<PAGE>
Pursuant to Rule 424(b)(5)
Registration No. 333-66025
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 10, 1999)
$1,000,000,000
[LOGO]
NABISCO, INC.
MEDIUM-TERM NOTES
-----------------
NABISCO MAY OFFER FROM TIME TO TIME MEDIUM-TERM NOTES. THE SPECIFIC TERMS OF ANY
NOTES OFFERED WILL BE INCLUDED IN A PRICING SUPPLEMENT. UNLESS THE PRICING
SUPPLEMENT PROVIDES OTHERWISE, THE NOTES OFFERED WILL HAVE THE FOLLOWING GENERAL
TERMS:
- - THE NOTES WILL MATURE NINE MONTHS OR MORE FROM THE DATE OF ISSUE.
- - THE NOTES WILL BEAR INTEREST AT EITHER A FIXED OR A FLOATING RATE. FLOATING
RATE INTEREST WILL BE BASED ON:
- CD RATE
- CMT RATE
- COMMERCIAL PAPER RATE
- EURIBOR
- FEDERAL FUNDS RATE
- LIBOR
- PRIME RATE
- TREASURY RATE
- ANY OTHER RATE SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT.
- - FIXED RATE INTEREST WILL BE PAID ON MARCH 15 AND SEPTEMBER 15, ACCRUING FROM
THE DATE OF ISSUE.
- - FLOATING RATE INTEREST WILL BE PAID ON THE DATES STATED IN THE APPLICABLE
PRICING SUPPLEMENT.
- - THE NOTES WILL BE HELD IN GLOBAL FORM BY THE DEPOSITORY TRUST COMPANY, UNLESS
OTHERWISE SPECIFIED.
- - THE NOTES MAY BE EITHER CALLABLE BY NABISCO OR PUTTABLE BY YOU IF SPECIFIED IN
THE APPLICABLE PRICING SUPPLEMENT.
- - THE NOTES WILL HAVE MINIMUM DENOMINATIONS OF $1,000.
-------------------
INVESTING IN THE NOTES INVOLVES RISKS. SEE "FOREIGN CURRENCY RISKS" BEGINNING ON
PAGE S-4.
-------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------- ----------- -----------
<S> <C> <C> <C>
PER NOTE............. 100% .125%--.750% 99.875%--99.250%
TOTAL................ $1,000,000,000 $1,250,000-$7,500,000 $998,750,000-$992,500,000
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS ARE TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
OFFERS TO PURCHASE THE NOTES ARE BEING SOLICITED FROM TIME TO TIME BY THE AGENTS
LISTED BELOW. THE AGENTS HAVE AGREED TO USE THEIR REASONABLE BEST EFFORTS TO
SELL THE NOTES. THERE IS NO ESTABLISHED TRADING MARKET FOR THE NOTES AND WE
CANNOT ASSURE YOU THAT A SECONDARY MARKET FOR THE NOTES WILL DEVELOP.
-------------------
MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
WARBURG DILLON READ LLC
DECEMBER 21, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Summary............................... S-3
Foreign Currency Risks................ S-4
Description of Notes.................. S-6
The Depositary........................ S-24
United States Federal Taxation........ S-25
Plan of Distribution.................. S-32
Legal Matters......................... S-33
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS
About this Prospectus................. 2
Where You Can Find More Information... 2
Nabisco............................... 4
Recent Developments................... 4
Ratio of Earnings to Fixed Charges/
Deficiency in the Coverage of Fixed
Charges by Earnings Before Fixed
Charges............................. 4
Use of Proceeds....................... 4
Description of Debt Securities........ 5
Plan of Distribution.................. 19
Legal Matters......................... 21
Experts............................... 21
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the prospectus and any pricing
supplement. We have not authorized anyone else to provide you with different or
additional information. We are offering to sell these securities and seeking
offers to buy these securities only in jurisdictions where offers and sales are
permitted.
<PAGE>
SUMMARY
The following summary describes the notes we are offering under this program
in general terms only. You should read the summary together with the more
detailed information contained in this prospectus supplement, in the
accompanying prospectus and in the applicable pricing supplement.
We, Nabisco, may offer from time to time up to U.S. $1,000,000,000, or the
equivalent of this amount in other currencies, of the medium-term notes
described in this prospectus supplement. We refer to the notes offered under
this prospectus supplement as our medium-term notes. We refer to the offering of
the medium-term notes as our "medium term note program."
<TABLE>
<S> <C>
GENERAL TERMS OF THE NOTES................ - The notes will mature nine months or more from the
date of issuance and will pay interest, if any, on
the dates specified in the applicable pricing
supplement.
- The notes will bear interest at either a fixed
rate, which may be zero in the case of notes issued
at an original issue discount, or a floating rate.
- The notes will be issued in U.S. dollars unless we
specify otherwise in the applicable pricing
supplement.
- The notes may be either callable by us or puttable
by you.
- Payments of principal and/or interest on the notes
may be linked to currency prices, commodity prices,
single securities, baskets of securities or
indices.
- We may issue amortizing notes that pay a level
amount in respect of both interest and principal
amortized over the life of the notes.
- The notes will be held in global form by The
Depository Trust Company, unless we specify
otherwise in the applicable pricing supplement.
- The notes will not be listed on any securities
exchange, unless we specify otherwise in the
applicable pricing supplement.
FORMS OF SECURITIES....................... The securities that we offer under our medium-term note
program will be issued in fully registered form and
will be represented either by a global security
registered in the name of a nominee of The
Depository Trust Company, as depositary, or by
certificates issued in definitive form, as set forth
in the applicable pricing supplement. We will not
issue book-entry securities as certificated
securities except under the circumstances described
in "Description of Debt Securities--Global
Securities" in the prospectus. For information on
The Depository Trust Company's book-entry system,
see "The Depositary" in this prospectus supplement.
HOW TO REACH US........................... You may contact us at our principal executive offices at
7 Campus Drive, Parsippany, New Jersey 07054
(telephone number (973) 682-5000).
</TABLE>
S-3
<PAGE>
FOREIGN CURRENCY RISKS
YOU SHOULD CONSULT YOUR FINANCIAL AND LEGAL ADVISORS AS TO ANY SPECIFIC
RISKS ENTAILED BY AN INVESTMENT IN NOTES THAT ARE DENOMINATED OR PAYABLE IN, OR
THE PAYMENT OF WHICH IS LINKED TO THE VALUE OF, FOREIGN CURRENCY. THESE NOTES
ARE NOT APPROPRIATE INVESTMENTS FOR INVESTORS WHO ARE NOT SOPHISTICATED IN
FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this prospectus supplement is directed to
prospective purchasers who are United States residents. We disclaim any
responsibility to advise prospective purchasers who are residents of countries
other than the United States of any matters arising under foreign law that may
affect the purchase of or holding of, or receipt of payments on, the notes.
These persons should consult their own legal and financial advisors concerning
these matters.
EXCHANGE RATES AND EXCHANGE CONTROLS MAY AFFECT THE SECURITIES' VALUE OR RETURN
SECURITIES INVOLVING FOREIGN CURRENCIES ARE SUBJECT TO GENERAL EXCHANGE RATE
AND EXCHANGE CONTROL RISKS. An investment in a note that is denominated or
payable in, or the payment of which is linked to the value of, currencies 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 the
relevant foreign currencies and the possibility of the imposition or
modification of exchange controls by either the U.S. or foreign governments.
These risks generally depend on economic and political events over which we have
no control.
EXCHANGE RATES WILL AFFECT YOUR INVESTMENT. In recent years, rates of
exchange between U.S. dollars and some foreign currencies have been highly
volatile and this volatility may continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any note.
Depreciation against the U.S. dollar of the currency in which a note is payable
would result in a decrease in the effective yield of the note below its coupon
rate and could result in an overall loss to you on a U.S. dollar basis. In
addition, depending on the specific terms of a currency-linked note, changes in
exchange rates relating to any of the relevant currencies could result in a
decrease in its effective yield and in your loss of all or a substantial portion
of the value of that note.
WE HAVE NO CONTROL OVER EXCHANGE RATES. Foreign exchange rates can either
float or be fixed by sovereign governments. Exchange rates of most economically
developed nations are permitted to fluctuate in value relative to the U.S.
dollar and to each other. However, from time to time governments may use a
variety of techniques, such as intervention by a country's central bank or the
imposition of regulatory controls or taxes, to influence the exchange rates of
their currencies. Governments may also issue a new currency to replace an
existing currency or alter the exchange rate or relative exchange
characteristics by a devaluation or revaluation of a currency. These
governmental actions could change or interfere with currency valuations and
currency fluctuations that would otherwise occur in response to economic forces,
as well as in response to the movement of currencies across borders.
As a consequence, these government actions could adversely affect the U.S.
dollar-equivalent yields or payouts for (a) notes denominated or payable in
currencies other than U.S. dollars and (b) currency-linked notes.
We will not make any adjustment or change in the terms of the notes in the
event that exchange rates should become fixed, or in the event of any
devaluation or revaluation or imposition of exchange or other regulatory
controls or taxes, or in the event of other developments affecting the U.S.
dollar or any applicable foreign currency. You will bear those risks.
SOME FOREIGN CURRENCIES MAY BECOME UNAVAILABLE. Governments have imposed
from time to time, and may in the future impose, exchange controls that could
also affect the availability of a specified foreign
S-4
<PAGE>
currency. Even if there are no actual exchange controls, it is possible that the
applicable currency for any note not denominated in U.S. dollars would not be
available when payments on that note are due.
ALTERNATIVE PAYMENT METHOD USED IF PAYMENT CURRENCY BECOMES UNAVAILABLE. If
a payment currency is unavailable, we would make required payments in U.S.
dollars on the basis of the market exchange rate. However, if the applicable
currency for any note is not available because the euro has been substituted for
that currency, we would make the payments in euro. The mechanisms for making
payments in these alternative currencies are explained in "Description of
Notes--Interest and Principal Payments" below.
WE WILL PROVIDE CURRENCY EXCHANGE INFORMATION IN PRICING SUPPLEMENTS. The
applicable pricing supplement will include information regarding current
applicable exchange controls, if any, and historic exchange rate information for
any note denominated or payable in a foreign currency or requiring payments that
are related to the value of a foreign currency. That information will be
furnished only for information purposes. You should not assume that any historic
information concerning currency exchange rates will be representative of the
range of or trends in fluctuations in currency exchange rates that may occur in
the future.
CURRENCY CONVERSIONS MAY AFFECT PAYMENTS ON SOME SECURITIES
The applicable pricing supplement may provide for (1) payments on a non-U.S.
dollar denominated note to be made in U.S. dollars or (2) payments on a U.S.
dollar denominated note to be made in a currency other than U.S. dollars. In
these cases, Citibank, N.A., in its capacity as exchange rate agent, or a
different exchange rate agent identified in the pricing supplement, will convert
the currencies. You will bear the costs of conversion through deductions from
those payments.
EXCHANGE RATES MAY AFFECT THE VALUE OF A NEW YORK JUDGMENT INVOLVING NON-U.S.
