amended, solely for the purpose of calculating the filing fee, on
the basis of the average of the high and low prices reported as of June 1,
1995 on the New York Stock Exchange Composite Tape for the Depositary
Shares.
**The amount of the filing fee, calculated in accordance with Rule 0-11(b)(2)
under the Securities Exchange Act of 1934, as amended, equals one-fiftieth
of one percent of the value of the Securities to be acquired.
[X]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
under the Securities Exchange Act of 1934, as amended, and identify the
filing with which the offsetting fee was previously paid. Identify the
previous filing by Registration Statement number, or the Form or Schedule
and the date of its filing.
Amount Previously Paid: $158,277
Form or Registration No.: 33-58625
Filing Party: McDonald's Corporation
Date Filed: April 14, 1995
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<PAGE>
This Statement relates to an offer by McDonald's Corporation, a Delaware
corporation (the "Company"), to exchange, upon the terms and subject to the
conditions contained in the Company's Prospectus, dated June 5, 1995 (the
"Prospectus"), and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer" and which are annexed to and filed with this
Statement as Exhibits (a)(1) and (a)(2), respectively) up to $450,000,000
aggregate principal amount of debentures designated as its 8.35% Subordinated
Deferrable Interest Debentures due 2025 (the "Debentures") for up to 18,000,000
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 Exchange Offer will be
effected on a basis of $25 principal amount of Debentures for each Depositary
Share validly tendered and accepted for exchange.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is McDonald's Corporation. The Company's principal
executive offices are located at One McDonald's Plaza, Oak Brook, Illinois
60521, telephone (708) 575-3000.
(b) The class of securities to which this Statement relates is the Depositary
Shares. Reference is hereby made to the information set forth on the cover page
of the Prospectus and in "The Exchange Offer--Purpose of The Exchange Offer",
"--Terms of The Exchange Offer" and "--Transactions and Arrangements Concerning
the Company's Securities" of the Prospectus, which is incorporated herein by
reference.
(c) Reference is hereby made to the information set forth in "Price Range of
Depositary Shares and Dividends" of the Prospectus, which is incorporated
herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Reference is hereby made to the information set forth on the cover page
of the Prospectus and in "The Exchange Offer--Terms of the Exchange Offer" of
the Prospectus, which is incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) Reference is hereby made to the information set forth on the cover
page of the Prospectus and in "The Exchange Offer--Purpose of the Exchange
Offer" and "Certain Considerations Relating to the Exchange Offer and the
Debentures--Listing and Trading of Debentures and Depositary Shares" of the
Prospectus, which is incorporated herein by reference. Except as set forth in
the Prospectus, the Company has no present plans or proposals which would
relate to, or would result in, any transaction, change or other occurrence with
respect to the Company or any class of its equity securities as is listed in
paragraphs (a) through (j) of Item 3 of Schedule 13E-4.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Reference is hereby made to the information set forth in "The Exchange
Offer--Transactions and Arrangements Concerning the Company's Securities" of
the Prospectus, which is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Reference is hereby made to the information set forth in "The Exchange
Offer--Transactions and Arrangements Concerning the Company's Securities" of
the Prospectus, which is incorporated herein by reference.
<PAGE>
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth on the cover page of
the Prospectus and in "The Exchange Offer--Exchange Agent and Information
Agent," "--Dealer Managers and Soliciting Dealers" and "--Fees and Expenses;
Transfer Taxes" of the Prospectus, which is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) Reference is hereby made to the information set forth in
"Capitalization" and "Selected Consolidated Financial Data" of the Prospectus,
which is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) None.
(b) In certain jurisdictions, the Debentures may be required to be qualified,
or claims of exemption with respect to the Exchange Offer may be required to be
made, under the respective securities or blue sky laws thereof.
(c) Not applicable.
(d) None.
(e) Reference is hereby made to the entire text of the Prospectus and the
related Letter of Transmittal, which are incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Prospectus, dated June 5, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and other Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees to their clients.
(a)(6) Form of Letter to holders of Depositary Shares.
(a)(7) Form of Press Release dated June 5, 1995.
(a)(8) Form of Summary Advertisement dated June 5, 1995.
(b) None.
(c)None.
(d)Tax Opinion and Consent of Sonnenschein Nath & Rosenthal.
(e)See Exhibit (a)(1).
(f)None.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
McDONALD'S CORPORATION
/s/ Jack M. Greenberg
By __________________________________
Jack M. Greenberg
Vice Chairman, Chief Financial
Officer and Director
Dated: June 5, 1995
3
<PAGE>
MCDONALD'S CORPORATION
OFFER TO EXCHANGE
QUARTERLY INCOME DEBT SECURITIES (QUIDS*)
(8.35% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025)
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF 7.72% CUMULATIVE PREFERRED STOCK,
SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
McDonald's Corporation, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with this Prospectus, constitute the "Exchange
Offer"), to exchange up to $450,000,000 aggregate principal amount of
debentures designated as its 8.35% 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 May 31, 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 June 1, 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 12:00 midnight, New York City
time, on June 30, 1995, or if extended by the Company, in its sole discretion,
the latest date and time to which the Exchange Offer is extended (the
"Expiration Date"). The Exchange Offer will expire on the Expiration Date.
Tenders of Depositary Shares may be withdrawn at any time prior to the
Expiration Date and, unless accepted for exchange by the Company, may be
withdrawn at any time after forty business days after the date of this
Prospectus. If the number of Depositary Shares tendered for exchange is
greater than the Amount Sought the Depositary Shares tendered will be subject
to proration. Depositary Shares not exchanged because of proration will be
returned.
The Company will pay to Soliciting Dealers (as defined herein) designated by
the registered or beneficial owner, as appropriate, of Depositary Shares a
solicitation fee of $0.50 per Depositary Share validly tendered and accepted
for exchange pursuant to the Exchange Offer, subject to certain conditions.
Soliciting Dealers are not entitled to a solicitation fee for Depositary
Shares beneficially owned by such Soliciting Dealer. See "The Exchange Offer--
Dealer Managers and Soliciting Dealers".
SEE "CERTAIN CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE
DEBENTURES" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE DEBENTURES,
INCLUDING IN THE CASE OF THE DEBENTURES THE PERIOD AND CIRCUMSTANCES DURING
AND UNDER WHICH PAYMENT OF INTEREST MAY BE DEFERRED AND CERTAIN RELATED UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES.
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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.
INCORPORATED
SALOMON BROTHERS INC
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The date of this Prospectus is June 5, 1995
<PAGE>
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER WHETHER TO TENDER ANY OR ALL OF ITS DEPOSITARY SHARES.
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares if any of the
conditions to the Exchange Offer is not satisfied. See "The Exchange Offer--
Expiration Date; Extensions; Amendments; Termination" and "--Conditions of the
Exchange Offer".
The Debentures will mature on June 30, 2025 and will bear interest at an
annual rate of 8.35% from the first day following the Expiration Date (the
"Issue Date"). Interest will be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing September 30, 1995,
provided that, so long as the Company shall not be in default in the payment of
interest on the Debentures, the Company shall have the right, upon prior notice
by public announcement given in accordance with New York Stock Exchange, Inc.
("NYSE") rules (or the rules of any other applicable self-regulatory
organization) at any time during the term of the Debentures, to extend the
interest payment period from time to time for a period not exceeding 20
consecutive quarterly interest payment periods (each, an "Extension Period").
No interest shall be due and payable during an Extension Period, but at the end
of each Extension Period the Company shall pay all interest then accrued and
unpaid on the Debentures, together with interest thereon, compounded quarterly,
at the interest rate on the Debentures. Upon the termination of any Extension
Period and the payment of all interest then due, the Company may commence a new
Extension Period. After prior notice by public announcement given in accordance
with NYSE rules (or the rules of any other applicable self-regulatory
organization), the Company also may prepay at any time all or any portion of
the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths throughout the term of the
Debentures. The Company has no current intention of exercising its right to
extend any interest payment period and believes that such an extension is
unlikely. However, should the Company determine to exercise such right in the
future, the market price of the Debentures is likely to be adversely affected.
See "Certain Considerations Relating to the Exchange Offer and the Debentures"
and "Description of Debentures--Interest" and "--Option to Extend Interest
Payment Period".
The Debentures will be redeemable at the option of the Company at any time on
or after December 3, 1997 (which is the same date on or after which the Series
E Preferred Stock is redeemable at the option of the Company), in whole or in
part, at a redemption price of 100% of the principal amount of the Debentures
redeemed, plus an amount equal to accrued and unpaid interest to the redemption
date. See "Description of Debentures--Redemption".
The Debentures will be unsecured obligations of the Company and will be
subordinate to all existing and future Senior Indebtedness (as defined herein)
of the Company, but senior to all preferred stock (the "Preferred Stock") and
common stock (the "Common Stock") of the Company. As of March 31, 1995,
outstanding Senior Indebtedness of the Company aggregated approximately $3.9
billion. See "Description of Debentures--Subordination".
For United States federal income tax purposes, the exchange of Depositary
Shares for Debentures will, depending upon each particular exchanging holder's
facts and circumstances, be treated as either an exchange in which gain or loss
is recognized or as a dividend, and the Debentures will be treated as having
been issued with original issue discount. For a discussion of these and other
United States federal income tax considerations relevant to the Exchange Offer,
see "Certain United States Federal Income Tax Considerations" and "Certain
United States Federal Tax Considerations for Non-United States Persons".
The Depositary Shares are listed and traded on the NYSE under the symbol
"MCDPRE". On June 2, 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 $25 7/8 per Depositary Share. Holders of Depositary
Shares are urged to obtain current market quotations for the Depositary Shares.
To the extent that Depositary Shares are tendered and accepted for exchange
pursuant to the Exchange Offer, the trading market for untendered Depositary
Shares may be adversely affected. However, the Depositary Shares should
continue to be listed on the NYSE following the consummation of the Exchange
Offer. The Debentures constitute a new issue of securities with no established
trading market. While the Debentures have been approved for listing on the
NYSE, subject to official notice of issuance, there can be no assurance that an
active market for the Debentures will develop.
2
<PAGE>
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc (the "Dealer Managers") are acting as Dealer Managers
for the Exchange Offer. The Dealer Managers have agreed to use their best
efforts to solicit the exchange of Depositary Shares pursuant to the Exchange
Offer. First Chicago Trust Company of New York (the "Exchange Agent") is acting
as Exchange Agent for the Exchange Offer and D.F. King & Co., Inc. (the
"Information Agent") is acting as Information Agent in connection with the
Exchange Offer.
Questions and requests for assistance may be directed to the Dealer Managers
or the Information Agent, as set forth on the back cover of this Prospectus.
Requests for additional copies of this Prospectus, the Letter of Transmittal
and the Notice of Guaranteed Delivery may be directed to the Information Agent.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES OF
WHICH INFORMATION IS GIVEN HEREIN. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR
WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS (AS DEFINED BELOW) OF
DEPOSITARY SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. HOWEVER, THE COMPANY MAY, AT ITS DISCRETION, TAKE SUCH ACTION AS
IT MAY DEEM NECESSARY TO MAKE THE EXCHANGE OFFER IN ANY SUCH JURISDICTION AND
EXTEND THE EXCHANGE OFFER TO HOLDERS OF DEPOSITARY SHARES IN SUCH JURISDICTION.
IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE
EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE EXCHANGE OFFER IS
BEING MADE ON BEHALF OF THE COMPANY BY THE DEALER MANAGERS OR ONE OR MORE
REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the Commission: New York Regional Office, Suite 1300, 7 World Trade
Center, New York, New York 10048 and Chicago Regional Office, 500 W. Madison
Street, Suite 1400, Chicago, Illinois 60661; and copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information can also be inspected at the offices of the
New York Stock Exchange and Chicago Stock Exchange.
The Company has filed with the Commission a Registration Statement on Form S-
4 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Exchange Offer and the Debentures. The
Company will file an Issuer Tender Offer Statement on Schedule 13E-4 (the
"Schedule 13E-4") with the Commission under the Exchange Act, which includes
certain additional information relating to the Exchange Offer. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the Schedule 13E-4, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement and the Schedule 13E-4.
A Company franchisee provides food services exclusively to United States
government personnel stationed at the United States naval station in Guantanamo
Bay, Cuba. This statement is made pursuant to the disclosure requirements of
Florida law and is accurate as of the date of this Prospectus. Investors may
obtain current information by contacting the Florida Department of Banking and
Finance, The Capitol, Tallahassee, Florida 32399-0350, telephone: (904) 488-
9805.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
have been filed with the Commission (File No. 1-5231) pursuant to the Exchange
Act and are incorporated herein by reference and made a part of this
Prospectus. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST
OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS DESCRIBED ABOVE, OTHER
THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM MCDONALD'S INVESTOR RELATIONS SERVICE CENTER, MCDONALD'S
CORPORATION, KROC DRIVE, OAK BROOK, ILLINOIS 60521, TELEPHONE: (708) 575-7428.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 4
Prospectus Summary........................................................ 5
Certain Considerations Relating to the Exchange Offer and the Debentures.. 13
McDonald's Corporation.................................................... 15
Capitalization............................................................ 16
Selected Consolidated Financial Data...................................... 17
Price Range of Depositary Shares and Dividends............................ 18
The Exchange Offer........................................................ 18
Description of Debentures................................................. 28
Description of Depositary Shares.......................................... 33
Description of Series E Preferred Stock................................... 34
Certain United States Federal Income Tax Considerations................... 36
Certain United States Federal Tax Considerations for Non-United States
Persons.................................................................. 40
Legal Matters............................................................. 42
Experts................................................................... 42
</TABLE>
4
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the detailed information contained elsewhere in this Prospectus or
by documents incorporated by reference in this Prospectus.
THE COMPANY AND THE DEPOSITARY SHARES
McDonald's Corporation and its subsidiaries develop, operate, franchise and
service a worldwide system of restaurants which prepare, assemble, package and
sell a limited menu of value-priced foods. These restaurants are operated by
the Company and its subsidiaries or, under the terms of franchise arrangements,
by franchisees who are independent third parties, or by affiliates operating
under joint venture agreements between the Company or its subsidiaries and
local businesspeople.
The Company's principal executive offices are located at One McDonald's
Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000.
The Depositary Shares were initially offered to the public on November 25,
1992 and were issued on December 3, 1992.
SPECIAL CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE DEBENTURES
In addition to the other information contained in this Prospectus, which
should be read carefully, holders should consider the following factors prior
to deciding whether or not to tender Depositary Shares in exchange for
Debentures in the Exchange Offer:
. The annual interest rate on the Debentures will be 8.35% as compared with
the annual dividend rate of 7.72% on the Series E Preferred Stock. To
facilitate reporting for income tax purposes, interest on the Debentures
will be payable on March 31, June 30, September 30 and December 31 of
each year, beginning September 30, 1995, as compared with dividends on
the Series E Preferred Stock which are payable on the first day of March,
June, September and December of each year. See "Comparison of Debentures
and Series E Preferred Stock" below.
. The Debentures will rank senior to the Series E Preferred Stock as to
payment in respect thereof and as to the distribution of assets upon
liquidation. However, the Debentures will be unsecured obligations of the
Company and will be (as the Series E Preferred Stock is) subordinate in
right to payment to all existing and future Senior Indebtedness of the
Company. In addition, the Debentures will be (as the Series E Preferred
Stock is) effectively subordinated to all obligations of the Company's
subsidiaries. See "Certain Considerations Relating to the Exchange Offer
and the Debentures--Subordination of Debentures".
. Participation in the Exchange Offer will be a taxable event. The
consequences of the Exchange Offer and holding Debentures in lieu of
Depositary Shares may vary depending upon the holder's particular facts
and circumstances. Accordingly, holders are advised to consult with their
own tax advisors for guidance with respect to their particular facts and
circumstances. See "Certain Considerations Relating to the Exchange Offer
and the Debentures--Exchange Will Be a Taxable Event", "--Continued
Accrual of Interest Income for Federal Income Tax Purposes in Event of
Interest Deferral", "Certain United States Federal Income Tax
Considerations" and "Certain United States Federal Tax Considerations for
Non-United States Persons".
. There has not been any public market for the Debentures. While the
Debentures have been approved for listing on the NYSE, subject to
official notice of issuance, there can be no assurance that an active
market for the Debentures will develop or be sustained in the future on
such exchange. See "Certain Considerations Relating to the Exchange Offer
and the Debentures--Listing and Trading of Debentures and Depositary
Shares".
5
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Series E Preferred Stock represented by
the Depositary Shares with the Debentures. The potential cash flow benefit to
the Company arises because interest payable on the Debentures will be
deductible by the Company as it accrues for United States federal income tax
purposes, while dividends payable on the Series E Preferred Stock are not
deductible. See "The Exchange Offer--Purpose of the Exchange Offer".
THE EXCHANGE OFFER; SECURITIES OFFERED
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company hereby offers to exchange up to $450,000,000
aggregate principal amount of Debentures for up to 18,000,000 of the 20,000,000
outstanding Depositary Shares, each representing 1/2,000 of a share of Series E
Preferred Stock. Exchanges will be effected on a basis of $25 principal amount
of Debentures (the minimum permitted denomination) for each Depositary Share
validly tendered and accepted for exchange in the Exchange Offer. If the number
of Depositary Shares tendered for exchange is greater than the Amount Sought
the Depositary Shares tendered will be subject to proration. See "The Exchange
Offer--Terms of the Exchange Offer" and "--Proration".
The Exchange Offer is subject to the condition that a minimum of 4,000,000
Depositary Shares shall have been tendered and not withdrawn prior to the
Expiration Date (the "Minimum Condition"). The Exchange Offer is also subject
to certain additional conditions. See "The Exchange Offer--Terms of the
Exchange Offer" and "--Conditions of the Exchange Offer".
The Debentures will mature on June 30, 2025 and will bear interest at an
annual rate of 8.35% from the Issue Date or from the most recent interest
payment date to which interest has been paid or duly provided for. Interest
will be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1995, provided that, so long
as the Company shall not be in default in the payment of interest on the
Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules (or the rules of any other
applicable self-regulatory organization) at any time during the term of the
Debentures, to extend the interest payment period from time to time for a
period not exceeding 20 consecutive quarterly interest payment periods. As a
consequence, quarterly interest payments on the Debentures would be deferred,
but would continue to accrue with interest thereon compounded quarterly at the
rate of interest on the Debentures. The Company has no current intention of
exercising its right to extend any interest payment period and believes that
such an extension is unlikely. However, should the Company determine to
exercise such right in the future, the market price of the Debentures is likely
to be adversely affected. See "Certain Considerations Relating to the Exchange
Offer and the Debentures", "Description of Debentures--Interest" and "--Option
to Extend Interest Payment Period".
The Debentures will be redeemable at the option of the Company at any time on
or after December 3, 1997 (which is the same date on or after which the Series
E Preferred Stock is redeemable at the option of the Company), in whole or in
part, at a redemption price of 100% of the principal amount of the Debentures
redeemed, plus an amount equal to accrued and unpaid interest to the redemption
date. The Debentures will not be subject to mandatory redemption, and no
sinking fund will be established for the payment of the Debentures. See
"Description of Debentures--Redemption".
6
<PAGE>
Dividends accumulated after May 31, 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 June 1, 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 the Issue Date, between the Company and First Fidelity Bank, National
Association, as trustee. See "Description of Debentures--Interest" and "--The
Trustee".
EXPIRATION DATE; WITHDRAWALS
The Company will accept for exchange Depositary Shares, validly tendered and
not withdrawn prior to 12:00 midnight, New York City time, on June 30, 1995, or
if extended by the Company, in its sole discretion, the latest date and time to
which the Exchange Offer is extended. The Exchange Offer will expire on the
Expiration Date. Tenders of Depositary Shares pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date and, unless accepted
for exchange by the Company, may be withdrawn at any time after forty business
days after the date of this Prospectus. See "The Exchange Offer--Expiration
Date; Extensions; Amendments; Termination" and "--Withdrawal of Tenders".
EXTENSIONS, AMENDMENTS AND TERMINATION
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares if any of the
conditions to the Exchange Offer is not satisfied. See "The Exchange Offer--
Expiration Date; Extensions; Amendments; Termination" and "--Conditions of the
Exchange Offer".
PROCEDURES FOR TENDERING
Each holder of Depositary Shares wishing to accept the Exchange Offer must
(i) properly complete and sign the Letter of Transmittal or a photocopy thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a photocopy thereof) in accordance with the instructions contained
herein and therein, together with any required signature guarantees, or an
Agent's Message (as hereinafter defined) in connection with a book-entry
transfer of Depositary Shares, together with any other required documents, and
deliver the same to First Chicago Trust Company of New York, as Exchange Agent,
at either of its addresses set forth in "The Exchange Offer--Exchange Agent and
Information Agent" and either (a) cause depositary receipts for the Depositary
Shares to be received by the Exchange Agent at such address or (b) cause such
Depositary Shares to be transferred pursuant to the procedures for book-entry
transfer described herein and a confirmation of such book-entry transfer to be
received by the Exchange Agent, in each case prior to the Expiration Date or
(ii) comply with the guaranteed delivery procedures described herein.
DEPOSITARY RECEIPTS, LETTERS OF TRANSMITTAL AND OTHER REQUIRED DOCUMENTS SHOULD
BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY, THE DEALER MANAGERS
OR THE INFORMATION AGENT. See "The Exchange Offer--General" and "--Procedures
for Tendering".
Holders of Depositary Shares who are not registered holders of, and who seek
to tender such Depositary Shares should (i) obtain a properly completed Letter
of Transmittal for such Depositary Shares from the registered holder with
signatures guaranteed by an Eligible Institution (as hereinafter defined), or
(ii) obtain and include with the Letter of Transmittal depositary receipts for
Depositary Shares properly endorsed for transfer by the registered holder or
accompanied by a stock power from the registered holder with signatures on the
endorsement or written instrument or instruments of transfer guaranteed by an
Eligible Institution or (iii) effect a record transfer of such Depositary
Shares
7
<PAGE>
and comply with the requirements applicable to registered holders for tendering
Depositary Shares prior to the Expiration Date. See "The Exchange Offer--
Procedures for Tendering".
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
Any beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Depositary Shares should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on its own behalf, such owner
must, prior to completing and executing a Letter of Transmittal and delivering
its Depositary Shares, either make appropriate arrangements to register
ownership of the Depositary Shares in such owner's name or obtain a properly
completed stock power from the registered holder. The transfer of registered
ownership may take considerable time and may not be able to be completed prior
to the Expiration Date and, accordingly, may prohibit a transferring beneficial
owner from participating in the Exchange Offer. See "The Exchange Offer--
Procedures for Tendering--Signature Guarantees".
GUARANTEED DELIVERY PROCEDURES
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Depositary Shares to reach the Exchange Agent before
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering--Guaranteed Delivery".
