Filed Pursuant to Rule 424(b)(2)
Registration No. 333-59145
PRICING SUPPLEMENT NO. 5 DATED MAY 26, 2000
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(To Prospectus dated July 21, 1998 and
U.S. Prospectus Supplement dated July 29, 1998)
U.S.$1,000,000,000
McDONALD'S CORPORATION
Medium-Term Notes, Series F
(Fixed Rate Notes)
Due from 1 Year to 60 Years from Date of Issue
The following description of the terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith
replaces, the descriptions included in the Prospectus and
Prospectus Supplement referred to above, to which descriptions
reference is hereby made.
Principal Amount: Yen 12,500,000,000
Issue Price: Varying prices related to prevailing market prices
Original Issue Date: June 12, 2000
Stated Maturity: June 12, 2030
Interest Rate: 2.850% per annum
Interest Payment Dates: The Notes will bear interest from June 12, 2000 at
the rate shown above, payable in equal semiannual installments on December
12 and June 12 in each year beginning on December 12, 2000, to the holders
of record as of the applicable Record Date set forth below. Whenever it is
necessary to compute any amount of accrued interest in respect of the Notes
for a period of less than one full year, other than with respect to regular
semiannual interest payments, interest will be calculated on the basis of
the actual number of days in the period and a year of 365 days.
(Applicable only if other than February 15 and August 15 of each year)
Regular Record Dates: The first Record Date will be November 27, 2000, and
thereafter Record Dates will be May 28 and November 27 of each year.
(Applicable only if other than February 1 and August 1 of each year)
Form: /X/ Book-Entry / / Certificated
Specified Currency: Japanese Yen ("Yen")
(If other than U.S. dollars)
Option to Receive Payments in Specified Currency: /X/ Yes / / No
(Applicable only if Specified Currency is other than U.S. dollars)
Authorized Denominations: The Notes will be issued in denominations of Yen
1,000,000 and integral multiples of Yen 1,000,000.
(Applicable only if other than U.S.$1,000 and increments of U.S.$1,000
or if Specified Currency is other than U.S. dollars)
Method of Payment of Principal:
(Applicable only if other than immediately available funds)
Optional Redemption: / / The Notes cannot be redeemed prior to Stated
Maturity.
/X/ The Notes can be redeemed prior to Stated
Maturity at the option of McDonald's Corporation (the "Company") as set
forth below. The Notes may also be redeemed as provided under the heading
"Redemption for Tax Reasons."
Optional Redemption Dates: The Notes will be redeemable in whole or in
part, as set forth below, at the option of the Company at any time on or
after June 12, 2010.
Redemption Prices:
/ / The Redemption Price shall initially be % of the principal
amount of the Note to be redeemed and shall decline at each anniversary of
the initial Optional Redemption Date by % of the principal amount to
be redeemed until the Redemption Price is 100% of such principal amount;
provided, however, that in the case of an Original Issue Discount Note, the
Redemption Price shall be the Amortized Face Amount of the principal amount
to be redeemed.
/X/ Other: The Notes due will be redeemable as a whole or in part, at
the option of the Company at any time on or after June 12, 2010, at a
redemption price equal to the greater of (i) 100% of the principal amount
of such Notes and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (calculated on the basis of the
actual number of days in the period and a year of 365 days) at the JGB Rate
minus 5 basis points, plus, in each case, accrued interest thereon to the
date of redemption.
"JGB Rate" means, with respect to any redemption date, the rate per annum
equal to the semiannual equivalent compound yield to maturity of the
Comparable JGB Issue, assuming a price for the Comparable JGB Issue
(expressed as a percentage of its principal amount) equal to the Comparable
JGB Price for such redemption date.
"Comparable JGB Issue" means the Japanese Government Bond selected by
Merrill Lynch International as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of a comparable maturity to
the remaining term of such Notes.
"Comparable JGB Price" means, with respect to any redemption date, (A) the
average of the Reference JGB Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference JGB Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
JGB Dealer Quotations, the average of all such quotations.
"Reference JGB Dealer Quotations" means, with respect to each Reference
JGB Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable JGB Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference JGB Dealer at 3:30 p.m. Tokyo time
on the third business day preceding such redemption date.
