<PAGE>
Filed Pursuant Rule No. 424(b)(5)
PROSPECTUS SUPPLEMENT Registration No. 333-15401
Registration No. 33-63823
(TO PROSPECTUS DATED DECEMBER 6, 1996)
$500,000,000
LOGO
MEDIUM-TERM NOTES, SERIES F
DUE FROM 9 MONTHS TO 15 YEARS FROM THE DATE OF ISSUE
--------------
Comdisco, Inc. (the "Company") may offer from time to time its Medium-Term
Notes, Series F (the "Notes"), up to $500,000,000 in aggregate principal
amount (or gross proceeds in the case of Notes issued at an original issue
discount), or the equivalent in currencies or currency units other than United
States dollars ("Foreign Currency"). Each Note will mature on a date from 9
months to 15 years from the date of its issue as selected by the initial
purchaser and agreed to by the Company as set forth on the face thereof and
specified in a Pricing Supplement ("Pricing Supplement") to be delivered with
this Prospectus Supplement to the purchaser of such Notes. Unless otherwise
indicated in the applicable Pricing Supplement, the Notes will be issued only
in fully registered form and in denominations of $1,000 and any integral
multiples thereof. Unless otherwise indicated in the applicable Pricing
Supplement, the Notes will bear interest at fixed or floating rates ("Fixed
Rate Notes" and "Floating Rate Notes", respectively). The interest rates or
the method of determining the interest rates, the issue prices, and the stated
maturity for each Note will be established by the Company at the date of
issuance of such Note and will be indicated in the applicable Pricing
Supplement. Interest rates and interest rate formulas are subject to change by
the Company but no such change will affect any Note already issued or which
the Company has agreed to issue. Each Note may be subject to redemption at the
option of the Company or repayment at the option of the Holder, prior to its
stated maturity, as set forth on the face thereof and in the applicable
Pricing Supplement.
Fixed Rate Notes, unless otherwise provided in the applicable Pricing
Supplement, will pay interest on each March 1 and September 1 and at maturity
or, if applicable, upon redemption or optional repayment. The applicable
Pricing Supplement will specify whether a Floating Rate Note is a Regular
Floating Rate Note, a Floating Rate/Fixed Rate Note or an Inverse Floating
Rate Note and whether the rate of interest thereon will be determined by
reference to one or more of the Commercial Paper Rate, the Federal Funds Rate,
LIBOR, the Prime Rate, the Treasury Rate, the Eleventh District Cost of Funds
Rate, or the CMT Rate or any other interest rate basis or formula (each, an
"Interest Rate Basis"), and may be adjusted by a Spread and/or Spread
Multiplier, as such terms are defined herein. Floating Rate Notes, unless
otherwise specified in the applicable Pricing Supplement, will pay interest on
the dates set forth in the applicable Pricing Supplement, and at maturity, or,
if applicable, upon redemption or optional repayment. The Notes may also be
issued with original issue discount, and such Notes may or may not pay any
interest. See "Description of the Notes".
If the Notes are to be denominated in a Foreign Currency ("Foreign Currency
Notes"), the provisions with respect thereto will be set forth in a prospectus
supplement to be delivered with this Prospectus Supplement ("Foreign Currency
Prospectus Supplement"), and will include currency exchange rate information
and material tax considerations.
Each Note will be represented by either a global note (a "Global Note"),
registered in the name of The Depository Trust Company (the "Depositary") or
its nominee (each such Note represented by a Global Note referred to herein as
a "Book-Entry Note") and deposited with the Depositary, or a certificate
issued in definitive form ("Certificated Note"), as set forth in the
applicable Pricing Supplement. An interest in a Book-Entry Note will be shown
only on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. The Company currently
intends to issue all Notes which can be so issued as Book-Entry Notes. See
"Description of the Notes--Book-Entry Notes".
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SEE "RISK FACTORS" ON PAGE S-2 FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES OFFERED HEREBY.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
AGENTS' DISCOUNTS
PRICE TO AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(1)(2) COMPANY(1)(2)(3)
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<S> <C> <C> <C>
Per Note........................................ 100% .125%-.625% 99.375%-99.875%
- -----------------------------------------------------------------------------------------------------------
Total(4)........................................ $500,000,000 $625,000-$3,125,000 $496,875,000-$499,375,000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
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(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
NationsBanc Capital Markets, Inc., Salomon Brothers Inc, Smith Barney
Inc., or UBS Securities LLC, (the "Agents"), may purchase the Notes, as
principal, from the Company for resale to one or more investors or other
purchasers at varying prices related to prevailing market prices at the
time of resale, to be determined by such Agent, or, if so specified in an
applicable Pricing Supplement, for resale at a fixed public offering
price. Unless otherwise specified in the applicable Pricing Supplement,
any Note sold to an Agent as principal will be purchased by such Agent at
a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to an agency sale of a Note of
identical maturity. If agreed to by the Company and an Agent, the Agent
may utilize its reasonable efforts on an agency basis to solicit offers to
purchase Notes at 100% of the principal amount thereof, unless otherwise
specified in an applicable Pricing Supplement. The Company will pay a
commission to each Agent, ranging from .125% to .625% of the principal
amount of any Note, depending upon the maturity of the Note, sold through
such Agent on behalf of the Company Commissions with respect to Foreign
Currency Notes may differ, as set forth in the Foreign Currency Prospectus
Supplement. No commission will be payable on any sales made directly by
the Company.
(2) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) Assuming Notes are issued at 100% of principal amount and before deducting
expenses payable by the Company estimated at $400,000.
(4) In U.S. dollars or, for Notes denominated in foreign currencies or
currency units, the equivalent thereof based on the prevailing exchange
rates at the respective times such Notes are first offered.
The Notes are being offered on a continuing basis by the Company to or
through the Agents. The Company may also sell Notes to any Agent acting as
principal for resale to one or more investors or other purchasers. The Company
also may sell Notes directly to one or more investors or other purchasers on
its own behalf in those jurisdictions where it is authorized to do so and
through one or more other agents identified in any applicable Pricing
Supplement. The Company reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Company or the Agent which solicits any
offer may reject such offer to purchase Notes, in whole or in part. See "Plan
of Distribution".
--------------
MERRILL LYNCH & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
UBS
SECURITIES
--------------
The date of this Prospectus Supplement is December 6, 1996.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY AN AGENT AS PRINCIPAL
ON A FIXED OFFERING PRICE BASIS, SUCH AGENT MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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RISK FACTORS
This Prospectus Supplement does not describe all of the risks of an
investment in Notes, whether resulting from such Notes being denominated or
payable in or determined by reference to a currency or composite currency
other than United States dollars or to one or more interest rate, currency or
other indices or formulas, or otherwise. The Company and the Agents disclaim
any responsibility to advise prospective investors of such risks as they exist
at the date of this Prospectus Supplement or as they change from time to time.
Prospective investors should consult their own financial and legal advisors as
to the risks entailed by an investment in such Notes and the suitability of
investing in such Notes in light of their particular circumstances. Such Notes
are not an appropriate investment for investors who are unsophisticated with
respect to foreign currency transactions or transactions involving the
applicable interest rate index or currency index or other indices or formulas.
Prospective investors should carefully consider, among other factors, the
matters described below.
STRUCTURE RISKS
An investment in Notes indexed, as to principal, premium, if any, and/or
interest, if any, to one or more interest rate, currency (including exchange
rates and swap rates between currencies or composite currencies), or other
indices or formulas, either directly or inversely, entails significant risks
that are not associated with similar investments in a conventional fixed rate
or floating rate debt security. Such risks include, without limitation, the
possibility that such indices or formulas may be subject to significant
changes, that no interest will be payable in respect of such Notes or will be
payable at a rate lower than one applicable to a conventional fixed rate or
floating rate debt security issued by the Company at the same time, that
repayment of the principal and/or premium, if any, in respect of such Notes
may occur at times other than that expected by the Holders, and that the
Holders could lose all or a substantial portion of principal and/or premium,
if any, payable with respect to such Notes on the Maturity Date (as defined
under "Description of the Notes--General"). Such risks depend on a number of
interrelated factors, including economic, financial and political events, over
which the Company has no control. Additionally, if the formula used to
determine the amount of principal, premium, if any, and/or interest, if any,
payable with respect to such Notes contains a multiplier or leverage factor,
the effect of any change in the applicable index or indices or formula or
formulas will be magnified. In recent years, values of certain indices and
formulas have been highly volatile and such volatility may be expected to
continue in the future. Fluctuations in the value of any particular index or
formula that have occurred in the past are not necessarily indicative,
however, of fluctuations that may occur in the future.
The secondary market, if any, for Notes will be affected by a number of
factors independent of the creditworthiness of the Company and the value of
the applicable index or indices or formula or formulas including the
complexity and volatility of each such index or formula, the method of
calculating the principal, premium, if any, and/or interest, if any, in
respect of such Notes, the time remaining to the maturity of such Notes, the
outstanding amount of such Notes, any redemption features of such Notes, the
amount of other debt securities linked to such index or formula and the level,
direction and volatility of market interest rates generally. Such factors also
will affect the market value of such Notes. Additionally, certain Notes may be
designed for specific investment objectives or strategies and, therefore, may
have a more limited secondary market and experience more price volatility than
conventional debt securities. Investors may not be able to sell Notes readily
or at prices that will enable investors to realize their anticipated yield. No
investor should purchase Notes unless such investor understands and is able to
bear the risk that certain Notes may not be readily saleable, that the value
of Notes will fluctuate over time and that such fluctuations may be
significant.
S-2
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EFFECT OF OPTIONAL REDEMPTION
Any optional redemption feature of the Notes might affect the market value of
such Notes. Since the Company may be expected to redeem the Notes when
prevailing interest rates are relatively low, an investor might not be able to
reinvest the redemption proceeds at an effective interest rate as high as the
interest rate on such Notes.
NO ESTABLISHED TRADING MARKET
The Notes will not have an established trading market when issued and there
can be no assurance of a secondary market for the Notes or the continued
liquidity of such market if one develops. See "Plan of Distribution."
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a debt security denominated and
payable in United States dollars. Such risks include, without limitation, the
possibility of significant changes in the rate of exchange between the United
States dollar and the applicable Foreign Currency and the possibility of the
imposition or modification of exchange controls by the applicable governments
or monetary authorities. Such risks generally depend on factors over which the
Company has no control, such as economic, financial and political events and
the supply and demand for the applicable currencies or composite currencies. In
addition, if the formula used to determine the amount of principal, premium, if
any, and/or interest, if any, payable with respect to Foreign Currency Notes
contains a multiplier or leverage factor, the effect of any change in the
applicable currencies or composite currencies will be magnified. The exchange
rate between the U.S. dollar and a Foreign Currency is at any moment a result
of the supply and demand for such currency or the currencies comprising such
composite currency, and changes in the rate result over time from the
interaction of many factors, among which are rates of inflation, interest rate
levels, balance of payments and the extent of governmental surpluses or
deficits in the countries of such currencies. These factors are in turn
sensitive to the monetary, fiscal and trade policies pursued by such
governments and those of other countries important to international trade and
finance. In recent years, rates of exchange between the United States dollar
and Foreign Currencies have been highly volatile and such volatility may be
expected 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 in the future. Depreciation of the Foreign Currency in which a
Foreign Currency Note is payable against the United States dollar would result
in a decrease in the United States dollar-equivalent yield of such Foreign
Currency Note, in the United States dollar-equivalent value of the principal
and premium, if any, payable on the Maturity Date of such Foreign Currency Note
and, generally, in the United States dollar-equivalent market value of such
Foreign Currency Note and, in certain circumstances could result in a loss to
the investor on a United States dollar-equivalent basis.
Governments or monetary authorities have from time to time imposed, and may
in the future impose or revise, exchange controls that could affect exchange
rates as well as the availability of a Foreign Currency at the time of payment
of principal of, premium, if any, or interest, if any, on, a Foreign Currency
Note. There can be no assurances that exchange controls will not restrict or
prohibit payments of principal, and premium, if any, or interest, if any, in
any Foreign Currency. In addition to the risks associated with relative
currency valuations discussed above, the imposition of exchange controls might
impact the liquidity of any Note denominated in, or the value of which is
linked to, a foreign currency. Even if there are no actual exchange controls,
it is possible that the Foreign Currency for such Note would not be available
to the Company when payments on such Note are due because of circumstances
beyond the control of the Company. In that event, the Company will make
required payments in U.S. dollars on the basis described herein.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are residents of the United States, and the Company
and the Agents disclaim any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect
S-3
<PAGE>
the purchase, holding or receipt of payments of principal of, premium, if any,
and interest, if any, on, the Notes. Persons who are not residents of the
United States should consult their own legal advisors with regard to such
matters.
The Foreign Currency Prospectus Supplement, or any applicable Pricing
Supplement relating to Foreign Currency Notes, will contain information
concerning historical exchange rates for the applicable Foreign Currency
against the U.S. dollar or other relevant currency, a description of the
currency or currencies and any exchange controls affecting such currency or
currencies. The information contained therein concerning exchange rates is
furnished as a matter of information only and should not be regarded as
indicative of the range of or trends in fluctuations in currency exchange rates
that may occur in the future.
CREDIT RATINGS
Any credit ratings assigned to the Company's medium-term note program may not
reflect the potential impact of all risks related to structure and other
factors on the market value of the Notes. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risks entailed
by an investment in the Notes and the suitability of such Notes in light of
their particular circumstances.
FOREIGN CURRENCY NOTES
If any Note is not to be denominated in U.S. dollars, the applicable Pricing
Supplement or Foreign Currency Prospectus Supplement will specify the currency
or currencies, including composite currencies such as the ECU, in which the
principal and interest with respect to such Note are to be paid, along with any
other terms relating to Foreign Currency Notes. See "Special Provisions
Relating to Foreign Currency Notes".
S-4
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities"
and "Senior Debt Securities") supplements, and to the extent, if any,
inconsistent therewith replaces, the description of the general terms and
provisions of the Debt Securities and Senior Debt Securities set forth in the
Prospectus, to which description reference is made. Unless otherwise specified
in the applicable Pricing Supplement, the Notes will have the terms and
conditions set forth below. Capitalized terms not defined herein have the
meanings assigned to such terms in the Prospectus.
GENERAL
The Notes offered hereby will be issued under an Indenture, dated as of
December 1, 1995 (the "Senior Indenture"), between the Company and Yasuda Bank
and Trust Company (U.S.A.), as Trustee. The Notes constitute a single series
of Debt Securities for purposes of the Senior Indenture, currently limited to
$500,000,000 in aggregate principal amount (or gross proceeds in the case of
Notes issued at an original issue discount), or its equivalent in one or more
foreign or composite currencies, subject to reduction as a result of future
sales of the Company's Debt Securities described in the accompanying
Prospectus. The foregoing limit, however, may be increased by the Company if,
in the future, it determines to issue additional Notes. The Notes will be
offered by the Company under the Registration Statement on a continuing basis
and each Note will mature on any day from nine months to 15 years from the
date of its issue (each, a "Stated Maturity Date"), as selected by the initial
purchaser of such Note and agreed to by the Company, as specified in the
applicable Pricing Supplement. Unless otherwise specified in an applicable
Pricing Supplement, interest-bearing Notes will either be Fixed Rate Notes or
Floating Rate Notes as specified in the applicable Pricing Supplement. Notes
may be issued at significant discounts from their principal amount payable at
the Stated Maturity Date (or on any prior date on which the principal or an
installment of principal of a Note becomes due and payable, whether by the
declaration of acceleration, call for redemption at the option of the Company,
repayment at the option of the holder, or otherwise (the Stated Maturity Date
or such prior date, as the case may be, is herein referred to as the "Maturity
Date" with respect to the principal repayable on such date)), and some Notes
may not bear interest.
Unless otherwise specified in the applicable Pricing Supplement, each Note,
other than a Foreign Currency Note, will be issuable only in fully registered
form as a Book-Entry Note or Certificated Note in denominations of $1,000 and
any integral multiples thereof. The authorized denominations of Foreign
Currency Notes will be indicated in the applicable Pricing Supplement.
Interest rates offered by the Company with respect to the Notes may differ
depending upon the aggregate principal amount of Notes subject to purchase in
any single transaction. Payments of principal of and interest on the Notes
will be payable in U.S. dollars, except as may otherwise be provided in the
applicable Pricing Supplement and Foreign Currency Prospectus Supplement.
References herein to "$" and "dollars" are references to U.S. dollars.
Except as set forth in the Prospectus under "Description of Debt
Securities--Global Securities" and below under "Book-Entry Notes", Book-Entry
Notes will not be issuable in certificated form. It is currently contemplated
that only Notes that are denominated and payable in U.S. dollars will be
issued as Book-Entry Notes.
On November 21, 1996, the Company issued $250 million of its 6 3/8% Notes
Due November 30, 2001 under the Registration Statement (of which this
Prospectus Supplement and accompanying Prospectus form a part) pursuant to the
Senior Indenture. As of the date of this Prospectus Supplement, $200 million
in Debt Securities will remain unallocated under the Registration Statement.
The Senior Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued upon the authorization of the Company's Board
of Directors. The Notes are not secured by any lien but rank on a parity with
other unsecured and unsubordinated indebtedness of the Company. The Company
also has outstanding other unsecured indebtedness, as well as secured
indebtedness. As of September 30, 1996, the Company had approximately $2.9
billion in unsecured and unsubordinated indebtedness which will rank on a
parity with the Notes, and $1.2 billion in outstanding secured indebtedness.