DOLLAR SECURITIES
The notes will be governed by and construed in accordance with the laws of
the State of New York. Unlike many courts in the United States outside the State
of New York, the courts in the State of New York customarily enter judgments or
decrees for money damages in the foreign currency in which notes are
denominated. These amounts would then be converted into U.S. dollars at the rate
of exchange in effect on the date the judgment or decree is entered. You would
bear the foreign currency risk during litigation.
ADDITIONAL RISKS SPECIFIC TO PARTICULAR SECURITIES ISSUED UNDER OUR MEDIUM
TERM NOTE PROGRAM WILL BE DETAILED IN THE APPLICABLE PRICING SUPPLEMENTS.
S-5
<PAGE>
DESCRIPTION OF NOTES
Investors should carefully read the general terms and provisions of our debt
securities in "Description of Debt Securities" in the prospectus. This section
supplements that description. The pricing supplement will add specific terms for
each issuance of notes and may modify or replace any of the information in this
section and in "Description of Debt Securities" in the prospectus.
GENERAL TERMS OF NOTES
We may issue notes under the indenture. The medium-term notes issued under
the indenture will constitute a single series under the indenture, together with
any medium-term notes we issue in the future under the indenture that we
designate as being part of that series.
RANKING. Notes issued under the indenture will rank on a parity with all
other senior indebtedness of Nabisco and with all other unsecured and
unsubordinated indebtedness of Nabisco, subject to statutory exceptions in the
event of liquidation upon insolvency.
TERMS SPECIFIED IN PRICING SUPPLEMENTS. A pricing supplement will specify
the following terms of any issuance of our medium-term notes to the extent
applicable:
- the specific designation of the notes;
- the issue price;
- the aggregate principal amount;
- the denominations or minimum denominations;
- the original issue date;
- the scheduled maturity date and any terms related to any extension of the
maturity date;
- whether the notes are fixed rate notes, floating rate notes, notes with
original issue discount and/or amortizing notes;
- for fixed rate notes, the rate per year at which the notes will bear
interest, if any, or the method of calculating that rate and the dates on
which interest will be payable;
- for floating rate notes, the base rate, the index maturity, the spread,
the spread multiplier, the initial interest rate, the interest reset
periods, the interest payment dates, the maximum interest rate, the
minimum interest rate and any other terms relating to the particular
method of calculating the interest rate for the note;
- if the note is an amortizing note, the amortization schedule;
- whether the notes may be called, or redeemed, in whole or in part, at our
option or repaid at your option, or put, prior to the scheduled maturity
date, and the terms of any redemption or repayment;
- whether the notes are currency-linked notes and/or notes linked to
commodity prices, single securities, baskets of securities or indices;
- if any note is not denominated and payable in U.S. dollars, the currency
or currencies in which the principal, premium, if any, and interest, if
any, will be paid, which we refer to as the "specified currency," along
with any other terms relating to the non-U.S. dollar denomination,
including exchange rates as against the U.S. dollar at selected times
during the last five years and any exchange controls affecting that
specified currency;
- whether the notes will be listed on any stock exchange;
- whether the notes will be issued in book-entry or certificated form; and
- any other terms on which we will issue the notes.
S-6
<PAGE>
SOME DEFINITIONS. We have defined some of the terms that we use frequently
in this prospectus supplement below:
A "business day" means any day, other than a Saturday or Sunday, (a) that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close (x) in The City of New York or
(y) for notes denominated in a specified currency other than U.S. dollars,
Australian dollars or euro, in the principal financial center of the country of
the specified currency or (z) for notes denominated in Australian dollars, in
Sydney, and (b) for notes denominated in euro, that is also a day on which the
Trans-European Automated Real-time Gross Settlement Express Transfer System,
which is commonly referred to as "TARGET," is operating.
"Depositary" means The Depository Trust Company, New York, New York.
"Euro LIBOR notes" means LIBOR notes for which the index currency is euros.
An "interest payment date" for any note means a date on which, under the
terms of that note, regularly scheduled interest is payable.
"London banking day" means any day on which dealings in deposits in the
relevant index currency are transacted in the London interbank market.
The "record date" for any interest payment date is the date 15 calendar days
prior to that interest payment date, whether or not that date is a business day.
"TARGET Settlement Day" means any day on which the Trans-European Automated
Real-time Gross Settlement Express Transfer System is open.
References in this prospectus supplement to "U.S. dollars" or "U.S.$" or "$"
are to the currency of the United States of America.
FORMS OF NOTES
We will offer the notes on a continuing basis and will issue notes only in
fully registered form either as book-entry notes or as certificated notes.
BOOK-ENTRY NOTES. For notes in book-entry form, Nabisco will issue one or
more global certificates representing the entire issue of notes. Except as set
forth in the prospectus under "Description of Debt Securities--Global
Securities," you may not exchange book-entry notes or interests in book-entry
notes for certificated notes.
Each global note certificate representing book-entry notes will be deposited
with, or on behalf of, the Depositary and registered in the name of a nominee of
the Depositary. These certificates name the Depositary or its nominee as the
owner of the notes. The Depositary maintains a computerized system that will
reflect the interests held by its participants in the global notes. An
investor's beneficial interest will be reflected in the records of the
Depositary's direct or indirect participants through an account maintained by
the investor with its broker/dealer, bank, trust company or other
representative. A further description of the Depositary's procedures for global
notes representing book-entry notes is set forth in the prospectus under
"Description of Debt Securities--Global Securities." The Depositary has
confirmed to Nabisco, the agents and each trustee that it intends to follow
these procedures.
CERTIFICATED NOTES. If we issue notes in certificated form, the certificate
will name the investor or the investor's nominee as the owner of the note. The
person named in the note register will be considered the owner of the note for
all purposes under the indenture. For example, if we need to ask the holders of
the notes to vote on a proposed amendment to the notes, the person named in the
note register will be asked to cast any vote regarding that note. If you have
chosen to have some other entity hold the certificates for you, that entity will
be considered the owner of your note in our records and will be entitled to cast
the vote
S-7
<PAGE>
regarding your note. You may not exchange certificated notes for book-entry
notes or interests in book-entry notes.
DENOMINATIONS. Nabisco will issue the notes:
- for U.S. dollar-denominated notes, in denominations of $1,000 or any
amount greater than $1,000 that is an integral multiple of $1,000; or
- for notes denominated in a specified currency other than U.S. dollars, in
denominations of the equivalent of $1,000, rounded to an integral multiple
of 1,000 units of the specified currency, or any larger integral multiple
of 1,000 units of the specified currency, as determined by reference to
the market exchange rate, as defined under "--Interest and Principal
Payments--Unavailability of Foreign Currency" below, on the business day
immediately preceding the date of issuance.
INTEREST AND PRINCIPAL PAYMENTS
PAYMENTS, EXCHANGES AND TRANSFERS. Holders may present notes for payment of
principal, premium, if any, and interest, if any, register the transfer of the
notes and exchange the notes at the agency in the Borough of Manhattan, The City
of New York, maintained by Nabisco for that purpose. However, holders of global
notes may transfer and exchange global notes only in the manner and to the
extent set forth under "Description of Debt Securities--Global Securities" in
the prospectus. On the date of this prospectus supplement, the agent for the
payment, transfer and exchange of the notes is Citibank, N.A., acting through
its corporate trust office at 120 Wall Street, New York, New York 10043. We
refer to Citibank, acting in this capacity, as the paying agent.
We will not be required to:
- register the transfer of or exchange any note if the holder has exercised
the holder's right, if any, to require us to repurchase the note, in whole
or in part, except the portion of the note not required to be repurchased,
- register the transfer of or exchange notes to be redeemed for a period of
fifteen calendar days preceding the mailing of the relevant notice of
redemption, or
- register the transfer of or exchange any registered note selected for
redemption in whole or in part, except the unredeemed or unpaid portion of
that registered note being redeemed in part.
No service charge will be made for any registration or transfer or exchange
of notes, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with the registration of
transfer or exchange of notes.
Although we anticipate making payments of principal, premium, if any, and
interest, if any, on most notes in U.S. dollars, some notes may be payable in
foreign currencies as specified in the applicable pricing supplement. Currently,
few facilities exist in the United States to convert U.S. dollars into foreign
currencies and vice versa. In addition, most U.S. banks do not offer non-U.S.
dollar denominated checking or savings account facilities. Accordingly, unless
alternative arrangements are made, we will pay principal, premium, if any, and
interest, if any, on notes that are payable in a foreign currency to an account
at a bank outside the United States, which, in the case of a note payable in
euro, will be made by credit or transfer to a euro account specified by the
payee in a country for which the euro is the lawful currency.
RECIPIENTS OF PAYMENTS. The paying agent will pay interest to the person in
whose name the note is registered at the close of business on the applicable
record date. However, upon maturity, redemption or repayment, the paying agent
will pay any interest due to the person to whom it pays the principal of the
note. The paying agent will make the payment of interest on the date of
maturity, redemption or repayment, whether or not that date is an interest
payment date. The paying agent will make the initial interest payment on a note
on the first interest payment date falling after the date of issuance, unless
the
S-8
<PAGE>
date of issuance is less than 15 calendar days before an interest payment date.
In that case, the paying agent will pay interest or, in the case of an
amortizing note, principal and interest, on the next succeeding interest payment
date to the holder of record on the record date corresponding to the succeeding
interest payment date.
BOOK-ENTRY NOTES. The paying agent will make payments of principal,
premium, if any, and interest, if any, to the account of the Depositary, as
holder of book-entry notes, by wire transfer of immediately available funds. We
expect that the Depositary, upon receipt of any payment, will immediately credit
its participants' accounts in amounts proportionate to their respective
beneficial interests in the book-entry notes as shown on the records of the
Depositary. We also expect that payments by the Depositary's participants to
owners of beneficial interests in the book-entry notes will be governed by
standing customer instructions and customary practices and will be the
responsibility of those participants.
CERTIFICATED NOTES. Except as indicated below for payments of interest at
maturity, redemption or repayment, the paying agent will make U.S. dollar
payments of interest either:
- by check mailed to the address of the person entitled to payment as shown
on the note register; or
- for a holder of at least $10,000,000 in aggregate principal amount of
certificated notes having the same interest payment date, by wire transfer
of immediately available funds, if the holder has given written notice to
the paying agent not later than 15 calendar days prior to the applicable
interest payment date.
U.S. dollar payments of principal, premium, if any, and interest, if any, upon
maturity, redemption or repayment on a note will be made in immediately
available funds against presentation and surrender of the note.
PAYMENT PROCEDURES FOR BOOK-ENTRY NOTES DENOMINATED IN A FOREIGN
CURRENCY. Book-entry notes payable in a specified currency other than U.S.
dollars will provide that a beneficial owner of interests in those notes may
elect to receive all or a portion of the payments of principal, premium, if any,
or interest, if any, in U.S. dollars. In those cases, the Depositary will elect
to receive all payments with respect to the beneficial owner's interest in the
notes in U.S. Dollars, unless the beneficial owner takes the following steps:
- The beneficial owner must give complete instructions to the direct or
indirect participant through which it holds the book-entry notes of its
election to receive those payments in the specified currency other than
U.S. dollars by wire transfer to an account specified by the beneficial
owner with a bank located outside the United States. In the case of a note
payable in euro, the account must be a euro account in a country for which
the euro is the lawful currency.
