<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 033-52771
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 4, 1994)
$298,167,500
Olin Corporation
MEDIUM-TERM NOTES, SERIES A
------------------------
Due From Nine Months to 40 Years From Date of Issue
------------------------
Olin Corporation (the "Company") may offer from time to time its Medium-Term
Notes, Series A (the "Notes", which term shall include Notes which are Senior
Securities ("Senior Notes") and Notes which are Subordinated Securities
("Subordinated Notes")), with an aggregate principal amount of up to
U.S. $298,167,500, or the equivalent thereof in other currencies, including
composite currencies (the "Specified Currency") such as the European Currency
Unit (ECU). Such aggregate offering price is subject to reduction as a result of
the sale by the Company of certain other Securities. See "Plan of Distribution."
As of the date of this Prospectus Supplement, certain officers of the Company
have been authorized to fix the terms of Notes having an aggregate principal
amount outstanding of up to $150 million. Inssuance of Notes in excess of that
amount will be subject to additional prior action of the Board of Directors of
the Company or its Executive and Finance Committee. Each Note will mature from
nine months to forty years from its date of issue, as agreed upon by the Company
and the purchaser, and may be subject to redemption prior to maturity at the
option of the Company or repayment at the option of the registered holder if set
forth in the applicable Pricing Supplement. Each Note will bear interest either
at a fixed rate (a "Fixed Rate Note") established by the Company at the date of
issue of such Note, which may be zero in the case of certain Original Issue
Discount Notes, or at a floating rate (a "Floating Rate Note"), as set forth
therein and specified in the applicable Pricing Supplement. A Fixed Rate Note
may pay a level amount in respect of both interest and principal amortized over
the life of the Note (an "Amortizing Note"). The Notes may be issued as Senior
Notes or Subordinated Notes, as set forth in the applicable Pricing Supplement.
Subordinated Notes will be subordinated to all Superior Indebtedness. See
"Description of Debt Securities -- Subordination of Subordinated Securities" in
the accompanying Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, interest on
each Fixed Rate Note will be payable each June 15 and December 15 and at
maturity. Interest on each Floating Rate Note will be payable on the dates set
forth herein and in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, Amortizing Notes will pay
principal and interest semiannually each June 15 and December 15, or quarterly
each March 15, June 15, September 15 and December 15, and at maturity. Each
Fixed Rate Note will mature on a day from nine months to forty years from the
date of issue, as set forth in the applicable Pricing Supplement. Each Floating
Rate Note will mature on an Interest Payment Date from nine months to forty
years from the date of issue, as set forth in the applicable Pricing Supplement.
See "Description of Notes." Unless otherwise specified in the applicable Pricing
Supplement, the Notes may not be redeemed by the Company or the holder prior to
maturity. Notes denominated in U.S. dollars will be issued in denominations of
$1,000 or any amount in excess thereof which is an integral multiple of $1,000.
The authorized denominations of Notes not denominated in U.S. dollars will be
set forth in the applicable Pricing Supplement. Any terms relating to Notes
being denominated in foreign currencies or composite currencies will be set
forth in the applicable Pricing Supplement.
Each Note will be issued only in fully registered form and will be
represented either by a Global Security registered in the name of a nominee of
The Depository Trust Company, as Depositary (a "Book-Entry Note"), or by a
certificate issued in definitive form (a "Certificated Note"), as set forth in
the applicable Pricing Supplement. Beneficial interests in Global Securities
representing Book-Entry Notes will be shown on, and transfers thereof will be
effected through, the records maintained by the Depositary (with respect to
participants' interests) and its participants. Book-Entry Notes will not be
issuable as Certificated Notes except as described under "Description of Debt
Securities -- Global Securities" in the accompanying Prospectus.
------------------------
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 SUPPLEMENT HERETO OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PRICE AGENTS' DISCOUNTS AND PROCEEDS TO
TO PUBLIC (1) COMMISSIONS (2) COMPANY (2)(3)
-------------------- ------------------------------ ----------------------------
<S> <C> <C> <C>
Per Note.............................. 100.000% .125% to .750% 99.875% to 99.250%
Total (4)............................. $298,167,500 $372,710 to $2,236,257 $297,794,790 to $295,931,243
</TABLE>
- ------------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will
be sold at 100% of their principal amount. If the Company issues any Note at
a discount from or at a premium over its principal amount, the Price to
Public of such Note will be set forth in the applicable Pricing Supplement.
(2) The commission payable to an Agent for each Note sold through such Agent
shall initially range from .125% to .750% of the principal amount of such
Note; provided, however, that commissions with respect to Notes having a
maturity in excess of 30 years will be negotiated. The Company may also sell
Notes to an Agent, as principal, at negotiated discounts, for resale to
investors and other purchasers. The Company has agreed to indemnify each
Agent against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
(3) Before deducting expenses payable by the Company estimated to be $57,000.
(4) Or the equivalent thereof in other currencies including composite
currencies.
------------------------
The Notes are being offered on a continuous basis by Morgan Stanley & Co.
Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. (including its
affiliate, Lehman Government Securities Inc.) and J.P. Morgan Securities Inc.
(individually, an "Agent" and collectively, the "Agents"), on behalf of the
Company. The Agents have agreed to use their best efforts to solicit purchases
of such Notes. The Company may also sell Notes to an Agent acting as principal
for its own account for resale to one or more investors and other purchasers at
varying prices related to prevailing market prices at the time of resale or
otherwise, to be determined by such Agent. No termination date for the offering
of the Notes has been established. The Company or an Agent may reject any order
in whole or in part. The Company reserves the right to withdraw, cancel or
modify the offer made hereby without notice. The Notes will not be listed on any
securities exchange, and there can be no assurance that the Notes offered hereby
will be sold or that there will be a secondary market for the Notes. See "Plan
of Distribution."
------------------------
MORGAN STANLEY & CO.
Incorporated
CITICORP SECURITIES, INC.
LEHMAN BROTHERS
J.P. MORGAN SECURITIES INC.
May 26, 1995
<PAGE> 2
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY OR OTHER DEBT SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE AGENTS. THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY NOTES BY ANYONE IN ANY JURISDICTION 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 PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF ANY PRICING
SUPPLEMENT, THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes.............................................................. S-3
Consolidated Ratio................................................................ S-18
Foreign Currency Risks............................................................ S-18
Certain United States Federal Income Tax Consequences............................. S-19
Plan of Distribution.............................................................. S-26
Validity of the Notes............................................................. S-27
PROSPECTUS
Available Information............................................................. 2
Incorporation of Certain Documents by Reference................................... 2
The Company....................................................................... 3
Use of Proceeds................................................................... 5
Consolidated Ratios............................................................... 5
Description of Debt Securities.................................................... 6
Description of Capital Stock...................................................... 13
Description of Securities Warrants................................................ 18
Plan of Distribution.............................................................. 19
Legal Matters..................................................................... 20
Experts........................................................................... 20
</TABLE>
<PAGE> 3
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set forth
under the heading "Description of Debt Securities" in the accompanying
Prospectus, to which reference is hereby made. The particular terms of the Notes
sold pursuant to any pricing supplement (a "Pricing Supplement") will be
described therein. The terms and conditions set forth in "Description of Notes"
will apply to each Note unless otherwise specified in the applicable Pricing
Supplement and in such Note. Capitalized terms not defined herein shall have the
same meanings assigned to such terms in the Prospectus or the applicable
Indenture. References herein to "U.S. dollars" or "U.S.$" or "$" are to the
currency of the United States of America.
GENERAL
The Notes offered hereby, if Senior Securities, will be issued under the
Senior Indenture, as amended or supplemented. Notes issued under the Senior
Indenture will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company. Notes issued under the Subordinated Indenture will
be subordinated in right of payment to the prior payment in full of the Superior
Indebtedness of the Company. See "Description of Debt Securities Subordination
of Subordinated Securities" in the accompanying Prospectus. As of March 31,
1995, the Company had approximately $440 million of Superior Indebtedness
outstanding. The following description of the Notes will apply unless otherwise
specified in an applicable Pricing Supplement.
The Notes will be offered on a continuous basis. The Notes issued under the
Senior Indenture and Subordinated Indenture will constitute all or part of a
single series for purposes of such Indentures. The Notes of such series offered
hereby are limited to an aggregate initial offering price of U.S. $298,167,500
(or the equivalent thereof in one or more Specified Currencies), subject to
reduction as a result of the sale by the Company of certain other Securities
referred to in the accompanying Prospectus. See "Plan of Distribution" herein
and in the accompanying Prospectus. As of the date of this Prospectus
Supplement, certain officers of the Company have been authorized to fix the
terms of Notes having an aggregate principal amount outstanding of up to $150
million. Issuance of Notes in excess of that amount will be subject to
additional prior action of the Board of Directors of the Company or its
Executive and Finance Committee. For purposes of this Prospectus Supplement, (i)
the principal amount of any Original Issue Discount Note (as defined below)
means the Issue Price (as defined below) of such Note and (ii) the principal
amount of any Note issued in the Specified Currency means the U.S. dollar
equivalent on the date of issue of the Issue Price of such Note.
Each Note will mature from nine months to forty years from its date of
issue, as selected by the initial purchaser and agreed to by the Company, and
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 defined herein) if set
forth in the applicable Pricing Supplement. See "Optional Redemption" and
"Repayment at the Noteholders' Option" below. Fixed Rate Notes, Amortizing Notes
and Original Issue Discount Notes will mature on any day from nine months to
forty years from the date of issue, as set forth in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
Floating Rate Notes will mature on an Interest Payment Date (as defined below)
from nine months to forty years from the date of issue, as set forth in the
applicable Pricing Supplement.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. However, the Company currently contemplates that the Notes
will be issued as Book-Entry Notes. Except as set forth under "Description of
Debt Securities -- Global Securities" in the accompanying Prospectus, Book-Entry
Notes will not be issuable as Certificated Notes. See "Book-Entry System" below.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of, premium, if
any, and interest on the Notes will be made in U.S. dollars. Except for Notes
not denominated in U.S. dollars or as otherwise provided in the applicable
Pricing Supplement, the Notes will be issued only in fully registered form in
denominations of U.S. $1,000 or any amount in excess thereof which is an
integral multiple of U.S. $1,000. If any of the Notes are to be
S-3
<PAGE> 4
denominated in a Specified Currency other than U.S. dollars, additional
information pertaining to the terms of such Notes and other matters relevant to
the holders thereof will be described in the applicable Pricing Supplement.
The Notes may be issued as Original Issue Discount Notes (including Zero
Coupon Notes), as indicated in the applicable Pricing Supplement. An "Original
Issue Discount Note" means any Note that provides for an amount more than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof pursuant to the applicable Indenture. See
"Certain United States Federal Income Tax Consequences -- United States
Holders -- Original Issue Discount" below.
The Notes may be issued as Indexed Notes, as indicated in the applicable
Pricing Supplement. See "Indexed Notes" below.
The Pricing Supplement relating to each Note will specify the price
(expressed as a percentage of the aggregate principal amount thereof) at which
such Note will be issued if other than 100% (the "Issue Price"), the principal
amount, the interest rate or interest rate formula, ranking, maturity, currency
or composite currency, any redemption or repayment provisions and any other
terms on which each such Note will be issued that are not inconsistent with the
provisions of the applicable Indenture.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund.
Book-Entry Notes may be transferred or exchanged only through the
Depositary, see "Book-Entry System" below. The Certificated Notes may be
presented for registration of transfer or exchange at the corporate trust office
of the Trustee in the Borough of Manhattan, The City of New York, in the case of
Senior Securities, and at the corporate trust office maintained for such purpose
by the Trustee under the Subordinated Indenture, in the case of Subordinated
Securities.
As used herein, "Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are generally authorized or required by law or regulation to close in The City
of New York and (i) in respect of LIBOR Notes (as defined below), in the City of
London and which is a London Banking Day, (ii) with respect to Notes denominated
or payable in a Specified Currency other than ECUs, in the financial center of
the country issuing the Specified Currency and (iii) with respect to Notes
denominated or payable in ECUs, that is not a non-ECU settlement day. "London
Banking Day" shall mean any day (i) if the Index Currency (as defined below) is
other than ECU, on which dealings in such Index Currency are transacted in the
London interbank market and (ii) if the Index Currency is ECU, that is not a
non-ECU settlement day.
As used herein, an "Interest Payment Date" with respect to any Note shall
be a date on which, under the terms of such Note, regularly scheduled interest
shall be payable. Unless otherwise specified in the applicable Pricing
Supplement, "Record Date" with respect to any Interest Payment Date shall be the
date fifteen calendar days (whether or not such date is a Business Day) prior to
such Interest Payment Date.
PAYMENT CURRENCY AND CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for Notes denominated in a Specified
Currency in such Specified Currency, and payments of principal of, premium, if
any, and interest on such Notes will be made in such Specified Currency, unless
otherwise provided in the applicable Pricing Supplement. Currently, there are
limited facilities in the United States for the conversion of U.S. dollars and
foreign currencies. In addition, most banks do not currently offer non-U.S.
dollar denominated checking or savings account facilities in the United States.
Accordingly, unless otherwise specified in the applicable Pricing Supplement, or
unless alternative arrangements are made, payment of principal of, premium, if
any, and interest on Notes in a Specified Currency other than U.S. dollars will
be made to an account at a bank outside the United States.
If the applicable Pricing Supplement provides for payments of principal of,
premium, if any, and interest on a non-U.S. dollar denominated Note to be made
in U.S. dollars or for payments of principal of, premium, if any, and interest
on a U.S. dollar denominated Note to be made in a Specified Currency other than
S-4
<PAGE> 5
U.S. dollars, the conversion of the Specified Currency into U.S. dollars or U.S.
dollars into the Specified Currency, as the case may be, will be made by the
Exchange Rate Agent identified in the applicable Pricing Supplement. The costs
of such conversion will be borne by the holder of such Note through deductions
from such payments.
If the applicable Pricing Supplement provides for payments of principal of,
premium, if any, and interest on a non-U.S. dollar denominated Note to be made,
at the option of the holder of such Note, in U.S. dollars, conversion of the
Specified Currency into U.S. dollars 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
which may be the Exchange Rate Agent unless the Exchange Rate Agent is the
applicable Agent) for the purchase by the quoting dealer of the Specified
Currency for U.S. dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to the holders of Notes and at which
the applicable dealer commits to execute a contract. If such bid quotations are
not available, payments will be made in the Specified Currency. All currency
exchange costs will be borne by the holders of Notes by deductions from such
payments.
Except as set forth below, if the principal of, premium, if any, or
interest on a Note is payable in a Specified Currency other than U.S. dollars
and such Specified Currency is not available to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Company or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Company will
be entitled to satisfy its obligations to holders of the Notes by making such
payments in U.S. dollars on the basis of the Market Exchange Rate as defined in
the applicable Pricing Supplement on the date of such payment or, if the Market
Exchange Rate is not available on such date, as of the most recent practicable
date. Any payment made under such circumstances in U.S. dollars where the
required payment is in a Specified Currency other than U.S. dollars will not
constitute an Event of Default under the applicable Indenture.
If payment in respect of a Note is required to be made in ECUs and ECUs are
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or are no longer used in the European Monetary
System, then all payments in respect of such Note shall be made in U.S. dollars
until ECUs are again available or so used. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars, determined as described below, as of the second Business Day prior to
the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date shall be
determined by the Company or its agent on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall be the currency
amounts that were components of the ECU as of the last date on which the ECU was
used in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or such agent on the basis of the most recently
available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of combination or
subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more Components are
consolidated into a single currency, the amounts of those currencies as
Components shall be replaced by an amount in such single currency equal to the
sum of the appropriate amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or more
currencies, the amount of the original component currency shall be replaced by
the appropriate amounts of such two or more currencies, the sum of which shall
be equal to the amount of the original component currency.
For a description of risks relating to foreign currencies, see "Foreign
Currency Risks" below.
S-5
<PAGE> 6
All determinations referred to above made by the Company or its agent shall
be at the Company's sole discretion and shall, in the absence of manifest error,
be conclusive for all purposes and binding on holders of Notes.