S-5
<PAGE>
Unless otherwise indicated in an applicable Pricing Supplement, payments of
principal of and any premium and interest on any Note, other than Book-Entry
Notes, will be payable, the transfer of the Notes, other than Book-Entry
Notes, will be registrable, and Notes, other than Book-Entry Notes, will be
exchangeable for Notes bearing identical terms and provisions, at the office
of the Trustee in The City of New York designated for such purpose which on
the date of this Prospectus Supplement is 666 Fifth Avenue, 8th Floor, New
York, New York 10103; provided, however, that, at the option of the Company,
payment of interest, other than interest payable at maturity (or on the date
of redemption or repayment, if a Note is redeemed or repaid by the Company
prior to maturity), may be made by check mailed to the address of the person
entitled thereto as shown on the Security Register. Payment of principal and
interest at maturity or upon redemption will be made in immediately available
funds. Notwithstanding the foregoing, a Holder of $10,000,000 or more in
aggregate principal amount of U.S. dollar denominated Notes having the same
Interest Payment Date shall upon written request be entitled to receive
payments of interest (other than at maturity or upon redemption or repayment)
by wire transfer of immediately available funds. With respect to payments of
interest on Book-Entry Notes and transfers of Book-Entry Notes and exchanges
of permanent Global Notes representing Book-Entry Notes, see "Book-Entry
Notes" below.
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If so agreed upon by the Company and
the purchaser thereof, a Note will be redeemable on and after a date fixed at
the time of sale and specified in the applicable Pricing Supplement (the
"Initial Redemption Date") either in whole or in part, at the option of the
Company, on written notice given not more than 60 nor less than 30 days prior
to the date of redemption by the Company to the Holder thereof in accordance
with the provisions of the Senior Indenture. On and after the Initial
Redemption Date, if any, such Note will be redeemable in increments of $1,000
(or the minimum denomination specified in the applicable Pricing Supplement)
at the option of the Company at a redemption price, including any premium, as
described below, determined in accordance with the following paragraph (the
"Redemption Price"), together with interest thereon. If less than all Notes
are to be redeemed, the terms of the Notes to be so redeemed shall be selected
by the Company. If the Company elects to redeem any Note in part only, the
remaining principal amount of such Note will be an authorized denomination of
such Note. If no Initial Redemption Date is specified in the applicable
Pricing Supplement, such Note will not be redeemable prior to its Stated
Maturity Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
Redemption Price for each Note subject to redemption shall initially be equal
to a certain percentage (the "Initial Redemption Percentage") of the principal
amount of such Note to be redeemed and shall decline at each anniversary of
the Initial Redemption Date with respect to such Note by a percentage (the
"Annual Redemption Percentage Reduction") of the principal amount to be
redeemed until the Redemption Price is 100% of such principal amount. The
Initial Redemption Percentage and any Annual Redemption Percentage Reduction
with respect to each Note subject to redemption prior to maturity will be
fixed at the time of sale and set forth in the Note and any applicable Pricing
Supplement.
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be subject to repayment by the Company at the option of the
Holders thereof in accordance with the terms of the Notes on the optional
repayment date or dates, if any, as agreed upon by the Company and the
purchasers at the time of sale and specified in the applicable Pricing
Supplement (the "Optional Repayment Dates"). If no Optional Repayment Date is
specified with respect to a Note, such Note will not be repayable by the
Company at the option of the Holder thereof prior to the Stated Maturity Date.
On any Optional Repayment Date with respect to a Note, such Note will be
repayable in whole or in part in increments of $1,000 (or the minimum
denomination specified in the applicable Pricing Supplement) provided that any
remaining principal amount of such Note will be an authorized denomination of
such Note. Unless otherwise specified in the applicable Pricing Supplement,
the repayment price for any Note to be repaid means an amount equal to the sum
of (i) 100% of the unpaid principal amount or the portion thereof to be repaid
plus (ii) accrued but unpaid interest
S-6
<PAGE>
to the date of repayment. Information with respect to the repayment price for
Indexed Notes (as defined below) shall be set forth in the applicable Pricing
Supplement. For any Note to be repaid, such Note must be received, together
with the form thereon entitled "Option to Elect Repayment" duly completed, by
the Trustee at its office (or such other address of which the Company shall
from time to time notify the Holders) not more than 60 nor less than 20 days
prior to the date of repayment. Exercise of such repayment option by the
Holder will be irrevocable.
Only the Depositary may exercise the repayment option in respect of Global
Notes representing Book-Entry Notes. Accordingly, Beneficial Owners (as
defined below) of Global Notes that desire to have all or any portion of the
Book-Entry Notes represented by such Global Notes repaid must instruct the
Participant (as defined below) through which they own their interest to direct
the Depositary to exercise the repayment option on their behalf by delivering
the related Global Note and duly completed election form to the Trustee as
aforesaid. In order to ensure that such Global Note and election form are
received by the Trustee on a particular day, the applicable Beneficial Owner
must so instruct the Participant through which it owns its interest before
such Participant's deadline for accepting instructions for that day. Different
firms may have different deadlines for accepting instructions from their
customers. Accordingly, Beneficial Owners should consult the Participants
through which they own their interest for the respective deadlines for such
Participants. All instructions given to Participants from Beneficial Owners of
Global Notes relating to the option to elect repayment shall be irrevocable.
In addition, at the time such instructions are given, each such Beneficial
Owner shall cause the Participant through which it owns its interest to
transfer such Beneficial Owner's interest in the Global Note or Notes
representing the related Book-Entry Notes, on the Depositary's records, to the
Trustee. See "--Book-Entry Notes".
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other
securities laws or regulation in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
INTEREST AND INTEREST RATES
Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest at either (a) a fixed rate of
interest per annum (a "Fixed Rate Note"), which may be zero, or (b) a floating
rate (a "Floating Rate Note"), determined by reference to an interest rate
formula, plus or minus the Spread, if any, and/or multiplied by the Spread
Multiplier, if any, in the manner specified in the applicable Pricing
Supplement and in the Note.
Each Note will bear interest from the date of issue, or, except as otherwise
specified herein with respect to certain Floating Rate Notes, from the most
recent Interest Payment Date to which interest on such Note has been paid or
duly provided for at the annual rate, or at a rate calculated pursuant to an
interest rate formula, stated therein and in the applicable Pricing
Supplement, until the principal thereof is paid or made available for payment.
Interest will be payable on each Interest Payment Date and at maturity (or, if
applicable, on the applicable Redemption Date or Optional Repayment Date, if a
Note is redeemed or repaid by the Company prior to maturity). Interest will be
payable to the person in whose name a Note (or any Predecessor Security, as
defined in the Senior Indenture) is registered at the close of business on the
Regular Record Date next preceding each Interest Payment Date; provided,
however, interest payable at maturity (or, if applicable, on the applicable
Redemption Date or Optional Repayment Date, if a Note is redeemed or repaid by
the Company prior to maturity) will be payable to the person to whom principal
shall be payable. The first payment of interest on any Note issued between a
Regular Record Date and an Interest Payment Date will be made on the Interest
Payment Date following the next succeeding Regular Record Date to the
registered owner on such next succeeding Regular Record Date. Interest rates
and interest rate bases are subject to change by the Company from time to time
but no such change will affect any Note already issued or to which an offer to
purchase has been accepted by the Company. The Interest Payment Dates and the
Regular Record Dates for Fixed Rate Notes shall be as
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described below under "Fixed Rate Notes". The Interest Payment Dates for
Floating Rate Notes shall be as indicated in the applicable Pricing Supplement
and in such Note, and unless otherwise specified in the applicable Pricing
Supplement, each Regular Record Date for a Floating Rate Note will be the
fifteenth calendar day (whether or not a Business Day) next preceding each
Interest Payment Date.
Unless otherwise specified in an applicable Pricing Supplement, all
percentages resulting from any calculation will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point, with five one-
millionths of a percentage point rounded upward (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or
.09876544) being rounded to 9.87654% (or .0987654)), and all amounts used in
or resulting from such calculation will be rounded, in the case of U.S.
dollars, to the nearest cent or, in the case of a currency other than U.S.
dollars, to the nearest unit (with one-half cent or unit being rounded
upward).
As used herein, unless otherwise specified in the applicable Pricing
Supplement, "Business Day" means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, that, with respect to Foreign Currency
Notes the payment of which is to be made in a Specified Currency other than
U.S. dollars, such day is also not a day on which banking institutions are
authorized or required by law, regulation or executive order to close in the
Principal Financial Center (as defined below) of the country issuing such
Specified Currency (or, in the case of the European Currency Unit ("ECU"), is
not a day designated as an ECU Non-Settlement Day on the display designated as
"ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by
the ECU Banking Association) or, if ECU Non-Settlement Days do not appear on
that page (and are not so designated), is not a day on which payments in ECU
cannot be settled in the international interbank market); provided, further,
that, with respect to Notes as to which LIBOR is an applicable Interest Rate
Basis, such day is also a London Business Day (as defined below). "London
Business Day" means a day on which dealings in the Index Currency (as defined
below) are transacted in the London interbank market.
A Floating Rate Note may also have either or both of the following as
specified in the applicable Pricing Supplement: (i) a maximum interest rate,
or ceiling, that may accrue during any interest period and (ii) a minimum
interest rate, or floor, that may accrue during any interest period. In
addition to any maximum interest rate that may apply to any Floating Rate
Note, the interest rate on Floating Rate Notes will in no event be higher than
the maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the annual
rate stated on the face thereof and in the applicable Pricing Supplement until
the principal thereof is paid in full or made available for payment. Unless
otherwise specified in the applicable Pricing Supplement, Interest Payment
Dates for the Fixed Rate Notes will be March 1 and September 1 of each year
and at maturity (or, if applicable, any Redemption Date or Optional Repayment
Date, if a Fixed Rate Note is redeemed or repaid by the Company prior to
maturity). The Regular Record Dates for such Notes will be the February 15 and
August 15 next preceding the March 1 and September 1 Interest Payment Dates.
The first payment of interest on any Fixed Rate Note originally issued between
a Regular Record Date and an Interest Payment Date will be made on the
Interest Payment Date following the next succeeding Regular Record Date to the
registered owner on such next succeeding Regular Record Date. Unless otherwise
specified in the applicable Pricing Supplement, interest on Fixed Rate Notes
will be computed and paid on the basis of a 360-day year consisting of twelve
30-day months. Interest payments on an Interest Payment Date will include
interest accrued from, and including, the immediately preceding Interest
Payment Date in respect of which interest has been paid (or from and including
the date of issue if no interest has been paid with respect to such Note) to,
but excluding, the next succeeding Interest Payment Date or Maturity Date, as
the case may be. Any payment of principal or interest required to be made on
an Interest Payment Date or at the stated maturity date of a Fixed Rate Note
(or, if applicable, the Redemption Date or Optional Repayment
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Date, if a Fixed Rate Note is redeemed or repaid by the Company prior to
maturity) which is not a Business Day need not be made on such day, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the Interest Payment Date or maturity date (or, if applicable, the
Redemption Date or Optional Repayment Date, if a Fixed Rate Note is redeemed
or repaid by the Company prior to maturity), as the case may be, and no
interest shall accrue for the period from and after such Interest Payment Date
or maturity date (or, if applicable, the Redemption Date or Optional Repayment
Date, if a Fixed Rate Note is redeemed or repaid by the Company prior to
maturity).
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing
Supplement will designate one or more of the following Interest Rate Bases as
applicable to the relevant Note: (a) the Commercial Paper Rate, in which case
the Note shall be a "Commercial Paper Rate Note", (b) the Federal Funds Rate,
in which case the Note shall be a "Federal Funds Rate Note", (c) LIBOR, in
which case the Note shall be a "LIBOR Note", (d) the Prime Rate, in which case
the Note shall be a "Prime Rate Note", (e) the Treasury Rate, in which case
the Note shall be a "Treasury Rate Note", (f) the Eleventh District Cost of
Funds Rate, in which case the Note shall be a "Eleventh District Cost of Funds
Rate Note", (g) the CMT Rate, in which case such Note will be a "CMT Rate
Note", or (h) such other interest rate basis or formula as is set forth in
such Pricing Supplement; provided, however, that with respect to a Floating
Rate/Fixed Rate Note, the interest rate commencing on the Fixed Rate
Commencement Date and continuing until maturity shall be the Fixed Interest
Rate, if such rate is specified in the applicable Pricing Supplement, or if no
such Fixed Interest Rate is so specified, the interest rate in effect thereon
on the Business Day immediately preceding the Fixed Rate Commencement Date.
In addition, the applicable Pricing Supplement will specify certain other
terms with respect to which such Floating Rate Note is being delivered,
including: whether such Floating Rate Note is a "Regular Floating Rate Note,"
a "Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate Note", the
Spread and/or Spread Multiplier, if any, the maximum or minimum interest rate
limitation, if any, the period to maturity of the instrument or obligation
with respect to which the Interest Basis or Bases will be calculated (the
"Index Maturity"), Initial Interest Rate, if any, Interest Payment Dates,
Fixed Rate Commencement Date, if any, Fixed Interest Rate, if applicable,
Regular Record Dates, Interest Reset Dates, Redemption Dates and Optional
Repayment Dates, and if one or more of the applicable Interest Rate Bases is
LIBOR, the Index Currency, if any, and the Designated LIBOR Page or the
Designated CMT Maturity Index and Designated CMT Telerate Page, respectively,
as such terms are defined below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," an "Inverse Floating Rate Note" or as having an
Addendum attached or having "Other/Additional Provisions" apply, in each
case relating to a different interest rate formula, such Floating Rate Note
will be designated as a "Regular Floating Rate Note" and, except as
described below or in the applicable Pricing Supplement, will bear interest
at the rate determined by reference to the applicable Interest Rate Basis
or Bases (a) plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any. Commencing on the
first Interest Reset Date, the rate at which interest on such Regular
Floating Rate Note shall be payable shall be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the
period, if any, from the date of issue to the first Interest Reset Date
will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the first Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period,
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if any, from the date of issue to the first Interest Reset Date will be the
Initial Interest Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date to the Maturity Date shall
be the Fixed Interest Rate, if such rate is specified in the applicable
Pricing Supplement or, if no such Fixed Interest Rate is so specified, the
interest rate in effect thereon on the Business Day immediately preceding
the Fixed Rate Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, the interest rate thereon will not be less than zero
percent. Commencing on the first Interest Reset Date, the rate at which
interest on such Inverse Floating Rate Note is payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period from the date of issue to the first Interest Reset
Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate
Note, and the "Spread Multiplier" is the percentage of the related Interest
Rate Basis or Bases by which such Interest Rate Basis or Bases will be
multiplied to determine the applicable interest rate on such Floating Rate
Note.
Notwithstanding the foregoing, if such Floating Rate is designated as having
an Addendum attached or "Other/Additional Provisions" apply as specified on
the face thereof, such Floating Rate Note shall bear interest in accordance
with the terms described in such Addendum or such "Other/Additional
Provisions" and the applicable Pricing Supplement.
Except as otherwise specified in the applicable Pricing Supplement and in
the applicable Floating Rate Note, or as provided below, interest on Floating
Rate Notes will be payable, in the case of Floating Rate Notes which are
reset: (i) daily, weekly or monthly, on the third Wednesday of each month or
on the third Wednesday of March, June, September and December of each year;
(ii) quarterly, on the third Wednesday of each March, June, September and
December of each year; (iii) semi-annually, on the third Wednesday of the two
months of each year specified in the Floating Rate Note and in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month
specified in the Floating Rate Note and in the applicable Pricing Supplement
(each an "Interest Payment Date"), and in each case, at its Maturity Date. If
any Interest Payment Date for any Floating Rate Note, other than an Interest
Payment Date occurring at a Maturity Date, would otherwise be a day that is
not a Business Day for such Floating Rate Note, the Interest Payment Date for
such Floating Rate Note shall be postponed to the next day that is a Business
Day for such Floating Rate Note, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding Business Day. If the Maturity
Date for any Floating Rate Note would otherwise be a day that is not a
Business Day for such Floating Rate Note, principal, premium, if any, and
interest payable for such Floating Rate Note will be paid on the next day that
is a Business Day with the same force and effect as if made on the Maturity
Date, and no interest on such payment will accrue for the period from and
after the Maturity Date to the date of payment or the next succeeding Business
Day.