- The participant must notify the Depositary of the beneficial owner's
election on or prior to the third business day after the applicable record
date, for payments of interest, and on or prior to the twelfth business
day prior to the maturity date or any redemption or repayment date, for
payment of principal or premium.
- The Depositary will notify the paying agent of the beneficial owner's
election on or prior to the fifth business day after the applicable record
date, for payments of interest, and on or prior to the tenth business day
prior to the maturity date or any redemption or repayment date, for
payment of principal or premium.
Beneficial owners should consult their participants in order to ascertain
the deadline for giving instructions to participants in order to ensure that
timely notice will be delivered to the Depositary.
PAYMENT PROCEDURES FOR CERTIFICATED NOTES DENOMINATED IN A FOREIGN
CURRENCY. For certificated notes payable in a specified currency other than
U.S. dollars, the notes may provide that the holder may elect to
S-9
<PAGE>
receive all or a portion of the payments on those notes in U.S. dollars. To do
so, the holder must send a written request to the paying agent:
- for payments of interest, on or prior to the fifth business day after the
applicable record date; or
- for payments of principal, at least ten business days prior to the
maturity date or any redemption or repayment date.
To revoke this election for all or a portion of the payments on the certificated
notes, the holder must send written notice to the paying agent:
- at least five business days prior to the applicable record date, for
payment of interest; or
- at least ten calendar days prior to the maturity date or any redemption or
repayment date, for payments of principal.
If the holder does not elect to be paid in U.S. dollars, the paying agent will
pay the principal, premium, if any, or interest, if any, on the certificated
notes:
- by wire transfer of immediately available funds in the specified currency
to the holder's account at a bank located outside the United States, and
in the case of a note payable in euro, in a country for which the euro is
the lawful currency, if the paying agent has received the holder's written
wire transfer instructions not less than 15 calendar days prior to the
applicable payment date; or
- by check payable in the specified currency mailed to the address of the
person entitled to payment that is specified in the note register, if the
holder has not provided wire instructions.
However, the paying agent will only pay the principal of the certificated notes,
any premium and interest, if any, due at maturity, or on any redemption or
repayment date, upon surrender of the certificated notes at the office or agency
of the paying agent.
DETERMINATION OF EXCHANGE RATE FOR PAYMENTS IN U.S. DOLLARS FOR NOTES
DENOMINATED IN A FOREIGN CURRENCY. The exchange rate agent will convert the
specified currency into U.S. dollars for holders who elect to receive payments
in U.S. dollars and for beneficial owners of book-entry notes that do not follow
the procedures we have described immediately above. The conversion will be based
on the highest bid quotation in The City of New York received by the exchange
rate agent at approximately 11:00 a.m., New York City time, on the second
business day preceding the applicable payment date from three recognized foreign
exchange dealers for the purchase by the quoting dealer:
- of the specified currency for U.S. dollars for settlement on the payment
date;
- in the aggregate amount of the specified currency payable to those holders
or beneficial owners of notes; and
- at which the applicable dealer commits to execute a contract.
One of the dealers providing quotations may be the exchange rate agent unless
the exchange rate agent is our affiliate. If those bid quotations are not
available, payments will be made in the specified currency. The holders or
beneficial owners of notes will pay all currency exchange costs by deductions
from the amounts payable on the notes.
UNAVAILABILITY OF FOREIGN CURRENCY. The relevant specified currency may not
be available to us for making payments of principal of, premium, if any, or
interest, if any, on any note. This could occur due to the imposition of
exchange controls or other circumstances beyond our control or if the specified
currency is no longer used by the government of the country issuing that
currency or by public institutions within the international banking community
for the settlement of transactions. If the specified currency is unavailable, we
may satisfy our obligations to holders of the notes by making those payments on
the date of payment in U.S. dollars on the basis of the noon dollar buying rate
in The City of New York for cable
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transfers of the currency or currencies in which a payment on any note was to be
made, published by the Federal Reserve Bank of New York, which we refer to as
the "market exchange rate." If that rate of exchange is not then available or is
not published for a particular payment currency, the market exchange rate will
be based on the highest bid quotation in The City of New York received by the
exchange rate agent at approximately 11:00 a.m., New York City time, on the
second business day preceding the applicable payment date from three recognized
foreign exchange dealers for the purchase by the quoting dealer:
- of the specified currency for U.S. dollars for settlement on the payment
date;
- in the aggregate amount of the specified currency payable to those holders
or beneficial owners of notes; and
- at which the applicable dealer commits to execute a contract.
One of the dealers providing quotations may be the exchange rate agent unless
the exchange rate agent is our affiliate. If those bid quotations are not
available, the exchange rate agent will determine the market exchange rate at
its sole discretion.
These provisions do not apply if a specified currency is unavailable because
it has been replaced by the euro. If the euro has been substituted for a
specified currency, Nabisco may at its option, or will, if required by
applicable law, without the consent of the holders of the affected notes, pay
the principal of, premium, if any, or interest, if any, on any note denominated
in the specified currency in euro instead of the specified currency, in
conformity with legally applicable measures taken pursuant to, or by virtue of,
the treaty establishing the European Community, as amended by the treaty on
European Union. Any payment made in U.S. dollars or in euro as described above
where the required payment is in an unavailable specified currency will not
constitute an event of default.
DISCOUNT NOTES. Some notes may be considered to be issued with original
issue discount, which must be included in income for United States federal
income tax purposes at a constant yield. See "United States Federal
Taxation--Discount Notes" below. If the principal of any note that is considered
to be issued with original issue discount is declared to be due and payable
immediately as described under "Description of Debt Securities--Events of
Default" in the prospectus, the amount of principal due and payable on that note
will be limited to:
- the aggregate principal amount of the note multiplied by the sum of
- its issue price, expressed as a percentage of the aggregate principal
amount, plus
- the original issue discount amortized from the date of issue to the date
of declaration, expressed as a percentage of the aggregate principal
amount.
The amortization will be calculated using the "interest method," computed in
accordance with generally accepted accounting principles in effect on the date
of declaration. See the applicable pricing supplement for any special
considerations applicable to these notes.
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FIXED RATE NOTES
Each fixed rate note will bear interest from the date of issuance at the
annual rate stated on its face until the principal is paid or made available for
payment.
HOW INTEREST IS CALCULATED. Interest on fixed rate notes will be computed
on the basis of a 360-day year of twelve 30-day months.
HOW INTEREST ACCRUES. Interest on fixed rate notes will accrue from and
including the most recent interest payment date to which interest has been paid
or duly provided for, or, if no interest has been paid or duly provided for,
from and including the issue date or any other date specified in a pricing
supplement on which interest begins to accrue. Interest will accrue to but
excluding the next interest payment date, or, if earlier, the date on which the
principal has been paid or duly made available for payment, except as described
below under "If a Payment Date is Not a Business Day."
WHEN INTEREST IS PAID. Payments of interest on fixed rate notes will be
made on the interest payment dates or scheduled maturity date specified in the
applicable pricing supplement. However, if the first interest payment date is
less than 15 days after the date of issuance, interest will not be paid on the
first interest payment date, but will be paid on the second interest payment
date.
AMOUNT OF INTEREST PAYABLE. Interest payments for fixed rate notes will
include accrued interest from and including the date of issue or from and
including the last date in respect of which interest has been paid, as the case
may be, to but excluding the relevant interest payment date or date of maturity
or earlier redemption or repayment, as the case may be.
IF A PAYMENT DATE IS NOT A BUSINESS DAY. If any scheduled interest payment
date is not a business day, Nabisco will pay interest on the next business day,
but interest on that payment will not accrue during the period from and after
the scheduled interest payment date. If the scheduled maturity date or date of
redemption or repayment is not a business day, Nabisco may pay interest and
principal and premium, if any, on the next succeeding business day, but interest
on that payment will not accrue during the period from and after the scheduled
maturity date or date of redemption or repayment.
AMORTIZING NOTES. A fixed rate note may pay a level amount in respect of
both interest and principal amortized over the life of the note. Payments of
principal and interest on amortizing notes will be made on the interest payment
dates specified in the applicable pricing supplement, and at maturity or upon
any earlier redemption or repayment. Payments on amortizing notes will be
applied first to interest due and payable and then to the reduction of the
unpaid principal amount. We will provide to the original purchaser, and will
furnish to subsequent holders upon request to us, a table setting forth
repayment information for each amortizing note.
FLOATING RATE NOTES
Each floating rate note will mature on the date specified in the applicable
pricing supplement.
Each floating rate note will bear interest at a floating rate determined by
reference to an interest rate or interest rate formula, which we refer to as the
"base rate." The base rate may be one or more of the following:
- the CD rate,
- the commercial paper rate,
- EURIBOR,
- the federal funds rate,
- LIBOR,
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- the prime rate,
- the Treasury rate,
- the CMT rate, or
- any other rate or interest rate formula specified in the applicable
pricing supplement and in the floating rate note.
FORMULA FOR INTEREST RATES. The interest rate on each floating rate note
will be calculated by reference to:
- the specified base rate based on the index maturity,
- plus or minus the spread, if any, and/or
- multiplied by the spread multiplier, if any.
For any floating rate note, "index maturity" means the period of maturity of
the instrument or obligation from which the base rate is calculated and will be
specified in the applicable pricing supplement. The "spread" is the number of
basis points (one one-hundredth of a percentage point) specified in the
applicable pricing supplement to be added to or subtracted from the base rate
for a floating rate note. The "spread multiplier" is the percentage specified in
the applicable pricing supplement to be applied to the base rate for a floating
rate note.
LIMITATIONS ON INTEREST RATE. A floating rate note may also have either or
both of the following limitations on the interest rate:
- a maximum limitation, or ceiling, on the rate of interest which may accrue
during any interest period, which we refer to as the "maximum interest
rate;"
- a minimum limitation, or floor, on the rate of interest that may accrue
during any interest period, which we refer to as the "minimum interest
rate."
Any applicable maximum interest rate or minimum interest rate will be set
forth in the pricing supplement.
In addition, the interest rate on a floating rate note may not be higher
than the maximum rate permitted by New York law, as that rate may be modified by
United States law of general application. Under current New York law, the
maximum rate of interest, subject to some exceptions, for any loan in an amount
less than $250,000 is 16% and for any loan in the amount of $250,000 or more but
less than $2,500,000 is 25% per annum on a simple interest basis. These limits
do not apply to loans of $2,500,000 or more.