INTEREST AND PRINCIPAL PAYMENTS
Payments of principal of, and premium and interest, if any, on Book-Entry
Notes will be made by the Company through the Trustee to the Depositary. See
"Book-Entry System" below. With respect to Certificated Notes, interest will be
payable to the person in whose name the Certificated Note is registered at the
close of business on the applicable Record Date; provided that the interest
payable upon maturity, redemption or repayment (whether or not the date of
maturity, redemption or repayment is an Interest Payment Date) will be payable
to the person to whom principal is payable. Unless otherwise specified in the
applicable Pricing Supplement, the initial interest payment on a Note will be
made on the first Interest Payment Date falling after the date the Note is
issued; provided, however, that payments of interest (or, in the case of an
Amortizing Note, principal and interest) on a Note issued less than 15 calendar
days before an Interest Payment Date will be paid on the next succeeding
Interest Payment Date to the holder of record on the Record Date with respect to
such succeeding Interest Payment Date, unless otherwise specified in the
applicable Pricing Supplement. See "Certain United States Federal Income Tax
Consequences -- United States Holders -- Payments of Interest" below.
Payments of principal of, premium, if any, and interest payable at
maturity, redemption or repayment on Certificated Notes, other than Certificated
Notes payable in a Specified Currency other than U.S. dollars, will be made in
immediately available funds at the corporate trust office of the Trustee in the
Borough of Manhattan, The City of New York, in the case of Certificated Notes
which are Senior Securities, and at the corporate trust office maintained for
such purpose by the Trustee under the Subordinated Indenture in the case of
Certificated Notes which are Subordinated Securities, provided that the Note is
presented to the Paying Agent in time for the Paying Agent to make such payments
in such funds in accordance with its normal procedures. Payment of interest
(other than at maturity, redemption or repayment) may be made by check mailed to
the person entitled thereto or, at the option of the Company, by wire transfer
to an account maintained by such person with a bank located in the United
States. Notwithstanding the foregoing, a holder of $10,000,000 or more in
aggregate principal amount of Notes of like tenor and terms (or the holder of
the equivalent thereof in a Specified Currency other than U.S. dollars) shall be
entitled to receive interest payments (other than at maturity, redemption or
repayment) by wire transfer in immediately available funds, but only if
appropriate instructions have been received in writing by the Paying Agent on or
prior to the applicable Record Date for such payment of interest.
Unless otherwise specified in the applicable Pricing Supplement or unless
alternative arrangements are made, payments of principal of, premium, if any,
and interest on a Note in a Specified Currency other than U.S. dollars will be
made by wire transfer of immediately available funds to an account maintained by
the payee with a bank located outside the United States if the holder of such
Notes provides the Paying Agent with the appropriate wire transfer instructions
not later than 15 calendar days prior to the applicable payment date. If such
wire transfer instructions are not so provided, payments of principal of,
premium, if any, and interest on such Notes will be made by check payable in
such Specified Currency mailed to the address of the person entitled thereto as
such address shall appear in the Note register.
Certain Notes, including Original Issue Discount Notes, may be considered
to be issued with original issue discount, which must be included in income for
United States Federal income tax purposes at a constant rate. Unless otherwise
specified in the applicable Pricing Supplement, if the principal of any Original
Issue Discount Note is declared to be due and payable immediately, the amount of
principal due and payable with respect to such Note shall be limited to the
aggregate principal amount of such Note multiplied by the sum of its Issue Price
(expressed as a percentage of the aggregate principal amount) plus the original
issue discount amortized from the date of issue to the date of declaration,
which amortization shall be calculated using the "interest method" (computed in
accordance with generally accepted accounting principles in effect on the date
of declaration). Special considerations applicable to any such Notes will be set
forth in the applicable
S-6
<PAGE> 7
Pricing Supplement. See "Certain United States Federal Income Tax
Consequences -- United States Holders -- Original Issue Discount" below.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issuance at the
annual rate stated on the face thereof, except as described below under
"Extension of Maturity," until the principal thereof is paid or made available
for payment. Unless otherwise specified in the applicable Pricing Supplement,
such interest will be computed on the basis of a 360-day year of twelve 30-day
months. Unless otherwise specified in the applicable Pricing Supplement,
payments of interest on Fixed Rate Notes other than Amortizing Notes will be
made semiannually on each June 15 and December 15 and at maturity or upon any
earlier redemption or repayment. Unless otherwise specified in the applicable
Pricing Supplement, payments of principal of and interest on Amortizing Notes,
which are securities on which payments of principal and interest are made in
equal installments over the life of the security, will be made either quarterly
on each March 15, June 15, September 15 and December 15 or semiannually on each
June 15 and December 15, as set forth in the applicable Pricing Supplement, and
at maturity or upon any earlier redemption or repayment. 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. A table
setting forth repayment information in respect of each Amortizing Note will be
provided to the original purchaser and will be available, upon request, to
subsequent holders.
If any Interest Payment Date for any Fixed Rate Note would fall on a day
that is not a Business Day, the interest payment shall be postponed to the next
day that is a Business Day, and no interest on such payment shall accrue for the
period from and after the Interest Payment Date. If the maturity date (or date
of redemption or repayment) of any Fixed Rate Note would fall on a day that is
not a Business Day, the payment of principal, premium, if any, and interest may
be made on the next succeeding Business Day, and no interest on such payment
shall accrue for the period from and after the maturity date (or date of
redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued interest from
the date of issue or from the last date in respect of which interest has been
paid or duly provided for, as the case may be, to, but excluding, the Interest
Payment Date or the date of maturity or earlier redemption or repayment, as the
case may be.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from the date of issuance until
the principal thereof is paid or made available for payment at a rate determined
by reference to an interest rate basis (the "Base Rate"), which may be adjusted
by a Spread and/or Spread Multiplier (each as defined below). The applicable
Pricing Supplement will designate one or more of the following Base Rates as
applicable to each Floating Rate Note: (a) the CD Rate (a "CD Rate Note"), (b)
the Commercial Paper Rate (a "Commercial Paper Rate Note"), (c) the Federal
Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR (a "LIBOR Note"), (e) the
Prime Rate (a "Prime Rate Note"), (f) the Treasury Rate (a "Treasury Rate
Note"), (g) the CMT Rate (a "CMT Rate Note") or (h) such other Base Rate as is
set forth in such Pricing Supplement and in such Floating Rate Note. The "Index
Maturity" for any Floating Rate Note is the designated maturity of the
instrument or obligation from which the Base Rate is calculated as specified in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, and/or (ii) multiplied
by the Spread Multiplier, if any. The "Spread" is the number of basis points
(one basis point equals one-hundredth of a percentage point) specified in the
applicable Pricing Supplement to be added to or subtracted from the Base Rate
for such Floating Rate Note, and the "Spread Multiplier" is the percentage
specified in the applicable Pricing Supplement by which the Base Rate will be
multiplied to determine the applicable interest rate for such Floating Rate
Note.
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As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or ceiling,
on the rate of interest which may accrue during any interest period ("Maximum
Interest Rate"); and (ii) a minimum limitation, or floor, on the rate of
interest which may accrue during any interest period ("Minimum Interest Rate").
In addition to any Maximum Interest Rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on a Floating Rate
Note 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. Under
current New York law, the maximum rate of interest is 25% per annum on a simple
interest basis. The limit may not apply to Floating Rate Notes in which an
investor has invested $2,500,000 or more.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" for such Note, and the first day of each Interest Reset Period being an
"Interest Reset Date"), as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the Interest
Reset Date will be: (i) in the case of Floating Rate Notes which reset daily,
each Business Day; (ii) in the case of Floating Rate Notes (other than Treasury
Rate Notes) which reset weekly, the Wednesday of each week; (iii) in the case of
Treasury Rate Notes which reset weekly, the Tuesday of each week, except as
provided below under "Treasury Rate Notes"; (iv) in the case of Floating Rate
Notes which reset monthly, the third Wednesday of each month; (v) in the case of
Floating Rate Notes which reset quarterly, the third Wednesday of March, June,
September and December; (vi) in the case of Floating Rate Notes which reset
semiannually, the third Wednesday of two months of each year, as specified in
the applicable Pricing Supplement; and (vii) in the case of Floating Rate Notes
which reset annually, the third Wednesday of one month of each year, as
specified in the applicable Pricing Supplement; provided, however, that (a) the
interest rate in effect from the date of issue to the first Interest Reset Date
with respect to a Floating Rate Note will be the initial interest rate set forth
in the applicable Pricing Supplement (the "Initial Interest Rate") and (b)
unless otherwise specified in the applicable Pricing Supplement, the interest
rate in effect for the ten days immediately prior to maturity, redemption or
repayment will be that in effect on the tenth day preceding such maturity,
redemption or repayment date. If any Interest Reset Date for any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Reset
Date shall be postponed to the next succeeding Business Day, except that, in the
case of a LIBOR Note, if such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the next preceding Business Day.
Except as provided below, unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the
case of Floating Rate Notes with a daily, weekly or monthly Interest Reset Date,
on the third Wednesday of each month; (ii) in the case of Floating Rate Notes
with a quarterly Interest Reset Date, on the third Wednesday of March, June,
September and December; (iii) in the case of Floating Rate Notes with a
semiannual Interest Reset Date, the third Wednesday of the two months specified
in the applicable Pricing Supplement; and (iv) in the case of Floating Rate
Notes with an annual Interest Reset Date, the third Wednesday of the month
specified in the applicable Pricing Supplement and, in each case, at maturity,
redemption or repayment. If any Interest Payment Date for any Floating Rate Note
would fall on a day that is not a Business Day with respect to such Floating
Rate Note, such Interest Payment Date will be the following day that is a
Business Day with respect to 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 day that is a
Business Day with respect to such LIBOR Note. If the maturity date or any
earlier redemption or repayment date of a Floating Rate Note would fall on a day
that is not a Business Day, the payment of principal, premium, if any, and
interest will be made on the next succeeding Business Day, and no interest on
such payment shall accrue for the period from and after such maturity,
redemption or repayment date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments for Floating Rate Notes (except Floating Rate Notes on which interest
is reset daily or weekly) shall be the amount of interest accrued from and
including the date of issue, or from and including the last date to which
interest has been paid to or duly provided for, to but excluding the Interest
Payment Date. In the case of a Floating Rate Note
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on which interest is reset daily or weekly, interest payments shall be, unless
otherwise specified in the applicable Pricing Supplement, the amount of interest
accrued from the date of issue, or from and including the last date to which
interest has been paid or duly provided for, as the case may be, to and
including the Record Date immediately preceding such Interest Payment Date,
except that at maturity or earlier redemption or repayment, the interest payable
will include interest accrued to, but excluding, the maturity, redemption or
repayment date, as the case may be.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable Pricing Supplement, the
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes, or by
the actual number of days in the year, in the case of Treasury Rate Notes and
CMT Rate 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 (as defined below) 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 immediately 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; provided, however, that (i) the interest rate in
effect for the period from the date of issue to the first Interest Reset Date
set forth in the applicable Pricing Supplement with respect to a Floating Rate
Note will be the "Initial Interest Rate" specified in the applicable Pricing
Supplement; and (ii) unless otherwise specified in the applicable Pricing
Supplement, the interest rate in effect for ten calendar days immediately prior
to maturity will be that in effect on the tenth calendar day preceding such
maturity.
All percentages used in or resulting from any calculation of the rate of
interest on a Floating Rate Note will be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on Floating Rate Notes will be rounded to the nearest
cent, with one-half cent rounded upward.
The applicable Pricing Supplement shall specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. Upon the
request of the holder of any Floating Rate Note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective on the next Interest Reset Date with respect to such
Floating Rate Note.
The "Interest Determination Date" pertaining to an Interest Reset Date for
CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, Prime Rate
Notes and CMT Rate Notes will be the second Business Day next preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a LIBOR Note will be the second London Banking Day preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a Treasury Rate Note will be the day of the week on which such
Interest Reset Date falls on which Treasury bills of the specified index
maturity would normally be auctioned. Treasury bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, but 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 Interest
Determination Date pertaining to the Interest Reset Date occurring in the next
succeeding week. If an auction falls on a day that is an Interest Reset Date,
such Interest Reset Date will be the next following Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date," where applicable, pertaining to an Interest Determination
Date will be the earlier of the tenth calendar day after such Interest
Determination Date or the next succeeding Record Date after such Interest
Determination Date or, if either such day is not a Business Day, the next
succeeding Business Day.
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Interest rates will be determined (which determination, in the absence of
manifest error, will be conclusive for all purposes and binding on holders of
Notes) by the Calculation Agent as follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in each CD Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H. 15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)," or, if
not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable U.S. dollar certificates of
deposit of the Index Maturity designated in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 p.m. Quotations for U.S. Government Securities" (the
"Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or the Composite Quotations by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the CD Rate on such Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the secondary market offered rates as of 10:00 a.m., New York City time, on such
Interest Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity designated in
the applicable Pricing Supplement of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money center banks of the highest credit standing in the market for negotiable
certificates of deposit; provided, however, that if fewer than three dealers
selected as aforesaid by the Calculation Agent are quoting as set forth above,
the CD Rate in effect for the applicable period will be the same as the CD Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the CD Rate Notes for
which such CD Rate is being determined shall be the Initial Interest Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in each Commercial Paper Rate Note and
in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below) of the per annum rate (quoted on a
bank discount basis) on such date for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement, as such rate shall be published
in H.15(519), under the heading "Commercial Paper." In the event that such rate
is not published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the Commercial Paper Rate
shall be the Money Market Yield of the rate on such Interest Determination Date
for commercial paper of the specified Index Maturity as published in the
Composite Quotations under the heading "Commercial Paper." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet available in
either H.15(519) or the Composite Quotations, then the Commercial Paper Rate
shall be the Money Market Yield of the arithmetic mean of the offered per annum
rates (quoted on a bank discount basis) as of 11:00 a.m., New York City time, on
such Interest Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for commercial paper of
the specified Index Maturity, placed for an industrial issuer whose bond rating
is "AA," or the equivalent, from a nationally recognized statistical rating
agency; provided, however, that if fewer than three dealers selected as
aforesaid by
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the Calculation Agent are quoting offered rates as mentioned in this sentence,
the Commercial Paper Rate in effect for the applicable period will be the same
as the Commercial Paper Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the Commercial Paper Rate Notes for which such Commercial Paper Rate is being
determined shall be the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = ------------- x 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 period for which accrued interest is being calculated.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in each Federal Funds Rate Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date, the
rate on such date for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)," or, if not so published by 3:00 p.m., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Federal Funds Rate will be the rate on such Interest Determination Date
published in the Composite Quotations under the heading "Federal Funds/Effective
Rate." if such rate is not yet published in either H.15(519) or the Composite
Quotations by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate for such 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 Federal
funds, as of 9:00 a.m., New York City time, on such Interest Determination Date,
arranged by three leading brokers of Federal funds transactions in The City of
New York selected by the Calculation Agent; provided, however, that if fewer
than three brokers selected as aforesaid by the Calculation Agent are quoting as
set forth above, the Federal Funds Rate in effect for the applicable period will
be the same as the Federal Funds Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the rate of
interest payable on the Federal Funds Rate Notes for which such Federal Funds
Rate is being determined shall be the Initial Interest Rate).
LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject
to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in
each LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
for each Interest Determination Date will be determined by the Calculation Agent
as follows:
(i) As of the Interest Determination Date, LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the specified Designated LIBOR
Page (as defined below) 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 designated in the applicable Pricing
Supplement, commencing on the second London Banking Day immediately
following such Interest Determination Date, that appear on the Designated
LIBOR Page as of 11:00 a.m., London time, on that Interest Determination
Date, if at least two such offered rates appear (unless, as aforesaid, only
a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR
Telerate" is specified in the applicable Pricing Supplement, the rate for
deposits in the Index Currency
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having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
Interest Determination Date, that appears on the Designated LIBOR Page as
of 11:00 a.m., London time, on that Interest Determination Date. If fewer
than two offered rates appear (if "LIBOR Reuters" is specified in the
applicable Pricing Supplement) or no rate appears (if "LIBOR Telerate" is
specified in the applicable Pricing Supplement), LIBOR in respect of the
related Interest Determination Date will be determined as if the parties
had specified the rate described in clause (ii) below.
(ii) With respect to an Interest Determination Date on which fewer
than two offered rates appear (if "LIBOR Reuters" is specified in the
applicable Pricing Supplement) or no rate appears (if "LIBOR Telerate" is
specified in the applicable Pricing Supplement"), the Calculation Agent
will request the principal London offices of each of four major reference
banks in the London interbank market, as selected by the Calculation Agent,
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 second London Banking Day
immediately following such Interest Determination Date, to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
such Interest Determination Date and in a principal amount of not less than
$1,000,000 (or the equivalent in the Index Currency, if the Index Currency
is not the U.S. dollar) 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, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
a.m. (or such other time specified in the applicable Pricing Supplement),
in the applicable financial center for the country of the Index Currency on
such Interest Determination Date, by three major banks in such financial
center selected by the Calculation Agent for loans in the Index Currency to
leading European banks, having the Index Maturity designated in the
applicable Pricing Supplement and in a principal amount of not less than
$1,000,000 commencing on the second London Banking Day immediately
following such Interest Determination Date (or the equivalent in the Index
Currency, if the Index Currency is not the U.S. dollar) that is
representative for a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
in effect for the applicable period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the LIBOR Notes for
which LIBOR is being determined shall be the Initial Interest Rate).