The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semi-annually or annually or on such other specified basis (each,
an "Interest Reset Period") and the dates on which such rate of interest will
be reset (each, an "Interest Reset Date"). The Interest Reset Date will be,
unless otherwise specified in the applicable Pricing Supplement, in the case
of Floating Rate Notes which are reset daily, each Business Day; in the case
of Floating Rate Notes which are reset weekly, the Wednesday of each week
(with the exception of weekly reset Treasury Rate Notes which will be reset
the Tuesday of each week, except as specified below); in the case of Floating
Rate Notes which are reset monthly, the third Wednesday of each month (with
the exception of monthly reset Eleventh District Cost of Funds Rate Notes,
which will reset on the first calendar day of the month); in the case of
Floating
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Rate Notes which are reset quarterly, the third Wednesday of each March, June,
September and December; in the case of Floating Rate Notes which are reset
semi-annually, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes which
are reset annually, the third Wednesday of the month as specified in the
applicable Pricing Supplement; provided however, that, with respect to
Floating Rate/Fixed Rate Notes, the rate of interest thereon will not reset
after the applicable Fixed Rate Commencement Date.; and provided further, that
the interest rate in effect from the date of issue to the first Interest Reset
Date with respect to a Floating Rate Note (the "Initial Interest Rate") will
be as set forth in the applicable Pricing Supplement if such rate is
available. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day for such Floating Rate Note, the
Interest Reset Date for such Floating Rate Note shall be postponed to the next
succeeding Business Day with respect to such Note, except that if such Note is
a LIBOR Note, and the next succeeding Business Day falls in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (the
"Commercial Paper Interest Determination Date"), for a Federal Funds Rate Note
or any Floating Rate Note for which the interest rate is determined with
reference to the Federal Funds Rate (the "Federal Funds Interest Determination
Date"), or for a Prime Rate Note or any Floating Rate Note for which the
interest rate is determined with reference to the Prime Rate (the "Prime Rate
Interest Determination Date"), or for a CMT Rate Note, or any Floating Rate
Note for which the interest rate is determined with reference to the CMT Rate
(the "CMT Rate Interest Determination Date"), will be the second Business Day
preceding to the Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a LIBOR Note or any Floating Rate
Note for which the interest rate is determined with reference to LIBOR (the
"LIBOR Interest Determination Date") will be the second London Business Day
immediately preceding the Interest Reset Date with respect to such Note,
unless the Index Currency (as defined below) is British pounds sterling, in
which case the Interest Determination Date will be the applicable Interest
Reset Date. The Interest Determination Date pertaining to an Interest Reset
Date for an Eleventh District Cost of Funds Rate Note or any Floating Rate
Note for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (the "Eleventh District Cost of Funds Rate
Interest Determination Date") will be the last working day of the month
immediately preceding the applicable Interest Reset Date on which the Federal
Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the
Index (as defined below). The Interest Determination Date pertaining to an
Interest Reset Date for a Treasury Rate Note or any Floating Rate Note for
which the interest rate is determined with reference to the Treasury Rate (the
"Treasury Interest Determination Date") will be the day of the week on which
Treasury bills (as defined below) would normally be auctioned in the week in
which such Interest Reset Date falls. Treasury bills are usually sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be
the Treasury Interest Determination Date pertaining to the Interest Reset Date
occurring in the next succeeding week. If an auction date shall fall on a day
which would otherwise be an Interest Reset Date for a Treasury Rate Note, then
such Interest Reset Date shall instead be the first Business Day immediately
following such auction date. The Interest Determination Date pertaining to a
Floating Rate Note the interest rate of which is determined by reference to
two or more Interest Rate Bases will be the most recent Business Day which is
at least two Business Days prior to the applicable Interest Reset Date for
such Floating Rate Note on which each Interest Rate Basis is determinable.
Each Interest Rate Basis will be determined on such date, and the applicable
interest rate will take effect on the applicable Interest Reset Date.
Unless otherwise indicated in the Note and in the applicable Pricing
Supplement, interest payments on an Interest Payment Date for a Floating Rate
Note will include interest accrued from, and including, the next preceding
Interest Payment Date in respect of which interest has been paid (or from and
including the date of issue if no interest has been paid with respect to such
Floating Rate Note) to, but excluding, the next succeeding Interest Payment
Date or maturity (or, if applicable, the Redemption Date or Optional Repayment
Date if a Note is redeemed or repaid by the Company prior to maturity) as the
case may be. The interest for any period is
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calculated by multiplying the face amount of a Note by an accrued interest
factor. Such accrued interest factor is computed by adding the interest factor
for each day in the period for which interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day will be computed by dividing the interest rate applicable to
such day by 360, in the case of Notes for which the Interest Rate Basis of the
Commercial Paper Rate, Eleventh District Cost of Funds Rate, Federal Funds
Rate, LIBOR or the Prime Rate, or by the actual number of days in the year, in
the case of Notes for which the Interest Rate Basis of the CMT Rate or
Treasury Rate. Unless otherwise specified in an applicable Pricing Supplement,
the interest factor for Notes for which the interest rate is calculated with
reference to two or more Interest Rate Bases will be calculated in each period
in the same manner as if only one of the applicable Interest Rate Bases
applied as specified in the applicable Pricing Supplement and the Notes. The
interest rate in effect on each day will be (a) if such day is an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to such Interest Reset Date or, (b) if such day is not an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to the next preceding Interest Reset Date, subject in either case
to any maximum or minimum interest rate limitation referred to above and to
any adjustment by a Spread and/or a Spread Multiplier referred to above.
Unless otherwise provided in the applicable Pricing Supplement, the Trustee
will be the initial Calculation Agent with respect to the Notes and will
determine the interest rate for each Interest Reset Date as described below.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect and, if then determined,
the interest rate which will become effective on the next Interest Reset Date
with respect to such Floating Rate Note. Unless otherwise provided in the
applicable Pricing Supplement, the "Calculation Date", if applicable,
pertaining to any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or, if any such day
is not a Business Day, the next succeeding Business Day, or (ii) the Business
Day preceding the applicable Interest Payment Date or Maturity Date, as the
case may be (or, if applicable, on the Redemption Date or Optional Repayment
Date if a Note is redeemed or repaid by the Company prior to maturity).
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest at interest rates
calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, specified on the face of such Note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement, as such rate is published by the Board of Governors of the Federal
Reserve System in its weekly statistical release entitled "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication
("H.15(519)"), under the heading "Commercial Paper". In the event that such
rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to that Commercial Paper Interest Determination
Date, then the Commercial Paper Rate on that Commercial Paper Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper of the specified Index Maturity as published by the Federal Reserve Bank
of New York in its daily statistical release, entitled "Composite 3:30 P.M.
Quotations for U.S. Government Securities," or any successor publication
("Composite Quotations"), under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an
Index Maturity of 30 days or 90 days, respectively). If such rate is not yet
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on such Calculation Date, the Commercial Paper Rate for that
Commercial Paper Interest Determination Date will be calculated by the
Calculation Agent and will 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 Commercial
Paper Interest Determination Date, of three leading dealers of commercial
paper in The City of New York (which may include one or more of the Agents or
their respective affiliates) selected by the Calculation Agent (after
consultation with the Company), for commercial paper of the specified Index
Maturity
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placed for an industrial issuer whose bond rating is "AA", or the equivalent,
from a nationally recognized statistical rating agency; provided, however,
that if the dealers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate determined as of such
Commercial Paper Rate Interest Determination Date will be the Commercial Paper
Rate in effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Money Market D X 360 X
Yield = ------------ 100
360 - (D X
M)
where "D" refers to the applicable per annum 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.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest at interest rates calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, specified on the face of such Note and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on such date for U.S. dollar federal funds as published in
H.15(519) under the heading "Federal Funds (Effective)". If such rate is not
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Federal Funds Interest Determination Date, the Federal Funds Rate will
be the rate on such Federal Funds Interest Determination Date for U.S. dollar
federal funds as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If by 3:00 P.M., New York City time, on such
Calculation Date such rate on a Federal Funds Interest Determination Date is
not yet published in either H.15(519) or Composite Quotations, then the
Federal Funds Rate for such Federal Funds Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates for the last transaction in overnight United States dollar federal funds
arranged by three leading brokers of federal funds transactions in The City of
New York (which may include one or more of the Agents or their respective
affiliates) selected by the Calculation Agent (after consultation with the
Company) prior to 9:00 A.M., New York City time, on such Federal Funds
Interest Determination Date; provided, however, that if the brokers so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Federal Funds Rate determined as of such Federal Funds Interest
Determination Date will be the Federal Funds Rate in effect on such Federal
Funds Interest Determination Date.
LIBOR Notes
Each LIBOR Note will bear interest at interest rates calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified
on the face of such Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to any LIBOR Interest Determination Date, LIBOR will be
either: (A) if "LIBOR: Reuters" is specified on the face of such Note or in
the applicable Pricing Supplement, the arithmetic mean of offered rates
(unless the specified Designated LIBOR Page by its terms provides only for
a single rate, in which case such single rate shall be used) for deposits
in the Index Currency having the Index Maturity specified in the applicable
Pricing Supplement, commencing on the applicable Interest Reset Date, that
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appear (or, if only a single rate is required as aforesaid, appears) on the
Designated LIBOR Page specified on the face of such Note or in the
applicable Pricing Supplement as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date or (B) if "LIBOR: Telerate", is specified on
the face of such Note or in the applicable Pricing Supplement or if no
method of calculation of LIBOR is specified, the rate for deposits in the
Index Currency having the Index Maturity specified in the applicable
Pricing Supplement, commencing on the applicable Interest Reset Date, which
appears on the Designated LIBOR Page specified on the face of such Note or
in the applicable Pricing Supplement as of 11:00 A.M., London time, on such
LIBOR Interest Determination Date. If fewer than two offered rates appear
(unless the specified Designated LIBOR Page by its terms provides for a
single rate), or if no rate appears, as applicable, LIBOR on such LIBOR
Interest Determination Date will be determined as if the parties had
specified the rate described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or if no rate appears, as the case may be,
on the applicable Designated LIBOR Page specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market (which may include
affiliates of certain of the Agents) selected by the Calculation Agent
(after consultation with the Company) to provide the Calculation Agent with
its offered quotation for deposits in the Index Currency for the period of
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the applicable Interest Reset Date, to prime banks in the
London interbank market at approximately 11:00 A.M., London time, on such
LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time. If at least two such quotations are provided, then
LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean
of such quotations. If fewer than two quotations are provided, then LIBOR
on such LIBOR Interest Determination Date will be the arithmetic mean of
the rates quoted at approximately 11:00 A.M., in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center (which may include affiliates of
certain of the Agents), selected by the Calculation Agent (after
consultation with the Company), for loans in such Index Currency to leading
European banks, having the Index Maturity designated in the applicable
Pricing Supplement or specified on the face of such Note, and in a
principal amount that is representative for a single transaction in such
Index Currency in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR determined as of such LIBOR Interest
Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which
LIBOR shall be calculated. If no such currency is specified in the
applicable Pricing Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR: Telerate" is
specified on the face of a Note or in the applicable Pricing Supplement or
neither "LIBOR: Reuters" nor "LIBOR: Telerate" is specified as the method
for calculating LIBOR, the display on the Dow Jones Telerate Service or any
successor on the page specified on the face of the Note or in the
applicable Pricing Supplement (or any other page as may replace such page
on such service) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency, or (b) if "LIBOR:
Reuters" is specified in the applicable Pricing Supplement or on the face
of a Note, the display on the Reuters Monitor Money Rates Service or any
successor on the page specified on the face of the Note or in the
applicable Pricing Supplement (or any other page as may replace such page
on such service) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency.
"Principal Financial Center" means the capital city of the country
issuing the currency or composite currency in which any payment in respect
of the related Notes is to be made or, solely with respect to the
calculation of LIBOR, the Index Currency, except that with respect to U.S.
dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and
ECUs, the Principal Financial Center shall be The City of New York,
Frankfurt, Amsterdam, Milan, Zurich and Brussels, respectively.
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Prime Rate Notes
Each Prime Rate Note will bear interest at interest rates calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any,
specified on the face of such Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Rate Interest Determination Date, the
rate on such date as such rate is published in H.15(519) under the heading
"Bank Prime Loan". If such rate is not published prior to 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Prime Rate Interest
Determination Date, then the Prime Rate will be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 Page (as defined below) as such bank's prime rate or base
lending rate as in effect for that Prime Rate Interest Determination Date. If
fewer than four such rates appear on the Reuters Screen USPRIME1 Page for such
Prime Rate Interest Determination Date, then the Prime Rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business on such
Prime Rate Interest Determination Date by four major money center banks in The
City of New York (which may include affiliates of certain of the Agents)
selected by the Calculation Agent (after consultation with the Company). If
fewer than four such quotations are so provided, then the Prime Rate shall be
the arithmetic mean of four prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
such quotations and by a reasonable number of substitute banks or trust
companies (which may include certain affiliates of the Agents) organized and
doing business under the laws of the United States, or any state thereof, in
each case having total equity capital of at least $500 million and being
subject to supervision or examination by Federal or state authority, selected
by the Calculation Agent (after consultation with the Company) to provide such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service (or such other page as
may replace the USPRIME1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
Treasury Rate Notes
Each Treasury Rate Note will bear interest at interest rates calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, specified on the face of such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the Pricing Supplement, "Treasury Rate" means,
with respect to any Treasury Interest Determination Date, the rate from the
auction held on such Treasury Interest Determination Date (an "Auction") of
direct obligations of the United States ("Treasury bills") having the Index
Maturity specified in the applicable Pricing Supplement, as such rate is
published in H.15(519) under the heading, "Treasury bills--auction average
(investment)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. If the results of the Auction of Treasury bills
having the Index Maturity designated in the applicable Pricing Supplement are
not published or reported as provided above by 3:00 P.M., New York City time,
on such Calculation Date, or if no such Auction is held on such Treasury
Interest Determination Date, then the Treasury Rate will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Interest Determination Date, of three leading primary United States government
securities dealers (which may include one or more of the Agents or their
respective affiliates) selected by the Calculation Agent (after consultation
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with the Company) for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate determined as of such Treasury Interest Determination Date will be the
Treasury Rate in effect on such Treasury Interest Determination Date.
Eleventh District Cost of Funds Rate
Each Eleventh District Cost of Funds Rate Note will bear interest at
interest rates calculated with reference to the Eleventh District Cost of
Funds Rate and the Spread and/or Spread Multiplier, if any, specified on the
face of such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Eleventh District Cost
of Funds Rate Interest Determination Date, the rate equal to the monthly
weighted average cost of funds for the calendar month immediately preceding
the month in which such Eleventh District Cost of Funds Rate Interest
Determination Date falls, as set forth under the caption "11th district" on
Telerate Page 7058 (as defined below) as of 11:00 A.M., San Francisco time, on
such Eleventh District Cost of Funds Rate Interest Determination Date. If such
rate does not appear on Telerate Page 7058 on such Eleventh District Cost of
Funds Rate Interest Determination Date, then the Eleventh District Cost of
Funds Rate on such Eleventh District Cost of Funds Rate Interest Determination
Date will be the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home loan Bank District that was most
recently announced (the "Index") by the FHLB of San Francisco as such cost of
funds for the calendar month immediately preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month immediately preceding such Eleventh District Cost of Funds Rate
Interest Determination Date, then the Eleventh District Cost of Funds Rate
determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date will be the Eleventh District Cost of Funds Rate in effect
on such Eleventh District Cost of Funds Rate Interest Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the Dow
Jones Telerate Service (or such other page as may replace the 7058 page on
that service for the purpose of displaying the monthly weighted average cost
of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
CMT Rate
Each CMT Rate Note will bear interest at the interest rates calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified on the face of such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Rate Interest Determination Date, the rate
displayed on the Designated CMT Telerate Page 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 (i) if the Designated CMT Telerate Page
is 7055, the rate on such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the weekly or monthly average, as
specified in the applicable Pricing Supplement, for the week or the month, as
applicable, ended immediately preceding the week or month, as applicable, in
which the related CMT Rate Interest Determination Date occurs. If such 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 for
such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index as published in H.15(519).
If such rate 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 for such
CMT Rate Interest Determination Date will be such treasury constant maturity
rate for the Designated CMT Maturity Index (or other United States Treasury
rate for the Designated CMT Maturity Index) for the CMT Rate Interest
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Determination Date with respect to such Interest Reset 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 H.15(519). If such information is not
provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate on the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will 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 such CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include one or more of
the Agents or their respective affiliates) selected by the Calculation Agent
(from five such Reference Dealers selected by the Calculation Agent (after
consultation with the Company) and eliminating 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 ("Treasury
Notes") with an original maturity of approximately the Designated CMT Maturity
Index and a remaining term to maturity of not less than such Designated CMT
Maturity Index minus one year. If the Calculation Agent cannot obtain three
such Treasury Note quotations, the CMT Rate on such CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will 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 CMT Rate
Interest Determination Date of three Reference Dealers in The City of New York
(from five such Reference Dealers selected by the Calculation Agent (after
consultation with the Company) and eliminating 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 Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to the maturity closest to
the Designated CMT Maturity Index and in an amount of at least $100 million.
If three or four (and not five) of such 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 such quotes
will be eliminated; provided however, that if fewer than three Reference
Dealers so selected by the Calculation Agent are quoting as described herein,
the CMT Rate determined as of such CMT Rate Interest Determination Date will
be the CMT Rate in effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quote for the Treasury Note with the shorter remaining
term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement or on the
face of such Note (or any other page as may replace such page on that service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified in the applicable Pricing
Supplement or on the face of such Note, the Designated CMT Telerate Page shall
be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement or on the face of such Note with respect
to which the CMT Rate will be calculated. If no such maturity is specified in
the applicable Pricing Supplement or on the face of such Note, the Designated
CMT Maturity Index shall be 2 years.
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal
amount thereof. Further information concerning additional terms and provisions
of Amortizing Notes will be specified in the applicable Pricing Supplement,
including a table setting forth repayment information for such Amortizing
Notes.