HOW FLOATING INTEREST RATES ARE RESET. The interest rate in effect from the
date of issue to the first interest reset date for a floating rate note will be
the initial interest rate specified in the applicable pricing supplement. We
refer to this rate as the "initial interest rate." The interest rate on each
floating rate note may be reset daily, weekly, monthly, quarterly, semiannually
or annually. This period is the "interest reset period" and the first day of
each interest reset period is the "interest reset date." The "interest
determination date" for any interest reset date is the day the calculation agent
will refer to when determining the new interest rate at which a floating rate
will reset, and is applicable as follows:
- for CD rate notes, commercial paper rate notes, federal funds rate notes,
prime rate notes and CMT rate notes, the interest determination date will
be the second business day prior to the interest reset date;
- for EURIBOR notes or Euro LIBOR notes, the interest determination date
will be the second TARGET Settlement Day, as defined under "--General
Terms of Notes--Some Definitions," prior to the interest reset date;
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- for LIBOR notes (other than Euro LIBOR notes), the interest determination
date will be the second London banking day prior to the interest reset
date, except that the interest determination date pertaining to an
interest reset date for a LIBOR note for which the index currency is
pounds sterling will be the interest reset date; and
- for Treasury rate notes, the interest determination date will be the day
of the week in which the interest reset date falls on which Treasury bills
would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, but the auction may be held on the preceding Friday. If, as
the result of a legal holiday, the auction is held on the preceding Friday, that
Friday will be the interest determination date pertaining to the interest reset
date occurring in the next succeeding week. If an auction falls on a day that is
an interest reset date, that interest reset date will be the next following
business day.
The interest reset dates will be specified in the applicable pricing
supplement. If an interest reset date for any floating rate note falls on a day
that is not a business day, it will be postponed to the following business day,
except that, in the case of a EURIBOR note or a LIBOR note, if that business day
is in the next calendar month, the interest reset date will be the immediately
preceding business day.
In the detailed descriptions of the various base rates which follow, the
"calculation date" pertaining to an interest determination date means the
earlier of (1) the tenth calendar day after that interest determination date,
or, if that day is not a business day, the next succeeding business day, and
(2) the business day preceding the applicable interest payment date or maturity
date or, for any principal amount to be redeemed or repaid, any redemption or
repayment date.
HOW INTEREST IS CALCULATED. Interest on floating rate notes will accrue
from and including the most recent interest payment date to which interest has
been paid or duly provided for, or, if no interest has been paid or duly
provided for, from and including the issue date or any other date specified in a
pricing supplement on which interest begins to accrue. Interest will accrue to
but excluding the next interest payment date or, if earlier, the date on which
the principal has been paid or duly made available for payment, except as
described below under "If a Payment Date is Not a Business Day."
The applicable pricing supplement will specify a calculation agent for any
issue of floating rate notes. Upon the request of the holder of any floating
rate note, the calculation agent will provide the interest rate then in effect
and, if determined, the interest rate that will become effective on the next
interest reset date for that floating rate note.
For a floating rate note, accrued interest will be calculated by multiplying
the principal amount of the floating rate note by an accrued interest factor.
This accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which interest is being paid. The
interest factor for each day is computed by dividing the interest rate
applicable to that day:
- by 360, in the case of CD rate notes, commercial paper rate notes, EURIBOR
notes, federal funds rate notes, LIBOR notes, except for LIBOR notes
denominated in pounds sterling, and prime rate notes;
- by 365, in the case of LIBOR notes denominated in pounds sterling; or
- by the actual number of days in the year, in the case of Treasury rate
notes and CMT rate notes.
For these calculations, the interest rate in effect on any interest reset date
will be the applicable rate as reset on that date. The interest rate applicable
to any other day is the interest rate from the immediately preceding interest
reset date or, if none, the initial interest rate.
All percentages used in or resulting from any calculation of the rate of
interest on a floating rate note will be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point (.0000001),
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with five one-millionths of a percentage point rounded upward, and all U.S.
dollar amounts used in or resulting from these calculations on floating rate
notes will be rounded to the nearest cent, with one-half cent rounded upward.
WHEN INTEREST IS PAID. Nabisco will pay interest on floating rate notes on
the interest payment dates specified in the applicable pricing supplement.
However, if the first interest payment date is less than 15 days after the date
of issuance, interest will not be paid on the first interest payment date, but
will be paid on the second interest payment date.
IF A PAYMENT DATE IS NOT A BUSINESS DAY. If any scheduled interest payment
date, other than the maturity date or any earlier redemption or repayment date,
for any floating rate note falls on a day that is not a business day, it will be
postponed to the following business day, except that, in the case of a EURIBOR
note or a LIBOR note, if that business day would fall in the next calendar
month, the interest payment date will be the immediately preceding business day.
If the scheduled maturity date or any earlier redemption or repayment date of a
floating rate note falls on a day that is not a business day, the payment of
principal, premium, if any, and interest, if any, will be made on the next
succeeding business day, but interest on that payment will not accrue during the
period from and after the maturity, redemption or repayment date.
BASE RATES
CD RATE NOTES
CD rate notes will bear interest at the interest rates specified in the CD
rate notes and in the applicable pricing supplement. Those interest rates will
be based on the CD rate and any spread and/or spread multiplier and will be
subject to the minimum interest rate and the maximum interest rate, if any.
"CD rate" means, for any interest determination date, the rate on that date
for negotiable certificates of deposit having the index maturity specified in
the applicable pricing supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)."
The following procedures will be followed if the CD rate cannot be
determined as described above:
- If the above rate is not published in H.15(519) by 9:00 a.m., New York
City time, on the calculation date, the CD rate will be the rate on that
interest determination date set forth in the daily update of H.15(519),
available through the world wide website of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update,
or such other recognized electronic source used for the purpose of
displaying such rate, or any successor site or publication, which is
commonly referred to as the "H.15 Daily Update," for the interest
determination date for certificates of deposit having the index maturity
specified in the applicable pricing supplement, under the caption "CDs
(Secondary Market)."
- If the above rate is not yet published in either H.15(519) or the H.15
Daily Update by 3:00 p.m., New York City time, on the calculation date,
the calculation agent will determine the CD rate to be the arithmetic mean
of the secondary market offered rates as of 10:00 a.m., New York City
time, on that interest determination date of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in The City of New York
selected by the calculation agent, after consultation with us, for
negotiable certificates of deposit of major United States money center
banks of the highest credit standing in the market for negotiable
certificates of deposit with a remaining maturity closest to the index
maturity specified in the applicable pricing supplement in an amount that
is representative for a single transaction in that market at that time.
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- If the dealers selected by the calculation agent are not quoting as set
forth above, the CD rate will remain the CD rate for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest rate.
COMMERCIAL PAPER RATE NOTES
Commercial paper rate notes will bear interest at the interest rates
specified in the commercial paper rate notes and in the applicable pricing
supplement. Those interest rates will be based on the commercial paper rate and
any spread and/or spread multiplier and will be subject to the minimum interest
rate and the maximum interest rate, if any.
The "commercial paper rate" means, for any interest determination date, the
money market yield, calculated as described below, of the rate on that date for
commercial paper having the index maturity specified in the applicable pricing
supplement, as that rate is published in H.15(519), under the heading
"Commercial Paper--Nonfinancial."
The following procedures will be followed if the commercial paper rate
cannot be determined as described above:
- If the above rate is not published by 9:00 a.m., New York City time, on
the calculation date, then the commercial paper rate will be the money
market yield of the rate on that interest determination date for
commercial paper of the index maturity specified in the applicable pricing
supplement as published in the H.15 Daily Update under the heading
"Commercial Paper--Nonfinancial."
- If by 3:00 p.m., New York City time, on that calculation date the rate is
not yet published in either H.15(519) or the H.15 Daily Update, then the
calculation agent will determine the commercial paper rate to be the money
market yield of the arithmetic mean of the offered rates as of
11:00 a.m., New York City time, on that interest determination date of
three leading dealers of commercial paper in The City of New York selected
by the calculation agent, after consultation with us, for commercial paper
of the index maturity specified in the applicable pricing supplement,
placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized statistical rating agency.
- If the dealers selected by the calculation agent are not quoting as
mentioned above, the commercial paper rate for that interest determination
date will remain the commercial paper rate for the immediately preceding
interest reset period, or, if there was no interest reset period, the rate
of interest payable will be the initial interest rate.
The "money market yield" will be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
D X 360
money market yield = -------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per year rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
EURIBOR NOTES
EURIBOR notes will bear interest at the interest rates specified in the
EURIBOR notes and in the applicable pricing supplement. That interest rate will
be based on EURIBOR and any spread and/or spread multiplier and will be subject
to the minimum interest rate and the maximum interest rate, if any.
"EURIBOR" means, for any interest determination date, the rate for deposits
in euros as sponsored, calculated and published jointly by the European Banking
Federation and ACI--The Financial Market
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Association, or any company established by the joint sponsors for purposes of
compiling and publishing those rates, for the index maturity specified in the
applicable pricing supplement as that rate appears on the display on Bridge
Telerate, Inc., or any successor service, on page 248 or any other page as may
replace page 248 on that service, which is commonly referred to as "Telerate
Page 248," as of 11:00 a.m. (Brussels time).
The following procedures will be followed if the rate cannot be determined
as described above:
- If the above rate does not appear, the calculation agent will request the
principal Euro-zone office of each of four major banks in the Euro-zone
interbank market, as selected by the calculation agent, after consultation
with us, to provide the calculation agent with its offered rate for
deposits in euros, at approximately 11:00 a.m. (Brussels time) on the
interest determination date, to prime banks in the Euro-zone interbank
market for the index maturity specified in the applicable pricing
supplement commencing on the applicable interest reset date, and in a
principal amount not less than the equivalent of U.S.$1 million in euro
that is representative of a single transaction in euro, in that market at
that time. If at least two quotations are provided, EURIBOR will be the
arithmetic mean of those quotations.
- If fewer than two quotations are provided, EURIBOR will be the arithmetic
mean of the rates quoted by four major banks in the Euro-zone, as selected
by the calculation agent, after consultation with us, at approximately
11:00 a.m. (Brussels time), on the applicable interest reset date for
loans in euro to leading European banks for a period of time equivalent to
the index maturity specified in the applicable pricing supplement
commencing on that interest reset date in a principal amount not less than
the equivalent of U.S.$1 million in euro.
- If the banks so selected by the calculation agent are not quoting as
mentioned in the previous bullet point, the EURIBOR rate in effect for the
applicable period will be the same as EURIBOR for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest will be the initial interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
FEDERAL FUNDS RATE NOTES
Federal funds rate notes will bear interest at the interest rates specified
in the federal funds rate notes and in the applicable pricing supplement. Those
interest rates will be based on the federal funds rate and any spread and/or
spread multiplier and will be subject to the minimum interest rate and the
maximum interest rate, if any.
The "federal funds rate" means, for any interest determination date, the
rate on that date for federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" as displayed on Bridge Telerate, Inc., or any
successor service, on page 120 or any other page as may replace the applicable
page on that service, which is commonly referred to as "Telerate Page 120."
The following procedures will be followed if the federal funds rate cannot
be determined as described above:
- If the above rate is not published by 9:00 a.m., New York City time, on
the calculation date, the federal funds rate will be the rate on that
interest determination date as published in the H.15 Daily Update under
the heading "Federal Funds/Effective Rate."
- If that rate is not yet published in either H.15(519) or the H.15 Daily
Update by 3:00 p.m., New York City time, on the calculation date, the
calculation agent will determine the federal funds rate to be the
arithmetic mean of the rates for the last transaction in overnight federal
funds by each of
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three leading brokers of federal funds transactions in The City of New
York selected by the calculation agent, after consultation with us, prior
to 9:00 a.m., New York City time, on that interest determination date.
- If the brokers selected by the calculation agent are not quoting as
mentioned above, the federal funds rate relating to that interest
determination date will remain the federal funds rate for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest rate.