"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 Reuters" is designated
in the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, Page 3750) had been specified.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in each Prime Rate Note and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the rate published
in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the arithmetic mean of the rates of interest publicly
announced by each bank named on the Reuters Screen NYMF Page (as defined below)
as such bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen NYMF Page on such Interest
Determination Date, or, if fewer than four such rates appear on the Reuters
Screen NYMF Page for such Interest Determination Date, the 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 360 as of the close of business on such Interest
Determination Date by at least two of the three major money center banks in The
City of New York selected by the Calculation Agent from which quotations are
requested. If fewer than two quotations are provided, the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean on the basis of the prime rates in The City of New York by the appropriate
number of substitute banks or trust companies 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 U.S. $500 million and being subject to supervision or
examination by Federal or State authority, selected by the Calculation Agent to
quote such rate or rates.
"Reuters Screen NYMF Page" means the display designated as Page "NYMF" on
the Reuters Monitor Money Rates Services (or such other page as may replace the
NYMF Page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
If in any month the Prime Rate is not published in H.15(519) and the banks
or trust companies selected as aforesaid are not quoting as mentioned in the
preceding paragraph, the "Prime Rate" for such Interest Reset Period will be the
same as the Prime Rate for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the rate of interest payable on the
Prime Rate Notes for which the Prime Rate is being determined shall be the
Initial Interest Rate).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if
any) specified in each Treasury Rate Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
for the auction held on such date of direct obligations of the United States
("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement, as published in H.15(519) under the heading "Treasury
Bills-auction average (investment)" or, if not so published by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination Date
(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. In the event that 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
Interest Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall 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) calculated using the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 p.m., New York City time, on such
Interest Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent 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 fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting bid rates as
mentioned in this sentence, the Treasury Rate for the applicable period will be
the same as the Treasury Rate for the immediately preceding Interest Reset
Period (or, if there
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was no such Interest Reset Period, the rate of interest payable on the Treasury
Rate Notes for which the Treasury Rate is being determined shall be the Initial
Interest Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in each CMT Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 p.m.," under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is
7055, the rate on such Interest Determination Date and (ii) if the Designated
CMT Telerate Page is 7052, the week or the month, as applicable, ended
immediately preceding the week in which the related 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 Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index as published in the
relevant 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 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 Interest
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 the relevant 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 for the 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 the 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 the Agents or their 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
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 for such 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 Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent 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 maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100,000,000. If three or four (and not five)
of 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 selected by the Calculation Agent are
quoting as described herein, the CMT Rate for such Interest Reset Date will be
the same as the CMT Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the CMT Rate Notes for which the CMT Rate is being determined shall be the
Initial Interest Rate). If two Treasury notes with an original maturity as
described in the third preceding sentence have remaining terms to maturity
equally close to the Designated
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<PAGE> 15
CMT Maturity Index, the quotes 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 designated in an applicable Pricing Supplement (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, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in an applicable Pricing Supplement with respect to which the CMT Rate
will be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be two years.
INDEXED NOTES
The Notes may be issued, from time to time, as Notes of which the principal
amount payable on a date more than nine months from the date of original issue
(the "Stated Maturity") and/or on which the amount of interest payable on an
Interest Payment Date and/or any premium payable will be determined by reference
to currencies, currency units, commodity prices, financial or nonfinancial
indices or other factors (the "Indexed Notes"), as indicated in the applicable
Pricing Supplement. Holders of Indexed Notes may receive a principal amount at
maturity that is greater than or less than the face amount of such Notes
depending upon the fluctuation of the relative value, rate or price of the
specified index. Specific information pertaining to the method for determining
the principal amount payable at maturity, a historical comparison of the
relative value, rate or price of the specified index and the face amount of the
Indexed Note and certain additional United States Federal tax considerations
will be described in the applicable Pricing Supplement.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Fixed Rate Note (other than an
Amortizing Note) will indicate whether the Company has the option to extend the
maturity of such Fixed Rate Note for one or more periods of one or more whole
years (each an "Extension Period") up to but not beyond the date (the "Final
Maturity Date") set forth in such Pricing Supplement. If the Company has such
option with respect to any such Fixed Rate Note (an "Extendible Note"), the
following procedures will apply, unless modified as set forth in the applicable
Pricing Supplement, and certain additional United States Federal tax
considerations may apply, as set forth in the applicable Pricing Supplement.
The Company may exercise such option with respect to an Extendible Note by
notifying the Paying Agent of such exercise at least 45 but not more than 60
days prior to the maturity date originally in effect with respect to such Note
(the "Original Maturity Date") or, if the maturity date of such Note has already
been extended, prior to the maturity date then in effect (an "Extended Maturity
Date"). At least 38 days prior to the Original Maturity Date or an Extended
Maturity Date, as the case may be (each, a "Maturity Date"), the Paying Agent
will mail to the holder of such Note a notice (the "Extension Notice") relating
to such Extension Period, by first-class mail, postage prepaid, setting forth
(a) the election of the Company to extend the maturity of such Note; (b) the new
Extended Maturity Date; (c) the interest rate applicable to the Extension
Period; and (d) the provisions, if any, for redemption during the Extension
Period, including the date or dates on which, the period or periods during which
and the price or prices at which such redemption may occur during the Extension
Period. Upon the mailing by the Paying Agent of an Extension Notice to the
holder of an Extendible Note, the Maturity of such Note shall be extended
automatically, and, except as modified by the Extension Notice and as described
in the next paragraph, such Note will have the same terms it had prior to the
mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 a.m., New York City
time, on the twentieth calendar day prior to the Maturity Date then in effect
for an Extendible Note (or, if such day is not a Business Day, not later than
10:00 a.m., New York City time, on the immediately succeeding Business Day), the
Company may, at its option, revoke the interest rate provided for in the
Extension Notice and establish a higher interest rate
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<PAGE> 16
for the Extension Period by causing the Paying Agent to send notice of such
higher interest rate to the holder of such Note by first-class mail, postage
prepaid, or by such other means as shall be agreed between the Company and the
Paying Agent. Such notice shall be irrevocable. All Extendible Notes with
respect to which the Maturity Date is extended in accordance with an Extension
Notice will bear such higher interest rate for the Extension Period, whether or
not tendered for repayment.
If the Company elects to extend the maturity of an Extendible Note, the
holder of such Note will have the option to require the Company to repay such
Note on the Maturity Date then in effect at a price equal to the principal
amount thereof plus any accrued and unpaid interest to such date. In order for
an Extendible Note to be repaid on such Maturity Date, the holder thereof must
follow the procedures set forth below under "Repayment at the Noteholders'
Option" for optional repayment, except that the period for delivery of such Note
or notification to the Paying Agent shall be at least 25 but not more than 35
days prior to the Maturity Date then in effect and except that a holder who has
tendered an Extendible Note for repayment pursuant to an Extension Notice may,
by written notice to the Paying Agent, revoke any such tender for repayment
until 3:00 p.m., New York City time, on the twentieth calendar day prior to the
Maturity Date then in effect (or, if such day is not a Business Day, until 3:00
p.m., New York City time, on the next succeeding Business Day).
BOOK-ENTRY SYSTEM
Unless otherwise indicated in the applicable Pricing Supplement, upon
issuance, all Fixed Rate Book-Entry Notes having the same Issue Date, interest
rate, if any, amortization schedule, if any, maturity date and other terms, if
any, will be represented by one or more Global Securities, and all Floating Rate
Book-Entry Notes having the same Issue Date, Initial Interest Rate, Base Rate,
Interest Reset Period, Interest Payment Dates, Index Maturity, Spread and/or
Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum Interest Rate,
if any, maturity date and other terms, if any, will be represented by one or
more Global Securities. Each Global Security representing Book-Entry Notes will
be deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depositary"), and registered in the name of a nominee of the
Depositary. Except under the circumstances described in the accompanying
Prospectus, Certificated Notes will not be exchangeable for Book-Entry Notes and
Book-Entry Notes will not be exchangeable for Certificated Notes. See
"Description of Debt Securities -- Global Securities" in the accompanying
Prospectus.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation within
the meaning of the New York Uniform Commercial Code," and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of its participating organizations
("Participants") and to facilitate the clearance and settlement of transactions
among its Participants in such securities through electronic book-entry changes
in accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. The Depositary's Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations, some of whom (and for their representatives)
own the Depositary. Access to the Depositary book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly.
A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the accompanying
Prospectus under "Description of Debt Securities -- Global Securities" in the
accompanying Prospectus.
OPTIONAL REDEMPTION
Unless otherwise indicated in the applicable Pricing Supplement, Notes may
not be redeemed by the Company prior to maturity. If so specified in the
applicable Pricing Supplement, the Notes will be redeemable prior to maturity at
the option of the Company on the terms specified therein. Unless otherwise
indicated in the applicable Pricing Supplement, notice of redemption will be
provided by mailing a notice of such
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<PAGE> 17
redemption to each holder by first-class mail, postage prepaid, at least 30 days
and not more than 60 days prior to the date fixed for redemption to the
respective address of each holder as that address appears upon the books
maintained by the Paying Agent.
REPAYMENT AT THE NOTEHOLDERS' OPTION
Unless otherwise indicated in the applicable Pricing Supplement, Notes may
not be redeemed at the option of the holders thereof prior to maturity. If so
specified in the applicable Pricing Supplement, a Note will be repayable at the
option of the holder on a date or dates specified prior to its maturity date
and, unless otherwise specified in such Pricing Supplement, at a price equal to
100% of the principal amount thereof, together with accrued interest to the date
of repayment, unless such Notes were issued with original issue discount, in
which case the applicable Pricing Supplement will specify the amount payable
upon such repayment.
Unless otherwise indicated in the applicable Pricing Supplement, in order
for such a Note to be repaid, the Paying Agent must receive at least 15 days but
not more than 30 days prior to the repayment date (i) the Note with the form
entitled "Option to Elect Repayment" on the reverse of the Note duly completed
or (ii) a telegram, facsimile transmission or a letter from a member of a
national securities exchange, or the National Association of Securities Dealers,
Inc. (the "NASD") or a commercial bank or trust company in the United States
setting forth the name of the holder of the Note, the principal amount of the
Note, the principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid, together with the duly completed form entitled "Option to Elect
Repayment" on the reverse of the Note, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, facsimile
transmission or letter, provided however, that such telegram, facsimile
transmission or letter shall only be effective if such Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Except in
the case of Extendible Notes, and unless otherwise specified in the applicable
Pricing Supplement, exercise of the repayment option by the holder of a Note
will be irrevocable. The repayment option may be exercised by the holder of a
Note for less than the entire principal amount of the Note but, in that event,
the principal amount of the Note remaining outstanding after repayment must be
an authorized denomination.
If a Note is represented by a Global Security, the Depositary's nominee
will be the holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect Participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect Participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depositary.
REPURCHASE
The Company may purchase Notes at any price in the open market or
otherwise. Notes so purchased by the Company may, at the discretion of the
Company, be held or resold or surrendered to the relevant Trustee for
cancellation.
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CONSOLIDATED RATIO
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ----------------------------------------
1995 1994 1993 1992 1991 1990
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
5.0 3.6 --* 2.6 0.6* 2.5
</TABLE>
- ---------------
*In 1993 and 1991, earnings were inadequate to cover fixed charges by $144
million and $23 million, respectively.
In 1993, the Company recorded an after-tax charge of $132 million for
personnel reductions, business restructurings involving consolidations and
re-alignments within divisions, costs at sites of discontinued businesses,
future environmental liabilities, and other charges. In 1991, the Company
recorded an after-tax charge of $80 million to cover losses on disposition and
write-down of certain businesses and costs of personnel reductions.
For purposes of computing this consolidated ratio, earnings represent
income before income taxes with certain adjustments, primarily for capitalized
interest, plus fixed charges. Fixed charges consist of interest expense
(including capitalized interest), amortization of debt discount and expense, and
the estimated interest factor reflected in rental expense.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
Any investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than U.S. dollars entails
significant risks that are not associated with a similar investment in a
security denominated in U.S. dollars. Such risks include, without limitation,
the possibility of significant changes in rates of exchange between the U.S.
dollar and the various foreign currencies (or composite currencies) and the
possibility of the imposition or modification of exchange controls by either the
U.S. or foreign governments. Such risks generally depend on economic and
political events over which the Company has no control. In recent years, rates
of exchange between U.S. dollars and certain foreign currencies have been highly
volatile and such volatility may be expected to continue in the future.
Fluctuations in any particular exchange rate that have occurred in the past are
not necessarily indicative, however, of fluctuations in such rate that may occur
during the term of any Note. Depreciation against the U.S. dollar of the
currency in which a Note is payable would result in a decrease in the effective
yield of such Note below its coupon rate and, in certain circumstances, could
result in a loss to the investor on a U.S. dollar basis. In addition, depending
on the specific terms of a Note denominated in a Specified Currency, changes in
exchange rates relating to any of the currencies involved may result in a
decrease in its effective yield and, in certain circumstances, could result in a
loss of all or a substantial portion of the principal of a Note to the investor.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN FINANCIAL AND LEGAL
ADVISORS AS TO ANY SPECIFIC RISKS ENTAILED BY AN INVESTMENT BY SUCH INVESTOR IN
NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF,
FOREIGN CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO
ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company
disclaims 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, premium, if
any, and interest on the Notes. Such persons should consult their own counsel
with regard to such matters.
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<PAGE> 19
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at the time of payment of principal of, premium,
if any, or interest on a Note. Even if there are no actual exchange controls, it
is possible that the Specified Currency for any particular Note not denominated
in U.S. dollars would not be available when payments on such Note are due. In
that event, the Company would make required payments in U.S. dollars on the
basis of the Market Exchange Rate on the date of such payment, or if such rate
of exchange is not then available, on the basis of the Market Exchange Rate as
of the most recent practicable date. See "Description of Notes -- Payment
Currency and Currency Exchange Information."
With respect to any Note denominated in, or the payment of which is related
to the value of, a foreign currency or currency unit, the applicable Pricing
Supplement will include information with respect to applicable current exchange
controls, if any, and historic exchange rate information on such currency or
currency unit. The information contained therein shall not constitute a part of
this Prospectus Supplement and 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.
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. In the event an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a Federal or State
court in the United States, it is likely that such court would grant judgment
relating to the Notes only in U.S. dollars. The date used to determine the rate
of conversion of a Specified Currency into U.S. dollars will depend upon various
factors, including which court renders the judgment. In the event of an action
based on Notes denominated in a Specified Currency other than U.S. dollars in a
state court in the State of New York, such court would be required to render
such judgment in the Specified Currency in which the Note is denominated, and
such judgment would be converted into U.S. dollars at the exchange rate
prevailing on the date of entry of the judgment.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the principal U.S. Federal tax consequences
resulting from the beneficial ownership of Notes by certain persons. This
summary does not purport to consider all the possible tax consequences of the
purchase, ownership or disposition of the Notes and is not intended to reflect
the individual tax position of any beneficial owner. It deals only with Notes
held as capital assets, whether issued in U.S. dollars or currencies or
composite currencies other than U.S. dollars ("Foreign Currency"). Moreover,
except as expressly indicated, it deals only with initial purchasers and does
not deal with beneficial owners with a special tax status or special tax
situations, such as dealers in securities or currencies, Notes (or Foreign
Currency) held as a hedge against currency risks or as part of a straddle with
other investments or as part of a "synthetic security" or other integrated
investment (including a "conversion transaction") comprised of a Note and one or
more other investments, or situations in which the functional currency of the
beneficial owner is not the U.S. dollar. Except to the extent discussed below
under "Non-United States Holders", this summary may not be applicable to
non-United States persons not subject to United States Federal income tax on
their worldwide income. The summary is based upon the United States Federal tax
laws and regulations as now in effect and as currently interpreted and does not
take into account possible changes in such tax laws or such interpretations,
which may be applied retroactively. It does not include any description of the
tax laws of any state, local or foreign governments that may be applicable to
the Notes or holders thereof. Persons considering the purchase of Notes should
consult their own tax advisors concerning the application of the United States
Federal tax laws to their particular situations as well as any consequences to
them under the laws of any other taxing jurisdiction.