ACCEPTANCE OF DEPOSITARY SHARES AND DELIVERY OF DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer, including
the reservation by the Company of the right to withdraw or terminate the
Exchange Offer and certain other rights, the Company will accept for exchange
Depositary Shares up to the Amount Sought that are properly tendered in the
Exchange Offer and not withdrawn prior to the Expiration Date. Subject to such
terms and conditions, the Debentures issued pursuant to the Exchange Offer will
be delivered as promptly as practicable following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer" and "--Expiration Date;
Extensions; Amendments; Termination".
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the aggregate number of Depositary Shares validly
tendered and not properly withdrawn (including Depositary Shares tendered by
the guaranteed delivery procedures), the Company does not expect that it would
be able to announce the final results of such proration until approximately
seven business days after the Expiration Date. Preliminary results of proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Depositary Shares may obtain such preliminary
information from the Dealer Managers or Information Agent and may also be able
to obtain such information from their brokers. The Company will not issue any
Debentures in exchange for any Depositary Shares accepted for exchange pursuant
to the Exchange Offer, or return Depositary Shares delivered to the Exchange
Agent but not tendered, or return Depositary Shares tendered but not accepted
for exchange because of proration, until the final proration factors are known.
See "The Exchange Offer--Proration".
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Depositary Shares for Debentures pursuant to the Exchange
Offer will be a taxable event. Depending on each exchanging holder's particular
facts and circumstances, the exchange may be treated as (i) a transaction in
which gain or loss will be recognized in an amount
8
<PAGE>
equal to the difference between the fair market value of the Debentures
received in the exchange and the exchanging holder's tax basis in the
Depositary Shares surrendered or (ii) a distribution taxable as a dividend in
an amount not in excess of the fair market value of the Debentures received by
such exchanging holder. If a holder does not own, either directly or
indirectly, any Common Stock immediately after the Expiration Date of the
Exchange Offer, a holder's exchange of Depositary Shares for Debentures
pursuant to the Exchange Offer should be treated as a sale or exchange of such
Depositary Shares for United States federal income tax purposes. All holders of
the Depositary Shares are advised to consult their own tax advisors regarding
the United States federal, state, local and foreign tax consequences of the
exchange of the Depositary Shares for the Debentures. See "Certain United
States Federal Income Tax Considerations" and "Certain United States Federal
Tax Considerations for Non-United States Persons".
Because the Company has the right to extend any interest payment for a period
not exceeding 20 consecutive quarterly interest payment periods, the Debentures
will be treated as issued with "original issue discount" for United States
federal income tax purposes. In the event an Extension Period occurs, holders
of the Debentures would continue under the original issue discount rules to
include original issue discount in gross income as it accrues for United States
federal income tax purposes. As a result, a holder would include such amounts
in gross income without receiving current cash interest payments. A holder that
disposes of its Debentures prior to the record date for payment of interest at
the end of an Extension Period will not receive cash from the Company related
to such interest because such interest will be paid to the holder of record on
such record date, regardless of who the holders of record may have been on
other dates during the Extension Period. See "Certain United States Federal
Income Tax Considerations--Interest and Original Issue Discount on Debentures".
UNTENDERED DEPOSITARY SHARES
Holders of Depositary Shares who do not tender their Depositary Shares in the
Exchange Offer or whose Depositary Shares are not accepted for exchange will
continue to hold such Depositary Shares and will be entitled to all the rights
and preferences, and will be subject to all of the limitations, applicable
thereto. The Company expects that the Depositary Shares will continue to be
listed on the NYSE following the consummation of the Exchange Offer. See
"Certain Considerations Relating to the Exchange Offer and Debentures--Listing
and Trading of Debentures and Depositary Shares".
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
in connection with the Exchange Offer. D. F. King & Co., Inc. has been retained
by the Company to act as Information Agent for the Exchange Offer. QUESTIONS
AND REQUESTS FOR ASSISTANCE, REQUESTS FOR ADDITIONAL COPIES OF THIS PROSPECTUS
OR OF THE LETTER OF TRANSMITTAL AND REQUESTS FOR THE NOTICE OF GUARANTEED
DELIVERY SHOULD BE DIRECTED TO D. F. KING & CO., INC. AT (800) 628-8536. The
addresses and telephone numbers of the Exchange Agent and Information Agent are
set forth in "The Exchange Offer--Exchange Agent and Information Agent".
DEALER MANAGERS
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc have been retained as Dealer Managers to solicit
exchanges of Depositary Shares for Debentures. Questions with respect to the
Exchange Offer may be directed to Goldman, Sachs & Co. at (800) 828-3182. See
"The Exchange Offer--Dealer Managers and Soliciting Dealers".
SOLICITING DEALER FEES AND EXPENSES
The expenses of soliciting tenders of Depositary Shares will be borne by the
Company. Subject to the receipt of a properly completed and duly executed
Letter of Transmittal or Notice of Solicited
9
<PAGE>
Tenders as described herein, the Company will pay to any Soliciting Dealer (as
hereinafter defined) a solicitation fee of $0.50 per Depositary Share tendered
and accepted for exchange pursuant to the Exchange Offer. See "The Exchange
Offer--Dealer Managers and Soliciting Dealers".
COMPARISON OF DEBENTURES AND SERIES E PREFERRED STOCK
The following is a brief summary comparison of certain of the principal terms
of the Debentures and the Series E Preferred Stock represented by the
Depositary Shares.
<TABLE>
<CAPTION>
DEBENTURES SERIES E PREFERRED STOCK
---------- ------------------------
<S> <C> <C>
Interest/Dividend Rate.. 8.35% 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,
June 1, 1995 through the Expira- June 1, September 1 and December
tion Date) payable quarterly in 1 of each year, when, as and if
arrears on March 31, June 30, declared by the Company's Board
September 30 and December 31 of of Directors (the "Board of Di-
each year, commencing September rectors"). All dividends on the
30, 1995, subject to the Series E Preferred Stock have
Company's right to extend the been paid to date. In the event
interest payment period from dividends are not paid on a div-
time to time for a period not idend payment date in the fu-
exceeding 20 consecutive quar- ture, holders would not be enti-
terly interest payment periods, tled to receive interest on any
as described herein. At the end dividend arrearages. The Company
of each Extension Period the may not declare or pay dividends
Company shall pay to the holders on the Common Stock or any other
all interest then accrued and class of stock ranking junior to
unpaid, together with interest the Series E Preferred Stock un-
thereon, compounded quarterly at less all dividends on the Series
the rate of interest on the De- E Preferred Stock have been
bentures. During any Extension paid.
Period, the Company may not de-
clare or pay dividends on, or
redeem, purchase or acquire, any
of its capital stock. The Com-
pany has no current intention of
exercising its right to extend
an interest payment period and
believes that such an extension
is unlikely.
Maturity; Sinking Fund.. June 30, 2025. There is no man- Not applicable. There is no man-
datory redemption or sinking datory redemption or sinking
fund for the Debentures. fund for the Series E Preferred
Stock.
Optional Redemption..... Redeemable at the option of the Redeemable at the option of the
Company at any time on or after Company at any time on or after
December 3, 1997, in whole or in December 3, 1997, in whole or in
part, at a redemption price of part, at a redemption price
100% of the principal amount of equal to the liquidation prefer-
the Debentures redeemed, plus an ence of the Series E Preferred
amount equal to accrued and un- Stock (equal to $25 per Deposi-
paid interest to the redemption tary Share) redeemed, plus an
date. amount equal to accrued and un-
paid dividends to the redemption
date.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
DEBENTURES SERIES E PREFERRED STOCK
---------- ------------------------
<S> <C> <C>
Events of Default;
Acceleration of Events of Default under the In- Not applicable. However, hold-
Maturity................ denture include: default for ers of the outstanding shares
thirty days in payment of any of the Series E Preferred
interest installment when due; Stock, voting together as a
default for ten days in payment class with the holders of all
of principal, at maturity or on other series of Preferred Stock
redemption or otherwise, when entitled to receive cumulative
due; default for sixty days af- preferred dividends, are enti-
ter notice to the Company by tled to elect two members of
the Trustee, or to the Company the Board of Directors (the au-
and the Trustee by the holders thorized number of directors
of at least 25% in principal not to be increased for this
amount of the Debentures then purpose) in the event that div-
outstanding in the performance idends payable on the Series E
of any other covenant or war- Preferred Stock or on any other
ranty in the Indenture; and series of Preferred Stock are
certain events of bankruptcy, in arrears and unpaid in an
insolvency or reorganization of amount equal to or exceeding
the Company. If an Event of De- the amount payable on such se-
fault shall have occurred and ries of Preferred Stock for six
be continuing, either the quarterly dividend periods,
Trustee or the holders of 25% whether or not consecutive.
in principal amount of the De-
bentures then outstanding may
declare the principal of all
the Debentures to be due and
payable, subject to prior pay-
ment to holders of Senior In-
debtedness. As of March 31,
1995, outstanding Senior In-
debtedness aggregated approxi-
mately $3.9 billion.
Subordination........... Subordinate to all existing and Subordinate to claims of credi-
future Senior Indebtedness of tors, including holders of the
the Company, but senior to all Company's outstanding debt se-
issued and outstanding Pre- curities and the Debentures, on
ferred Stock, including the Se- a parity with all other issued
ries E Preferred Stock, and to and outstanding Preferred Stock
the Common Stock. As of March of the Company, and senior to
31, 1995, outstanding Senior all issued and outstanding Com-
Indebtedness of the Company ag- mon Stock. Effectively subordi-
gregated approximately $3.9 nate to all obligations of the
billion. Effectively subordi- Company's subsidiaries.
nate to all obligations of the
Company's subsidiaries.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
DEBENTURES SERIES E PREFERRED STOCK
---------- ------------------------
<S> <C> <C>
Voting Rights........... None. None, except in certain circum-
stances.
Restrictions on
Consolidation, Merger,
Conveyance, Transfer or
Lease................... The Company shall not consoli- None.
date with or merge into any
other Person (other than an af-
filiate) or convey, transfer or
lease all or substantially all
of its properties and assets to
any Person (other than an af-
filiate) as an entirety, and
the Company shall not permit
any Person to consolidate with
or merge into the Company or
convey, transfer or lease its
properties and assets unless
certain conditions are met.
New York Stock Exchange The Debentures have been ap-
Listing................. proved for listing on the NYSE, The Depositary Shares are
subject to official notice of listed on the NYSE under the
issuance. symbol "MCDPRE". The Series E
Preferred Stock has not been
and will not be listed on the
NYSE.
Dividends-Received Interest paid to corporate Dividends paid to corporate
Deduction............... holders will not be eligible holders are eligible for the
for the dividends-received de- dividends-received deduction
duction for corporate holders. for corporate holders. The div-
idends-received deduction is
not applicable to individual
holders.
Minimum Denominations... $25 per Debenture. $25 per Depositary Share.
</TABLE>
12
<PAGE>
CERTAIN CONSIDERATIONS RELATING TO THE EXCHANGE OFFER AND THE DEBENTURES
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered prior to deciding whether
or not to tender Depositary Shares in exchange for Debentures in the Exchange
Offer:
EXCHANGE WILL BE A TAXABLE EVENT
The exchange of Depositary Shares for Debentures pursuant to the Exchange
Offer will be a taxable event for United States federal income tax purposes.
Depending on each exchanging holder's particular facts and circumstances, the
exchange may be treated as (i) a transaction in which gain or loss will be
recognized in an amount equal to the difference between the fair market value
of the Debentures received in the exchange and the exchanging holder's tax
basis in the Depositary Shares surrendered or (ii) a distribution taxable as a
dividend in an amount not in excess of the fair market value of the Debentures
received by such exchanging holder. If a holder does not own, either directly
or indirectly, any Common Stock immediately after the Expiration Date of the
Exchange Offer, a holder's exchange of Depositary Shares for Debentures
pursuant to the Exchange Offer should be treated as a sale or exchange of such
Depositary Shares for United States federal income tax purposes. All holders of
Depositary Shares are advised to consult their own tax advisors regarding the
United States federal, state, local and foreign tax consequences of the
exchange of Depositary Shares. See "Certain United States Federal Income Tax
Considerations" and "Certain United States Federal Tax Considerations for Non-
United States Persons".
COMPANY HAS RIGHT TO DEFER PAYMENT OF INTEREST
So long as the Company shall not be in default in the payment of interest on
the Debentures, the Company shall have the right under the Indenture, upon
prior notice by public announcement given in accordance with NYSE rules (or the
rules of any other applicable self-regulatory organization) at any time during
the term of the Debentures, to extend any interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest payment
periods. No interest shall be due and payable during an Extension Period, but
on the interest payment date occurring at the end of each Extension Period, the
Company shall pay to the holders of record on the record date for such interest
payment date (regardless of who the holders of record may have been on other
dates during the Extension Period) all accrued and unpaid interest on the
Debentures, together with interest thereon, compounded quarterly at the rate of
interest on the Debentures.
Prior to the termination of any Extension Period, the Company may further
extend such Extension Period; provided that such Extension Period, together
with all such previous and further extensions thereof, may not exceed 20
consecutive quarterly interest payment periods. Upon the termination of any
Extension Period and the payment of all interest then due, the Company may
commence a new Extension Period. After prior notice given by public
announcement in accordance with NYSE rules (or the rules of any other
applicable self-regulatory organization), the Company may also prepay at any
time all or a portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths
throughout the term of the Debentures. See "Description of Debentures--Option
to Extend Interest Payment Period".
The Company has no current intention of exercising its right to extend any
interest payment period and believes that such an extension is unlikely.
INTEREST DEFERRAL LIKELY TO HAVE ADVERSE EFFECT ON MARKET PRICE OF DEBENTURES
As described above, the Company has the right to extend an interest payment
period from time to time for a period not exceeding 20 consecutive quarterly
interest payment periods. In the event that the Company exercises its right to
cause an Extension Period, or in the event the Company thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Debentures is likely to be adversely
affected. In addition, as a result of
13
<PAGE>
such rights, the market price of the Debentures may be more volatile than other
debt instruments with original issue discount that do not have such rights. A
holder that disposes of its Debentures during an Extension Period, therefore,
may not receive the same return on its investment as a holder that continues to
hold its Debentures. See "Description of Debentures--Option to Extend Interest
Payment Period".
CONTINUED ACCRUAL OF INTEREST INCOME FOR FEDERAL INCOME TAX PURPOSES IN EVENT
OF INTEREST DEFERRAL
Because the Company has the right to extend any interest payment for a period
not exceeding 20 consecutive quarterly interest payment periods, the Debentures
will be treated as issued with "original issue discount" for United States
federal income tax purposes, meaning that, in most cases for federal income tax
purposes, a holder of Debentures will be required to include in such holder's
gross income interest on the Debentures whether or not such holder actually
receives cash amounts in respect of such interest. Generally, all of a holder's
taxable interest income with respect to the Debentures will be accounted for as
"original issue discount" and actual distributions of stated interest will not
be separately reported as taxable income. In the event an Extension Period
occurs, holders of the Debentures would be required to continue under the
original issue discount rules to include in such holder's gross income original
issue discount as it accrues during such Extension Period notwithstanding that
such holder would not receive current cash interest payments. A holder that
disposes of its Debentures prior to the record date for payment of interest at
the end of an Extension Period will not receive cash from the Company related
to such interest because such interest will be paid to the holder of record on
such record date, regardless of who the holders of record may have been on
other dates during the Extension Period. The extent to which such a holder
would receive a return on the Debentures for the period it held such Debentures
will depend on the market for the Debentures at the time of disposition. See
"Certain United States Federal Income Tax Considerations--Interest and Original
Issue Discount on Debentures".
SUBORDINATION OF DEBENTURES
The Debentures will be unsecured obligations of the Company and will be
subordinate to all existing and future Senior Indebtedness of the Company. As
of March 31, 1995, outstanding Senior Indebtedness of the Company aggregated
approximately $3.9 billion. There are no terms of the Debentures or the
Indenture (as hereinafter defined) that limit the Company's ability to incur
additional indebtedness, including indebtedness that ranks senior to or pari
passu with the Debentures. The Debentures also effectively will be subordinate
to all obligations of the Company's subsidiaries. See "Description of
Debentures--Subordination".
LISTING AND TRADING OF DEBENTURES AND DEPOSITARY SHARES
The Debentures constitute a new series of securities with no established
trading market. While the Debentures have been approved for listing on the
NYSE, subject to official notice of issuance, there can be no assurance that an
active market for the Debentures will develop or be sustained in the future on
such exchange. Although the Dealer Managers have indicated to the Company that
they intend to make a market in the Debentures as permitted by applicable laws
and regulations, they are not obligated to do so and may discontinue any such
market making activities at any time without notice. Accordingly, no assurance
can be given as to the liquidity of, or trading for, the Debentures.
The Exchange Offer will reduce the number of Depositary Shares that might
otherwise trade publicly and will reduce the number of holders of Depositary
Shares, which could adversely affect the liquidity and market value of the
Depositary Shares not tendered and exchanged in the Exchange Offer. The Company
anticipates that there will be a sufficient number of Depositary Shares
outstanding and publicly traded following the consummation of the Exchange
Offer to ensure a continued trading market in the Depositary Shares. Based on
the published guidelines of the NYSE, the Company's acceptance for exchange of
the Amount Sought pursuant to the Exchange Offer should not cause the remaining
Depositary Shares to be delisted from the NYSE.
14
<PAGE>
MCDONALD'S CORPORATION
McDonald's Corporation and its subsidiaries develop, operate, franchise and
service a worldwide system of restaurants which prepare, assemble, package and
sell a limited menu of value-priced foods. These restaurants are operated by
the Company and its subsidiaries or, under the terms of franchise arrangements,
by franchisees who are independent third parties, or by affiliates operating
under joint venture agreements between the Company or its subsidiaries and
local businesspeople.
McDonald's restaurants offer a substantially uniform menu consisting of
hamburgers and cheeseburgers, including the Big Mac and Quarter Pounder with
Cheese sandwiches, the Filet-O-Fish, McGrilled Chicken and McChicken
sandwiches, french fries, Chicken McNuggets, salads, shakes, sundaes and cones
made with low fat frozen yogurt, pies, cookies and a limited number of soft
drinks and other beverages. In addition, the restaurants sell a variety of
products during limited promotional time periods. McDonald's restaurants
operating in the United States are open during breakfast hours and offer a full
breakfast menu including the Egg McMuffin and the Sausage McMuffin with Egg
sandwiches, hotcakes and sausage; three varieties of biscuit sandwiches; Apple-
Bran muffins; and cereals. McDonald's restaurants in many countries around the
world offer many of these same products as well as other products and limited
breakfast menus. The Company tests new products on an ongoing basis.
McDonald's restaurants are located in all fifty of the United States and the
District of Columbia, and in many foreign locations, principally Japan, Canada,
Germany, England, Australia and France. At March 31, 1995, there were 15,370
restaurants worldwide, of which 9,795 were located in the United States and
5,575 in 78 other countries. An additional 327 restaurants were under
construction at March 31, 1995, including 228 outside the United States.
At March 31, 1995, 68% of McDonald's restaurants were operated by independent
franchisees, 21% were operated by the Company and its subsidiaries and 11% were
operated by affiliates (entities in which the Company and/or its subsidiaries
have an equity interest of 50% or less and in which the remaining equity
interest generally is owned by a local resident).
The Company's principal executive offices are located at One McDonald's
Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000.
15
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of March 31, 1995 and as adjusted to give effect
to the Exchange Offer (assuming that either 50% or 90% of the outstanding
Depositary Shares, 10,000,000 and 18,000,000 Depositary Shares, respectively,
are exchanged). The financial data as of March 31, 1995 appearing in the
"Actual" column of the following table is derived from the Company's unaudited
condensed consolidated financial statements as of and for the period ended
March 31, 1995, incorporated by reference herein.
<TABLE>
<CAPTION>
MARCH 31, 1995
-------------------------------
(U.S. DOLLARS IN MILLIONS)
ACTUAL AS ADJUSTED(3)
--------- --------------------
ASSUMING ASSUMING
50% 90%
EXCHANGE EXCHANGE
--------- ---------
<S> <C> <C> <C>
Short-term debt(1)--
Notes payable............................... $ 433.6 $ 433.6 $ 433.6
Current maturities of long-term debt........ 66.2 66.2 66.2
--------- --------- ---------
Total short-term debt................... 499.8 499.8 499.8
Long-term debt(1)--
Long-term obligations....................... 3,986.4 3,986.4 3,986.4
Subordinated debentures due 2025............ 250.0 450.0
--------- --------- ---------
Total long-term debt.................... 3,986.4 4,236.4 4,436.4
--------- --------- ---------
Total debt(2)........................... 4,486.2 4,736.2 4,936.2
Shareholders' equity(1)--
Preferred stock, no par value
Authorized 165 million shares; issued 11.2
million shares........................... 673.2 423.2 223.2
Common Stock, no par value
Authorized 1.25 billion shares; issued
830.3 million shares..................... 92.3 92.3 92.3
Additional paid-in capital.................. 300.1 300.1 300.1
Guarantee of ESOP Notes(2).................. (234.2) (234.2) (234.2)
Retained earnings........................... 8,853.0 8,853.0 8,853.0
Foreign currency translation adjustment..... (50.4) (50.4) (50.4)
--------- --------- ---------
9,634.0 9,384.0 9,184.0
Common Stock in treasury, at cost; 135.5
million shares............................. (2,387.4) (2,387.4) (2,387.4)
--------- --------- ---------
Total shareholders' equity.............. 7,246.6 6,996.6 6,796.6
--------- --------- ---------
Total capitalization.......................... $11,732.8 $11,732.8 $11,732.8
========= ========= =========
</TABLE>
- --------
(1) For additional information concerning debt and Shareholders' equity, see
the Company's unaudited condensed consolidated financial statements and
accompanying financial comments as of March 31, 1995, and the Company's
audited consolidated financial statements and accompanying financial
comments as of December 31, 1994, all as incorporated by reference herein.
There has been no material change in the capitalization of the Company and
its consolidated subsidiaries since March 31, 1995.
(2) Included in total debt at March 31, 1995 were $159.5 million of 7.5% ESOP
Notes Series A, and $83.3 million of 7.2% ESOP Notes Series B
(collectively, the "ESOP Notes"), issued by the Leveraged Employee Stock
Ownership Plan, with payments through 2004 and 2006, respectively, which
are guaranteed by the Company. The Company has agreed to repurchase the
ESOP Notes upon the occurrence of certain events. The Company also has
guaranteed certain foreign affiliate loans of $60.9 million at March 31,
1995.
(3) Assuming a 50% exchange, the Debentures that will be issued are expected to
have an aggregate principal amount of $250 million and are assumed to have
an aggregate fair market value of approximately $250 million as of the
Issue Date. Assuming a 90% exchange, the Debentures that will be issued are
expected to have an aggregate principal amount of $450 million and are
assumed to have an aggregate fair market value of approximately $450
million as of the Issue Date. The difference, if any, between the aggregate
principal amount and the aggregate fair market value of the Debentures will
be classified as debt premium or discount. The difference, if any, between
the aggregate fair market value of the Debentures and the aggregate
carrying value of the Series E Preferred Stock will be recorded in
Additional paid-in capital. To the extent the actual aggregate fair market
value of the Debentures at the Issue Date differs from the assumed amount,
the debt premium or discount and Additional paid-in capital accounts will
change accordingly.