"Reference JGB Dealer" means each of Merrill Lynch International, Daiwa
Securities International, Inc., Goldman Sachs International, Nikko
Securities Co. International, Inc. and Nomura Securities International,
Inc., or their affiliates which are Japanese Government Bond securities
dealers, and their respective successors.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the Notes or
portions thereof called for redemption
Sinking Fund: /X/ The Notes are not subject to a Sinking Fund.
/ / The Notes are subject to a Sinking Fund.
Sinking Fund Dates:
Sinking Fund Amounts:
Amortizing Note: / / Yes /X/ No
Optional Repayment: / / Yes /X/ No
Optional Repayment Dates:
Optional Repayment Prices:
Original Issue Discount Note: / / Yes /X/ No
Total Amount of OID:
Yield to Stated Maturity:
Initial Accrual Period OID:
Calculation Agent (if other than Principal Paying Agent):
Agent's discount or commission: .625% of the principal amount of the Notes
Net proceeds to Company (if sale to Agent as principal): 99.375% of the
principal amount of the Notes
Agent's Capacity: / / Agent /X/ Principal
Agent: Merrill Lynch International
CUSIP: 580 13M DL5
ISIN Number: US58013MDL54
Common Code: 011257097
Plan of Distribution: Merrill Lynch International has agreed to purchase
the principal amount of the Notes. The Notes will be represented by a
single Permanent Global Note (the "Permanent Global Note") which will be
deposited with The Depository Trust Company ("DTC"), as depositary, and
registered in the name of Cede & Co. Holders may elect to hold interests
in the Notes through either the DTC (in the United States) or Clearstream
Banking S.A. (formerly Cedelbank) ("Clearstream, Luxembourg"), and Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear"), if they are participants in such systems or
indirectly through organizations which are participants in such systems.
Clearstream, Luxembourg and Euroclear will hold interests on behalf of
their participants through customers' securities accounts in Clearstream,
Luxembourg's and Euroclear's names on the books of their respective
depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of the DTC.
Initial holders will be required to pay for the Notes in Japanese Yen.
Merrill Lynch International as Agent, is prepared to arrange for the
conversion of U.S. dollars into Japanese Yen to facilitate payment for the
Notes by U.S. purchasers. Each conversion will be made by Merrill Lynch
International on the terms and subject to the conditions, limitations and
charges as Merrill Lynch International may from time to time establish in
accordance with its regular foreign exchange practices, and subject to
United States laws and regulations. All costs of conversion will be borne
by the holder.
The Company will make payments on each Note in Japanese Yen, but
holders of beneficial interests in the Permanent Global Note, other than
Euroclear and Clearstream, Luxembourg, will receive payments in U.S.
dollars unless they elect to receive payments in Japanese Yen. Such U.S.
dollar payments will be converted by the paying agent as described in the
following paragraph.
The paying agent will determine the amount of any U.S. dollar payment
based on the highest firm bid quotation, expressed in U.S. dollars, that it
receives at approximately 11:00 a.m., London time two Business Days before
the applicable payment date (if no rate is quoted on that date, the paying
agent will use the last date on which the rate was quoted). To determine
the highest quote, the paying agent will request quotes from three (or, if
three are not available, then two) recognized foreign exchange dealers in
London (which may include the Agent, its affiliates or the paying agent)
for the purchase, and settlement on the applicable payment date, of the
total amount of Japanese Yen then payable. The holder will be responsible
for all currency exchange costs, such amount to be deducted from the U.S.
dollar payments. If no bid quotations are available, the Company will make
payments in Japanese Yen, unless Japanese Yen is unavailable due to the
imposition of exchange controls or other circumstances beyond its control.
In that case, the Company will make payments as described under "Exchange
Rates and Exchange Controls."