LIBOR NOTES
LIBOR notes will bear interest at the interest rates specified in the LIBOR
notes and in the applicable pricing supplement. That interest rate will be based
on London interbank offered rate, which is commonly referred to as "LIBOR," and
any spread and/or spread multiplier and will be subject to the minimum interest
rate and the maximum interest rate, if any.
The calculation agent will determine "LIBOR" for each interest determination
date as follows:
- As of the interest determination date, LIBOR will be either:
- if "LIBOR Reuters" is specified in the applicable pricing supplement,
the arithmetic mean of the offered rates for deposits in the index
currency having the index maturity designated in the applicable pricing
supplement, commencing on the second London banking day immediately
following that interest determination date, that appear on the
Designated LIBOR Page, as defined below, as of 11:00 a.m., London time,
on that interest determination date, if at least two offered rates
appear on the Designated LIBOR Page; except that if the specified
Designated LIBOR Page, by its terms provides only for a single rate,
that single rate will be used; or
- if "LIBOR Telerate" is specified in the applicable pricing supplement,
the rate for deposits in the index currency having the index maturity
designated in the applicable pricing supplement, commencing on the
second London banking day immediately following that interest
determination date or, if pounds sterling is the index currency,
commencing on that interest determination date, that appears on the
Designated LIBOR Page at approximately 11:00 a.m., London time, on that
interest determination date.
- If (1) fewer than two offered rates appear and "LIBOR Reuters" is
specified in the applicable pricing supplement, or (2) no rate appears and
the applicable pricing supplement specifies either (x) "LIBOR Telerate" or
(y) "LIBOR Reuters" and the Designated LIBOR Page by its terms provides
only for a single rate, then the calculation agent will request the
principal London offices of each of four major reference banks in the
London interbank market, as selected by the calculation agent after
consultation with us, to provide the calculation agent with its offered
quotation for deposits in the index currency for the period of the index
maturity specified in the applicable pricing supplement commencing on the
second London banking day immediately following the interest determination
date or, if pounds sterling is the index currency, commencing on that
interest determination date, to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on that interest determination
date and in a principal amount that is representative of a single
transaction in that index currency in that market at that time.
- If at least two quotations are provided, LIBOR determined on that interest
determination date will be the arithmetic mean of those quotations. If
fewer than two quotations are provided, LIBOR will be determined for the
applicable interest reset date as the arithmetic mean of the rates quoted
at approximately 11:00 a.m., London time, or some other time specified in
the applicable pricing supplement, in the applicable principal financial
center for the country of the index currency on that interest reset date,
by three major banks in that principal financial center selected by the
calculation agent, after consultation with us, for loans in the index
currency to leading European banks, having
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the index maturity specified in the applicable pricing supplement and in a
principal amount that is representative of a single transaction in that
index currency in that market at that time.
- If the banks so selected by the calculation agent are not quoting as
mentioned in the previous bullet point, LIBOR in effect for the applicable
period will be the same as LIBOR for the immediately preceding interest
reset period, or, if there was no interest reset period, the rate of
interest payable will be the initial interest rate.
The "index currency" means the currency specified in the applicable pricing
supplement as the currency for which LIBOR will be calculated, or, if the euro
is substituted for that currency, the index currency will be the euro. If that
currency is not specified in the applicable pricing supplement, the index
currency will be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable pricing supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable index currency or its designated successor, or (b) if
"LIBOR Telerate" is designated in the applicable pricing supplement, the display
on Bridge Telerate Inc., or any successor service, on the page specified in the
applicable pricing supplement, or any other page as may replace that page on
that service, for the purpose of displaying the London interbank rates of major
banks for the applicable index currency.
If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
pricing supplement, LIBOR for the applicable index currency will be determined
as if LIBOR Telerate were specified, and, if the U.S. dollar is the index
currency, as if Page 3750, had been specified.
PRIME RATE NOTES
Prime rate notes will bear interest at the interest rates specified in the
prime rate notes and in the applicable pricing supplement. That interest rate
will be based on the prime rate and any spread and/or spread multiplier, and
will be subject to the minimum interest rate and the maximum interest rate, if
any.
The "prime rate" means, for any interest determination date, the rate on
that date as published in H.15(519) under the heading "Bank Prime Loan."
The following procedures will be followed if the prime rate cannot be
determined as described above:
- If the rate is not published prior to 9:00 a.m., New York City time, on
the calculation date, then the prime rate will be the rate on that
interest determination date as published in H.15 Daily Update under the
heading "Bank Prime Loan."
- If the rate is not published prior to 3:00 p.m., New York City time, on
the calculation date in either H.15(519) or the H.15 Daily Update, then
the calculation agent will determine the prime rate to be the arithmetic
mean of the rates of interest publicly announced by each bank that appears
on the Reuters Screen USPRIME 1 Page, as defined below, as that bank's
prime rate or base lending rate as in effect for that interest
determination date.
- If fewer than four rates appear on the Reuters Screen USPRIME 1 Page for
that interest determination date, the calculation agent will determine the
prime rate to be the arithmetic mean of the prime rates quoted on the
basis of the actual number of days in the year divided by 360 as of the
close of business on that interest determination date by at least three
major banks in The City of New York selected by the calculation agent,
after consultation with us.
- If the banks selected are not quoting as mentioned above, the prime rate
will remain the prime rate for the immediately preceding interest reset
period, or, if there was no interest reset period, the rate of interest
payable will be the initial interest rate.
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"Reuters Screen USPRIME 1 Page" means the display designated as page
"USPRIME 1" on the Reuters Monitor Money Rates Service, or any successor
service, or any other page as may replace the USPRIME 1 Page on that service for
the purpose of displaying prime rates or base lending rates of major United
States banks.
TREASURY RATE NOTES
Treasury rate notes will bear interest at the interest rates specified in
the Treasury rate notes and in the applicable pricing supplement. That interest
rate will be based on the Treasury rate and any spread and/or spread multiplier
and will be subject to the minimum interest rate and the maximum interest rate,
if any.
"Treasury rate" means:
- the rate from the auction held on the applicable interest determination
date, which we refer to as the "auction," of direct obligations of the
United States, which are commonly referred to as "Treasury Bills," having
the index maturity specified in the applicable pricing supplement as that
rate appears under the caption "INVESTMENT RATE" on the display on Bridge
Telerate, Inc., or any successor service, on page 56 or any other page as
may replace page 56 on that service, which we refer to as "Telerate Page
56," or page 57 or any other page as may replace page 57 on that service,
which we refer to as "Telerate Page 57,"
- if the rate described in the first bullet point is not published by
3:00 p.m., New York City time, on the calculation date, the bond
equivalent yield of the rate for the applicable Treasury Bills as
published in the H.15 Daily Update, or other recognized electronic source
used for the purpose of displaying the applicable rate, under the caption
"U.S. Government Securities/Treasury Bills/ Auction High,"
- if the rate described in the second bullet point is not published by
3:00 p.m., New York City time, on the related calculation date, the bond
equivalent yield of the auction rate of the applicable Treasury Bills,
announced by the United States Department of the Treasury,
- in the event that the rate referred to in the third bullet point is not
announced by the United States Department of the Treasury, or if the
auction is not held, the bond equivalent yield of the rate on the
applicable interest determination date of Treasury Bills having the index
maturity specified in the applicable pricing supplement published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market,"
- if the rate referred to in the fourth bullet point is not so published by
3:00 p.m., New York City time, on the related calculation date, the rate
on the applicable interest determination date of the applicable Treasury
Bills as published in H.15 Daily Update, or other recognized electronic
source used for the purpose of displaying the applicable rate, under the
caption "U.S. Government Securities/Treasury Bills/Secondary Market,"
- if the rate referred to in the fifth bullet point is not so published by
3:00 p.m., New York City time, on the related calculation date, the rate
on the applicable interest determination date calculated by the
calculation agent as the bond equivalent yield of the arithmetic mean of
the secondary market bid rates, as of approximately 3:30 p.m., New York
City time, on the applicable interest determination date, of three primary
United States government securities dealers, which may include the agent
or its affiliates, selected by the calculation agent, for the issue of
Treasury Bills with a remaining maturity closest to the index maturity
specified in the applicable pricing supplement, or
- if the dealers selected by the calculation agent are not quoting as
mentioned in the sixth bullet point, the Treasury rate for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest rate.
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The "bond equivalent yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <C> <C>
D X N
Bold Equivalent Yield = -------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest is
being calculated.
CMT RATE NOTES
CMT rate notes will bear interest at the interest rates specified in the CMT
rate notes and in the applicable pricing supplement. That interest rate will be
based on the CMT rate and any spread and/or spread multiplier and will be
subject to the minimum interest rate and the maximum interest rate, if any.
The "CMT rate" means, for any interest determination date, the rate
displayed on the Designated CMT Telerate Page, as defined below, under the
caption "... Treasury Constant Maturities... Federal Reserve Board Release
H.15... Mondays Approximately 3:45 p.m.," under the column for the Designated
CMT Maturity Index, as defined below, for:
(1) the rate on that interest determination date, if the Designated CMT
Telerate Page is 7051; and
(2) the week or the month, as applicable, ended immediately preceding
the week in which the related interest determination date occurs, if the
Designated CMT Telerate Page is 7052.
The following procedures will be followed if the CMT rate cannot be
determined as described above:
- If that rate is no longer displayed on the relevant page, or if not
displayed by 3:00 p.m., New York City time, on the related calculation
date, then the CMT rate will be the Treasury Constant Maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519).
- If the rate described in the immediately preceding sentence is no longer
published, or if not published by 3:00 p.m., New York City time, on the
related calculation date, then the CMT rate will be the Treasury Constant
Maturity rate for the Designated CMT Maturity Index or other United States
Treasury rate for the Designated CMT Maturity Index on the interest
determination date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of
the Treasury that the calculation agent determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and published
in the relevant H.15(519).
- If the information described in the immediately preceding sentence is not
provided by 3:00 p.m., New York City time, on the related calculation
date, then the calculation agent will determine the CMT rate to be a yield
to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 p.m., New York City time, on
the interest determination date, reported, according to their written
records, by three leading primary United States government securities
dealers, which we refer to as a "reference dealer," in The City of New
York, which may include an agent or other affiliates of ours, selected by
the calculation agent as described in the following sentence. The
calculation agent will select five reference dealers, after consultation
with us, and will eliminate the highest quotation or, in the event of
equality, one of the highest, and the lowest quotation or, in the event of
equality, one of the lowest, for the most recently issued direct
noncallable fixed rate obligations of the United States, which are
commonly referred to as "Treasury notes," with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to
maturity of not less than that Designated CMT Maturity Index minus one
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year. If two Treasury notes with an original maturity as described above
have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury note with the shorter
remaining term to maturity will be used.
- If the calculation agent cannot obtain three Treasury notes quotations as
described in the immediately preceding sentence, the calculation agent
will determine the CMT rate to be a yield to maturity based on the
arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the interest determination
date of three reference dealers in The City of New York, selected using
the same method described in the immediately preceding sentence, for
Treasury notes with an original maturity equal to the number of years
closest to but not less than the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity Index
and in an amount of at least $100,000,000.