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------- -------------------------------------------------
1995(2) 1994(2) 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE OF COMMON STOCK DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Systemwide sales (unau-
dited)(3).............. $ 6,671.6 $ 5,709.2 $25,987.4 $23,586.9 $21,885.4 $19,928.2 $18,758.9
========= ========= ========= ========= ========= ========= =========
Income statement data:
Sales by Company oper-
ated
restaurants........... $ 1,511.6 $ 1,244.7 $ 5,792.6 $ 5,157.2 $ 5,102.5 $ 4,908.5 $ 5,018.9
Revenues from
franchised
restaurants........... 649.7 551.3 2,528.2 2,250.9 2,030.8 1,786.5 1,620.7
--------- --------- --------- --------- --------- --------- ---------
Total revenues......... 2,161.3 1,796.0 8,320.8 7,408.1 7,133.3 6,695.0 6,639.6
Income before provi-
sion for income tax-
es.................... 435.1 377.4 1,886.6 1,675.7 1,448.1 1,299.4 1,246.3
Net income............. 280.7 243.4 1,224.4 1,082.5 958.6 859.6 802.3
========= ========= ========= ========= ========= ========= =========
Balance sheet data:
Shareholders' equity
at end of
period................ $ 7,246.6 $ 6,462.8 $ 6,885.4 $ 6,274.1 $ 5,892.4 $ 4,835.1 $ 4,182.3
Long-term debt at end
of period............. 3,986.4 3,560.0 2,935.4 3,489.4 3,176.4 4,267.4 4,428.7
Total assets at end of
period................ 14,213.5 12,183.1 13,591.9 12,035.2 11,681.2 11,349.1 10,667.5
========= ========= ========= ========= ========= ========= =========
Per share of Common
Stock:(4)
Net income............. $ 0.39 $ 0.33 $ 1.68 $ 1.45 $ 1.30 $ 1.17 $ 1.10
Dividends declared..... 0.06 0.05 0.23 0.21 0.20 0.18 0.17
Book value(5).......... 9.69 8.38 9.20 8.12 7.39 6.73 5.82
========= ========= ========= ========= ========= ========= =========
Other data:
Ratio of earnings to
fixed charges(6)...... 4.66 4.70 5.26 4.86 3.96 3.53 3.48
========= ========= ========= ========= ========= ========= =========
Number of restaurants
at end of
period:
Operated by franchi-
sees................ 10,477 9,886 10,458 9,832 9,237 8,735 8,131
Operated by the Com-
pany................ 3,143 2,741 3,083 2,699 2,551 2,547 2,643
Operated by affili-
ates................ 1,750 1,491 1,664 1,462 1,305 1,136 1,029
--------- --------- --------- --------- --------- --------- ---------
Total restaurants.... 15,370 14,118 15,205 13,993 13,093 12,418 11,803
========= ========= ========= ========= ========= ========= =========
</TABLE>
- --------
(1) The Income statement data, Balance sheet data and Number of restaurants
data should be read in conjunction with the audited consolidated financial
statements and accompanying financial comments and the unaudited condensed
consolidated financial statements and accompanying financial comments of
the Company in the documents incorporated by reference herein. See
"Incorporation of Certain Documents by Reference".
(2) The financial information presented for the three months ended March 31,
1995 and 1994 is unaudited. In the opinion of the Company, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
have been included.
(3) Systemwide sales represent sales by all Company-operated, franchised and
affiliated restaurants.
(4) Per share of Common Stock data has been restated to reflect a two-for-one
Common Stock split which was effected in the form of a stock dividend
distributed on June 24, 1994, to common shareholders of record on June 7,
1994.
(5) Book value represents total Shareholders' equity excluding Preferred Stock
and the portion of the guarantee of ESOP Notes related to Preferred Stock.
(6) The ratios of earnings to fixed charges shown above have been computed on a
total enterprise basis. Earnings represent income before provision for
income taxes and fixed charges. Fixed charges consist of interest on all
indebtedness, amortization of debt issuance costs and discount or premium
relating to any indebtedness, and such portion of rental charges (after
reduction for related sublease income) considered to be representative of
the interest component in the particular case.
17
<PAGE>
PRICE RANGE OF DEPOSITARY SHARES AND DIVIDENDS
The Depositary Shares are listed and traded on the NYSE under the symbol
"MCDPRE". The following table sets forth the high and low closing sales prices
of the Depositary Shares on the NYSE Composite Tape and the cash dividends per
Depositary Share paid in the fiscal quarters indicated.
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PER DEPOSITARY SHARE
------ ------ --------------------
<S> <C> <C> <C>
1992: 4th Quarter (from December 23, 1992)... 25 5/8 25 1/4 $ 0
1993: 1st Quarter............................ 26 5/8 25 1/2 0.4717
2nd Quarter............................... 27 26 0.4825
3rd Quarter............................... 27 1/4 26 0.4825
4th Quarter............................... 27 7/8 26 3/8 0.4825
1994: 1st Quarter............................ 27 1/2 25 3/8 0.4825
2nd Quarter............................... 26 1/8 24 5/8 0.4825
3rd Quarter............................... 25 7/8 24 5/8 0.4825
4th Quarter............................... 24 5/8 22 7/8 0.4825
1995: 1st Quarter............................ 25 5/8 24 1/4 0.4825
2nd Quarter (through June 2, 1995)........ 26 1/8 25 1/4 0.4825
</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 June 2,
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 $25 7/8 per Depositary Share. There can be no assurance as
to the prices at which the Depositary Shares may trade following the Exchange
Offer. The exchange of Depositary Shares pursuant to the Exchange Offer will
reduce the number of Depositary Shares that might otherwise trade publicly and
the number of holders of Depositary Shares and, depending on the number of
Depositary Shares exchanged, could adversely affect the liquidity and market
value of the remaining Depositary Shares held by the public. HOLDERS OF
DEPOSITARY SHARES ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
DEPOSITARY SHARES.
THE EXCHANGE OFFER
GENERAL
Participation in the Exchange Offer is voluntary and Holders should carefully
consider whether to tender their Depositary Shares thereunder. Neither the
Company nor its Board of Directors makes any recommendation to Holders as to
whether to tender or refrain from tendering Depositary Shares pursuant to the
Exchange Offer. Holders of the Depositary Shares are urged to consult their
financial and tax advisors in making their own decisions on what action to take
in light of their own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect to the
Exchange Offer means (i) any person in whose name any Depositary Shares are
registered on the books of the Company, (ii) any other person who has obtained
a properly completed stock power from the registered holder or (iii) any person
whose Depositary Shares are held of record by The Depository Trust Company
("DTC") who desires to deliver such Depositary Shares by book-entry transfer at
DTC.
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Series E Preferred Stock represented by
the Depositary Shares with the Debentures. The
18
<PAGE>
potential cash flow benefit to the Company arises because interest payable on
the Debentures (whether paid currently or deferred under the terms of the
Debentures) will be deductible by the Company as it accrues for United States
federal income tax purposes, while dividends payable on the Series E Preferred
Stock are not deductible.
The Series E Preferred Stock represented by the Depositary Shares exchanged
pursuant to the Exchange Offer will be retired. The Company will take all
actions necessary to restore such retired Preferred Stock to the status of
authorized but unissued Preferred Stock which may thereafter be reissued.
Except as described herein, the Company has no present plans or intentions to
make acquisitions of or offers for the Depositary Shares or the Series E
Preferred Stock. The Company will continue to monitor the market for the
Depositary Shares outstanding after the expiration of the Exchange Offer and
reserves the right, in its sole discretion, subject to applicable law, to
acquire and to make offers for Depositary Shares subsequent to the Expiration
Date for cash or in exchange for other securities, by optional redemption of
the Series E Preferred Stock or otherwise. The terms of any such acquisitions
or offers may differ from the terms of the Exchange Offer. Such acquisitions or
offers, if any, may depend upon, among other things, the market price of the
Depositary Shares, and general economic and market conditions.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company will exchange up to $450,000,000 aggregate
principal amount of Debentures for Depositary Shares up to the Amount Sought.
The Debentures are offered in minimum denominations of $25 and integral
multiples thereof, and the Series E Preferred Stock has a liquidation
preference of $25 per Depositary Share. The Exchange Offer will be effected on
a basis of $25 principal amount of Debentures for each Depositary Share validly
tendered and accepted for exchange. Upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal, the Company will
accept Depositary Shares validly tendered and not withdrawn as promptly as
practicable after the Expiration Date unless the Exchange Offer has been
withdrawn or terminated. The Company will not accept Depositary Shares for
exchange prior to the Expiration Date.
The Exchange Offer is subject to the Minimum Condition, which requires that a
minimum of 4,000,000 Depositary Shares be tendered to the Company pursuant to
the Exchange Offer and not withdrawn prior to the Expiration Date. The Exchange
Offer is subject to certain additional conditions. See "--Conditions of the
Exchange Offer".
The Company expressly reserves the right, in its sole discretion, to delay
acceptance for exchange of Depositary Shares tendered under the Exchange Offer
or the exchange of the Debentures for the Depositary Shares accepted for
exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which
require that the Company consummate the Exchange Offer or return the Depositary
Shares deposited by or on behalf of the Holders thereof promptly after the
termination or withdrawal of the Exchange Offer), or to withdraw or terminate
the Exchange Offer and not accept any Depositary Shares at any time in the
event that the Minimum Condition or any of the other conditions described under
"--Conditions of the Exchange Offer" is not satisfied. In all cases, except to
the extent waived by the Company, delivery of Debentures in exchange for the
Depositary Shares accepted for exchange pursuant to the Exchange Offer will be
made only after timely receipt by the Exchange Agent of Depositary Shares (or
confirmation of book-entry transfer thereof), a properly completed and duly
executed Letter of Transmittal (or an Agent's Message in connection with a
book-entry transfer) and any other documents required thereby.
As of the date of this Prospectus, there were 20,000,000 Depositary Shares
outstanding. The 18,000,000 Depositary Shares for which the Company is offering
to exchange Debentures represent
19
<PAGE>
90% of the Depositary Shares that are outstanding. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered holders of
Depositary Shares as of June 2, 1995.
The Company shall be deemed to have accepted validly tendered Depositary
Shares (or defectively tendered Depositary Shares with respect to which the
Company has waived such defect) when, as and if the Company has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering Holders for the purpose of receiving the Debentures
from the Company and delivering such Debentures to tendering Holders. Upon the
terms and subject to the conditions of the Exchange Offer, delivery of
Debentures in exchange for Depositary Shares will be made as promptly as
practicable after the Expiration Date.
Holders of Depositary Shares will not have any appraisal or dissenters'
rights under the Delaware General Corporation Law in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
Holders who tender Depositary Shares in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Depositary Shares pursuant to the Exchange Offer. See "--Fees and Expenses;
Transfer Taxes".
PRORATION
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, if the Amount Sought or fewer Depositary Shares have
been validly tendered and not withdrawn on or prior to the Expiration Date, the
Company will exchange Debentures for all such Depositary Shares. If more
Depositary Shares than the Amount Sought have been validly tendered and not
withdrawn on or prior to the Expiration Date, the Company will exchange
Debentures for Depositary Shares from each tendering Holder on a pro rata
basis, subject to adjustment to avoid the exchange of fractional Depositary
Shares.
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the aggregate number of Depositary Shares validly
tendered and not properly withdrawn (including Depositary Shares tendered by
the guaranteed delivery procedures described in "--Procedures for Tendering"),
the Company does not expect that it would be able to announce the final results
of such proration until approximately seven business days after the Expiration
Date. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Depositary Shares
may obtain such preliminary information from the Dealer Managers or the
Information Agent and may also be able to obtain such information from their
brokers. The Company will not issue any Debentures in exchange for any
Depositary Shares accepted for exchange pursuant to the Exchange Offer, or
return Depositary Shares delivered to the Exchange Agent but not tendered, or
return Depositary Shares tendered but not accepted for exchange because of
proration, until the final proration factors are known.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" shall mean 12:00 midnight, New York City time, on June 30, 1995, unless
the Company, in its sole discretion, extends the Exchange Offer, in which case
the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended.
The Company reserves the right to extend the Exchange Offer in its sole
discretion at any time and from time to time by giving oral or written notice
to the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the Exchange Offer, all
Depositary Shares previously tendered pursuant to the Exchange Offer and not
withdrawn will remain subject to the Exchange Offer.
20
<PAGE>
The Company expressly reserves the right to (i) amend or modify the terms of
the Exchange Offer in any manner and (ii) withdraw or terminate the Exchange
Offer and not accept for exchange any Depositary Shares if any of the
conditions to the Exchange Offer is not satisfied. If the Company makes a
material change in the terms of the Exchange Offer (including an increase or
decrease in the consideration offered or the Amount Sought in the Exchange
Offer) or if it waives a material condition of the Exchange Offer, the Company
will extend the Exchange Offer. The minimum period for which the Exchange Offer
will be extended following a material change or waiver, other than a change in
the Amount Sought, will depend upon the facts and circumstances, including the
relative materiality of the change or waiver. With respect to a change in the
Amount Sought, the offer will be extended for a minimum of ten business days
(within the meaning of Regulation 14E under the Exchange Act) following public
announcement of such change. Any withdrawal or termination of the Exchange
Offer will be followed as promptly as practicable by public announcement
thereof. In the event the Company withdraws or terminates the Exchange Offer,
it will give immediate notice to the Exchange Agent, and all Depositary Shares
theretofore tendered pursuant to the Exchange Offer will be returned promptly
to the tendering Holders.
ACCUMULATED DIVIDENDS AND INTEREST ON DEBENTURES
The Debentures will bear interest at an annual rate of 8.35% 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 May
31, 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 June 1, 1995 through the Expiration Date, payable at the time of the
first interest payment on the Debentures. See "Description of Debentures--
Interest".
PROCEDURES FOR TENDERING
The tender of Depositary Shares by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
Each Holder of Depositary Shares wishing to accept the Exchange Offer must
(i) properly complete and sign the Letter of Transmittal or a photocopy thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a photocopy thereof) in accordance with the instructions contained
herein and therein, together with any required signature guarantees, or an
Agent's Message (as hereinafter defined) in connection with a book-entry
transfer of Depositary Shares, together with any other required documents, and
deliver the same to the Exchange Agent, at either of its addresses set forth in
"--Exchange Agent and Information Agent" and either (a) cause depositary
receipts for the Depositary Shares to be received by the Exchange Agent at such
address or (b) cause such Depositary Shares to be transferred pursuant to the
procedures for book-entry transfer described below and a confirmation of such
book-entry transfer to be received by the Exchange Agent, in each case prior to
the Expiration Date or (ii) comply with the guaranteed delivery procedures
described below.
Each Holder that delivers depositary receipts evidencing Depositary Shares to
the Exchange Agent will receive Debentures in certificate form if accepted for
exchange by the Company in the Exchange Offer. Similarly, each Holder that
transfers Depositary Shares pursuant to the procedures for book-entry transfer
to the Exchange Agent will receive Debentures in book-entry form if accepted
for exchange by the Company in the Exchange Offer.
LETTERS OF TRANSMITTAL, DEPOSITARY RECEIPTS FOR THE DEPOSITARY SHARES AND ANY
OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO
THE COMPANY, THE DEALER
21
<PAGE>
MANAGERS OR THE INFORMATION AGENT. THE METHOD OF DELIVERY OF DEPOSITARY
RECEIPTS FOR THE DEPOSITARY SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED HEREIN, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SENT BY MAIL,
IT IS RECOMMENDED THAT THE HOLDERS USE PROPERLY INSURED REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
Holders of Depositary Shares who are not registered holders of, and who seek
to tender Depositary Shares should (i) obtain a properly completed Letter of
Transmittal for such Depositary Shares from the registered holder with
signatures guaranteed by an Eligible Institution (as hereinafter defined), or
(ii) obtain and include with the Letter of Transmittal depositary receipts for
Depositary Shares properly endorsed for transfer by the registered holder or
accompanied by a stock power from the registered holder with signatures on the
endorsement or written instrument or instruments of transfer guaranteed by an
Eligible Institution or (iii) effect a record transfer of such Depositary
Shares and comply with the requirements applicable to registered holders for
tendering Depositary Shares prior to the Expiration Date. Any Depositary Shares
properly tendered prior to the Expiration Date accompanied by a properly
completed Letter of Transmittal for such Depositary Shares will be transferred
of record by the registrar either prior to or as of the Expiration Date at the
discretion of the Company. The registrar has no obligation to transfer, and the
Company has no obligation to cause the registrar to transfer, any Depositary
Shares from the name of the registered holder thereof if the Company does not
accept for exchange any of the Depositary Shares so tendered.
If a Holder desires to tender Depositary Shares but is unable to locate the
depositary receipts evidencing such shares to be tendered, such Holder should
write to or telephone First Chicago Trust Company of New York, as Depositary
(the "Depositary") under the Deposit Agreement (the "Deposit Agreement") among
the Company, the Depositary and the holders from time to time of depositary
receipts evidencing the Depositary Shares, Suite 4687, P.O. Box 2591, Jersey
City, New Jersey 07303-2591, telephone (800) 621-7825, about procedures for
obtaining replacement depositary receipts evidencing Depositary Shares and
arranging for indemnification.
Signature Guarantees. If tendered Depositary Shares are registered in the
name of the signer of the Letter of Transmittal and the Debentures to be issued
in exchange therefor are to be issued (and any untendered Depositary Shares are
to be reissued) in the name of, and returned to, the registered holder (which
term, for the purposes described herein, shall include any participant in DTC
whose name appears on a security listing as the owner of Depositary Shares),
the signature of such signer need not be guaranteed. If the tendered Depositary
Shares are registered in the name of someone other than the signer of the
Letter of Transmittal, such tendered Depositary Shares must be endorsed or
accompanied by written instruments of transfer in form satisfactory to the
Company and duly executed by the registered holder, and the signature on the
endorsement or instrument of transfer must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or The New York Stock Exchange Medallion Signature Guarantee Program or the
Stock Exchange Medallion Program (any of the foregoing hereinafter referred to
as an "Eligible Institution"). If the Debentures and/or Depositary Shares not
exchanged are to be issued in the name of a person other than the registered
holder or delivered to an address other than that of the registered holder
appearing on the register for the Depositary Shares, the signature on the
Letter of Transmittal must be guaranteed by an Eligible Institution. Any
beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Depositary Shares should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on its own behalf, such owner
must, prior to completing and executing a Letter of Transmittal and delivering
its Depositary
22
<PAGE>
Shares, either make appropriate arrangements to register ownership of the
Depositary Shares in such owner's name or obtain a properly completed stock
power from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date and, accordingly, may prohibit a transferring beneficial owner from
participating in the Exchange Offer.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish accounts
with respect to the Depositary Shares at DTC for the purpose of facilitating
the Exchange Offer and, subject to the establishment thereof, any financial
institution that is a participant in DTC's system may make book-entry delivery
of Depositary Shares by causing DTC to transfer such Depositary Shares into the
Exchange Agent's account with respect to the Depositary Shares in accordance
with DTC's Automated Tender Offer Program ("ATOP") procedures for such book-
entry transfers. However, the exchange for the Depositary Shares so tendered
will only be made after timely confirmation (a "Book-Entry Confirmation") of
such book-entry transfer of Depositary Shares into the Exchange Agent's
account, and timely receipt by the Exchange Agent at either of its addresses
set forth on the back cover of this Prospectus of a Letter of Transmittal,
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message (as such term is defined below) and any other documents
required by the Letter of Transmittal. Delivery of documents to DTC in
accordance with its procedures does not constitute delivery to the Exchange
Agent.
The term "Agent's Message" means a message, transmitted by DTC and received
by the Exchange Agent and forming a part of a Book-Entry Confirmation, which
states that DTC has received an express acknowledgement from a participant
tendering Depositary Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such participant.
Guaranteed Delivery. If a Holder desires to accept the Exchange Offer and
time will not permit such Holder's Letter of Transmittal, Depositary Shares or
other required documents to reach the Exchange Agent before the Expiration Date
or the procedure for book-entry transfer cannot be completed on a timely basis,
a tender may be effected if the Exchange Agent has received at its office,
prior to the Expiration Date, a letter, a telegram or facsimile transmission
from an Eligible Institution setting forth the name and address of the
tendering Holder, the name(s) in which the Depositary Shares are registered
and, if the Depositary Shares are held in depositary receipt form, the
depositary receipt number of the Depositary Shares to be tendered, and stating
that the tender is being made thereby and guaranteeing that within five NYSE
trading days after the date of execution of such letter, telegram or facsimile
transmission by the Eligible Institution, the Depositary Shares in proper form
for transfer together with a properly completed and duly executed Letter of
Transmittal (and any other required documents), or a confirmation of book-entry
transfer of such Depositary Shares into the Exchange Agent's account at DTC in
accordance with DTC's ATOP procedures (together with an Agent's Message and all
other required documents), will be delivered by such Eligible Institution.
Unless the Depositary Shares being tendered by the above-described method are
deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents) or a confirmation of book-entry transfer of such
Depositary Shares into the Exchange Agent's account at DTC in accordance with
DTC's ATOP procedures (together with an Agent's Message and all other required
documents) is received, the Company may, at its option, reject the tender.
Copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from
the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of Depositary Shares
will be determined by the Company,
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whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders not in proper form or the
acceptance for exchange of which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any defect
or irregularity in the tender of any Depositary Shares, and the Company's
interpretation of the terms and conditions of the Exchange Offer (including the
Instructions in the Letter of Transmittal) will be final and binding. None of
the Company, the Exchange Agent, the Dealer Managers, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Tenders of Depositary Shares involving any irregularities will be deemed not
to have been made until such irregularities have been cured or waived.
Depositary Shares received by the Exchange Agent that are not validly tendered
and as to which the irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Depositary Shares will be credited to an account
maintained at DTC designated by the participant therein who so delivered such
Depositary Shares), unless otherwise requested by the Holder in the Letter of
Transmittal, as promptly as practicable after the Expiration Date or the
withdrawal or termination of the Exchange Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Depositary Shares for exchange (the "Transferor") tenders
for exchange, assigns and transfers the Depositary Shares to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Depositary Shares to be assigned,
transferred and exchanged. The Transferor specifically authorizes the
Depositary to withdraw under the Deposit Agreement the Series E Preferred Stock
underlying any tendered Depositary Shares, and to tender such underlying Series
E Preferred Stock in the Exchange Offer. The Transferor represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Depositary Shares and the underlying Series E Preferred Stock and to
acquire Debentures issuable upon the exchange of such tendered Depositary
Shares, and that, when the same are accepted for exchange, the Company will
acquire good, marketable and unencumbered title to the tendered Depositary
Shares and the Series E Preferred Stock underlying the tendered Depositary
Shares, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor also warrants that it will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Depositary Shares and the
underlying Series E Preferred Stock or transfer ownership of such Depositary
Shares on the account books maintained by DTC. All authority conferred by the
Transferor will survive the death, bankruptcy or incapacity of the Transferor
and every obligation of the Transferor shall be binding upon the heirs,
executors, administrators, personal representatives, successors and assigns of
such Transferor.