The holder of a beneficial interest in the Permanent Global Note held
through a participant of the DTC (other than Euroclear or Clearstream,
Luxembourg) may elect to receive a payment or payments in Japanese Yen by
notifying the DTC participant through which its Notes are held on or prior
to the applicable Record Date of (1) the holder's election to receive all
or a portion of the payment in Japanese Yen, and (2) wire transfer
instructions to a Japanese Yen account located in Japan. DTC must be
notified of an election and wire transfer instructions (1) on or prior to
the third New York Business Day (as defined below) after the Record Date
for any payment of interest, and (2) on or prior to the tenth New York
Business Day after the Record Date for any payment of principal. DTC will
notify the paying agent of an election and wire transfer instructions (1)
on or prior to 5:00 p.m. New York City time on the fifth New York Business
Day after the Record Date for any payment of interest, and (2) on or prior
to 5:00 p.m. New York City time on the twelfth New York Business Day after
the Record Date for any payment of principal. If complete instructions are
forwarded to DTC through DTC participants and by DTC to the paying agent on
or prior to such dates, such holder will receive payment in Japanese Yen
outside of DTC; otherwise, only U.S. dollar payments will be made by the
paying agent to DTC.
The term "Business Day" means any day other than a Saturday or Sunday
that is (i) neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City
of New York, London or Tokyo.
The term "New York Business Day" means any day other than a Saturday
or Sunday or a day on which banking institutions in the City of New York
are authorized or required by law or executive order to close.
As of December 31, 1999, the Yen/U.S.$ rate of exchange was Yen
102.5/U.S.$1, and as of May 26, 2000, the Yen/U.S.$ rate of exchange was
Yen 107.1/U.S.$1.
Redemption for Tax Reasons:
The Notes may be redeemed at the option of the Company, as a whole but
not in part, at any time prior to maturity, upon the giving of a notice of
redemption as described below, at a redemption price equal to 100% of the
principal amount of the Notes, together with accrued interest to the date
fixed for redemption, if the Company determines that, as a result of, (a)
any actual or proposed change in or amendment to the laws (or any
regulations or rulings promulgated thereunder) of the United States or of
any political subdivision or taxing authority thereof or therein affecting
taxation, or any change in the application, official interpretation, or
enforcement of such laws, regulations or rulings, (b) any action taken by a
taxing authority of the United States or any political subdivision or
taxing authority thereof or therein which action is generally applied or is
taken with respect to the Company, (c) a decision rendered by a court of
competent jurisdiction in the United States or any political subdivision
thereof, whether or not such decision was rendered with respect to the
Company, or (d) a technical advice memorandum or letter ruling issued by
the National Office of the United States Internal Revenue Service on
substantially the same facts as those pertaining to the Company which
change, amendment, action, decision, memorandum, or letter ruling becomes
effective on or after June 12, 2000, there is a substantial likelihood
that the Company has or will become obligated to pay Additional Amounts
with respect to the Notes as described herein under the heading "Payment of
Additional Amounts" and such obligation cannot be avoided by the Company's
taking reasonable measures available to it. Prior to the publication of
any notice of redemption of the Notes pursuant to this Paragraph, the
Company shall notify the paying agent of its intent to redeem.
Notice of redemption will be given by the Company not less than 30 nor
more than 60 days prior to the date fixed for redemption, which date and
the redemption price will be specified in the notice.
If the Company shall determine that any payment made outside the
United States by the Company or any of its paying agents of principal of or
interest on any Note or coupon would, under any present or future laws or
regulations of the United States, be subject to any certification,
identification, documentation, information or other reporting requirement
of any kind, the effect of which requirement is the disclosure to the
Company or any paying agent or any governmental authority of the
nationality, residence or identity of a beneficial owner of such Note or of
any coupon who is not a United States person (other than such a requirement
(a) which would not be applicable to a payment made by the Company or any
paying agent (i) directly to the beneficial owner or (ii) to a custodian,
nominee or other agent of the beneficial owner, or (b) which can be
satisfied by such custodian, nominee or other agent certifying to the
effect that such beneficial owner is not a United States person, provided
that in each case referred to in clauses (a)(ii) and (b), payment by such
custodian, nominee or agent to such beneficial owner is not otherwise
subject to any such requirement, or (c) which would not be applicable to a
payment made by at least one paying agent), the Company shall, at its
election, either redeem the Notes, as a whole, at a redemption price equal
to the redemption amount, together with accrued interest to the date fixed
for redemption, or, if the conditions of the next paragraph are satisfied,
pay the Additional Amounts specified in such paragraph. The Company shall
make such determination and election as soon as practicable and publish
prompt notice thereof (the "Determination Notice") stating the effective
date of such certification, documentation, identification, information or
other reporting requirement, whether the Company has elected to redeem the
Notes or pay the Additional Amounts specified in the next paragraph and (if
applicable) the last date by which the redemption of the Notes must take
place, as provided in the next succeeding sentence. If the Company elects
to redeem the Notes, such redemption shall take place on such date, not
later than one year after the publication of the Determination Notice, as
the Company shall elect by notice given to the paying agent at least 60
days prior to the date fixed for redemption. Notice of such redemption of
the Notes will be given to the holders of the Notes not more than 60 nor
less than 30 days prior to the date fixed for such redemption.