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ORIGINAL ISSUE DISCOUNT NOTES
The Company may offer Original Issue Discount Notes from time to time. Such
Original Issue Discount Notes may pay no current interest or interest at a
rate which at the time of issuance is below market rates. In the event of
redemption, repayment or acceleration of maturity in respect of an Original
Issue Discount Note, the amount payable to the Holder of such Original Issue
Discount Note will be equal to (i) the Amortized Face Amount (as defined
below) as of the date of such event, plus (ii) with respect to any redemption
of an Original Issue Discount Note, the Initial Redemption Percentage
specified in the applicable Pricing Supplement (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) minus 100% multiplied by the
Issue Price specified in such Pricing Supplement (the "Issue Price"), not of
any portion of such Issue Price which has been paid prior to the date of
redemption, or the portion of the Issue Price (or the net amount)
proportionate to the portion of the unpaid principal amount to be redeemed,
plus (iii) any accrued interest to the date of such event the payment of which
would constitute qualified stated interest payments within the meaning of
Treasury Regulation 1.1273-1(c) under the Internal Revenue Code of 1986, as
amended (the "Code"). The "Amortized Face Amount" of an Original Issue
Discount Note means an amount equal to (i) the Issue Price thereof, plus (ii)
the aggregate portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of
such Original Issue Discount Note within the meaning of Section 1273(a)(2) of
the Code, whether denominated as principal or interest, over the Issue Price)
which shall theretofore have accrued pursuant to Section 1272 of the Code
(without regard to Section 1272(a)(7) of the Code) from the date of issue of
such Original Issue Discount Note to the date of determination, minus (iii)
any amount considered as part of the "stated redemption price at maturity" of
such Original Issue Discount Note which has been paid from the date of issue
to the date of determination. See "Certain United States Federal Income Tax
Considerations." Certain additional considerations relating to the offering of
any Original Issue Discount Notes may be set forth in the applicable Pricing
Supplement.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Base Note, the Interest Payment Dates,
the Maturity Date or any other term relating thereto, may be modified and/or
supplemented as specified under "Other/Additional Provisions" on the face
thereof or in an Addendum relating thereto, if so specified on the face
thereof and in the applicable Pricing Supplement.
INDEXED NOTES
Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, to the exchange rate of one or more
specified currencies (including a composite currency such as the ECU) relative
to an indexed currency or to such other price(s) or exchange rate(s) ("Indexed
Notes"), as specified in the applicable Pricing Supplement. In certain cases,
Holders of Indexed Notes may receive a principal payment on the Maturity Date
that is greater than or less than the principal amount of such Indexed Notes
depending upon the relative value on the Maturity Date of the specified
indexed item. Information as to the method for determining the amount of
principal, premium, if any, and/or interest payable in respect of Indexed
Notes, certain historical information with respect to the specified indexed
item and tax considerations associated with an investment in Indexed Notes
will be specified in the applicable Pricing Supplement.
BOOK-ENTRY NOTES
Unless otherwise specified in the applicable Pricing Supplement, the Company
has established a depository arrangement with The Depository Trust Company
with respect to the Book-Entry Notes, the terms of which are summarized below.
In addition, the Company has appointed First Trust New York as paying agent
and issuing agent with respect to the Book-Entry Notes. Any additional or
differing terms of the depository arrangement with respect to the Book-Entry
Notes will be described in the applicable Pricing Supplement.
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Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, currency of denomination and
payment, Interest Payment Dates (if any), Stated Maturity Date, redemption
provisions (if any), repayment provisions (if any) and other terms will be
represented by a single Global Note. Each Global Note representing Book-Entry
Notes will be deposited with, or on behalf of, the Depositary and will be
registered in the name of the Depositary or a nominee of the Depositary. No
Global Note may be transferred except as a whole by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or such nominee to a successor of the Depositary or a nominee
of such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Note, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided in this section, the Beneficial Owners
of the Global Note or Notes representing Book-Entry Notes will not be entitled
to receive physical delivery of Certificated Notes and will not be considered
the Holders thereof for any purpose under the Indenture, and no Global Note
representing Book-Entry Notes shall be exchangeable or transferrable.
Accordingly, each Beneficial Owner (as defined below) must rely on the
procedures of the Depositary and, if such Beneficial Owner is not a
Participant (as defined below), on the procedures of the Participant through
which such Beneficial Owner owns its interest in order to exercise any rights
of a Holder under such Global Note or the Senior Indenture. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws
may impair the ability to transfer beneficial interests in a Global Note
representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each Global
Note representing Book-Entry Notes will be exchangeable for Certificated Notes
of like tenor and terms and of differing authorized denominations aggregating
a like principal amount, only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for the Global Notes and a
successor depositary has not been appointed by the Company within sixty (60)
days, (ii) the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the
Company in its sole discretion determines that the Global Notes shall be
exchangeable for Certificated Notes or (iv) there shall have occurred and be
continuing an Event of Default under the Senior Indenture with respect to the
Notes. Upon any such exchange, the Certificated Notes shall be registered in
the names of the Beneficial Owners of the Global Note or Notes representing
Book-Entry Notes, which names shall be provided by the Depositary's relevant
Participants (as identified by the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership
nominee). One fully registered Global Note will be issued for each issue of
Book-Entry Notes, each in the aggregate principal amount of such issue, and
will be deposited with the Depositary. If, however, the aggregate principal
amount of any issue exceeds $200,000,000, one Global Note will be issued
with respect to each $200,000,000 of principal amount and an additional
Global Note will be issued with respect to any remaining principal amount
of such issue.
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 Exchange Act. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations (including the Agents and the
Trustee). The Depositary
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is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary's system
is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of
each actual purchaser of each Book-Entry Note represented by a Global Note
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which such Beneficial Owner entered
into the transaction. Transfers of ownership interests in a Global Note
representing Book-Entry Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners of a Global Note representing Book-Entry Notes will not receive
Certificated Notes representing their ownership interests therein, except
in the event that use of the book-entry system for such Book-Entry Notes is
discontinued.
To facilitate subsequent transfers, all Global Notes representing Book-
Entry Notes which are deposited with, or on behalf of, the Depositary are
registered in the name of the Depositary's nominee, Cede & Co. The deposit
of Global Notes with, or on behalf of, the Depositary and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Notes representing the Book-Entry Notes; the Depositary's
records reflect only the identity of the Direct Participants to whose
accounts such Book-Entry Notes are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct and Indirect Participants to Beneficial Owners will by governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Global Notes representing the Book-Entry Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest payments on the Global Notes
representing the Book-Entry Notes will be made in immediately available
funds to the Depositary. The Depositary's practice is to credit Direct
Participants' accounts on the applicable payment date in accordance with
their respective holdings shown on the Depositary's records unless the
Depositary has reason to believe that it will not receive payment on such
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such Participant and
not of the Depositary, the Trustee or the Company, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment
of principal, premium, if any, and/or interest to the Depositary is the
responsibility of the Company or the Trustee, disbursement of such payments
to Direct Participants shall be the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
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A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes by causing the
Direct Participant to transfer the Participant's interest in the Global
Note or Notes representing such Book-Entry Notes, on the Depositary's
records, to the Trustee. The requirement for physical delivery of Book-
Entry Notes in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the Global Note or Notes
representing such Book-Entry Notes are transferred by Direct Participants
on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes
to be reliable, but the Company takes no responsibility for the accuracy
thereof.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing
the applicable currency. The information set forth in this Prospectus
Supplement is directed to prospective purchasers who are United States
residents and, with respect to Foreign Currency Notes, is by necessity
incomplete. The Company and the Agents disclaim any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase, holding or
receipt of payments of principal of, and premium, if any, and interest, if
any, on, the Foreign Currency Notes. Such persons should consult their own
financial and legal advisors with regard to such matters. See "Risk Factors--
Exchange Rates and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
Unless otherwise specified in the applicable Pricing Supplement, the Company
is obligated to make payments of principal of, and premium, if any, and
interest, if any, on, Foreign Currency Notes in the applicable Foreign
Currency (or, if such Foreign Currency is not at the time of such payment
legal tender for the payment of public and private debts, in such other coin
or currency of the country which issued such Foreign Currency as at the time
of such payment is legal tender for the payment of such debts). Any such
amounts payable by the Company in a Foreign Currency will, unless otherwise
specified in the applicable Pricing Supplement, be converted by the Exchange
Rate Agent named in the applicable Pricing Supplement into United States
dollars for payment to Holders. However, the Holder of a Foreign Currency Note
may elect to receive amounts payable in a Foreign Currency in such Foreign
Currency as hereinafter described.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note 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 (one of whom may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the
Company for the purchase by the quoting dealer of the applicable Foreign
Currency for United States dollars for settlement on such payment date in the
aggregate amount of such Foreign Currency payable to all Holders of Foreign
Currency Notes scheduled to receive United States dollar payments and at which
the applicable dealer commits to execute a contract. All currency exchange
costs will be borne by
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the Holders of such Foreign Currency Notes by deductions from such payments.
If three such bid quotations are not available, payments will be made in the
applicable Foreign Currency.
If the principal of, and premium, if any, and interest, if any, on, Foreign
Currency Notes are payable in a Foreign Currency, Holders of such Foreign
Currency Notes may elect to receive all or a specified portion of such
payments in such Foreign Currency by submitting a written request for such
payment to the Trustee at its corporate trust office in The City of New York
on or prior to the applicable Record Date or at least fifteen calendar days
prior to the Maturity Date, as the case may be. Such written request may be
mailed or hand delivered or sent by cable, telex or other form of facsimile
transmission. Holders of such Foreign Currency Notes may elect to receive all
or a specified portion of all future payments in the applicable Foreign
Currency in respect of such principal, premium, if any, and/or interest, if
any, and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least fifteen calendar days prior to
the Maturity Date, as the case may be. Holders of such Foreign Currency Notes
to be held in the name of a broker or nominee should contact such broker or
nominee to determine whether and how an election to receive payments in the
applicable foreign currency or composite currency may be made.
Payments of the principal of, and premium, if any, and/or interest, if any,
on, Foreign Currency Notes which are to be made in United States dollars will
be made in the manner specified herein with respect to notes denominated in
United States dollars. See "Description of Notes--General." Payments of
interest, if any, on Foreign Currency Notes which are to be made in the
applicable Foreign Currency on an Interest Payment Date other than the
Maturity Date will be made by check mailed to the address of the Holders of
such Foreign Currency Notes as they appear in the Security Register, subject
to the right to receive such interest payments by wire transfer of immediately
available funds under the circumstances described under "Description of
Notes--General." Payments of principal of, and premium, if any, and/or
interest, if any, on, Foreign Currency Notes which are to be made in the
applicable Foreign Currency on the Maturity Date will be made by wire transfer
of immediately available funds to an account with a bank designated at least
fifteen calendar days prior to the Maturity Date by each Holder thereof,
provided that such bank has appropriate facilities therefor and that the
applicable Foreign Currency Note is presented and surrendered at the principal
corporate trust office of the Trustee in time for the Trustee to make such
payments in such funds in accordance with its normal procedures.
Unless otherwise specified in the applicable Pricing Supplement, a
Beneficial Owner of a Global Note or Notes representing Book-Entry Notes
payable in a Foreign Currency which elects to receive payments of principal,
premium, if any, and/or interest, if any, in such Foreign Currency must notify
the Participant through which it owns its interest on or prior to the
applicable Record Date or at least fifteen calendar days prior to the Maturity
Date, as the case may be, of such Beneficial Owner's election. Such
Participant must notify the Depositary of such election on or prior to the
third Business Day after such Record Date or at least twelve calendar days
prior to the Maturity Date, as the case may be, and the Depositary will notify
the Trustee of such election on or prior to the fifth Business Day after such
Record Date or at least ten calendar days prior to the Maturity Date, as the
case may be. If complete instructions are received by the Participant from the
Beneficial Owner and forwarded by the Participant to the Depositary, and by
the Depositary to the Trustee, on or prior to such dates, then such Beneficial
Owner will receive payments in the applicable Foreign Currency.
PAYMENT CURRENCY
Except as set forth below, if the applicable foreign currency or composite
currency for a Foreign Currency Note is not available for the required payment
of principal, premium, if any, and/or interest, if any, due to the imposition
of exchange controls or other circumstances beyond the control of the Company,
the Company will be entitled to satisfy its obligations to the Holder of such
Foreign Currency Note by making such payment in United States dollars on the
basis of the Market Exchange Rate, computed by the Exchange Rate Agent, on the
second Business Day prior to such payment or, if such Market Exchange Rate is
not then available, on the basis of the most recently available Market
Exchange Rate or as otherwise specified in the applicable Pricing Supplement.
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If payment in respect of a Foreign Currency Note is required to be made in
any composite currency, and such composite currency is unavailable due to the
imposition of exchange controls or other circumstances beyond the control of
the Company, the Company will be entitled to satisfy its obligations to the
Holder of such Foreign Currency Note by making such payment in United States
dollars on the basis of the equivalent of the composite currency in United
States dollars. The component currencies of the composite currency for this
purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on which the composite currency was used. The
equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the
Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the
basis of the Market Exchange Rate on the second Business Day prior to the
required payment, or, if such Market Exchange Rate is not then available, on
the basis of the most recently available Market Exchange Rate for each such
Component Currency, or as otherwise specified in the applicable Pricing
Supplement.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
Component Currencies expressed in such single currency. If any Component
Currency is divided into two or more currencies, the amount of the original
Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
The "Market Exchange Rate" for a Foreign Currency means the noon dollar
buying rate in The City of New York for cable transfers for such Foreign
Currency as certified for customs purposes by (or if not so certified, as
otherwise determined by) the Federal Reserve Bank of New York. Any payment
made in United States dollars under such circumstances where the required
payment is in a Foreign Currency will not constitute an Event of Default under
the Indenture with respect to the Notes.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
GOVERNING LAW; JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. Under current New York law, a state court in the State
of New York rendering a judgment in respect of a Foreign Currency Note would
be required to render such judgment in the applicable Foreign Currency and
such foreign currency judgment would be converted into United States dollars
at the exchange rate prevailing on the date of entry of such judgment.
Accordingly, the Holder of such Foreign Currency Note would be subject to
exchange rate fluctuations between the date of entry of such foreign currency
judgment and the time the amount of such foreign currency judgment is paid to
such Holder in United States dollars. It is not certain, however, whether a
non-New York state court would follow the same rules and procedures with
respect to conversions of foreign currency judgments.
The Company will indemnify the Holder of any Note against any loss incurred
by such Holder as a result of any judgment or order being given or made for
any amount due under such Note and such judgment or order requiring payment in
a currency or composite currency (the "Judgment Currency") other than the
applicable Foreign Currency, and as a result of any variation between (i) the
rate of exchange at which the applicable Foreign Currency amount is converted
into the Judgment Currency for the purpose of such judgment or order, and (ii)
the rate of exchange at which the Holder of such Note, on the date of payment
of such judgment or order, is able to purchase the applicable Foreign Currency
with the amount of the Judgment Currency actually received by such Holder, as
the case may be.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes. It is
based on the Internal Revenue Code of 1986, as amended (the "Code"),
administrative pronouncements, judicial decisions, and final and proposed
Treasury Regulations now in effect, all of which are subject to change
(including changes in effective dates) or possible differing interpretations.
It deals only with Notes held as capital assets and does not purport to deal
with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle" for tax purposes, or persons whose functional currency
is not the U.S. dollar. It also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering the
purchase of the Notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created
or organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source, or (iv) any
other person whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular
method of tax accounting).
Original Issue Discount. The following summary is a general discussion of the
United States Federal income tax consequences to U.S. Holders of the purchase,
ownership and disposition of Notes issued with original issue discount
("Discount Notes"). The following summary is based upon Treasury Regulations
that were published in the Federal Register on February 2, 1994, that became
effective as Final Treasury Regulations on April 4, 1994 and that were amended
on June 11, 1996 to be generally effective on June 14, 1996, and Treasury
Regulations published in the Federal Register on June 11, 1996 and that are
generally effective as Final Treasury Regulations on August 13, 1996
(collectively, the "OID Regulations").
For United States Federal income tax purposes, original issue discount is the
excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a Note
providing for the payment of any amount other than qualified stated interest
(as defined below) prior to maturity, multiplied by the weighted average
maturity of such Note). The issue price of each Note in an issue of Notes
equals the first price at which a substantial amount of such Notes has been
sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers). The stated redemption price at maturity of a Note is the sum of
all payments provided by the Note other than "qualified stated interest"
payments. "Qualified stated interest" generally means 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. In addition, under the OID
Regulations, if a Note bears interest for one or more accrual periods at a rate
below the rate applicable for the remaining term of such Note (e.g., Notes with
teaser rates or interest holidays), and if the greater of either the resulting
foregone interest on such Note or any "true" discount on such Note (i.e., the
excess of the Note's stated principal amount over its issue price) equals or
exceeds a specified de minimis amount, then the stated interest on the Note
would be treated as original issue discount rather than qualified stated
interest.
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Payments of qualified stated interest on a Note are taxable to a Holder as
ordinary interest income at the time such payments are accrued or are received
(in accordance with the U.S. Holder's regular method of tax accounting). A U.S.
Holder of a Discount Note must include original issue discount in income as
ordinary interest for United States Federal income tax purposes as it accrues
under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of the U.S. Holder's regular method of
tax accounting. In general, the amount of original issue discount included in
income by the initial U.S. Holder of a Discount Note is the sum of the daily
portions of original issue discount with respect to such Discount Note for each
day during the taxable year (or portion of the taxable year) on which such U.S.