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<PAGE> 20
UNITED STATES HOLDERS
Payments of Interest
In general, interest on a Note, whether payable in U.S. dollars or a
Foreign Currency (other than certain payments on a Discount Note, as defined and
described below under "Original Issue Discount"), will be taxable to a
beneficial owner who or which is (i) a citizen or resident of the United States,
(ii) a corporation created or organized under the laws of the United States or
any State thereof (including the District of Columbia), (iii) an estate or trust
the income of which is subject to United States Federal income taxation
regardless of its source or (iv) a person otherwise subject to United States
Federal income taxation on its worldwide income (a "U.S. Holder") as ordinary
income at the time it is received or accrued, depending on the holder's method
of accounting for tax purposes. If an interest payment is denominated in or
determined by reference to a Foreign Currency, then special rules, described
below under "Foreign Currency Notes", apply.
Original Issue Discount
The following discussion summarizes the United States Federal income tax
consequences to holders of Notes issued with original issue discount ("OID").
The basic rules for reporting OID are contained in the Internal Revenue Code of
1986, as amended (the "Code"). On February 2, 1994, the Treasury Department
published final regulations (the "OID Regulations"), which expand and illustrate
the rules provided by the Code.
Special rules apply to OID on a Discount Note that is denominated in
Foreign Currency. See "Foreign Currency Notes -- Foreign Currency Discount
Notes".
General. A Note will be treated as issued with OID (a "Discount Note") if
the excess of the Note's "stated redemption price at maturity" over its issue
price exceeds a de minimis amount (i.e., such excess is equal to or greater than
.25% of the "stated redemption price at maturity" multiplied by the number of
complete years to maturity). Generally, the issue price of a Note (or any Note
that is part of an issue of Notes) will be the first price at which a
substantial amount of Notes that are part of such issue of Notes are sold to the
public (excluding amounts sold to bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers). Under the OID Regulations, the "stated redemption price at
maturity" of a Note is the sum of all payments provided by the Note that are not
payments of "qualified stated interest". A "qualified stated interest" payment
includes any stated interest payment on a Note that is unconditionally payable
at least annually at a single fixed rate (or at certain floating rates) that
appropriately takes into account the length of the interval between stated
interest payments. The applicable Pricing Supplement will state whether a
particular issue of Notes will constitute an issue of Discount Notes.
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is de minimis, then such excess constitutes "de minimis
OID". Under the OID Regulations, unless the election described below under
"Election to Treat All Interest as Original Issue Discount" is made, such a Note
will not be treated as issued with OID (in which case the following paragraphs
under "Original Issue Discount" will not apply) and a U.S. Holder of such a Note
will recognize capital gain with respect to such de minimis OID as stated
principal payments on the Note are made. The amount of such gain with respect to
each such payment will equal the product of the total amount of the Note's de
minimis OID and a fraction, the numerator of which is the amount of the
principal payment made and the denominator of which is the stated principal
amount of the Note.
In certain cases, Notes that bear stated interest and are issued at par may
be deemed to bear OID for Federal income tax purposes, with the result that the
inclusion of interest in income for Federal income tax purposes may vary from
the actual cash payments of interest made on such Notes, generally accelerating
income for cash method taxpayers. Under the OID Regulations, a Note may be a
Discount Note where (i) a Floating Rate Note provides for a Maximum Interest
Rate or a Minimum Interest Rate that is reasonably expected as of the issue date
to cause the yield on the debt instrument to be significantly less, in the case
of a maximum rate, or more, in the case of a minimum rate, than the expected
yield determined without the
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<PAGE> 21
maximum or minimum rate, as the case may be; (ii) a Floating Rate Note provides
for significant front-loading or back-loading of interest; (iii) a Note bears
interest at certain combinations of floating or fixed rates; or (iv) a Note
provides for certain other kinds of contingent payments. Notice will be given in
the applicable Pricing Supplement when the Company determines that a particular
Note will be a Discount Note. Unless specified in the applicable Pricing
Supplement, Floating Rate Notes will not be Discount Notes.
The Code and the OID Regulations provide rules that require a U.S. Holder
of a Discount Note having a maturity of more than one year from its date of
issue to include OID in gross income before the receipt of cash attributable to
such income, without regard to the holder's method of accounting for tax
purposes. The amount of OID includible in gross income by a U.S. Holder of a
Discount Note is the sum of the "daily portions" of OID with respect to the
Discount Note for each day during the taxable year or portion of the taxable
year in which the U.S. Holder holds such Discount Note ("accrued OID"). The
daily portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. Under the OID
Regulations, accrual periods with respect to a Note may be any set of periods
(which may be of varying lengths) selected by the U.S. Holder as long as (i) no
accrual period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on the first day or final day of an
accrual period.
The amount of OID allocable to an accrual period equals the excess of (a)
the product of the Discount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
The "adjusted issue price" of a Discount Note at the beginning of the first
accrual period is the issue price and at the beginning of any accrual period
thereafter is (x) the sum of the issue price of such Discount Note, the accrued
OID for each prior accrual period (determined without regard to the amortization
of any acquisition premium or bond premium, which are discussed below), and the
amount of any qualified stated interest on the Note that has accrued prior to
the beginning of the accrual period but is not payable until a later date, less
(y) any prior payments on the Discount Note that were not qualified stated
interest payments. If a payment (other than a payment of qualified stated
interest) is made on the first day of an accrual period, then the adjusted issue
price at the beginning of such accrual period is reduced by the amount of the
payment. If a portion of the initial purchase price of a Note is attributable to
interest that accrued prior to the Note's issue date, the first stated interest
payment on the Note is to be made within one year of the Note's issue date and
such payment will equal or exceed the amount of pre-issuance accrued interest,
then the U.S. Holder may elect to decrease the issue price of the Note by the
amount of pre-issuance accrued interest, in which case a portion of the first
stated interest payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Note (other than any
payment of qualified stated interest) over the Note's adjusted issue price as of
the beginning of such final accrual period. In addition, if an interval between
payments of qualified stated interest on a Note contains more than one accrual
period, then the amount of qualified stated interest payable at the end of such
interval is allocated pro rata (on the basis of their relative lengths) between
the accrual periods contained in the interval.
U.S. Holders of Discount Notes generally will have to include in income
increasingly greater amounts of OID over the life of the Notes.
Acquisition Premium. A U.S. Holder that purchases a Note at its original
issuance for an amount in excess of its issue price but less than its stated
redemption price at maturity (any such excess being "acquisition premium"), and
that does not make the election described below under "Original Issue Discount
- -- Election To Treat All Interest as Original Issue Discount", is permitted to
reduce the daily portions of OID by a fraction, the numerator of which is the
excess of the U.S. Holder's purchase price for the Note over the issue price for
the Note, and the denominator of which is the excess of the sum of all amounts
payable on the
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Note after the purchase date, other than payments of qualified stated interest,
over the Note's issue price. Alternatively, a U.S. Holder may elect to compute
OID accruals as described under "Original Issue Discount -- General" above,
treating the U.S. Holder's purchase price as the issue price.
Optional Redemption. If the Company has an option to redeem a Note, or the
Holder has an option to cause a Note to be repurchased, prior to the Note's
stated maturity, such option will be presumed to be exercised if, by utilizing
any date on which such Note may be redeemed or repurchased as the maturity date
and the amount payable on such date in accordance with the terms of such Note
(the "redemption price") as the stated redemption price at maturity, the yield
on the Note would be (i) in the case of an option of the Company, lower than its
yield to stated maturity, or (ii) in the case of an option of the Holder, higher
than its yield to stated maturity. If such option is not in fact exercised when
presumed to be exercised, the Note would be treated solely for OID purposes as
if it were redeemed or repurchased, and a new Note were issued, on the presumed
exercise date for an amount equal to the Note's adjusted issue price on that
date.
Short-Term Notes. Under the Code, special rules apply with respect to OID
on Notes that mature one year or less from the date of their issuance
("Short-Term Notes"). In general, an individual or other cash basis U.S. Holder
of a Short-Term Note is not required to include OID in income as it accrues for
United States Federal income tax purposes unless it elects to do so. Accrual
basis U.S. Holders and certain other U.S. Holders, including banks, regulated
investment companies, dealers in securities and cash basis U.S. Holders who so
elect, are required to include OID on Short-Term Notes as it accrues on either a
straight-line basis or under the constant yield method (based on daily
compounding), at the election of the U.S. Holder. In the case of a U.S. Holder
not required and not electing to include OID in income currently, any gain
realized on the sale or retirement of a Short-Term Note will be ordinary income
to the extent of the OID accrued on a straight-line basis (unless an election is
made to accrue the original issue discount under the constant yield method)
through the date of sale or retirement. U.S. Holders who are not required and do
not elect to include OID on Short-Term Notes in income as it accrues will be
required to defer deductions for interest on borrowings allocable to Short-Term
Notes in an amount not exceeding the deferred income until the deferred income
is realized.
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of "acquisition discount", if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price. Acquisition discount
will be treated as accruing on a ratable basis or, at the election of the
holder, on a constant-yield basis. However, any payment on a Short-Term Note,
whether denominated as principal or interest, will be treated as a payment of
accrued OID, to the extent that OID has accrued at the time of payment.
For purposes of determining the amount of OID subject to these rules, the
OID Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Note's stated redemption price at maturity.
Notes Purchased at a Premium
Under the Code, a U.S. Holder that purchases a Note for an amount in excess
of its principal amount will not be subject to the OID rules and may elect to
treat such excess as "amortizable bond premium", in which case the amount
required to be qualified stated included in the U.S. Holder's income each year
with respect to interest on the Note will be reduced by the amount of
amortizable bond premium allocable (based on the Note's yield to maturity) to
such year. Any election to amortize bond premium shall apply to all bonds (other
than bonds the interest on which is excludible from gross income) held by the
U.S. Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired by the U.S. Holder, and is irrevocable without
the consent of the Internal Revenue Service (the "IRS"). See also "Original
Issue Discount -- Election to Treat All Interest as Original Issue Discount".
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<PAGE> 23
Notes Purchased at a Market Discount
A Note, other than a Short-Term Note, will be treated as issued at a market
discount (a "Market Discount Note") if the amount for which a U.S. Holder
purchased the Note is less than the Note's issue price, subject to a de minimis
rule similar to the rule relating to de minimis OID described under "Original
Issue Discount -- General".
In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Market Discount Note. Such an election applies to
all debt instruments with market discount acquired by the electing U.S. Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder
elects to accrue such market discount on a constant yield to maturity basis.
Such an election shall apply only to the Note with respect to which it is made
and may not be revoked. A U.S. Holder of a Market Discount Note who does not
elect to include market discount in income currently generally will be required
to defer deductions for interest on borrowings allocable to such Note in an
amount not exceeding the accrued market discount on such Note until the maturity
or disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
Election To Treat All Interest as Original Issue Discount
Any U.S. Holder may elect to include in gross income all interest that
accrues on a Note using the constant yield method described above under the
heading "Original Issue Discount -- General," with the modifications described
below. For purposes of this election, interest includes stated interest, OID, de
minimis OID, market discount (described above under "Notes Purchased at a Market
Discount"), acquisition discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium (described above under
"Notes Purchased at a Premium") or acquisition premium.
In applying the constant yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing U.S.
Holder's adjusted basis in the Note immediately after its acquisition, the issue
date of the Note will be the date of its acquisition by the electing U.S.
Holder, and no payments on the Note will be treated as payments of qualified
stated interest. This election will generally apply only to the Note with
respect to which it is made and may not be revoked without the consent of the
IRS. If this election is made with respect to a Note with amortizable bond
premium, then the electing U.S. Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all debt instruments
with amortizable bond premium (other than debt instruments the interest on which
is excludible from gross income) held by such electing U.S. Holder as of the
beginning of the taxable year in which the Note with respect to which the
election is made is acquired or thereafter acquired. The deemed election with
respect to amortizable bond premium may not be revoked without the consent of
the IRS.
If the election described above to apply the constant-yield method to all
interest on a Note is made with respect to a Market Discount Note, as defined
above, then the electing U.S. Holder will be treated as having made the election
discussed above under "Notes Purchased at a Market Discount" to include market
discount in income currently over the life of all debt instruments held or
thereafter acquired by such U.S. Holder.
Purchase, Sale and Retirement of the Notes
General. A U.S. Holder's tax basis in a Note will generally be its U.S.
dollar cost (which, in the case of a Note purchased with a foreign currency,
will be the U.S. dollar value of the purchase price on the date of purchase),
increased by the amount of any OID or market discount (or acquisition discount,
in the case of a Short-Term Note) included in the U.S. Holder's income with
respect to the Note and the amount, if any, of income attributable to de minimis
OID included in the U.S. Holder's income with respect to the Note, and reduced
by the sum of (i) the amount of any payments that are not qualified stated
interest payments, and
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<PAGE> 24
(ii) the amount of any amortizable bond premium applied to reduce interest on
the Note. A U.S. Holder generally will recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on the
sale or retirement and the tax basis of the Note. The amount realized on a sale
or retirement for an amount in foreign currency will be the U.S. dollar value of
such amount on the date of sale or retirement. Except to the extent described
above under "Original Issue Discount -- Short Term Notes" or "Market Discount"
or below under "Foreign Currency Notes -- Exchange Gain or Loss", and except to
the extent attributable to accrued but unpaid interest, gain or loss recognized
on the sale or retirement of a Note will be capital gain or loss and will be
long-term capital gain or loss if the Note was held for more than one year.
Foreign Currency Notes
Interest Payments. If an interest payment is denominated in or determined
by reference to a Foreign Currency, the amount of income recognized by a cash
basis U.S. Holder will be the U.S. dollar value of the interest payment, based
on the exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars. Accrual basis U.S. Holders may
determine the amount of income recognized with respect to such interest payments
in accordance with either of two methods. Under the first method, the amount of
income recognized will be based on the average exchange rate in effect during
the interest accrual period (or, with respect to an accrual period that spans
two taxable years, the partial period within the taxable year). Upon receipt of
an interest payment (including a payment attributable to accrued but unpaid
interest upon the sale or retirement of a Note) determined by reference to a
Foreign Currency, an accrual basis U.S. Holder will recognize ordinary income or
loss measured by the difference between such average exchange rate and the
exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars. Under the second method, an
accrual basis U.S. Holder may elect to translate interest income into U.S.
dollars at the spot exchange rate in effect on the last day of the accrual
period or, in the case of an accrual period that spans two taxable years, at the
exchange rate in effect on the last day of the partial period within the taxable
year. Additionally, if a payment of interest is actually received within 5
business days of the last day of the accrual period or taxable year, an accrual
basis U.S. Holder applying the second method may instead translate such accrued
interest into U.S. dollars at the spot exchange rate in effect on the day of
actual receipt (in which case no exchange gain or loss will result). Any
election to apply the second method will apply to all debt instruments held by
the U.S. Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired by the U.S. Holder, and will be irrevocable
without the consent of the IRS.
Exchange of Amounts in Other than U.S. Dollars. Foreign Currency received
as interest on a Note or on the sale or retirement of a Note will have a tax
basis equal to its U.S. dollar value at the time such interest is received or at
the time of such sale or retirement, as the case may be. Foreign Currency that
is purchased will generally have a tax basis equal to the U.S. dollar value of
the Foreign Currency on the date of purchase. Any gain or loss recognized on a
sale or other disposition of a Foreign Currency (including its use to purchase
Notes or upon exchange for U.S. dollars) will be ordinary income or loss.
Foreign Currency Discount Notes. OID for any accrual period on a Discount
Note that is denominated in a Foreign Currency will be determined in the Foreign
Currency and then translated into U.S. dollars in the same manner as stated
interest accrued by an accrual basis U.S. Holder. Upon receipt of an amount
attributable to original issue discount (whether in connection with a payment of
interest or the sale or retirement of a Note), a U.S. Holder may recognize
ordinary income or loss.
Amortizable Bond Premium. In the case of a Note that is denominated in a
Foreign Currency, bond premium will be computed in units of Foreign Currency,
and amortizable bond premium will reduce interest income in units of the Foreign
Currency. At the time amortized bond premium offsets interest income, a U.S.
Holder may realize ordinary income or loss, measured by the difference between
exchange rates at that time and at the time of the acquisition of the Notes.