Notwithstanding the foregoing, the Company will not so redeem the Notes if
the Company shall subsequently determine, not less than 30 days prior to
the date fixed for redemption, that subsequent payments on the Notes would
not be subject to any such certification, identification, documentation,
information or other reporting requirement, in which case the Company shall
publish prompt notice of such determination and any earlier redemption
notice will thereupon be revoked and of no further effect.
If and so long as the certification, identification, documentation,
information or other reporting requirement referred to in the preceding
paragraph would be fully satisfied by payment of a backup withholding tax
or similar charge, the Company may elect to pay Additional Amounts as
defined below in respect of such tax in lieu of effecting the redemption
described above. If the Company elects to pay Additional Amounts pursuant
to this Paragraph and the condition specified in the first sentence of this
Paragraph should no longer be satisfied, then the Company shall redeem the
Notes pursuant to the applicable provisions of the preceding paragraph.
The redemption amount paid by the Company pursuant to either of the two
immediately preceding sentences shall not be reduced for applicable
withholding taxes.
Payment of Additional Amounts:
The Company will, subject to the exceptions and limitations set forth
below, pay such additional amounts (the "Additional Amounts") to the holder
of any Note who is not a United States person as may be necessary in order
that every net payment of the principal of or interest on such Note, after
deduction or withholding for or on account of any present or future tax,
assessment or governmental charge imposed by the United States (or any
political subdivision or taxing authority thereof or therein) upon, or as a
result of, such payment, will not be less than the amount provided for in
such Note or coupon to be then due and payable. However, the Company will
not be required to make any payment of Additional Amounts to any such
holder for or on account of:
(a) any tax, assessment or other governmental charge which would
not have been so imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, a trust, a partnership or a
corporation) and the United States, including, without limitation, such
holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being, or
having been, engaged in a trade or business or present therein or having,
or having had, a permanent establishment therein or (ii) the presentation
by the holder of any such Note or coupon for payment on a date more than 10
days after the date on which such payment becomes due and payable or the
date on which payment thereof is duly provided for, whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer, personal
property or excise tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge imposed by
reason of such holder's past or present status as a personal holding
company, foreign personal holding company, controlled foreign corporation
related to the Company through stock ownership, private foundation or other
tax exempt organization, in each case with respect to the United States, or
as a corporation which accumulates earnings to avoid United States federal
income tax;
(d) any tax, assessment or other governmental charge which is
payable otherwise than by withholding from payments on or in respect of any
Note or coupon;
(e) any tax, assessment or other governmental charge required to
be withheld by any paying agent from any payment of principal of or
interest on any Note, if such payment can be made without such withholding
by any other paying agent;
(f) any tax, assessment or other governmental charge which would
not have been imposed but for the failure to comply with any certification,
identification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the holder or beneficial owner of such Note or coupon, if
such compliance is required by statute or by regulation of the United
States or of any political subdivision or taxing authority thereof or
therein as a precondition to relief or exemption from such tax, assessment
or other governmental charge (including backup withholding);
(g) any tax, assessment or other governmental charge imposed by
reason of such holder's past or present status as the actual or
constructive owner of 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote; or
(h) any combination of items (a), (b), (c), (d), (e), (f) or
(g);
nor shall Additional Amounts be paid with respect to any payment in respect
of a Note or coupon to a person who is not a United States person and who
is a fiduciary or partnership or other than the sole beneficial owner of
such Note or coupon to the extent that a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial
owner would not have been entitled to such Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of the
Note or coupon.