Holder held such Discount Note. The "daily portion" of original issue discount
on any Discount Note is determined by allocating to each day in any accrual
period a ratable portion of the original issue discount allocable to that
accrual period. An "accrual period" may be of any length and the accrual
periods may vary in length over the term of the Discount Note, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the final day of an accrual period or on
the first day of an accrual period. The amount of original issue discount
allocable to each accrual period is generally equal to the difference between
(a) the product of the Discount Note's adjusted issue price at the beginning of
such accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and appropriately adjusted to
take into account the length of the particular accrual period) and (b) the
amount of any qualified stated interest payments allocable to such accrual
period. The "adjusted issue price" of a Discount Note at the beginning of any
accrual period is the sum of the issue price of the Discount Note plus the
amount of original issue discount allocable to all prior accrual periods minus
the amount of any prior payments on the Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders generally will have
to include in income increasingly greater amounts of original issue discount in
successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium." Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder
must include in its gross income with respect to such Discount Note for any
taxable year (or portion thereof in which the U.S. Holder holds the Discount
Note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the
total noncontingent principal payments due under the Variable Note by more than
a specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate.
However, for Notes issued after August 13, 1996, a multiple of a qualified
floating rate will be a qualified floating rate only if it is a fixed multiple
that is greater than 0.65 and less than 1.35. In addition, under the OID
Regulations, two or more qualified floating rates that can reasonably be
expected to have approximately the same values throughout the term of the
Variable Note (e.g., two or more qualified floating rates with values within 25
basis points of each other as determined on the Variable Note's issue date)
will be treated as a single qualified floating rate. Notwithstanding the
foregoing, a variable rate that would otherwise constitute a qualified floating
rate but which
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is subject to one or more restrictions, such as a maximum numerical limitation
(i.e., a cap) or a minimum numerical limitation (i.e., a floor) may, under
certain circumstances, fail to be treated as a qualified floating rate under
the OID Regulations unless such cap or floor is fixed throughout the term of
the Note.
An "objective rate" is a rate that is not itself a qualified floating rate
but which is determined using a single fixed formula and which is based upon:
(i) one or more qualified floating rates, (ii) one or more rates where each
rate would be a qualified floating rate for a debt instrument denominated in a
currency other than the currency in which the Variable Note is denominated,
(iii) either the yield or changes in the price of one or more items of actively
traded personal property (other than stock or debt of the issuer or a related
party), or (iv) a combination of objective rates. For Notes issued on or after
August 13, 1996, the definition of "objective rate" is amended to mean a rate
(other than a qualified floating rate) that is determined by using a single
fixed formula and that is based on objective financial or economic information
(other than a rate based on information that is within the control of the
issuer (or a related party) or that is unique to the circumstances of the
issuer (or related party), such as dividends, profits or the value of the
issuer's stock). The OID Regulations also provide that other variable interest
rates may be treated as objective rates if so designated by the IRS in the
future. Despite the foregoing, a variable rate of interest on a Variable Note
will not constitute an objective rate if it is reasonably expected that the
average value of such rate during the first half of the Variable Note's term
will be either significantly less than or significantly greater than the
average value of the rate during the final half of the Variable Note's term.
A "qualified inverse floating rate" is any objective rate where such rate is
equal to a fixed rate minus a qualified floating rate, as long as variations in
the rate can reasonably be expected to reflect inversely contemporaneous
variations in the cost of newly borrowed funds. The OID Regulations also
provide that if a Variable Note provides for stated interest at a fixed rate
for an initial period of less than one year followed by a variable rate that is
either a qualified floating rate or an objective rate, and if the variable rate
on the Variable Note's issue date is intended to approximate the fixed rate
(e.g., the value of the variable rate on the issue date does not differ from
the value of the fixed rate by more than 25 basis points), then the fixed rate
and the variable rate together will constitute either a single qualified
floating rate or objective rate, as the case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (a) in the case of
a qualified floating rate or qualified inverse floating rate, the value as of
the issue date, of the qualified floating rate or qualified inverse floating
rate, or (b) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is reasonably
expected for the Variable Note.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed
rate that reflects the yield that is reasonably expected for the Variable Note.
In the case of a Variable Note that qualifies as a "variable rate debt
instrument" and provides
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for stated interest at a fixed rate in addition to either one or more qualified
floating rates or a qualified inverse floating rate, the fixed rate is
initially converted into a qualified floating rate (or a qualified inverse
floating rate, if the Variable Note provides for a qualified inverse floating
rate). Under such circumstances, the qualified floating rate or qualified
inverse floating rate that replaces the fixed rate must be such that the fair
market value of the Variable Note as of the Variable Note's issue date is
approximately the same as the fair market value of an otherwise identical debt
instrument that provides for either the qualified floating rate or qualified
inverse floating rate rather than the fixed rate. After converting the fixed
rate into either a qualified floating rate or a qualified inverse floating
rate, the Variable Note is then converted into an "equivalent" fixed rate debt
instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument. A U.S. Holder of
the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. In each accrual period, appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the Variable Note during the accrual period.
U.S. Holders should be aware that on December 15, 1994, the IRS released
proposed amendments to the OID Regulations which would broaden the definition
of an objective rate and would further clarify certain other provisions
contained in the OID Regulations. If ultimately adopted, these amendments to
the OID Regulations generally would be effective for debt instruments issued 60
days or more after final regulations are published in the Federal Register.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. The OID Regulations relating to the tax
treatment of contingent payment debt instruments (effective for debt
instruments issued on or after August 13, 1996) adopt the "noncontingent bond
method" for contingent payment debt instruments that are issued for cash or
publicly traded property. Under the noncontingent bond method, the yield on the
debt instrument must first be determined based on the yield at which the issuer
would issue a fixed rate debt instrument with terms and conditions similar to
those of the contingent payment debt instrument. A projected payment schedule
is then set to fit the yield. Once a projected payment schedule is determined
for a debt instrument as of the issue date, interest accrues on the debt
instrument based on this schedule. The projected payment schedule includes all
noncontingent payments as well as a projected amount for each contingent
payment. Appropriate adjustments are made to account for any difference between
the projected amount of a contingent payment and the actual amount of the
payment. The projected amounts are, in effect, treated as fixed, and interest
accrual is required based on these projected amounts whether or not the amount
of any payment is fixed or determinable in the taxable year. Thus, the
noncontingent bond method may result in recognition of income prior to the
receipt of cash. Prospective investors should consult their own tax advisors
with respect to the application of the contingent payment debt instrument
provisions to Variable Notes. Any other special United States Federal income
tax considerations, not otherwise discussed herein, which are applicable to any
particular issue of Notes will be discussed in the applicable Pricing
Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company prior
to their stated maturity (a "call option") and/or (ii) may be repayable at the
option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
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U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortized bond premium or acquisition
premium) that accrues on a debt instrument by using the constant yield method
applicable to original issue discount, subject to certain limitations and
exceptions. This election must be made for the taxable year in which the U.S.
Holder acquires the debt instrument and may be revoked only with the consent of
the IRS.
Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects
to do so. If such an election is not made, any gain recognized by the U.S.
Holder on the sale, exchange or maturity of the Short-Term Note will be
ordinary income to the extent of the original issue discount accrued on a
straight-line basis, or upon election under the constant yield method (based on
daily compounding), through the date of sale or maturity, and a portion of the
deductions otherwise allowable to the U.S. Holder for interest on borrowings
allocable to the Short-Term Note will be deferred until a corresponding amount
of income is realized. U.S. Holders who report income for United States Federal
income tax purposes under the accrual method, and certain other holders
including banks and dealers in securities, are required to accrue original
issue discount on a Short-Term Note on a straight-line basis unless an election
is made to accrue the original issue discount under a constant yield method
(based on daily compounding).
Market Discount. If a U.S. Holder purchases a Note, other than a Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of a Discount Note, for an amount that is less than its adjusted issue price as
of the purchase date, the U.S. Holder will be treated as having purchased such
Note at a "market discount," unless the difference is less than a specified de
minimis amount.
Under the market discount rules, a U.S. 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 (a) the amount of such payment or realized gain
or (b) the market discount which has not previously been included in income and
is treated as having accrued on such Note at the time of such payment or
disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless
the U.S. Holder elects to accrue market discount on the basis of semiannual
compounding.
A U.S. 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 with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to
the extent the interest expense exceeds an allocable portion of market
discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding 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 certain
cash payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes. Such an election will
apply to all debt instruments acquired by the U.S. Holder on or after the first
day of the taxable year to which such election applies and may be revoked only
with the consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is greater than
the sum of all amounts payable on the Note after the purchase date other than
payments of qualified stated interest, the U.S. Holder will be considered to
have purchased the Note with "amortizable bond premium" equal in amount to such
excess. A U.S. Holder may elect to amortize such premium using a constant yield
method over the remaining term of the Note and may offset interest otherwise
required to be included in respect of the Note during any taxable year by the
amortized amount of such excess for the taxable year. However, if the Note may
be redeemed at the option
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of the Company after the U.S. Holder acquires it at a price in excess of its
stated redemption price at maturity, special rules would apply which 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
taxable debt obligations then owned and thereafter acquired by the U.S. Holder
and may be revoked only with the consent of the IRS.
Disposition of a Note. Except as discussed above, upon the sale, exchange or
retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included such market
discount in income) and decreased by the amount of any payments, other than
qualified stated interest payments, received and amortizable bond premium taken
with respect to such Note. Such gain or loss generally will be long-term
capital gain or loss if the Note was held for more than one year.
NOTES DENOMINATED IN A FOREIGN CURRENCY OR ON WHICH INTEREST IS PAYABLE IN A
FOREIGN CURRENCY
If any Note is to be denominated in a Foreign Currency or provides for
interest payable in a Foreign Currency, the applicable Foreign Currency
Prospectus Supplement and Pricing Supplement will address the principal United
States Federal income tax aspects of any such Note and payments to be made
thereunder.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original
issue discount, if any) on a Note, unless such non-U.S. Holder is a direct or
indirect 10% or greater shareholder of the Company, a controlled foreign
corporation related to the Company, or a bank receiving interest described in
section 881(C)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a non-
U.S. Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder, and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by
the beneficial owner to the organization or institution. The Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder and, in the case
of an individual, the non-U.S. Holder is not present in the United States for
183 days or more in the taxable year in which the retirement or disposition
occurs or certain other conditions are not met. Certain other exceptions may be
applicable, and a non-U.S. Holder should consult its tax advisor in this
regard.
Proposed Treasury Regulations were released on April 22, 1996 (the "Proposed
Regulations"), regarding withholding of United States tax on payments of
certain kinds of income to non-U.S. Holders. If finalized in their proposed
form, these Proposed Regulations would make significant changes to some of the
procedures and requirements described above in order to obtain reduction or
exemption from U.S. withholding tax otherwise due with respect to payments to
non-U.S. Holders. These Proposed Regulations are proposed to be effective for
payments made after December 31, 1997 without regard to the date of issuance of
the debt instrument with respect to which the payments are made.
S-29
<PAGE>
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
Company or, at the time of such individual's death, payments in respect of the
Notes would have been effectively connected with the conduct by such individual
of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made under
the Notes to a U.S. Holder must be reported to the IRS unless the U.S. Holder
is an exempt recipient or establishes an exemption. Compliance with the
identification procedures described in the preceding section would establish an
exemption from backup withholding for those non-U.S. Holders who are not exempt
recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (a) the broker
determines that the seller is a corporation or other exempt recipient, or (b)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be
reported by the broker to the IRS, unless either (i) the broker determines that
the seller is an exempt recipient or (ii) the seller certifies its non-U.S.
status (and certain other conditions are met). Certification of the registered
owner's non-U.S. status would be made normally on an IRS Form W-8 under
penalties of perjury, although in certain cases it may be possible to submit
other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
If finalized in their current form, the Proposed Regulations would make
significant changes to the above summary of backup withholding and information
reporting requirements. Thus, prospective investors who are non-U.S. Holders
should consult their own tax advisors as to the potential tax consequences to
them of the Proposed Regulations.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company,
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, NationsBanc Capital Markets, Inc., Salomon Brothers Inc, Smith
Barney Inc., and UBS Securities LLC (the "Agents"), who will purchase the Notes
as principal, from the Company, for resale to investors and other purchasers at
varying prices relating to prevailing market prices at the time of resale as
determined by the Agents, or, if so specified in an applicable Pricing
Supplement, for resale at a fixed public offering price. If agreed to by the
Company and an Agent, the Agent may utilize its reasonable efforts on an agency
basis to solicit offers to purchase the Notes at 100% of the principal amount
thereof, unless otherwise specified in an applicable Pricing Supplement. The
Company will pay a commission to the Agent, ranging from .125% to .625% of the
principal amount of each Note, depending upon its stated maturity, sold through
the Agent. Commissions with respect to Foreign Currency Notes may differ, as
set forth in the applicable Foreign Currency Prospectus Supplement.
Unless otherwise specified in an applicable Pricing Supplement, any Note sold
to an Agent as principal will be purchased by the Agent at a price equal to
100% of the principal amount thereof less a percentage of the principal amount
equal to the commission applicable to an agency sale (as described below) of a
Note of identical maturity. The Agents may sell Notes they have purchased from
the Company as principal to other dealers for
S-30
<PAGE>
resale to investors and other purchasers, and may allow any portion for the
discount received in connection with such purchase from the Company to such
dealers. After the initial public offering of Notes, the public offering price
(in the case of Notes to be resold at a fixed public offering price), the
concession and the discount may be changed.
The Notes also may be sold by the Company directly to one or more investors
or other purchasers in those jurisdictions in which the Company is authorized
to do so, and through one or more other agents, as disclosed in the applicable
Pricing Supplement, on substantially the same terms and conditions as sales
through an Agent. No commission will be paid on Notes sold directly by the
Company.
The Company reserves the right to withdraw, cancel or modify the offer
without notice and may reject orders in whole or in part (whether placed
directly with the Company or through the Agents). The Agents will have the
right, in their discretion reasonably exercised, to reject in whole or in part
any offer to purchase Notes received by them on an agency basis.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in immediately
available funds in the currency or composite currency in which such Notes are
denominated in The City of New York on the date of settlement.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Securities Act"). The Company has agreed to
indemnify the Agents against, and to contribute to payments with respect to,
certain civil liabilities, including liabilities under the Securities Act. The
Company has agreed to reimburse the Agents for certain expenses.
The Agents each engage in transactions with and perform services for the
Company in the ordinary course of business. Thomas H. Patrick, a director of
the Company, is Chairman, Special Advisory Services, for Merrill Lynch & Co.,
Inc.
No Note will have an established trading market when issued. Unless otherwise
specified in the applicable Pricing Supplement, the Notes will not be listed on
any securities exchange. Each of the Agents may from time to time purchase and
sell Notes in a secondary market, but is not obligated to do so, and there can
be no assurance that there will be a secondary market for the Notes or
liquidity in the secondary market if one develops. From time to time, each of
the Agents may make a market in the Notes, but is not obligated to do so and
may discontinue market-making at any time and without notice.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Debt Securities described in the
accompanying Prospectus pursuant to the Indenture referred to herein.
S-31
<PAGE>
PROSPECTUS
$950,000,000
LOGO
DEBT SECURITIES
Comdisco, Inc. (the "Company") may issue from time to time, together or
separately its debt securities (the "Debt Securities"), which may be either
senior ("Senior Debt Securities") or subordinated in priority of payment
("Subordinated Debt Securities"). The Company may also issue Debt Securities
which may be convertible into or exchangeable for shares of common stock, par
value $0.10, of the Company (the "Common Stock"). The Company may also issue
Subordinated Debt Securities at a substantial discount from their principal
amount at maturity, with no periodic payments of interest, which will be
convertible into or exchangeable for shares of Common Stock, in amounts, at
prices and on terms to be determined by market conditions at the time of
offering ("Zero-Coupon Subordinated Convertible Securities").
The Debt Securities may be issued in one or more series or issuances and will
be limited to $950,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt
Securities are issued for one or more foreign currencies or currency units).
The Debt Securities may be sold for U.S. dollars, or any foreign currency or
currencies or currency units, and the principal of, any premium on, and any
interest on, the Debt Securities may be payable in U.S. dollars, or any foreign
currency or currencies or currency units.
The specific terms of the Debt Securities in respect of which this Prospectus
is being delivered are set forth in the accompanying Prospectus Supplement,
including, where applicable, the specific designation, ranking, priority,
aggregate principal amount, currency or currencies, denominations, maturity,
which may be fixed or extendible, premium or discount, if any, interest rate
(or method of calculation), which may be fixed or floating, and time of payment
of interest, form (which may be bearer, registered or global), terms for
redemption at the option of the Company or repayment at the option of the
holder, terms for sinking fund payments, terms for conversion into or exchange
for shares of Common Stock and any other terms in connection with the offers
and sale of Debt Securities. Additionally, the Prospectus Supplement relating
to an issuance of Subordinated Debt Securities or Zero-Coupon Subordinated
Convertible Securities will identify the indenture pursuant to which such Debt
Securities will be offered and the trustee under such indenture, and will
provide a summary of the provisions of such indenture which are materially
different than the descriptions contained in this Prospectus. The applicable
Prospectus Supplement will also contain information, where applicable, about
certain United States federal income tax considerations relating to the Debt
Securities and any listing on a securities exchange of the Debt Securities
covered by such Prospectus Supplement and about relationships between the
Company and the applicable trustee.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Debt Securities may be offered directly, through agents designated from
time to time, through underwriting syndicates led by one or more managing
underwriters, through or to one or more dealers or underwriters acting alone,
or through a combination of the foregoing. If any agents, dealers or
underwriters are involved in the sale of any of the Debt Securities, their
names, and any applicable fee, commission, purchase price or discount
arrangements with them, will be set forth, or will be calculable from the
information set forth, in the applicable Prospectus Supplement. See "Plan of
Distribution."