Market Discount. Market discount is determined in units of the Foreign
Currency, accrued market discount that is required to be taken into account on
the maturity or upon disposition of a Note is translated
S-24
<PAGE> 25
into U.S. dollars at the exchange rate on the maturity or the disposition date,
as the case may be (and no part is treated as exchange gain or loss), accrued
market discount currently includible in income by an electing U.S. Holder is
translated into U.S. dollars at the average exchange rate for the accrual period
(or the partial accrual period during which the U.S. Holder held the Note), and
exchange gain or loss is determined on maturity or disposition of the Note (as
the case may be) in the manner described above under "Foreign Currency
Notes -- Interest Payments" with respect to the computation of exchange gain or
loss on the receipt of accrued interest by an accrual method holder.
Exchange Gain or Loss. Gain or loss recognized by a U.S. Holder on the
sale or retirement of a Note that is attributable to changes in exchange rates
will be treated as ordinary income or loss. However, exchange gain or loss is
taken into account only to the extent of total gain or loss realized on the
transaction.
Indexed Notes
The applicable Pricing Supplement will contain a discussion of any special
United States Federal income tax rules with respect to Indexed Notes.
NON-UNITED STATES HOLDERS
Subject to the discussion of backup withholding below, payments of
principal (and premium, if any) and interest, including OID, by the Company or
any agent of the Company (acting in its capacity as such) to any holder of a
Note that is not a United States person (a "Non-U.S. Holder") will not be
subject to U.S. Federal withholding tax; provided, however, that in the case of
interest, including OID, (i) such holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote, (ii) such holder is not a controlled foreign
corporation for U.S. tax purposes that is related to the Company (directly or
indirectly) through stock ownership and (iii) either (A) the beneficial owner of
the Note certifies to the Company or its agent under penalties of perjury that
it is not a United States person and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Note certifies to the Company or its
agent under penalties of perjury that such statement has been received from the
beneficial owner by it or by another financial institution and furnishes the
payor with a copy thereof.
If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest, including OID, on the Note is effectively connected with the
conduct of such trade or business, such holder, although exempt from the
withholding tax discussed in the preceding paragraph, may be subject to U.S.
Federal income tax on such interest, and OID, in the same manner as if it were a
U.S. Holder. In addition, if such a holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest (including OID) on a Note will be
included in the earnings and profits of such holder if such interest (or OID) is
effectively connected with the conduct by such holder of a trade or business in
the United States. In lieu of the certificate described in the preceding
paragraph, such a holder must provide the payor with a properly executed IRS
Form 4224 to claim an exemption from U.S. Federal withholding tax.
Any capital gain, market discount or exchange gain realized on the sale,
exchange, retirement or other disposition of a Note by a Non-U.S. Holder will
not be subject to U.S. Federal income or withholding taxes if (i) such gain is
not effectively connected with a U.S. trade or business of the holder and (ii)
in the case of an individual, such holder (A) is not present in the United
States for 183 days or more in the taxable year of the sale, exchange,
retirement or other disposition or (B) does not have a tax home (as defined in
Section 911(d)(3) of the Code) in the United States in the taxable year of the
sale, exchange, retirement or other disposition and the gain is not attributable
to an office or other fixed place of business maintained by such individual in
the United States.
Notes held by an individual who is neither a citizen nor a resident of the
United States for U.S. Federal tax purposes at the time of such individual's
death will not be subject to U.S. Federal estate tax, provided that the income
from such Notes was not or would not have been effectively connected with a U.S.
trade or
S-25
<PAGE> 26
business of such individual and that such individual qualified for the exemption
from U.S. Federal withholding tax (without regard to the certification
requirements) described above.
PURCHASERS OF NOTES WHO ARE NON-U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES WITHHOLDING
AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE NOTES.
INFORMATION REPORTING AND BACKUP WITHHOLDING
For each calendar year in which the Notes are outstanding, each Participant
or indirect Participant holding an interest in a Note on behalf of a beneficial
owner of a Note and each paying agent making payments in respect of a Note will
generally be required to provide the IRS with certain information, including
such beneficial owner's name, address and taxpayer identification number (either
such beneficial owner's Social Security number or its employer identification
number, as the case may be), and the aggregate amount of interest (including
OID, if any) and principal paid to such beneficial owner during the calendar
year. These reporting requirements, however, do not apply with respect to
certain beneficial owners who establish their eligibility for an exemption,
including corporations, securities broker-dealers, other financial institutions,
tax-exempt organizations, qualified pension and profit sharing trusts,
individual retirement accounts and Non-U.S. persons.
In the event that a beneficial owner of a Note fails to establish its
exemption from such information reporting requirements or is subject to the
reporting requirements described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law, or underreports
its tax liability, as the case may be, the Participant or indirect Participant
holding such interest on behalf of such beneficial owner or paying agent making
payments in respect of a Note may be required to "backup" withhold a tax equal
to 31% of each payment of interest (including OID, if any) and principal with
respect to Notes. This backup withholding tax is not an additional tax and may
be credited against the beneficial owner's United States Federal income tax
liability if the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
the Agents, each of which has agreed to use its best efforts to solicit offers
to purchase Notes. The Company will have the sole right to accept offers to
purchase Notes and may reject any offer to purchase Notes in whole or in part.
An Agent will have the right to reject any offer to purchase Notes solicited by
it in whole or in part. Payment of the purchase price of the Notes will be
required to be made in immediately available funds. The Company will pay an
Agent, in connection with sales of Notes resulting from a solicitation made or
an offer to purchase received by such Agent, a commission, initially ranging
from .125% to .750% of the principal amount of Notes to be sold depending on the
maturity of the Notes; provided, however, that commissions with respect to Notes
having a maturity in excess of 30 years will be negotiated. The Company also
reserves the right to sell Notes directly to investors on its behalf in those
jurisdictions where it is authorized to do so.
The Company may also sell Notes to an Agent as principal for its own
account at discounts to be agreed upon at the time of sale. Such Notes may be
resold to investors and other purchasers at prevailing market prices, or prices
related thereto at the time of such resale or otherwise, as determined by the
Agent. In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer will not be in excess of the discount to be
received by such Agent from the Company. After the initial public offering of
Notes to be resold to investors and other purchasers on a fixed public offering
price basis, the public offering price, concession and discount may be changed.
An Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company and the
Agents have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
made in respect
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<PAGE> 27
thereof. The Company has also agreed to reimburse the Agents for certain
expenses, including the reasonable fees and expenses of counsel.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange, but has been advised by the Agents that the Agents
intend to make a market in the Notes, as permitted by applicable laws and
regulations. The Agents are not obligated to do so, however, and the Agents may
discontinue making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Securities as described in the accompanying
Prospectus.
In the ordinary course of their respective businesses, certain of the
Agents and their affiliates have engaged, and may in the future engage, in
investment banking and commercial banking transactions with the Company and
certain of its affiliates.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by Johnnie M.
Jackson, Jr., Esq., General Counsel Corporate Resources for the Company and for
the Agents by Brown & Wood, Washington, D.C. Cravath, Swaine & Moore, New York
may also act as counsel for the Company. Mr. Jackson, Cravath, Swaine & Moore
and Brown & Wood may rely as to all matters of Virginia law upon the opinion of
Hunton & Williams, Richmond, Va.
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<PAGE> 28
PROSPECTUS
OLIN CORPORATION
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
------------------------
Olin Corporation ("Olin" or the "Company") intends to issue from time to
time its (i) unsecured debt securities, which may either be senior (the "Senior
Securities") or subordinated (the "Subordinated Securities"; the Senior
Securities and the Subordinated Securities being referred to collectively as the
"Debt Securities"), (ii) warrants to purchase the Debt Securities (the "Debt
Warrants"), (iii) shares of preferred stock, par value $1 per share (the
"Preferred Stock"), (iv) warrants to purchase shares of Preferred Stock
("Preferred Stock Warrants"), (v) shares of common stock, par value $1 per share
(the "Common Stock") and (vi) warrants to purchase shares of Common Stock
("Common Stock Warrants"; the Debt Warrants, Preferred Stock Warrants and Common
Stock Warrants being referred to herein collectively as the "Securities
Warrants"), having an aggregate initial public offering price not to exceed
$400,000,000 or the equivalent thereof in one or more foreign currencies or
composite currencies, including European Currency Units, on terms to be
determined at the time of sale. The Debt Securities, Preferred Stock, Common
Stock and Securities Warrants offered hereby (collectively, the "Offered
Securities") may be offered, separately or as units with other Offered
Securities, in separate series in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, priority, interest rate (which may be variable or
fixed), time of payment or interest, terms of redemption at the option of the
Company or repayment at the option of the holder or for sinking fund payments,
the designation of the Trustee acting under the applicable Indenture and the
initial public offering price; (ii) in the case of Preferred Stock, the specific
title and stated value, number of shares or fractional interests therein, and
the dividend, liquidation, redemption, conversion, voting and other rights and
the initial public offering price; (iii) in the case of Common Stock, the
initial offering price; (iv) in the case of Securities Warrants, the duration,
offering price, exercise price and detachability thereof; and (v) in the case of
all Offered Securities, whether such Offered Security will be offered separately
or as a unit with other Offered Securities, will be set forth in the
accompanying Prospectus Supplement.
The Prospectus Supplement will also contain information, where applicable,
about certain United States Federal income tax considerations relating to, and
any listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.
The Offered Securities may be sold directly by the Company, or through
agents designated from time to time, or through underwriters or dealers. If any
agent of the Company, or any underwriters are involved in the sale of Offered
Securities, the names of such agents or underwriters and any applicable fees,
commissions or discounts and the net proceeds to the Company from such sale will
be set forth in the applicable Prospectus Supplement. The Company may also issue
the Offered Securities to one or more persons in exchange for outstanding
securities of the Company acquired by such persons from third parties in open
market transactions or in privately negotiated transactions. The newly issued
Offered Securities in such cases may be offered pursuant to this Prospectus and
the applicable Prospectus Supplement by such persons acting as principal for
their own accounts, at market prices prevailing at the time of sale, at prices
otherwise negotiated or at fixed prices. Unless otherwise indicated in the
applicable Prospectus Supplement, the Company will only receive outstanding
securities and will not receive cash proceeds in connection with such exchanges
or sales. See "Plan of Distribution".
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------------
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. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS MAY 4, 1994
<PAGE> 29
IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS, IF ANY, FOR SUCH OFFERING
MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICES OF THE OFFERED SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 5
Consolidated Ratios.................... 5
Description of Debt Securities......... 6
Description of Capital Stock........... 13
Description of Securities Warrants..... 18
Plan of Distribution................... 19
Legal Matters.......................... 20
Experts................................ 20
</TABLE>
AVAILABLE INFORMATION
Olin is subject to the information requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed by Olin with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. In addition, copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such reports, proxy statements and other information
concerning Olin can also be inspected at the offices of The New York Stock
Exchange, 20 Broad Street, New York, New York 10005, The Pacific Stock Exchange,
301 Pine Street, San Francisco, California 94104, and The Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605.
Olin has filed with the Commission a Registration Statement on Form S-3
under the Securities Act of 1933 (the "Securities Act") with respect to the
securities offered hereby. For further information with respect to Olin and the
Offered Securities, reference is made to such Registration Statement and to the
exhibits thereto. Statements contained herein concerning the provisions of
certain documents are not necessarily complete and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Olin's Annual Report on Form 10-K for the fiscal year ended December 31,
1993, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1994
and Current Report on Form 8-K, dated January 10, 1994, filed pursuant to
Section 13 or 15(d) of the Exchange Act (File No. 1-1070) is hereby incorporated
by reference into this Prospectus. All documents filed by Olin with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
made hereby 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 or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
Olin will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above which have been or may be
incorporated by reference into this Prospectus, other than certain exhibits to
such documents. Copies of the Indentures summarized below are also available
upon request. Requests for such copies should be directed to Secretary, Olin
Corporation, 120 Long Ridge Road, Stamford, Connecticut 06904 (Telephone: (203)
356-3126).
2
<PAGE> 30
THE COMPANY
Olin Corporation, a Virginia corporation incorporated in 1892, is a
manufacturer of chemicals, metals, and ammunition and defense-related products
which it markets to commercial and governmental customers. Results for the
Company are reported in three operating segments: chemicals, metals, and defense
and ammunition. The Company has recognized brand names in each of these
segments, including Olin pool chemicals sold under the brand names HTH(R) and
Pace(R), metal products sold under the brand name Olin(R) Brass and sporting
ammunition sold under the brand names Winchester(R) and Super-X(R).
References to the Company or Olin in this section include the Company and
its subsidiaries and affiliates. Olin's principal executive offices are located
at 120 Long Ridge Road, Stamford, Connecticut 06904, telephone (203) 356-2000.
CHEMICALS
In its largest segment, the Company manufactures and markets three major
product lines: chlor-alkali, urethanes and pool chemicals. In addition, it
produces a number of other chemical products described below.
Chlor-Alkali. The Company is a leading producer of chlorine and caustic
soda in the southeastern United States, with facilities at McIntosh, Alabama,
Charleston, Tennessee, and Augusta, Georgia. In addition, Niachlor, a
partnership formed between the Company and E.I. duPont de Nemours & Company,
produces chlorine and caustic soda at a Niagara Falls, New York facility.
Chlorine and caustic soda are co-products of the electrolysis of salt.
Chlorine is used as a bleaching agent in pulp and paper manufacturing and as a
raw material in the production of polyvinyl chloride. It is also used in the
manufacture of bleach and in water purification and in general inorganic and
organic chemical manufacturing. Caustic soda is used in petroleum refining and
in the manufacturing of pulp and paper, aluminum, detergents, soap and in a
variety of other organic and inorganic chemical products.
While the Company has historically marketed chlorine to pulp and paper
manufacturers in the southeastern United States, environmental concerns have
resulted in the decreased usage of chlorine in pulp bleaching. As a result, the
Company has shifted its chlorine business mix to other markets, including
manufacturers of ethylene dichloride and vinyl chloride monomer, as well as
other industrial customers. Approximately 30% of the Company's chlorine is used
captively for the manufacture of pool chemicals, toluene di-isocyanate ("TDI")
and other uses.
Urethanes. The Company has one of the largest production capacities in the
United States for TDI, a key component in the production of urethane foam which
is used in products such as automotive seating, furniture, mattresses and
padding. The Company sells TDI and an array of polyether polyols to intermediate
and final manufacturers of urethane foam products. The Company's polyols are
used to produce urethane products that are known as flexible urethanes, rigid
urethanes, and non-foam urethanes.
In addition, the Company is a supplier of specialty polyols used in
adhesives, coatings, elastomers and sealants. These products are sold to
intermediate and end use manufacturers.
Pool Chemicals. The Company manufactures or markets a wide array of
swimming pool chemicals and accessory products. It has two widely recognized
brand names in the U.S. pool chemicals industry: HTH(R) and Pace(R). The Company
sells its pool chemical products to mass merchandisers, pool professionals,
distributors and pool chemical repackers. In addition, the Company participates
in the worldwide pool chemicals market through joint ventures in Brazil and
South Africa. Pool chemicals are manufactured using chlorine and caustic soda,
which can be directly sourced from the Company's own production. The Company
believes it has the largest production capacity for calcium hypochlorite in the
United States. Much of its calcium hypochlorite is sold under the HTH(R) brand
name. The pool business assets acquired from FMC Corporation in 1985, which
include one of the Company's two isocyanurate manufacturing facilities, its
packaging facility and the Sun(R) trademark, are subject to a final Federal
Trade Commission divestiture order requiring divestiture no later than February
22, 1995.
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<PAGE> 31
Other Chemical Products. The Company manufactures a large number of
additional chemical products which are sold to intermediate and end use
manufacturers, such as zinc Omadine(R) additive used in anti-dandruff shampoos;
sulfuric acid used in petroleum refining and in manufacturing agricultural
chemicals; hydrazine solutions used as an intermediate in plastics manufacturing
and agricultural chemicals; hydrazine-based rocket propellants; Reductone(R)
brand sodium hydrosulfite used in paper, textile and clay bleaching; and
surfactants and fluids used in industrial and institutional detergents and
hydraulic fluids. In 1993, the Company added 130,000 tons of annual sulfuric
acid regeneration capacity to help it serve the growing market for
environmentally sounder gasoline.
Olin recently constructed an aliphatic di-isocyanate ("ADI") plant at Lake
Charles, Louisiana. The products manufactured at the ADI plant are used by
manufacturers of products such as automotive topcoats, premium paints and marine
and metal appliance finishes.
The Company, through Olin Hunt Specialty Products, Inc., a wholly-owned
subsidiary, and OCG Microelectronic Materials ("OCG"), affiliated joint venture
companies owned by the Company and CIBA-GEIGY Limited, develops, manufactures
and markets image-forming and other specialty electronic chemicals. In
particular, OCG produces and markets worldwide photoresist and polyimide
products, both of which are basic materials for manufacturing semiconductors.