WITHDRAWAL OF TENDERS
Tenders of Depositary Shares pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for exchange by
the Company, may be withdrawn at any time after 40 business days after the date
of this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange
Agent at either of the addresses set forth in this Prospectus. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Depositary
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Shares to be withdrawn, (ii) if the Depositary Shares are held in depositary
receipt form, the depositary receipt numbers of the Depositary Shares to be
withdrawn, (iii) the number of Depositary Shares delivered for exchange, (iv) a
statement that such Holder is withdrawing its election to have such Depositary
Shares exchanged, and (v) the name of the registered Holder of such Depositary
Shares, and must be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Depositary Shares being withdrawn. If Depositary Shares have been tendered
pursuant to the procedure for book-entry transfer, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawn Depositary Shares and otherwise comply with DTC's procedures. The
Exchange Agent will return properly withdrawn Depositary Shares promptly
(normally within five to seven business days) following receipt of notice of
withdrawal. All questions as to the validity of notice of withdrawal, including
time of receipt, will be determined by the Company, and such determination will
be final and binding on all parties. Withdrawals of tenders of Depositary
Shares may not be rescinded and any Depositary Shares withdrawn will thereafter
be deemed not to be validly tendered for purposes of the Exchange Offer.
Properly withdrawn Depositary Shares, however, may be retendered by following
the procedures therefor described elsewhere herein at any time prior to the
Expiration Date. See "--Procedures for Tendering".
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is subject to the satisfaction of certain conditions.
Notwithstanding any other provision of the Exchange Offer or any extension of
the Exchange Offer, the Company will not be required to accept Depositary
Shares or to issue Debentures in exchange therefor pursuant to the Exchange
Offer if, prior to the Expiration Date, a change or event occurs that is likely
to affect the Exchange Offer adversely, including, but not limited to, the
following:
(i) there shall have been instituted or threatened or be pending any
action or proceeding before or by any court or governmental agency or
instrumentality directly or indirectly relating to the Exchange Offer;
(ii) there shall have occurred any development in any pending action or
proceeding which would or might (a) prohibit, restrict or delay
consummation of the Exchange Offer or (b) impair the contemplated benefits
of the Exchange Offer;
(iii) there shall have occurred and be continuing any general suspension
of trading in, or limitation on prices for, securities on any national
securities exchange or interdealer quotation system (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index);
(iv) any statute, rule or regulation shall have been proposed or enacted,
or any action shall have been taken by any governmental authority, which
would or might (a) prohibit, restrict or delay consummation of the Exchange
Offer or (b) impair the contemplated benefits of the Exchange Offer to the
Company; or
(v) there shall have occurred any change, or development involving a
prospective change, which has had or may have an adverse effect on the
Exchange Offer, or may change the contemplated benefits of the Exchange
Offer to the Company or to holders of Depositary Shares or Debentures.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
conditions, or may be waived by the Company, in whole or in part at any time
and from time to time, in its sole discretion. The failure by the Company, at
any time, to exercise its rights with respect to any of these conditions will
not be deemed a waiver of any such conditions. Any determination by the Company
concerning the events set forth under this caption will be final and binding
upon all parties.
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The Company expressly reserves the right to terminate or amend the Exchange
Offer if any of the foregoing conditions is not satisfied on the Expiration
Date. See "--Exchange Date; Extension; Amendment; Termination".
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
for the Exchange Offer. Deliveries to the Exchange Agent should be as follows:
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
P. O. Box 2559, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notices of Guaranteed Delivery by Telephone:
(201) 222-4707
D. F. King & Co., Inc. has been retained as Information Agent. Questions and
requests for assistance regarding the Exchange Offer, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for the
Notice of Guaranteed Delivery may be directed to the Information Agent at 77
Water Street, New York, New York 10005, telephone (800) 628-8536 or (212) 269-
5550 (collect). The Information Agent may contact holders of Depositary Shares
by mail, telephone, telex, telegraph and personal interviews, and may request
brokers, dealers and other nominee holders to forward materials relating to the
Exchange Offer to beneficial owners.
The Company will pay the Exchange Agent and Information Agent reasonable and
customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith. The Company has
agreed to indemnify the Exchange Agent and the Information Agent against
certain liabilities, including certain liabilities under the federal securities
laws, in connection with the Exchange Offer. Neither the Information Agent nor
the Exchange Agent has been retained to make solicitations or recommendations
in connection with the Exchange Offer.
DEALER MANAGERS AND SOLICITING DEALERS
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc will act as Dealer Managers for the Company in
connection with the Exchange Offer. The Company has agreed to pay the Dealer
Managers, upon acceptance for exchange of Depositary Shares pursuant to the
Exchange Offer, a fee of $0.125 per Depositary Share exchanged in the Exchange
Offer. The Dealer Managers will also be reimbursed by the Company for their
reasonable out-of-pocket expenses, including attorneys' fees, and will be
indemnified against certain liabilities, including liabilities under the
federal securities laws, in connection with the Exchange Offer. The Dealer
Managers have rendered, are currently rendering and are expected to continue to
render, various investment banking and other advisory services to the Company.
The Dealer Managers have received, and will continue to receive, customary
compensation from the Company for such services.
The Company will pay a solicitation fee of $0.50 per Depositary Share (the
"Solicitation Fee") for any Depositary Shares tendered by physically delivering
depositary receipts which are accepted for exchange and exchanged pursuant to
the Exchange Offer and covered by a Letter of Transmittal which designates, as
having solicited and obtained the tender, the name of (i) any broker or dealer
in
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securities, including each Dealer Manager in its capacity as a broker or
dealer, which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (iii) any
bank or trust company (each of which is referred to herein as a "Soliciting
Dealer"). No Solicitation Fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
Holder unless the Letter of Transmittal accompanying such tender designates
such Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer
must return a Notice of Solicited Tenders (included in the materials provided
to brokers and dealers) to the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date in order to receive a
Solicitation Fee. No Solicitation Fee shall be payable to a Soliciting Dealer
in respect of Depositary Shares (i) beneficially owned by such Soliciting
Dealer or (ii) registered in the name of such Soliciting Dealer unless such
Depositary Shares are held by such Soliciting Dealer as nominee and such
Depositary Shares are being tendered for the benefit of one or more beneficial
owners identified on the Letter of Transmittal or the Notice of Solicited
Tenders. No Solicitation Fee shall be payable to the Soliciting Dealer with
respect to the tender of Depositary Shares by the Holder of record, for the
benefit of the beneficial owner, unless the beneficial owner has designated
such Soliciting Dealer.
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
Other than as described above, the Company will not pay any solicitation fees
to any broker, dealer, bank, trust company or other person for any Depositary
Shares exchanged in connection with the Exchange Offer. The Company will
reimburse such persons for customary handling and mailing expenses incurred in
connection with the Exchange Offer.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Depositary Shares will be borne by
the Company. For compensation to be paid to the Dealer Managers and Soliciting
Dealers see "--Dealer Managers and Soliciting Dealers". The total cash
expenditures to be incurred by the Company in connection with the Exchange
Offer, other than fees payable to the Dealer Managers and Soliciting Dealers,
but including the expenses of the Dealer Managers, a debt structuring fee paid
to Goldman, Sachs & Co., printing, accounting, legal and listing fees, and the
fees and expenses of the Exchange Agent, the Information Agent and the Trustee
under the Indenture, are estimated to be approximately $1,000,000.
Holders of the Depositary Shares accepted in the Exchange Offer will not be
required to pay transfer taxes for exchanges pursuant to the Exchange Offer
that do not constitute a transfer, but are responsible for paying any transfer
taxes in connection with exchanges constituting a transfer. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE COMPANY'S SECURITIES
The Company has been advised by its directors and executive officers that no
directors or executive officers of the Company own any Depositary Shares. Based
upon the Company's records and upon information provided to the Company by its
directors and executive officers, neither the Company nor, to the Company's
knowledge, any of its associates, subsidiaries, directors, executive
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officers or any associate of any such director or executive officer has engaged
in any transactions involving Depositary Shares during the 40 business days
preceding the date hereof. Except as described herein, neither the Company nor,
to the Company's knowledge, any of its directors or executive officers is a
party to any contract, arrangement, understanding or relationship relating
directly or indirectly to the Exchange Offer with any other person with respect
to any securities of the Company.
DESCRIPTION OF DEBENTURES
GENERAL
The Debentures constitute debt securities to be issued under an Indenture
(the "Indenture"), to be dated as of the Issue Date, between the Company and
First Fidelity Bank, National Association, as trustee (the "Trustee"). The
following statements with respect to the Debentures are summaries and are
subject to the detailed provisions of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the Indenture, a copy of the form of
which has been filed as an exhibit to the Registration Statement. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Debentures and the Indenture, including the definitions
therein of certain terms capitalized and not otherwise defined in this
Prospectus. Wherever references are made to particular provisions of the
Indenture or terms defined therein, such provisions or definitions are
incorporated by reference as part of the statements made and such statements
are qualified in their entirety by such references.
The Debentures will be unsecured, subordinated obligations of the Company,
will be limited in aggregate principal amount to the aggregate principal amount
of Debentures issued in the Exchange Offer and will mature on June 30, 2025.
The Debentures will be issued in fully registered form, without coupons, and
will be available in minimum denominations of $25 and integral multiples
thereof.
The Indenture does not contain any provisions that would limit the ability of
the Company to incur additional indebtedness or that would afford holders of
the Debentures protection in the event of a highly leveraged or similar
transaction involving the Company.
INTEREST
The Debentures will bear interest at an annual rate of 8.35% 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 June 1, 1995
through the Expiration Date, in lieu of dividends accumulating after May 31,
1995 on the Series E Preferred Stock for which Depositary Shares have been
accepted for exchange, payable at the time of the first interest payment on the
Debentures. Interest will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year commencing September 30, 1995,
provided that so long as the Company shall not be in default in the payment of
interest on the Debentures, the Company shall have the right, upon prior notice
by public announcement given in accordance with NYSE rules (or the rules of any
other applicable self-regulatory organization) at any time during the term of
the Debentures, to extend the interest payment period from time to time for a
period not exceeding 20 consecutive quarterly interest payment periods.
Interest will continue to accrue on the Debentures during an Extension Period
and will compound quarterly, at the rate of interest on the Debentures, to the
extent permitted by applicable law. See "--Option to Extend Interest Payment
Period". Interest payable on any Debenture that is punctually paid or duly
provided for on any Interest Payment Date shall be paid to the person in whose
name such Debenture is registered at the close of business on the March 15,
June 15, September 15 or December 15, respectively, preceding such Interest
Payment Date (each, a "Record Date"). Interest will be computed on the basis of
a 360-day year of twelve 30-day months and, for any period shorter than a full
calendar month, on the basis of the actual number of
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days elapsed in such period. (Section 310 of the Indenture.) If any date on
which interest is payable on the Debentures is not a Business Day, the payment
of interest due on such date may be made on the next succeeding Business Day
(and without any interest or other payment in respect of such delay). A
"Business Day" shall mean any day other than a day on which banking
institutions in the City of New York or in Philadelphia, Pennsylvania are
authorized or required by law to close.
Payments in respect of the Debentures will be made at the office or agency of
the Company maintained for that purpose in the City of New York (which, unless
changed, shall be a corporate trust office or agency of the Trustee). However,
at the option of the Company, payments of interest on the Debentures may be
made by checks mailed by the Trustee to the holders entitled thereto at their
registered addresses. Interest payable on any Debenture that is not punctually
paid or duly provided for on any Interest Payment Date shall forthwith cease to
be payable to the person in whose name such Debenture is registered on the
relevant Record Date, and such defaulted interest will instead be payable to
the person in whose name such Debenture is registered on the special record
date or other specified date determined in accordance with the Indenture;
provided, however, that interest shall not be considered payable by the Company
on any Interest Payment Date falling within an Extension Period unless the
Company has elected to make a full or partial payment of interest accrued on
the Debentures on such Interest Payment Date. (Section 307 of the Indenture.)
In the event the Company fails at any time to make any payment of interest or
principal on the Debentures when due (after giving effect to any grace period
for payment thereof as described in "--Events of Default, Notice and Certain
Rights on Default") or the Company exercises its right to extend the interest
payment period for an Extension Period as described in "--Option to Extend
Interest Payment Period", the Company will not, until all defaulted interest on
the Debentures and all interest accrued on the Debentures during an Extension
Period and all principal then due and payable on the Debentures shall have been
paid in full, (i) declare, set aside or pay any dividend or distribution on any
capital stock of the Company (except for dividends or distributions in shares
of its capital stock or in rights to acquire shares of its capital stock), or
(ii) repurchase, redeem or otherwise acquire any shares of its capital stock
(except by conversion into or exchange for shares of its capital stock and
except for a redemption, purchase or other acquisition of shares of its capital
stock made for the purpose of any employee incentive plan or benefit plan of
the Company or any of its affiliates). (Section 1010 of the Indenture.)
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest on
the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules (which require, among other
things, immediate release to the wire services and the press and prior
notification to the NYSE if such release is made shortly before opening or
during market hours) or the rules of any other applicable self-regulatory
organization, at any time during the term of the Debentures, prior to an
Interest Payment Date as provided below, to extend the interest payment period
from time to time to another Interest Payment Date by one or more quarterly
periods, not to exceed 20 consecutive quarterly interest payment periods from
the last Interest Payment Date to which interest was paid in full. No interest
shall be due and payable during an Extension Period, but on the Interest
Payment Date occurring at the end of each Extension Period the Company shall
pay to the holders of record on the Record Date for such Interest Payment Date
(regardless of who the holders of record may have been on other dates during
the Extension Period) all accrued and unpaid interest on the Debentures,
together with interest thereon. Interest will continue to accrue on the
Debentures during an Extension Period and will compound quarterly, at the rate
specified for the Debentures, to the extent permitted by applicable law. Prior
to the termination of any Extension Period, the Company may pay all or any
portion of the interest accrued on the Debentures on any Interest Payment Date
to holders of record on the Record Date for such Interest Payment Date or from
time to time further extend the
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interest payment period, provided that any such Extension Period together with
all such previous and further extensions thereof may not exceed 20 quarterly
interest payment periods. If the Company shall elect to pay all of the interest
accrued on the Debentures on an Interest Payment Date during an Extension
Period, such Extension Period shall automatically terminate on such Interest
Payment Date. Upon the termination of any Extension Period and the payment of
all amounts of interest then due, the Company may commence a new Extension
Period, subject to the above requirements. Consequently, there could be
multiple Extension Periods of varying lengths throughout the term of the
Debentures. The Company believes that the extension of any quarterly interest
payment period on the Debentures is unlikely.
The Company has no current intention of exercising its right to defer any
interest payment period. However, in the event the Company determines to extend
an interest payment period, or in the event the Company thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Debentures is likely to be adversely
affected. In addition, as a result of such rights, the market price of the
Debentures may be more volatile than other debt instruments with original issue
discount that do not have such rights. A holder that disposes of its Debentures
during an Extension Period, therefore, may not receive the same return on its
investment as a holder that continues to hold its Debentures.
The Company shall cause the Trustee to give holders of the Debentures prior
notice, by public announcement given in accordance with NYSE rules (or the
rules of any other applicable self-regulatory organization) and by mail to all
such holders, of (i) the Company's election to initiate an Extension Period and
the duration thereof, (ii) the Company's election to extend any Extension
Period beyond the Interest Payment Date on which such Extension Period is then
scheduled to terminate, and the duration of such extension, and (iii) the
Company's election to make a full or partial payment of interest accrued on the
Debentures on any Interest Payment Date during any Extension Period and the
amount of such payment. In no event shall such notice be given less than five
Business Days prior to the March 15, June 15, September 15 or December 15 next
preceding the applicable Interest Payment Date.
SUBORDINATION
The Indenture provides that, unless otherwise provided in a supplemental
indenture, the Debentures will be subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding as of the date of the Indenture or thereafter incurred. (Section
1201 of the Indenture.)
No payment of principal of (including redemption payments), or interest on,
the Debentures may be made if any Senior Indebtedness is not paid when due, any
applicable grace period with respect to such default has ended and such default
has not been cured or waived, or if the maturity of any Senior Indebtedness has
been accelerated because of a default. (Section 1202 of the Indenture.) Upon
any distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all principal of,
and interest due or to become due on, all Senior Indebtedness must be paid in
full before the holders of the Debentures are entitled to receive or retain any
payment. (Section 1203 of the Indenture.) The rights of the holders of the
Debentures will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Debentures are paid in full.
(Section 1204 of the Indenture.)
The term "Senior Indebtedness" of the Company means the principal of,
premium, if any, interest on, and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of the Indenture or
thereafter incurred, created or assumed: (i) all indebtedness or obligations of
the Company evidenced by notes, debentures, bonds or other securities or
financial instruments; (ii) all indebtedness or obligations of others of the
kinds described in the preceding clause (i) assumed by
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or guaranteed in any manner by the Company, including through an agreement to
purchase, contingent or otherwise; and (iii) all renewals, extensions or
refundings of indebtedness or obligations of the kinds described in either of
the preceding clauses (i) or (ii); unless, in the case of any particular
indebtedness, renewal, extension or refunding, the instrument creating or
evidencing the same or the assumption or guarantee of the same expressly
provides that such indebtedness, renewal, extension or refunding is not
superior in right of payment to or is pari passu with the Debentures; provided,
however, that Senior Indebtedness shall not include amounts owed to trade
creditors in the ordinary course of business. (Section 101 of the Indenture.)
The Debentures will be effectively subordinated to all obligations of the
Company's subsidiaries.
On March 31, 1995 approximately $3.9 billion of Senior Indebtedness was
outstanding. There is no restriction under the Indenture on the creation of
additional indebtedness, including Senior Indebtedness, by the Company,
including indebtedness owed by the Company to subsidiaries.
REDEMPTION
The Debentures will not be subject to any mandatory redemption, sinking fund
or other obligation of the Company to amortize, redeem or retire the
Debentures, and will not be redeemable prior to December 3, 1997. On or after
such date, the Company has the option to redeem the Debentures in whole or in
part, at a redemption price of 100% of the principal amount of the Debentures
redeemed plus an amount equal to accrued and unpaid interest to the redemption
date.
If less than all the outstanding Debentures are to be redeemed, the Trustee,
not more than 60 days prior to the redemption date, will select those
Debentures to be redeemed by lot, meaning that the Trustee will divide all
outstanding Debentures into units of $25 in principal amount and randomly
select by computer to be redeemed such number of units representing, in the
aggregate, the total principal amount of Debentures subject to redemption. Each
$25 portion of the principal amount of any Debenture will have an equal
probability of being redeemed as any other $25 portion of the principal amount
of the same or any other Debenture, without regard to the aggregate principal
amount of such Debenture. (Section 1104 of the Indenture.)
After the redemption date, interest will cease to accrue on the Debentures
called for redemption and all rights of the holders of such Debentures will
terminate, except the right to receive the redemption price.
VOTING RIGHTS
The holders of the Debentures will have no voting rights as such.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE BY THE COMPANY
The Indenture provides that the Company shall not consolidate with or merge
into any other Person (other than an affiliate) or convey, transfer or lease
all or substantially all of its properties and assets to any Person (other than
an affiliate) as an entirety, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless: (i)
in case the Company shall consolidate with or merge into another Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust organized and validly
existing under the laws of the United States of America, any state thereof or
the District of Columbia and shall expressly assume, by supplemental indenture,
all the obligations of the Company
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under the Debentures and the Indenture; (ii) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred
and be continuing; and (iii) certain other conditions are met. In the event a
successor assumes the obligations of the Company, such successor shall succeed
to and be substituted for the Company under the Indenture and under the
Debentures and all obligations of the Company thereunder shall terminate.
(Article 8 of the Indenture.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, either the Trustee or the holders of 25% in
principal amount of the Debentures then outstanding may, by written notice to
the Company (and to the Trustee, if notice is given by such holders of
Debentures), declare the principal of all the Debentures to be due and payable,
subject to prior payment to holders of Senior Indebtedness. As of March 31,
1995, outstanding Senior Indebtedness aggregated approximately $3.9 billion.
(Section 502 of the Indenture.)
Events of Default are defined in the Indenture as being: default for thirty
days in payment of any interest installment when due; default for ten days in
payment of principal, at maturity or on redemption or otherwise, on the
Debentures when due; default for sixty days after notice to the Company by the
Trustee, or to the Company and the Trustee by the holders of at least 25% in
principal amount of the Debentures then outstanding, in the performance of any
other covenant or warranty in the Indenture; and certain events of bankruptcy,
insolvency or reorganization of the Company. (Section 501 of the Indenture.)
The Indenture provides that the Trustee shall, within ninety days after the
occurrence of a default with respect to the Debentures, give to the holders of
the Debentures notice of such uncured default known to it; provided that,
except in the case of default in payment on the Debentures the Trustee may
withhold the notice if and so long as the board of directors of the Trustee, a
specified committee thereof, or a Responsible Officer (as defined in the
Indenture) in good faith determines that withholding such notice is in the
interests of the holders. (Section 602 of the Indenture.)
The Indenture provides that the holders of a majority in principal amount of
the Debentures then outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that such
direction shall not be in conflict with any law or the Indenture and the
Trustee may take any other action not inconsistent with such direction.
(Section 512 of the Indenture.) The right of any holder of Debentures to
institute any proceeding for any remedy under the Indenture (except the right
to enforce payment of the principal of and interest on its Debentures when due)
is subject to certain conditions precedent, including a request to the Trustee
by the holders of not less than 25% in principal amount of Debentures then
outstanding to take action, and an offer to the Trustee of reasonable
indemnification against liabilities incurred by it in so doing (Sections 507
and 508 of the Indenture.)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions
and covenants of the Indenture. (Section 1004 of the Indenture.)
The holders of a majority in principal amount of the Debentures then
outstanding by notice to the Trustee may waive, on behalf of the holders of all
the Debentures, any past default and its consequences except a default in the
payment of the principal of or interest on any of the Debentures. (Section 513
of the Indenture.)
AGREED TAX TREATMENT
The Debentures provide that each holder of a Debenture, each person that
acquires a beneficial ownership interest in a Debenture and the Company agree
that for United States federal, state and local tax purposes that such
Debenture constitutes and will be treated as indebtedness.
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MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debentures in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants of the
Company by such successor to the Company; (ii) to add to the covenants of the
Company or surrender any right or power of the Company; (iii) to add additional
Events of Default; or (iv) to cure any ambiguity, to correct or supplement any
inconsistent provisions in the Indenture or to make any other provisions with
respect to matters or questions arising under the Indenture which shall not be
inconsistent with the provisions of the Indenture, provided that such action
shall not adversely affect the interests of the holders of the Debentures.