The date of this Prospectus is December 6, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's Regional Offices
located at 7 World Trade Center, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained by mail from the Public Reference Branch of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
reports, proxy statements and other information concerning the Company may be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, 7th
floor, New York, New York 10005 and the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois 60605. The Commission maintains a Web site,
which contains reports, proxy and information statements and other information
regarding registrants that, like the Company, file electronically with the
Commission, at the following address: http://www.sec.gov.
Additional information regarding the Company and the Debt Securities is
contained in the registration statements on Form S-3 (together with all
exhibits and amendments, collectively, the "Registration Statement") filed
with the Commission (File No. 33-63823 and File No. 333-15401) under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the
Commission's rules. For further information pertaining to the Company and the
Debt Securities offered hereby reference is made to the Registration Statement
which may be inspected without charge at the office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be obtained
from the Commission at prescribed rates.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission, reference is made to such exhibit or
other filing for a more complete description of the matter involved, and each
such statement is qualified in its entirety by such reference.
----------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "dollars,"
"U.S. dollars," or "U.S.$").
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-7725) are
incorporated herein by reference.
1. The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995.
2. The Company's Current Report on Form 8-K dated January 8, 1996 and
filed with the Commission on January 10, 1996.
3. The Company's Current Report on Form 8-K dated January 12, 1996 and
filed with the Commission on January 17, 1996.
4. The Company's Quarterly Report on Form 10-Q dated December 31, 1995
and filed with the Commission on February 8, 1996.
5. The Company's Current Report on Form 8-K dated February 7, 1996 and
filed with the Commission on February 16, 1996.
2
<PAGE>
6. The Company's Quarterly Report on Form 10-Q dated March 31, 1996 and
filed with the Commission on May 15, 1996.
7. The Company's Quarterly Report on Form 10-Q dated June 30, 1996 and
filed with the Commission on July 30, 1996, as amended by Form 10-Q/A dated
August 15, 1996 and filed with the Commission on August 16, 1996.
8. The Company's Current Report on Form 8-K dated November 15, 1996 and
filed with the Commission on November 15, 1996.
9. The Company's Current Report on Form 8-K dated November 18, 1996 and
filed with the Commission on November 21, 1996.
10. The description of the Common Stock included in the registration
statement filed under the Exchange Act under File No. 1-7725, including all
amendments or reports filed for the purpose of updating such description.
11. The description of the Company's Common Stock Purchase Rights
included in the Registration Statement on Form 8-A filed November 20, 1987,
as amended by Form 8-A/A filed December 6, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person,
including any beneficial owner, a copy of any or all of the documents
incorporated herein by reference (other than exhibits, unless such exhibits are
specifically incorporated by reference in such documents). Written requests for
such copies should be directed to Edward A. Pacewicz, Vice President and
Treasurer, Comdisco, Inc., 6111 North River Road, Rosemont, Illinois 60018;
telephone (847) 698-3000.
THE COMPANY
Comdisco, Inc. (with its subsidiaries, the "Company" or "Comdisco") is
primarily engaged in the buying, selling and leasing of new and used computer
and other high technology equipment and in providing business continuity
services. In addition, the Company provides technology planning and asset
management services, integrating leasing and business continuity services with
customized asset acquisition, asset management software tools and data center
moves and/or consolidations, disposition and migration strategies. These
services are designed to provide integrated, long-term, cost effective asset
and technological planning to users of high technology equipment.
The Company's operations are conducted through its principal office in the
Chicago area and approximately fifty offices in the United States, Canada,
Europe and the Pacific Rim. The Company also operates in South America;
however, it does not maintain local offices. Subsidiaries in Europe and Canada
offer services similar to those offered in the United States, although the
Company's European leasing operations are predominately in the computer
marketplace. The Company's business continuity activities include the domestic,
Canadian and European marketplaces.
The Company was founded in 1969 and incorporated in Delaware in 1971. The
executive offices of the Company are located in the Chicago area at 6111 North
River Road, Rosemont, Illinois 60018, and its telephone number is (847) 698-
3000. At June 30, 1996, the Company had 2,238 full-time employees.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
Company for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.64 1.55 1.29 1.43 1.09
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges, earnings
have been calculated by adding fixed charges and income taxes to net earnings
to common stockholders without taking into account earnings and losses
attributed to discontinued operations and extraordinary items. Fixed charges
consist of interest expense on all indebtedness, amortization of debt issuance
costs, and one-third of rental expense, which is assumed to be the
representative interest portion of rental expense.
USE OF PROCEEDS
Unless otherwise stated in the accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities
for general corporate purposes, including equipment purchases, repayment of
short-term debt and redemption or repurchase of senior debt. Pending such
applications, the net proceeds may be temporarily invested in cash equivalents.
Management of the Company expects that it will, on a recurrent basis, engage in
additional financings as the need arises to finance the growth of the Company
or to lengthen the average maturity of its borrowings.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to such Debt Securities will be described in such
Prospectus Supplement.
The Senior Debt Securities are to be issued under an Indenture, as amended
from time to time (the "Senior Indenture") dated as of December 1, 1995,
between the Company and Yasuda Bank and Trust Company (U.S.A.) as trustee, or
the trustee named in the applicable Prospectus Supplement as trustee (the
"Senior Trustee"). The Senior Indenture is an exhibit to the Registration
Statement. Subordinated Debt Securities (other than Zero-Coupon Convertible
Subordinated Securities) will be issued under an indenture or indentures, as
amended from time to time (collectively, the "Subordinated Indenture") between
the Company and the trustee or trustees named in the applicable Prospectus
Supplement (collectively, the "Subordinated Trustee"). Zero-Coupon Convertible
Subordinated Securities will be issued under an indenture or indentures, as
amended from time to time (collectively, the "Zero-Coupon Convertibles
Indenture") between the Company and the trustee named in the applicable
Prospectus Supplement as trustee (collectively, the "Zero-Coupon Convertibles
Trustee"). Prior to the issuance of any Subordinated Debt Securities or Zero-
Coupon Convertible Subordinated Securities thereunder, the forms of
Subordinated Indenture and Zero-Coupon Convertibles Indenture, as applicable,
will be qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and filed by amendment as exhibits to the Registration
Statement. The Senior Indenture, Subordinated Indenture and Zero-Coupon
Convertibles Indenture are collectively referred to as the "Indentures."
The terms of the Debt Securities include those stated, and to be stated, in
the Indentures and those made a part of the Indentures by reference to the
Trust Indenture Act, and the holders of Debt Securities are referred to
4
<PAGE>
the Indentures and the Trust Indenture Act for a statement thereof. The
following summary of certain provisions of the Debt Securities and the
Indentures does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the Indentures and the Trust Indenture Act.
The term "Debt Securities," as used under this caption, refers to all
Securities issued or issuable from time to time under the Indentures. The
particular terms of the Debt Securities offered by a Prospectus Supplement and
the extent, if any, to which such general provisions may apply to Debt
Securities, will be described in the Prospectus Supplement relating to such
Debt Securities.
Wherever particular defined terms of the Indentures are referred to, it is
intended that such defined terms shall be incorporated herein by reference.
Unless otherwise indicated herein, capitalized terms used herein that are
defined in the Indentures shall have the meanings ascribed to them in the
Indentures.
Unless otherwise provided in the applicable Prospectus Supplement, none of
the Indentures limits the amount of Debt Securities which may be issued
thereunder, and each Indenture provides that Debt Securities of any series may
be issued thereunder up to the aggregate principal amount which may be
authorized from time to time by the Company and may be denominated in any
currency or currency unit designated by the Company. Unless otherwise provided
in the applicable Prospectus Supplement, neither the Indentures nor the Debt
Securities will limit or otherwise restrict the amount of other indebtedness
which may be incurred or the other securities which may be issued by the
Company or any of its subsidiaries.
Debt Securities of a series may be issuable in registered form without
coupons ("Registered Securities"), in bearer form with or without coupons
attached ("Bearer Securities") or in the form of one or more global securities
in registered or bearer form (each a "Global Security").
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms, when
applicable, of the Debt Securities: (i) the title of the Debt Securities; (ii)
any limit on the aggregate principal amount of the Debt Securities; (iii) the
date or dates, or the method by which such date or dates will be determined or
extended, on which the principal (and premium, if any) of the Debt Securities
will be payable; (iv) the rate or rates per annum at which the Debt Securities
will bear interest, if any, or the method by which such rate or rates will be
determined and the date or dates from which such interest will accrue; (v) the
dates on which such interest, if any, will be payable and the Regular Record
Dates for any interest payable on any Registered Security on any such Interest
Payment Dates, any circumstances in which the Company may defer interest
payments or any manner of computing interest if other than a 360-day year of
twelve 30-day months; (vi) the place or places where principal and interest
(and premium, if any) on the Debt Securities may be payable, where any
Registered Securities may be surrendered for transfer and where Debt Securities
may be exchanged and notices and demands may be served or published, (vii) the
price at which, the periods within which or the date or dates on which, and the
terms and conditions upon which the Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed at the option of the
Company; (viii) the obligation, if any, of the Company to redeem, repay or
purchase Debt Securities pursuant to any sinking fund or analogous provisions
or at the option of a Holder thereof and the period or periods, price or prices
and terms and conditions upon which such repurchase, redemption or purchase
shall occur; (ix) whether Debt Securities are to be Registered Securities,
Bearer Securities or both, are to be issuable with or without coupons and the
terms upon which Bearer Securities may be exchanged for Registered Securities
and in the case of Bearer Securities, the date as of which such Bearer
Securities shall be dated (if not the date of original issuance of the first
security of like tenor and term); (x) whether Debt Securities are to be issued
in the form of a Global Security, the Depositary and Global Exchange Agent,
whether such global form is temporary or permanent, the circumstances under
which any temporary Global Security will be exchanged for definitive Global
Securities and any applicable Exchange Date; (xi) whether any additional
amounts ("Additional Amounts") will be payable to Holders of the Debt
Securities; (xii) the denomination of any Registered Security (if other than
$1,000 or any integral multiple thereof) and of any Bearer Security (if other
than $5,000 or any integral multiple thereof); (xiii) if other than Dollars,
the currency or currencies of denomination, including any composite currency or
index; (xiv) the application, if any, of the defeasance or covenant defeasance
provisions of the applicable Indenture to the Debt Securities; (xv) if other
than Dollars, the currency, currencies or currency units in which payments
shall
5
<PAGE>
be made on the Debt Securities and the time and manner of determining any
exchange rate between the currency or Currencies of denomination and that or
those in which they are to be paid; (xvi) the manner in which any payments on
an offered Security may be determined with respect to an index; (xvii) the
designation of any initial Exchange Rate Agent; (xviii) the terms and
conditions, if any, upon which the Debt Securities are to be convertible into
or exchangeable for any securities of any Person (including the Company); (xix)
the portion of the principal amount of the Debt Securities, if other than the
principal amount thereof, payable upon acceleration of maturity thereof; (xx)
the Person to whom any interest on any Registered Security shall be payable, if
other than the Person in whose name such Registered Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date, the manner in which, or Person to whom, any interest on any Bearer
Security will be payable, if other than upon presentation and surrender of the
coupons appertaining thereto as they mature, and the extent to which any
interest payable on an Interest Payment Date on any temporary Security issued
in Global form will be paid if other than the manner in the applicable
Indenture; (xxi) the terms of any pledge of property made to secure the
obligations of the Company under such Debt Securities and the circumstances
under which such pledge may be released, and the limitations, if any, on
recourse against the Company under such Debt Securities; (xxii) if other than
the Trustee, the identity of the Security Registrar and/or Paying Agent;
(xxiii) if other than the principal amount thereof, the portion of the
principal amount of the Debt Securities which will be payable upon declaration
of acceleration of the maturity thereof pursuant to an Event of Default; (xxiv)
if other than as defined in the Indenture, the meaning of "Business Day" when
used with respect to the Debt Securities; and (xxv) any other terms of the Debt
Securities not inconsistent with the provisions of the applicable Indenture.
The variable terms of the Debt Securities are subject to change from time to
time, but no such change will affect any Debt Security already issued or as to
which an offer to purchase has been accepted by the Company. For purposes of
this Prospectus, any reference to the payment of principal (or premium, if any)
or interest, if any, on any Debt Securities will be deemed to include mention
of the payment of any Additional Amounts required by the terms of such Debt
Securities.
Special United States Federal income tax considerations or other restrictions
or terms applicable to any Debt Securities which are (i) Bearer Securities,
(ii) offered exclusively to United States Aliens (as defined in the Indenture)
or (iii) denominated in a currency other than United States dollars will be set
forth in a Prospectus Supplement relating thereto.
Under the Indentures, the Company will have the ability to issue Debt
Securities with terms different from those of Debt Securities previously issued
thereunder and, without the consent of the holders thereof, to issue additional
amounts of a series of Debt Securities (with different dates for payments,
different rates of interest and in different currencies or currency), in an
aggregate principal amount determined by the Company.
Unless otherwise specified in the applicable Prospectus Supplement, the
Indentures do not, and will not, include covenants of the Company restricting
its ability to incur additional debt.
Principal and interest, premium and additional amounts, if any, will be
payable in the manner, at the places and subject to the restriction set forth
in the Indentures, the Debt Securities and the Prospectus Supplement relating
thereto, provided that payment of any interest and any additional amounts may
be made at the option of the Company by check mailed to the holders of
registered Debt Securities at their registered addresses.
Debt Securities may be presented for exchange, and registered Debt Securities
may be presented for transfer in the manner, at the places and subject to the
restrictions set forth in the applicable Indentures, the Debt Securities and
the Prospectus Supplement relating thereto. Bearer Securities and the coupons,
if any, pertaining thereto will be transferable by delivery. Unless otherwise
specified in the applicable Prospectus Supplement, no service charge will be
made for any transfer or exchange of Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
DENOMINATIONS, FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable solely as Registered Securities,
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities denominated in U.S. dollars (other than Global
Securities, which may be of
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any denomination) are issuable in denominations of $1,000 and any integral
multiple thereof and Bearer Securities denominated in U.S. dollars are issuable
in denominations of $5,000 and any integral multiples thereof. The Indentures
will also provide that Debt Securities of a series may be issuable in global
form. See "Description of Debt Securities--Global Securities" below. Unless
otherwise indicated in the applicable Prospectus Supplement, Bearer Securities
(except Global Securities) will have interest coupons attached.
Registered Securities of any series will be exchangeable for other Registered
Securities of the same series of authorized denominations and of a like
aggregate principal amount, tenor and terms. In addition, if Debt Securities of
any series are issuable as both Registered Securities and Bearer Securities, at
the option of the Holder, but subject to applicable laws, upon request
confirmed in writing, and subject to the terms of the applicable Indenture,
Bearer Securities (with all unmatured coupons, except as provided below, and
all matured coupons in default) of such series will be exchangeable into
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount, tenor and terms. Bearer Securities
surrendered in exchange for Registered Securities of the same series between
the close of business on a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered without the coupon
relating to such date for payment of interest, and interest will not be payable
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the terms of the applicable Indenture. Unless otherwise
specified in the applicable Prospectus Supplement, Bearer Securities will not
otherwise be issued in exchange for Registered Securities.
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a satisfactory written instrument of transfer), at
the office of the Security Registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to such series of Debt
Securities, without service charge and upon payment of any taxes and other
governmental charges. If the Prospectus Supplement refers to any transfer agent
(in addition to the Security Registrar) initially designated by the Company
with respect to any series of Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent (or Security Registrar) acts,
except that, if Debt Securities of a series are issuable solely as Registered
Securities, the Company will be required to maintain a transfer agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (in
addition to the Security Registrar) a transfer agent in a Place of Payment for
such series located outside the United States. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities.
The Company shall not be required (i) to issue, register the transfer of or
exchange Debt Securities of any particular series to be redeemed or exchanged
for a period of 15 days preceding the first publication of the relevant notice
of redemption or, if Registered Securities are outstanding and there is no
publication, the mailing of the relevant notice of redemption or exchange, (ii)
to register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except the unredeemed portion of any Registered
Security being redeemed or exchanged in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of like tenor and terms of that series,
provided that such Registered Security shall be surrendered for redemption.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the form
of one or more Global Securities that will be deposited with, or on behalf of,
a depository (the "Depository") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued in fully registered or
bearer form and may be issued in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for the individual Debt Securities
represented thereby, a Global Security may not be transferred except as a whole
by the Depository for such Global Security to a nominee of such Depository or
by a nominee of such Depository to such Depository or another nominee of such
Depository or by the Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor.
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The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will generally apply to depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, pledge or transfer a beneficial interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Debt
Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
any such Debt Securities of such series in definitive form and will not be
considered the owners or holders thereof under the applicable Indenture.
Payments of principal of and any interest (and premium, if any) on individual
Debt Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to the Depository or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. None of the Company, the Trustee, any Paying Agent or the
Security Registrar for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interest.