METALS
The Company is a leading brass and copper alloy manufacturer in the United
States and rerolls and forms other metals. It is an active participant in the
worldwide market for these products, selling directly to large volume customers
and through distributors. The Company, through sales of its Posit-Bond(R) clad
metal, produced by a unique cladding process, is a supplier of metal to the U.S.
Mint. The Company also sells various alloys to foreign governments for coinage
purposes.
While the end use markets for the Company's metal products vary from year
to year, principal markets include automotive (for connectors and radiators);
electronics (for lead frames, connectors and wiring); ammunition; coinage
metals; and other applications such as builder's hardware and plumbing supplies
and seamless and welded tube (for utility condensers and industrial heat
exchangers). The Company uses a portion of its ammunition cartridge cup
production captively in its Winchester(R) sporting ammunition and also sells
this brass product to other ammunition makers.
In 1988, the Company acquired the former Bridgeport Brass Corporation of
Indianapolis, with primary manufacturing operations in Indianapolis, Indiana and
Bryan, Ohio, which significantly increased the Company's brass manufacturing
capacity.
In 1991, the Company acquired A. J. Oster Company ("Oster"), a distributor
of copper and copper-based alloy products, steel products, aluminum strip and
aluminum foil. Oster has a network of metal service centers located in several
states and Puerto Rico.
The Company has a joint venture with Yamaha of Japan, which sells high
performance alloys into the Far East market. The joint venture's local
manufacturing presence has enabled Olin Brass to participate in the Japanese
market for such products.
DEFENSE AND AMMUNITION
The Company produces small, medium and large caliber ammunition for sale to
commercial and military customers. The Company believes its Winchester Division
is a leading U.S. producer of ammunition for recreational shooters, hunters, law
enforcement agencies and the U.S. Armed Forces. The Company's Ordnance Division
provides medium and large caliber ammunition to governmental customers. In
addition, the Company's Aerospace Division provides advanced technology products
to the defense and aerospace industries.
Winchester. The Winchester(R) brand name is widely recognized. The
Company's product line includes all major sizes of shotgun shells and rimfire
and centerfire ammunition for pistols and rifles. These products
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are sold to mass merchandisers, distributors and the U.S. Government. This
ammunition is manufactured in East Alton, Illinois.
In 1993, the Company completed its eighth year of managing the Lake City
Army Ammunition Plant at Independence, Missouri. This government-owned,
contractor-operated ("GOCO") facility is the largest small caliber ammunition
facility in the United States.
In 1993, the Company installed at its East Alton, Illinois facility an
advanced rolling mill contributing to improved quality and productivity.
Ordnance. The Company's Ordnance Division provides medium (20, 25 and 30
millimeter) and large (105 and 120 millimeter) caliber ammunition to the United
States and certain foreign governments. Olin Ordnance is a major supplier of
ammunition for the Abrams M1A1 tank which was utilized in the Persian Gulf War.
Ball Powder(R) propellant and other propellants for Winchester(R) ammunition and
U.S. Government ammunition production are sourced from the Company's Ball
Powder(R) propellant plant in St. Marks, Florida.
This division utilizes its project and program management capabilities as
both a prime and subcontractor on contracts in which other defense suppliers
participate. The Company seeks to exploit these capabilities to acquire
additional GOCO work and to bid on other project management work. The Company
believes there are additional opportunities in the area of weapons
demilitarization.
Aerospace. The Company's Aerospace Division is comprised of two
subsidiaries: Olin Aerospace Company ("OAC") and Physics International Company.
Customers for these subsidiaries include satellite, aircraft and missile
contractors, other defense/aerospace subsystems and systems contractors, the
National Aeronautics and Space Administration and other government research and
development agencies and laboratories.
OAC is recognized as a major manufacturer of small rocket motors and
control thrusters used in satellites and other spacecraft such as Voyager II and
Magellan. It has been a leader in this technology for more than 20 years and
more recently has become a leader in advanced electric propulsion technology and
systems for satellites and spacecraft. OAC also manufactures inflators used in
various flotation devices, military munitions dispensing systems and aircraft
escape systems, as well as low voltage power conditioning and controlling
devices, digital test equipment and airborne electronic products.
Physics International Company's pulsed power systems are used in nuclear
radiation simulators and other electromagnetic applications. In addition, it
designs, tests and manufactures advanced, high performance anti-armor warhead
systems.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used for general
corporate purposes, which may include additions to working capital, capital
expenditures, stock repurchases, repayment of indebtedness and acquisitions.
CONSOLIDATED RATIOS
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------
1993 1992 1991 1990 1989
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
- --* 2.6 0.6 * 2.5 3.6
</TABLE>
- ---------------
*In 1993 and 1991, earnings were inadequate to cover fixed charges by $144
million and $23 million, respectively.
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<PAGE> 33
The following table sets forth the consolidated ratio of earnings to
combined fixed charges and preferred stock dividends for the Company:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------
1993 1992 1991 1990 1989
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
- --* 1.8 0.5* 2.1 3.3
</TABLE>
- ---------------
*In 1993 and 1991, earnings were inadequate to cover combined fixed charges and
preferred stock dividends by $172 million and $36 million, respectively.
In 1993, the Company recorded an after-tax charge of $132 million for
personnel reductions, business restructurings involving consolidations and
re-alignments within divisions, costs at sites of discontinued businesses,
future environmental liabilities and other charges. In 1991, the Company
recorded an after-tax charge of $80 million to cover losses on the disposition
and write-down of certain businesses and costs of personnel reductions.
For purposes of computing these consolidated ratios, earnings represent
income before income taxes with certain adjustments, primarily for capitalized
interest, plus fixed charges. Fixed charges consist of interest expense
(including capitalized interest), amortization of debt discount and expense, and
the estimated interest factor reflected in rental expense. For the consolidated
ratio of earnings to combined fixed charges and preferred stock dividends, fixed
charges are then aggregated with preferred stock dividend requirements on the
outstanding preferred stock.
DESCRIPTION OF DEBT SECURITIES
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 the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities. Accordingly, for
a description of the terms of a particular issue of Debt Securities, reference
must be made to both the Prospectus Supplement relating thereto and to the
following description.
Senior Securities were and may be issued under an Indenture dated as of
June 15, 1992, as supplemented ("Senior Indenture"), between Olin and Chemical
Bank. Subordinated Securities may be issued under an Indenture ("Subordinated
Indenture") between Olin and a commercial bank to be selected (collectively, the
Senior Indenture and the Subordinated Indenture are referred to as the
"Indentures"). Copies of the Indentures have been filed as exhibits to the
Registration Statement filed with the Commission. Chemical Bank will serve as
Trustee for series of Senior Securities and a commercial bank to be selected
will serve as Trustee for any series of Subordinated Securities which may be
issued. The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indentures including the definition
therein of certain terms.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. The Debt Securities may be issued in
one or more series as may be authorized from time to time by Olin. Reference is
made to the applicable Prospectus Supplement for the following terms of the Debt
Securities: (i) the designation, aggregate principal amount and authorized
denominations of the Debt Securities; (ii) the percentage of their principal
amount at which such Debt Securities will be issued; (iii) the date on which the
Debt Securities will mature; (iv) the rate or rates (which may be fixed or
variable) per annum, if any, or the method of determining such rate or rates, at
which the Debt Securities will bear interest; (v) the times at which any such
interest will be payable; (vi) the currency or currencies or units of two or
more currencies in which the Debt Securities are denominated and principal and
interest may be payable, and for which the Debt Securities may be purchased,
which may be in United States dollars, a foreign currency or currencies or units
of two or more foreign currencies; (vii) whether such Debt Securities are to be
Senior
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<PAGE> 34
Securities or Subordinated Securities; (viii) any redemption or sinking fund
terms or certain other specific terms; (ix) any Event of Default or covenant
with respect to the Debt Securities of a particular series, if not set forth
herein, and (x) any other terms of such series (which terms shall not be
inconsistent with the provisions of the Subordinated Indenture or the Senior
Indenture, as the case may be). Unless otherwise indicated in the applicable
Prospectus Supplement, principal, premium, if any, and interest, if any, will be
payable and the Debt Securities will be transferable at the corporate trust
office of the respective Trustee, provided that payment of interest may be made
at the option of Olin by check mailed to the address of the person entitled
thereto as it appears in the respective Debt Securities register.
The Debt Securities will be unsecured. Senior Securities will rank on a
parity with all other unsecured and unsubordinated indebtedness of Olin.
Subordinated Securities will be subordinated to certain present and future
superior indebtedness of Olin. See "Subordination of Subordinated Securities"
below.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form without coupons and
in denominations of $1,000 or any integral multiple thereof. No service charge
will be made for any transfer or exchange of such Debt Securities, but Olin may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Special federal income tax and other considerations relating to Debt
Securities denominated in foreign currencies or units of two or more foreign
currencies will be described in the applicable Prospectus Supplement.
Debt Securities may be issued as discounted Debt Securities (bearing no
interest or interest at a rate which at the time of issuance is below market
rates) to be sold at a substantial discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any such discounted Debt Securities will be described in the Prospectus
Supplement relating thereto.
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indentures and the Debt Securities will not afford
holders of Debt Securities protection in the event of a highly leveraged
transaction involving the Company.
GLOBAL SECURITIES
The Debt Securities of a series issued under the Indentures may be issued
in whole or in part in the form of one or more global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the Prospectus Supplement relating to such series.
Global Securities may be issued only in fully registered form and 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 Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Olin anticipates that the following provisions will generally apply
to depositary arrangements.
Upon the issuance of a Global Security, the Depositary 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 Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by Olin if such
Debt Securities are offered and sold directly by Olin. Ownership of beneficial
interests in a Global Security will be limited to persons that have accounts
with the applicable Depositary ("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 Depositary or its nominee
(with respect to interests of participants) and the records of participants
(with respect to interests of persons other than 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 transfer beneficial interests in a Global Security.
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<PAGE> 35
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary 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
Indenture governing such Debt Securities. 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 Indenture governing
such Debt Securities.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. Neither Olin, the Trustee for such Debt
Securities, any paying agent (a "Paying Agent"), nor the Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made by the Depository or any participants on
account of beneficial ownership interests of the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Olin expects that the Depositary for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium or interest 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 interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. Olin 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 the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by Olin within 90 days, Olin will issue individual Debt Securities of
such series in exchange for the Global Security or Securities representing such
series of Debt Securities. In addition, Olin may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities, determine not to have any Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue individual Debt Securities of such series in exchange for the Global
Security or Securities representing such series of Debt Securities. Further, if
Olin so specifies with respect to the Debt Securities of a series, an owner of a
beneficial interest in a Global Security representing Debt Securities of such
series may, on terms acceptable to Olin, the Trustee, and the Depositary for
such Global Security, receive individual Debt Securities of such series in
exchange for such beneficial interests, subject to any limitations described in
the Prospectus Supplement relating to such Debt Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities of the series
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Debt Securities registered in its name. Individual
Debt Securities of such series so issued will be issued in denominations, unless
otherwise specified by Olin, of $1,000 and integral multiples thereof.
SUBORDINATION OF SUBORDINATED SECURITIES
The payment of the principal of, premium, if any, and interest on the
Subordinated Securities, including sinking fund payments, if any, is
subordinated in right of payment, as set forth in the Subordinated Indenture, to
the prior payment in full of all Superior Indebtedness of Olin. Superior
Indebtedness is defined as (a) the principal of, premium, if any, and accrued
and unpaid interest on (whether outstanding on the date of execution of the
Subordinated Indenture or thereafter created, incurred or assumed) (i)
indebtedness of Olin for money borrowed (other than the Subordinated
Securities), (ii) guarantees by Olin of indebtedness for money borrowed of any
other person, (iii) indebtedness evidenced by notes, debentures, bonds or other
instruments of indebtedness for the payment of which Olin is responsible or
liable, by guarantees or otherwise,
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<PAGE> 36
(iv) obligations of Olin under any agreement relating to any interest rate or
currency swap, interest rate cap, interest rate collar, interest rate future,
currency exchange or forward currency transaction, or any similar interest rate
or currency hedging transaction, whether outstanding on the date of the
Subordinated Indenture or thereafter created, incurred or assumed, and (v)
obligations of Olin under any agreement to lease, or any lease of, any real or
personal property which, in accordance with generally accepted accounting
principles, is classified on Olin's balance sheet as a liability, and (b)
modifications, renewals, extensions and refundings of any such indebtedness,
liability, obligation or guarantee; unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such indebtedness, liability, obligation or guarantee, or such
modification, renewal, extension or refunding thereof, is not superior in right
of payment to the Subordinated Securities; provided, however, that Superior
Indebtedness shall not be deemed to include (i) any obligation of Olin to any
subsidiary and (ii) any other indebtedness, guarantee or obligation of Olin of
the type set forth above which is subordinate or junior in ranking in any
respect to any other indebtedness, guarantee or obligation of Olin.
No payment by Olin on account of principal of, premium, if any, or interest
on the Subordinated Securities, including sinking fund payments, if any, may be
made if any default or event of default with respect to any Superior
Indebtedness shall have occurred and be continuing and (unless such default or
event of default is the failure by Olin to pay principal or interest on any
instrument constituting Superior Indebtedness) written notice thereof shall have
been given to the Trustee by Olin or to Olin and the Trustee by the holders of
at least 10% in principal amount of any kind or category of any Superior
Indebtedness (or a representative or trustee on their behalf). Olin may resume
payments on the Subordinated Securities (unless otherwise prohibited by the
related Indenture) if (i) such default is cured or waived or (ii) unless such
default is the failure of Olin to pay principal or interest on any Superior
Indebtedness, 120 days pass after the notice is given if such default is not the
subject of judicial proceedings. In the event that any Subordinated Security is
declared due and payable before the date specified therein as the fixed date on
which the principal thereof is due and payable, or upon any payment or
distribution of assets of Olin to creditors upon any dissolution, winding up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal of (and
premium, if any) and interest due or to become due on all Superior Indebtedness
must be paid in full before the holders of Subordinated Securities are entitled
to receive or retain any payment (other than shares of stock or subordinated
indebtedness provided by a plan of reorganization or adjustment which does not
alter the rights of holders of Superior Indebtedness without such holders'
consent). Subject to the payment in full of all Superior Indebtedness, the
holders of the Subordinated Securities are to be subrogated to the rights of the
holders of Superior Indebtedness to receive payments or distributions of assets
of Olin applicable to Superior Indebtedness until the Subordinated Securities
are paid in full.
By reason of such subordination, in the event of insolvency, creditors of
Olin who are holders of Superior Indebtedness, as well as certain general
creditors of Olin, may recover more, ratably, than the holders of the
Subordinated Securities.
The Subordinated Indenture will not limit the amount of Superior
Indebtedness or securities which may be issued by Olin or any of its
subsidiaries.
CERTAIN COVENANTS OF OLIN WITH RESPECT TO SENIOR SECURITIES
Limitations on Liens. (a) Olin will agree that neither it nor any
Restricted Subsidiary (as defined below) will issue, assume or guarantee any
notes, bonds, debentures or other similar evidences of indebtedness for money
borrowed ("Debt") secured by a mortgage, lien, pledge or other encumbrance
("Mortgages") upon any Principal Property (as defined below), or upon any shares
of stock of any Restricted Subsidiary, without effectively providing that the
Senior Securities (together with, if Olin so determines, any other indebtedness
or obligation then existing or thereafter created, ranking equally with the
Senior Securities) shall be secured equally and ratably with (or, at the option
of Olin, prior to) such Debt so long as such Debt shall be so secured, except
that this restriction will not apply to (i) Mortgages existing on the date of
the Senior Indenture; (ii) Mortgages affecting property of a corporation
existing at the time it becomes a Restricted Subsidiary or at the time it is
merged into or consolidated with Olin or a Restricted Subsidiary;
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<PAGE> 37
(iii) Mortgages on property existing at the time of acquisition thereof, or to
secure payment of all or part of the purchase price thereof, or to secure Debt
incurred prior to, at the time of or within 24 months after such acquisition for
the purpose of financing all or part of the purchase price thereof, or assumed
or incurred in connection with the acquisition of property; (iv) Mortgages on
property to secure all or part of the cost of repairing, altering, constructing,
improving, exploring, drilling or developing such property, or to secure Debt
incurred to provide funds for such purpose; (v) Mortgages in connection with
non-recourse Debt; (vi) Mortgages on current assets or other personal property
(other than shares of stock or indebtedness of Subsidiaries (as defined below))
to secure loans maturing not more than one year from the date of the creation
thereof or to secure any renewal thereof for not more than one year at any one
time; (vii) Mortgages which secure indebtedness owing by a Restricted Subsidiary
to Olin or a Subsidiary; (viii) Mortgages on property of any Restricted
Subsidiary principally engaged in a financing or leasing business; (ix)
Mortgages incurred which do not in the aggregate materially detract from the
value of the property or assets affected thereby or materially impair the use of
such property or assets in the operation of its business; and (x) any extension,
renewal or replacement (or successive extensions, renewals or replacements), in
whole or in part, of any Mortgage referred to in the foregoing or of any Debt
secured thereby, provided that the principal amount of Debt secured thereby
shall not, with respect to Mortgages referred to in clauses (i) through (iv)
above, exceed the principal amount of Debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement Mortgage shall be limited to all or part of substantially the same
property which secured the Mortgage extended, renewed or replaced (plus
improvements on such property).