(Section 901 of the Indenture.)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in principal amount of
the Debentures then outstanding, to enter into supplemental indentures adding
any provisions to or changing or eliminating any of the provisions of the
Indenture or modifying the rights of the holders, except that no such
supplemental indenture may, without the consent of each holder, (i) change the
date for payment of the principal of, or any installment of interest on, any
Debenture or reduce the principal amount thereof or the rate of interest
thereon or change the place of payment where, or the coin or currency in which,
any Debenture or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the date for
payment thereof or modify the provisions of the Indenture with respect to the
subordination of the Debentures in a manner adverse to the holders; (ii) reduce
the percentage in principal amount of the Debentures outstanding, the consent
of whose holders is required for any such supplemental indenture, or the
consent of whose holders is required for any waiver provided for in the
Indenture; or (iii) modify the provisions relating to waiver of certain
defaults or any of the foregoing provisions. (Section 902 of the Indenture.)
GOVERNING LAW
The Indenture and the Debentures are governed by the internal laws of the
State of Illinois.
THE TRUSTEE
First Fidelity Bank, National Association is the Trustee under the Indenture.
First Fidelity Bank, National Association, is also Trustee under that certain
Indenture dated as of March 1, 1987 relating to certain Senior Indebtedness of
the Company.
DESCRIPTION OF DEPOSITARY SHARES
The Depositary Shares were initially offered to the public on November 25,
1992 and were issued on December 3, 1992.
Each Depositary Share represents ownership of 1/2,000 of a share of the
Series E Preferred Stock. The shares of Series E Preferred Stock represented by
the Depositary Shares are on deposit with First Chicago Trust Company of New
York, as Depositary, under the Deposit Agreement. The depositary receipts
issued pursuant to the Deposit Agreement evidence the Depositary Shares.
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
is entitled, in proportion to the 1/2,000 of a share of the Series E Preferred
Stock represented by such Depositary Share, to all the rights and preferences
of the Series E Preferred Stock represented thereby (including dividend,
voting, redemption and liquidation rights). Since each share of Series E
Preferred Stock is entitled to one vote on matters on which the Series E
Preferred Stock is entitled to vote, each Depositary Share, in effect, is
entitled to 1/2,000 of a vote, rather than one full vote, per Depositary Share
on such matters.
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In addition to acting as Depositary and as Exchange Agent for the Exchange
Offer, First Chicago Trust Company of New York is also the transfer agent and
registrar for the Depositary Shares, the Series E Preferred Stock, certain
other series of Preferred Stock, and the Common Stock. The Company and certain
subsidiaries of the Company maintain deposits and conduct other banking
transactions with affiliates of First Chicago Trust Company of New York in the
ordinary course of business.
DESCRIPTION OF SERIES E PREFERRED STOCK
The description of certain provisions of the Series E Preferred Stock set
forth below does not purport to be complete and is subject to and qualified in
its entirety by reference to the Certificate of Designations, Preferences and
Rights relating to the Series E Preferred Stock which is filed as an exhibit to
the Registration Statement and is incorporated herein by reference.
GENERAL
The Series E Preferred Stock ranks as to payment of dividends and
distribution of assets on a parity with the Company's Series B ESOP Convertible
Preferred Stock, Series C ESOP Convertible Preferred Stock and Series D
Preferred Stock (which are the only series of Preferred Stock currently
outstanding) and prior to the Common Stock. If shares of the Company's Series A
Junior Participating Preferred Stock (the "Junior Preferred") are issued, the
Series E Preferred Stock will rank prior to the Junior Preferred as to the
payment of dividends and on a parity with the Junior Preferred as to
distribution of assets.
DIVIDENDS
Holders of shares of Series E Preferred Stock are entitled to receive, when,
as and if declared by the Board of Directors out of any funds legally available
for that purpose, cumulative cash dividends on the liquidation preference per
share of the Series E Preferred Stock at an annual rate of 7.72% (equivalent to
$1.93 per Depositary Share). Dividends on the Series E Preferred Stock are
payable quarterly on the first day of March, June, September and December in
each year. Each such dividend is payable to holders of record as they appear in
the stock records of the Company at the close of business on such record dates,
not exceeding 60 days preceding the payment dates thereof, as fixed by the
Board of Directors. Dividends accrue from the date of original issuance.
Accrued dividends bear no interest. The amount of dividends payable for any
period greater than or less than a full dividend period are computed on the
basis of twelve 30-day months and a 360-day year.
No dividend will be declared or paid on the shares of any series of Preferred
Stock ranking on a parity with the Series E Preferred Stock as to payment of
dividends unless at the same time a dividend in like proportion (whether full
or pro rata) to the respectively designated dividend amounts is declared or
paid on the shares of Series E Preferred Stock. The holders of the Series E
Preferred Stock are entitled to receive dividends before any dividends are
declared and paid or set apart for payment upon the Common Stock or the Junior
Preferred. The Company shall not declare and pay any dividend on the Common
Stock or on any other class of stock ranking junior to the Series E Preferred
Stock (collectively, "the Junior Stock") unless all accrued and unpaid
dividends with respect to the Series E Preferred Stock and any other series of
Preferred Stock having cumulative dividend rights at the time such dividends
are payable have been paid, provided, however, that the foregoing restriction
shall not prohibit the Company from paying dividends on Junior Stock in shares
of Junior Stock.
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series E Preferred Stock will be
entitled to receive, out of assets of the Company
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available for distribution to stockholders, $50,000 per share of Series E
Preferred Stock (equivalent to $25 per Depositary Share), plus an amount equal
to accrued and unpaid dividends for the then current dividend period and all
dividend periods prior thereto.
Holders of the Series E Preferred Stock (if any shares thereof are then
issued and outstanding) are entitled to payment of the above liquidation price,
out of the available assets of the Company, in preference to the holders of
Junior Stock upon liquidation, dissolution or winding up. The holders of the
Common Stock will be entitled to receive, ratably, assets of the Company
available for payment to stockholders remaining after payment in full of the
preferential amounts on the Series E Preferred Stock. The Company's Restated
Certificate of Incorporation provides that the sale, conveyance, exchange or
transfer of all or substantially all of the property or assets of the Company
or a consolidation or merger of the Company with one or more corporations shall
not be deemed to be a liquidation, dissolution or winding up of the Company.
REDEMPTION
The Series E Preferred Stock is not redeemable prior to December 3, 1997. The
Series E Preferred Stock will be redeemable at the option of the Company in
whole or in part, at any time on and after December 3, 1997, upon not less than
30 nor more than 90 days' notice, for cash at a redemption price per share of
Series E Preferred Stock of $50,000 (equivalent to $25 per Depositary Share),
plus an amount equal to accrued and unpaid dividends to the redemption date.
There is no restriction on the Company's ability to redeem or repurchase shares
of the Series E Preferred Stock when dividends on the Series E Preferred Stock
are in arrears.
VOTING RIGHTS
The Series E Preferred Stock has no voting rights except as set forth below
or as otherwise provided by law.
The holders of the outstanding shares of the Series E Preferred Stock, voting
together as a class with the holders of any other series of Preferred Stock
entitled to receive cumulative preferred dividends, are entitled to elect two
directors to the Board of Directors (the authorized number of directors not to
be increased for this purpose) in the event that dividends payable on the
Series E Preferred Stock or any such other series of Preferred Stock are in
arrears and unpaid in an amount equal to or exceeding the amount payable on
such series of Preferred Stock for six quarterly dividend periods, whether or
not consecutive. Any such right to elect members of the Board of Directors
shall continue until all unpaid dividends upon all such series of Preferred
Stock shall have been paid in full. Upon payment in full of all unpaid
dividends upon all such series of Preferred Stock, the aforesaid voting rights
shall terminate (subject to re-vesting in the event of a subsequent arrearage)
and the term of office of the two directors elected pursuant to such voting
rights shall terminate.
The Company's Restated Certificate of Incorporation provides that, without
the vote or consent of the holders of at least a majority of the then
outstanding shares of Preferred Stock (including the Series E Preferred Stock),
irrespective of series, the Company may not: (i) adopt any amendment to the
Company's Restated Certificate of Incorporation or take any other action which
in any material respect adversely affects any preference, power, special right,
or other term of the Preferred Stock (including the Series E Preferred Stock)
or the holders thereof, (ii) create or issue any class of stock entitled to any
preference over the Preferred Stock (including the Series E Preferred Stock) as
to the payment of dividends or the distribution of capital assets, (iii)
increase the aggregate number of shares constituting the authorized Preferred
Stock, or (iv) create or issue any other class of stock entitled to any
preference on a parity with the Preferred Stock as to the payment of dividends
or the distribution of capital assets.
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Under current provisions of the Delaware General Corporation Law, the holders
of issued and outstanding Preferred Stock (including the Series E Preferred
Stock) are entitled to vote as a class upon a proposed amendment to the
Company's Restated Certificate of Incorporation (whether or not entitled to
vote thereon by the Company's Restated Certificate of Incorporation), with the
consent of a majority of said class being required to increase or decrease the
aggregate number of authorized shares of Preferred Stock, increase or decrease
the par value of Preferred Stock, or alter or change the powers, preferences or
special rights of the Preferred Stock as to affect them adversely. If any
proposed amendment would alter or change the powers, preferences or special
rights of one or more series of Preferred Stock (including the Series E
Preferred Stock) so as to affect the holders of such series adversely, but
would not so affect the holders of all series of outstanding Preferred Stock,
then only the shares of the series so affected by the amendment would be
considered a separate class for the purpose of determining who is entitled to
vote on the proposed amendment.
Voting rights of the holders of Preferred Stock and Common Stock are non-
cumulative. On any item in which the holders of the Series E Preferred Stock
are entitled to vote, such holders shall be entitled to one vote for each share
of Series E Preferred Stock held.
CONVERSION
The Series E Preferred Stock is not convertible into shares of any other
class or series of capital stock (or any other security) of the Company.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States federal
income tax considerations relevant to an exchange of Depositary Shares for
Debentures and the ownership and disposition of Debentures by persons acquiring
Debentures pursuant to the Exchange Offer. To the extent it relates to matters
of law or legal conclusions, this summary constitutes the opinion of
Sonnenschein Nath & Rosenthal, special tax counsel to the Company. This summary
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, Internal Revenue Service ("IRS") rulings, official
pronouncements and judicial decisions, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect, or
different interpretations. This summary is applicable only to holders who are
United States persons for United States federal income tax purposes and who
hold Depositary Shares as a capital asset and who will hold Debentures as
capital assets. For a discussion of certain material United States federal
income and estate tax considerations that may be relevant to non-United States
persons, see "Certain United States Federal Tax Considerations for Non-United
States Persons".
This summary does not discuss all the tax consequences that may be relevant
to a particular holder in light of the holder's particular circumstances and it
is not intended to be applicable in all respects to all categories of
investors, some of whom--such as insurance companies, tax-exempt persons,
financial institutions, regulated investment companies, dealers in securities
or currencies, persons that hold Depositary Shares or the Debentures received
in the exchange as a position in a "straddle", as part of a "synthetic
security", "hedge", "conversion transaction" or other integrated investment or
persons whose functional currency is other than United States dollars--may be
subject to different rules not discussed below. In addition, this summary does
not address any state, local or foreign tax considerations that may be relevant
to a holder's decision to exchange Depositary Shares for Debentures pursuant to
the Exchange Offer.
ALL HOLDERS OF DEPOSITARY SHARES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE EXCHANGE OF
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DEPOSITARY SHARES FOR DEBENTURES AND OF THE OWNERSHIP AND DISPOSITION OF
DEBENTURES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
EXCHANGE OF DEPOSITARY SHARES FOR DEBENTURES
Characterization of the Exchange. An exchange of Depositary Shares for
Debentures pursuant to the Exchange Offer will be a taxable transaction for
United States federal income tax purposes and may also be a taxable transaction
under applicable state, local and foreign tax laws. The United States federal
income tax consequences to a particular exchanging holder may vary depending
upon the holder's particular circumstances. If a holder does not own, either
directly or indirectly under the attribution rules described below, any Common
Stock immediately after the Expiration Date of the Exchange Offer, a holder's
exchange of Depositary Shares for Debentures pursuant to the Exchange Offer
should be treated as a sale or exchange of such Depositary Shares for United
States federal income tax purposes. See "Section 302 Tests" and "Attribution"
below.
Under Section 302 of the Code, a holder's exchange of Depositary Shares for
Debentures pursuant to the Exchange Offer will be treated as a "sale or
exchange" of such Depositary Shares for United States federal income tax
purposes (rather than as a distribution by the Company with respect to the
Depositary Shares held by the exchanging holder) if the holder can satisfy
either (i) the "complete redemption" test or (ii) the "not essentially
equivalent to a dividend" test (each test as described below under "Section 302
Tests").
If either of the above tests is satisfied, and the exchange of the Depositary
Shares for Debentures is therefore treated as a "sale or exchange" of such
Depositary Shares for United States federal income tax purposes, the exchanging
holder will recognize gain or loss equal to the difference between the fair
market value of the Debentures received by the holder pursuant to the Exchange
Offer and the holder's tax basis in the Depositary Shares surrendered pursuant
to the Exchange Offer. Any such gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if the Depositary Shares have been held
for more than one year. The exchanging holder's tax basis in the Debentures
received in the exchange will equal the fair market value of such Debentures at
the time of the exchange and the holding period for such Debentures will begin
on the day after the day on which the Debentures are acquired by such holder.
If neither of the above tests is satisfied, the holder would be treated as
having received a dividend to the extent the distribution of the Debentures is
treated as made from the Company's earnings and profits for United States
federal income tax purposes. Such amount would be includible in gross income as
an ordinary item in its entirety (without reduction for the tax basis of the
Depositary Shares exchanged pursuant to the Exchange Offer), no loss would be
recognized, and the holder's basis in the Depositary Shares exchanged pursuant
to the Exchange Offer would be added to such holder's basis in its remaining
Depositary Shares or other stock that it owns in the Company, if any. To the
extent the fair market value of the Debentures received by the holder pursuant
to the Exchange Offer exceeds the amount of the dividend computed above, such
holder's basis will be reduced by the amount of such excess. Any amounts in
excess of such basis will be treated as capital gain. The holding period for
the Debentures will begin on the day after the day on which the Debentures are
acquired by the exchanging holder.
Section 302 Tests. The receipt of Debentures by an exchanging holder will be
a "complete redemption" if immediately after the Expiration Date of the
Exchange Offer either (i) the holder does not own, actually or constructively,
any Depositary Shares or other stock of the Company or (ii) the holder (a) does
not actually own any Depositary Shares or other stock of the Company, (b)
constructively owns Depositary Shares or other stock of the Company only by
reason of the family attribution rules of Section 318(a)(1) of the Code and (c)
waives such constructive ownership by complying with the procedures described
in Section 302(c) of the Code.
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The receipt of Debentures by an exchanging holder will be "not essentially
equivalent to a dividend" if the holder's exchange of Depositary Shares for
Debentures pursuant to the Exchange Offer results in a "meaningful reduction"
in the holder's interest in the Company. The exchange of Depositary Shares for
Debentures by a holder that does not own, either directly or indirectly under
the attribution rules, any Common Stock immediately after the Expiration Date
of the Exchange Offer should qualify as "not essentially equivalent to a
dividend" regardless of proration in the Exchange Offer. Also, a holder who
owns only a small amount of Common Stock would probably satisfy the "not
essentially equivalent to a dividend" test notwithstanding proration in the
Exchange Offer. Holders of Depositary Shares expecting to rely upon the "not
essentially equivalent to a dividend" test should consult their own tax
advisors as to its application in their particular situation.
Attribution. In determining whether either of the tests under Section 302 of
the Code is satisfied, a holder must take into account not only the Depositary
Shares and other stock of the Company which are actually owned by the holder,
but also Depositary Shares and other stock of the Company which are
constructively owned by the holder under Section 318 of the Code. Under Section
318 of the Code, a holder may constructively own Depositary Shares and other
stock of the Company actually owned, and in some cases constructively owned, by
certain related individuals or entities, and Depositary Shares and other stock
of the Company which the holder has the right to acquire by exercise of an
option or by conversion. Contemporaneous dispositions or acquisitions of
Depositary Shares by a holder or related individuals or entities may be deemed
to be part of a single integrated transaction which will be taken into account
in determining whether any of the tests under Section 302 of the Code has been
satisfied.
Each holder should be aware that because proration may occur in the Exchange
Offer, even if all the Depositary Shares actually and constructively owned by a
holder are tendered pursuant to the Exchange Offer, fewer than all of such
Depositary Shares may be purchased by the Company. Thus, proration may affect
whether a holder's exchange of Depositary Shares for Debentures pursuant to the
Exchange Offer will meet any of the tests under Section 302 of the Code.
Corporate Holder Dividend Treatment. To the extent a corporate holder's
exchange of Depositary Shares is taxable as a dividend, (i) it will be eligible
for a dividends-received deduction (subject to the minimum holding period
requirements under Section 246(c) of the Code and other applicable limitations)
and (ii) it will be subject to the "extraordinary dividend" provisions of the
Code which, if applicable, would require a corporate shareholder to reduce its
tax basis (and possibly recognize gain) in any stock of the Company held by it
by the nontaxed portion of any such dividend. Under recently proposed
legislation, however, a corporate holder that otherwise would receive a
dividends-received deduction with respect to the exchange would instead
generally be required to treat the exchange as a "sale or exchange." The
proposed legislation would apply to transactions effected after May 3, 1995.
Corporate holders are advised to consult their tax advisors regarding the
possible implications of the proposed legislation.
INTEREST AND ORIGINAL ISSUE DISCOUNT ON DEBENTURES
The following discussion addresses only the tax treatment of holders of
Debentures that acquired the Debentures pursuant to the Exchange Offer and thus
does not address the tax treatment of holders of the Debentures that purchase
the Debentures in the secondary market. In accordance with Sections 1271
through 1275 of the Code and the final Treasury Regulations promulgated
thereunder (the "OID Regulations"), a debt instrument bears original issue
discount ("OID") if its "stated redemption price at maturity" exceeds its
"issue price" by more than a de minimis amount. The issue price of the
Debentures will be their fair market value at the time of the exchange. The
stated redemption price at maturity of a debt instrument generally includes all
amounts payable other than "qualified stated interest" (i.e., payments that are
unconditionally required to be paid at least annually at a single fixed rate
over the term of the instrument). Because the Company has the right to elect to
extend any interest
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payment for a period not exceeding 20 consecutive quarterly interest payment
periods, none of the payments of stated interest on the Debentures will
constitute qualified stated interest. Thus, the Debentures will have OID in an
amount equal to the excess of all payments required to be made under the
Debentures over their issue price. A holder will be required to include OID in
income on a current basis, based on a constant yield method and in accordance
with the detailed requirements of the OID Regulations, regardless of such
holder's regular method of accounting. As a result, during any period in which
the Company has elected to extend the interest payment period a holder will be
required to include OID in income but will not receive a corresponding cash
distribution. A holder will not recognize any income upon the receipt of a
payment of stated interest on a Debenture; instead, a holder's basis in the
Debentures will be increased by the amount of OID includible in income and
reduced by all payments made on the Debentures.
Because the fair market value of the Debentures on the date of the exchange
may not equal their principal amount, the yield on the Debentures may differ
from the stated interest rate on the Debentures. To the extent the yield on the
Debentures exceeds the stated interest rate, the amount of OID includible in
income for a holder of Debentures in each quarter would exceed the cash amount
of the interest payment for that quarter. The Company will provide each non-
corporate holder of the Debentures with reports of the amount of OID includible
in income on Form 1099 OID. The calculations of OID income accruals on the
Debentures will also be available to the public in IRS Publication 1212.
Under the OID Regulations, in computing the yield to maturity of an
instrument the issuer is deemed to elect to exercise any unconditional option
available to it under the instrument if doing so will minimize the yield on the
instrument. If the issuer does not exercise such an option, then, solely for
purposes of determining the accrual of OID, the yield and maturity of the
instrument are redetermined by treating the instrument as reissued for an
amount equal to its adjusted issue price. Based on current market prices and
the advice of the lead Dealer-Manager, the Company expects the issue price of
the Debentures to exceed their stated principal amount. If such expectation
proves to be correct, the Company intends to assume, solely for purposes of
calculating OID on the Debentures, that the Company will exercise its right to
redeem the Debentures in 1997. If the Company does not in fact elect to redeem
the Debentures in 1997, the OID Regulations would require that OID be
recomputed, in accordance with that changed fact. In addition, if, contrary to
the Company's expectation, the issue price of the Debentures is less than their
stated principal amount, the calculation of OID would differ from that
described above. The aggregate amount of OID on the Debentures would be higher
and the timing of inclusions of such OID may be affected by the unconditional
option rule. The results of the Company's determinations will be reflected in
the information provided to non-corporate holders on Form 1099 OID.
A portion of the stated interest paid on the Debentures on the first Interest
Payment Date will be attributable to the period preceding the Issue Date. No
portion of such interest payable on such Interest Payment Date will be eligible
for the dividends-received deduction.
SALE OR REDEMPTION OF DEBENTURES
Generally, a sale or redemption of Debentures will result in taxable gain or
loss equal to the difference between the amount realized and the holder's tax
basis in the Debentures. Such gain or loss will be long-term capital gain or
loss if the Debentures are held for more than one year.
BACKUP WITHHOLDING
A holder of Depositary Shares or Debentures may be subject to backup
withholding at a rate of 31% with respect to dividends or interest (including
OID) on, or the proceeds of a sale, exchange, or redemption of such Depositary
Shares or Debentures as the case may be, unless (i) such holder is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable backup withholding rules.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES PERSONS
The following is a general summary of the material United States federal
income and estate tax considerations relevant to the exchange of Depositary
Shares for Debentures by non-United States persons and the ownership and
disposition by non-United States persons acquiring Debentures pursuant to the
Exchange Offer. To the extent it relates to matters of law or legal conclusions
this summary constitutes the opinion of Sonnenschein Nath & Rosenthal, special
tax counsel to the Company. This summary is based on the Code, Treasury
Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, IRS rulings, official pronouncements and judicial
decisions, all as in effect on the date hereof and all of which are subject to
change, possibly with retroactive effect, or different interpretations. This
summary does not discuss all the tax consequences that may be relevant to a
particular holder that is a non-United States person in light of the holder's
particular circumstances and it is not intended to be applicable in all
respects to all categories of non-United States persons, some of whom--such as
foreign governments and certain international organizations--may be subject to
special rules not discussed below. In addition, this summary does not address
any state, local or foreign tax considerations that may be relevant to a
holder's decision to exchange Depositary Shares for Debentures pursuant to the
Exchange Offer. For a discussion of certain United States federal income tax
considerations, some of which may also be relevant to non-United States
persons, see "Certain United States Federal Income Tax Considerations".