As used herein, the term "United States person" means a person who is
a citizen or resident of the United States, or that is a corporation,
partnership or other entity created or organized in or under the laws of
the United States or any political subdivision thereof, an estate the
income of which is subject to United states federal income taxation
regardless of its source or a trust if (i) a U.S. court is able to exercise
primary supervision over the trust's administration and (ii) one or more
United States persons have the authority to control all of the trust's
substantial decisions, and the term "United States" means the United States
of America (including the States and the District of Columbia).
Clearing Systems:
DTC advises that it is a limited-purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes
in accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. DTC's participants include securities
brokers and dealers (including Agents), banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
Clearstream, Luxembourg advises that it is incorporated under the laws
of Luxembourg as a professional depositary. Clearstream, Luxembourg holds
securities for Clearstream, Luxembourg participants ("Clearstream
Participants") and facilitates the clearance and settlement of securities
transactions between Clearstream Participants through electronic book-entry
changes in accounts of Clearstream Participants, thereby eliminating the
need for physical movement of certificates. Clearstream, Luxembourg
provides to Clearstream Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream,
Luxembourg interfaces with domestic markets in several countries. As a
professional depositary, Clearstream, Luxembourg is subject to regulation
by the Luxembourg Monetary Institute. Clearstream Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include the Agents.
Indirect access to Clearstream, Luxembourg is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Clearstream Participant either
directly or indirectly.
Distributions with respect to Notes held beneficially through
Clearstream, Luxembourg will be credited to cash accounts of Clearstream
Participants in accordance with its rules and procedures, to the extent
received by Clearstream, Luxembourg.
Euroclear advises that it was created in 1968 to hold securities for
Euroclear participants ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries. Euroclear is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euroclear Clearance Systems
S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers
and dealers and other professional financial intermediaries and may include
the Agents. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System, and
applicable Belgian law (collectively, the "Euroclear Terms and
Conditions"). The Euroclear Terms and Conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash
from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis
without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Euroclear Terms
and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants
in accordance with the Euroclear Terms and Conditions, to the extent
received by the Euroclear Operator and by Euroclear.
Although the DTC, Clearstream, Luxembourg and Euroclear have agreed to
the foregoing procedures in order to facilitate transfers of Notes among
participants of the DTC, Clearstream, Luxembourg and Euroclear, they are
under no obligation to perform or continue to perform such procedures and
such procedures may be discontinued at any time.
Clearance and Settlement Procedures:
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with the DTC's rules and will be settled in
immediately available funds using the DTC's Same-Day Funds Settlement
System. Secondary market trading between Clearstream Participants and/or
Euroclear Participants will occur in the ordinary way in accordance with
the applicable rules and operating procedures of Clearstream, Luxembourg
and Euroclear and will be settled using the procedures applicable to
conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the DTC on the one hand, and directly or indirectly through
Clearstream or Euroclear Participants on the other, will be effected
through the DTC in accordance with the DTC's rules on behalf of the
relevant European international clearing system by its U.S. Depositary;
however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. Depositary to take action to
effect final settlement on its behalf by delivering or receiving notes in
the DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to the DTC.
Clearstream Participants and Euroclear Participants may not deliver
instructions directly to the DTC.
Because of time-zone differences, credits of notes received in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a
participant of the DTC will be made during subsequent securities settlement
processing and will be credited the business day following the DTC
settlement date. Such credits or any transactions in such notes settled
during such processing will be reported to the relevant Euroclear or
Clearstream Participants on such business day. Cash received in
Clearstream, Luxembourg or Euroclear as a result of sales of notes by or
through a Clearstream Participant or a Euroclear Participant to a
participant of the DTC will be received with value on the DTC settlement
date but will be available in the relevant Clearstream, Luxembourg or
Euroclear cash account only as of the business day following settlement in
the DTC.
Exchange Rates and Exchange Controls:
An investment in a note denominated in a currency other than U.S.
dollars entails significant risks. These risks include the possibility of
significant changes in rates of exchange between the U.S. dollar and such
currency and the possibility of the imposition or modification of foreign
exchange controls by either the United States or foreign governments.