- If three or four (and not five) of the reference dealers are quoting as
described above, then the CMT rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of those
quotes will be eliminated.
- If fewer than three reference dealers selected by the calculation agent
are quoting as described above, the CMT rate will be the CMT rate for the
immediately preceding interest reset period, or, if there was no interest
reset period, the rate of interest payable will be the initial interest
rate.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc.,
or any successor service, on the page designated in the applicable pricing
supplement or any other page as may replace that page on that service for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no page is specified in the applicable pricing supplement, the Designated CMT
Telerate Page will be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities, which is either 1, 2, 3, 5, 7, 10, 20 or 30 years,
specified in an applicable pricing supplement for which the CMT rate will be
calculated. If no maturity is specified in the applicable pricing supplement,
the Designated CMT Maturity Index will be two years.
NOTES LINKED TO COMMODITY PRICES, SINGLE SECURITIES, BASKETS OF SECURITIES OR
INDICES
Nabisco may issue notes with the principal amount payable on any principal
payment date and/or the amount of interest payable on any interest payment date
determined by reference to one or more commodity prices, securities of entities
not affiliated with us, a basket of those securities or an index or indices of
those securities. These notes may include other terms, which will be specified
in the relevant pricing supplement.
CURRENCY-LINKED NOTES
Nabisco may issue notes with the principal amount payable on any principal
payment date and/or the amount of interest payable on any interest payment date
to be determined by reference to the value of one or more currencies as compared
to the value of one or more other currencies, which we refer to as
"currency-linked notes." The pricing supplement will specify the following:
- information as to the one or more currencies to which the principal amount
payable on any principal payment date or the amount of interest payable on
any interest payment date is linked or indexed;
- the currency in which the face amount of the currency-linked note is
denominated, which we refer to as the "denominated currency;"
- the currency in which principal on the currency-linked note will be paid,
which we refer to as the "payment currency;"
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- the interest rate per annum and the dates on which Nabisco will make
interest payments;
- specific historic exchange rate information and any currency risks
relating to the specific currencies selected; and
- additional tax considerations, if any.
The denominated currency and the payment currency may be the same currency
or different currencies. Interest on currency-linked notes will be paid in the
denominated currency.
REDEMPTION AND REPURCHASE OF NOTES
OPTIONAL REDEMPTION BY NABISCO. The pricing supplement will indicate the
terms of our option to redeem (or "call") the notes if any. Nabisco will mail a
notice of redemption to each holder by first-class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption,
or within the redemption notice period designated in the applicable pricing
supplement, to the address of each holder as that address appears upon the books
maintained by the paying agent and such notice will specify the redemption date,
the amount to be redeemed and the redemption price. The notes, except for
amortizing notes, will not be subject to any sinking fund.
REPAYMENT AT OPTION OF HOLDER. If applicable, the pricing supplement
relating to each note will indicate that the holder has the option to have
Nabisco repay the note (or to "put" the note to Nabisco) on a date or dates
specified prior to its maturity date. The repayment price will be equal to 100%
of the principal amount of the note, together with accrued interest to the date
of repayment. For notes issued with original issue discount, the pricing
supplement will specify the amount payable upon repayment.
For Nabisco to repay a note, the paying agent must receive at least 15 days
but not more than 30 days prior to the repayment date:
- the note with the form entitled "Option to Elect Repayment" on the reverse
of the note duly completed; or
- a telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange, or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States
setting forth the name of the holder of the note, the principal amount of
the note, the principal amount of the note to be repaid, the certificate
number or a description of the tenor and terms of the note, a statement
that the option to elect repayment is being exercised and a guarantee that
the note to be repaid, together with the duly completed form entitled
"Option to Elect Repayment" on the reverse of the note, will be received
by the paying agent not later than the fifth business day after the date
of that telegram, telex, facsimile transmission or letter. However, the
telegram, telex, facsimile transmission or letter will only be effective
if that note and form duly completed are received by the paying agent by
the fifth business day after the date of that telegram, telex, facsimile
transmission or letter.
Except in the case of renewable notes, exercise of the repayment option by
the holder of a note will be irrevocable. The holder may exercise the repayment
option for less than the entire principal amount of the note but, in that event,
the principal amount of the note remaining outstanding after repayment must be
an authorized denomination.
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SPECIAL REQUIREMENTS FOR OPTIONAL REPAYMENT OF GLOBAL NOTES. If a note is
represented by a global note, the Depositary or the Depositary's nominee will be
the holder of the note and therefore will be the only entity that can exercise a
right to repayment. In order to ensure that the Depositary's nominee will timely
exercise a right to repayment of a particular note, the beneficial owner of the
note must instruct the broker or other direct or indirect participant through
which it holds an interest in the note to notify the Depositary of its desire to
exercise a right to repayment. Different firms have different cut-off times for
accepting instructions from their customers and, accordingly, each beneficial
owner should consult the broker or other direct or indirect participant through
which it holds an interest in a note in order to ascertain the cut-off time by
which an instruction must be given in order for timely notice to be delivered to
the Depositary.
OPEN MARKET PURCHASES BY NABISCO. Nabisco may purchase notes at any price
in the open market or otherwise. Notes so purchased by Nabisco may, at the
discretion of Nabisco, be held or resold or surrendered to the relevant trustee
for cancellation.
REPLACEMENT OF NOTES
At the expense of the holder, we will replace any notes that become
mutilated, destroyed, lost or stolen or are apparently destroyed, lost or
stolen. The mutilated notes must be delivered to the applicable trustee, the
paying agent and the registrar, in the case of registered notes, or satisfactory
evidence of the destruction, loss or theft of the notes must be delivered to us,
the paying agent, the registrar, in the case of registered notes, and the
applicable trustee. At the expense of the holder, an indemnity that is
satisfactory to us, the principal paying agent, the registrar, in the case of
registered notes, and the applicable trustee may be required before a
replacement note will be issued.
THE DEPOSITARY
The Depository Trust Company, New York, New York will be designated as the
depositary for any registered global security. Each registered global security
will be registered in the name of Cede & Co., the Depositary's nominee.
The Depositary has advised Nabisco as follows: the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, 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. The Depositary holds securities deposited with it by its
participants, and it facilitates the settlement of transactions among its
participants in those securities through electronic computerized book-entry
changes in participants' accounts, eliminating the need for physical movement of
securities certificates. The Depositary's participants include securities
brokers and dealers, including the agents, banks, trust companies, clearing
corporations and other organizations, some of whom and/or their representatives
own the Depositary. Access to the Depositary'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.
The Depositary's management is aware that some computer applications,
systems, and the like for processing data that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." The Depositary has informed participants and other members
of the financial community that it has developed and is implementing a program
so that its computer applications and other systems, in ensuring the timely
payment of distributions, including principal and income payments, to security
holders, book-entry deliveries, and settlement of trades within the Depositary,
continue to function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally, the
Depositary's plan includes a testing phase, which is
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expected to be completed within appropriate time frames. However, the
Depositary's ability to perform its services properly is also dependent upon
other parties, including but not limited to issuers and their agents, as well as
third party vendors from whom the Depositary licenses software and hardware, and
third party vendors on whom the Depositary relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. The Depositary has informed the financial
community that it is contacting, and will continue to contact, third party
vendors from whom the Depositary acquires services to impress upon them the
importance of those services being Year 2000 compliant, and to determine the
extent of their efforts for Year 2000 remediation and, as appropriate, testing
of their services. In addition, the Depositary is in the process of developing
contingency plans as it deems appropriate.
According to the Depositary, the foregoing information relating to the
Depositary has been provided to the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
UNITED STATES FEDERAL TAXATION
In the opinion of Davis Polk & Wardwell, counsel to Nabisco, the following
summary accurately describes the material United States federal income tax
consequences of the ownership and disposition of the notes. This summary is
based on the Internal Revenue Code of 1986, which we refer to as the "Code," and
existing and proposed Treasury regulations, revenue rulings, administrative
interpretations and judicial decisions, all as currently in effect and all of
which are subject to change, possibly with retroactive effect. Except as
specifically set forth in this section, this summary deals only with notes
purchased by a United States holder, as defined below, on original issuance and
held as capital assets within the meaning of Section 1221 of the Code. It does
not discuss all of the tax consequences that may be relevant to you in light of
your particular circumstances or to holders subject to special rules, such as
persons other than United States holders, insurance companies, dealers in
securities or foreign currencies, persons holding the notes as part of a hedging
transaction, "straddle," conversion transaction, or other integrated
transaction, or United States holders whose functional currency, as defined in
Section 985 of the Code, is not the U.S. dollar. Persons considering the
purchase of the notes should consult with their own tax advisors concerning the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign jurisdiction.
As used in this section, the term "United States holder" means a beneficial
owner of a note who or that is:
- a citizen or resident of the United States for United States federal
income tax purposes;
- a corporation, including an entity treated as a corporation for United
States federal income tax purposes, created or organized in or under the
laws of the United States, any state of the United States or the District
of Columbia; or
- an estate or trust the income of which is subject to United States federal
income taxation regardless of its source (or a trust that was treated as a
United States person before August 20, 1996 and that has elected to
continue to be so treated).
If a partnership holds notes, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships holding notes should consult their tax
advisers.
PAYMENTS OF INTEREST ON THE NOTES
Interest paid on a note will generally be taxable to a United States holder
as ordinary interest income at the time it accrues or is received, in accordance
with the United States holder's method of tax accounting.
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Special rules governing the treatment of interest paid with respect to
discount notes (as defined below), including notes issued for an amount less
than their stated redemption price at maturity, notes that mature one year or
less from their date of issuance and notes that pay interest annually that are
issued less than 15 calendar days before an interest payment date, are described
under "Discount Notes" below. Additional rules applicable to discount notes that
are denominated in a specified currency other than the U.S. dollar, or have
payments of interest or principal determined by reference to the value of one or
more currencies or currency units other than the U.S. dollar, are described
under "Foreign Currency Notes" below.
DISCOUNT NOTES
A note that has an "issue price" that is less than its "stated redemption
price at maturity" will generally be considered to have been issued bearing
original issue discount for United States federal income tax purposes, which we
refer to as "OID," unless the difference is less than a specified de minimis
amount described below. Such notes are referred to below as "discount notes."
The issue price of each note in an issue of notes issued for cash generally will
equal the first price at which a substantial amount of those notes is sold to
the public, ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers. The issue price of a note does not change even if part of the issue
is subsequently sold at a different price. The stated redemption price at
maturity of a note is the total of all payments required to be made under the
note other than "qualified stated interest" payments. The term "qualified stated
interest" is defined as stated interest that is unconditionally payable in cash
or property, other than debt instruments of the issuer, at least annually at a
single fixed rate of interest. In addition, qualified stated interest generally
includes, among other things, stated interest on a variable rate debt instrument
that is unconditionally payable at least annually at a single qualified floating
rate or a rate that is determined using a single fixed formula that is based on
objective financial or economic information. A rate is a qualified floating rate
if variations in the rate can reasonably be expected to measure contemporaneous
fluctuations in the cost of newly borrowed funds in the currency in which the
note is denominated. The applicable pricing supplement will state whether a
particular issue of notes will constitute an issue of discount notes. Unless
specified in the applicable pricing supplement, notes that bear interest at a
floating rate will not be discount notes.