As used herein, "non-United States person" means any person who, for United
States federal income tax purposes, is neither (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any State or of any
of its territories or possessions or (iii) a domestic trust or estate.
ALL HOLDERS OF DEPOSITARY SHARES THAT ARE NON-UNITED STATES PERSONS ARE
ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE UNITED STATES FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE EXCHANGE OF DEPOSITARY SHARES
FOR DEBENTURES AND THE OWNERSHIP AND DISPOSITION OF DEBENTURES RECEIVED IN THE
EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF DEPOSITARY SHARES FOR DEBENTURES
Subject to the discussion of backup withholding below, if a holder that is a
non-United States person certifies, in a manner and under arrangements
satisfactory to the Company or other withholding agent, that the exchange of
Depositary Shares for Debentures by such holder qualifies as a "sale or
exchange", rather than as a dividend (see "Certain United States Federal Income
Tax Considerations--Exchange of Depositary Shares for Debentures", above), the
Company or such withholding agent will not withhold United States federal
income tax on the issuance of Debentures to such holder. Such a holder
generally will not be subject to United States federal income tax in respect of
gain recognized on such exchange unless (i) such gain is effectively connected
with a trade or business conducted by such non-United States person within the
United States (in which case the branch profits tax may also apply if the
holder is a foreign corporation), (ii) in the case of a non-United States
person that is an individual, such holder is present in the United States for a
period or periods aggregating 183 days or more in the taxable year of the
exchange and certain other conditions are satisfied, or (iii) the Company is or
has been a "United States real property holding corporation" for United States
federal income tax purposes at any time during the five-year period ending on
the date of the exchange and, at any time during such five-year period, the
holder either actually or constructively owned more than five percent of the
Depositary Shares. The Company believes that it has not been a United States
real property holding corporation at any time during the five-year period
preceding the date of this Prospectus and does not anticipate becoming a United
States real property holding corporation in the future.
40
<PAGE>
If a non-United States holder exchanges Depositary Shares for Debentures and
does not certify, in a manner satisfactory to the Company or other withholding
agent, that such exchange qualifies as a "sale or exchange" of the Depositary
Shares, United States federal withholding tax will be withheld from the gross
proceeds to such holder in an amount equal to 30% of such proceeds (including
Debentures that such holder would otherwise have received) unless (i) such
holder is eligible for a reduced withholding tax rate with respect to dividend
income under the provisions of an income tax treaty and duly establishes its
entitlement to the reduced rate, in which case the tax will be withheld at the
reduced rate, (ii) such income is effectively connected with a trade or
business conducted by such non-United States holder in the United States (and
such holder provides a Form 4224 to the withholding agent), or (iii) such
holder establishes that it is exempt from such tax (e.g., by providing the
appropriate form certifying its status as a foreign government). A holder that
is a non-United States person that is engaged in a trade or business in the
United States generally will be taxed at ordinary United States federal income
tax rates on a net income basis (and may be subject to the branch profits tax)
with respect to such dividend.
If the Company collects U.S. withholding tax on the exchange of Depositary
Shares for Debentures, a non-United States holder may be eligible to obtain a
refund of such tax from the IRS if it establishes that the exchange does not
give rise to dividend income, as described above under "Certain United States
Federal Income Tax Considerations--Exchange of Depositary Shares for
Debentures" or otherwise establishes a complete or partial exemption from such
withholding tax.
PAYMENTS ON DEBENTURES
Subject to the discussion of backup withholding below, payments of principal
and interest (including OID) on a Debenture by the Company or its agent (in its
capacity as such) to a beneficial owner that is a non-United States person will
not be subject to United States federal withholding tax; provided that (a) such
person does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote,
(b) such person is not a controlled foreign corporation that is related to the
Company actually or constructively through stock ownership and (c) either (i)
the beneficial owner certifies to the Company or its agent, under penalties of
perjury, that it is not a United States person and provides its name and
address on Form W-8 or its equivalent or (ii) a qualifying securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business and that holds the
Debenture certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or by a
qualifying intermediary and furnishes the payor with a copy thereof.
If a beneficial owner of a Debenture who is a non-United States person is
engaged in a trade or business within the United States and interest (including
OID) on the Debenture is effectively connected with the conduct of such trade
or business, such beneficial owner may be subject to United States federal
income tax on such interest (including OID) at ordinary United States federal
income tax rates on a net basis (in which case the branch profits tax may also
apply if the holder is a foreign corporation).
SALE OR EXCHANGE OF DEBENTURES
Subject to the discussion of backup withholding below, any capital gain
realized upon a sale or exchange of a Debenture (including upon retirement of a
Debenture) by a beneficial owner who is a non-United States person ordinarily
will not be subject to United States federal income tax unless (i) such gain is
effectively connected with a trade or business conducted by such non-United
States person within the United States (in which case the branch profits tax
may also apply if the holder is a foreign corporation) or (ii) in the case of a
non-United States person that is an individual, such holder is present in the
United States for a period or periods aggregating 183 days or more in the
taxable year of the sale or exchange and certain other conditions are met.
41
<PAGE>
FEDERAL ESTATE TAXES
Debentures beneficially owned by an individual who at the time of death is
neither a citizen nor a resident of the United States will not be subject to
United States federal estate tax as a result of such individual's death,
provided that (i) such holder did not at the time of death actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company and (ii) at the time of death the income from the
Debentures would not have been effectively connected with the conduct by such
individual of a trade or business within the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 OID and backup withholding at a rate
of 31% will not apply to payments of principal and interest (including OID)
made by the Company or a paying agent to a non-United States holder on a
Debenture if the certification described in clause (c) under "--Payments on
Debentures" above is received. However, interest (including OID) on a Debenture
owned by a holder that is a non-United States person will be required to be
reported annually on IRS Form 1042S.
Payments of the proceeds of the sale by a holder that is a non-United States
person of a Debenture made to or through a foreign office of a broker will not
be subject to information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign corporation for United
States federal tax purposes or a foreign person 50% or more of whose gross
income is effectively connected with a United States trade or business for a
specified three-year period, information reporting may apply to such payments.
Payments of the proceeds of the sale of a Debenture to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the holder certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
LEGAL MATTERS
The validity of the Debentures offered hereby, will be passed upon for the
Company by Shelby Yastrow, Senior Vice President, General Counsel and Secretary
of the Company. Mr. Yastrow is a full-time employee of the Company and owns,
and holds options to purchase, shares of the Company's Common Stock.
Sonnenschein Nath & Rosenthal, Chicago, Illinois, will act on behalf of the
Company as special tax counsel. Donald G. Lubin, a partner and Chairman of
Sonnenschein Nath & Rosenthal, is a director of the Company and owns, and holds
options to purchase, shares of the Company's Common Stock. Certain legal
matters will be passed upon for the Dealer Managers by Cleary, Gottlieb, Steen
& Hamilton, New York, New York. From time to time, Cleary, Gottlieb, Steen &
Hamilton provides legal services to the Company.
EXPERTS
The consolidated financial statements of McDonald's Corporation included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein, and are incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
42
<PAGE>
Duly executed photocopies of the Letter of Transmittal will be accepted.
Letters of Transmittal, depositary receipts evidencing Depositary Shares and
any other required documents should be sent by each holder of Depositary Shares
or his broker, dealer, commercial bank, trust company or other nominee to the
Exchange Agent at one of the addresses as set forth below:
The Exchange Agent Is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
P.O. Box 2559, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notices of Guaranteed Delivery by Telephone:
(201) 222-4707
The Information Agent Is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 628-8536 (Toll-Free)
(212) 269-5550 (Call Collect)
Any questions or requests for assistance or additional copies of this
Prospectus and the Letter of Transmittal or Notices of Guaranteed Delivery
may be directed to the Information Agent at its telephone number and
location set forth above. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning
the Exchange Offer.
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
85 Broad Street World Financial Center
New York, New York 10004 North Tower
(800) 828-3182 (Toll-Free) New York, New York 10281
(212) 236-4565 (Call Collect)
MORGAN STANLEY & CO.
INCORPORATED SALOMON BROTHERS INC
1221 Avenue of the Americas Seven World Trade Center
New York, New York 10020 New York, New York 10048
(800) 422-6464 ext. 6620 (Toll-Free) (800) 558-3745 (Toll-Free)
<PAGE>
MCDONALD'S CORPORATION
LETTER OF TRANSMITTAL
FOR DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
List below (or on a separate signed schedule affixed hereto) the Depositary
Shares (as defined below) to which this Letter of Transmittal relates.
DESCRIPTION OF DEPOSITARY SHARES TENDERED
(SEE INSTRUCTIONS 1 AND 2)
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
NAME(S) AND ADDRESS(ES) OF NUMBER OF
REGISTERED HOLDER(S) DEPOSITARY SHARES
(PLEASE FILL IN EXACTLY AS DEPOSITARY REPRESENTED BY NUMBER OF
NAME(S) APPEAR(S) ON DEPOSITARY RECEIPT DEPOSITARY DEPOSITARY SHARES
RECEIPT(S)) NUMBER(S)* RECEIPT(S)* TENDERED**
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
TOTAL DEPOSITARY SHARES
- --------------------------------------------------------------------------------------------
</TABLE>
*Need not be completed by Holders delivering Depositary Shares by book-
entry transfer.
** Unless otherwise indicated, the Holder will be deemed to have tendered
the full number of Depositary Shares represented by the tendered
depositary receipts.
Letters of Transmittal (or photocopies thereof), duly executed, depositary
receipts evidencing Depositary Shares and any other required documents should
be sent by each Holder (as defined below) of Depositary Shares, or its broker,
dealer, commercial bank, trust company or other nominee, to the Exchange Agent
at one of the addresses as set forth below.
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
P.O. Box 2559, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2559
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED. QUESTIONS AND REQUESTS
FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO D. F. KING & CO., INC., THE INFORMATION AGENT
FOR THE EXCHANGE OFFER, AT 77 WATER STREET, NEW YORK, NEW YORK 10005, TELEPHONE
(800) 628-8536 (TOLL-FREE) OR (212) 269-5550 (COLLECT).
<PAGE>
This Letter of Transmittal (or a photocopy hereof), duly executed, must
accompany depositary receipts evidencing Depositary Shares (as defined below)
to be forwarded herewith pursuant to the procedures set forth in the Prospectus
(as defined below) under the caption "The Exchange Offer--Procedures for
Tendering". If depositary receipts for tendered Depositary Shares are
registered in different names, it will be necessary to complete, sign and
submit as many separate copies of this Letter of Transmittal as there are
different registrations of Depositary Shares.
Eligible Institutions (as defined below) may also use this Letter of
Transmittal if delivery of Depositary Shares is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company ("DTC"). If such delivery is to be made, this Letter of Transmittal
need not be physically delivered; provided, however, that an Agent's Message is
received and tenders of Depositary Shares have been effected in accordance with
DTC's Automated Tender Offer Program ("ATOP") procedures and the other
procedures set forth in the Prospectus under the caption "The Exchange Offer--
Procedures for Tendering--Book Entry Transfer".
The term "Agent's Message" means a message, transmitted by DTC and received
by the Exchange Agent and forming a part of a Book-Entry Confirmation (as
defined in the Prospectus), which states that DTC has received an express
acknowledgment from a participant tendering Depositary Shares that are the
subject of such Book-Entry Confirmation, that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal, and that the
Company may enforce the Letter of Transmittal against such participant. Unless
the context requires otherwise, the term "Holder" for purposes of this Letter
of Transmittal means any person in whose name any Depositary Shares are
registered on the books of the Company or any other person who has obtained a
properly completed stock power from the registered holder or any person whose
Depositary Shares are held of record by DTC who desires to deliver such
Depositary Shares by book-entry transfer at DTC.
Holders who cannot deliver their Depositary Shares and all other documents
required hereby to the Exchange Agent prior to the Expiration Date, or comply
with book-entry procedures on a timely basis, may tender their Depositary
Shares according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering--
Guaranteed Delivery".
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: __________________________________________
The Depository Trust Company Account Number: ____________________________
Transaction Code Number: ________________________________________________
[_]CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ________________________________________
Date of Execution of Notice of Guaranteed Delivery: _____________________
Name of Eligible Institution that Guaranteed Delivery: __________________
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Name of Tendering Institution: __________________________________________
The Depository Trust Company Account Number: ____________________________
Transaction Code Number: ________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
To First Chicago Trust Company of New York:
The undersigned acknowledges receipt of the Prospectus dated June 5, 1995
(the "Prospectus") of McDonald's Corporation (the "Company") which, together
with this Letter of Transmittal (the "Letter of Transmittal"), constitutes the
Company's offer (the "Exchange Offer") to exchange up to $450,000,000 of its
8.35% Subordinated Deferrable Interest Debentures due 2025 (the "Debentures")
for up to 18,000,000 (the "Amount Sought") Depositary Shares (the "Depositary
Shares"), each representing 1/2,000 of a share of 7.72% Cumulative Preferred
Stock, Series E (the "Series E Preferred Stock"), of the Company. The
undersigned understands that exchanges will be made on a basis of $25 principal
amount of Debentures (the minimum permitted denomination) for each Depositary
Share (which has a liquidation preference of $25 per Depositary Share) validly
tendered and accepted for exchange in the Exchange Offer.
Subject to, and effective upon, the acceptance for exchange of the Depositary
Shares tendered herewith in accordance with the terms of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms or
conditions of any such extension or amendment), the undersigned hereby tenders
for exchange, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Depositary Shares and the underlying
Series E Preferred Stock. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that said Exchange Agent acts as the
agent of the undersigned in connection with the Exchange Offer) to (a) deliver
depositary receipts for such Depositary Shares, or transfer ownership of such
Depositary Shares on the account books maintained by DTC, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of the Company, (b) present such Depositary Shares for registration
and transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Depositary
Shares, all in accordance with the terms of the Exchange Offer.
The undersigned authorizes First Chicago Trust Company of New York, as
Depositary (the "Depositary") under that certain Deposit Agreement dated as of
November 25, 1992 by and among the Company, the Depositary and the holders from
time to time of depositary receipts evidencing the Depositary Shares, to
withdraw and tender to the Company the Series E Preferred Stock evidenced by
the Depositary Shares tendered hereby.
The undersigned represents and warrants that it has full power and authority
to tender, exchange, assign and transfer the Depositary Shares tendered hereby
and the underlying Series E Preferred Stock and to acquire the Debentures
issuable upon the exchange of such tendered Depositary Shares in accordance
with the terms of the Exchange Offer, and that, when the same are accepted for
exchange, the Company will acquire good, marketable and unencumbered title to
the tendered Depositary Shares and the underlying Series E Preferred Stock,
free and clear of all liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer thereof,
and the same will not be subject to any adverse claims. The undersigned also
warrants that it will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of tendered
Depositary Shares and the underlying Series E Preferred Stock or transfer
ownership of such Depositary Shares on the account books maintained by DTC. The
undersigned further represents that it has read and agreed to all of the terms
and conditions of the Exchange Offer.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death, bankruptcy or incapacity of the
undersigned and every obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, successors
and assigns of the undersigned. Except as provided in the Exchange Offer, this
tender is irrevocable.
The undersigned understands that tenders of Depositary Shares pursuant to any
one of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto
3
<PAGE>
will constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer, including the undersigned's representation and warranty that
(i) the undersigned has a net long position in the Depositary Shares being
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) the tender of such Depositary Shares
complies with Rule 14e-4. The Company's acceptance for exchange of Depositary
Shares tendered pursuant to the Exchange Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Exchange Offer.
The undersigned understands that the Company may (i) amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares, if any of the
conditions to the Exchange Offer is not satisfied, including (without
limitation) if fewer than 4,000,000 Depositary Shares are tendered. The
undersigned further understands that if more Depositary Shares than the Amount
Sought have been validly tendered and not withdrawn, the Company also may
accept for exchange, pro rata with Depositary Shares tendered by other Holders,
fewer than all of the Depositary Shares tendered hereby. In either event, the
undersigned understands that depositary receipts for any Depositary Shares not
tendered or not exchanged will be returned to the undersigned.
SOLICITED TENDERS
(TO BE COMPLETED ONLY FOR TENDERS OF DEPOSITARY SHARES MADE BY PHYSICALLY
DELIVERING DEPOSITARY RECEIPTS)
(SEE INSTRUCTION 3)
The Company will pay to any Soliciting Dealer, as defined in Instruction 3,
a solicitation fee of $0.50 per Depositary Share for each Depositary Share
tendered, accepted for exchange and exchanged pursuant to the Exchange Offer.
A registered holder may designate a Soliciting Dealer below ONLY if
depositary receipts for tendered Depositary Shares physically accompany this
Letter of Transmittal. The undersigned represents that the Soliciting Dealer
which solicited and obtained this tender is (Please print):
Name of Firm: ________________________________________________________________
Name of Individual Broker or Financial Consultant: ___________________________
Identification Number (if known): ____________________________________________
Address (Include Zip Code): __________________________________________________
______________________________________________________________________________
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with its
solicitation of tenders of Depositary Shares pursuant to the Exchange Offer;
(ii) it is entitled to such compensation for such solicitation under the
terms and conditions of the Exchange Offer; (iii) in soliciting tenders of
Depositary Shares, it has used no soliciting materials other than those
furnished by the Company; and (iv) if it is a foreign broker or dealer not
eligible for membership in the National Association of Securities Dealers,
Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations.
If tendered Depositary Shares are being delivered by book-entry transfer
made to an account maintained by the Exchange Agent with DTC, the Soliciting
Dealer must return a Notice of Solicited Tenders to the Exchange Agent to
receive a solicitation fee.
4
<PAGE>
TENDERING HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 4, 5 AND 8)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
---------------------------------------- Date: ________________________, 1995
---------------------------------------- Date: ________________________, 1995
SIGNATURE(S) OF HOLDER(S)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
depositary receipt(s) for Depositary Shares or by any person(s) authorized to
become registered holder(s) by endorsements and documents transmitted
herewith or, if the Depositary Shares are held of record by DTC, the person
in whose name such Depositary Shares are registered on the books of DTC. If
signature above is by a trustee, executor, administrator, guardian, attorney-
in-fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, complete the following (Please print):
Name(s): _____________________________________________________________________
Capacity (full title): _______________________________________________________
Address (Include Zip Code): __________________________________________________
------------------------------------------------------------------------------
Telephone Number: ___________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 5 AND 6)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
Title: _______________________________________________________________________
Address (Include Zip Code): __________________________________________________
Name of Firm: ________________________________________________________________
Telephone Number: ___________________________________________________________
Date: ________________________________________________________________________
5
<PAGE>
SPECIAL ISSUANCE
INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if the
Debentures to be issued in exchange
for Depositary Shares accepted for
exchange, or depositary receipts
for Depositary Shares not tendered
or not accepted for exchange, are
to be issued or reissued, in the
name of someone other than the
undersigned.
Issue
[_] Debentures and/or
[_] depositary receipts to:
Name(s):____________________________
------------------------------------
Address (Include Zip Code):
------------------------------------
------------------------------------
Taxpayer Identification No. ________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if the
Debentures to be issued in exchange
for Depositary Shares accepted for
exchange, or depositary receipts
for Depositary Shares not tendered
or not accepted for exchange, are
to be sent to someone other than
the undersigned or to the
undersigned at an address other
than that appearing above under
"Description of Depositary Shares
Tendered."
Mail
[_] Debentures and/or
[_] depositary receipts to:
Name(s):____________________________
------------------------------------
Address (Include Zip Code):
------------------------------------
------------------------------------
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Depositary Shares are
accepted for exchange is required to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9.
If a holder is an individual, the TIN is the holder's social security number.
If the Exchange Agent is not provided with the correct TIN, the holder may be
subject to a penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such holder with respect to Debentures acquired
pursuant to the Exchange Offer may be subject to backup withholding.
If backup withholding applies, the Exchange Agent is required to withhold 31%
of all payments made to the holder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
To prevent backup withholding on payments that are made to a holder with
respect to Debentures, the holder is required to notify the Company of his or
its correct TIN by completing the Form below, certifying that the TIN provided
on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and
that (i) the holder has not been notified by the Internal Revenue Service that
the holder is subject to backup withholding as a result of a failure to report
all interest or dividends or (ii) the Internal Revenue Service has notified the
holder that the holder is no longer subject to backup withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. A corporation must, however, complete the Substitute Form W-9,
including providing its TIN (unless it is a foreign corporation that does not
have a TIN) and indicating that it is exempt from backup withholding, in order
to establish its exemption from backup withholding. A foreign corporation or
individual, or other foreign person, must submit a statement (i.e., Form W-8 or
substitute), signed under penalties of perjury, attesting to such person's
status as a non-United States person. Such statements can be obtained from the
Exchange Agent.
6
<PAGE>
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Social Security Number
SUBSTITUTE PART 1--PLEASE
PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
FORM W-9 OR __________________________
DEPARTMENT OF THE Employer Identification Number
TREASURY --------------------------------------------------------
INTERNAL REVENUE PART 2--I am not subject to backup
SERVICE withholding because (i) I am exempt FOR PAYEES
from backup withholding, or (ii) I EXEMPT FROM
have not been notified by the IRS BACKUP
that I am subject to backup WITHHOLDING
withholding as a result of a failure
to report all interest or dividends,
or (iii) the IRS has notified me
that I am no longer subject to
backup withholding. (YOU MUST CROSS
OUT THIS PART 2 IF YOU ARE CURRENTLY
SUBJECT TO BACKUP WITHHOLDING
BECAUSE OF UNDERREPORTING OF
INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.)
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION
NUMBER (TIN)
Write "EXEMPT"
if you are ex-
empt from
backup with-
holding.
--------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF
PERJURY, I CERTIFY THAT THE PART 3--
INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE.
Awaiting TIN
SIGNATURE ___________DATE ___________ [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
CERTIFICATE OF TAXPAYER AWAITING TIN
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
----------------------------------------- --------------------------------
SIGNATURE DATE
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND DEPOSITARY RECEIPTS. Depositary
receipts for all physically delivered Depositary Shares, or confirmation of any
book-entry transfer to the Exchange Agent's account at DTC of Depositary Shares
tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal, and any other documents required
by this Letter of Transmittal, or an Agent's Message in connection with a book-
entry transfer, must be received by the Exchange Agent at either of the
addresses set forth herein prior to the Expiration Date (as defined in the
Prospectus).
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, DEPOSITARY RECEIPTS FOR
THE DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS
AT THE ELECTION AND RISK OF THE HOLDER AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SENT BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE PROPERLY INSURED REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
Holders who cannot deliver their Depositary Shares and all other required
documents to the Exchange Agent prior to the Expiration Date, or comply with
book-entry transfer procedures on a timely basis, may tender their Depositary
Shares pursuant to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering--Guaranteed
Delivery".
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by executing a copy of this Letter of
Transmittal, shall waive any right to receive notice of the acceptance of the
Depositary Shares for exchange.