The Company expects that the Depository for a series of Debt Securities or
its nominee, upon receipt of any payment of principal or interest (or premium,
if any) in respect of a permanent Global Security representing any of such Debt
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of such Global Security representing such Debt Securities as shown on
the records of such Depository or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in such Global
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
If a Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is
not appointed by the Company within 90 days, the Company will issue definitive
Debt Securities of such series to Participants in exchange for the Global
Security representing such series of Debt Securities. In addition, the Company
may, at any time and in its sole discretion, subject to any limitations
described in the applicable Prospectus Supplement relating to such Debt
Securities, determine not to have any Debt Securities of such series
represented by one or more Global Securities and, in such event, will issue
individual Debt Securities of such series to Participants in exchange for the
Global Security or Securities representing such series of Debt Securities.
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ORIGINAL ISSUE DISCOUNT SECURITIES
The Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount below
their principal amount. Special United States federal income tax, accounting
and other considerations applicable to any such Original Issue Discount
Securities will be described in any Prospectus Supplement relating thereto.
"Original Issue Discount Security" means any security that provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof as a result of the
occurrence of an Event of Default and the continuation thereof. In addition,
the Subordinated Debt Securities may, for United States federal income tax
purposes, be deemed to have been issued with "Original Issue Discount" ("OID")
even if such securities are offered and sold at an amount equal to their stated
principal amount. The United States federal income tax consequences of
Subordinated Debt Securities deemed to be issued with OID will be described in
any Prospectus Supplement relating thereto.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to United States persons (each
as defined below) other than to a Qualifying Branch of a United States
Financial Institution (as defined below) or a United States person acquiring
Bearer Securities through a Qualifying Branch of a United States Financial
Institution and any underwriters, agents and dealers participating in the
offering of Debt Securities must agree that they will not offer any Bearer
Securities for sale or resale in the United States or to United States persons
(other than a Qualifying Branch of a United States Financial Institution or a
United States person acquiring Bearer Securities through a Qualifying Branch of
a United States Financial Institution) nor deliver Bearer Securities within the
United States. In addition, any such underwriters, agents and dealers must
agree to send confirmations to each purchaser of a Bearer Security confirming
that such purchaser represents that it is not a United States person or is a
Qualifying Branch of a United States Financial Institution and, if such person
is a dealer, that it will send similar confirmations to purchasers form it. The
term "Qualifying Branch of a United States Financial Institution" means a
branch located outside the United States of a United States securities clearing
organization, bank or other financial institution listed under Treasury
Regulation Section 1.165(c)(1)(v) that agrees to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Code and the regulations thereunder.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code, holders
that are United States persons, with certain exceptions, will not be entitled
to deduct any loss on Bearer Securities and must treat as ordinary income any
gain realized on the sale or other disposition (including the receipt of
principal) of Bearer Securities.
The term "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision thereof,
and an estate or trust the income of which is subject to United States federal
income taxation regardless of its source, and the term "United States" means
the United State of America (including the states and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (including the Commonwealth of Puerto Rico).
PAYMENT AND PAYING AGENTS
Unless otherwise provided in the applicable Prospectus Supplement, the Place
of Payment for a series issuable solely as Registered Securities will be New
York, New York, U.S.A., and the Company will initially designate the corporate
trust office of the applicable Trustee for this purpose. Notwithstanding the
foregoing, at the option of the Company, interest, if any, may be paid on
Registered Securities (i) by check mailed to the
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address of the Person entitled thereto as such Person's address appears in the
Security Register or (ii) by wire transfer to an account located in the United
States maintained by the Person entitled thereto as specified in the Security
Register. Unless otherwise provided in the applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities will be made to
the Person in whose name such Registered Security is registered at the close of
business on the Regular Record Date of such interest.
If Debt Securities of a series are issuable solely as Bearer Securities or as
both Registered Securities and Bearer Securities, information relating to the
place and manner of payment, and the identity of the Company's Paying Agents,
will be specified in the applicable Prospectus Supplement.
The Company may from time to time designate additional offices or agencies
for payment with respect to any Debt Securities, approve a change in the
location of any such office or agency and, except as provided above, rescind
the designation of any such office or agency.
CONSOLIDATION, MERGER OR SALE OF ASSETS BY THE COMPANY
Except as is otherwise specified in the applicable Prospectus Supplement,
each Indenture provides, or will provide, that the Company may, without the
consent of the Holders of Outstanding Debt Securities, consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets substantially as an entirety to another person, provided that, (i) the
resulting, surviving or transferee person (if other than the Company) is
organized and existing under the laws of the United States, any state thereof
or the District of Columbia and such person assumes all obligations of the
Company under any Debt Securities and related Indenture, (ii) the Company or
such successor person shall not immediately thereafter be in default under the
Indenture relating to any Debt Securities and (iii) certain other conditions
under the applicable Indenture are met. Upon the assumption of the Company's
obligations by such a person in such circumstances, subject to certain
exceptions, the Company shall be discharged from all obligations under any Debt
Securities and the Indenture relating to any Debt Securities.
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
Each Indenture provides, or will provide, that, with the consent of the
holders of not less than a majority in aggregate principal amount of the
outstanding Debt Securities of each affected series, modifications and
alterations of such Indenture may be made which affect the rights of the
holders of such Debt Securities and that at least a majority in principal
amount of Debt Securities of each affected series may, with respect to such
Debt Securities, waive past defaults under such Indenture or compliance by the
Company with certain provisions of such Indenture; provided however, that no
such modification or alteration may be made without the consent of the holder
of each Debt Security so affected which would, among other things, (i) change
the maturity of the principal of, or of any installment of interest (or
premium, if any) on, or any redemption price, with respect to any Debt Security
issued pursuant to such Indenture, or reduce the principal amount thereof or
any premium thereon, or change the place of payment, method of calculation of
interest or the currency of payment of principal or interest (or premium, if
any) on, or reduce the minimum rate of interest thereon, or impair the right to
institute suit for the enforcement of any such payment on or with respect to
any such Debt Security, or reduce the amount of principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof; or (ii) reduce the percentage in principal amount of
outstanding Debt Securities required to modify or alter such Indenture or
required to waive compliance with certain provisions of, or past defaults
under, such Indenture, or reduce the requirements for quorum or voting provided
by such Indenture.
ADDITIONAL PROVISIONS
Each Indenture provides, or will provide, that, subject to the duty of the
applicable Trustee during default to act with the required standard of care,
the applicable Trustee will be under no obligation to exercise any of its
rights or powers under such Indenture at the request or direction of any of the
holders, unless such holders shall have offered to the applicable Trustee
reasonable indemnity. Subject to such provisions for the indemnification
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of the applicable Trustee and certain other conditions, the holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee,
or exercising any trust or power conferred on the applicable Trustee with
respect to the Debt Securities of that series.
No holder of any Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture or for any remedy
thereunder, unless: (i) such holder shall have previously given to the
applicable Trustee written notice of a continuing Event of Default with respect
to Debt Securities of that series; (ii) the holders of not less than 25% in
aggregate principal amount of the Outstanding Debt Securities of that series
shall have made written request, and offered reasonable indemnity, to the
applicable Trustee to institute such proceeding as trustee; (iii) the
applicable Trustee shall have failed to institute such proceeding within 60
days after receipt of such written request; and (iv) the applicable Trustee
shall not have received during such 60 day period from the holders of a
majority in principal amount of the Outstanding Debt Securities of that series
a direction inconsistent with such request. However, the holder of any Debt
Security will have an absolute right to receive payment of the principal of
(and premium, if any) and interest on such Debt Security on the due dates
expressed in such Debt Security and to institute suit for the enforcement of
any such payment.
PARTICULAR TERMS OF THE SENIOR DEBT SECURITIES
GENERAL
The following description of the Senior Debt Securities sets forth certain
general terms and provisions of the Senior Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Senior Debt
Securities offered by any Prospectus Supplement, and the extent, if any, to
which such general provisions may apply to the Senior Debt Securities so
offered, will be described in the Prospectus Supplement relating to such Senior
Debt Securities. The Senior Debt Securities will be direct, unsecured
obligations of the Company and will rank equally with each other and with all
outstanding unsecured senior indebtedness of the Company.
EVENTS OF DEFAULT; WAIVERS, ETC.
Unless otherwise described in the applicable Prospectus Supplement, under the
Senior Indenture, the following will be Events of Default with respect to
Senior Debt Securities of any series under the Senior Indenture: (a) default in
the payment of any interest or Additional Amounts upon any of the Senior Debt
Securities of that series when due, continued for 30 days; (b) default in the
payment of any principal or premium, if any, on any of the Senior Debt
Securities of that series when due, whether at maturity, upon declaration of
acceleration, notice of redemption, request for repayment, or otherwise; (c)
default in the deposit of any sinking fund payment, when due, in respect of any
of the Senior Debt Securities of that series; (d) default in the performance of
any covenant of the Company, contained in the Senior Indenture (other than a
covenant expressly included in the Senior Indenture for the benefit of a series
of Senior Debt Securities other than such series or otherwise expressly dealt
with in the Senior Indenture or the Senior Debt Securities) continued for 60
days after written notice as provided in the Senior Indenture; (e) default in
the payment when due (subject to any applicable grace period), whether at
stated maturity or otherwise, of any principal of or interest on (however
designated) any indebtedness for borrowed money of, or guaranteed by, the
Company (other than the Senior Debt Securities of any series and other than
non-recourse indebtedness) in an aggregate principal amount exceeding 5% of the
consolidated net worth of the Company and its subsidiaries (determined as of
the most recent fiscal quarter for which a balance sheet is available), whether
such indebtedness now exists or shall hereafter be created, which default shall
result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable and the Senior
Trustee receives written notice from a Holder or the Company of such
declaration; provided however, that if any such acceleration shall subsequently
be rescinded or annulled (including through the discharge of the accelerated
indebtedness) prior to the obtaining of any judgment or decree for the payment
of any money due on such indebtedness or the actual payment of money on such
indebtedness, any acceleration with respect to Senior Debt Securities of any
series consequent solely on such other acceleration shall likewise be deemed
rescinded or annulled without further action on the part of any
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Holders; provided, further, that for a default other than a default in payment,
so long as the Company is contesting in good faith such event of default and
the Company delivers to the Senior Trustee a certificate that the Company is
contesting in good faith the existence of such event of default, then no Event
of Default shall be deemed to exist under this clause; (f) certain events in
bankruptcy, insolvency or reorganization; and (g) any other Event of Default
established with respect to Senior Debt Securities of that series. The Senior
Trustee may withhold notice to the Holders of any series of Debt Securities
issued under the Senior Indenture of any default (except in the payment of
principal, premium, if any, or interest, if any, on any of the Debt Securities
of such series or in the making of any sinking fund installment) if it
considers it in the interest of such Holders to do so. No Event of Default with
respect to a particular series of Senior Debt Securities necessarily
constitutes an Event of Default with respect to any other series of Senior Debt
Securities issued under the Senior Indenture.
If an Event of Default with respect to outstanding Senior Debt Securities of
any series occurs and is continuing, the Senior Trustee or the Holders of not
less than 25% in principal amount of the outstanding Senior Debt Securities of
that series may declare the principal amount of all outstanding Senior Debt
Securities of that series (or such lesser amount as may be provided for in the
Senior Debt Securities of that series or the Prospectus Supplement relating to
that series) and the interest accrued thereon and Additional Amounts payable in
respect thereof, if any, to be due and payable immediately. At any time after a
declaration of acceleration has been made with respect to Senior Debt
Securities of any series, but before a judgment or decree for payment of money
due has been obtained by the Senior Trustee, the Holders of a majority in
principal amount of the outstanding Senior Debt Securities of that series may
rescind any declaration of acceleration and its consequences, if all payments
due (other than those due as a result of acceleration) have been made and all
Events of Default have been remedied or waived.
Any default with respect to Senior Debt Securities of any series may be
waived by the Holders of a majority in principal amount of all outstanding
Senior Debt Securities of that series, except a default in the payment of
principal or premium, if any, or interest or Additional Amounts, if any, on any
of the Senior Debt Securities of that series or a default in respect of a
covenant or provisions which cannot be modified or amended without the consent
of the Holder of each of the outstanding Senior Debt Securities of such series
affected. Upon any such waiver, such default shall cease to exist and any Event
of Default arising from it shall be deemed to be cured.
The Holders of a majority in principal amount of the outstanding Senior Debt
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Senior Trustee or exercising any
trust or power conferred on the Senior Trustee with respect to Senior Debt
Securities of such series, provided that such direction shall not be in
conflict with any rule of law or the Senior Indenture and the Senior Trustee
determines that the action so directed is not unduly prejudicial to the rights
of other Holders of such series. Before proceeding to exercise any right or
power under the Indenture at the direction of such Holders, the Senior Trustee
shall be entitled to receive from such Holders reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
complying with any such direction.
The Company is required to file with the Senior Trustee annually a written
statement as to the presence or absence of certain defaults under the Senior
Indenture and compliance by the Company with all conditions and covenants under
the Senior Indenture.
CONCERNING THE SENIOR TRUSTEE
The Senior Trustee has its principal office at 666 Fifth Avenue, 8th Floor,
New York, New York 10103. The Senior Trustee's offices for the purpose of
presenting Securities for payment or registration of transfer or exchange are
located at the same address. The Company has leased equipment to the Senior
Trustee and provides it with business continuity services through its
subsidiaries. The Senior Trustee is one of several core relationship banks
which provide credit and banking services to the Company and its subsidiaries,
both domestically and internationally.
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PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES
GENERAL
The particular terms of the Subordinated Debt Securities, including Zero-
Coupon Convertible Subordinated Securities, offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply
will be described in the Prospectus Supplement relating to such Subordinated
Debt Securities.
The Subordinated Debt Securities will be direct, unsecured obligations of the
Company. Except to the extent otherwise set forth in the applicable Prospectus
Supplement or applicable Subordinated Debt Indenture or Zero-Coupon
Convertibles Indenture, the obligations of the Company pursuant to the
Subordinated Debt Securities will be subordinated in right of payment to all
Senior Indebtedness of the Company. See "Subordination," below.
The default provisions, covenants and amendment provisions, relating to
Subordinated Debt Securities, including, as applicable, Zero-Coupon Convertible
Subordinated Securities, will be set forth in the applicable Indenture and the
Prospectus Supplement relating to such Debt Securities.
To the extent that Subordinated Debt Securities, including, as applicable,
Zero-Coupon Convertible Subordinated Securities, are issued as Original Issue
Discount Securities, or deemed to be issued with OID, the United States federal
income tax considerations applicable to such Subordinated Debt Securities will
be described in any applicable Prospectus Supplement.
Prior to the issuance of any Subordinated Debt Securities, including without
limitation, Zero-Coupon Convertible Subordinated Securities, the Company will
qualify the applicable Zero-Coupon Convertibles Indenture or Subordinated
Indenture under the Trust Indenture Act and amend the Registration Statement to
file the applicable Indenture as an exhibit. The applicable Prospectus
Supplement will also identify the Trustee under the applicable Indenture and
the Trustee's relationships with the Company.
SUBORDINATION
Indebtedness evidenced by the Subordinated Debt Securities, including Zero-
Coupon Convertible Subordinated Securities, will be subordinated in right of
payment, as set forth in the applicable Subordinated Indenture or Zero-Coupon
Convertibles Indenture, to the prior payment in full, in cash or cash
equivalents, of all existing and future Senior Indebtedness (as defined below),
in each case as more fully provided in the Prospectus Supplement applicable to
such Subordinated Debt Securities.
By reason of such subordination, unless and to the extent otherwise provided
in the applicable Prospectus Supplement, in the event of dissolution,
insolvency, bankruptcy or similar proceedings, upon any distribution of the
assets of the Company, the holders of Senior Indebtedness will first be
entitled to receive payment in full in cash or cash equivalents of all amounts
due or to become due thereon, before the Holders of the Subordinated Debt
Securities, including Zero-Coupon Convertible Subordinated Securities, will be
entitled to receive any payment or distribution from the Company with respect
to any Subordinated Debt Securities, including Zero-Coupon Convertible
Subordinated Securities.
Unless otherwise indicated in the applicable Prospectus Supplement, no
payment of the principal amount at maturity, interest, if any, or any other
amount with respect to the Subordinated Debt Securities, including Zero-Coupon
Convertible Subordinated Securities, may be made (nor may the Company acquire
any Zero-Coupon Convertible Subordinated Securities for cash or property) if
(i) any payment default on any Senior Indebtedness occurs and is continuing
that permits the acceleration of the maturity thereof or (ii) any other default
on any Senior Indebtedness occurs and is continuing that permits the
acceleration of the maturity thereof and either such default is the subject of
judicial proceedings or the Company receives notice of the default, unless (a)
in the case of defaults on Senior Indebtedness other than payment defaults, 180
days pass after notice of default is given and such default is not then the
subject of judicial proceedings or (b) the default with respect to Senior
Indebtedness is cured or waived and, in each case, the terms of the applicable
Subordinated Indenture or Zero-
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Coupon Convertibles Indenture otherwise permit the payment (or acquisition of
the Zero-Coupon Convertible Subordinated Securities) at that time.