No payment of interest on a note that matures one year or less from its date
of issuance will be considered qualified stated interest and accordingly that
note will be treated as a discount note.
A United States holder of a discount note is required to include qualified
stated interest regarding the note in income at the time it is received or
accrued, in accordance with the holder's method of accounting. In addition,
United States holders of discount notes that mature more than one year from the
date of issuance will be required to include OID in income for United States
federal income tax purposes as it accrues, in accordance with a constant yield
method based on a compounding of interest, before the receipt of cash payments
attributable to that income. Under this method, United States holders of
discount notes will generally be required to include in income increasingly
greater amounts of OID in successive accrual periods. Special rules will apply
for calculating OID for initial short or final accrual periods.
Notes that pay interest annually that are issued less than 15 calendar days
before an interest payment date may be treated as discount notes. United States
holders intending to purchase those notes should refer to the applicable pricing
supplement.
If the amount of OID with respect to a note is less than the specified de
minimis amount, generally 0.0025 multiplied by the product of the stated
redemption price at maturity and the number of complete years to maturity (or,
in the case of amortizing notes, the weighted average years to maturity), the
amount of OID is treated as zero and all stated interest is treated as qualified
stated interest. United States holders of notes with a de minimis amount of OID
will generally include this amount in income, as capital gain, as principal
payments are made on the notes.
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Discount notes may be redeemable prior to maturity at the option of Nabisco,
which we refer to as a "call option," and/or repayable prior to maturity at the
option of the holder, which we refer to as a "put option." Discount notes
containing either or both of these features may be subject to rules that differ
from the general rules discussed above. Holders intending to purchase discount
notes with either or both of these features should carefully examine the
applicable pricing supplement and should consult with their own tax advisors
with respect to either or both of these features since the tax consequences with
respect to OID will depend, in part, on the particular terms and the particular
features of the purchased note.
In general, a United States holder who uses the cash method of tax
accounting and who holds a discount note that matures one year or less from the
date of its issuance, which we refer to as a "short-term discount note," is not
required to accrue OID for United States federal income tax purposes unless the
holder elects to do so. United States holders who report income for United
States federal income tax purposes on the accrual method and other holders,
including banks and dealers in securities, are required to include OID, or
alternatively acquisition discount, on those short-term discount notes on a
straight-line basis, unless an election is made to accrue the OID according to a
constant yield method based on daily compounding. In the case of a United States
holder who is not required, and does not elect, to include OID in income
currently, any gain realized on the sale, exchange or retirement of a short-term
discount note will be ordinary interest income to the extent of the OID accrued
on a straight-line basis or, if elected by the holder, under the constant yield
method through the date of sale, exchange or retirement. In addition,
non-electing United States holders who are not subject to the current inclusion
requirement described in the second sentence of this paragraph may be required
to defer the deduction of all or a portion of any interest paid on indebtedness
incurred to purchase short-term discount notes until OID is included in the
holder's income.
United States holders are permitted to elect to include all interest on a
note using the constant yield method. For this purpose, interest includes stated
interest, acquisition discount, OID, de minimis OID, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. Special rules apply to elections made with
respect to notes with amortizable bond premium or market discount and United
States holders considering this election should consult their own tax advisors.
The election cannot be revoked without the approval of the Internal Revenue
Service.
MARKET DISCOUNT AND PREMIUM
If a United States holder purchases a note, other than a discount note, for
an amount that is less than its issue price or, with respect to a subsequent
purchaser, its stated redemption price at maturity or, in the case of a discount
note, its adjusted issue price, the amount of the difference will be treated as
"market discount" for United States federal income tax purposes, unless this
difference is less than a specified DE MINIMIS amount.
Under the market discount rules of the Code, a United States holder will be
required to treat any partial principal payment or, in the case of a discount
note, any payment that does not constitute qualified stated interest, on, or any
gain realized on the sale, exchange, retirement or other disposition of, a note
as ordinary income to the extent of the lesser of:
- the amount of the payment or realized gain, or
- the market discount that has not previously been included in income and is
treated as having accrued on the note at the time of payment or
disposition.
If the note is disposed of in a nontaxable transaction, other than a
nonrecognition transaction described in Code Section 1276(c), the amount of gain
realized on the disposition for purposes of the market discount rules will be
determined as if the holder had sold the note at its then fair market value.
Market discount will be considered to accrue ratably during the period from the
date of acquisition to the
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maturity date of the note, unless the United States holder elects to accrue on
the basis of a constant interest rate.
A United States holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a note until the maturity of the note or its
earlier disposition, except for certain nonrecognition transactions. A United
States holder may elect to include market discount in income currently as it
accrues, on either a ratable or a constant interest rate basis, in which case
the rules described above regarding the treatment as ordinary income of gain
upon the disposition of the note and upon the receipt of cash payments on the
note and regarding the deferral of interest deductions will not apply.
Generally, this currently included market discount is treated as ordinary
interest. The election will apply to all debt instruments acquired by the United
States holder on or after the first day of the first taxable year to which that
election applies and may be revoked only with the consent of the Internal
Revenue Service.
A United States holder who purchases a discount note for an amount that is
greater than its adjusted issue price, but less than or equal to the sum of all
amounts payable on the note after the purchase date, other than payments of
qualified stated interest, will be considered to have purchased the note at an
"acquisition premium" within the meaning of the Code. Under the acquisition
premium rules, the amount of OID which the holder must include in its gross
income with respect to the note for any taxable year, or for the part of a
taxable year in which the United States holder holds the discount note, will be
reduced by a fraction the numerator of which is the excess of the cost of the
note over its adjusted issue price and the denominator of which is the excess of
the sum of all amounts payable on the note after the purchase date, other than
qualified stated interest, over the note's adjusted issue price.
A United States holder who purchases a discount note for an amount that is
greater than the sum of all amounts payable on the note after the purchase date,
other than qualified stated interest, will be considered to have purchased that
note at a "premium" within the meaning of the OID regulations. In that case, the
holder is not required to include any OID in gross income.
If a United States holder purchases a note, other than an exchangeable note,
for an amount that is greater than the amount payable at maturity, or on the
earlier call date, in the case of a note that is redeemable at the option of
Nabisco, that holder will be considered to have purchased the note with
"amortizable bond premium" equal in amount to that excess, and may elect, in
accordance with applicable Code provisions, to amortize this premium, using a
constant yield method over the remaining term of the note and to offset interest
otherwise required to be included in income in respect of the note during any
taxable year by the amortized amount of that excess for the taxable year.
However, if the note may be optionally redeemed after the United States holder
acquires it at a price in excess of its stated redemption price at maturity,
special rules would apply that could result in a deferral of the amortization of
some bond premium until later in the term of the note. Any election to amortize
bond premium applies to all debt instruments acquired by the United States
holder on or after the first day of the first taxable year to which the election
applies and may be revoked only with the consent of the Internal Revenue
Service.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a note, a United States holder will
generally recognize taxable gain or loss equal to the difference between the
amount realized on the sale, exchange or retirement and the United States
holder's adjusted tax basis in the note. For these purposes, the amount realized
on the sale, exchange or retirement of a note does not include any amount
attributable to accrued interest or, in the case of a discount note, accrued
qualified stated interest, which will be taxable as interest unless previously
taken into account. A United States holder's adjusted tax basis in a note
generally will equal the cost of the note to that holder, increased by the
amounts of any market discount, OID and de minimis OID previously included in
income by the holder with respect to the note and reduced by any
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amortized bond premium and any principal payments received by the United States
holder and, in the case of a discount note, by the amounts of any other payments
that do not constitute qualified stated interest.
Subject to the discussion under "Foreign Currency Notes" below, gain or loss
recognized on the sale, exchange or retirement of a note will be capital gain or
loss, except to the extent of any accrued market discount or, in the case of a
short-term discount note, any accrued OID which the United States holder has not
previously included in income, and will generally be long-term capital gain or
loss if at the time of sale, exchange or retirement the note has been held for
more than one year. The deductibility of capital losses is subject to
limitations.
A United States holder generally will not recognize gain or loss upon an
election to extend, the revocation of an election to extend, or the failure to
terminate the automatic extension of, the maturity of a renewable note.
FOREIGN CURRENCY NOTES
The following discussion summarizes the material United States federal
income tax consequences to a United States holder of the ownership and
disposition of notes that are denominated in a specified currency other than the
U.S. dollar or the payments of interest or principal on which are payable in one
or more currencies or currency units other than the U.S. dollar, which we refer
to as "foreign currency notes."
The rules discussed below will generally not apply to a United States holder
that enters into a "qualified hedging transaction." A qualified hedging
transaction is an integrated economic transaction consisting of a qualifying
debt instrument, such as a foreign currency note, and a "section 1.988-5(a)
hedge," as defined in section 1.988-5(a)(4) of the Treasury regulations.
Generally, an integrated economic transaction, if identified as an integrated
economic transaction by either the United States holder or the Internal Revenue
Service, is treated as a single transaction for United States federal income tax
purposes, the effect of which is to treat a holder as owning a synthetic debt
instrument that is subject to rules applicable to discount notes. The rules with
respect to a qualified hedging transaction are extremely complex and special
rules may apply in certain circumstances, and persons that are considering
hedging the currency risk are urged to consult with their own tax advisors with
respect to the application of these rules.
A United States holder who uses the cash method of accounting and who
receives a payment of interest with respect to a foreign currency note, other
than a discount note, except to the extent any qualified stated interest is
received, on which OID is accrued on a current basis, will be required to
include in income the U.S. dollar value of the foreign currency payment,
determined on the date that payment is received, regardless of whether the
payment is in fact converted to U.S. dollars at that time, and that U.S. dollar
value will be the United States holder's tax basis in the foreign currency.
A United States holder, to the extent the above paragraph is not applicable,
will be required to include in income the U.S. dollar value of the amount of
interest income, including OID or market discount and reduced by premium,
acquisition premium and amortizable bond premium to the extent applicable, that
has accrued and is otherwise required to be taken into account with respect to a
foreign currency note during an accrual period. The U.S. dollar value of the
accrued income will be determined by translating the income at the average rate
of exchange for the accrual period or, with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. The average rate of exchange for the accrual period, or partial
period, is the simple average of the exchange rates for each business day of the
period, or may be calculated using another method if this method is reasonably
derived and consistently applied. A United States holder may elect to determine
the U.S. dollar value of this accrued income by translating the income at the
spot rate on the last day of the interest accrual period, or, in the case of a
partial accrual period, the spot rate on the last day of the taxable year, or,
if the date of receipt is within five business days of the last day of the
interest accrual period, the spot rate on the date of receipt. The United States
holder will recognize ordinary gain or loss with respect to accrued interest
income on the date this income is received. The amount of ordinary gain or loss
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recognized will equal the difference between the U.S. dollar value of the
foreign currency payments received, determined on the date this payment is
received, in respect of the accrual period and the U.S. dollar value of interest
income that has accrued during this accrual period, as determined above.