(b) Notwithstanding the above, Olin and any one or more Restricted
Subsidiaries may, without securing the Senior Securities, issue, assume or
guarantee Debt secured by Mortgages which would not be permitted by the
immediately preceding paragraph in an aggregate amount which, together with (i)
all other such Debt of Olin and its Restricted Subsidiaries which would not be
permitted under the immediately preceding paragraph and (ii) the Attributable
Debt (as defined below) in respect of Sale and Lease-Back Transactions (as
defined in the Senior Indenture) existing at such time (other than Sale and
Lease-Back Transactions in which the property involved would have been permitted
to be mortgaged under this section "Limitations on Liens" or the proceeds of
which have been applied to the retirement of long term indebtedness), does not
at the time exceed 10% of Consolidated Net Tangible Assets. The term
"Consolidated Net Tangible Assets" means the total amount of assets after
deducting therefrom (i) all current liabilities (excluding any thereof which are
by their terms extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount thereof is being
computed), and (ii) unamortized Debt discount and expense, goodwill, trademarks,
brand names, patents and other intangible assets, all as shown on the latest
audited consolidated financial statements of the Company at the time of the
determination.
(c) For purposes of this covenant, the following are not considered Debt
secured by a Mortgage: (i) the sale or other transfer of any interest in
property of the character commonly referred to as a "production payment" and
(ii) Mortgages in favor of governmental bodies to secure advance or progress
payments pursuant to any contract or statute or indebtedness incurred for the
purpose of financing the purchase price or cost of constructing or improving the
property subject thereto.
Sale and Lease-Back Transactions. (a) Sale and Lease-Back Transactions
with respect to Principal Property by Olin or any Restricted Subsidiary (except
for temporary leases for terms of not more than three years or between the
Company or a Subsidiary and a Restricted Subsidiary) are prohibited by the
Senior Indenture unless the proceeds of any such sale are at least equal to the
fair value of such property and either (i) Olin or such Restricted Subsidiary
would be entitled to incur, assume or guarantee Debt secured by a mortgage on
the Principal Property to be leased without equally and ratably securing the
Senior Securities or (ii) Olin applies an amount equal to the fair value of the
property so leased to the retirement of long-term indebtedness of Olin which
ranks prior to or on a par with the Senior Securities. Sale and Lease-Back
Transactions do not include arrangements with governmental bodies entered into
for the purpose of financing the purchase price or the cost of constructing or
improving the property subject thereto.
(b) Notwithstanding the provisions of the preceding paragraph (a), Olin or
any Restricted Subsidiary may enter into any Sale and Lease-Back Transaction
which would not be permitted under the immediately preceding paragraph if the
amount of the Attributable Debt in respect of Sale and Lease-Back Transactions
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for such transaction, together with (i) all Debt of Olin and its Restricted
Subsidiaries secured by a Mortgage on Principal Property and not permitted under
paragraph (a) of "Limitations on Liens" and (ii) all other Attributable Debt in
respect of Sale and Lease-Back Transactions existing at such time (other than
Sale and Lease-Back Transactions permitted because Olin would be entitled to
incur, assume or guarantee Debt secured by a Mortgage on the Principal Property
to be leased without equally and ratably securing the Senior Securities and
other than Sale and Lease-Back Transactions the proceeds of which have been
applied in accordance with clause (ii) of the immediately preceding paragraph
(a)), does not at the time exceed 10% of Consolidated Net Tangible Assets.
The term "Principal Property" means any property or plant of Olin or any
Restricted Subsidiary primarily used for the manufacture of products and located
within the United States or its territories or possessions, except any such
property or plant which the Board of Directors of Olin by resolution declares is
not of material importance to the total business conducted by Olin and its
Subsidiaries as an entity.
The term "Attributable Debt" means, as of any particular time, the present
value, discounted at a rate per annum equal to the weighted average of the
interest rate(s) of the Senior Securities, or, in the case of Original Issue
Discount Debt Securities (as defined in the Senior Indenture), the Yields to
Maturity (as defined in the Senior Indenture) (compounded semi-annually), of the
obligation of a lessee for rental payments (not including amounts payable by the
lessee for maintenance, property taxes and insurance) due during the remaining
term of any lease (including any period for which such lease has been extended
or may, at the option of the lessor, be extended).
The term "Subsidiary" means any corporation, association or other business
entity of which more than 50% of the Voting Stock (as defined in the Senior
Indenture) is at the time directly or indirectly owned by Olin. The term
"Restricted Subsidiary" means (i) any Subsidiary which owns or leases, directly
or indirectly, a Principal Property, and (ii) any Subsidiary which owns,
directly or indirectly, any stock or indebtedness of a Restricted Subsidiary;
except that the term "Restricted Subsidiary" shall not include (A) any
Subsidiary engaged primarily in financing receivables, making loans, extending
credit or other activities of a character conducted by a finance company, or (B)
any Subsidiary (1) which conducts substantially all of its business outside the
United States or its territories and possessions or (2) the principal assets of
which are stock or indebtedness of corporations which conduct substantially all
of their business outside the United States and its territories and possessions.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The following events are defined in each Indenture as "Events of Default"
with respect to a series of Debt Securities issued under such Indenture: (a)
failure to pay interest or a sinking fund installment, if any, on such series
for 30 days or to pay the principal of and premium, if any, on such series when
due, whether at maturity, upon redemption, by declaration or otherwise; (b)
failure to perform any other covenants in such Indenture for 60 days after
notice; and (c) certain events of bankruptcy, insolvency or reorganization. An
Event of Default with respect to one series of Debt Securities is not
necessarily an Event of Default for another series.
If an Event of Default described under (a) above shall have occurred and is
continuing with respect to any series of Debt Securities, unless the principal
of all the Debt Securities of such series shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debt Securities of such series then outstanding may
declare the principal amount (or, if original issue discount securities, such
portion of the principal amount as specified in such series of Debt Securities)
of all Debt Securities of such series immediately due and payable. If an Event
of Default described under (b) above shall have occurred and is continuing,
unless the principal amount of all the Debt Securities of all series shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of all Debt Securities then outstanding
may declare the principal amount (or, if any series are original issue discount
securities, such portion of the principal amount as specified in such series) of
all Debt Securities then outstanding immediately due and payable.
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Each of the Indentures provides that the Trustee under such Indenture
shall, within 90 days after the occurrence of a default with respect to a series
of Debt Securities under such Indenture, give to the holders of the Debt
Securities in such series notice of all uncured defaults with respect to such
series known to it; provided that, except in the case of default in the payment
of principal of or premium, if any, or interest or the making of any sinking
fund payment on any of the Debt Securities in such series, the Trustee shall be
protected in withholding such notice if it in good faith determines that it is
in the interest of the holders of such series.
Any Event of Default with respect to a particular series of Debt Securities
may be waived by the holders of a majority in aggregate principal amount of the
Outstanding Debt Securities (as defined in the Indentures) of such series (or of
all the Outstanding Debt Securities, as the case may be), except in each case a
failure to pay principal of, premium, if any, or interest on such Debt Security.
MODIFICATION OF THE INDENTURES
Each of the Indentures and the rights of holders of Debt Securities
thereunder may be modified by Olin and the respective Trustee with the consent
of the holders of not less than 66 2/3% of the aggregate principal amount of all
series of Debt Securities under such Indenture then outstanding affected thereby
(voting as one class); provided, however, that no such modification shall extend
the fixed maturity of any Debt Securities, or reduce the principal amount
thereof or any premium thereon or the amount of any sinking fund payment, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, or reduce the percentage required
for modification, without the consent of the holder of each Debt Security so
affected.
Each of the Indentures provides that the Company and the Trustee may enter
into supplemental indentures without the consent of the holders of Debt
Securities to: (a) evidence the assumption by a successor corporation of the
obligations of the Company, (b) add covenants for the protection of the holders
of Debt Securities, (c) cure any ambiguity or correct any inconsistency in
either of the Indentures, (d) establish the form or terms of Debt Securities of
any series, (e) modify or amend either of the Indentures to permit the
qualification of indentures supplemental thereto and (f) provide for the
issuance under either of the Indentures of Debt Securities in coupon form
exchangeable with Debt Securities issued under the Indentures.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each of the Indentures provides that the Company may not merge or
consolidate with any other corporation or sell or convey all or substantially
all of its assets to any Person (as defined in each of the Indentures), unless
(a) the successor corporation shall be a corporation organized under the laws of
the United States of America or any State thereof and shall expressly assume the
due and punctual payment of the principal of and premium, if any, and interest
on all the Debt Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of the
Indentures to be performed or observed by the Company, by supplemental indenture
satisfactory to the Trustee, executed and delivered to the Trustee by such
corporation, and (b) the successor corporation shall not, immediately after such
merger or consolidation, or such sale or conveyance, be in default in the
performance of any such covenant or condition.
SATISFACTION AND DISCHARGE OF THE INDENTURES; DEFEASANCE; COVENANT DEFEASANCE
The Subordinated Indenture will be discharged upon cancellation of all the
Subordinated Securities or, with certain limitations, upon deposit with the
respective Trustee of funds sufficient for the payment or redemption thereof.
The Senior Indenture provides that Olin, at Olin's option, (a) will be
discharged from any and all obligations in respect of the Senior Securities of a
series (except for certain obligations to register the transfer or exchange of
Debt Securities, replace stolen, lost or mutilated Debt Securities, maintain
paying agencies and hold moneys for payment in trust) or (b) need not comply
with certain restrictive covenants of such Indenture (including those described
under "Certain Covenants of Olin With Respect To Senior Securities"), in each
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case if Olin deposits, in trust with the Trustee or the Defeasance Agent (as
defined in the Senior Indenture), money or U.S. Government Obligations (as
defined in the Senior Indenture), or any combination thereof, which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money, in an amount sufficient to pay all the principal (including
any mandatory sinking fund payments) of, and interest and premium, if any, on,
the Senior Securities of such series on the dates such payments are due in
accordance with the terms of such Senior Securities. To exercise any such
option, Olin is required to deliver to the Trustee and the Defeasance Agent, if
any, an opinion of counsel to the effect that (i) the deposit and related
defeasance would not cause the holders of the Senior Securities of such series
to recognize income, gain or loss for federal income tax purposes and, in the
case of a discharge pursuant to clause (a), such opinion shall be accompanied by
a private letter ruling to that effect received from the United States Internal
Revenue Service or a revenue ruling pertaining to a comparable form of
transaction to that effect published by the United States Internal Revenue
Service, and (ii) if listed on any national securities exchange, such Debt
Securities would not be delisted from such exchange as a result of the exercise
of such option.
THE TRUSTEES
Olin may maintain banking and other commercial relationships with the
Trustees and their affiliates in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized stock of the Company consists of 60,000,000 shares of common
stock, par value $1 per share (the "Common Stock"), and 10,000,000 shares of
preferred stock, par value $1 per share (the "Preferred Stock"), issuable in
series. On March 3, 1994, there were approximately 19,116,000 shares of Common
Stock, 1,172,000 shares of ESOP Preferred Stock (the "ESOP Preferred") and
2,760,000 shares of Series A Conversion Preferred Stock (the "PERCS")
outstanding.
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's Restated Articles of
Incorporation, as amended (the "Restated Articles"), and by-laws (the "By-Laws")
as currently in effect. These statements do not purport to be complete, or to
give full effect to the terms of the provisions of statutory or common law, and
are subject to, and are qualified in their entirety by reference to, the terms
of the Restated Articles, By-Laws and the Rights Agreement, dated as of February
27, 1986 between the Company and Manufacturers Hanover Trust Company (now known
as Chemical Bank) (the "Rights Agreement"), which are filed as Exhibits to the
Registration Statement of which this Prospectus is a part.
Preferred Stock
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of the Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. The description set
forth below is subject to and qualified in its entirety by reference to the
Articles of Amendment to the Restated Articles establishing a particular series
of the Preferred Stock which will be filed with the Commission in connection
with the offering of such series of Preferred Stock.
General. Under the Restated Articles, the Board of Directors of the
Company (the "Board of Directors") is authorized, without further shareholder
action, to provide for the issuance of up to 10,000,000 shares of preferred
stock, $1 par value per share, in one or more series, with such voting powers
and with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions, as shall
be set forth in resolutions providing for the issue thereof adopted by the Board
of Directors or a duly authorized committee thereof. The Company may amend from
time to time its
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Restated Articles to increase the number of authorized shares of preferred
stock. Any such amendment would require the approval of the holders of a
majority of the outstanding shares of Common Stock, and the approval of the
holders of a majority of the outstanding shares of all series of preferred stock
voting together as a single class without regard to series. As of the date of
this Prospectus, the Company has two series of preferred stock outstanding,
which are described below under "Outstanding Preferred Stock".
The Preferred Stock will have the dividend, liquidation, redemption,
conversion and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including: (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion provisions of such Preferred Stock; and (vi) any
additional dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity as to dividends and distributions in the event of a liquidation with the
outstanding preferred stock of the Company and each other series of the
Preferred Stock. See "Outstanding Preferred Stock" below.
Dividend Rights. Holders of the Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors, out of
assets of the Company legally available therefor, cash dividends at such rates
and on such dates as are set forth in the Prospectus Supplement relating to such
series of the Preferred Stock. Such rate may be fixed or variable or both. Each
such dividend will be payable to the holders of record as they appear on the
stock books of the Company on such record dates as will be fixed by the Board of
Directors or a duly authorized committee thereof. Dividends on any series of the
Preferred Stock may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating thereto. If the Board of Directors fails to
declare a dividend payable on a dividend payment date on any series of Preferred
Stock for which dividends are noncumulative, then the right to receive a
dividend in respect of the dividend period ending on such dividend payment day
will be lost, and the Company shall have no obligation to pay the dividend
accrued for that period, whether or not dividends are declared for any future
period.
If the Prospectus Supplement so provides, no full dividends will be
declared or paid or set apart for payment on the Preferred Stock of any series
ranking, as to dividends, on a parity with or junior to any other series of
preferred stock for any period unless full dividends have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for such payment, on such other series of
preferred stock for the then-current dividend payment period and, if such other
preferred stock is cumulative, all other dividend payment periods terminating on
or before the date of payment of such full dividends. If the Prospectus
Supplement so provides, when dividends are not paid in full upon any series of
the Preferred Stock and any other preferred stock ranking on a parity as to
dividends with such series of the Preferred Stock, all dividends declared upon
such series of the Preferred Stock and any other preferred stock ranking on a
parity as to dividends will be declared pro rata so that the amount of dividends
declared per share on such series of the Preferred Stock and such other
preferred stock will in all cases bear to each other the same ratio that accrued
dividends per share on such series of the Preferred Stock and such other
preferred stock bear to each other. Except as provided in the preceding
sentence, unless full dividends, including, in the case of cumulative Preferred
Stock, accumulations, if any, in respect of prior dividend payment periods, on
all outstanding shares of any series of the Preferred Stock have been paid, no
dividends (other than in shares of Common Stock or another stock ranking junior
to such series of the Preferred Stock as to dividends and upon liquidation) will
be declared or paid or set aside for payment or other distributions made upon
the Common Stock or any other stock of the Company ranking junior to the
Preferred Stock as to dividends. If the Prospectus Supplement so provides, no
Common Stock or any other stock of the Company ranking junior to or on a parity
with such series of the Preferred Stock as to dividends or upon liquidation be
redeemed, purchased
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or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Company (except by conversion into or exchange for stock of the Company
ranking junior to such series of the Preferred Stock as to dividends and upon
liquidation).