2. PARTIAL TENDERS. If less than the entire number of Depositary Shares
evidenced by a submitted depositary receipt are tendered, the tendering Holder
must fill in the number of Depositary Shares tendered in the box entitled
"Number of Depositary Shares Tendered". A newly issued depositary receipt for
Depositary Shares submitted but not tendered, together with any tendered
Depositary Shares that were not accepted for exchange because of proration or
otherwise, will be returned without expense to the tendering Holder as soon as
practicable following the Expiration Date (or, in the case of Depositary Shares
tendered by book-entry transfer, such Depositary Shares will be credited to an
account maintained at DTC), subject to delays, if any, resulting from
proration. All Depositary Shares delivered to the Exchange Agent will be deemed
to have been tendered unless otherwise indicated.
3. SOLICITED TENDERS. The Company will pay a solicitation fee of $0.50 per
Depositary Share (the "Solicitation Fee") for any Depositary Shares tendered by
physically delivering depositary receipts which are accepted for exchange and
exchanged pursuant to the Exchange Offer and covered by this Letter of
Transmittal which designates, in the box captioned "Solicited Tenders," as
having solicited and obtained the tender, the name of (i) any broker or dealer
in securities, including each Dealer Manager in its capacity as a dealer or
broker, which is a member of any national securities exchange or of the NASD,
(ii) any foreign broker or dealer not eligible for membership in the NASD which
agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders
outside the United States to the same extent as though it were an NASD member,
or (iii) any bank or trust company (each of which is referred to herein as a
"Soliciting Dealer"). No Solicitation Fee shall be payable to a Soliciting
Dealer with respect to the tender of depositary receipts evidencing Depositary
Shares by a Holder unless the Letter of Transmittal accompanying such tender
designates such Soliciting Dealer as such in the box captioned "Solicited
Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer
must return a Notice of Solicited Tenders to the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date in order to receive
a Solicitation Fee. No Solicitation Fee shall be payable to a Soliciting Dealer
in respect of Depositary Shares (i) beneficially owned by such Soliciting
Dealer or (ii) registered in the name of such Soliciting Dealer unless such
Depositary Shares are held by such Soliciting Dealer as nominee and such
Depositary Shares are being tendered for the benefit of one or more beneficial
owners identified on the Letter of Transmittal or the Notice of Solicited
Tenders. No Solicitation Fee shall be payable to the Soliciting Dealer with
respect to the tender of Depositary Shares by the Holder of record, for the
benefit of the beneficial owner, unless the beneficial owner has designated
such Soliciting Dealer.
8
<PAGE>
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
4. SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL. If this Letter of Transmittal
is signed by the registered holder(s) of the Depositary Shares tendered hereby,
the signature(s) must correspond with the name(s) as written on the face of the
depositary receipts for the Depositary Shares, without alteration, enlargement
or any change whatsoever. When this Letter of Transmittal is signed by the
registered holder(s) of Depositary Shares tendered hereby, no endorsements of
certificates or separate written instruments of transfer or exchange are
required.
If any of the Depositary Shares tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal. If
depositary receipts for tendered Depositary Shares are registered in different
names, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Depositary Shares.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution (as defined below), provided the Depositary Shares are
tendered: (i) by a registered holder of such Depositary Shares who has not
completed either of the boxes entitled "Special Issuance Instructions" or
"Special Delivery Instructions"; or (ii) for the account of an Eligible
Institution.
5. WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this
Letter of Transmittal is signed by a person other than the registered holder(s)
of the Depositary Shares tendered hereby, such Depositary Shares must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to the Company and duly executed by the registered
holder(s), in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on the depositary receipts for the Depositary Shares.
If this Letter of Transmittal, any depositary receipts or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on depositary receipts or signatures on separate written
instruments of transfer or exchange required by this Instruction 5 must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program or The New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (any of the
foregoing hereinafter referred to as an "Eligible Institution").
6. SPECIAL ISSUANCE INSTRUCTIONS AND SPECIAL DELIVERY INSTRUCTIONS. If the
Debentures to be issued in exchange for the Depositary Shares and/or depositary
receipts for Depositary Shares not tendered or not accepted for exchange, are
to be issued or reissued in the name of someone other than the tendering Holder
or are to be sent to someone other than the tendering Holder or to the
tendering Holder at an address other than that shown above, the tendering
Holder must fill in the information in the appropriate box of this Letter of
Transmittal and have its signature guaranteed by an Eligible Institution as
provided in Instruction 5.
7. TRANSFER TAXES. The Company will pay any transfer taxes with respect to
the transfer and exchange of Depositary Shares to it or its order pursuant to
the Exchange Offer. If, however, the Debentures due in respect of the
Depositary Shares accepted for exchange are to be issued to, or (in the
circumstances permitted hereby) if depositary receipts for Depositary Shares
not tendered or not exchanged are to be registered in the name of, any person
other than the person(s) signing this Letter of Transmittal, the amount of any
transfer taxes (whether imposed on the registered holder or such person)
payable on account of the transfer to such person will be billed directly to
such person in respect of the Depositary Shares accepted for exchange if
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
not submitted.
9
<PAGE>
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the depositary receipts evidencing
Depositary Shares listed in this Letter of Transmittal.
8. SUBSTITUTE FORM W-9. Except as described under "Important Tax
Information," federal income tax laws require each tendering holder to provide
the Exchange Agent (as Payor) with a correct taxpayer identification number
("TIN") on the Substitute Form W-9 which is provided herein, and to indicate
whether or not the holder is not subject to backup withholding by crossing out
Part 2 on the Substitute Form W-9 if the holder is currently subject to backup
withholding. Failure to provide the information on the Form W-9 or to cross out
Part 2 of the Form W-9 (if applicable) may subject the tendering holder to 31%
federal income tax withholding on payments made to the holder. The box in Part
3 of the Form W-9 may be checked if the tendering holder has not been issued a
TIN and has applied for a TIN or intends to apply for a TIN in the near future.
If the box in Part 3 is checked and the holder has not provided a TIN within
sixty (60) days, the Company will withhold 31% on all such payments thereafter
until a TIN is provided to the Company.
9. WITHHOLDING ON FOREIGN HOLDERS IN CONNECTION WITH THE EXCHANGE OFFER.
United States federal income tax generally will be withheld from the gross
proceeds payable to a holder that is a non-United States person (a "foreign
holder") (including Debentures that such foreign holder would otherwise be
entitled to receive) unless such foreign holder provides the Exchange Agent
with a Foreign Holder Certification, in form and substance satisfactory to the
Company, in which such holder certifies that such holder's exchange of
Depositary Shares for Debentures pursuant to the Exchange Offer qualifies as a
sale or exchange, rather than as a dividend, for federal income tax purposes
(as described in "Certain United States Federal Tax Considerations for Non-
United States Persons--Exchange of Depositary Shares for Debentures" in the
Prospectus) and such holder agrees that it will provide additional information
to the Company if necessary to demonstrate such qualification and that it will
reimburse the Company if it is determined that federal withholding tax was due.
The withholding rate is ordinarily 30% unless the foreign holder is eligible
for a reduced tax treaty rate with respect to dividend income, in which case
withholding will be made at the reduced treaty rate, or the foreign holder
otherwise establishes to the satisfaction of the withholding agent that such
holder is exempt from tax on such exchange (e.g., by certifying to the
withholding agent on IRS Form 8709 as to such holder's status as a foreign
government). For this purpose, a non-United States person is any person that is
not (i) an individual citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or (iii) any
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income. Copies of the Foreign Holder
Certification are available from the Exchange Agent. A holder's status as a
foreign holder and eligibility for a tax treaty reduced rate of withholding
will be determined by reference to the holder's address and to any outstanding
certificates (i.e., Form W-8 or substitute) or statements concerning
eligibility for a reduced rate of withholding, unless facts and circumstances
indicate that reliance is not warranted. EACH FOREIGN HOLDER SHOULD CONSULT
WITH ITS TAX ADVISOR REGARDING THE FOREGOING.
A holder that exchanges Depositary Shares for Debentures on behalf of a
beneficial owner that is a non-United States person will be responsible for
determining whether and what rate of withholding is required on such exchange
and for obtaining any required forms or certifications from such beneficial
owner.
A foreign holder may be eligible to obtain from the U.S. Internal Revenue
Service a refund of any tax withheld if such shareholder meets one of the two
tests for sale or exchange treatment described in "Certain United States
Federal Tax Considerations for Non-United States Persons--Exchange of
Depositary Shares for Debentures" in the Prospectus or otherwise is able to
establish that no tax (or a reduced amount of tax) was due.
10. WITHDRAWALS. Tenders of Depositary Shares pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date and, unless accepted
for exchange by the Company, may be withdrawn at any time after 40 business
days after the date of the Prospectus. To be effective, a written notice of
withdrawal delivered by mail, hand delivery or facsimile transmission must be
timely received by the Exchange Agent at either of the addresses set forth in
the Prospectus. The method of notification is at the risk and election of the
Holder. Any such notice of withdrawal must specify (i) the Holder named in the
Letter of Transmittal as having tendered
10
<PAGE>
Depositary Shares to be withdrawn, (ii) if the Depositary Shares are held in
depositary receipt form, the depositary receipt numbers of the Depositary
Shares to be withdrawn, (iii) the number of Depositary Shares delivered for
exchange, (iv) a statement that such Holder is withdrawing its election to have
such Depositary Shares exchanged, and (v) the name of the registered holder of
such Depositary Shares, and must be signed by the Holder in the same manner as
the original signature on this Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial
ownership of the Depositary Shares being withdrawn. If Depositary Shares have
been tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawn Depositary Shares and otherwise comply with DTC's
procedures. The Exchange Agent will return properly withdrawn Depositary Shares
promptly (normally within five to seven business days) following receipt of
notice of withdrawal. All questions as to the validity of notice of withdrawal,
including time of receipt, will be determined by the Company, and such
determination will be final and binding on all parties. Withdrawals of tenders
of Depositary Shares may not be rescinded and any Depositary Shares withdrawn
will thereafter be deemed not to be validly tendered for purposes of the
Exchange Offer. Properly withdrawn Depositary Shares, however, may be
retendered by following the procedures for tendering at any time prior to the
Expiration Date.
11. EXTENSIONS, AMENDMENTS AND TERMINATION. The Company expressly reserves
the right to (i) amend or modify the terms of the Exchange Offer in any manner
and (ii) withdraw or terminate the Exchange Offer and not accept for exchange
any Depositary Shares, if any of the conditions to the Exchange Offer is not
satisfied, including (without limitation) if fewer than 4,000,000 Depositary
Shares are tendered. The conditions of the Exchange Offer are for the sole
benefit of the Company and may be asserted by the Company regardless of the
circumstances giving rise to such conditions, or may be waived by the Company,
in whole or in part at any time and from time to time, in its sole discretion.
The failure by the Company, at any time, to exercise its rights with respect to
any of the conditions of the Exchange Offer will not be deemed a waiver of any
such conditions.
12. MUTILATED, LOST, STOLEN OR DESTROYED DEPOSITARY RECEIPTS. Any Holder
whose depositary receipts have been mutilated, lost, stolen or destroyed should
contact First Chicago Trust Company of New York, Suite 4687, P.O. Box 2591,
Jersey City, New Jersey 07303-2591, telephone (800) 621-7825.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. All questions relating to
the Exchange Offer, as well as requests for additional copies of the Prospectus
and this Letter of Transmittal, may be directed to D.F. King & Co., Inc., the
Information Agent for the Exchange Offer, at 77 Water Street, New York, New
York 10005, telephone (800) 628-8536 (toll-free) or (212) 269-5550 (collect).
14. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
Depositary Shares will be resolved by the Company, and such determination will
be final and binding on all parties. The Company reserves the absolute right to
reject any or all Letters of Transmittal or tenders that are not in proper form
or the acceptance of which would, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to the particular Depositary Shares covered by any
Letter of Transmittal or tendered pursuant to such letter. None of the Company,
the Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Company's interpretation of the
terms and conditions of the Exchange Offer shall be final and binding on all
parties.
15. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and not
otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A PHOTOCOPY THEREOF), DULY
EXECUTED, (TOGETHER WITH DEPOSITARY RECEIPTS FOR DEPOSITARY SHARES AND ALL
OTHER REQUIRED DOCUMENTS) OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
11
<PAGE>
MCDONALD'S CORPORATION
NOTICE OF GUARANTEED DELIVERY
FOR DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery or one substantially equivalent hereto may
be used by registered holders of outstanding Depositary Shares (the "Depositary
Shares"), each representing 1/2,000 of a share of 7.72% Cumulative Preferred
Stock, Series E, of McDonald's Corporation who wish to tender Depositary Shares
in exchange for McDonald's Corporation's 8.35% Subordinated Deferrable Interest
Debentures due 2025 upon the terms and subject to the conditions set forth in
the Prospectus dated June 5, 1995 (the "Prospectus") of McDonald's Corporation
and the related Letter of Transmittal (the "Letter of Transmittal") and, in
each case, who cannot deliver their Depositary Shares and Letter of Transmittal
(and any other documents required by the Letter of Transmittal) to First
Chicago Trust Company of New York (the "Exchange Agent") prior to the
Expiration Date (as defined in the Prospectus) or comply with book-entry
procedures on a timely basis. This Notice of Guaranteed Delivery may be mailed,
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) to the
Exchange Agent for receipt prior to the Expiration Date as set forth below. See
"The Exchange Offer--Procedures for Tendering--Guaranteed Delivery" in the
Prospectus.
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail Suite 4680-McD
recommended) 14 Wall Street, 8th Floor
P.O. Box 2559, Mail Suite 4660-McD New York, New York 10005
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
Eligible Institution, such signature guarantee must appear in the applicable
space provided on the Letter of Transmittal for guarantee of signatures.
<PAGE>
To First Chicago Trust Company of New York:
The undersigned hereby tenders to McDonald's Corporation the number of
Depositary Shares indicated below, upon the terms and subject to the conditions
contained in the Prospectus dated
June 5, 1995, of McDonald's Corporation and the related Letter of Transmittal,
receipt of which is hereby acknowledged.
DESCRIPTION OF DEPOSITARY SHARES TENDERED (PLEASE PRINT)
NAME(S) AND ADDRESS(ES) OF DEPOSITARY NUMBER OF NUMBER OF
REGISTERED HOLDER(S) RECEIPT DEPOSITARY DEPOSITARY
(PLEASE FILL IN EXACTLY AS NUMBER(S) SHARES SHARES
NAME(S) APPEAR(S) ON REPRESENTED BY TENDERED*
DEPOSITARY RECEIPT(S)) DEPOSITARY
RECEIPT(S)
- --------------------------------------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Total Depositary
Shares
- --------------------------------------------------------------------------------
* Unless otherwise indicated, the holder will be deemed to have tendered
the full number of Depositary Shares represented by the tendered
depositary receipts.
Signature(s) :________________________________________________________________
Date:____________________________________
Telephone Number:________________________
Name and address of Tendering Holder (if different than Registered Holder):___
------------------------------------------------------------------------------
IF DEPOSITARY SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER
Name of Tendering Institution:
-----------------------------------------
Account No. at The Depository Trust Company:
-----------------------------------------
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office,
branch, agency or correspondent in the United States, hereby guarantees (a)
that the above named person(s) "own(s)" the Depositary Shares tendered
hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of
1934, as amended, (b) that such tender of Depositary Shares complies with
Rule 14e-4 and (c) to deliver to the Exchange Agent, at one of its addresses
set forth above, the depositary receipts evidencing the Depositary Shares,
together with a properly completed and duly executed copy of the Letter of
Transmittal, with any required signature guarantees (or an Agent's Message
and a Book-Entry Confirmation for Depositary Shares tendered by book-entry
transfer), and any other documents required by the Letter of Transmittal
within five New York Stock Exchange trading days after the date of execution
of this Notice of Guaranteed Delivery.
------------------------------------ ------------------------------------
Name of Firm Authorized Signature
------------------------------------ ------------------------------------
Street Address Print Name
------------------------------------ ____________________________________
City/Stat_________________ZipeCode Title
Telephone Number: __________________ Date: ______________________________
DO NOT SEND DEPOSITARY RECEIPTS EVIDENCING DEPOSITARY SHARES WITH THIS NOTICE
OF GUARANTEED DELIVERY. DEPOSITARY RECEIPTS EVIDENCING DEPOSITARY SHARES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
MCDONALD'S CORPORATION
OFFER TO EXCHANGE
8.35% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
June 5, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
In our capacity as Dealer Managers, we are enclosing materials relating to
the offer by McDonald's Corporation, a Delaware corporation (the "Company"), to
exchange up to $450,000,000 aggregate principal amount of its 8.35%
Subordinated Deferrable Interest Debentures due 2025 (the "Debentures") for up
to 18,000,000 Depositary Shares (the "Depositary Shares"), each representing
1/2,000 of a share of 7.72% Cumulative Preferred Stock, Series E, of the
Company, upon the terms and subject to the conditions set forth in the
Prospectus, dated June 5, 1995 (the "Prospectus"), and in the related Letter of
Transmittal (which together constitute the "Exchange Offer").
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares, if any of the
conditions to the Exchange Offer is not satisfied, including (without
limitation) if fewer than 4,000,000 Depositary Shares are tendered.
We are asking you to contact your clients for whom you hold Depositary Shares
registered in your name (or in the name of your nominee) or who hold Depositary
Shares registered in their own names. Please bring the Exchange Offer to their
attention as promptly as possible.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER AS TO WHETHER TO TENDER ALL OR ANY DEPOSITARY SHARES. HOLDERS MUST
MAKE THEIR OWN DECISIONS AS TO WHETHER TO TENDER DEPOSITARY SHARES AND, IF SO,
HOW MANY DEPOSITARY SHARES TO TENDER.
The Company will pay a solicitation fee of $0.50 per Depositary Share (the
"Solicitation Fee") for any Depositary Shares tendered by physically delivering
depositary receipts which are accepted for exchange and exchanged pursuant to
the Exchange Offer and covered by a Letter of Transmittal which designates, as
having solicited and obtained the tender, the name of (i) any broker or dealer
in securities, including each Dealer Manager in its capacity as a broker or
dealer, which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (iii) any
bank or trust company (each of which is referred to herein as a "Soliciting
Dealer"). No Solicitation Fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
holder unless the Letter of Transmittal accompanying such tender designates
such Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer
must return a Notice of Solicited
<PAGE>
Tenders to the Exchange Agent within five New York Stock Exchange trading days
after the Expiration Date in order to receive a Solicitation Fee. No
Solicitation Fee shall be payable to a Soliciting Dealer in respect of
Depositary Shares (i) beneficially owned by such Soliciting Dealer or (ii)
registered in the name of such Soliciting Dealer unless such Depositary Shares
are held by such Soliciting Dealer as nominee and such Depositary Shares are
being tendered for the benefit of one or more beneficial owners identified on
the Letter of Transmittal or the Notice of Solicited Tenders. No Solicitation
Fee shall be payable to the Soliciting Dealer with respect to the tender of
Depositary Shares by the holder of record, for the benefit of the beneficial
owner, unless the beneficial owner has designated such Soliciting Dealer.
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
The Company will also, upon request, reimburse Soliciting Dealers for
reasonable and customary handling and mailing expenses incurred by them in
forwarding materials relating to the Exchange Offer to their customers. The
Company will pay all transfer taxes applicable to the exchange of Depositary
Shares pursuant to the Exchange Offer, subject to Instruction 7 of the Letter
of Transmittal.
Enclosed herewith for your information and for forwarding to your clients are
copies of the following documents:
1. The Prospectus dated June 5, 1995;
2. The Letter of Transmittal to be used by holders of Depositary Shares
in accepting the Exchange Offer (duly executed photocopies of the Letter of
Transmittal may also be used);
3. The Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if the Depositary Shares or other required documents cannot be
delivered to the Exchange Agent by the Expiration Date or book-entry
procedures cannot be complied with on a timely basis;
4. A form of letter which may be sent to your clients for whose accounts
you hold Depositary Shares registered in your name or in the name of your
nominee, with a form provided for obtaining such client's instructions with
regard to the Exchange Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to First Chicago Trust Company of New
York, the Exchange Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED. PLEASE FURNISH COPIES OF THE ENCLOSED
MATERIALS TO YOUR CLIENTS FOR WHOM YOU HOLD DEPOSITARY SHARES REGISTERED IN
YOUR NAME OR IN THE NAME OF YOUR NOMINEE AS QUICKLY AS POSSIBLE.
In all cases, exchanges of Debentures for Depositary Shares pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
depositary receipts for all physically delivered Depositary Shares, or
confirmation of any book-entry transfer to the Exchange Agent's account at DTC
of Depositary Shares tendered by book-entry transfer, as well as a properly
completed and duly executed Letter of Transmittal, and any other documents
required by the Letter of Transmittal, or an Agent's Message (as defined in the
Prospectus) in connection with a book-entry transfer.
2
<PAGE>
The Exchange Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Depositary Shares residing in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be
in compliance with the laws of such jurisdiction.
Questions and requests for assistance with respect to the Exchange Offer or
for copies of the Prospectus and Letter of Transmittal may be directed to D.F.
King & Co., Inc., the Information Agent
for the Exchange Offer, at 77 Water Street, New York, New York 10005, telephone
(800) 628-8536 (toll-free) or (212) 269-5550 (collect).
Very truly yours,
Goldman, Sachs & Co.
Merrill Lynch & Co.
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE COMPANY, OR ANY AFFILIATE THEREOF, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
NOTICE OF SOLICITED TENDERS
(TO BE COMPLETED ONLY FOR TENDERS OF DEPOSITARY SHARES MADE BY BOOK-ENTRY
TRANSFER)
List below the number of Depositary Shares tendered by book-entry transfer by
each beneficial owner whose tender you have solicited. All Depositary Shares
beneficially owned by a beneficial owner, whether in one account or several,
and in however many capacities, must be aggregated for purposes of completing
the table below. Any questions as to what constitutes beneficial ownership
should be directed to the Exchange Agent. If the space below is inadequate,
list the Beneficial Owners and the Depositary Shares tendered in a separate
signed schedule and affix the list to this Notice of Solicited Tenders. Please
do not complete the sections of the table headed "TO BE COMPLETED ONLY BY THE
EXCHANGE AGENT."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO, AND ALL QUESTIONS
CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO, THE EXCHANGE
AGENT. ALL NOTICES OF SOLICITED TENDERS MUST BE RECEIVED BY THE EXCHANGE AGENT
WITHIN FIVE NEW YORK STOCK EXCHANGE TRADING DAYS AFTER THE EXPIRATION DATE.