Unless otherwise defined in the definitive form of applicable Subordinated
Indenture or Zero-Coupon Convertibles Indenture filed under the Registration
Statement, or is otherwise provided in an applicable Prospectus Supplement,
"Senior Indebtedness" means the principal of, premium, if any, and interest on
(including interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law, whether or not allowable as a claim
in such proceeding) and other amounts due on or in connection with, any
Indebtedness of the Company, either outstanding on the date of the applicable
Subordinated Indenture or Zero-Coupon Convertibles Indenture or created,
incurred or assumed subsequent to such date, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Subordinated Debt
Securities, including Zero-Coupon Convertible Subordinated Securities. Without
limiting the generality of the foregoing, and except as otherwise provided in
the applicable Subordinated Indenture or Zero-Coupon Convertibles Indenture, or
in the applicable Prospectus Supplement, "Senior Indebtedness" shall include
the principal of, premium, if any, and interest on (including interest accruing
after the filing of a petition initiating any proceeding pursuant to any
bankruptcy law, whether or not allowable as a claim in such proceeding) all
obligations of every nature of the Company from time to time owed to the
holders of the Senior Debt Securities under the Senior Indenture including,
without limitation, all fees, expenses (including fees and expenses of
counsel), claims, charges and indemnity obligations.
Unless otherwise defined in the definitive form of applicable Subordinated
Indenture or Zero-Coupon Convertibles Indenture filed under the Registration
Statement, or otherwise provided in the applicable Prospectus Supplement,
"Indebtedness" means (i) any liability of any Person (A) for borrowed money, or
under any reimbursement obligation relating to a letter of credit, or (B)
evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind (other than a trade payable or a
current liability arising in the ordinary course of business), or (C) under
interest rate contracts and exchange rate contracts, or (D) for the payment of
money as lessee under leases required to be capitalized on the balance sheet of
the lessee under generally accepted accounting principles; (ii) any liability
of others described in the preceding clause (i) that such Person has guaranteed
or that is otherwise its legal liability; (iii) all Indebtedness referred to in
(but not excluded from ) clauses (i) and (ii) above of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any lien upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness; and (iv) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (i), (ii) and (iii) above.
If Subordinated Debt Securities are issued under a Subordinated Indenture, or
Zero-Coupon Subordinated Convertible Securities are issued under a Zero-Coupon
Convertibles Indenture, the amount of Senior Indebtedness outstanding as of a
then recent date will be set forth in the applicable Prospectus Supplement.
Except to the extent otherwise set forth in a Prospectus Supplement, no
Subordinated Indenture or Zero-Coupon Convertibles Indenture will contain any
restriction on the amount of Senior Indebtedness which the Company may incur.
DESCRIPTION OF THE COMPANY'S COMMON STOCK
The following statements with respect to the Company's common stock and
common stock purchase rights are subject to the detailed provisions of the
Company's restated certificate of incorporation, as amended (the "Certificate
of Incorporation"), and bylaws, as amended (the "Bylaws"), and to the Rights
Agreement (as defined below). These statements do not purport to be complete
and are qualified in their entirety by reference to the terms of the
Certificate of Incorporation, the Bylaws and the Rights Agreement, which are
incorporated by reference as exhibits to the Registration Statement. All
references to outstanding Common Stock and related rights reflect the three-
for-two stock split of the Company's Common Stock which was effected with
respect to holders of record on November 17, 1995.
14
<PAGE>
GENERAL
The Company is authorized to issue 200,000,000 shares of Common Stock, par
value $0.10 per share, of which 50,371,511 shares were issued and outstanding
as of June 30, 1996, and 100,000,000 shares of preferred stock, par value $.10
per share ("Preferred Stock"), of which an aggregate of 3,562,600 shares of
8.75% Cumulative Preferred Stock, Series A and B were issued and outstanding as
of June 30, 1996.
Holders of Common Stock are entitled to one vote for each share held on all
matters requiring stockholder action. Subject to the rights of the holders of
Preferred Stock, the holders of Common Stock are entitled to receive dividends
out of any funds of the Company lawfully available therefore (if, when and as
declared by the Board of Directors in its discretion). Certain restrictions set
forth in the Company's financing agreements limit the Company's ability to
declare and pay dividends.
Stockholders are entitled upon liquidation, dissolution or winding-up of the
affairs of the Company to share ratably in the assets of the Company legally
available for distribution to holders of Common Stock. Holders of Common Stock
have no preemptive rights. The shares of Common Stock do not have cumulative
voting rights.
The Certificate of Incorporation of the Company provides for a Board of
Directors of not less than four and no more than fifteen directors, with the
number to be set by or in accordance with the Bylaws. The affirmative votes of
the holders of at least 66 2/3% of the stock then entitled to vote in an
election of directors is required for the approval of any proposal that any
director of the Company be removed from office, or that the provisions relating
to the number in classification of directors or the Bylaw provision setting the
number or procedure for determining the number of directors be altered, amended
or repealed.
Article 12 of the Certificate of Incorporation of the Company requires the
affirmative vote of the holders of at least 66 2/3% of the stock and entitled
to vote in an election of directors, not owned by a Substantial Stockholder (as
defined below) for the approval of certain business combinations and certain
other transactions with a Substantial Stockholder unless certain minimum price
and procedural requirements are met and for the amendment or repeal of these
provisions. A Substantial Stockholder is defined as any person or entity that
acquires at least 10% or more of the Common Stock of the Company, excluding any
member of the Board of Directors of the Company as of September 30, 1985, or
any employee benefit plan of the Company or its subsidiaries. Such super-
majority approval would not be required if (1) the business combination is
solely between the Company and another corporation 50% or more stock which is
owned, directly or indirectly, by the Company and none of which is owned by a
Substantial Stockholder or (2) all following conditions are satisfied: (a) the
cash or fair market value of the consideration to be received per share by
holders of the common stock is not less than the higher of (i) the highest per
share price paid by such Substantial Stockholder in acquiring any Common Stock
of the Company of (ii) the highest per share market price of the Company's
Common Stock during the three-month period immediately preceding the date of
the proxy statement described in (c) below or, if none, the six-month period
prior to the consummation of the business combination; (b) after becoming a
Substantial Stockholder and prior to consummation of such business combination
(i) such Substantial Stockholder shall not have acquired any newly issued
shares of capital stock, directly or indirectly, from the Company except
proportionately as a stockholder or upon compliance with the provisions of
Article 12 and (ii) such Substantial Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a stockholder), of
any loans or other financial assistance provided by the Company, or made any
major change in the Company's equity capital structure; and (c) if such
proposal otherwise requires stockholder approval, a proxy statement responsive
to the requirements of the Securities Exchange Act of 1934, whether or not the
Company is subject to such requirements, shall be mailed to the stockholders of
the Company for the purpose of soliciting stockholder approval of such business
combination.
The outstanding shares of the Company's Common Stock are duly and validly
issued, fully paid and nonassessable, and any shares of Common Stock issuable
upon the conversion or exchange of Debt Securities which are convertible into
or exchangeable for Common Stock, unless the applicable Prospectus Supplement
specifies otherwise, upon the purchase of such Debt Securities at the option of
the Holder thereof will be, duly and validly issued, fully paid and
nonassessable.
15
<PAGE>
COMMON STOCK PURCHASE RIGHTS
Each outstanding share of Common Stock of the Company is accompanied by a
common stock purchase right (a "Right"). Each Right entitles the registered
holder to purchase from the Company one share of Common Stock of the Company at
a price of $63.49 per share, subject to adjustment. The description and terms
of the Rights are set forth in the Rights Agreement, dated as of November 18,
1987, as amended and restated as of November 7, 1994 (the "Rights Agreement"),
between the Company and Chemical Bank (the successor of Manufacturers Hanover
Trust Company), as Rights Agent.
The following summary of certain provisions of the Rights and the Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all of the provisions of the Rights and the
Rights Agreement, including particular provisions or defined terms of the
Rights Agreement. A copy of the Rights Agreement has been filed with the
Commission as an exhibit to a Registration Statement on Form 8-A, which, as
amended by Form 8-A/A, is incorporated herein by reference. See "Incorporation
of Certain Documents by Reference."
Presently, the Rights are attached to all Common Stock certificates
representing shares outstanding, and no separate Right Certificates have been
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) 10 days following a public announcement
that a person or group has become an Acquiring Person (as defined below) or
(ii) the close of business on the 10th business day (or such later date as the
Board of Directors determine) after the date a person or group makes a tender
or exchange offer which if completed would result in such person or group being
the beneficial owner of 15% or more of the outstanding Common Stock or (iii)
the close of business on the 10th business day after the Board of Directors
declares a person to be an Adverse Person (as defined below). An "Acquiring
Person" is a person or group of affiliated or associated persons has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Stock (the date of such announcement being the "Stock
Acquisition Date"); provided, however, that an Acquiring Person shall not
include, and a Distribution Date shall not occur as a result of the ownership
of Common Stock by, any person who, at the Record Date, together with all
affiliates and associates of such person, is the beneficial owner of 20% or
more of the shares of Common Stock then outstanding (an "Existing Holder")
until such time as such Existing Holder or any affiliate or associate of such
Existing Holder shall become the beneficial owner of any additional shares of
Common Stock or any other person who is the beneficial owner of any shares of
Common Stock shall become an affiliate or associate of such Existing Holder, if
after giving effect to such additional shares or the shares beneficially owned
by such other person, such Existing Holder, together with all affiliates and
associates of such Existing Holder, shall be the beneficial owner of 30% or
more of the shares of Common Stock then outstanding; and provided further that
each of the Existing Holder's successors in interest (as defined in the Rights
Agreement) that would beneficially own, as a result of the transfer to such
successor of any shares of Common Stock beneficially owned by an Existing
Holder, 15% or more of the shares of Common Stock then outstanding shall be
treated as an Existing Holder. An "Adverse Person" is a person or group, other
than an Existing Holder, which beneficially owns 10% or more of the outstanding
Common Stock and as to which the Board of Directors has made a determination
that such person or group has interests adverse to those of the Company (based
on requirements set out in the Rights Agreement).
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) Common Stock certificates issued after the Record Date will
contain a notation incorporating the Rights Agreement by reference and (iii)
the surrender for transfer of any certificates for shares of Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire at
the close of business on November 17, 1997, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Rights
16
<PAGE>
Certificates alone will represent the Rights. All shares of Common Stock issued
prior to the Distribution Date will be issued with Rights. Shares of Common
Stock issued after the Distribution Date will be issued with Rights if such
shares are issued pursuant to the exercise of stock options or under an
employee benefit plan, granted or awarded as of the Distribution Date, or upon
the conversion of securities issued after adoption of the Rights Agreement.
Except as otherwise determined by the Board of Directors, no other shares of
Common Stock issued after the Distribution Date will be issued with Rights.
In the event that (i) a person becomes an Acquiring Person (except pursuant
to an offer for all outstanding shares of Common Stock which the independent
directors of the Company determine to be fair to and otherwise in the best
interests of the Company and its stockholders) or (ii) the Board of Directors
declares a person to be an Adverse Person, following the Distribution Date,
each holder of a Right will thereafter have the right to receive, upon
exercise, the number of shares of Common Stock for which such Right was
exercisable immediately prior to the first occurrence of such event (currently,
one) at an adjusted per share Purchase Price of 20% of the market price per
share of Common Stock. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or Adverse Person will be null and
void. However, Rights are not exercisable following the occurrence of any of
the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction
(other than a merger which follows an offer described in the preceding
paragraph) or (ii) 50% or more of the Company's assets or earning power is sold
or transferred, each holder of a Right (except Rights which have previously
been voided as set forth above) shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to
two times the Exercise Price of the Right. The Exercise Price is the Purchase
Price multiplied by the number of shares of Common Stock issuable upon exercise
of a Right prior to the events described in this paragraph (currently, one).
The events set forth in this paragraph and in the preceding paragraph are
referred to as the "Triggering Events".
The Purchase Price payable, and the number of shares of Common Stock or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for shares of Common Stock or convertible securities at
less than the current market price of the Common Stock or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments amount to at least 1% of the Purchase Price. No
fractional shares of Common Stock will be issued upon exercise of the Rights
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the date of
exercise.
At any time until fifteen days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.048
per Right (payable, at the election of the Company, in cash, Common Stock or
such other consideration as the Board of Directors may determine). Immediately
upon the action of the Board of Directors ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be
to receive the $.048 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date.
17
<PAGE>
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, defect or inconsistency,
to make changes which do not adversely affect the interests of holders of
Rights (excluding the interests of an Acquiring Person or Adverse Person), or
to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
Each share of outstanding Common Stock has one Right attached thereto. Until
the Distribution Date, the Company will issue one Right with each share of
Common Stock that shall become outstanding so that all such shares will have
attached Rights.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being
acquired. Accordingly, the existence of the Rights may deter certain acquirors
from making takeover proposals or tender offers. However, the Rights are not
intended to prevent a takeover but rather are designed to enhance the ability
of the Board of Directors to negotiate with an acquiror on behalf of all of the
stockholders. In addition, the Rights should not interfere with a proxy
contest.
PLAN OF DISTRIBUTION
The Company may sell any of the Debt Securities directly to purchasers, or
through agents, dealers, or underwriters.
The Prospectus Supplement and Pricing Supplement, if any, set forth the terms
of the offering of the particular series of Debt Securities to which such
Prospectus Supplement and any such Pricing Supplement relate, including (i) the
name or names of any underwriters or agents with whom the Company has entered
into arrangements with respect to the sale of such series of Debt Securities,
(ii) the initial public offering or purchase price of such series of Debt
Securities, (iii) any underwriting discounts, commissions and other items
constituting underwriters' compensation from the Company and any other
discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to the Company, and (vi) the securities exchanges, if any, on
which such series of Debt Securities will be listed.
If underwriters are used in the sale, the Debt Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase such Debt Securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the Debt Securities offered by the Prospectus Supplement
relating to such series if any are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Offers to purchase the Debt Securities may be solicited directly by the
Company or by agents designated by the Company from time to time. Any agent
involved in the offering and sale thereof in respect of which this Prospectus
is delivered is named and any commissions payable by the Company to such agent
are set forth in the Prospectus Supplement relating to such series. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If the sale is accomplished through an underwriter or underwriters, the
Company will enter into an underwriting agreement with such underwriters at the
time of sale to them, and the names of the underwriters (including
identification of any managing underwriter or underwriters) and the terms of
the transaction will be
18
<PAGE>
set forth in the Prospectus Supplement, which, together with this Prospectus,
will be used by the underwriters to make resales of the Debt Securities in
respect of which the Prospectus Supplement and this Prospectus is delivered to
the public.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize underwriters, agents or dealers to solicit offers by certain
institutions to purchase Debt Securities to which such Prospectus Supplement
relates pursuant to Delayed Delivery Contracts ("Contracts") providing for
payment and delivery on the date or dates stated in the Prospectus Supplement.
Each of the Contracts will be for an amount not less than, and, unless the
Company otherwise agrees, the aggregate principal amount of Debt Securities
sold pursuant to such Contracts shall not be less or more than, the respective
amounts stated in the Prospectus Supplement. Institutions with whom Contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions
except that (i) the purchase by an institution of Debt Securities covered
thereby shall not at the time of delivery be prohibited under the applicable
laws of any jurisdiction in the United States to which such institution is
subject, and (ii) if the particular Debt Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
amount of such Debt Securities less the amount thereof covered by such
Contracts. Underwriters, agents or dealers will not have any responsibility in
respect of the validity of such arrangements or the performance of the Company
or such institutional investors thereunder.
Underwriters, agents and dealers may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof.
All Debt Securities will be new issues of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the
Company for public offering and sale may make a market in such Debt
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given concerning the liquidity of the trading market for any Debt Securities.
Underwriters, agents and dealers, and their respective affiliates, may
engage in transactions with, or perform services for, the Company, including
investment and commercial banking transactions and services, in the ordinary
course of business.
Underwriters, agents and dealers participating in the distribution of the
Debt Securities may be deemed to be underwriters under the Securities Act, and
any discounts and commissions received by them and any profit realized by them
on resale of Debt Securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Debt Securities
will be passed upon for the Company by Jeremiah M. Fitzgerald, Esq., Vice
President and General Counsel of the Company and for the underwriters, agents
and dealers by Brown & Wood LLP, New York, New York. Mr. Fitzgerald
beneficially owns 20,727 shares of the Company's Common Stock and holds
options, granted under the Company's stock option plans, to purchase an
additional 40,084 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedule of Comdisco, Inc. and
subsidiaries as of September 30, 1995 and 1994 and for each of the years in
the three-year period ended September 30, 1995 incorporated herein by
reference to the Annual Report on Form 10-K of the Company for the year ended
September 30, 1995 have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in auditing and accounting.
19
<PAGE>
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NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUP-
PLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY-
ONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................... S-2
Description of the Notes................................................... S-5
Special Provisions Relating to Foreign Currency Notes...................... S-21
Certain United States Federal Income Tax Considerations.................... S-24
Plan of Distribution....................................................... S-30
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 4
Particular Terms of the Senior Debt Securities............................. 11
Particular Terms of the Subordinated Debt
Securities................................................................ 13
Description of the Company's Common Stock.................................. 14
Plan of Distribution....................................................... 18
Legal Matters.............................................................. 19
Experts.................................................................... 19
</TABLE>
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$500,000,000
LOGO
MEDIUM-TERM NOTES, SERIES F
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
UBS SECURITIES
DECEMBER 6, 1996
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