These risks generally depend on factors over which the Company has no
control, such as economic and political events and the supply of and demand
for the relevant currencies. In recent years, rates of exchange between
the U.S. dollar and certain currencies, including the Japanese Yen, have
been highly volatile, and each holder should be aware that volatility may
occur in the future. Fluctuations in any particular exchange rate that
have occurred in the past, however, are not necessarily indicative of
fluctuations in the rate that may occur during the term of any Note.
Depreciation of the Japanese Yen against the U.S. dollar would result in a
decrease in the effective yield of such Note (on a U.S. dollar basis) below
its coupon rate and, in certain circumstances, could result in a loss to
the holder on a U.S. dollar basis.
If payment in respect of a note is required to be made in a currency
other than U.S. dollars and such currency is unavailable to the Company due
to the imposition of exchange controls or other circumstances beyond the
Company's control or is no longer used by the government of the relevant
country or for the settlement of transactions by public institutions of or
within the international banking community, then all payments in respect of
such note will be made in U.S. dollars until such currency is again
available to the Company or so used. The amount payable on any date in
such currency will be converted into U.S. dollars on the basis of the most
recently available market exchange rate for such currency. Any payment in
respect of such note so made in U.S. dollars will not constitute an event
of default under the Indentures.
Foreign Currency Judgements:
The Notes will be governed by and construed in accordance with the
internal laws of the State of Illinois. Courts in the United States
customarily have not rendered judgments for money damages denominated in
any currency other than the U.S. dollar.
Selling Restrictions:
The Agent represents and agrees that it has not offered or sold and
agrees that it will not offer or sell any Note directly or indirectly in
Japan or to residents of Japan or for the benefit of any Japanese person
(which term as used herein means any person resident in Japan, including
any corporation or other entity organized under the laws of Japan) or to
others for reoffering or resale directly or indirectly in Japan or to any
Japanese person except under circumstances that will result in compliance
with any applicable laws, regulations and ministerial guidelines of Japan
taken as a whole. Furthermore, in connection with the issuance of Notes
denominated in Japanese Yen, the Company and the Agent agree to comply with
all applicable laws, regulations and guidelines as amended from time to
time of the Japanese governmental and regulatory authorities.
The Agent represents and agrees that no action has been taken or will
be taken by the Agent that would permit a public offering of the Notes or
possession or distribution of any offering material in relation to the
Notes in any jurisdiction where action by the Company for that purpose is
required unless the Company has agreed to such actions and such actions
have been taken. The Agent represents and agrees that it will not offer,
sell or deliver any of the Notes or distribute any such offering material
in or from any jurisdiction except under circumstances which will result in
compliance with applicable laws and regulations and which will not impose
any obligation on the Company. The Agent is not authorized to give any
information or make any representations in relation to the Notes other than
those contained in the Prospectus and the Prospectus Supplement for the
Notes. The Agent represents and agrees that it will comply with all
applicable laws and regulations known by it or that should have been known
by it in each jurisdiction in which it purchases, offers or sells the Notes
or possesses or distributes the Prospectus and the Prospectus Supplement or
any other offering material and will obtain any consent, approval or
permission required by it for the purchase offer or sale by it of the Notes
under the laws and regulations in force in any jurisdiction to which it is
subject or in which it makes such purchases, offers or sales, and the
Company shall have no responsibility therefor.
Tax Consequences to Non-United States Holders:
As used herein, the term "non-United States holder" means a holder of
a Note that is, for United Stated federal income tax purposes:
- a nonresident alien individual,
- a foreign corporation,
- a nonresident alien fiduciary of a foreign estate or trust, or
- a foreign partnership one or more of the members of which is, for
United States federal income tax purposes, a nonresident alien individual,
a foreign corporation or a nonresident alien fiduciary of a foreign estate
or trust.