<TABLE>
<CAPTION>
TO BE COMPLETED TO BE COMPLETED TO BE COMPLETED TO BE COMPLETED
BY THE BY THE ONLY BY THE ONLY BY THE
SOLICITING DEALER SOLICITING DEALER EXCHANGE AGENT EXCHANGE AGENT
- ----------------------------------------------------------------------------------
FEE
NUMBER OF NUMBER OF ($0.50 PER
BENEFICIAL DEPOSITARY SHARES VOI TICKET DEPOSITARY DEPOSITARY
OWNERS TENDERED* NUMBER* SHARES ACCEPTED SHARE)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Beneficial
Owner
No. 1
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 2
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 3
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 4
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 5
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 6
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 7
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 8
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 9
- ----------------------------------------------------------------------------------
Beneficial
Owner
No. 10
- ----------------------------------------------------------------------------------
Total
</TABLE>
*Must be completed in order to obtain payment of soliciting dealer fee.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Exchange
Agent, in its sole discretion, which determination will be final and binding.
Neither the Exchange Agent nor any other person will be under any duty to give
notification of any defects or irregularities in any Notice of Solicited
Tenders or incur any liability for failure to give such notification.
4
<PAGE>
The undersigned hereby confirms that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with its
solicitation of tenders of Depositary Shares pursuant to the Exchange Offer;
(ii) it is entitled to such compensation for such solicitation under the terms
and conditions of the Exchange Offer; (iii) in soliciting tenders of Depositary
Shares, it has used no soliciting materials other than those furnished by the
Company; and (iv) if it is a foreign broker or dealer not eligible for
membership in the NASD, it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations.
- ------------------------------------- -------------------------------------
Firm Name (Please print) Address (Include Zip Code)
- ------------------------------------- -------------------------------------
Authorized Signature
- ------------------------------------- -------------------------------------
Name and Title Telephone Number
5
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Purpose of Form.--A person who is required to file an information return with
the IRS must obtain your correct TIN to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an IRA. Use Form W-9 to furnish
your correct TIN to the requester (the person asking you to furnish your TIN)
and, when applicable, (1) to certify that the TIN you are furnishing is correct
(or that you are waiting for a number to be issued), (2) to certify that you
are not subject to backup withholding, and (3) to claim exemption from backup
withholding if you are an exempt payee. Furnishing your correct TIN and making
the appropriate certifications will prevent certain payments from being subject
to backup withholding. Section references are to the Internal Revenue Code.
Note: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
How to Obtain a TIN.--If you do not have a TIN, apply for one immediately. To
apply, get Form SS-5, Application for a Social Security Card (for individuals),
from your local office of the Social Security Administration, or Form SS-4,
Application for Employer Identification Number (for businesses and all other
entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I (or check the box in Part 3 of Substitute Form W-
9), sign and date the form, and give it to the requester. Generally, you must
obtain a TIN and furnish it to the requester by the time of payment. If the
requester does not receive your TIN by the time of payment, backup withholding,
if applicable, will begin and continue until you furnish your TIN to the
requester.
Note: Writing "Applied for" (or checking the box in Part 3 of the Substitute
Form W-9) on the form means that you have already applied for a TIN OR that you
intend to apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and give it to the requester.
What is Backup Withholding?--Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN, or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
<PAGE>
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Example Payees and Payments
under Specific Instructions, below, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding.--The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except
item (9). For broker transactions, payees listed in (1) through (13) and a
person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except a corporation that provides medical
and health care services or bills and collects payments for such services is
not exempt from backup withholding or information reporting.
(1) A corporation. (2) An organization exempt from tax under section 501(a),
or an IRA, or a custodial account under section 403(b)(7). (3) The United
States or any of its agencies or instrumentalities. (4) A state, the District
of Columbia, a possession of the United States, or any of their political
subdivisions or instrumentalities. (5) A foreign government or any of its
political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) a foreign central
bank of issue. (8) A dealer in securities or commodities required to register
in the United States or a possession of the United States. (9) A futures
commission merchant registered with the Commodity Futures Trading Commission.
(10) A real estate investment trust. (11) An entity registered at all times
during the tax year under the Investment Company Act of 1940. (12) A common
trust fund operated by a bank under section 584(a). (13) A financial
institution. (14) A middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664
or described in section 4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
PENALTIES
Failure to Furnish TIN.--If you fail to furnish your correct TIN to a
requester, you will be subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding.--If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name.--If you are an individual, you must generally provide the name shown on
your Social Security card. However, if you have changed your last name, for
instance, due to marriage, without informing the
2
<PAGE>
Social Security Administration of the name change, please enter your first
name, the last name shown on your Social Security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing
business as" name on the business name line. Enter your name(s) as shown on
your Social Security card and/or as it was used to apply for your EIN on Form
SS-4.
SIGNING THE CERTIFICATION.
1. Interest, Dividend, Broker and Barter Exchange Accounts Opened Before 1984
and Broker Accounts Considered Active During 1983. You are required to furnish
your correct TIN, but you are not required to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After 1983
and Broker Accounts Considered Inactive During 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out Part 2 in the certification before signing the form. For a joint
account, only the person whose TIN is shown in Part 1 should sign.
3. Exempt Payees and Payments. If you are exempt from backup withholding, you
should complete this form to avoid possible erroneous backup withholding. Enter
your correct TIN in Part 1, write "EXEMPT" in the block in Part 2, and sign and
date the form. If you are a nonresident alien or foreign entity not subject to
backup withholding, give the requester a complete Form W-8, Certificate of
Foreign Status.
PRIVACY ACT NOTICE.
Section 6109 requires you to furnish your correct TIN to persons who must
file information returns with the IRS to report interest, dividends, and
certain other income paid to you, mortgage interest you paid, the acquisition
or abandonment of secured property, or contributions you made to an IRA. The
IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<S> <C>
For this type of account: Give name and SSN of:
1. Individual.............................. The individual
2. Two or more individuals (joint account). The actual owner of the account
or, if combined funds, the first
individual on the account(1)
3. Custodian account of a minor (Uniform
Gift to Minors Act)....................... The minor(2)
4. a. The usual revocable savings trust
(grantor is also trustee)............... The grantor-trustee(1)
b. So-called trust account that is not a
legal or valid trust under state law...... The actual owner(1)
5. Sole proprietorship..................... The owner(3)
For this type of account: Give name and EIN of:
6. Sole proprietorship..................... The owner(3)
7. A valid trust, estate, or pension trust. Legal entity(4)
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
8. Corporate......................................... The corporation
9. Association, club, religious, charitable,
educational, or other tax-exempt organization....... The organization
10. Partnership....................................... The partnership
11. A broker or registered nominee.................... The broker or nominee
12. Account with the Department of Agriculture in the
name of a public entity (such as a state or local
government, school district or prison) that receives
agriculture program payments........................ The public entity
</TABLE>
- --------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or trustee
unless the legal entity itself is not designated in the account title.)
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
4
<PAGE>
MCDONALD'S CORPORATION
OFFER TO EXCHANGE
8.35% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
June 5, 1995
To Our Clients:
We are enclosing for your consideration a Prospectus, dated June 5, 1995, of
McDonald's Corporation (the "Company") and a related Letter of Transmittal
(which together constitute the "Exchange Offer") relating to the Company's
offer to exchange up to $450,000,000 aggregate principal amount of its 8.35%
Subordinated Deferrable Interest Debentures due 2025 (the "Debentures") for up
to 18,000,000 (the "Amount Sought") Depositary Shares (the "Depositary
Shares"), each representing 1/2,000 of a share of 7.72% Cumulative Preferred
Stock, Series E, of the Company.
The Company will exchange Debentures for all Depositary Shares validly
tendered and not withdrawn, up to the Amount Sought, upon the terms and subject
to the conditions of the Exchange Offer, including the provisions thereof
relating to proration. The Company expressly reserves the right to (i) extend,
amend or modify the terms of the Exchange Offer in any manner and (ii) withdraw
or terminate the Exchange Offer and not accept for exchange any Depositary
Shares, if any of the conditions to the Exchange Offer is not satisfied,
including (without limitation) if fewer than 4,000,000 Depositary Shares are
tendered.
WE ARE THE HOLDER OF RECORD OF DEPOSITARY SHARES HELD BY US FOR YOUR ACCOUNT.
A TENDER OF SUCH DEPOSITARY SHARES CAN BE MADE ONLY BY US AS THE RECORD HOLDER
AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO
YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER DEPOSITARY
SHARES HELD BY US FOR YOUR ACCOUNT.
If you wish to have us tender all or part of the Depositary Shares held by us
for your account pursuant to the terms and conditions of the Exchange Offer,
please complete, sign and return to us, by mail, courier or facsimile, the
attached instructions for beneficial owners of Depositary Shares in ample time
to permit us to submit a tender on your behalf.
If you do not wish to participate in the Exchange Offer, you need not take
any action.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER AS TO WHETHER TO TENDER ALL OR ANY DEPOSITARY SHARES. HOLDERS MUST
MAKE THEIR OWN DECISIONS AS TO WHETHER TO TENDER DEPOSITARY SHARES AND, IF SO,
HOW MANY DEPOSITARY SHARES TO TENDER.
Very truly yours,
<PAGE>
MCDONALD'S CORPORATION
INSTRUCTIONS WITH RESPECT TO
OFFER TO EXCHANGE
8.35% SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2025
FOR UP TO 18,000,000 DEPOSITARY SHARES
EACH REPRESENTING 1/2,000 OF A SHARE OF
7.72% CUMULATIVE PREFERRED STOCK, SERIES E
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus dated June 5, 1995, (the "Prospectus") of McDonald's Corporation
(the "Company") and a related Letter of Transmittal (which together constitute
the "Exchange Offer") relating to the offer by the Company to exchange up to
$450,000,000 aggregate principal amount of its 8.35% Subordinated Deferrable
Interest Debentures due 2025 for up to 18,000,000 Depositary Shares (the
"Depositary Shares"), each representing 1/2,000 of a share of 7.72% Cumulative
Preferred Stock, Series E, of the Company, upon the terms and subject to the
conditions set forth in the Exchange Offer. This will instruct you to tender
the number of Depositary Shares indicated below held by you for the account of
the undersigned, pursuant to the terms and subject to the conditions of the
Exchange Offer. In addition, this will confirm that you may make the
representations contained in the Letter of Transmittal on behalf of the
undersigned.
DEPOSITARY SHARES TO BE TENDERED
AGGREGATE NUMBER OF DEPOSITARY SHARES
HELD BY YOU FOR THE ACCOUNT OF THE NUMBER OF DEPOSITARY SHARES TENDERED*
UNDERSIGNED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME(S) OF BENEFICIAL OWNER(S) (PLEASE PRINT)
- --------------------------------------------------------------------------------
ADDRESS(ES) (INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TELEPHONE NUMBER
- --------------------------------------------------------------------------------
EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
SIGNATURE(S)
- --------------------------------------------------------------------------------
DATE
- --------------------------------------------------------------------------------
*Unless otherwise indicated, it will be assumed that all of the undersigned's
Depositary Shares are to be tendered.
PLEASE DESIGNATE BELOW ANY SOLICITING DEALER WHO SOLICITED YOUR TENDER
SOLICITED TENDERS
Name of Firm (Please print): ______________________________________________
Name of Individual Broker or Financial Consultant: ________________________
Identification Number (if known): _________________________________________
Address (Include Zip Code): _______________________________________________
---------------------------------------------------------------------------
<PAGE>
LOGO McDonald's Corporation
Kroc Drive
Oak Brook, Illinois 60521
June 5, 1995
Dear Holder of McDonald's Depositary Shares:
McDonald's Corporation is offering the holders of its Depositary Shares,
each representing 1/2,000 of a share of 7.72% Cumulative Preferred Stock,
Series E, the opportunity to exchange those Depositary Shares for newly issued
8.35% Subordinated Deferrable Interest Debentures. The exchange offer will be
effected on a basis of $25 principal amount of Debentures for each Depositary
Share. Both the Depositary Shares and the Debentures are redeemable at the
option of the Company on or after December 3, 1997.
The exchange of Debentures for Depositary Shares will improve the Company's
after-tax cash flow, as interest payable on the Debentures will be tax
deductible by the Company, while the dividends paid on the Depositary Shares
are not tax deductible.
We encourage you to carefully review the enclosed Prospectus, Letter of
Transmittal, and related documents for details on the exchange offer. We also
suggest that you speak with your tax advisor as participation in this exchange
offer will be a taxable event.
If you have any questions or need additional information, please contact
McDonald's Information Agent, D.F. King & Co., Inc. at 1-800-628-8536.
Sincerely,
LOGO
Michael R. Quinlan
Chairman and Chief Executive Officer
<PAGE>
INVESTOR RELEASE
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
00/00/95 Investors: Patty Paul, 708-575-3499
Media: Chuck Ebeling, 708-575-6150
MCDONALD'S OFFERS TO EXCHANGE DEBENTURES
FOR PREFERRED STOCK
OAK BROOK, IL--Today, McDonald's Corporation announced it was commencing an
offer to issue subordinated deferrable interest debentures, due 2025, bearing
interest at 8.35 percent, paid quarterly, in exchange for up to 90 percent of
its outstanding depositary shares representing the 7.72% Cumulative Preferred
Stock Series E.
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc are the dealer managers for the exchange offer.
This exchange offer will be made only by means of a prospectus which may be
obtained by writing the information agent, D.F. King & Co., Inc., at 77 Water
Street, New York, NY 10005 or calling 1-800-628-8536.
This press release shall not constitute a solicitation of an offer to
exchange, nor shall there be any exchange of the debentures in any state in
which such offer, solicitation or exchange would be unlawful prior to the
registration or qualification under the securities laws of any such state.
McDonald's is the largest and best known global foodservice retailer with
more than 15,300 locations in 80 countries. About 80 percent of McDonald's
restaurant businesses are locally owned and operated by independent
entrepreneurs.
# # #
<PAGE>
This is neither an offer to exchange or to sell nor a solicitation of an offer
to exchange or buy any of these securities. The Exchange Offer is made only by
the Prospectus and the related Letter of Transmittal and the Exchange Offer is
being made to all holders of these securities. The Company is not aware of any
state where the making of the Exchange Offer is prohibited by administrative or
judicial action pursuant to any valid statute. If the Company becomes aware of
any valid state statute prohibiting the making of the Exchange Offer or the
exchange of securities pursuant thereto, the Company will make a good faith
effort to comply with such statute. If, after such good faith effort, the
Company cannot comply with such state statute, the Exchange Offer will not be
made to, nor will tenders be accepted from or on behalf of, holders of
securities in such state. In any jurisdiction where the securities, blue sky or
other laws 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 other brokers or dealers which are licensed under the laws of
such jurisdiction.
McDonald's Corporation
Offer to Exchange
Quarterly Income Debt Securities (QUIDS*)
(8.35% Subordinated Deferrable Interest Debentures due 2025)
For up to 18,000,000 Depositary Shares
Each Representing 1/2,000 of a Share of
7.72% Cumulative Preferred Stock, Series E
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995, UNLESS THE EXCHANGE OFFER IS
EXTENDED.
McDonald's Corporation, a Delaware corporation (the "Company"), is offering,
upon the terms and subject to the conditions set forth in its Prospectus dated
June 5, 1995 (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal" which, together with the Prospectus, constitute the
"Exchange Offer"), to exchange up to $450,000,000 aggregate principal amount of
its 8.35% 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. Exchanges will be made on the basis of $25
principal amount of Debentures for each Depositary Share (liquidation preference
$25 per Depositary Share) validly tendered and accepted for exchange in the
Exchange Offer.
The Company will accept for exchange up to 18,000,000 Depositary Shares, validly
tendered and not withdrawn prior to 12:00 Midnight, New York City time, on June
30, 1995, or if the Exchange Offer is extended by the Company, in its sole
discretion, the latest date and time to which the Exchange Offer is extended
(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 40
business days after June 5, 1995. Upon the terms and subject to the conditions
of the Exchange Offer, if the Amount Sought or fewer Depositary Shares have been
validly tendered and not withdrawn 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 prior
to the Expiration Date, the Company will exchange Debentures for Depositary
Shares from each tendering holder of Depositary Shares on a pro rata basis,
subject to adjustment to avoid the exchange of fractional Depositary Shares.
Depositary Shares not accepted because of proration will be returned to the
tendering holders at the Company's expense as promptly as practicable following
the Expiration Date.
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Depositary Shares, if any of the
conditions to the Exchange Offer is not satisfied, including (without
limitation) if fewer than 4,000,000 Depositary Shares are tendered (which
condition may be waived by the Company).
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.
The Prospectus and the Letter of Transmittal contain important information which
should be read before any action is taken by holders of Depositary Shares.
Tenders may be made only in conformance with the terms of the Prospectus and the
Letter of Transmittal.
The Company will pay to Soliciting Dealers (as defined in the Prospectus)
designated by the registered or beneficial owner, as appropriate, of the
Depositary Shares, a solicitation fee of $.50 per Depositary Share validly
tendered and accepted for exchange pursuant to the Exchange Offer, subject to
certain conditions. Soliciting Dealers are not entitled to a solicitation fee
for Depositary Shares beneficially owned by such Soliciting Dealer.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Prospectus and is incorporated herein by reference.
The Prospectus and the Letter of Transmittal are being sent to registered
holders of Depositary Shares as of June 2, 1995 and are being furnished to
brokers, dealers, banks and similar persons whose names, or names of whose
nominees, appear on the lists of holders of the Depositary Shares or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Depositary
Shares.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
HOLDERS OF DEPOSITARY SHARES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
DEPOSITARY SHARES PURSUANT TO THE EXCHANGE OFFER. HOLDERS OF 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.
Questions and requests for assistance may be directed to the Information Agent
and the Dealer Managers at their respective addresses and telephone numbers set
forth below. Requests for copies of the Prospectus or of the Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the
Information Agent and copies will be forwarded promptly at the Company's
expense. Holders of Depositary Shares may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Exchange Offer.
The Information Agent for the Exchange Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(800) 628-8536 (Toll-Free)
(212) 269-5550 (Call Collect)
The Dealer Managers for the Exchange Offer are:
Goldman, Sachs & Co. Merrill Lynch & Co.
85 Broad Street World Financial Center
New York, New York 10004 North Tower
(800) 828-3182 (Toll-Free) New York, New York 10281
(212) 236-4565 (Call Collect)
Morgan Stanley & Co. Salomon Brothers Inc
Incorporated Seven World Trade Center
1251 Avenue of the Americas New York, New York 10048
New York, New York 10020 (800) 558-3745 (Toll-Free)
(800) 422-6464 ext. 6620 (Toll-Free)
June 5, 1995
*An application has been filed by Goldman, Sachs & Co. with the United States
Patent and Trademark Office for the "QUIDS" service mark.
<PAGE>
[LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL]
Sheldon I. Fink
(312) 876-8107
May 31, 1995
Shelby Yastrow, Esq.
Senior Vice President
McDonald's Corporation
One McDonald's Plaza
Oak Brook, IL 60521
Dear Mr. Yastrow:
You have engaged our Firm to act as special tax counsel to McDonald's
Corporation ("McDonald's") in connection with the offer (the "Exchange Offer")
by McDonald's to exchange Subordinated Deferrable Interest Debentures due 2025
(the "Debentures") for up to 18,000,000 Depositary Shares each representing
1/2,000 of a share of 7.72% Cumulative Preferred Stock, Series E, of McDonald's
(the "Depositary Shares"). In particular, you have requested our opinion
relating to certain material United States federal income tax considerations
relevant to a United States person which is a holder of Depositary Shares and
which exchanges those Depositary Shares for Debentures pursuant to the Exchange
Offer and relevant to a holder of Debentures after the Exchange Offer. You have
also requested our opinion as to certain material United States federal income
and estate tax considerations that may be relevant to non-United States Persons
in connection with such Exchange Offer.
In rendering the opinion set forth below, we have examined and relied upon
the information set forth in the Pre-Effective Amendment No. 1 to Form S-4
Registration Statement under the Securities Act of 1933, filed with the United
States Securities and Exchange Commission by McDonald's on May 31, 1995,
relating to the Exchange Offer (the "Registration Statement"). We have examined
and relied upon originals, copies or specimens, certified or otherwise
identified to our satisfaction, of the Registration Statement and of such
certificates, corporate records and other documents, agreements and instruments
as we have deemed necessary to form a basis for such opinion, but we have not
taken further action to independently verify the accuracy or completeness of
such certificates, records, documents, agreements and instruments. In
connection with such examination, we have assumed (a) the genuineness of all
signatures, (b) the authenticity of all certificates, records, documents,
agreements, and instruments (herein called "documents") submitted to us as
originals, (c) the conformity to
<PAGE>
Shelby Yastrow, Esq.
May 31, 1995
Page 2
originals of all documents submitted to us as copies or specimens, and (d) the
authenticity of the originals of such documents submitted to us as copies or
specimens.
We further have assumed the due authorization, execution and delivery of
all documents submitted to us and the validity and enforceability of each such
document in accordance with its terms.
Based upon and subject to the foregoing, the statements set forth in the
Registration Statement under the headings "Certain United States Federal Income
Tax Considerations" and "Certain United States Federal Tax Considerations For
Non-United States Persons", to the extent that they constitute matters of law or
legal conclusions with respect to the Federal law of the United States,
accurately reflects and constitutes and is consistent with the legal opinion of
our Firm.
Our opinion is based on the Internal Revenue Code of 1986, as amended,
Treasury Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, Internal Revenue Service rulings, official
pronouncements and judicial decisions, all as in effect on the date of this
opinion and all of which are subject to change, possibly with retroactive
effect, or different interpretations.
Our opinion does not discuss all the United States federal tax consequences
that may be relevant to the Exchange Offer or subsequent events in light of a
Debenture holder's or a holder of Depositary Shares' particular circumstances,
and it is not intended to be applicable in all respects to all categories of
investors. In particular, our opinion does not address any special rules that
may be applicable to insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons which hold Depositary Shares or Debentures received in the
exchange as a position in a "straddle," as part of a "synthetic security,"
"hedge," "conversion transaction" or other integrated investment, or persons
whose functional currency is other than United States dollars. In addition, our
opinion does not address any state, local or foreign tax considerations. As
indicated in the Registration Statement, all holders of Depositary Shares should
consult their own tax advisors regarding the United States federal, state, local
and foreign tax consequences of the proposed exchange and of the ownership and
disposition of Debentures received in the exchange in light of their own
particular circumstances.
<PAGE>
Shelby Yastrow, Esq.
May 31, 1995
Page 3
We are furnishing this opinion to you solely for the purpose of providing
an opinion which may be used, circulated, quoted or otherwise referred to by you
as part of the filing of the above-referenced Registration Statement with the
United States Securities and Exchange Commission, and our opinion is not to be
relied upon or used for any other purpose without our prior written consent. We
are aware that we are named in the Registration Statement as special tax counsel
for the Company and hereby consent to the use of our name and the filing of this
opinion with the Securities and Exchange Commission as an exhibit to the
Registration Statement.
This opinion is rendered on the date hereof and we have no continuing
obligation hereunder to inform you of changes of law subsequent to the date
hereof.
Very truly yours,
/s/ SONNENSCHEIN NATH & ROSENTHAL
1168993