The amount of dividends payable for each dividend period will be computed
by annualizing the applicable dividend rate and dividing by the number of
dividend periods in a year, except that the amount of dividends payable for the
initial dividend period or any period shorter than a full dividend period shall
be computed on the basis of 30-day months, a 360-day year and the actual number
of days elapsed in the period.
Each series of Preferred Stock will be entitled to dividends as described
in the Prospectus Supplement relating to such series, which may be based upon
one or more methods of determination. Different series of the Preferred Stock
may be entitled to dividends at different dividend rates or based upon different
methods of determination.
Rights Upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of each
series of Preferred Stock will be entitled to receive out of the assets of the
Company available for distribution to shareholders, before any distribution of
assets is made to holders of Common Stock or any other class of stock ranking
junior to such series of Preferred Stock upon liquidation, liquidating
distributions in the amount set forth in the Prospectus Supplement relating to
such series of the Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series and any other shares of stock of
the Company ranking as to any such distribution on a parity with such series of
the Preferred Stock are not paid in full, the holders of the Preferred Stock of
such series and of such other shares will share ratably in any such distribution
of assets of the Company in proportion to the full respective preferential
amounts to which they are entitled.
Redemption. A series of the Preferred Stock may be redeemable, in whole or
in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund, in each case upon terms, at the time, the
redemption prices and for the types of consideration set forth in the Prospectus
Supplement relating to such series.
The Prospectus Supplement relating to a series of Preferred Stock which is
subject to mandatory redemption shall specify the number of shares of such
series of Preferred Stock which shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption.
Conversion Rights. The Prospectus Supplement for any series of the
Preferred Stock will state the terms, if any, on which shares of that series are
convertible into shares of Common Stock or another series of preferred stock of
the Company. The Preferred Stock will have no preemptive rights.
Voting Rights. Except as indicated below or in the Prospectus Supplement
relating to a particular series of Preferred Stock, or except as expressly
required by applicable law, a holder of the Preferred Stock will not be entitled
to vote. Except as indicated in the Prospectus Supplement relating to a
particular series of Preferred Stock, in the event the Company issues full
shares of any series of Preferred Stock, each such share will be entitled to one
vote on matters on which holders of such series of the Preferred Stock are
entitled to vote.
The affirmative vote or consent of the holders of a majority of the
outstanding shares of any series of Preferred Stock (unless the Board of
Directors establishes a higher amount), voting as a separate class, will be
required for any amendment of the Restated Articles (or any certificate
amendatory thereof or supplemental thereto relating to any series of the
Preferred Stock) which changes any rights or preferences of such series of
Preferred Stock.
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In addition to the foregoing voting rights, under Virginia law as now in
effect, the holders of the Preferred Stock will have the voting rights set forth
under "General" above with respect to amendments to the Restated Articles which
would increase the number of authorized shares of preferred stock of the
Company.
Outstanding Preferred Stock. As of March 3, 1994, the Company had two
series of Preferred Stock outstanding, PERCS and ESOP Preferred. The PERCS and
the ESOP Preferred rank on a parity with respect to each other and rank senior
to the Common Stock with respect to payment of dividends and rights upon
liquidation.
PERCS. Subject to the rights of holders of other classes of stock ranking
on a parity with or senior to the PERCS with respect to the payment of dividends
which may from time to time be issued by the Company, the owners of the PERCS
are entitled to receive, when, as and if the Board of Directors declares a
dividend on the PERCS, cumulative preferential cash dividends accruing at the
rate of $3.64 per annum or $.91 per quarter for each share of the PERCS.
Dividends on the PERCS accrue whether or not the Company has earnings, whether
or not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared. Accumulated unpaid dividends will
not bear interest.
On the Mandatory Conversion Date, March 1, 1995, the outstanding PERCS will
convert automatically into shares of Common Stock at the Common Equivalent Rate
(as described below) in effect on such date and the right to receive an amount
in cash equal to all accrued and unpaid dividends on such PERCS, subject to the
rights of the Company to call the PERCS for redemption prior to the Mandatory
Conversion Date, as described below. The Common Equivalent Rate is initially one
share of the Common Stock for each PERCS. The Common Equivalent Rate is subject
to adjustment under certain circumstances.
In addition, (x) immediately prior to the effectiveness of a merger or
consolidation of the Company that results in the conversion or exchange of the
Common Stock into, or results in holders of the Common Stock having the right to
receive, other securities or other property (whether of the Company or any other
entity) or (y) immediately prior to the close of business on the business day
immediately preceding the distribution date of the Rights associated with the
Common Stock, each outstanding share of the PERCS will convert automatically
into (i) shares of Common Stock, plus (ii) the right to receive an amount in
cash equal to the accrued and unpaid dividends on such PERCS to and including
the settlement date, plus (iii) the right to receive an amount in cash initially
equal to $4.32, declining by $.00386 on each day following the date of issue of
the PERCS to $.23 on January 1, 1995, and equal to zero thereafter. At the
option of the Company, it may deliver on the settlement date, in lieu of some or
all of the cash amounts described in clauses (i) and (iii) of the preceding
sentence, shares of Common Stock.
The PERCS are not convertible into shares of Common Stock at the option of
the holders thereof.
At any time and from time to time prior to the Mandatory Conversion Date,
the Company shall have the right to call, in whole or in part, the outstanding
PERCS for redemption and to deliver to the holders thereof in exchange for each
such share of the PERCS, a number of shares of Common Stock equal to the call
price in effect on the date of redemption divided by the current market price of
the Common Stock determined as of the second trading day immediately preceding
the notice date, plus an amount in cash equal to any accrued and unpaid
dividends to and including the date of redemption.
In the event of the liquidation, dissolution or winding up of the business
of the Company, whether voluntary or involuntary, the holders of the PERCS,
after payment or provision for payment of the debts and other liabilities of the
Company and before any distribution to the holders of the Common Stock or any
other stock ranking junior to the PERCS with respect to distributions upon
liquidation, dissolution or winding up, will be entitled to receive, for each
share of the PERCS, an amount equal to the sum of (i) the price to public for
each share of the PERCS and (ii) all accrued and unpaid dividends thereon, and
no more.
The holders of PERCS do not have voting rights except as required by law
and except that (i) upon the failure of the Company to pay dividends on the
PERCS in full for six quarterly dividend periods, the holders of the PERCS
(together with the holders of all other series of the Preferred Stock having
such rights) will be entitled to elect two directors to the Board of Directors
until the default is cured and (ii) any amendment of any of the provisions of
the Restated Articles which would (A) authorize or create any shares of stock
ranking
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senior to the PERCS as to dividends or as to distributions in the event of the
Company's liquidation, dissolution or winding up or (B) alter or change the
rights, preferences or limitations of the PERCS so as to affect such rights,
preferences or limitations adversely would require the affirmative vote of the
holders of at least two-thirds of the total number of outstanding shares of the
PERCS, voting together as a single voting group with any other series of the
Preferred Stock that is (x) affected in the same or substantially similar manner
and (y) entitled by law, by the Restated Articles or by resolution of the Board
of Directors to vote on such amendment.
ESOP Preferred Stock. The Board of Directors, by amendment to the Restated
Articles effective June 27, 1989, established 1,750,000 shares of ESOP
Preferred. The ESOP Preferred is issuable only to the trustee of the Olin
Corporation Contributing Employee Ownership Plan, which purchased 1,298,195
shares of such stock on June 29, 1989. The ESOP Preferred has a liquidation
value of $77.03 per share (plus accrued and unpaid dividends) and cumulative
annual dividends of $5.97 per share. Subject to Virginia law, each share of ESOP
Preferred is currently entitled to one vote and is voted with the Common Stock
as a single class on matters submitted to a vote of the Company's shareholders.
Each share of ESOP Preferred is convertible into not less than one share of
Common Stock, subject to anti-dilutive adjustments. The ESOP Preferred may be
redeemed at the option of the Company after July 1, 1994, or at the option of
the trustee of such Plan under certain circumstances (including upon payment of
withdrawing Plan participant accounts or if required to meet ESOP debt
payments). The Company may pay the redemption price with cash, marketable
securities or shares of Common Stock or in any combination of the foregoing.
Currently, the Company intends to redeem the ESOP Preferred solely with shares
of Common Stock whenever mandatory redemptions occur as a result of Plan
participants withdrawing their accounts.
Transfer Agent and Registrar. The transfer agent, registrar and dividend
disbursement agent for a series of the Preferred Stock will be selected by the
Company and be described in the applicable Prospectus Supplement. The registrar
for shares of Preferred Stock will send notices to shareholders of any meetings
at which holders of the Preferred Stock have the right to elect directors of the
Company or to vote on any other matter.
Common Stock
Holders of Common Stock are entitled to dividends as declared by the Board
of Directors from time to time after payment of, or provision for, full
cumulative dividends on and any required redemptions of shares of Preferred
Stock then outstanding. Holders of Common Stock are entitled to one vote per
share and may not cumulate votes for the election of directors. Holders of
Common Stock have no preemptive or subscription rights and have no liability for
further calls or assessments. In the event of the liquidation, dissolution or
winding up of the Company, holders of Common Stock are entitled to receive pro
rata all the remaining assets of the Company available for distribution, after
satisfaction of the prior preferential rights of the Preferred Stock and the
satisfaction of all debts and liabilities of the Company.
The Transfer Agent and Registrar for the Common Stock is Chemical Bank.
CERTAIN PROVISIONS OF THE RESTATED ARTICLES AND BY-LAWS
The Board of Directors consists of three classes as nearly equal in number
as possible, each of which serves for three years with one class being elected
each year. The total number of Directors may not exceed 18. Special meetings of
shareholders may be called only by the Board of Directors, designated officers
or the holders of a majority of the shares entitled to vote at the special
meeting. Directors may be removed only with cause, and vacancies on the Board of
Directors, including any vacancy created by an increase in the number of
Directors, may be filled only by the Board of Directors unless the vacancy is to
be filled at an annual meeting of shareholders. The By-Laws require that advance
notice of nominees for election as Directors to be made by a shareholder be
given to the Secretary of the Company, together with certain specified
information, no later than 90 days before an annual meeting of shareholders or
seven days following notice of a special meeting of shareholders for the
election of Directors. The provisions of the Restated Articles and By-Laws
described above may, in certain circumstances, make more difficult or discourage
a takeover of the Company.
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COMMON STOCK PURCHASE RIGHTS
On February 27, 1986, the Company distributed one Common Stock purchase
right ("Right") for each outstanding share of Common Stock to the shareholders
of record on March 10, 1986. Unless the Board of Directors directs otherwise,
one Right will be issued with respect to each share of Common Stock that becomes
outstanding prior to the occurrence of certain potential change-in-control
events. The Rights become exercisable upon certain potential change-in-control
events. When exercisable and upon the occurrence of certain events, the Rights
entitle holders to purchase shares of Common Stock at a substantial discount.
Exercise of the Rights will cause substantial dilution to a person or group
attempting to acquire control of the Company without the approval of the Board
of Directors. Except under certain circumstances, the Board of Directors may
cause the Company to redeem the Rights in whole, but not in part, at a price of
$.05 per Right. The Rights will not interfere with any merger or other business
combination approved by the Board of Directors. The Rights expire on February
27, 1996, if not redeemed earlier. The Rights have no voting or dividend
privileges. Until such time as the Rights become exercisable, they are attached
to and do not trade separately from the Common Stock.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with Debt Securities, Preferred Stock or Common Stock
offered by any Prospectus Supplement and may be attached to or separate from any
such Offered Securities. Each series of Securities Warrants will be issued under
a separate warrant agreement (a "Securities Warrant Agreement") to be entered
into between the Company and a bank or trust company, as warrant agent (the
"Securities Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of offered Securities Warrants. The Securities
Warrant Agent will act solely as an agent of the Company in connection with the
Securities Warrants and will not assume any obligation or relationship of agency
or trust for or with any holders of Securities Warrants or beneficial owners of
Securities Warrants. The following summary of certain provisions of the
Securities Warrants does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Securities
Warrant Agreements.
Reference is made to the Prospectus Supplement relating to the particular
issue of Securities Warrants offered thereby for the terms of such Securities
Warrants, including, where applicable: (i) the designation, aggregate principal
amount, currencies, denominations and terms of the series of Debt Securities
purchasable upon exercise of Securities Warrants to purchase Debt Securities and
the price at which such Debt Securities may be purchased upon such exercise;
(ii) the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights) of the
series of Preferred Stock purchasable upon exercise of Securities Warrants to
purchase shares of Preferred Stock and the price at which such number of shares
of Preferred Stock of such series may be purchased upon such exercise; (iii) the
number of shares of Common Stock purchasable upon the exercise of Securities
Warrants to purchase shares of Common Stock and the price at which such number
of shares of Common Stock may be purchased upon such exercise; (iv) the date on
which the right to exercise such Securities Warrants shall commence and the date
on which such right shall expire (the "Expiration Date"); (v) United States
Federal income tax consequences applicable to such Securities Warrants; and (vi)
any other terms of such Securities Warrants. Securities Warrants for the
purchase of Preferred Stock and Common Stock will be offered and exercisable for
U.S. dollars only. Securities Warrants will be issued in registered form only.
The exercise price for Securities Warrants will be subject to adjustment in
accordance with the applicable Prospectus Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred Stock
or Common Stock at such exercise price as shall in each case be set forth in, or
calculable from, the Prospectus Supplement relating to the offered Securities
Warrants, which exercise price may be subject to adjustment upon the occurrence
of certain events as set forth in such Prospectus Supplement. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Company), unexercised Securities Warrants will
become
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void. The place or places where, and the manner in which, Securities Warrants
may be exercised shall be specified in the Prospectus Supplement relating to
such Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock or Common Stock, holders of such Securities Warrants
will not have any of the rights of holders of the Debt Securities, Preferred
Stock or Common Stock, as the case may be, purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the applicable Indenture, or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
Olin may sell the Offered Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or a limited number of
institutional purchasers; or (iii) through agents. The Prospectus Supplement
with respect to the Offered Securities will set forth the terms of the offering
of the Offered Securities, including the name or names of any underwriters,
dealers or agents, the price of the Offered Securities and the net proceeds to
Olin from such sale, any underwriting discounts or other items constituting
underwriters' compensation, any discounts or concessions allowed or reallowed or
paid to dealers and any securities exchanges on which the Offered Securities may
be listed.
If underwriters are used in the sale, the Offered 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 Offered Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
investment banking firms or others, as designated. Unless otherwise set forth in
the Prospectus Supplement, the obligations of the underwriters or agents to
purchase the Offered Securities will be subject to certain conditions precedent
and the underwriters will be obligated to purchase all the Offered Securities 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.
If a dealer is utilized in the sale of any Offered Securities in respect of
which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealer, as principal. The dealer may then resell such Offered
Securities to the public at varying prices to be determined by such dealer at
the time of resale. The name of the dealer and the terms of the transaction will
be set forth in the Prospectus Supplement.
Offered Securities may be sold directly by Olin to one or more
institutional purchasers, or through agents designated by Olin from time to time
at a fixed price or prices, which may be changed, or at varying prices
determined at time of sale. Any agent involved in the offer or sale of the
Offered Securities will be named, and any commissions payable by Olin to such
agent will be set forth, in the Prospectus Supplement. 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 so indicated in the Prospectus Supplement, Olin will authorize agents,
underwriters or dealers to solicit offers by certain specified institutions to
purchase Offered Securities from Olin at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement and the
Prospectus Supplement will set forth the commission payable for solicitation of
such contracts.
Agents and underwriters may be entitled under agreements entered into with
Olin to indemnification by Olin against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with or perform services for Olin in the ordinary course of business.
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LEGAL MATTERS
The validity of the issuance of the Offered Securities offered hereby will
be passed upon for the Company by Johnnie M. Jackson, Jr., Esq., General
Counsel -- Corporate Resources and Secretary of the Company. Cravath Swaine &
Moore, New York, may also act as counsel for the Company and in certain cases
may represent the underwriters of any Offered Securities. Mr. Jackson and
Cravath, Swaine & Moore may rely as to matters of Virginia law upon the opinion
of Hunton & Williams, Richmond, Virginia. Each of Hunton & Williams and Cravath,
Swaine & Moore has in the past represented and continues to represent the
Company in other matters on a regular basis.
EXPERTS
The Company's consolidated financial statements and schedules as of
December 31, 1993 and 1992 and for each of the years in the three-year period
ended December 31, 1993 incorporated by reference herein have been incorporated
herein in reliance upon the reports of KPMG Peat Marwick, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing. The reports of KPMG Peat
Marwick refer to a change in accounting for postretirement benefits other than
pensions and income taxes in 1992.
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