Income and Withholding Tax
Subject to the discussion of backup withholding below, under current
United States federal income and estate tax law:
(a) payments of principal and interest on a Note that is
beneficially owned by a non-United States holder will not be subject to
withholding of United States federal income tax provided that:
- (i) the beneficial owner does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (ii) the beneficial owner
is not a controlled foreign corporation that is related, directly or
indirectly, to the Company through stock ownership, and (iii) either (A)
the beneficial owner of the Note certifies (generally on an IRS Form
W-8BEN) to the person otherwise required to withhold United States federal
income tax from such interest, under penalties of perjury, that it is not a
United States person as defined above under the heading "Payment of
Additional Amounts" and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and which holds the Note certifies to the person
otherwise required to withhold United States federal income tax from any
interest, under penalties of perjury, that a withholding certificate (IRS
Form W-8BEN) has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
payor with a copy of the certificate;
- the beneficial owner is entitled to the benefits of an
income tax treaty under which the interest is exempt from withholding of
United States federal income tax and the beneficial owner of the Note or
the owner's agent provides an IRS Form W-8BEN claiming the exemption; or
- the beneficial owner conducts a trade or business in the
United States to which the interest is effectively connected and the
beneficial owner of the Note or the owner's agent provides an IRS Form W-
8ECI;
provided that in each such case, the relevant certification or IRS Form is
delivered pursuant to applicable procedures and is properly transmitted to
the person otherwise required to withhold United States federal income tax,
and none of the persons receiving the relevant certification or IRS Form
has actual knowledge that the certification or any statement on the IRS
Form is false.
(b) a non-United States holder will not be subject to United
States federal income or withholding tax on any gain realized on the sale,
exchange or other disposition of a Note unless the gain is effectively
connected with the beneficial owner's trade or business in the United
States or, in the case of an individual, the holder is present in the
United States for 183 days or more in the taxable year in which the sale,
exchange or other disposition occurs and certain other conditions are met;
and
(c) a Note owned by an individual who at the time of death is
not, for United States estate tax purposes, a citizen or resident of the
United States generally will not be subject to United States federal estate
tax as a result of such individual's death if the individual does not
actually or constructively own 10% or more of the total combined voting
power of all classes of the Company's stock entitled to vote and, at the
time of such individual's death the income on the Note would not have been
effectively connected with a United States trade or business of the
individual.
With respect to the certification requirement referred to in
subparagraph (a) above, for Notes held by a foreign partnership, under
current law, the Form W-8BEN may be provided by the foreign partnership.
However, for interest and disposition proceeds paid with respect to a Note
after December 31, 2000, unless the foreign partnership has entered into a
withholding agreement with the IRS, a foreign partnership will be required,
in addition to providing an intermediary Form W-8IMY, to attach an
appropriate certification by each partner. Prospective investors,
including foreign partnerships and their partners, should consult their tax
advisors regarding possible additional reporting requirements.
If a non-United States holder holding a Note is engaged in a trade or
business in the United States, and if interest on the Note (or gain
realized on its sale, exchange or other disposition) is effectively
connected with the conduct of such trade or business, the holder, although
exempt from the withholding tax discussed in the preceding paragraphs, will
generally be subject to regular United States income tax on such
effectively connected income in the same manner as if it were a United
States holder. Such a holder may also need to provide a United States
taxpayer identification number on the Form W-8EC1 referred to in
subparagraph (a) above in order to meet the requirements set forth above.
In addition, if a holder is a foreign corporation, it may be subject to a
30% branch profits tax (unless reduced or eliminated by an applicable
treaty) on its effectively connected earnings and profits for the taxable
year, subject to certain adjustments. For purposes of the branch profits
tax, interest on, and any gain recognized on the sale, exchange or other
disposition of, a Note will be included in the effectively connected
earnings and profits of such holder if such interest or gain, as the case
may be, is effectively connected with the conduct by such holder of a trade
or business in the United States.
Each holder of a Note should be aware that if it does not properly
provide the required IRS form, or if the IRS form or, if permissible, a
copy of such form, is not properly transmitted to and received by the
United States person otherwise required to withhold United States federal
income tax, interest on the Note may be subject to United States
withholding tax at a 30% rate and the holder, including the beneficial
owner, will not be entitled to any Additional Amounts from the Company
described above under the heading "Payment of Additional Amounts" with
respect to that tax. Such tax, however, may in certain circumstances be
allowed as a refund or as a credit against such holder's United States
federal income tax. The foregoing does not deal with all aspects of
federal income tax withholding that may be relevant to non-United States
holders of the Notes. Investors are advised to consult their own tax
advisors for specific advice concerning the ownership and disposition of
Notes.