A United States holder will have a tax basis in any foreign currency
received on the sale, exchange or retirement of a foreign currency note equal to
the U.S. dollar value of that foreign currency, determined at the time of the
sale, exchange or retirement. Any gain or loss realized by a United States
holder on a sale or other disposition of foreign currency, including its
exchange for U.S. dollars or its use to purchase foreign currency notes, will be
ordinary income or loss.
A United States holder's tax basis in a foreign currency note, and the
amount of any subsequent adjustment to the United States holder's tax basis,
will be the U.S. dollar value of the foreign currency amount paid for the
foreign currency note, or of the foreign currency amount of the adjustment,
determined on the date of the purchase or adjustment. A United States holder who
converts U.S. dollars to a foreign currency and immediately uses that currency
to purchase a foreign currency note denominated in the same currency ordinarily
will not recognize gain or loss in connection with this conversion and purchase.
However, a United States holder who purchases a foreign currency note with
previously owned foreign currency will recognize ordinary income or loss in an
amount equal to the difference, if any, between the holder's tax basis in the
foreign currency and the U.S. dollar fair market value of the foreign currency
note on the date of purchase. For purposes of determining the amount of any gain
or loss recognized by a United States holder on the sale, exchange or retirement
of a foreign currency note, the amount realized upon the sale, exchange or
retirement will be the U.S. dollar value of the foreign currency received,
determined on the date of sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a foreign
currency note will be ordinary income or loss to the extent it is attributable
to fluctuations in currency exchange rates. Gain or loss attributable to
fluctuations in exchange rates will equal the difference between the U.S. dollar
value of the foreign currency principal amount of that note, determined on the
date that payment is received or that note is disposed of, including any payment
with respect to accrued interest, and the U.S. dollar value of the foreign
currency principal amount of the note, determined on the date the United States
holder acquired the note, and the U.S. dollar value of accrued interest
received, determined by translating that interest at the average exchange rate
for the accrual period. This foreign currency principal amount of a foreign
currency note generally equals the United States holder's purchase price in
units of foreign currency. This foreign currency gain or loss will be recognized
only to the extent of the total gain or loss recognized by a United States
holder on the sale, exchange or retirement of the foreign currency note.
The source of exchange gain or loss will be determined by reference to the
residence of the holder or the "qualified business unit" of the holder on whose
books the note is properly reflected. Any gain or loss recognized by a United
States holder in excess of the foreign currency gain or loss will be capital
gain or loss, except to the extent of any accrued market discount or, in the
case of a short-term discount note, any accrued OID, and generally will be
long-term capital gain or loss if the holding period of the foreign currency
note exceeds one year. The deductibility of capital losses is subject to
limitations.
Any gain or loss that is treated as ordinary income or loss, as described
above, generally will not be treated as interest income or expense except to the
extent provided by administrative pronouncements of the Internal Revenue
Service.
OID, market discount, premium, acquisition premium and amortizable bond
premium of a foreign currency note are to be determined in the relevant foreign
currency. The amount of the discount or premium that is taken into account
currently under general rules applicable to notes other than foreign currency
notes is to be determined for any accrual period in the relevant foreign
currency and then translated into the United States holder's functional currency
on the basis of the average exchange rate in effect during the accrual period.
The amount of accrued market discount, other than market discount that is
included in income on a current basis, taken into account upon the receipt of
any partial principal
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payment or upon the sale, exchange, retirement or other disposition of a foreign
currency note will be the U.S. dollar value of the accrued market discount
determined on the date of receipt of that partial principal payment or upon the
sale, exchange, retirement or other disposition.
Any loss realized on the sale, exchange or retirement of a foreign currency
note with amortizable bond premium by a United States holder who has not elected
to amortize the premium will be a capital loss to the extent of the bond
premium. If this election is made, amortizable bond premium taken into account
on a current basis will reduce interest income in units of the relevant foreign
currency. Exchange gain or loss is realized on the amortized bond premium with
respect to any period by treating the bond premium amortized in the period as a
return of principal.
The Code and the applicable regulations do not discuss the tax consequences
of an issuance of a foreign currency note that is denominated in, or has
payments of interest or principal determined by reference to, a so-called
hyperinflationary currency or more than one currency. On March 17, 1992,
Treasury regulations were proposed regarding debt instruments denominated in a
hyperinflationary currency. These proposed regulations are proposed to be
effective for transactions entered into on or after the date these regulations
are finalized.
A foreign currency note will be considered to be a debt instrument
denominated in a hyperinflationary currency if it is denominated in a specified
currency of a country in which there is cumulative inflation of at least 100%
during the 36 calendar month period ending on the last day of the preceding
calendar year. Under the proposed regulations, a United States holder who
acquires a foreign currency note that is denominated in a hyperinflationary
currency will recognize gain or loss for its taxable year determined by
reference to the change in exchange rates between the first day of the taxable
year, or the date the note was acquired, if later, and the last day of the
taxable year or the date the note was disposed of, if earlier. This gain or loss
will reduce or increase the amount of interest income otherwise required to be
taken into account. Special rules apply to the extent the loss exceeds the
amount of interest income otherwise taken into account.
If so specified in an applicable Pricing Supplement relating to a foreign
currency note, Nabisco may have the option to make all payments of principal and
interest scheduled after the exercise of such option in a currency other than
the specified currency. The United States federal income tax treatment of these
notes, which we refer to as "dual currency notes," is uncertain. Treasury
regulations currently in effect do not address the tax treatment of dual
currency notes. A recent IRS announcement states that the IRS is considering
issuing proposed regulations that would
- apply the principles contained in regulations governing contingent debt
instruments to dual currency notes in the "predominant currency" of the
dual currency notes, and
- apply the rules discussed above with respect to foreign currency notes
with OID for the translation of interest and principal into U.S. dollars.
The IRS states that these concepts are still under consideration. Persons
considering the purchase of dual currency notes should carefully examine the
applicable Pricing Supplement and should consult their own tax advisers
regarding the United States federal income tax consequences of the holding and
disposition of such notes.
NOTES LINKED TO CURRENCIES, COMMODITY PRICES, SINGLE SECURITIES, BASKETS OF
SECURITIES OR INDICES
The United States federal income tax consequences to a United States holder
of the ownership and disposition of notes that have principal or interest
determined by reference to commodity prices, securities of entities unaffiliated
with Nabisco, baskets of those securities or indices will vary depending upon
the exact terms of the notes and related factors. Prospective investors in these
notes should carefully examine the applicable Pricing Supplement and should
consult their own tax advisers regarding the United States federal income tax
consequences of the holding and disposition of the notes.
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BACKUP WITHHOLDING
Certain "backup" withholding and information reporting requirements may
apply to payments on, and to proceeds of the sale before maturity of, the notes.
Nabisco, its agent, a broker, the relevant trustee or any paying agent, as the
case may be, will generally withhold tax at a rate of 31% from any payments to a
United States holder who fails to furnish his taxpayer identification number,
i.e. social security number or employer identification number, to certify that
the holder is not subject to backup withholding, or to otherwise comply with the
applicable requirements of the backup withholding rules. Some holders,
including, among others, corporations, are generally not subject to the backup
withholding and information reporting requirements.
Any amounts withheld under the backup withholding rules from a payment to a
United States holder would be allowed as a refund or a credit against the
holder's United States federal income tax as long as the required information is
furnished to the Internal Revenue Service.
On October 6, 1997, the Treasury Department issued new regulations which
make modifications to the withholding, backup withholding and information
reporting rules described above. The new regulations attempt to unify
certification requirements and modify reliance standards. The new regulations
will generally be effective for payments made after December 31, 2000, subject
to transition rules. Prospective investors are urged to consult their own tax
advisors regarding the new regulations.
THE 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.
PLAN OF DISTRIBUTION
Nabisco is offering the medium term notes on a continuing basis through
Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, Chase
Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Smith Barney Inc. and Warburg Dillon Read LLC, which we
refer to individually as an "agent" and, together, as the "agents," who have
agreed to use reasonable efforts to solicit offers to purchase these securities.
Nabisco will have the sole right to accept offers to purchase these securities
and may reject any offer in whole or in part. Each agent may reject, in whole or
in part, any offer it solicited to purchase securities. Nabisco will pay an
agent, in connection with sales of these securities resulting from a
solicitation that agent made or an offer to purchase that agent received, a
commission ranging from .125% to .750% of the initial offering price of the
securities to be sold, depending upon the maturity of the securities. Nabisco
and the agent will negotiate commissions for securities with a maturity of
30 years or greater at the time of sale.
Nabisco may also sell these securities to an agent as principal for its own
account at discounts to be agreed upon at the time of sale. That agent may
resell these securities to investors and other purchasers at a fixed offering
price or at prevailing market prices, or prices related thereto at the time of
resale or otherwise, as that agent determines and as we will specify in the
applicable pricing supplement. An agent may offer the securities it has
purchased as principal to other dealers. That agent may sell the securities to
any dealer at a discount and, unless otherwise specified in the applicable
pricing supplement, the discount allowed to any dealer will not be in excess of
the discount that agent will receive from Nabisco. After the initial public
offering of securities that an agent is to resell on a fixed public offering
price basis, the agent may change the public offering price, concession and
discount.
Each of the agents may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933. Nabisco and the agents have agreed to indemnify
each other against certain liabilities, including
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liabilities under the Securities Act, or to contribute to payments made in
respect of those liabilities. Nabisco has also agreed to reimburse the agents
for specified expenses.
Unless otherwise provided in the applicable pricing supplement, Nabisco does
not intend to apply for the listing of these securities on a national securities
exchange, but has been advised by the agents that they intend to make a market
in these securities, as applicable laws and regulations permit. The agents are
not obligated to do so, however, and the agents may discontinue making a market
at any time without notice. No assurance can be given as to the liquidity of any
trading market for these securities.
In order to facilitate the offering of these securities, the agents may
engage in transactions that stabilize, maintain or otherwise affect the price of
these securities. Specifically, the agents may overallot in connection with any
offering of these securities, creating a short position in these securities for
their own accounts. In addition, to cover overallotments or to stabilize the
price of these securities, the agents may bid for, and purchase, these
securities in the open market. Finally, in any offering of these securities
through a syndicate of underwriters, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing these
securities in the offering if the syndicate repurchases previously distributed
securities in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of these securities above independent market levels. The agents are
not required to engage in these activities, and may end any of these activities
at any time.
Concurrently with the offering of these securities through the agents, we
may issue other debt securities under the indenture referred to in this
prospectus supplement. Any debt securities issued by Nabisco under the indenture
will reduce the aggregate offering price of the notes that may be offered under
this prospectus supplement, any pricing supplement and the accompanying
prospectus.
Some of the Agents or their affiliates have from time to time provided, and
may in the future provide, investment banking and general financing and banking
services to us and our affiliates.
LEGAL MATTERS
James A. Kirkman III, Nabisco's Executive Vice President, General Counsel
and Secretary, and Davis Polk & Wardwell will pass upon the validity of the
notes for Nabisco. Mr. Kirkman holds common stock and options to purchase the
common stock of Nabisco Holdings, Nabisco's parent. His common stock and options
in the aggregate account for less than 0.1% of the outstanding shares of all
classes of Nabisco Holdings' common stock. Simpson Thacher & Bartlett will pass
upon the validity of the notes for the agents.
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