Backup Withholding and Information Reporting
Under current Treasury Regulations, United States information
reporting requirements and backup withholding tax will not apply to
payments made outside the United States by the Company or a paying agent
(other than payments made to an address in the United States or by transfer
to an account maintained by the holder with a bank in the United States) on
a Note provided that the documentation described in subparagraph (a) under
"Tax Consequences to Non-United States Holders" is provided and neither the
Company nor any paying agent has actual knowledge that the holder is a
United States person. Information reporting requirements and backup
withholding tax will not apply to payments on a Note made outside the
United States by a foreign office of a foreign custodian, foreign nominee
or other foreign agent of the beneficial owner of such Note, provided that
such custodian, nominee or agent (i) derives less than 50% of its gross
income for a specified three-year period from the conduct of a trade or
business in the United States, (ii) is not a controlled foreign corporation
for United States federal income tax purposes and (iii) with respect to
payments made after December 31, 2000, is neither a foreign partnership
that, at any time during its taxable year, is more than 50 percent (by
income or capital interest) owned by U.S. persons or is engaged in the
conduct of a U.S. trade or business nor a foreign custodian that would be
treated as a "withholding foreign partnership" or, in certain cases, a
qualified intermediary under an agreement with the Internal Revenue
Service. Payments on a Note made outside the United States to the
beneficial owner thereof by a foreign office of any other custodian,
nominee or agent will not be subject to backup withholding tax, but will be
subject to information reporting requirements unless such custodian,
nominee, or agent has documentary evidence in its records that the
beneficial owner is not a United States person or the beneficial owner
otherwise establishes an exemption. Payments on a Note by the U.S. office
of a custodian, nominee or other agent of the beneficial owner of such Note
will be subject to information reporting requirements and backup
withholding tax unless the beneficial owner certifies its non-U.S. status
under penalties of perjury or otherwise establishes an exemption.
Under current Treasury Regulations, payments of the proceeds from the
sale, exchange or other disposition of a Note made to or through a foreign
office of a foreign broker (including a custodian, nominee or other agent
acting on behalf of the beneficial owner of a Note) generally will not be
subject to information reporting or backup withholding. However, if the
broker is a United States person, a controlled foreign corporation for
United States federal tax purposes, 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, or in the case of payments made
after December 31, 2000, a foreign partnership that, at any time during its
taxable year, is more than 50 percent (by income or capital interest) owned
by U.S. persons or is engaged in the conduct of a U.S. trade or business,
then information reporting will be required unless the broker has in its
records documentary evidence that the beneficial owner is not a United
States person and certain other conditions are met or the beneficial owner
otherwise establishes an exemption. Backup withholding may apply to any
payment that the broker is required to report if the broker has actual
knowledge that the payee is a United States person. Payments to or through
the United States office of a broker are subject to information reporting
and backup withholding unless the holder or beneficial owner certifies,
under penalties of perjury that it is a non-United States holder and that
it satisfies certain other conditions or otherwise establishes an exemption
from information reporting and backup withholding.
Non-United States holders holding Notes should consult their tax
advisors regarding the application of information reporting and backup
withholding in their particular situations, the availability of an
exemption therefrom, and the procedure for obtaining such an exemption, if
available. Backup withholding is not a separate tax, but is allowed as a
refund or credit against the holder's United States federal income tax,
provided the necessary information is furnished to the Internal Revenue
Service.
Interest on a Note that is beneficially owned by a non-United States
holder will be reported annually on IRS Form 1042S, which must be filed
with the Internal Revenue Service and furnished to the payee.
The United States federal income tax discussion set forth above is
included for general information only and may not be applicable depending
upon a holder's particular situation. Holders should consult their own tax
advisors with respect to the tax consequences to them of the ownership and
disposition of the Notes, including the tax consequences under state,
local, foreign and other tax laws and the possible effects of changes in
federal or other tax laws.
